On the evening of May 8, 2009, Hotel Soaltee Crowne Plaza

in Kathmandu was abuzz. As SUVs and sedans converged

at Soaltee Mode, leaving the dusty Kalimati road behind to
enter the hotel premises, passersby hardly took notice.

The thick foliage surrounding the hotel, after all, stands as a

buffer against the pettiness of the city, while containing
whatever opulence it exudes within itself.

As MD of KIST Bank, Kamal Gyawali would not have been

anywhere else that evening. This was only one of the many
plans of action he had charted out to become a dominant player
in the Nepali banking sector. In 2002, he started KIST Merchant
Banking & Finance with an initial investment of Rs 50 million.
The company’s tagline was “Power to Succeed.”

In a short span of time, KIST had, indeed, succeeded under his

leadership. Just a year ago it distributed cash dividends of up to
10% to its shareholders.

Seven years after KIST opened its first account, on that

evening, it was going to formally announce its transformation
into a grade ‘A’ commercial bank. Gyawali was at the centre of
its universe.

“This is only the beginning,” Gyawali, perhaps, said to himself.

As the night progressed, the guests, mainly top players of

Nepal’s banking sector, mingled with interim passion largely
caused by the free-flowing alcohol in the room. Two invitees,
however, had decided against going to the party.
A day earlier, Sashin Joshi and Surbir Poudel, the then
chairmen of Nepal Bankers’ Association and Securities Board of
Nepal, had both attended the formal launch programme. “Major
challenges lie ahead for KIST, especially in the area of
governance,” both of them had said at the launch.

Little did anyone present at the event know that few years later,
this would be the very trigger that would lead to the dramatic
collapse of KIST Bank, and along with it, the ambitions of Kamal
Gyawali.

Just three years ago, Gyawali was counted among the top
bankers in Nepal. Under his tutelage, KIST bank expanded its
operation with 51 branches all over the country. In the crowded
banking sector of the country, KIST usually held its position
among the top 10.

Kathmandu-based mediapersons was quick to take note.

Gyawali’s success story was such that most media outlets were
keen on writing about it. Even Gyawali himself had a savvy
media persona.

He had, among others, strengthened his ties with media houses

by maintaining a strong business relationship with them.

Three years and several bad decisions later, Gyawali’s legacy

lives in infamy as cases of loan fraud come to surface. Gyawali
and his wife Gauri are currently on the loose after a Patan
Appellate court ruling against both.

Gyawali first came to Kathmandu in 1995 to pursue his higher

studies. Born to a middle-class family in Gulmi in western
Nepal, he first took on odd jobs to support himself in the city.
According to his autobiography Karma, he had Rs 10,000 with
him when he first came to Kathmandu. He then worked as a
teacher for sometime. In the seven years leading to the
commencement of KIST Merchant Banking & Finance, Gyawali
had succumbed to the ways of the big city. For Gyawali, the city
itself existed as a living advertisement of dreams and
possibilities.

But without hopefulness to humble him of his burning ambition,

Gyawali took his chance and opened KIST Merchant Banking &
Finance in 2002, only seven years after he first came to
Kathmandu.

In the next seven years, Gyawali increased the paid-up capital

of the company to Rs 2 billion and upgraded it to a grade ‘A’
commercial bank. His net worth reached approximately Rs 3
billion as the success of his earlier finance company was
carried over even after its upgradation to a commercial bank,
however short-lived it may have been.

During those years, nothing could tie Gyawali down.

He had cashed in strategically on the booming real estate

sector of the country. “There should be a revised list of
billionaires in the country,” he had said to this scribe during
2008.
But Gyawali would not stop even if he was listed as one of the
richest person in the country.

“He called himself a ‘businessman’ rather than a banker,” says

a managerial staff, who worked with Gyawali at KIST Bank.

“He would talk about earning more all the time.” Several other
colleagues also talk about this ambition. It was the same
ambition, which had catapulted him to success. But others
could see what Gyawali fell into, and the possibility of this
ambition being the reason for his fall.

For Gyawali, KIST bank was a manifestation of this ambition.

The gleaming glass-wrapped, seven-storied HQ of KIST bank at
Anamnagar, commissioned by Gyawali himself, was the most
striking display of this.

