A senior NRB official disclosed that a team formed by the central bank to facilitate the merger of banks and financial institutions has already garnered a broader understanding in this connection after holding talks with their CEOs. [break]
“Dialogues were held with 15 trade unions of these banks as well. They too are eager for the merger,” said a source with the direct knowledge of the development.
Subsequent to the initiatives, the RDBs too have formed a merger committee of their own under the leadership of Dharma Raj Pandey, CEO of the Western RDB to work out different methods and ways to execute the merger.
In a bid to compliment and support the merger committee, the NRB has also appointed a task force to evaluate financial and other details of the institutions which operate under Grameen Model.
“We anticipate both the teams to finalize their reports soon. Further decision on the merger will be taken depending on their findings and suggestions,” said the source.
Being the main shareholder in the RDBs that were established between 1992 and 1996, NRB had earlier taken initiatives to restructure them. The NRB´s ultimate goal was to privatize them and limit its stake at 10 percent in each of them. In this connection, it had sold the shares of Western RDB to private investors and also issued shares of Eastern and Central RDBs to public.
However, the restructuring drive hit a snag after the employees of RDBs protested the change. “That is why we decided to hold consultations with the trade unions as well. Given that the trade unions have expressed readiness to support merger, we are hopeful the situation will be quite different this time round,” said the source.
The five RDBs that are of diverse size presently operate with a total 928 staffs.
Latest records of NRB show, their paid up capital totals to Rs 355.36 million and that they have collected Rs 826.29 million from depositors, who are termed as members. They have funneled the members savings along with the fund borrowed from different institutions to their small borrowers.
“However, as their bloated structure, high perks and benefits to staffs and inefficiencies largely eat away their competitiveness, majority of them have dismal financial outlook,” reads a report of NRB.
Together, these RDBs have issued Rs 3.39 billion to some 150,782 borrowers. However, a large number of borrowers have not repaid their loans, raising the bad loans of RDBs to Rs 179.8 million.
The central bank, in a bid to clean their balance sheets, had absorbed all their losses some 10 years ago as well. “Sadly, the efforts that enabled them to start afresh under supposedly new and efficient structure failed to yeild desired results,” said the source.
Presently, only Western and Eastern RDBs are in profits. The remaining three RDBs are operating at a loss. Together, they are operating with a total of 168 branches across the five development regions.
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