Kathmandu, August 12:

Agricultural Development Bank Ltd (ADBL), a rural-oriented bank, has earmarked Rs 30 billion during fiscal year 2005-06 to be transacted from its various branches in ‘rural areas’ and

‘urban centres’. This transaction estimation had been prepared by the management of the bank, led by its general manager Ramchandra Maharjan recently, disclosed a bank’s source to The Himalayan Times. In view of the fragile peace and security condition in the country, ADBL’s target to transact Rs 30 billion in various forms seems challenging, said an official of the bank on conditions of anonymity. As per the bank’s internal report, which is yet to be made public, the bank has a target of lending Rs 13.98 billion in agriculture sector and other rural areas while it wants to recover Rs 11.72 billion in the current fiscal, a target that is ‘quite high’ compared to last year.

At the same time, the bank has a target to recover Rs 4.05 billion in the current fiscal despite a number of hurdles they are facing due to the on-going conflict in the country. In the 10th Five Year Plan, under the long-term agriculture development programme, the government has planned to invest Rs 100.75 billion on rural lending. Of this, Rs 53.15 billion is to be invested by ADBL. As per the government’s annual plans, ADBL has to target its loans to poor and disadvantaged sections of the society, agricultural commercialisation and boost private sector promotion with effective lending services, says the report. In the current fiscal year, the bank management has encouraged prospective borrowers with ‘Make Your Plans Yourself’ attitude to boost the morale of people in enterprise development, which will help people to be self-sufficient.

According to a latest progress report of the bank, the bank has recovered over four billion rupees in interest on cash based in the fiscal year 2004-05 which is up by more than 12 per cent of the outstanding loan. Before this, the bank had not been able to recover more than 10 per cent of the outstanding loans. The current NPA of the bank stands at about 28 per cent which is down compared to the previous year. However, it is still a big amount, commented an ADBL official. The bank takes a great risk by investing on agriculture sector due to the conflict, which may create difficulties for the bank in cash recovery and to reduce NPA in the current fiscal year as well. Bank experts agreed that the bank management has to ‘act’ more aggressively to meet the expectations of the people. ADBL currently disburses 65 per cent of its loans to rural farmers, while the rest is used by the commercial sector. Going by this trend, the bank has a great challenge and, at the same time, tremendous opportunities, to reduce the poverty level of the country through small lendings.