Kathmandu, January 19:

In a major development in the state-owned Agricultural Development Bank Ltd (ADBL), an initial public offering (IPO) worth Rs 750 million is being issued next year.

The bank also plans to issue ordinary shares worth Rs 125 million to its shareholders within the current fiscal year. “Necessary work is underway to issue ordinary shares to its shareholders and it will be ready for an IPO during the next fiscal,” said Yogeshwar Pant, general manager of ADBL.

At the beginning, the bank plans to issue five per cent shares among its shareholders and then go for public to raise 30 per cent of its total paid-up capital. Pant was speaking at a press meet on Friday, organised on the eve of the 40th anniversary of ADBL. The bank is turning 40 on Sunday.

He said that the ADBL has adopted new strategies to make the bank competitive and a vibrant financial institution, although its focus will continue to on rural areas and on development lending.

“With conversion into a limited company, ADBL is no more only a development bank. Since Nepal Rastra Bank (NRB) has already categorised us as ‘A’ class bank, we have to turn it into a profit making institution and at the same time, we cannot disregard our focus on rural areas, which have always been our backbone,” he added.

Pant further stated the bank is involved in implementing reform programmes aggressively to compete in the current competitive financial market. As part of this aim, ADBL is re-establishing its banking offices at 19 different places during the current fiscal year, Pant added.

“ADBL’s network expansion will again focus on rural areas and on the agricultural sector, with special focus on lending on agro-based activities as well as deposit mobilisation, remittance transfer and bank guarantee,” he informed.

Pant said that the modest efforts are being made to make ADBL a complete banking solution- commercial bank in urban areas and development bank for the rural poor.

The bank has changed its lending rates with effect from January 15, which enables good borrowers to get a waiver of 1.5 per cent on interest on any loans. ADBL has brought a relief scheme for marginalised farmers and conflict victims, Pant said.

Under the reform programmes, ADBL is all set to introduce a compulsory retirement scheme (CRS) from January 24, targeting those who have already served the bank for 30 years. “We received a good response under voluntary retirement scheme, under which 440 employees are quitting their job,” he said.

According to the financial report of the bank, ADBL’s loan mobilisation at the end of the last fiscal year 2005-06 rose by 10.4 per cent per annum and touched Rs 33.31 billion, whereas its deposit rose by 10.7 per cent to Rs 29.63 billion.

Pant further said that ADBL has expedited bank restructuring with additional capital injection. In order to increase its capital base, the Nepal government has already invested Rs 4.85 billion in ADBL, while the Asian Development Bank has approved Rs 7.20 billion.

Of the total loan support of ADB, ADBL has already received $40 million.

Most banking resources are centred in urban areas, whereas demand is in rural areas. Keeping this fact in mind, ADBL is working as a bridge between urban and rural sectors, said Devendra Pratap Shah, chairman of ADBL. “That is why we are diversifying our presence to meet the demands of urban populace as well as the rural poor,” he added.