Kathmandu, January 24:

Finance minister Dr Ram Sharan Mahat today expressed satisfaction over reforms being carried out at the largest, state-owned commercial bank, Rastriya Banijya Bank (RBB).

Addressing a programme today, organised to mark the 42nd anniversary of RBB, he stated that cash recovery and restructuring of loans in the past four years have shown a positive sign of recovery. “I think reforms have raised hopes for RBB and its customers, especially from rural areas,” he added.

Dr Mahat, however, cautiously underscored the need for speeding up restructuring of big loans, saying that reforms cannot be said to be very successful without recovering the loans from wilful defaulters. “This success should be taken as a motivating factor. With this, a journey has begun and RBB still has to travel a long way to become vibrant and a strong financial institution,” he said.

“It is the right time for expansion in rural areas. Now we should focus on generating opportunities from unexploited areas,” he added. Dr Mahat also asked the bank management to re-open closed branches in rural areas in order to revive financial activities.

Earlier, he gave away awards and prizes to winners of various sports events organised by the bank. He also handed over scholarship to Nepal Disabled Federation and financial assistance to Pashupati Bridhashram.

Highlighting the details of reforms in the bank, Bruce F Henderson, chief executive officer at RBB said the significant achievement made so far was to reduce NPA from Rs 16 billion from July 2003 to Rs 7.5 billion by mid-January this year.

Of the total loans and advances worth Rs 24.8 billion as of mid-December 2006, the performing portion has gone up to Rs 16 billion.

Henderson also informed that the bank’s entry into the retail lending sector has been successful, as it has accounted for 15 per cent of the total performing loan portfolio. It has been growing by Rs 100 million a month, he said.

“The bank has seen a steady rise on deposits, which touched Rs 47.5 billion by mid-December 2006, up from Rs 39.4 billion in July 2003. This reflects the public confidence in RBB and will further result in an increase in our investment portfolio,” Henderson said.

According to him, the bank has been making operating profits for the last three years and projects a target of two billion rupees this fiscal year. The bank had earned the operating profit of Rs 1.7 billion in the fiscal 2005-06 and Rs 1.32 billion in 2004-05.

Although reforms in RBB have brought about a number of positive changes in RBB, it still needs to be active about recovery, Bijaya Nath Bhattarai, governor at Nepal Rastra Bank said. He further said that the bank should get aggressively involved in commercial activities in order to increase the profitability.

Ken Ohashi, World Bank Country Director for Nepal and Alexander Pitt, resident representative of International Monetary Fund (IMF) expressed their continued support on the financial sector reform programmes in Nepal. Dr Bhola Nath Chalise, chairman of

RBB and Janardan Acharya, human resource manager, also expressed their views on the occasion.