Government banks no sitting ducks, warns Finance Minister Surendra Pandey

Government banks are regarded as agencies whose loans need not be repaid, said Finance Minister Surendra Pandey here today.
"These institutions are easy targets for defaulters as they think that they can use their political connections to default on loans," he said while talking to newly-elected memebers of the Society of Economic Journalists Nepal (Sejon) at his office in Singha Durbar.
Pandey also blamed the private sector for the failure of Nepal Bank Ltd (NBL) and Rastriya Banijya Bank (RBB). These two banks are making progress under the financial sector reform programme, though they still have negative networth.
"The government cannot inject capital into NBL. There is a 40 per cent government stake in it. RBB, a completely government bank, has to be provided options to bring its negative capital to positive. Both have to be made strong, professional banks," Pandey said, remaining cautious on the issue of privatisation of these two big banks.
According to Pandey, there are three options: Inject capital -- which the government is not willing to do, or divest the equities of NBL and government-owned RBB to private parties through a competitive bidding process, albeit gradually or by issuing bonds. "The committee to look after the continuation of financial sector reform process is looking into it seriously and soon there will be some solution," he asured.
The committee has the finance minister, Nepal Rastra Bank (NRB) governor, vice-chairmanof the National Planning Commission (NPC) and finance secretary.
Talking about his ambitious revenue target in the budget for the fiscal year 2009-10, Pandey said that the revenue target though described as ambitious is achievable. "Collection till date is satisfactory and we can meet the target," he added. The government has targeted to collect Rs 176 billion revenue within this fiscal year.Pandey also assured that development activities would go ahead smoothly. "Unlike last fiscal year, the government will spend on development activities," he said adding that the targetted big projects like Upper Seti, Sikta project and Fast Track road will start soon.
He has earmarked Rs 106 billion for development expenses. "If the ministries cannot spend their budget, they wil be allocated less budget next year," he said expressing his commitment to allocate the budget to ministries on the basis of progress and end the culture of releasing and transferring budget at the end of the fiscal year.