Q4 will be as good or even better than the earlier quarters.

Mr. A.K. Ahluwalia, the Chief Executive Officer of Everest Bank Limited, needs no introduction when it comes to banking sector of the country. Beginning as Management Trainee with Punjab National Bank, he has steadily climbed the corporate ladder to become Deputy General Manager of India’s leading Public Sector Bank. Back in July last year, he has taken up the mantle of Everest Bank Limited (EBL), one of the leading and most trusted banks in Nepal. Under his able leadership, EBL has further consolidated its financial and client base, particularly through its exemplary retail concept. ShareSansar caught up with Mr. Ahluwalia to know more about what the bank has in store for its organizational base, clients and shareholders. An excerpt of the interview.


On the onset, our viewers as well as the entire nation would like to know more about you.  When did you join the banking sector, and how did you become associated with EBL?

I joined the banking sector pretty long time back as a Management Trainee in Punjab National Bank, which is the Number 1 Public Sector bank of India. I then worked in different capacities and branches in different regions of India. I also had the opportunity of looking after recruitment of banking personnel being a head of the committee. Four years back, I became the Assistant General Managing of Punjab National Bank (PNB), and started working in the corporate office. Subsequently I became Deputy General Manager and also the Circle Head of Ludhiana, which is not just an industrial town of Punjab, but also the most industrialized town in north India. Since Everest Bank Limited is a joint venture with PNB, as per technical service agreement, PNB provides top management support to EBL, under which I assumed responsibility of Chief Executive Officer since July 2014.

EBL has bagged some of the most prestigious awards such as the “Bank of the Year”, “Best Managed Commercial Bank” etc.  What are your plans to maintain that level of excellence, especially when there is a cut-throat competition among the commercial banks?

There is a cut-throat competition everywhere. EBL has not been a part of the herd mentality, though. We have always tried to maintain our uniqueness. That explains for all those awards as well as our client base of over six lakh, which is a good figure considering that we are a private sector commercial bank. We are most of the time focusing on retail – whether it is deposit or credit. Let me explain with an example. Last year we started holding customers meet. We began with two of our branches. Practically all of our branches have held customers meet. I have not heard other commercial banks doing such things as a campaign. We should understand that not all customers can approach the corporate office even though he or she could have some complaints or suggestions. Thus, as a top management, it is our duty to listen to those things, which help us to improve our performance.  See, maintaining the level of excellence needs a constant endeavor. Last year as well as this year – from the first of August—we are also having retail credit program. We are focusing on the retail credit packages such as home and car loans. Retail deposit and credit helps us increase our base, bringing more clients into our fold and it also helps diversify the risk/exposure. That is the reason EBL has been able to maintain its position. And that is also the reason why our non-performing loan is less. On top of that, our customer service is good as our staff members are very dedicated – something which is visible if you visit any of our branches. Both staff members and clients treat the bank as their own; I have the greatest pride for this.

 The banking system faces surplus liquidity for quite some time. How are you tackling the situation?

Look, this is a cyclic thing. Hence banks have to be prepared for this. In our case, we have a strong base of retail customers which helps us to sell different customized products even at difficult times. Most importantly, customers do have faith on us and I have seen a tendency among customers to first approach EBL for any banking requirements. Besides, we also use whatever instruments issued by Nepal Rastra Bank to mop up the surplus liquidity.

Despite several attempts by the central bank to mop up excess liquidity in the banking sector, the situation has not improved much.  The new monetary policy has announced several tools to address surplus liquidity. Do you think these measures are enough?

I think liquidity situation is a major concern for NRB too. If it is not handled on timely manner, it may lead to inflation through demand-supply mismatch. Therefore, the central bank has been introducing instruments to mop it up from time to time. Last year it was mainly by issuing reverse repo and bonds. But the new monetary policy has gone a step forward and stated that deposit tool would also be brought in. Banks would have to bid for that 90 days deposit. Hence liquidity can be moped up by the way of deposits. If this also does not help, they would have to go for something like debentures, bonds, treasury bills etc. Similarly, the CRR rate has also been increased by 1 percent. At least smaller banks, which do not have much liquidity crisis, will benefit the most. As I mentioned before, liquidity management is a dynamic process. If the central bank feels that more measures are required few months down the line, it would introduce them. Going by our discussions with the central bank officials, I can say that they are completely seized of the matter. I think the central bank is taking steps in the right direction. Hence I think the liquidity situation should improve within a few months time.

The central bank has been promoting merger/ acquisition of the commercial banks. Is EBL also actively seeking merger with or acquisition of other BFIs?

No. Not yet. We do not have any such plan at this point of time.

What is your take on BASEL-III? Will it facilitate the growth of banking sector in the country?

BASEL-III is basically aimed at making banks stronger. Banks have to shore up their capital for that, which will strengthen their position. In the present scenario, banks have to be strong. We all have seen how even big banks in the United States faced problems. Hence, BASEL-III is really important, and banks should go for it as soon as it is mandatory for them. We are also having in-house preparation in this respect anticipating central bank’s guidelines in near future.

What is your plan to meet the paid-up capital requirement of Rs 2 arba as set by Nepal Rastra Bank?

We have been meeting all the requirements stipulated by the central bank, and will continue to meet it in days ahead.

What kinds of instruments are you planning to use to meet the paid-up requirement?

There are so many tools at our disposal to raise the paid-up capital, such as bonus issue, right issue and debentures. And there are also hybrid instruments in the market, which we can use.

By the third quarter end you have posted good profit, and the non-performing loan has also come down a bit.  How has the fourth quarter been, and when do you plan to come up with the fourth quarter report?

The fourth quarter report is being finalized, and I can assure you that it will be as good or even better than – the earlier quarters. Innate strength of EBL will ensure that the results are good.  

You have been offering impressive dividend over the years. Should the shareholders expect even better dividend, preferably more of bonus share, this time around.

Our shareholders have a lot of faith in us and we in no case will let it go down.

Coming to the stock market, how much opportunity do you see in the stock market when it comes to diversification of portfolio?

Right now the market is still expanding. Not many companies are listed, and transaction and trade volume is quite limited. I hope they will gradually increase. For that more and more of companies, basically real sector companies such as industrial companies, should be brought in. Once the number of listed companies, and thereby the number of shares increase, I think, that will make a lot of difference.  From my experience in India, I can also add that if there are more stock exchanges across the country, and if there is online trading system in place, they will help expand the market further. I think we will have similar facilities here in Nepal, too. It is just a matter of time.

Is EBL, as an institution, benefitting from the stock market?

We are not investing in the stock market as of now.

Everest Bank Limited is not just one of most trusted banks in the country, but also one of most sought-after blue chip companies in the share market. EBL is the only bank that has also been issuing convertible preference shares. What financial products investors can expect in days ahead? Is there any mutual fund or similar scheme in the pipeline, Sir?

We will be issuing any such instruments as and when required. But we don’t have any such immediate plan.

EBL has also sought license for Depository Partner for the CDS. Since you have an extensive network across the country, your involvement in the CDS is expected to boost the demat share trading.  What are your plans as a DP?

We became Depository Partner almost one year back. But the thing is that the CDS is yet to pick up momentum. The listed companies are yet to demat their shares. We cannot be of much help until the stock exchange continue to deal on paper shares.