Rastriya Banijya Bank (RBB) has targeted annual profits of Rs 4 billion  after three years by expanding its business. The state-owned bank said that action plans were being implemented to achieve the aim.

Speaking at the 49th anniversary ceremony held at RBB headquarters, Chief Executive Officer Krishna Prasad Sharma said the bank was implementing a business plan that projected higher profits. RBB earned a net profit of Rs 1.52 billion in the last fiscal year. As per the scheme, it proposes to increase deposits to Rs 121 billion and lending to Rs 78 billion in the next three years. As of the second quarter of the fiscal year, RBB had collected deposits of Rs 96 billion and provided loans of Rs 52 billion. 

RBB has been implementing the business plan and the capital after the central bank asked it to do so expressing concern at its low lending level. Sharma also described how the bank had been recovering after it plunged into a crisis a decade ago. 

According to Sharma, RBB has been able to reduce its bad debts to 5 percent from 62 percent a decade ago when financial sector reform programme was implemented there and at other state-owned banks.

He said that the negative net worth status had already turned positive and that its total capital has already reached Rs 8.58 billion. “The bank has moved ahead with the objective of increasing the capital adequacy ratio to the required level and removing its cumulative losses within the current fiscal year,” he added. During the event, Finance Minister Shanker Prasad Koirala asked RBB to maintain a balance between deposits and credit and ensure that lending expands along with deposits. He also told RBB directors and the management to work hard as there was stiff competition from the private sector. 

Similarly, Nepal Rastra Bank Governor Yubaraj Khatiwada told RBB to maintain the spread rate at 5 percent as private sector banks were required to do. “The banks should move to increase non-funded income instead of depending on earning profits through the spread rate,” he said. Governor Khatiwada asked the bank to step up its efforts to recover defaulted loans to improve its financial situation. He also urged the country’s largest bank to focus on decentralizing its services. “RBB has been losing business due to its centralised system in office procedures,” he said.  

Likewise, Finance Secr-etary Shanta Raj Subedi said the bank needed to focus on diversifying its portfolio. Subedi also suggested forming a standard to waive interest in order to recover bad debts.