Anil Shah is chief executive officer of  Mega Bank. As a CEO of new bank, he has a big task ahead of him to establish Mega as a banking giant. He talked to The Kathmandu Post about the progress Mega has achieved over the last six months since it opened and the challenges it is facing. Excerpts:

 How have banking operations been for Mega during the last six months?
Despite a fragile political and economic situation over the last six moths, our bank’s performance was better than what we had targeted. We can see better days ahead as the country is likely to see political stability with the formation of a new government. Our operating profit before provision stood at Rs 36.1 million in the second quarter while the operating income amounted to Rs 116 million.

 The banking sector is facing a crunch in deposit growth. How has it been for Mega?
It is a common problem for all the banks. That’s why Mega has not been untouched by this trend. However, we have been able to collect a good amount of deposits within a short span of time compared to other contemporary banks. Our latest deposit figure stands at Rs 3 billion and loans at Rs 3.5 billion. We have opened more than 15,000 deposit accounts in just six months. I think it is a great achievement within a short span of time.

Being a new bank, you have enough capital amount for lending. Are you also facing a liquidity crunch like other banks?
It is also a common problem for the banking sector. We have made lending of the capital amount along with deposits. There is pressure on liquidity as the government has not been able to spend the development budget. That’s’ why we are lending selectively and cautiously.

After the central bank’s directive to keep the difference in interest rates on savings deposits at not more than 2 percent, many banks including Mega increased the interest on general savings. What impact has it had on deposit collection?
After the central bank’s directive, we kept the interssest rate on general accounts at 8.5 percent and on special accounts at 10.5 percent. It helped deposits to grow in our bank. But we were compelled to increase the lending rate too due to the increased cost of funds. What impact it will have on profits is yet to be evaluated as we are a new bank and we don’t have previous data to compare with.

How is your lending in the real estate sector?
Our bank opened at a time when the realty sector was facing a slowdown. That’s why our lending in the sector is almost nil. There might be a negligible amount of lending in the sector to our corporate clients who are also involved in the realty sector. Otherwise, we have kept our lending out of the realty sector.

What possible risks do you think the banking sector may face this year?
The main risk is political risk as political uncertainty has been at the core of economic problems. In terms of banking practices, a manpower crunch has been the major bottleneck to ensure healthy banking development in the country. There are so many banks and financial institutions, but there are not enough and capable human resources.

Nepal Rastra Bank is set to review the monetary policy shortly. What do you expect from the half-yearly review?
I don’t expect much change in the monetary policy as the situation of the economy and the banking sector has not changed from what it was seven months ago. I hope the policy will be to control inflation and encourage development expenditure.

What are your plans for the next five years for Mega?
Our aim is to expand access to financial services to the general public. Our slogan is “From Plough to Hydro”, and we will try to make it come true. We will be expanding our branch network to 50 within three to five years with the strong backing of innovative technologies.

source: The Kathmandu Post (2011)," Our slogan is ‘From Plough to Hydro’: Anil Shah, CEO, Mega Bank", The Kathmandu Post, 17 Feb 2011

photo: The Kathmandu Post