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Kathmandu Monday November 20, 2000 Mangshir 05, 2057.
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State-owned banks need
overhaul
Post Report
KATHMANDU, Nov 19 - Ram Babu Pant, Deputy
Governor of the Nepal Rastra Bank (NRB) today admitted that state-owned banks - Rastriya
Banijya Bank (RBB) and Nepal Bank Limited (NBL) - are in critical condition due to ever
incrasing bad loans, and stressed for overall reform in these banks.
Dy Governor Pant made this remark at an
interaction programme on Challenges of Nepal Bank Limited in the changed context organized
jointly by Nepal Bank Employees Association (NBEA) and Financial Institute Employees Union
of Nepal (FIEUN) on the eve of 64th anniversary of NBL here today.
Pant said that financial sector reform was
the need of the hour, and in the ensuing period the government initiated the project as
the public sector banks were facing crisis due to weak management, poor financial
information system, among others.
Dr Shankar Sharma, member of the National
Planning Commission (NPC) at the same function reiterated his words that there is no
alternative but to expedite the financial sector reform.
International Auditing Firm KPMG had stated
in its report that two state-owned banks were in serious situation in terms of management,
lending and recovery of loans.
Dr Sharma said that there is excessive amount
of bad loans in public sector banks and works are underway to restructure outdated loans
introducing reform package. He said that the government is introducing new commercial
banks acts to streamline the banking industry.
Presenting a paper on Challenges of Nepal
Bank Limited in the changed context, A R Bhattarai, Chartered Accountant with NBL said,
"state-owned banks’ management is very poor along with weaking internal control,
backward technology, lack of a credit culture and lack of proper utilization of available
manpower."
Reform plan of the state-owned banks needs to
address both ‘stock and flow’ problems as the stock problem is dealing with the
bank’s current balance sheets, raising capital and removing non performing loans,
said Bhattarai.
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