Kathmandu: Veteran banker BK (Bishnukrishna) Shrestha passed away on 23 October 2023. The Nepali banking sector suffered an irreparable loss with the demise of Shrestha, the founder and chairman of the board of directors of Everest Bank, one of the country’s top commercial banks. His family endured an even greater personal loss. The issue of share transfer in BK’s name later caused distress for the family.
Shrestha was the one who brought India’s Punjab National Bank to Nepal. Leveraging his influence in India and his close associates, he encouraged investments in Nepal’s banking sector. BK Shrestha was a fearless, honest, and skilled entrepreneur. It was his initiative that brought Punjab National Bank’s investment into Nepal’s financial sector. While most Indian investments in Nepal come under terms set by the Indian side, BK brought Indian investments under his own terms.
It was said that BK had a strong standing even in Punjab National Bank. Through his sole efforts, Everest adopted a dynamic corporate culture. While the CEO was sent by Punjab, BK himself taught the work ethic. He personally reviewed every file and conducted interviews for employee recruitment. His towering personality commanded such respect that everyone feared him in his presence. Senior bank employees say that Everest Bank’s current position is solely due to BK’s efforts—an assertion that is no exaggeration.
BK Shrestha served as the chairman of Everest Bank’s board from 1995 until his last day. The bank received its ‘A’-class financial institution operating license from Nepal Rastra Bank in 1994. Born in 1929 into a Newar family in Lalitpur, BK pursued higher education in Calcutta, India, and later earned an MBA from the US. He was the first Nepali to obtain an MBA from America. After learning American management practices, he worked for some major companies before moving to India.
Shrestha operated several businesses in India, including SBL Global, a homeopathic company. BK was considered a top homeopathic business magnate in India, with his company being one of the largest homeopathic medicine producers. He ran various industries in cities like Calcutta, Sikkim, and Delhi. From 1950 to 1960, he was also involved in politics and maintained good relations with leaders like BP Koirala, Krishna Prasad Bhattarai, and Ganesh Man Singh.
When Nepal Rastra Bank opened banking licenses to the private sector, BK applied to establish Everest Bank. Initially, Everest had joint investments from Calcutta’s United Bank of India and Nepali investors. A few years later, Punjab National Bank acquired United’s stake. BK used his personal connections to bring both United and Punjab to Nepal. Those who knew him closely say he had significant influence in Punjab as well.
Currently, Punjab holds a 20 percent stake in Everest Bank. Shrestha owned 9.18 percent (9,821,511 shares) of the bank. At a face value of Rs. 100 per share, his stake was worth Rs 98 crore, and based on the latest market price (founder shares at Rs 145), his assets in the bank were around Rs 1.5 billion.
According to family sources, he had not disclosed who would inherit his assets after his death. He had secretly prepared a will regarding the bank’s shares, sealed in an envelope with instructions to open it only after his death. No one dared to check what was written in it.
In his later years, Shrestha had become physically frail but remained active in the bank’s operations. He had one son and two daughters. However, after his passing, no one knew who would inherit his shares—it was entirely his personal decision.
At 94, Shrestha passed away. Some time later, it was revealed what he had written in his will. Family sources confirmed that upon opening the will, it was found that he had written: “After my death, all my ownership in the bank shall be transferred to my daughter Pratima Shrestha.”
Now, Pratima Shrestha faces a dilemma. She already owned 14.77 percent (17,386,722 shares) of Everest Bank, making her the largest individual shareholder after Punjab National Bank. However, the Banks and Financial Institutions Act, 2017 (BAFIA) prohibits any individual or company (except joint-venture foreign banks) from holding more than 15 percent ownership in a bank.
BAFIA’s Section 41 enforces this rule, while Section 99(3)(a) allows Nepal Rastra Bank (NRB) to direct the board to freeze, block, or sell shares if someone violates directives. But BK Shrestha was no longer alive.
The question arose: Shouldn’t his contributions to Nepal’s banking sector be honoured by respecting his wishes? Following BK Shrestha’s will, Everest Bank wrote to NRB, requesting the transfer of his shares to Pratima.
Initially, NRB could not comply because transferring BK Shrestha’s 9.12 percent stake to Pratima would take her total ownership to 23.95 percent, directly violating BAFIA. Granting the request would mean the approving official was misusing authority. Thus, the file remained stuck for months in NRB’s drawers.
At first glance, this seemed unjust to Pratima Shrestha and the bank—an outright violation of constitutional property rights. BK Shrestha had decided to give the shares to his daughter, documented it in his will, and she had the right to accept the inheritance. On the other hand, BAFIA clearly restricts ownership beyond 15 percent.
NRB sought a solution where Pratima could receive the shares without violating BAFIA. Months passed. The bank kept asking NRB for updates, but NRB only replied, “It’s under process.”
NRB officials began seeking legal opinions. They did not want to freeze BK’s shares or act against his wishes, given his unparalleled contribution to Nepal’s banking. They were also aware of constitutional property rights.
Meanwhile, a Supreme Court precedent from November 2018 was discovered. In a similar case involving Siddharth Nagar’s Everest Finance, a man named Ran Bahadur Shah had willed 21,000 shares to his daughter Meeta Shah (Rana). However, NRB had imposed a condition that significant shareholders (owning over 5 percent) could not trade shares without approval. Shah challenged this in the Supreme Court, arguing it violated fundamental property rights. The court ruled in his favour, allowing unconditional share transfer.
This precedent eased NRB’s dilemma. While BAFIA restricts ownership, the Constitution supersedes it. The Supreme Court had already interpreted this. NRB concluded that BK’s shares could be transferred to Pratima—but without exceeding the 15 percent limit.
A practical solution emerged: “Pratima must gradually sell her existing shares while BK’s shares are transferred to her, ensuring her total ownership never crosses 15 percent.”
However, new questions arose: How long would this take? What if no buyers are found for such a large volume (over 1 million shares)? Many bank founders struggle to sell their shares due to a lack of buyers. BAFIA does not specify a timeline for selling shares.
NRB officials told Clickmandu: “Under BAFIA Section 41(3) and (4), we’ve allowed ownership retention but haven’t set a deadline for selling shares.” The NRB’s supervision department will monitor progress.
“NRB has no authority to set a deadline since BAFIA doesn’t specify one. The bank must start the selling process and find potential buyers. Only then will NRB approve the transfer to Pratima,” the official said. Failure to comply could lead to NRB action.
In balancing justice, NRB has not forgotten BAFIA, the Constitution, or the Supreme Court’s interpretation. The 15 percent limit under BAFIA Section 41(3) applies, but the daughter rightfully inherits her father’s gift. NRB has handled the matter sensitively.
However, since Pratima has not yet sold her shares, her father’s shares have not been transferred. The process remains pending.
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