Governor seeks target for reforms

Kathmandu, June 24:

Bijaya Nath Bhattarai, governor of Nepal Rastra Bank (NRB) today asked to set an ultimate destination for the financial sector reform programme — particularly in the two largest commercial banks.

Expressing satisfaction over achievements of the reforms in the two ailing public sector co-mmercial banks — Rastriya Ba-nijya Bank (RBB) and Nepal Ba-nk Ltd (NBL), Bhattarai hinted that the reforms could face snag due to government’s apathy towards setting its ‘logical end’.

He also said that the central bank has been constantly asking the government to set the logical end, particularly after the reform programme is over. “How will we handle these two banks after the reform and restructuring programme is over,” said Bhattarai, adding that “the government should be clear to this regard.”

Stating that reform is a long and continuous pro-cess, he said the reform over the last five years has yielded some positive results, ‘though not adequate.’ “It is a high time that the management teams of the-se banks should now come up with feasible succession plans for turning these largest banks commercially viable,” he said.

Presenting a paper, Janardan Acharya, acting CEO at RBB claimed that the bank has now become one of the most profit making financial institutions with an accumulated profit of Rs 5.3 billion.

“The business growth, computerisation, improvement in service delivery standards, recover of bad debts, laying down proper systems and procedures across the banking function are some of the pillars behind the success of RBB,” he said, adding that its NPA level has also significantly dropped to 32 per cent as of April 2007 from a whopping 72 per cent in July 2003.

Likewise, Craig McAllister, CEO at NBL also informed that the ongoing reform is on track and has yielded many positive results. “The NPA level has been reduced to 18.2 per cent from 56.3 per cent,” he said.

NBL has also posted an operating profit of Rs 784 million in 2006, especially from the cash recovery of the non-performing assets, McAllister said, adding that the total number of employees has been reduced by 41.9 per cent to 3,018.