Rastriya Banijya Bank to lower NPL to 2pc in 4 years

KATHMANDU, JAN 25 -

Rastriya Banijya Bank (RBB) plans to bring down its non-performing loan (NPL) level to below 2 percent within the next four years. At present, the bank has 10.86 percent NPL.

The bank’s NPL level had once crossed the 60 percent mark, which prompted the government to initiate the financial sector reform programme. The scheme ended in 2011. Although its NPL level has come down, it still has a negative net worth of Rs 10 billion.

Because of this huge negative net worth, the bank says it will be difficult for it to meet the minimum capital adequacy ratio. “We need generous help from the government and the Nepal Rastra Bank,” said RBB CEO Krishna Prasad Sharma at a programme to mark the bank’s 47th anniversary here on Tuesday.

RBB has demanded Rs 10 billion from the government for its recapitalisation. Efforts are being made for the state-owned bank’s merger with NIDC Development Bank, which is expected to help in its recapitalisation.

According to Sharma, the bank has aimed to increase its deposits by 50 percent and lending by 66 percent so as to earn a profit of Rs 2 billion annually. Currently, the bank’s deposits stand of Rs 75 billion, loans and advances at Rs 55 billion. The bank has 134 branches throughout the country.

“In order to realise the targets, we also need to increase our employee productivity. So we seek up the productivity by 60 percent within next four years,” said Sharma.

The RBB is also planning to prepare model commercial agricultural projects with its own participation and lend to such projects. The bank aims to run such projects under the ‘Commercial Agriculture Programme’.

Other plans of the bank, according to Sharma, include curbing ‘resource flight’ from rural to urban areas. “For this, we will make our rural branches independent and launch ‘Rural Agriculture and Microfinance Programme’,” he said.

Source: Kantipur