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Kathmandu Tuesday February 06, 2001 Magh 24, 2057.
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NIDB and IDBI sign agreement
Post Report
KATHMANDU, Feb 5 - Nepal Industrial Development Bank (NDB), the first
development of the Kingdom, has signed a financial and technical agreement with the
Industrial Development Bank of India (IDBI), under which IDBI will pick up 10 per cent
equity participation.
According to a press release issued at a program organized here today, the
participation of the foreign bank in the development of banks in Nepal, is first of its
kinds and should help to strengthen development bank practices in Nepal.
IDBI, one of the most successful development banks in India, will provide
extensive expertise in areas such as management of financial resources, merchant banking
and necessary training for the staffs of NDB. With the equity participation, the Indian
bank would also nominate a director onto the board of directors of NDA.
Uttam Pun, Executive Chairman of NDB and S K Chakrabarti, Deputy Managing
Director of IDIB, signed the agreement from their respective sides at a program held
recently in Mumbai.
NDA, the first development bank to operate under the Nepal Development Act
2052 with Rs 320 million issued capital and Rs 160 million authorized capital, started its
operation in February 1999. It was also disclosed that the bank is to issue 30 per cent
general shares for public investment in the near future.
Long term investment in infrastructure development is one of the major
objectives of the bank. Besides this, the bank also invests in the industrial, commercial
and agricultural sectors of the country by optimum utilization of domestic capital and
services. In addition, the bank also aims to promote various projects in sole financing or
in participation with other financial and industrial institutions.
Speaking on the occasion, Uttan Pun, Chairman of the NDB presented a rosy
financial picture of the bank. He informed the press that the bank so far, has accumulated
deposits worth Rs 1.55 billion and has made loan investment of Rs 1.38 billion. "The
operational profit of the bank, during the first half of the current fiscal year, has
scaled to Rs 18.6 million," he said. He added that in an attempt to extend its
services to other parts of the country, the bank has opened a regional office in Pokhara.
However, he also expressed his dissatisfaction with the existing different
rules, regulations and facilities between commercial and development banks and urged the
central bank to follow the principle of universal banking.
Satyendra P Shrestha, Former Governor of Nepal Rastra Bank and advisor the
NDB underlined the need of special facilities from the government for the sound and
sustainable development for development banks. " According to existing rules,
development banks are allowed to accept only fixed deposits, due to which, the cost of
capital would be higher than that of commercial banks," he said.
OBL Maskey, General Manager of the bank said that the failure of the
commercial banks to stimulate long-term infrastructure development has highlighted the
importance of development banks in Nepal and expressed confidence that NDB will play an
important role in that regard.
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