NATIONAL 4 - (Spotlight Weekly)

‘Credibility And Commitment Are Our Strength’

—SHOVAN DEV PANT

SHOVAN DEV PANT, chief executive officer of Nabil (Nepal Arab Bank Limited), has been associated with the banking sector for the last 17 years. Having joined Nabil in 1984, Pant is the first Nepalese chief executive officer of the bank. Pant, 42, who did his MBA from Tribhuvan University, spoke to KESHAB POUDEL at his office on Friday on various issues relating to Nepal’s banking sector. Excerpts:

As the first Nepalese chief executive officer of the bank, how can you prove that you are different than your foreign predecessors?

After my appointment as CEO, we have decided to introduce a scientific management system. One of the aims of the system is to demonstrate that Nepalese can run the bank efficiently under scientific management. We are planning to reorient the management system as a whole. I am promoting teamwork in the bank to activate all internal institutions. It is going to be very rewarding for the institution. We have constituted a high-level management team where we discuss and decide what reforms are required in the bank. Teamwork is important in making a bank an efficient and credible institution. There is no expert and everybody’s ideas are used to get results.

Do you believe changing management practices alone would bring better results?

This new method will produce better results. Earlier, one man took all the decisions, but now it is a team that is functioning. We have four senior members who are committed and experienced and who can contribute a lot to bring prosperity to the bank. In the process, we also have redefined business values. We are also trying to define the mission of the organization. All our efforts are dedicated to developing Nabil as a sustainable institution to serve the country with the objective of giving the best return to the investors. It is necessary to have a committed and efficient management to achieve this objective. The other objective is to place this institution as a catalytic institution.

What are your other goals?

We have many banks that are concerned with profits for investors, but they do not take major risk in distributing loans. Mostly what they do is to invest in government bonds. There is another section involved in unscrupulous lending. A bank is a custodian of public money. If we don’t maintain certain norms and values, banks will collapse. Nepal Bank and Rastriya Banijya Bank are facing a difficult situation. We don’t want to get into that situation. Nabil is always concerned with the safety of depositors. I am proud to say that the overall health of the bank is quite good. We are formulating a strategy keeping in the mind of overall health of the bank and shareholders. We expect Nabil will remain the leading force in the country’s economic activities.

What is the ratio of deposits?

We now have deposits of Rs.17 billion and lending of Rs. 9 billion. We do not see lending and deposits as the focus of growth. We are focusing on the quality of banking system as a whole. Generally, this is a time when the investment is very low and getting a good avenue for lending is hard. Even multinational companies like Kodak have pulled out of the country. The tourism sector, where all the banks have a stake, is in a bad position. Now we need to play a bigger role in supporting tourism. I don’t think a conventional banking process will safeguard our industries. We require a change in outlook. At a time when the economy is not functioning properly, a bank cannot invest in risky areas. This is the reason we are trying to introduce a pragmatic and practical outlook. If we do not take risks, it will not help the country. If the banking sector does not invest, the country will face a very difficult situation. As bankers, we also have the responsibility and obligation to invest the people’s money in the right places. We cannot lend money without observing and evaluating performance. For Nabil, our motto is "a friend in need and a partner in progress". We are making efforts to overcome a difficult time by harnessing the opportunities available. We are concerned about supporting industries and protecting deposits. Nabil is not just a profit-making institution, it also wants to fulfil social and economic obligations.

At a time when so many private banks are coming up, how competitive is the market?

Business is very competitive. It is more important to see how they are working rather than how they are. When there is a level playing field between competitors, then things will be alright. But I mean here, the banking sector does not seem to be performing within established norms. Nabil has maintained its credibility and we have been trying to improve our performance. Today our strength is our credibility and a committed work force. We are going to make them more productive and more efficient. In the present age of competition, only professionally run organizations can be sustainable. The banking sector will face problems experienced by non-professional cooperatives sector unless we change the strategic position. Nabil wants to have a balance sheet where the values of depositors should be protected. Nabil aims to survive in any situation with a strong and efficient management team.

How do you see the future of the banking sector in Nepal?

As I said earlier, sustaining all these institutions is a very difficult task. Again, only those institutions that provide good return to depositors can survive. It is not bad to have many banks, but do all of them protect the interest of depositors? I am very doubtful. As far as running the institution over the long run is concerned, we may face very difficult times.

How do you evaluate the monitoring system of Nepal Rastra Bank?

After the crisis in the two largest public-sector banks, Rastriya Banijya Bank (RBB) and Nepal Bank (NBL), Nepal Rastra Bank has introduced a more effective monitoring system. NRB has now realized the need for monitoring. They are trying to plug loopholes. They are now more concerned with enforcement.

What major contribution has Nabil made in the market?

In terms of manpower, Nabil is again a leading bank. We came in 1984 as a first joint-venture bank in Nepal. Since then, we have produced so many competent workers. You can find many former staffers of Nabil in the new banks. Nabil is very proud to have produced such efficient and qualified manpower. We have produced a huge number of people in various levels. Nabil has played a very important role as far as development of human resources is concerned. The bank will continue to play this role. We will continue to invest in human resources development since this will benefit the entire banking sector. You cannot run a bank without efficient and competitive manpower.

It is said that people unfamiliar with the banking sector are promoting many financial institutions. How do you see this situation?

I agree with you, but there is nothing wrong to invest in the sector as an investor. Everyone has not necessarily come with bad intentions. One has to understand that banking is totally different than other businesses. Banking is an area where the parties have to deal with public money. A person deposits his or her money only in a credible bank. The person handle public money has to enjoy credibility. Public trust is necessary to run a bank. A bank or financial institution run by inexperienced people is always vulnerable to bankruptcy. If the regulatory authority is weak, the possibility is much higher. The cases of cooperatives have already shown how vulnerable deposits in the hands of inexperienced promoters are. Lapses in monitoring are also creating an alarming situation. If there is a lack of mechanism and credibility in the banking sector, it will hamper the process. It is not just distribution of loans and making returns, there are many other issues involved.

As a pioneer joint-venture bank, what plan do you have to show that Nepalese management is capable of maintaining Nabil’s reputation?

The Nabil team has the capability to prove their credibility. What we are going to prove is that Nepalese have the capability to run things professionally. This is the need of the country. We have to develop skills to lead the nation. After all, it is the responsibility of Nepalese to develop their own country, bank and other institutions. Nepalese can manage things very efficiently and Nabil has the manpower to handle all challenges. I am very proud to say we have very competent and honest team.

You have been with the banking sector for such a long time. What are the prospects for banks in Nepal?

There are a lot of challenges ahead in the banking sector. The experiences of RBB and NBL have shown how vulnerable the banking sector can be if it is not managed properly. They have still more than 60 percent of deposits. The new private banks have to see the experiences of these two banks. One has to see the risk factors. If banks don’t lend money, the entire industrial sector will suffer.