On Banking Reforms
The on-going banking sector
reform activities have now reached a stage. Though NRB has not revealed any further
information about it as yet, by now it should have received detailed proposals from the
eight parties it had short-listed two months back in the process to find suitable parties
to take management contracts of Nepal Bank Ltd. (NBL) and Rastriya Banijya Bank (RBB).
In an opinion poll conducted by
Business Age, the senior business executives of the private sector, including the
entrepreneurs and bankers were optimistic by a sizable majority that the contractors would
be successful to bring these ailing public sector banks back to their sound health. But
they doubted the ability of the central bank to deal professionally with the foreign
contractor parties.
While 75% of the respondents
said they were quite optimistic about these banks regaining health in the hands of foreign
management teams being hired, only 38% of them were of the opinion that NRB will be able
to deal with these teams in a professional manner indicating that the central bank has yet
to convince the business and banking community about its level of professionalism.
The respondents were widely
divided on the question of whether a strategic shareholder would be a better solution to
the problems of these banks. While 37% described the alternative of inducting a strategic
shareholder in the banks as a plausible idea, equal number of them found it unacceptable.
It was very difficult for the
respondents to pinpoint a single party as more responsible than others for the existing
bad condition in these banks. Instead of pinpointing one, almost all of the respondents
said that the Board of Directors of the banks, the NRB, political parties and the
government were to blame equally. Surprisingly, none of the respondents blamed trade
unions.
Majority of the respondents
said that the best alternative for these banks under the present condition would be to
seek joint venture with foreign banks. Compared to 62% respondents who made such a
suggestion, only 25% endorsed the on-going effort to bring in foreign management.
Now the NRB has already gone a
long way to induct foreign management teams in these banks. And so it may not be so easy
for it to backtrack. The objective to be given to the foreign management teams is to turn
around these colossal banks without laying off the staff. That seems to be a Herculean
task. Respondents of Business Age opinion poll say, it cannot be achieved without reducing
the number of employees and branches of these banks.
4. Who is more responsible, in your view, for
the existing bad condition in NBL and RBB ?
5. What, in your opinion, is the best
alternative for these banks ?
6. Do you think that it is possible to turn
around NBL and RBB without reducing the numbers of employees and branches ?
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