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Kathmandu Saturday February 02, 2002 Magh 20, 2058.
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Salvaging RBB
The management of Rastriya Banijya Bank (RBB),
declared technically insolvent by an international auditing firm, has finally been handed
over to a private company. Deloitte Touche Tomatsu (DTT), the international consultant
firm, will take charge of the task of reviving the ailing bank over the next two years. In
this connection, a contract worth 5.8 million US dollars was signed in the capital the
other day. The handover was long in coming. It came after much arm-twisting by the World
Bank and the International Monetary Fund. Now that international donors and monetary
agencies have had their way, financial experts and independent observers are eagerly
waiting for DTT to get down to business. Entrusted with the immense responsibility of
putting a vital financial institution back on track, DTT is expected to touch upon a wide
range of chores starting from day-to-day management to curing the chronic illness
altogether. But as DDT sets about its assignment, the fear of likely retrenchment and an
impending list of do’s and don’ts has gripped the banking sector. Concern is
being raised over the fate of employees at several RBB branch offices which may be closed
down. Some of this fear may be allayed by the fact that DDT does not have the mandate to
impose forced retirements. Obviously, a new management will come up with its own ideas and
rules to revamp the bank, and these might not be to the liking of employees accustomed to
old ways. The turn of events may be a bit nightmarish for those who prefer the
lackadaisical atmosphere typical of state-run entities. But in signing the contract, the
government has formally acknowledged its failure in managing the bank, and the hand over
to a foreign company is supposedly for the better of our banking sector. They have no
option but to accept the situation with whatever optimism they can muster and with
determination to perform better henceforth.
As with many state-run enterprises, the poor
performance of RBB has been attributed to excessive political interference and the
attendant corruption. So much so, a select group of the high and mighty has over the years
virtually treated such banks as a convenient place for employing relatives and earning a
quick buck. Although some cases of misconduct landed in the courts, these have died down
mysteriously. Failure to recover loans and overvaluation of collateral, not to talk of
massive LC scams and embezzlements, eroded the financial base and credibility of these
banks, including Nepal Bank Limited, another ailing entity. Frequent attempts to change
governors at Nepal Rastra Bank hasn’t helped either. Hopefully, with a new and
experienced management at the helm at RBB, things will look up. But what after DDT leaves
in two years time? Will RBB revert to the same working style and the same woes? How often
can the country afford to bring in international companies to keep our financial house in
order? It is not enough for DDT to turn RBB around. It should make a dent in our pervasive
culture of corruption. The new off-hand policy of the government must include a scheme for
reopening cases and bringing the culprits to justice. Our local manpower is my no means
incompetent, they only lack moral strength. Another thing, there was always a danger that
the consultant firm would at the end of the two year contract decide that the ailing bank
was beyond redemption and simply advise HMG to declare it bankrupt. That would be a cop
out. No information has come to light about safeguards against such a possibility. |
