Nepali Times spoke to Radhesh Pant, CEO of Kumari Bank and Past President of Nepal Bankers' Association, about his plans for the bank and thoughts on corporate governance in Nepal. Excerpts:
MIN RATNA BAJRACHARYA
Nepali Times: You've been the bank's CEO for a little while. What challenges are you looking to tackle?
Radhesh Pant: The banking sector has become extremely competitive as banks have proliferated even as the investment and security climate has deteriorated. It will not be business as usual. Banks will now have to find their niche, think out of the box and focus on efficiency and new markets.
I've been CEO of Kumari Bank for about two and a half months now, and we've begun looking at a number of things that could help us optimise our performance. We have restructured the organisation, centralised certain functions and processes, diversified and reassessed both the lending and deposit portfolios and priced them by risk. We are also looking into ways of increasing our off-balance sheet income, and enhancing our bank's image and staff morale.
We are also looking into partnerships. We've signed an agreement with the Education Consultancy Association of Nepal (ECAN) and are now their official banker. This arrangement will be a win-win for students, agencies and the bank.
What makes Kumari Bank different from other banks?
We are more tech savvy than most other banks. We were the first to institute
e-banking in the country. The bank is wholly Nepali-owned. We believe in touching lives and making finance accessible to more Nepalis in the days to come. We are going to use our technological savvy to increase delivery channels to fulfill this.
Recently, there has been tension between CEOs and board directors and among board members in many Nepali banks. Your thoughts?
Nepali investors in the banking sector need to lose their 'saujee' mentality--the tendency to think that because you have a lot of equity, you are the final authority. We must realise that the contribution to profit from deposits always outweighs that from equity. As you know, a banking sector collapse can bring economies down especially in countries like Nepal where major non-governmental funding is through banks and financial institutions. So governance standards in banks need to be much higher than in any other industry.
What could be done to strengthen the corporate governance system of our banks?
First, the central bank (Nepal Rastra Bank) has good regulations but many evade them, so implementation must be improved. Second, the central bank needs to employ a stick-and-carrot approach so bad governance is penalised and good rewarded. Third, bank boards need to have a solid code of conduct that is implemented and a clear line needs to be drawn between the management and owners.
Banks are under statutory obligation to serve the rural population. What is Kumari Bank's strategy to do this?
We have consistently fulfilled our statutory obligations. However, we want to do more. We opened a branch in the remote town of Urlabari last week, and plan to open 11 more in rural areas this fiscal year. We want to utilise our technological edge to create more delivery channels that can be accessed by rural people. We will focus on microfinance, SMEs, small-scale projects like small hydropower and cooperative run projects. I see a lot of opportunities for banks in the rural sector. Moreover, this will have a direct impact on the country's economy and Kumari wants to be part and parcel of this.