Tech committee formed to divest ADBL stake

KATHMANDU, MAR 29 -

The government on Wednesday took a step forward to divest its 30 percent stake from the Agriculture Development Bank Limited (ADBL) to a strategic partner by forming a technical committee to carry forward the process.

The meeting of the privatisation committee, headed by Finance Minister , on Wednesday decided to form the technical committee under the chief of public enterprises coordination division at the Ministry of Financeto this effect.

According to a government official participating in the meeting, the committee will be working in this direction to complete the divestment process. “The committee will prepare a bid document subject to be endorsed by the privatisation committee and will call for tenders and evaluate the bids before awarding the contract,” said the official. After the divestment, the government will have only 21 percent stake in the bank.

Currently, the government has 50.71 percent stake in the bank, with the public and bank employees respectively holding 45 percent 5 percent of the total shares.

In November 2010, the cabinet had given a nod to proposal of changing the capital structure of the ADBL to pave the way for the bank to bring in a strategic partner. Divesting the government’s stake is one of key components of the Asian Development Bank assistance under Rural Finance Sector Development Programme-phase II.

The ADB has provided financial aid of US$ 72.5 million under this programme aimed at reforming multiple institutions including ADBL, Debt Recovery Tribunal, central bank among others.

The ADB has also been asking the government to expedite the process of divesting the government’s stake from the ADBL. The ADB has also been supporting in several sectors including installation of core banking system to enable it to start Any Branch Banking Services.

In its reform process, the bank was registered as a company and was brought under the purview of the Bank and Financial Institution Act five years ago. The government injected capital worth Rs 8.7 billion as preference shares to increase the bank’s financial strength with loans from the ADB.

Source: Kantipur