A friend of Maoist Chairman Pushpa Kamal Dahal, Budhathoki´s appointment to the top post of the bank had also raised questions about fairness in the selection process. In an interview with Rupak D Sharma of Republica he tried to explain that he did not cut corners to get the job. He also discussed ways to resurrect the financial health of the ´A´ class bank with a capital of Rs 9.47 billion. Excerpts:[break]
What do you have to say about the controversies surrounding your appointment?
First of all, let me tell you this: I´m a member of UCPN (Maoist). And it is also true that I and Maoist chairman Dahal went to the same college. But it is not appropriate to link these relationships with my appointment, as the bank has followed its due course while selecting the CEO. As you know, prior to choosing the new CEO, the ADBL had called for application from interested candidates and interviews were also conducted. I duly followed all these processes. So what is wrong with my appointment?
So how are you planning to steer the bank which has almost Rs 70 billion in assets?
ADBL must enhance its service quality so that it meets the expectations of today´s customers. In this context, we have already started upgrading our IT infrastructure so that we can link our branch offices located in remote areas with those in urban centers. These reforms -- a part of the Rural Financial Sector Development Program launched by the Asian Development Bank in 2004 -- will definitely give a boost to our business volume. Once the overhaul process is complete, other commercial banks will have difficulty competing with us as very few banks have established banking network like us.
What other roadblocks are in the way of the bank?
ADBL has not been able to mobilize people with proper qualification in proper areas. For instance, an engineer is working as a teller. This is because nobody wants to take a transfer and go outside of Kathmandu valley. That´s why I am planning to develop an employee performance evaluation system, under which people who join a rural branch are given more points. Since promotion and benefits that staffers get depend on the evaluation reports, I´m sure more people will be willing to take up jobs in rural areas once this system is introduced.
And what about improving financial health of the bank as the level of cumulative loss is still very high?
Yes, ADBL´s cumulative loss stands at Rs 870 million. The first Maoist government´s decision to extend around Rs 3.86 billion to the ADBL to write off outstanding loans of small farmers did give a lift to our chest, but we can´t expect similar policy to be introduced again. We hope we will be in a more comfortable position financially once we sell 30 percent of the bank´s share to a strategic partner. We have already initiated this process and once it is complete, we can mobilize the investor´s fund to stimulate growth.
The level of bank´s non-performing loans has also gone up this fiscal year.
Yes, the level of non-performing loan has gone up from 8.64 percent till the end of last fiscal year to around 11 percent in the first four months to mid-November. The NPL´s growth of around three percentage points in one quarter is not a joke and we are quite concerned about it.
What led to the growth in the level of NPL? And how are you planning to bring it under control?
The vacant position of CEO for around four months may be one reason. But I´m still not in a position to give you exact reasons as I joined the bank only on Sunday and I am still making inquiries about it. To shore up our balance sheet, we may either introduce interest waiver scheme so that borrowers can easily payback loan amount, sell non-banking assets (NBA) or lease out those assets to the government so that we can earn certain amount.
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