Kathmandu, September 1 :

Finance minister Dr Ram Sharan Mahat today urged the management of Agricultural Development Bank Ltd (ADBL) to reduce the increasing ratio of non-performing loans (NPLs) with a new strategy.

He was addressing a programme organised by ADBL today on the ‘Formulation of Programme Implementation Strategy’ at Bode, Bhaktapur.

The ratio of NPLs of ADBL has reached 18 per cent despite the bank having public deposits worth about Rs 30 billion. This needs ‘special attention’, according to Mahat.

Dr Mahat observed that small borrowers who are in serious trouble need to be rescued and the bank’s viability needs to be protected.

Case by case, borrowers’ issues need to be evaluated and addressed, he told the ADBL management. As ADBL comes in third in terms of public deposit, the deposits should be protected, said Dr Mahat.

The bank management has to focus its activities on socio-economic development and invest in upgrading poor people’s economic status, said Mahat, adding that it has to take fast decisions to make the service delivery effective for making the bank self-reliant in the long run.

Bijay Nath Bhattarai, governor of Nepal Rastra Bank (NRB) stressed that as the bank has to reduce its NPAs that stand at 18 per cent and boost its image in the financial sector as competition gets more intense by the day. As Nepal’s financial sector is being opened up to foreign investors from 2010 as per the commitments made to WTO, it has to work effectively to be competitive, Bhattarai said.

He stressed to render the accounting system of the bank at par with international standards, ensuring transparency.

The newly-appointed general manager of ADBL, Yogeshwore Pant said that the bank has been successful in rural investment and it has a plan to invest Rs 53.15 billion under agriculture and rural financing. In the fiscal year 2005-06, the bank has invested over Rs 30.42 billion in various sectors while it has also recovered loans worth over Rs 23.65 billion during the same period, said Pant speaking at the same function.

On the interest front, the ban has collected income on interests of over Rs 4.32 billion out of a total target of Rs 6.18 billion, according to Pant. The achievement overall stands at 70 per cent. For the fiscal year 2006-07, the bank has a target to issue loans of over Rs 15.67 billion.

Deputy general manager of the bank Krishna Bahadur Kunwar stressed that ADBL’s existing management is efficient and people are qualified to expedite the reform process in the bank. He also added that there is no need to hire foreign consultants, paying huge amounts of remuneration.

PriceWaterHouseCoopers, an international firm, has also concluded that bank has qualified manpower to run the bank, Kunwar informed. However, he said that in a transitional phase, it is quite difficult to adopt banking technologies for which the central bank and the Nepal government has to help the bank.