ADBL to provide LC, forex service

The Agricultural Development Bank Limited (ADBL) is getting ready to issue letters of credit (LC) and provide foreign exchange service. Following the Bank and Financial Institution Act 2006 which opened the door for it to provide these services as an A class commercial bank, it is now preparing the working procedures for the two services.

Earlier, the Agricultural Development Bank Act had prevented it from providing non-fund based services. The act had categorized it as a development bank. The act has been scrapped and it now operates under the Bank and Financial Institution Act like other banks. "We are making preparations to start LC service within the next two months," said Shyam Singh Pandey, chief executive officer of the bank. "We will try our best to start providing foreign exchange service by that time." Bank officials said that the bank was losing commission-based businesses although there was much potential. It has been referring its customers wanting to open LCs to the Bank of Kathmandu as per an agreement made between the two banks.

Customers deposit collateral at the Agricultural Development Bank while the Bank of Kathmandu issues the LC. The two banks share the commission generated by the transaction. Pandey said that the bank had been losing customers as it was unable to provide complete banking services. "Traders and contractors have been running away as we are not able to provide these services," Pandey said.

The bank has built a counter for the foreign exchange department at its head office. "A team is working to formulate a procedure for providing this service," Pandey added.
Source:eKantipur