Armed with 17 years of experience in the banking sector, Anil Shah heads Nabil Bank as chief executive officer. Nabil Bank is Nepal's first joint-venture bank and entered 25 years of operation Saturday. It is focusing on expanding services to rural areas and investing in infrastructure development. Shah says Nabil is working to become the financial solution provider of the first choice from being the bank of the first choice. Excerpts from his conversation with Prem Khanal of the Post:
How would you characterize the bank's performance?
First and foremost, I would like to note that we are the first joint-venture bank in Nepal. Prior to our entry, banking was carried out in a very traditional way. What we contributed to the banking sector was the introduction of international banking. Reflecting on Nabil Bank's 24 years of operation, we see that it has been a pioneer in many areas. Judging by customer response, we are leaders in most consumer products. This is because more and more customers are choosing to bank with us. As a result, both deposits and lending have doubled over the last five years. We have evolved to become a customer-centric bank.
From the perspective of stakeholders, we are one of the best performing banks in the stock market. Putting money in Nabil stock is a blue-chip investment. This means that they are choosing us. For the regulators, we are the model bank. We are delighted to reveal that we are one of the highest taxpayers in the corporate sector making a tremendous contribution to the state's coffers. The credit goes to our efficient and skilled staff. Today, we are where we are because of them. We take pride in the fact that many of today's leaders in Nepal's banking sector began their careers at Nabil.
How is Nabil Bank planning to deal with the growing competition?
We have long been saying that it is not quantity but quality that matters in banking. What we need today are bigger, more secure and stable banks. Merely expanding the number does not benefit customers. Quite remarkably, the banking system is different from other sectors. If other companies go bust, only the entrepreneurs lose. However, if a bank should get into trouble, the biggest losers will be its depositors and others who put their trust in it. In this context, the time has come for mergers and acquisitions, and to increase the size but not the number of banks. As for us, we are in a fairly comfortable position in terms of competition among the 25 existing banks. But what we have not forgotten is that no matter how big a bank is, there should be continuous efforts to make it bigger, more stable and more secure.
Do you sense that unhealthy competition is slowing entering the banking system?
Yes, there are already some signs of unhealthy competition. Banking is about risk management: analyzing the risk and pricing the risk. Due to heavy competition, many banks are concentrating on increasing lending. No one is looking at the risk, only the volume. Banking is a long-term strategy. We cannot remain happy by just making profits for one year. In the following year, the bank may suffer a loss, and ultimately collapse. It is extremely necessary to re-evaluate the sector as a whole.
Do you have any plans for mergers or acquisitions?
Instead of going for mergers, we want to grow organically. We believe we have the wherewithal to develop ourselves in such a way. In the past year, we opened nine branches which are performing well. This shows that we can expand ourselves. Nepal Bank and Rastriya Banijya Bank are the largest banks in the country on the strength of their vast network of branches. So we also want to move ahead by expanding and restructuring.
What are your future strategies?
We just introduced a five-year strategic plan process. We are working to develop Nabil from being the bank of the first choice to the financial solution provider of the first choice That means we want to provide the entire range of services such as all sorts of financing, mutual funds, brokerage, credit cards and syndicated loans. We want to be more efficient and productive. There will be two key areas where we will focus. We want to be an inclusive financial service provider. To make this happen, we will focus on investing in small and medium enterprises and micro-lending. We will go to the rural areas wherever people live, and not only stay in urban and semi-urban areas. Second, we will be focusing on infrastructure like roads, telecommunications, cement and hydropower. If we have to play a role to create an atmosphere favorable to do business, then we will do it.
What are the current challenges in banking? How do you think the banking system will change after 2010?
We do not have enough experts to run the financial sector. We need banking training institutes to churn out more bankers. In today's era, we need to have banks with vision. And only the best will survive. The question of survival will force them to merge. When 2010 comes, Nepal will open its doors to foreign banks as per its commitment to the global trade regime of the World Trade Organization. I don't think international banks will be interested in Nepal because of the small size of the market and other factors.
Source: eKantipur
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