Nepal Community Development Bank Ltd.

Note: IPO applied for more than 50 units should be divisible by 10 and when applied for more than or equal to Rs 50,000 the payment should be made through account payee check.

Issue Manager:

•    Growmore Merchant Banker Ltd.

Introduction of Nepal Community Development Bank Ltd.

Nepal Community Development Bank Limited was established in 2066/12/09 under the Company Act, 2063 and has been carrying out its activities as per Nepal Rastra Bank Act 2058, and Bank and Financial Institution Act, 2063. It commenced its operation as one of the financial institutions of Nepal from 2067/07/17 after receiving a license from Nepal Rastra Bank as on 2067/07/08. The bank is established with a mission “Viable banking services for needy and prospective entrepreneurs”.

The bank is a regional development bank which is operating within three districts: Rupandehi, Nawalparasi and Chitwan. The bank plans to expand its business in other districts as per the requirement of community. The bank is committed to provide effective and efficient banking services in the proposed area, where the banking activities are in short supply.

The bank’s promoters consists the personalities belonging from the diversified areas, having high social profile in their corresponding areas. The present Board of Directors in composed of eight members including one to be from the roster of the Nepal Rastra Bank as a Professional Director.

The Bank has been registered with an authorized capital of NPR 200 million and currently holds an issued capital of NPR 100 million and a paid-up capital of NPR 70 million.

The bank’s registered office is situated at Butwal-8, Rupandehi which is also the Head Office of the bank. Currently, the company is providing its services to customers through its three branch network and is in progress of expanding its services through another three branches in near future.


Major shareholders of Nepal Community Development Bank Limited as per the Offer Letter    

                    
There is presence of no major shareholders in the bank as per its Offer Letter.

Board of Directors of Nepal Community Development  Bank Limited

1.    Mr. Pashupati Ghimire , Chairman
Qualification: Graduate
Work Experience: Managing Director for 10 years in Nepal Coffee Company, Manigram, Rupandehi. Chairman for five years in FEC Saving and Credit Cooperative Ltd., Director for two years in FEC Saving and Credit Cooperative Ltd., Director for two years in Bikash Multipurpose Cooperative Society Ltd., Chairman for a year in Himalayan Coffee Cooperative Society Ltd., Managing Director from past eight years in Radha Krishna Plastic Udhyog, Moneygram, Rupandehi.

2.    Mr. Yubraj K.C. , Director
Qualification: Post Graduate  
Work Experience:  Executive Director for four years in Madhyamanchal Gramin Bikas Bank Limited, Janakpur. Senior Officer for three years in Rural Microfinance Development Centre, Kathmandu. Senior Officer for three years in Paschimanchal Grameen Bikas Bank Limited.

3.     Mr. Hiramani Aryal,  Director
Qualification: Post Graduate
Work Experience: 21 years of teaching experience. Currently, he has been serving as Campus Chief of Rudrawoti Multiple Campus, Gulmi Wami Taksar from the past seven years.

    
Board of Directors (BOD) shareholding in the bank as per the Offer letter

Management Team of Nepal Community Development Bank Ltd.

Dr. Ghaman Singh Khadka (Chief Executive Officer)
Qualification:  Doctor of Philosophy (Ph D. In Management)
Work Experience: Served 28 years in Agricultural Development Bank Limited up to the level of Senior Officer. He was also Professor for 16 years in Baneshwor Capmpus and served seven years as a director in same campus. He has been working as the CEO in this bank from past 10 months.

Mr. Min Bdr. Bohara (Assistant General Manager)
Qualification: Master of Arts (MA in Sociology)
Work Experience: Served 10 years in Paschimanchal Grameen Bikas Bank Limited up to the level of Officer. He has been engaged with Nepal Community Development Bank Ltd. from the past three and a half years as an Assistant General Manager.

Mr. Bhakta Bdr. Khadka ( Senior Officer/ Company Secretary )
Qualification: Bachelor of Arts (BA in Economics)
Work Experience: Served five years in Paschimanchal Grameen Bikas Bank Limited. He has been working with the Nepal Community Development Bank as a Senior Officer from the past three and a half years.


Capital Structure

     
FINANCIAL HIGHLIGHT OF THE BANK

                                        Figure in Rs “000”

Looking at the bank’s history, it is newly formed and in its initial FY 2066/67, it hasn’t carried out much of banking transactions. So, in this financial highlight we haven’t considered the performance of the initial year.

The paid-up capital of the bank has not been altered till date and currently it stands at 70% of the issued capital. With the initial public offering (IPO), the company plans to par the capital structure with that of the issued capital. Similarly, observing reserve and surplus of the company, it is posting a negative figure suggesting the bank is in a bad shape.

Though the negative reserve figure has decreased by some minimal amount in FY 2069/70, it is still not good indication toward the bank performance as it still sustains overall negative growth.

The growth in both deposit and loan portfolio of the company is in positive growth. However, compared to the new bank of same capital, the growth figure is comparatively low in number. Coming to the FY 2069/70, the growth in both deposit and loan has made a drastic plunge from the growth figure of 82.56% and 102.07% to 22.05% and 32.97% respectively.

The drastic saturation in both deposit and Loan suggest that the bank is having hard time expanding its business. In addition, low deposit growth also suggests the general public are wary towards bank.

In spite of its low growth in loan and deposit, the bank has come to maintain positive operating profit before provision which is slightly positive aspect of bank in the FY 2069/70. With the saturation in its interest expense and increase in its income from other income sources, the bank was able to post slightly better figure.

In addition to above positive aspects, the bank has also been able to decrease it bad loan which is indicated by net write back figure and net write back / loan figure. However, the fact that the bank still holds chuck of bad debt in its small loan portfolio cannot be overlooked.

The improvement in operating profit and reduction in bad debt has mainly attributed in the better performance of bank in last FY 2069/70. Though it has posted a positive profit in FY 2069/70, the earning size is not sound enough to consider it as a healthy growth.

If we look at the net worth of the company, its figure is below the par value which itself indicates that the bank performance is not satisfactory. Now, looking at the EPS, ROA and ROE also, we can see that, the bank doesn’t look impressive at all.

Apparently, the bank EPS, ROA and ROE have come to positive figure; however, it is negligible to consider it as a healthy performance. Looking into all the aspects of the bank, it is recovering from its previous losses and its performance is below par.

To sum, investing in this bank is a dicey deal as it is likely to decrease investment value of Rs 100 value to Rs 91.11, if the net worth of company is anything to go by. However, if the market sentiment is positive towards bank like that of KIST and Nepal Bank Ltd. , then the investors who invests in this bank’s IPO will have chance of getting good returns.

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