Kathmandu, January 15:

Finance minister Dr Ram Sharan Mahat has underscored the need for a common agenda on economic development, based on political consensus.

Economic development should be the top most priority at a time when all major political forces have come together with a dream of creating a new Nepal, he said.

Dr Mahat was speaking at the inaugural function of Global Bank Ltd’s corporate and main branch office at Kantipath, Kathmandu today.

“Every Nepali’s status must be upgraded and living standard should be improved,” he said, adding that a conducive atmosphere should be created and billions of rupees should be invested.

Tourism, hydropower, road and natural resources are areas where billions in investment from local parties and foreign investors could be attracted, he said, “The only need is an appropriate environment.”

He floated the idea of mobilising savings from urban areas into development of villages and rural areas, saying financial institutions, including commercial banks so far have been concentrated mainly in cities. “The urban-centred banks should go to villages and lead economic development activities there,” he urged.

Bijaya Nath Bhattarai, governor of Nepal Rastra Bank (NRB), expressed serious concern over increasing non-performing loans (NPL) in the banking system. “Our banking system is suffering from a chronic NPL problem, while days for an open competition with foreign banks are nearing,” he added.

As per the WTO agreement, Nepal has to open its financial sector by 2010, which will allow foreign banks and financial institutions to operate in the country. “The major challenges ahead for the banking system at present are reducing NPL levels and enhancing competitiveness,” stated Bhattarai, adding that strict action must be taken against wilful defaulters.

“Many wilful defaulters are living a lavish lifestyle on the money of common people, who have deposited money at various banks. They (defaulters) are not willing to repay,” he added. He said that the central bank is set to introduce stringent policy measures targeting wilful defaulters.

Dr Minendra Rijal, central member of Nepali Congress (Democratic), said that Nepalis should carry out Nepal’s development on their own. “It is up to the people to chose their destiny,” he said.

Dr Rijal also expressed hopes that the country would see more investment in sectors where Nepal has a comparative advantage.

“Each country has a unique characteristics in its economy. Nepal is no exception in this context. It has a lot of potential and unique characteristics. We need to harness this uniqueness properly,” said Dina Nath Sharma, central member of CPN-Maoists.

He also pointed out the need for maintaining a fiscal discipline by political parties, too, which should then be reflected on economic policies. “Nepal should not copy other’s economic policies as it is,” Sharma said.

Global Bank will concentrate its activities in areas which have a direct or indirect contribution in stimulating the national economy, said Chandra Prasad Dhakal, chairman of Global Bank.

Global Bank, a new entrant in Nepal’s banking sector is the 19th commercial bank, having the largest paid-up capital among private commercial banks, began its operation two weeks ago at Birgunj.

The bank’s paid-up capital stands at one billion rupees while its authorised capital is two billion rupees. The bank plans to go public within a year from the date of operations.