Reverse trend of investing in cities: PM

KATHMANDU,JAN 25: 

Prime minister Dr Baburam Bhattarai has asked the banks and financial institutions to reverse the trend of deposit collection from the rural areas and investing in the urban areas.

Addressing the 47th anniversary of Rastriya Banijya Bank (RBB) here today, he asked them to invest in the rural areas on agriculture and small and medium enterprises, and refrain from investing on urban centric projects. “The depositors in the rural areas are not getting any benefits from their savings as most of the financial institutions — both private and public — bring the deposits and cater to the credit needs of urban people,” he added.

“Rastriya Banijya Bank for being a government owned bank is also an agency to translate government’s policies and programmes into reality,” he said, adding that it should focus more on financing small projects in agro, tourism and hydro.

Despite peace process and constitution writing being the prime focus of the government, attaining economic prosperity is no less important, he pointed out. “The government is going to bring a structured plan for the economic development that will contribute in employment generation, increase national productivity along with construction of physical infrastructure,” he informed. “In addition, the government will be opening Entrepreneurship Development Centres to promote agriculture and micro-enterprises in the rural areas.

The central bank governor Yubaraj Khatiwada also emphasised on the bank’s need to finance small projects. “Rastriya Banijya Bank should better open a separate small and medium enterprise (SMEs) desk to address the needs of these relatively smaller projects as a means to promote real sector,” he said.

The governor also assured that Nepal Rastra Bank (NRB) will not be putting it under undue pressure stressing that privatising the state-owned bank is also not on cards. “But the central bank might ask the bank to re-open the branches that are not functioning at present in the viable areas so that more people get banking services,” he added. 

Asking Rastriya Banijya Bank to strive to become more professional and competitive, he pointed out that the bank’s massive expenses on employees is pulling the bank’s profit. “Other commercial banks spend less than 10 per cent of total expenses on employees, but Rastriya Banijya Bank is spending two-third of the expenses on employees,” he said, urging its employees to increase their productivity.

The newly appointed chief executive of the state-owned bank Krishna Prasad Sharma, on the occasion, informed that the bank is operating fully computer based services from 134 branches and has Rs 75 billion in deposit with Rs 36 billion as loan and Rs 19 billion investment.

“In the next four years, the bank will reduce its non performing assets to two per cent from current 10.68 per cent and make its capital fund positive,” he vowed, adding that the bank will be eyeing to cater to rural populace.

Source: THT