Cabinet appoints Dr Khatiwada as central bank governor and Mallick as PAF vice chairman

The cabinet on Friday appointed Dr Yubaraj Khatiwada as the governor of the central bank and Bidhyadhar Mallick as vice chairman of Poverty Alleviation Fund (PAF).

Khatiwada will be the 15th governor of Nepal Rastra Bank that has remained without a governor for almost two months, after former governor Vijaya Nath Bhattarai’s retirement on January 31.

In absence of governor, the central bank has not been able to publish mid-term analysis of the Monetary Policy — that needs a serious relook.

The central bank remained without a head as there was a serious rift among the ruling political parties on the appointment.

The current vice-chairman at the National Planning Commission, Khatiwada will have a challenge to contend with depleting forex reserves, negative balance of payment, rising inflation and exposure of the financial institutions to riskier sectors as the governor.

However, his long experience at the central bank will help him face the challenges. He has retired as an executive director from the central bank only a year ago.

The government had formed a committee headed by finance minister Surendra Pandey -- with former secretary Dr Bhola Chalise and Govind Bahadur Thapa -- to recommend the names for governor’s post, according to the Nepal Rastra Bank Act. The committee had recommended Dr Khatiwada, the vice-chairman of the National Planning commission, finance secretary Rameshwor Khanal and deputy governor Bir Bikram Rayamajhi.

Khatiwada began his career in Nepal Rastra Bank in 1983. He has also worked as an economic adviser and was a member of the NPC.

Khatiwada -- the PhD holder in monetary economics from Delhi University in 1991 -- was born in Taplejung on August 13, 1956. He did his masters in economics in 1981 and masters in public administration in 1984.

Kahatiwada, who started carier in Nepal Rastra Bank in 1983, has also worked as an economic adviser and was a member of the NPC. He is also guest lecturer of Tribhuwan University, Purbanchal University and Kathmandu University.

He has worked on improvement of poor industries, privatisation of public enterprises and fiscal reform committees. President for the two terms of Nepal Management Association (MAN) Khatiwada has also worked in Mongolia, Bhutan, Afghanistan, Laos, Sri-lanka, Bangladesh and Bhanuatu as a senior economist of UNDP.

ADBL readies for largest public issue

Agriculture Development Bank Ltd (ADBL) has appointed Ace Development Bank Ltd as the issue manager for its mega initial public offering (IPO) of 96,00,000-unit shares worth Rs 960 million.
Janak Raj Shah, chief executive officer (CEO) of ADBL, and Siddhanta Raj Pandey CEO and MD of Ace Development Bank Ltd signed an agreement on behalf of their respective organisations here today. The agreement paves the way for ADBL to issue the largest ever public offering. By next month, the bank will float the primary issue.
Three issue managers -- Ace Development Bank, NMB Bank and NIDC Capital Market -- had applied to ADBL to get the post of issue manager. But Ace got selected.

"Established as a development bank, ADBL is now a commercial bank," Shah said adding that the new financial institutions (FIs) cannot match its network strength. The growing number of FIs are a concern for some economists. But Shah thinks the growing number of FIs is beneficial for the economy as they will push up the rate of interest. He was of the view that policy rethink is the need of an hour as the concentration of financial insititutions is increasing in urban areas leaving the rural areas far behind.
"More FIs are needed to monetise the whole economy," he justified adding that rural sectors are still out of reach of the banks. "The increasing number of FIs and increasing deposit indicate that the market is not saturated yet," said Shah.
The growing number of financial institutions has also led to cut-throat competition and growing consumerism which has been blamed for sub-prime loan leading to the global financial crisis.
"Banks also must face business cycle and Nepali banks will have to face it sooner or later," said Shah, who is also the president of Managament Association of Nepal (MAN). He added that competition would bring good results. "FIs will be selective in investment, maintain professional ethics and culture and risk mitigation practices.
"However, as a commercial bank ADBL has also started consumer banking. Shah thinks that ADBL's case is different. "The other FIs have limitations and are forced to concentrate on consumer segment," he said, "That could lead to problems."His prescription to the central bank, Nepal Rastra Bank (NRB), is to do assessment with right policy measures and be more vigilant in mitigating risk. "The lack of a long term policy and inconsistency in policy matters have hit us and we are only into patch-up work," Shah said.
Talking about financial reform programme and privatisation, the wholly government-owned commercial bank's chief was of the opinion that Indian and Chinese experiences could be imitated. "They have not completly divested their banks but entered into partnetships," he added.Banks can be wheels of change too. "Development and commercial banks should be linked up," ADBL's first CEO Shah said. He pointed out, "Capital is key in development activities, but in Nepal the concentration of capital is in urban areas only -- that could create imbalance."

