NATIONAL 5 (Spotlight Weekly)]

'I Will Follow Directives of the Leaders'

- DR TILAK RAWAL

Amidst thick controversy Dr TILAK RAWAL was appointed goveror of Nepal Rastra Bank. The political weight of even Finance Minister Mahesh Acharya seemed lighter compared to Rawal who succeeded to grab the post of governor despite Acharya's fierce protests. Former executive chairman of Agriculture Development Bank and Rastriya Banijya Bank, Dr. Rawal managed to catch the attention of the whole country while he was in the eye of the controversy last week that culminated in the resignation of Acharya. A man from far-western region Rawal was firmly supported by the Prime Minister and other regional leaders of Nepali Congress. The controversial finance man spoke to KESHAB POUDEL at his office last week. Excerpts:

The circumstances surrounding your appointment as the governor of the central bank is known to all. A large section of the Nepali Congress leaders and ministers seemed to back you while Finance Minister chose to resign. How do you look at all these developments?

The proposal (for the post of governor) was not new to me. Long time back, two senior congress leaders Prime Minister Kishunji (K. P. Bhattarai), party President Girijababu (G. P. Koirala) and all the second generation leaders had asked me to prepare myself to head the Nepal Rastra Bank. Although there was some controversy during my appointment, I don't have anything to say about it. I already enjoy nearly nine year long experience in the Nepalese banking sector and I am pleased to work as the governor of the central bank.

You have served in different positions in banking sector and now you are heading the central bank. Do you have any further ambition now?

I do not have any ambition. Actuallly, my name was floated as a possible candidate for the governor four years ago. When my name was in the news, I was inspired to become the governor. Every one wants to go to the top. I too have similar feelings. Every Secretary who has performed well wants to become the Chief Secretary. I also had similar desire. I don't have any ambition although I am confident of handling any assignment that has been entrusted to me.

Like now, if party leaders offer you a better position in the party, would you accept it?

I don't have any particular target or plan. I am willing to do what the leaders want me to. Now I am here as a governor. For this appointment, I would like to thank Prime Minister Krishna Prasad Bhattarai and other senior leaders. Right now, I will concentrate my whole efforts to become a successful governor. If party leaders offer me new responsibilites in coming days, I will abide by it. In short, I am an obedient person who will follow the directives of leaders.

You started some reform measures in Agriculture Development Bank (ADB) and Rastriya Banijya Bank (RBB) during your tenure as chief there. Do you have similar plans for Nepal Rastra Bank (NRB)?

I started some good policies in ADB. Likewise, I initiated similar policies in RBB. I have never thought that RBB is free of problems. When I was appointed as the executive chairman of RBB, the bank was in total disarray. I made efforts to improve its performance. As a governor of NRB, I am considering to introduce some packages. After consultation with private and public sector banks, I will announce those plans.

Some sections of the press claim you made RBB bankrupt. What do you say?

Every individual has a right to have his own opinion. I can't stop them from doing so. When I was appointed as the executive chairman of RBB, it was in a nearly bankrupt condition. I borrowed nearly one billion rupees from the central bank in three months. The RBB did not have money even to maintain the Cash Reserve Ratio as mandated by the central bank. But the situation now is completely different. I have no hesitation to claim that the performance of the bank is today completely different and it is making progress.

As a newly appointed governor of Nepal Rastra Bank what are your major challenges?

One of the major challenges in front of the central bank is that it has a large amount of surplus deposit lying without use while demand for the loan is not increasing. The situation is fluid. How to invest this deposit in the production sector is my main worry. It is not good for the economy to have such a huge amount of money lying idle. The banks in private and public sector might have their own problems for investment. As a governor, I will issue directives after studying their complaints and problems.

As many small cooperatives are collecting public deposits, what steps will the NRB take to gurantee the safety of public investment?

The position of other commercial banks is not bad as banks are one of the profitable ventures for investment in the country. As cooperatives are established under the Cooperative Act, they are not forced to follow the financial regulations specified by the central bank. As a central bank, NRB should have the right to issue guidance to them. There is a need to amend the Cooperative Act to bring these cooperatives under the jurisdiction of the central bank. NRB is very concerned about the safety of public deposits. Every institution should follow financial discipline.

