Rural Finance Sector Development Cluster Programme : Government to request ADB for term extension of scheme
KATHMANDU, APR 07 -
The Ministry of Finance (MoF) is all set to request the Asian Development Bank (ADB) for a term extension of the Rural Finance Sector Development Cluster Programme, under which reforms are being carried out at the Agriculture Development Bank Limited (ADBL).
Last week, the government formed a technical committee to take ahead the plans to divest the government’s stake in ADBL.
The ministry is seeking ADB’s approval for the extension of the programme by two more years. The term of the programme expires at the end of 2012. According to ministry officials, ADB has been pushing for progress in the divestment process for the extension of the programme beyond December 2012.
The ADB board had approved the programme in June 2010 after the government agreed to divest its
share in ADBL and reduce the Nepal Rastra Bank (NRB)’s stake in Far- West Rural Development (FWRDB) Bank significantly.
“As the divestment process is moving ahead, we will write to ADB asking for an extension of the project, probably by an additional two years,” said a senior official at the ministry. “It is necessary to extend the programme’s term to complete all the tasks.”
A privatisation committee headed by the finance minister has asked the technical committee to prepare a tender document, fix value of shares and start share divestment process within the next six months. Besides divesting the government’s shares in ADBL and NRB’s stake in FWRDB, other components of the project are designing a supportive legal and regulatory framework for rural and micro-finance institutions, divesting NRB’s stakes from rural development banks, enabling infrastructure for rural micro-finance credit information service and the capacity development of Debt Recovery Tribunal (DRT).
To accomplish these tasks, ADB has allocated $ 72.5 million—$60.4 million in soft loans and the rest
in grants.
During its meeting on Thursday, the technical committee decided to review the progress made so far. “We also decided to appoint an agriculture expert in the technical committee as directed by the privatisation committee,” said Khum Raj Punjali, coordinator of the committee. On the other hand, NRB has already initiated the process of merging rural development banks after divesting the government’s shares. FWRDB is the only rural development bank where the NRB has not yet divested its stake. After the merger, NRB’s stake in FWRDB is expected to decrease.
In order to keep the credit information of micro-finance institutions (MFIs), the Credit Information Bureau (CIB) is in final stages of procuring necessary software. CIB is currently maintaining credit information of commercial banks, development banks and finance companies.
Work on capacity development of DRT is also being carried out at a rapid pace, according to finance ministry officials.
Source: Kantipur