But huge profits and an ever-expanding banking empire was not

enough for Gyawali. He wanted KIST to become an
indispensable institution, such that if the bank were ever to fail,
Singhadurbar itself would come to its rescue.

***

During late 2000s, high lending and low deposit collection

triggered a liquidity crunch in the market. This had a massive
impact on the local economy.

Investment in real estate increased as property prices soared.

As the global recession of 2008, which was caused by the
bursting of the housing bubble in the US, eventually impacted
the local economy, the central bank ordered commercial banks
of the country to limit investment in real estate to 25 per cent of
their portfolio.

This directive considerably slowed down the booming real

estate business.

This was bad news for Gyawali, who owed a major part of his
success to investments in land and property across the
country. “I don’t earn much from my salary,” he had told this
scribe in 2008. “I earn more than thrice my salary from real
estate.”

Gyawali had invested Rs 500 million in real estate by 2008. He

owned shares worth Rs 2.5 billion, a majority of which (more
than 4 million shares) was of KIST bank.

The same year, the price of KIST bank’s share rose to Rs 1,800
per share. But its value slowly declined during Dashain that
year as the central bank failed to issue new banknotes in the
market, worsening the liquidity crunch.

The following year, real estate business almost came to a halt.

The liquidity crunch had brought the local economy down on its
knees. These events challenged Gyawali’s ambition to expand
his banking empire to a level no other banks had reached.

Then Gyawali made a bad decision, and another. And another.

“If he had sold his shares and properties which he had invested
in, he could have saved KIST bank,” a close associate of
Gyawali says. But he instead chose to wait out the slump. He
then took more loan to clear out the outstanding ones.
In 2010, KIST granted a Rs 15.5 million loan to Kishore Dhakal,
proprietor of a publication house named Jamarko Prakashan
where Gyawali’s wife Gauri was involved. But Gyawali used
more than half of the amount of the loan to clear his outstanding
loans.

As the real estate situation worsened Gyawali took another

loan. This time in friend Kishore Dhakal’s name.

The loan worth Rs 10.3 million was taken against assets of

Jamarko publication from Siddhartha Development Bank. The
bank’s chairman Shekhar Aryal was a close friend of Gyawali.

Kamal Gyawali and Shekhar Aryal were the best of friends

during the time. The friendship grew stronger during passionate
talks about business and investment and shared vacations.

For CEO Dipendra Karki, Gyawali was a mentor.

But even the loan could not help him recover the losses
incurred from the real estate market, which showed no signs of
rebounding.

The friendships also quickly turned sour.

 
The newly-built headquarters of KIST bank in 2010. (inset) Prabhu bank took over the bank and
the building in 2014. Gyawali photographed in 2008.

As Gyawali took more loans to cover the losses in his

investment, he not only lost track of personal finance but also
turned those close to him against him. His outstanding loan
from Siddhartha had not been cleared. He even failed to pay its
interest.

The central bank took note of this irregularity after a complaint

was filed against him. In 2012, the central bank concluded that
Jamarko’s assets had been over-valuated by as much as Rs 35
million when loan was issued against it .

The central bank soon notified the CIB and charged Kishore
Dhakal who signed the loan deal. During investigation, the CIB
found out that Gyawali had used the loan himself. It arrested
Gyawali’s wife Gauri from their Maharajgunj residence. Gyawali,
however, was already on the run.

As the embezzlement dominated the headlines, stakeholders

lost confidence in KIST bank. It was not only Gyawali, who had
been charged but several other colleagues were also found to
be involved. Account holders queued to withdraw their money
from the bank. The survival of the bank was in question.

But no one could save the bank from from its doom.

As Prabhu Development Bank acquired KIST bank and

commenced operation as Prabhu Bank in 2014, KIST is now
part of history, one riddled with bad decisions and managerial
oversights.

“We had worked hard to bring back KIST bank on the right
track,” says a former executive of the bank. KIST bank had an
illustrious team of bankers and managers, which consisted of
Gyan Bahadur GC, Dr Danda Pani Paudel, Achyut Raj Joshi,
BN Gharti and Bal Kumar Pandey, among others. But the
mismanagement of the bank had already become irredeemable.
Source:Onlinekhabar