The Agricultural Development Bank Nepal (ADBN) was set up to finance agricultural development by designing sound programmes and lending a helping hand to farmers, particularly through project loans. As the great majority of the Nepalis still depend on agriculture for their main source of livelihood and this sector contributes a substantial part of the GDP, the role of the major institutional lender is obvious. The bank, incorporated under a separate Act but now converted into a limited company, plans to retain 65 per cent of its shares to ‘secure the interests of farmers’. Ultimate private participation in the bank’s ownership is a desirable idea for reasons, including the improvement of the management. The bank has invested in many areas, such as tea, sugarcane, vegetables, fishery and irrigation, to big farmers as well as to small ones. The bank’s micro-credit and micro-financing are good schemes, however, their effectiveness needs to be properly analysed. But because of the conflict, political interference and the lack of accountability, the bank’s performance leaves much to be desired.

The ADBN has also been running commercial banking operations besides agricultural financing. Therefore, it employs bank deposits for its agricultural loans. With its loan recovery rates hardly satisfactory, this practice may jeopardise the long-term interests of its depositors. This aspect needs reconsideration. In order for the ADBN to help the farmers better and become financially sound too, it will have to work harder to minimise risks, boost its service delivery as well as improve its management. By just running like any other government corporation, it cannot achieve these objectives. Professionalism and accountability are vital. This calls for reforms like organisational restructuring, reducing the number of unnecessary offices and excess employees, as well as cutting waste. If its new avatar as a company can do these things, it will be a solid step for ADBN.