Nabil Changes in a Bank

After the departure of foreign management from Nepal Arab Bank Ltd., this first private sector bank is fast introducing changes in the way the business is to run more effectively.

The first such change is going to be in the name of the company itself. The shareholders meeting scheduled for August 2001 is to change it into Nabil Ltd. removing the word ‘Arab’, which has now become redundant as there is no Arab shareholders any longer in the company.

But the changes are going to be more drastic in other aspects, as is learnt from the high officials of the company.

According to Shovan Dev Pant, who became the new CEO of the bank after the Technical Service Agreement with National Bank Ltd. of Bangladesh was over in May, this year, Nabil is working to define its Vision, Mission and corporate objectives, and is also to bring about significant restructuring of various functions, units and departments. The result, it seems, will be a significant improvement in the efficiency and productivity of the staffs. However, Pant does not want to divulge the details of the plan.

Still, he accepts that the bank is to restructure operations in such a way that the redundant employees from restructured departments will be redeployed in more profitable operations.

Another area of focus is to consolidate and strengthen the Balance Sheet of the Bank. The Bank is distributing bonus shares in the ratio of 4:1 to its existing shareholders. It will raise the capital base from present Rs. 392.79 million to Rs. 491 million

To compete in the market which has become more competitive now as a result of the entry of newer banks and other financial intermediaries, Nabil’s new CEO says, his team will be more customer oriented, add consumer bank products and go further deeper into retail banking.

Additionally, the area of focus will be in technology, he adds. The Annual Report to be presented to the Nabil shareholders states, the bank is to install ATMs to additional branches and it is to acquire, what it calls, "higher end" banking software to replace the existing one. Once the new software is installed, the bank will extend the Any Branch Banking Service (ABBs) also to branches outside Kathmandu Valley.

Financials of Nabil

Rs. in Million

The Nepali franchise of a global giant in IT education is salvaged from a wreckage, as the owner of the nformatics Computer School - Kathmandu Center likes to call it. Founded in 1997, the center ran into heavy losses for three consecutive years, completely wiping out the equity. But since the fourth year, it has been managing to remain breaking even, and now it is going for expansion outside the capital.

The turnaround was possible when the first batch of the students started going out of the country after completing the course, according to Binod Rajbhandari, the Chairman of the Center.

Why was it so difficult in the beginning? Rajbhandari says, it was the heavy initial investments (Rs. 7 million around including Rs. 3 million for the franchise). Added to that was also the fact that, compared to Indian brands of IT education centers that were well-advertised in the market, Informatics was not so well-known as a brand here, though its principal (Informatics Group) was being lauded for its performance by international evaluators like Forbes and Fortune.

That is now, however, a history. And Rajbhandari is now going for expansion by opening centers outside the capital. In the process, a center is already opened in Biratnagar. The next will be in Pokhara, most possibly. If both of these new centers do well, the next leg is likely to be in Narayangarh or in Birganj. But Rajbhandari also hastens to add that it is not likely before five years.

In expanding the business, the idea is, however, not profit, but growth. "Once you grow, profit automatically follows", says Rajbhandari about his management credo.

Despite being in IT education/training business, Rajbhandari, a CA by his background, prefers to go into software. The reason, as he puts it, training is not so profitable. "But it is a good platform to begin with as it provides you the manpower and other resources to go into softwares." However, Rajbhandari intends to do the software through a separate company.

That highlights the importance of IT education over software or hardware development. But the fiscal concessions the government in Nepal has been offering has been limited to hardware vendors, complains Rajbhandari commenting on the provisions of the new national budget. The provision to extend loan from provident fund is limited to the children of government employees. Therefore, Rajbhandari proposes zero rate VAT for colleges (not VAT exemption) so that all of them come under the income tax net.

Growth of Student Population
(Informatics Kathmandu Centre)

By New Business Age Reporter