--By Rashika Pokharel
Prabhu Bank Ltd
Prabhu Bank Ltd formed recently by merging four financial institutions—Kist Bank Ltd, Prabhu Development Bank Ltd, Gaurishankar Development Bank Ltd and Zenith Finance Ltd has finalized system integration and is currently integrating its staffs and corporate culture.
"The merger has concluded successfully. As the merger was among four financial institutions, we have tried to integrate all the staffs into a common platform for the growth and development of the bank. Integration process will take four to five more months but will definitely put up good results within this fiscal year," says Ashok Sherchan, acting CEO of Prabhu Bank.
To amalgamate cultures, styles and policies of four different financial institutions, the bank has been providing its staffs with regular in-house and out-sourced professional trainings. It has divided staffs in five regions. A regional manager is appointed for all of the five regions and these managers train staffs in the bank’s 112 branches across the country. Its focus, for the time being, is on addressing basic needs.
Besides this, the bank has been striving to correct its business figures, as they presently depict negative growth. "We are focusing on recovery of loans and are aggressively working on providing loans to new businesses. We did not have big corporate houses as our customers earlier. We are approaching them and many of the corporate houses have become our customers. Our efforts are paying off and we are confident that we will gain more of them," says Sherchan.
The bank believes that its biggest challenge is to turn negative figures into positive by the end of this fiscal year. It is trying to reduce bad loans and increase good loans and is confident to overcome the challenge.
New Launches and Plans
With its 112 branches, the bank has presence in all major places across the country. It is also looking at the possibilities of opening international branches. "If possible, by the end of this fiscal year, we will acquire more companies and merge other institutions. We are trying to work jointly with foreign banks and for that we are in talks with some potential international companies,” Sherchan said. To increase the size of capital, the bank has already collected money by issuing 10 per cent right shares.
As a part of its branding strategy, it is planning to introduce new products in market after Tihar, he informed. The bank has recently launched home loans and auto loan schemes with 7.4 per cent interest rate and other facilities. It has equally focused on building good relationship with its existing customers and has been reaching out to its inactive customers. "We have over 0.6 million account holders. Of these 30 to 40 per cent are inactivate and we are trying to get back in touch with them," he added.
Adjustment in the Name
During the merger, former Kist Bank lost its name while the new institution acquired its name from the erstwhile Prabhu Development Bank. Kist Bank had a very big network, good deposit mix, huge number of customers, but its name was not retained in the new bank, as was the practice in recent mergers of other Nepali banking and financial institutions. Commenting on this, Sherchan said the name was picked up by the investors. “The investors have the power to change the name of the bank, the entire board of directors and relocate them. Despite its good standing, Kist Bank had certain negative rumours attached to it in the market and the investors wanted to skip its name while naming the new bank. On the other hand, and which is the main factor, Prabhu is a popular name – both within and outside the country. So, Prabhu was chosen as the name of the new bank,” he informed. Prabhu Bank's sister remittance company "Prabhu Money Transfer" has good relationship with international organizations.
"Remittance volume is about 25 per cent of the country's GDP. Around six to seven billion rupees enters the country every year as remittance and this is equal to the deposits of 15 to 20 Nepali banks. To tap the remittance market, we used Prabhu as the bank's new name. As a recognised brand in the remittance market, we believe that Prabhu will help us in reaching out to people, winning their confidence and establishing ourselves fast," says Sherchan.
The Bank thinks that it has quite good opportunities for investment. "As a development bank earlier, we were not being able to use different instruments like national saving funds, shares,
foreign investment and were unable to participate in the foreign exchange. But now as an A class financial institution, we have access to all of them. We have enough resources and in the days ahead we will concentrate our investments in these fields," Sherchan said.
The bank's liquidity is quite good and its sister company Prabhu Money Transfer provides it with a good source for entering foreign currency exchange market. These factors have given the bank high hopes of doing good business in days ahead.
The bank is involved in various hydropower projects. "As a bank, we cannot directly invest. But we can provide credit facilities. We are involved with six hydropower companies as consultant member and in the agro sector. We are trying to work with big businesses in industries like cement, iron, poultry, trading etc. Presently, we are working with the Vishal Group, Jagdamba, Hama Iron among others and look forward to expand our customer base," Sherchan said. The current size of bank's loan investment is Rs 23 billion. However, it is aiming to make it Rs 30 billion within this fiscal year.
Bankers have to face lot of challenges in reaching agreement with the investors. This requires expertise in different sectors and procuring data. "We are dependent upon different organizations for data and face lot of hassle while getting work done at government offices. Sometimes challenges like time overrun might even affect the cost, bank's return, customers benefit and even the government's revenue," says Sherchan. Sometimes operational risks are much higher than credit risks. As operational risks are very dangerous and unpredictable, there are high chances of facing negative consequences, he said adding that the there is lack of skilled manpower in the banking sector.