The Agricultural Development Bank, Nepal (ADBN) is implementing a three-year restructuring programme aimed at improving its service delivery and its financial sustainability. It is said to be focusing on three major areas — financial restructuring, organisational restructuring and staff restructuring. Financial restructuring will include improving the methods of preparing financial statements and identifying areas for meeting capital deficiency of the bank. Organisational restructuring will involve discontinuance of the practice of opening branches without proper feasibility studies, cutting waste, and removing duplication and structural flaws. Staff restructuring will see cutting staff, and 340 of them have left taking advantage of the voluntary retirement scheme that has cost Rs.200 million.

We Nepalis have strange habits and tendencies. We create the mess and then, in order to clean it up, we depend on foreigners for loans and grants. Most of the financial sector reforms mean just that. And this applies to ADBN too. Voluntary retirement schemes had occasionally been introduced with golden handshakes, involving a lot of extra expense. But it was seen that most of the deadwood remained, while some of the best workers of the bank left, some in search of brighter prospects outside or others out of frustration. Has the bank benefited then? Frequent announcements of this scheme also suggest that there has been perpetual overstaffing, without any letup in new appointments even after enforcing this scheme. Moreover, there are too many tiers in the officer class and the bank has done nothing to cut them to manageable and cost-effective sizes. So this scheme,as it is, is of dubious merit.

Lack of accountability on the part of the management as well as of those in government who assumed supervisory roles and political interference have been at the root of the problem of any public corporation, including ADBN. The acute lack of a proper system of reward and punishment, aggravated by unhealthy political pressure, has sapped the zeal for work among hard and honest workers. The practice of appointing government bureaucrats to top positions has resulted in conflict of interest and laxity of control. Apart from its rural financing function, ADBN also runs commercial banking operations. Therefore, it employs bank deposits for its agricultural loans. With its loan recovery rates not very satisfactory, this practice may put in peril the long-term interests of its depositors. This area calls for investigation. Finally, in matters of professionalism, accountability, etc, all corporations need a similar approach. This is where the donors and the government should focus for improving the bank’s performance.