Credit flow slowdown is matter of concern: DPM Paudel

By A Staff Reporter,Kathmandu, Jan. 21: Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel has expressed his serious concern over the slowdown of credit flow as compared to the deposit collection from the banks.

Addressing the 58th anniversary of the Agricultural Development Bank Limited (ADBL) on Monday, DPM Paudel said that the inability to increase credit flow is a serious issue even though deposit collection in banks is good. 

“In recent days, bank savings have increased, but disbursement has not increased as expected. This is a matter of concern. We should increase the bank's investment in areas that have the potential to increase production, productivity and create employment,” said Deputy Prime Minister Paudel.

He directed the management and employees of the ADBL to work more professionally and competitively to make the bank strong and competent. 

“The bank is becoming competitive through the collective efforts of the bank's board of directors, management and employees. But we cannot rest on our successes. We must move forward as a better, more capable and competitive bank,” he said.

“We have the bitter experience of some institutions not making the expected progress due to the lack of good relations between management and employees. Therefore, the relationship between the bank's management and employees should be vibrant,” he said. 

He said that achieving the objectives for which the Agricultural Development Bank was established should be given top priority.

Governor of the Nepal Rastra Bank Maha Prasad Adhikari has said that country’s overall economic indicators are positive.

“The fundamentals of the economy as a whole are very good. We are strong in the external sector.  We have seen a huge impact of floods and landslides recently. As a result, inflation in the food and beverage sector has increased slightly. However, on average, inflation has remained within the target set by NRB so far,” he said.

He said that the liquidity in the banking system is good. He said, "Banks are well capitalised. There is a little stress in profits and in recovery. We have seen that clearly. The stress in recovery is guided by two types. We see the impact of a slight slowdown in the economy.” He said that there were some problems in loan recovery from banks and financial institutions, which has led to an increase in bad loans.

Governor Adhikari said that economy has slowed down somewhat due to the chaotic activities that instigate bank defaults. He said that impact of chaos in the banking system will affect the economy in the long term. 

Ram Sharan Pudasaini, Chairman of the Board of Directors of the ADBL, said that high priority has been given to proper compliance with prevailing laws and directives of regulatory bodies, risk management, effective internal control system and maintaining quality of loans for sustainable banking and financial stability. 

He said that special attention has been paid to business expansion and quality service flow through modern banking facilities, institutional good governance, maximum use of information technology in a safe manner and investment-friendly policies.

Chief Executive Officer of ADBL Govinda Gurung said that short-term and long-term strategies have been formulated and implemented to positively improve the overall areas of the bank, including its business capabilities.

“The increasing non-performing loans and obstacles in loan recovery, anti-social, unethical, undesirable activities, and illegal actions by some unscrupulous individuals motivated by the intention of not repaying loans have become a major challenge and a matter of concern for maintaining loan quality,” he said.

According to the bank, it has so far invested approximately Rs. 206 billion in loans to 152,000 customers. Similarly, it has mobilised deposits of around Rs. 259 billion from 2.1 million depositors.