Gopal Tiwari

Kathmandu, March 24:

Ramchandra Maharjan, chief executive officer cum general manager of Agricultural Development Bank Ltd (ADB-N), recently attended a meeting of the finance committee under the house of representatives. The finance committee is comprised of vice-chairmen of the council of ministers Dr Tulsi Giri and Kirti Nidhi Bista and other ministers of finance and law.

According to a source at the ministry of finance (MoF), CEO Maharajan had attended the finance committee of parliament to ‘apprise’ the government about the ADB-N’s ongoing reform programme being undertaken currently and, especially crucial financial restructuring component. Under the programme, ADB-N is being restructured through organisational and operational restructuring, converting it into a company limited and preparing a new business plan for the coming five years, Maharjan informed the committee. During the meeting, Maharjan had explained that the loan outstanding of the bank stood at Rs 30 billion which is divided under three headings that is developing banking (Rs 18 billion), micro financing (Rs 2 billion) and commercial banking (Rs10 billion), said a source at MoF.

The annual loan disbursement in developing banking sector is Rs 11 billion while the bank’s deposit is at Rs 26 billion which is 17.6 per cent growth on a an annual basis. The bank currently has 188 development banking outlets, 48 commercial banking outlets, 77 small farmers development programs outlets, says the CEO’s report presented to finance committee

(FC). After presenting the details, FC is authorised to send the same to the cabinet for approval. Cabinet has already approved conversion of ADB-N into a ‘limited company’ which has been allowed to float shares to the public within three years. However, the ministry of finance has not officially made the decision public, including the loans being provided by the government and Asian Development Bank to the ADB-N totalling Rs 9 billion, revealed a senior MoF official.

Maharjan said that commercial banks served largely in urban centres and rural development banks provide only micro-finance that has been insufficient to meet credit requirements in rural areas. The meeting discussed the fact that the Tenth Plan placed on ADB-N a huge responsibility to meet credit need of rural and agricultural sectors (52 per cent of rural credit).

ADB-N being a strong rural banking institution, the government recently endorsed the Restructuring Plan giving it full autonomy under the Bank and Financial Institution Ordinance, 2061 (BAFIO-2061). The ADB-N management also proposed a Rs 3.3 billion capital required to meet NRB capital adequacy norms, comprising of six per cent as ‘core capital’ of total risk weighted assets and six per cent as ‘supplementary capital’ of total risk weight assets. ADB-N management also proposed to make the capital structure at Rs 2.5 billion for ordinary shares and Rs 8.7 billion for preference shares.