What will the next 10 years be like?
The trend in the stock markets and financial results is that the banks have fared quite satisfactorily. Despite the economic slowdown and the fragile situation, the banks have sustained their growth. What worries me is if this growth can continue because of the impact of the slowdown in the industrial sector in the last few years. The banks have sustained growth by diversifying their product line, by keeping their spreads high. The interest rate in savings have gone down tremendously, lending rates have also gone down as per market rates. Looking at the inflation figures, bankers should be concerned on behalf of our depositors. If the spreads come down, with diversification, the impact will be seen in the performance of the banks in the coming days.

Isn't banking getting a bit crowded?
There is fierce competition among private sector banks and so far they have been reaping benefits because our two largest government owned banks are not playing the role they should. Once their health improves, and they are working on it, they would come in aggressively and this will impact private sector banks which will not be able to match their size and network. To meet this challenge, private sector commercial banks will have to re-devise their strategies in three areas: They have to be technologically superior, they will have to start monitoring non-performing assets, and human resources skills and knowledge have to be upgraded to meet national and international competitions that have been brought about by the WTO, SAFTA, BIMSTEC, etc.

What do you expect the public sector banks to do?
They can play a pivotal role in the economic development of the country. Looking at the size and the network they have with them, it has not been exploited in the right way. Their non-performing assets have increased to an extent that their entire energy has to be used to reduce such assets. They have not been able to focus on other developmental activities, or new products. The public has a negative perception which has to be reversed.

What is the trend among depositors and borrowers?
Customers are happy if they get to deal with a stronger entity. Such stronger entities are possible after mergers and acquisitions. That will also win the confidence of customers and shareholders. Look at the stock market, even today the public have faith in private sector banks.

What has been the response to your housing loans?
About two and a half years ago, when I talked about launching direct housing loans, there were not many takers. Everyone thought this was a grey area. But at Everest Bank we had given very deep thought to the idea, and today, every bank is into home loans. Being the pioneers we have reaped rewards, we have modified the needs of borrowers. Our target clients are from the middle and the upper middle class and they are the least defaulters.

How has the Rastra Bank's recent policy of reducing the cash reserve for the private banks helped in liquidity flow in the market?
The reduction of the Cash Reserve Ratio under the new monetary policy resulted into the increase of availability of funds in the banking sector.

For sometime, there was excess liquidity but Nepal Rastra Bank was trying to follow the peace budget. Big and new investments, like hydropower, will happen only if peace is restored. And if that happens, this liquidity, which seems to be in excess today, would fall short. In that case, we will have to look abroad to financing our projects