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Umesh Shrestha, another name of successful entrepreneur, is the Chairperson of the Prime Bank and also the parliament member from the Nepali Congress. He is involved in different sectors like banking, education, agro, hydro, tourism and entrepreneurship. He, who was born in Bhojpur, started his entrepreneurship four decades ago with thousands and now he, founder of Little Angels School in Lalitpur, is the boss of millions. Here are some of the excerpts of interview taken with banker Shrestha.
Could you tell me in brief about you and the story of bank as well?
I came to study in Kathmandu around 44 years ago from Bhojpur district. I used to work hard before and after the college tenure mostly morning and evening. I experienced the scarcity in life, and also I came to know what is meant to be poor. We established Prime Bank 10 years back by a team of 365 members
How did you come to this sector and was your struggling time?
I believe in work, and came to banking sector from education. I am involved in hydro, tourism, agro and entrepreneurship now.
How is banking condition in Nepal ?
There are nearly 30 commercial banks in Nepal. In the small country like Nepal, 7/8 banks are enough. There is high competition among the banks. Economy of Nepal is running through the remittance. Banks have not contributed a lot what they can do to develop the nation. They are always working in favor of rich people rather than poor ones.
Have you ever experienced any hassles because of the norms of the central bank?
The central bank has no long term policy. Each year, it comes with a new regulation. The central bank and the government have money, but commercial banks have faced liquidity crunch. Banks are required to stock 20 percent. The central bank has directed commercial banks to have eight billion from two billion capital in two years’ period. The time is too short to collect such a huge amount. Policy of the central bank is oriented only to tighten rules for the commercial banks than to facilitate. Recently, the central bank came with new Banking and Financial Institutions Act (BAFIA) system. It is good policy that controls banks in Nepal.
Banks provide low interest rate of deposits, but they charge high interest rate of loan with costumers. Have you thought to narrow down gap between interest rates of deposit and loan?
According to the new policy, bank cannot go beyond more than a gap of 5 percent interest rate of loan and deposit.
Banks decrease interest rate for depositors when saving interest rate is decreased, but banks don’t decrease loan interest rate in spite of decreasing the rates of savings and deposits. Why so?
Bank will decrease loan interest rate too if it is decreased. Because there is high competition in the banking market. If we cannot do so we can’t be able to sustain in the high competition.
Why do you take interest of interest charge for installment of loan payments?
Bank discipline is very high. It is required to send the report in each three months to the central bank. Even in other countries they will do so. It can be taken into consideration if it is highly affected.
What is good for payment condition in Nepal?
It is a system issuing pay checks even if the deposits are not enough. There were misuse of good for payments in Nepal. So, the central bank controlled it to save the banks from bankruptcy.
What is the provision of project and personal loan? Is it costumer friendly to work on different projects?
For the personal loan, people get maximum Rs. 10 Million. They can spend on the titles whatever they like. For the project loan, people should come up with the concrete ideas and plans along with strong collaterals. They should not focus only to import the international goods, they should come up with new growing and productive ideas. However, new generations prefer to IT and animation based business instead of productive ones and market demands based.
Are you planning to provide loans to young generation who are going abroad?
It is the serious issue. The government should play a vital role to bring comprehensive rules ensuring them to get loans without collaterals. But, in Nepal, it is hard to grow new entrepreneurs because it is difficult to get loan who do not have strong collaterals. Besides, interest rate of loan is high. The services of banks are only concentrated on cities.
Banks demand citizenship certificate and utility bills to open accounts even of family members repeatedly. Why don’t you make this process easier? Can rented people produce utility bills for KYC?
People can easily open account with a citizenship card. Now, bank account opening is very simple. People can do it with one rupee. Slowly it will be the paperless system. Further each holder has separate file so bank ask for the required documents individually. Clients need to understand the process
How can banks contribute to the development of a nation ?
Development of a nation depends on the government how it brings policies and rules, and maintain rule of laws. The state should focus on infrastructure development and industries, exploiting the human and natural resources. The banks are ready to assist the government for the development of the country.
How can we earn money?
We need to have a vision. Technical skill is required. Besides, hardworking, dedication, positive mind, risk taking capacity are required. Nepal has tremendous potentiality in various sectors like hydro, agro, tourism, trading and service industries. We have to tap the potentials.
What is your most painful and most exciting experience?
I belong to the educational field. It is my main profession. I chose to other field to diversify my mind. I have lots of visions. I wanted to open a university but the government didn’t grant the permission. I have everything including students, different faculties, own property but still couldn’t open university. It is really painful for me. Now I am involved in other fields because of this fact. However, I am happy for what I have done successfully.