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RBB to earn profits from mid-June 2004
KATHMANDU, DEC 16 - The new management of Rastriya Banijya Bank (RBB) today said the financial condition of the once technically bankrupt bank was improving and further claimed that it would start earning profits from the mid-June next year.
Officials of the bank further stated that the bank has recovered Rs 2.30 billion of defaulted loans during the period of last nine months when the new management took charges of the RBB.
"The bank will start earning profits from mid-June 2004," said Basudev Ram Joshi, Chairman of the bank, speaking at a press meeting organised with an aim to disseminate information on bank’s progress recorded after the new team took over its management.
He added that the bank’s operating loss has gone sharply down in the recent months and was curtailed to Rs 20 million in the first quarter of this fiscal year. The operating loss was Rs 730 million in 2002/03 and Rs 1.23 billion in 2001/02.
He stated that the bank has started discarding the collateral-based loans approval system and has adopted new system to evaluate loan repayment capacity of the party while issuing new loans. "In the past, loans were issued on the basis of social status rather than the project basis. But, people with social status themselves turned out to be defaulters," he said.
Stating that the bank has initiated negotiations with larger defaulters to expedite loan recovery, Joshi said, "Those who took loans must pay it back. If they can’t clear all their dues, we are ready to reschedule their loans. But they must come to the table and convince the management."
In a bid to expedite organisational restructuring and cut down financial burden, the new management has taken initiatives to reduce branches, he informed. The bank has already reduced its branches to 132 from previous 158 branches. "And we aim to bring it further down to 110," said he.
Joshi also said that the bank has become a major investor in the inter-banking lending after the new management took over its management. "Prior to it, we used to take inter-banking loans to manage liquidity," he stated.
The bank is undertaking inter-banking lending at the interest rate of 5.4 percent. Also owing to its better financial position, the bank has been lending to institutions like Nepal Electricity Authority and Nepal Oil Corporation, among others, said officials.
Bruce F Handerson, Chief Executive Director of the bank said that the central bank has provided various tools to expedite bank’s loan recovery efforts. "Also, to boost up the financial activities, the bank has prioritised small and micro-credit lending," he said.
The bank has already entered an understanding with Western Union to bring in remittances through the banking channel. It has also adopted voluntary retirement scheme (VRS) to down size the employees.
"By the end of first quarter of this fiscal year, 1,270 of 1,515 employees that crossed 20-year service has taken voluntary retirement," said Handerson.
Moreover, to streamline the banking operations, the new management has issued various work manuals including internal loans, foreign loans, auditing, human resource and loan recovery, among others.
Officials at the bank further said that the Maoists have looted about Rs 100 million worth of cash and jewelry from 24 branches of the RBB so far.Posted on: 2003-12-17 04:01
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