Political uncertainty, strong dollar result in low credit demand:Ganesh Kumar Shrestha,Century Bank Limited
"Low credit demand in recent days is also due to the appreciation of the
US dollar against the Nepali rupee, besides political uncertainty."
Ganesh Kumar Shrestha is the founding chief executive officer of Century Bank Limited. The former Nepal Rastra Bank (NRB) official has been running the second newest commercial bank for the last two years. The Kathmandu Post talked to Shrestha on Century’s progress and the overall banking sector. Excerpts.
Lately, excess liquidity has been troubling the bank ing sector. How’s the situation at Century?
We also have liquidity in excess of Rs 215.4 million. Compared to other bank s, it is not a big figure, and that we are not purchasing treasury bills issued by the NRB under the reverse repo.
How are you managing the excess liquidity and how is status of lending?
We have decreased the interest rates by 0.5-1 percent for the month after the bank ing sector started to witness excess liquidity. Although bank s have adequate liquidity, there is very little demand for loans. Even the approved loans have not been disbursed as borrowers are in a wait-and-see mode until the upcoming Constituent Assembly elections.
No big project has come for loan. That’s why credit growth has been slow in the last two months. By this time last year, we had extended loans worth Rs 1.5 billion, but so far this year, we are struggling to take our loan disbursements to even Rs 1 billion mark.
Based on the fact that just Rs 9 billion loans were extended by commercial bank s in the last two months, our loan disbursement figure is still high compared to others. Out deposit mobilisation of Rs 1.5 billion in the two-month period is also good against the overall sector’s deposit mobilisation of Rs 11 billion.
How has recent appreciation of the US dollar against the domestic currency affected the banking sector?
Low credit demand in recent days is also due to the appreciation of the US dollar against the Nepali rupee, besides political uncertainty. At this time of the year, the demand for loans—particularly the term and demand loans—peaks to import goods for Dashain and Tihar. However, due to the appreciation of the US dollar, the number of letters of credit (LC) opened for imports has decreased drastically. It has affected the term and demand loans.
As Dashain is round the corner, are you introducing special offers for the festival?
We are introducing two deposit accounts with relatively higher interest rates. First is “Century Platinum Saving Deposit Account”, in which depositors should deposit a minimum Rs 500,000 and they will get 8.25 percent interest. Another is “Century Rastra Sewak Deposit Account”, under which both government and private sector employees can put their money. They will get a 6.25 percent interest, which is higher than the normal 6 percent interest for saving depositors. Such depositors will also get additional facilities such as concession in the locker facility and while taking loans.
Century is one of the newest bank s. It may have more institutional deposits, whose share must be brought down to 60 percent of the total deposits as per the monetary policy. What are you doing on this front?
We have taken measures to reduce the size of institutional deposits. We have maintained higher interest rate on fixed deposits of individuals than of institutional deposits. We have offered 9 percent interest to individual depositors for a year, while the rate is 7-8 percent for institutional depositors. We have already brought down the share of institutional deposit to 68 percent from 72 percent, and we will continue to bring it down by increasing the share of individual depositors.
Has there been massive growth in home and auto loans amid this festive season?
Definitely, we have made efforts to increase these loans at a time when the demand from other sectors has not gone up. We have offered an interest rate of 10.5-11 percent on auto and home loans based on individual borrowers and location of their collateral.
What is going on with the initial public offering (IPO)?
Currently, we are in the process of getting our bank rated by a credit rating agency. ICRA Nepal has been doing that job. We expect the job will be completed either before or just after Dashain. After the rating is completed, we will submit the documents to the Securities Board of Nepal for its approval to issue the IPO. I hope we will get the Sebon approval within mid-December. We are confident that our IPO will be 10 times over-subscribed.
Do you have any plans for merger?