What about the monetary situation?

I have already told you that one of the major challenges is to invest huge amount of deposit in the productive sectors. These deposits should be invested in hydro power and infrastructure sectors. We also have to identify new sectors for investment. As government is committed to alleviate poverty, there is a need for effective mobilization of deposits to productive sectors. Investments are also needed to carry out programs like Bishweshwor With The Poor. These programs should be implemented effectively. NRB has a major role to effectively implement all these programs. Export and import performance of past five months have shown positive indications. The economic growth rate is also promising.

How do you look at the coordination between the Finance Ministry and NRB?

I have just taken over as the Governor. So I don't know much about it. I think Finance Ministry will cooperate with me as the Secretary of the Ministry is our board member. I don't expect any major problem from the Ministry.

What prompted ministers and MPs to openly back you during your appointment. Was it not the politicization?

I would like to thank MPs and journalists who supported me. The support extended to me was spontaneous. I have never offered even a cup of tea to anybody to plead in my favor. Personally, every one likes me. During my tenure as the executive chairman of RBB, I never offerred undue privilege to anyone. When I was taking rest after the retirement from RBB, I did not meet any journalist or MPs. I don't know why journalists supported me. As far as MPs are concerned, they always complain to me for not being available to talk. It is up to you to judge why all of them liked me.

What vision do you have for NRB?

As a student of economics, I know that there should be economic growth. As a govenor of NRB, I must do something for maintaining economic stability in the country. NRB will formulate its monetary policy so as not to disturb the process of stability. We have to invest deposits in productive sectors which can generate employment opportunities and increase per capita income of the common people. There must be bigger projects and industries. I am not in favor of promoting import-based export industries like garment and carpet. Of course, garment and carpet have also contributed to the national economy. When you look at the import volumes of these industries, you expect a miracle in economy from them. Unfortunately, we receive just a peanut from their exports. I don't mean that I will discourage these industries. What I want to do is concentrate on other areas also. I will encourage those industries which will give more benefit to the country. We must implement some programs for the upliftment of the poor people.

According to news reports, Finance Minister Mahesh Acharya resigned following differences over your appointment as govenor of NRB. Do you have any personal dispute with Acharya?

Look, I have a very cordial relations with former Finance Minister Mahesh Acharya as my association with him goes a long way back. When he was the Minister of Finance some years ago, I was the General Manager of Agriculture Development Bank (ADB). I have never felt any difficulty in working with him. During his recent tenure as the Finance Minister, I was the executive chairman of RBB. Acharya often hailed me as a capable person and even recommended my name for the governor of NRB. I had discussed with Acharya when my term in RBB expired. I don't know what prompted the recent controversy on the issue but I have always found his attitude as friendly and cordial toward me. I am his well-wisher. If Acharya had such difficulties, he should have asked me to withdraw from the race and I would have gladly done so. I did not get any hint from him. It is not my responsibility to know what the top leaders have in their mind. I want to continue my good relations with Acharya.

When did you last meet the former finance minister?

It was few months ago during my final days at RBB. At that meeting when I refused to continue another term in RBB, he accepted my proposal and asked me to consider for NRB. If he had found me incapable, he could have told me directly. I don't care about the statements of politicians -- who said what came to their mind. I will meet him soon as he is still one of my well wishers.

It was reported that you had opposed the privatization of RBB when you were its executive chairman. What is your opinion regarding the privatization?

I am not at all against privatization. My opinion is that privatization should be carried out in a systematic manner. For instance, there is a report about privatization of RBB. I think many steps are need to be taken alongside the privatization initiatives. The regulations and existing systems must be considered. Any institution should be privatized only after completing initial homeworks like infrastructure and others. In Nepal, we have seen many complications in privatization. In case of RBB, we must evaluate the precedent of Nepal Bank Ltd. Banking sectors need to be privatized but it must be done so on a case by case basis.