Scribd
Upload
14 views1 page

Banking Case 1

Mr. Amar Panday had a successful grocery business that expanded over time with the help of loans from Vijaya Bank. When Robinson Bank opened a branch, their manager convinced Mr. Panday to shift his business to real estate with loans triple the size. Real estate prices soon declined under new regulations. Mr. Panday defaulted on the loans as he couldn't sell properties, causing major losses for Robinson Bank after auctioning the collateral. The bank manager, credit officer, valuator, and Mr. Panday face prosecution for inappropriate lending practices and overvaluation of collateral.

Uploaded by

pranay chaudhary
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
14 views1 page

Banking Case 1

Mr. Amar Panday had a successful grocery business that expanded over time with the help of loans from Vijaya Bank. When Robinson Bank opened a branch, their manager convinced Mr. Panday to shift his business to real estate with loans triple the size. Real estate prices soon declined under new regulations. Mr. Panday defaulted on the loans as he couldn't sell properties, causing major losses for Robinson Bank after auctioning the collateral. The bank manager, credit officer, valuator, and Mr. Panday face prosecution for inappropriate lending practices and overvaluation of collateral.

Uploaded by

pranay chaudhary
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 1

Case 1:

Mr Amar Panday was a good businessman; he was continuing his grocery trading business started from his father. He was
happy with his profession. Vijaya Bank opened a branch in his place and the manager started to visit him for the business
purpose. After sometime, he availed credit limit in the name of his business and added new items in his product line. As a
positive result, he got continuous success in his business and soon able to covert his retail shop into a wholesale shop. His
business scope grew very well covering the surrounding villages as well. He took home loan and a car loan from the bank. He
also added other properties in the surrounding area and nearby villages. His children started to read in good boarding school in
Kathmandu.

After some time, Robinson Bank also opened a branch at the same place. Due to urbanization, the property price at that area
roared to new heights. The manager of Robinson bank also started to visit him regularly and made friendly relation with him.
He used to say that the management of his bank had given him huge target. He convinced Amar for the business of real estate
in view of golden profit in no time and no exercise. In greed of making huge money, Mr. Panday shifted his entire business from
his earlier bank. Robinson Bank provided him loan limit of thrice the previous limit in the name of same business unit against
the valuation of same properties. Due to the influence of the manager, the valuator compromised the valuation guidelines as a
result of which high-volume limit was sanctioned by the Head Office of Robinson Bank. Mr. Panday invested the additional
money in the real estate business. As he entered in this business, his life style dramatically changed and he started to be known
for his spending habit in entertainment and extravaganzas.

But soon the economy started to show slow down trend. As a result of which, NRB took sudden steps to control real estate
bubble and restricted banks for lending for land and property purchase. At the same time, NRB inspection team studied the
loan file and also paid visit to the unit of Mr. Panday. They traced out over financing in the unit and instructed the bank to
reduce the limit immediately. Meanwhile, the real estate sector went into distress and no of buyers for land and properties
were reduced dramatically. In absence of liquid money and finding no buyer for his properties, Mr. Panday was not only failed
to reduce the limits but also became defaulter for even paying interest obligation to the bank. Hence, Robinson Bank issued
recovery letter to him and finally legal action was initiated. The mortgaged properties were put on auction but buyers bided for
very lower amounts only. The collateral properties were again valued by another valuator and the valuation amount came quite
less than the previous valuation. Even after the auction, huge chunk of loan still remained unrecovered.

Finally, Bank dismissed the Manager and Credit Officer of the branch in the charge of lending in an inappropriate way. They
along with Mr. Panday and the valuator were prosecuted and presently under trial in the court of law.

1. In light of the above case, briefly mention how bank’s presence and assistance improves the financial soundness of
people.
2. What are the various mistakes done by the manager of the second Bank?
3. Critically analyze the reasons of business failure of Mr. Panday.
4. Based on above case, discuss about the consequences of misuse of banking funds.

You might also like