Density, distance and division; theme of World Development Report

Nepal lacks 3Ds -- density, distance and division -- according to a World Development Report: Reshaping Economic Geography' -- made public here today.
"Density, distance and division – the focus of this year’s report -- are key to growth," the report said arguing that the most effective policies for promoting long-term growth are those that facilitate geographic concentration and economic integration, both within and across countries.
"The world's most geographically disadvantaged people know all too well that growth does not come to every place at once," said Indermeet S Gill, director of the World Development Report (WDR) and chief economist, Europe and Central Asia. "Markets favour some places over others. Fighting this concentration tantamount to fighting prosperity. Governments should facilitate the geographic concentration of production," he said adding, "But they must also institute policies that make the provision of basic needs -- schools, security, streets, and sanitation -- more universal."
The new World Development Report also challenges the conventional assumption that economic activities must be spread geographically to benefit the world's most poor and vulnerable. Trying to spread out economic activity can hinder growth and does little to fight poverty, it said. "For rapid, shared growth, governments must promote economic integration which, at its core, is about the mobility of people, products, and ideas."
"Throughout history, mobility has helped people escape the tyranny of poor geography or poor governance," said Gill. "The report sees this as part of a vital process of economic integration, since mobile people and products form the cornerstone of inclusive, sustainable globalisation."
Integration should be the pivotal concept in the policy discussions involving the location of production, people and poverty in particular, debates on urbanization, regional development, and globalisation. Instead, all three overemphasize place-based interventions.
"The ideas that the report brings to the table are highly relevant to the transitional period that Nepal is currently undergoing," said Susan Goldmark, World Bank Country Director for Nepal. "Economic planners and policy makers in Nepal are discussing many of the same issues in the preparation of the government's National Development Strategy and ideas presented in the report should be useful as the country embarks on the path of redefining institutions to support a peaceful, inclusive and prosperous New Nepal."
The report reframes the policy debates to include all the instruments of integration -- common institutions, connective infrastructure, and targeted interventions. By common institutions, the report means regulations affecting land, labour and commerce and social services such as education and health financed through taxes and transfers.
"Infrastructure refers to roads, railways, ports, airports, and communications systems. Interventions include slum clearance programmes, special tax incentives to firms and preferential trade access for poor countries," said Rameshwor Prasad Khanal, secretary at the finance ministry. He also shared Nepal's experiences in planning and implementing development.
The report launching was co-hosted by the World Bank Nepal Office and Management Association of Nepal (MAN). MAN president Janak Raj Shah said Nepal was still in the discussion phase of how to shape the economy. "Reshaping the economy is a mammoth task," he added.National Planning Commission vice-chairman Dr Guna Nidhi Sharma chaired the event while former chief secretary Dr Bimal Prasad Koirala acted as moderator.

Anil Shah is manager of the year

Nabil Bank chief executive officer Anil Shah has been conferred Manager of the Year Award-2008. Similarly, Maiti Nepal chairperson Anuradha Koirala bagged the Outstanding Management Award for 2008
President Dr Ram Baran Yadav presented the awards at a function organised to mark the 28th National Management Convention and annual general meeting of Management Association of Nepal (MAN) in Kathmandu today. MAN annually awards best managers. Dr Bhagwan Koirala was the Manager of the Year 2007.
Speaking on the occasion, President Dr Yadav urged everyone to unite as per the norms and values of democracy and move ahead together to develop the country.
MAN chairman Rameshwor Khanal pointed out that no organisation could move ahead without good management.
Administrative officers Yadav Prasad Poudel and Rekha Sigdel were also honoured on the occasion.

Dr Koirala manager of the year

Dr Bhagawan Koirala, Director of Sahid Gangalal National Heart Centre has been awarded the Manager of the Year Award-2007, while Sangeeta Niroula, president of Swati has been conferred with Woman Manager Recognition Award-2007 by Management Association of Nepal (MAN).
Speaker Subash Nembang presented the awards at a function organised by to mark the 27th National Management Convention and annual general meeting of MAN in Kathmandu.
The meeting held during the first half of the day was followed by a brainstorming session on management development scenario in Nepal. Some of the leading management experts, corporate heads and entrepreneurs as well as officials of the World Bank attended the programme.