Kathmandu, September 7:

Senior officials of the World Bank today said that the reform in Nepal Bank Ltd (NBL) and Rastriya Banijya Bank (RBB) is going well, which will ultimately help initiate privatisation in two years’ time. Mudassir Khan, senior financial expert of The World Bank, who was here on a mission to review the restructuring process of Nepal Rastra Bank (NRB), including RBB and NBL said that reform is a ‘continuing process’ and it should be continued for the financial sector’s sustainability.

The WB mission was in the capital at a time when the tenure for management contract of NBL handled by J Craig McAllister, expired. Only about 10 days are now left for the existing team in NBL, despite the NBL foreign management having demanded with the NRB for a further two years’ extension. During the one-week review period in Nepal, Khan categorically made an assessment of NRB’s restructuring process, reforms in RBB and NBL, which are under the financial sector reform project. He said that he assessed the credit system of the banks, black-listing of defaulters, expansion of credit to the private sector, automation, recovery situation and NPA performance.

After reviewing the progress of NBL, Khan found out that cost structure of the bank has gone down, NPA level has been reduced, recovery of loans is on the rise and human resource development is picking up, he informed journalists. He said that before privatising the banks, we needed to look at ‘effective and sound’ investors to handle these two large banks.

When asked about how NBL new management can bracket Rs 1.44 billion generated from the sale of shares of Standard Chartered Bank Nepal under profit heading of the bank, Khan replied, “It is not profit. But, besides the sale of shares, the bank has also generated some profits.” However, he did not disclose the amount at the press meet.

Khan while talking about the financial sector reform also said that the role of judiciary is also crucial to expedite the performance of the sector. Financial sector reform can contribute to boost GDP growth, he said. Sabin Shrestha, financial sector expert of the World Bank, also talked about the decline in loans and implementation of voluntary retirement scheme (VRS), initiated by the new management in NBL.