RBB like to get huge capital injection from govt

REPUBLICA
KATHMANDU, Oct 6: Rastriya Banijya Bank (RBB), the largest bank of the country in terms of deposits and coverage, has floated a plan to make its net-worth positive and lower Non-Performing Assets (NPA) to less than 5 percent within the next two years.
According to the plan forwarded to the central bank for final approval, the RBB has set a target to recover around 50 percent of the outstanding Rs 4.82 billion, which was categorized as bad loan, within the next two years.
"If the plan of recapitalizing and recovering the bad loans gets implemented, RBB will emerge as the strongest bank in the country," said Janardan Acharya, the chief executive officer of the bank.
The NPA ratio of the second oldest bank in the country with largest branch network came down to 15.68 percent by the end of last fiscal year ending mid July from 21.63 percent a year earlier. The total value of negative net-worth of the bank currently stands at Rs 14.66 billion.
Along with extra efforts made on recovery of bad loans, the bank has no NPA on the loans that were extended after the management of the bank was handed over to private management, he said. Acharya also informed myrepublica.com that the government is seriously looking into all options to make the net-worth of the RBB, which at the moment is negative by over 14 billion, positive. "Issuing special bond and divesting 15 percent share of Nepal Investment Bank that the RBB holds are two major options that are on the table to raise the capital base of the bank,” said Acharya.
According to concerned government official, a recent meeting of High Level Committee on Financial Sector Reform, chaired by the Finance Minister Surendra Pandey, agreed in principle to issue such bonds and the Nepal Rastra Bank (NRB) has been asked to detail procedures of bond issuance.
Though the amount is yet to be decided, the total value of the special bonds is likely be to around Rs 10 billion, said the official. "Along with the special bond, the total negative net-worth of the bank can be made positive if we become successful in divesting 15 percent share of Nepal Investment Bank that is valued at around Rs 4 billion at the current market price," said Acharya. He further said that the bank has a plan to offer 30 percent of its paid-up capital to general public.
The bank that was able to manage a record net profit of Rs 2.04 billion during the last fiscal year is also planning to set up offices in major Indian cities to tap remittance business opportunities.
"First we are planning to open an office in Indian capital New Delhi soon and if things go as plan, we will open our offices in Chennai and Mumbai within a year," Acharya elaborated.