Of course. We are talking to various bank s and financial institutions on merger. But it will not happen until we issue the IPO. We are also exploring the possibility of a joint venture with foreign bank s. Our massive expansion of branches is also guided by attracting foreign bank s.
source: the kathmandu post,29 Sep 2013
photo: The Kathmandu post]
LINK
Ganesh Kumar Shrestha is the founding chief executive officer of Century Bank Limited. The former Nepal Rastra Bank (NRB) official has been running the second newest commercial bank for the last two years. The Kathmandu Post talked to Shrestha on Century’s progress and the overall banking sector. Excerpts.
Lately, excess liquidity has been troubling the bank ing sector. How’s the situation at Century?
We also have liquidity in excess of Rs 215.4 million. Compared to other bank s, it is not a big figure, and that we are not purchasing treasury bills issued by the NRB under the reverse repo.
How are you managing the excess liquidity and how is status of lending?
We have decreased the interest rates by 0.5-1 percent for the month after the bank ing sector started to witness excess liquidity. Although bank s have adequate liquidity, there is very little demand for loans. Even the approved loans have not been disbursed as borrowers are in a wait-and-see mode until the upcoming Constituent Assembly elections.
No big project has come for loan. That’s why credit growth has been slow in the last two months. By this time last year, we had extended loans worth Rs 1.5 billion, but so far this year, we are struggling to take our loan disbursements to even Rs 1 billion mark.
Based on the fact that just Rs 9 billion loans were extended by commercial bank s in the last two months, our loan disbursement figure is still high compared to others. Out deposit mobilisation of Rs 1.5 billion in the two-month period is also good against the overall sector’s deposit mobilisation of Rs 11 billion.
How has recent appreciation of the US dollar against the domestic currency affected the banking sector?
Low credit demand in recent days is also due to the appreciation of the US dollar against the Nepali rupee, besides political uncertainty. At this time of the year, the demand for loans—particularly the term and demand loans—peaks to import goods for Dashain and Tihar. However, due to the appreciation of the US dollar, the number of letters of credit (LC) opened for imports has decreased drastically. It has affected the term and demand loans.
As Dashain is round the corner, are you introducing special offers for the festival?
We are introducing two deposit accounts with relatively higher interest rates. First is “Century Platinum Saving Deposit Account”, in which depositors should deposit a minimum Rs 500,000 and they will get 8.25 percent interest. Another is “Century Rastra Sewak Deposit Account”, under which both government and private sector employees can put their money. They will get a 6.25 percent interest, which is higher than the normal 6 percent interest for saving depositors. Such depositors will also get additional facilities such as concession in the locker facility and while taking loans.
Century is one of the newest bank s. It may have more institutional deposits, whose share must be brought down to 60 percent of the total deposits as per the monetary policy. What are you doing on this front?
We have taken measures to reduce the size of institutional deposits. We have maintained higher interest rate on fixed deposits of individuals than of institutional deposits. We have offered 9 percent interest to individual depositors for a year, while the rate is 7-8 percent for institutional depositors. We have already brought down the share of institutional deposit to 68 percent from 72 percent, and we will continue to bring it down by increasing the share of individual depositors.
Has there been massive growth in home and auto loans amid this festive season?
Definitely, we have made efforts to increase these loans at a time when the demand from other sectors has not gone up. We have offered an interest rate of 10.5-11 percent on auto and home loans based on individual borrowers and location of their collateral.
What is going on with the initial public offering (IPO)?
Currently, we are in the process of getting our bank rated by a credit rating agency. ICRA Nepal has been doing that job. We expect the job will be completed either before or just after Dashain. After the rating is completed, we will submit the documents to the Securities Board of Nepal for its approval to issue the IPO. I hope we will get the Sebon approval within mid-December. We are confident that our IPO will be 10 times over-subscribed.
Do you have any plans for merger?
Of course. We are talking to various bank s and financial institutions on merger. But it will not happen until we issue the IPO. We are also exploring the possibility of a joint venture with foreign bank s. Our massive expansion of branches is also guided by attracting foreign bank s.
source: the kathmandu post,29 Sep 2013
photo: The Kathmandu post]
LINK
Comments
Post a Comment