RBB told to improve performance for recapitalization

Even though the government has announced a two-year recapitalization plan for Rastriya Banijya Bank (RBB), Finance Minister Surendra Pandey said on Monday that the actual implementation of the plan would depend on the performance of the bank itself.

“All the public sector entities are faring badly despite injecting of capital and other reform efforts. The government, hence, is no more willing to inject more capital in them. The management and employees at RBB should be aware of it,” said Pandey.

Pandey said this while referring to the need of recapitalizing the bank. The management has pleaded the government to re-inject around Rs 7 billion in the bank.

At the 20th annual general meeting of the bank, Pandey mainly urged the bank to improve its efficiency and step up loans recovery -- the two crucial objectives behind introducing reforms in the bank. He even flayed ´unionization´ of employees and instructed them to focus on their jobs than in ´politics´.

Following the introduction of reforms, the bank has cut staffs, streamlined its operations and managed to post profits. However, its financial picture still casts a gloomy look.

Janardan Acharya, chief executive officer of the bank said that the bank earned net profit of Rs 2.21 billion in the last fiscal year and managed to post cash recovery of Rs 2.15 billion of its bad loans during the period. “The bank´s performance has improved in a big way, and non-performing loans have dropped to 15 percent of the total loan portfolio,” he added.

Still the financial outlook of the bank cast gloomy look. The bank has negative net worth of some Rs 13 billion. It still has bad loans of Rs 5.40 billion to recover. “The face of the bank still does not look pleasant, but it will change in two years,” assured Acharya.

Acharya stated that the bank would soon dispose shares of Nepal Investment Bank that it owns. “We expect it to fetch around Rs 5 billion. With profits and recovery over the next two years, and of course, implementation of the recapitalization plan, we will turn around its outlook,” he added.

In a bid to give new boost to its operations, RBB management has announced that it will relocate some 12 branches, whose operations were merged with other branches during the conflict period, in their original places.

“We have already automated 110 branches and will computerize the rest soon,” said Acharya, elaborating that the bank would install a large number of automated teller machines (ATMs) over the next few months.

At the program, the bank unveiled a plan to add 18 new ATMs within the three months and install additional 20 ATMs by the end of next six months. RBB presently has 12 ATMs.

Source: Republica