Himalayan News Service

Kathmandu, March 31:

The ministry of finance and Agricultural Development Bank-Nepal (ADB-N) today have officially made public the cabinet decision to turn ADB-N into a limited company. Under the bank-restructuring programme, the government and Asian Development Bank (ADB) are giving financial help to the tune of nine billion rupees to ADB-N in the form of preference shares, confirmed government officials. About two weeks ago, the cabinet had taken a decision to turn the bank into a limited company with a view to turn it autonomous and strengthen its rural credit to serve the poorest of the poor better. In a press meet organised by the ADB-N at its office today, Krishna Gyanwali, joint secretary at the ministry of finance, said that the bank has turned into a company limited and has ‘certain mandatory’ functions like providing rural loans and pushing forward micro-credit programmes. The bank has now be-en renamed as Agricultural Development Bank Ltd (ADB-N).

Gyanwali said that the bank’s reform was being undertaken with financial support from the government and the Asian Development Bank (ADB). The aim of turning the bank into a company limited is to avoid government interference in running of the bank, he said. The government has formed a monitoring team to check whether ADB-N would carry out its activities effectively, targeting the rural poor as the bank provides over 85 per cent loans of its loans in rural areas, informed a government official. General manager of the bank, Ram Chandra Maharjan informed journalists that the bank, which has been in operation for the last 27 years, has Rs 92 billion in rural sector lending and has recovered Rs 71 billion so far. Total deposits of the bank stands at Rs 27 billion, informed Maharjan. The bank is in third position in deposit mobilisation.

After reforms started in the bank, the bank is being restructured and the staff is being reduced to 4,000 from an earlier 4,600. In three year’s time, the bank will reduce its staff to 3,600 through the enforcement of voluntary retirement schemes, according to the bank. The bank will ultimately run under the Bank and Financial Ordinance-2061 in due course of time, say the bank’s officials. Maharjan also informed that the bank might reduce interest rates on rural lending after becoming a company, which now stands between 10-12 per cent. In three years time, the share of the bank will be floated in the market and the government will own 70 per cent shares while employees and the public will get 30 per cent, informed Maharjan.