Lumbini Bank takes a turn around, churns profits

Lumbini Bank has set an example on how Nepalis themselves can turn a 'sick' financial institution into a sound and healthy one.
"When I took over the management of the bank four years back, it was in a state of collapse," said Shovan Deve Pant, CEO of the bank that was taken over by central bank in 2001 due to poor management. The central bank has clamped sanctions of March 7, 2006 restricting all major activities of the bank due to its high NPA, negative capital, serious noncompliances in various areas of accouting and income recognition and loan loss provisioning then.
After almost four years, Lumbini Bank has achieved capital adeqacy ratio of 24.23 per cent that is much above the regulatory requirement of 10 per cent and one of the best in the industry, he said adding that the NPA -- another barometer of the bank's financial health -- has come down to 4.66 per cent from 40.54 per cent in 2006.
The central bank has been restructuring the Nepal bank Ltd and Rastriya Banijya Bank with the grants. But still the restructuring of these banks are going on.
The zero deviation between unaudited and audited report of the bank for the fiscal year 2008-09 also reveals that the bank has improved its internal auditing. The bank has posted Rs 332.20 million profit in the fiscal year 2008-09.
"We now complied to all the central bank directives in regard to capital, NPA and increased income by more than five times in very difficult situations of emabargoes from NRB," Pant added.
After its financial health improved significantly, the Nepal Rastra Bank board has lifted all the sanctions from March 28, 2010. "We are proud to be one of the safest bank in Nepal's financial market," he added.