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Nepal - Financial Sector Restructuring Project (English)

The main objective of the project is to support the on-going efforts to develop a healthier financial sector in Nepal which intermediates funds more efficiently and effectively to the benefit of all segments of society and in a manner which supports private sector development, increased investment, and faster growth. The project has the following four components: Component 1) Voluntary Retirement Schemes (VRS). The largest component is designed to support the VRS in Rastriya Banijya Bank (RBB) and Nepal Bank Limited (NBL) in an effort to reduce their costs and ultimately assist in making them more saleable/privatizable institutions. Component 2) Hiring of Sales Advisors. The hiring of the Sales (Privatization) Advisors will not happen until a year or so into the project when the banks are in a better financial condition and are therefore more viable privatization candidates. These Advisors will undertake proper due diligence, prepare a prospectus for the banks, and then undertake a road show to bring them to the point of sale to "fit and proper" private sector buyers as rapidly as possible. Component 3) Phase II: On-going Nepal Rastra Bank Re-engineering. The Financial Sector Technical Assistance Project has commenced a process of re-engineering within the central bank. However, reform, revitalization, and professionalization are complicated, long-term tasks. Greatly enhancing the capacity of NRB to oversee a prudently operated banking system is a prime objective of the series of reforms being undertaken within the sector. Whereas the Phase I reforms in banking supervision have focused on developing an appropriate off-site reporting system and a minimalist amount of on-site bank supervisory assistance, the Phase I1 reforms will assist in augmenting the on-site supervisory capacities to oversee the commercial banks. Component 4) Management Team Support. It is agreed, that the two banks may not be privatized by the time that the current three year term of the existing Management Teams expire (two years with a possible one-year extension). It is equally recognized that the banks should not revert to old management practices. It is therefore necessary to include funding for a contingency to cover the costs of continuing management team support up until the point of privatization.

Details

  • Document Date

    2004/01/22

  • Document Type

    Project Appraisal Document

  • Report Number

    27417

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    Nepal,

  • Region

    South Asia,

  • Disclosure Date

    2010/07/01

  • Doc Name

    Nepal - Financial Sector Restructuring Project

  • Keywords

    Corporate and Financial Governance;Financial Sector;annual per capita income;economic and financial analysis;Finance & Private Sector;project design and implementation;commercial bank;financial sector reform;banking system;Leaving the Bank;fight against poverty;banking system asset;financial information system;global economic slowdown;commercial banking system;private sector owner;financial sector activity;case lending scenario;commercial banking activities;banking sector restructuring;credit information system;regulation and supervision;international accounting standard;public sector institution;access to finance;segments of society;interest rate deregulation;development finance institution;foreign exchange liberalization;production and export;financial management activities;stock exchange;political interference;governance arrangement;insurance companies;international banking;large bank;nonperforming loan;financial health;Banking Supervision;investment operation;financial system;legal framework;payback period;great power;Macroeconomic Stability;financial cooperatives;audited account;security concern;supervisory capacity;civil disturbance;vested interests;project approval;net worth;severance package;financial datum;cabinet approval;political influence;bank privatization;single shareholder;Public Spending;bank supervisor;fiscal stress;macroeconomic implication;banking reform;finance company;political intervention;financial strain;foreign ownership;social impact;elderly parent;donor community;counterpart funding;donor funding;good performance;payment request;extended family;family head;public accountability;gender relation;environmental issue;government elite;alternative employment;Labor Union;standard approach;voluntary retirement;personal circumstance;family system;competitive basis;financial evaluation;cultural context;selection procedures;procurement monitoring;future need;local circumstance;focus group;affected population;adjustment operation;retroactive financing;local bank;systemic risk;Investment companies;Central Banking;constrained environment;administrative support;state control;staff support;computer equipment;transparent fashion;social implications;operational performance;general ledger;sustainable banking;banking legislation;successful financial;operational capacity;bank owner;commercial viability;banking institution;private bank;staff costs;privatization candidate;reporting system;international audit;bank's accounts;Safeguard Policies;partnership arrangement;results framework;financial contract;rural water;poverty alleviation;employment opportunities;employment opportunity;commercial entity;grant funds;increased investment;international standard;financial legislation;project costing;financial discipline;adequate disclosure;governance objective;inclusive growth;borrower commitment;taxpayer money;fiscal resource;poverty need;credit in sdr;education certificate;loan recovery;branch network;legal environment;public pressure;corporate practice;interest group;private shareholder;adverse selection;mutual consent;disciplinary action;management function;ghost worker;restructuring process;state-owned enterprise;distressed bank;political support;institutional change;cost-effective solution;private investor;increased security;Banking Regulation;nepalese rupee;safeguard policy;corporate accounting;lending decision;stakeholder participation;bank regulation;corporate governance;reform measure;online system;connected lending;financial control;direct supervision;regular meetings;reform effort;popular support;political spectrum;political group;political communication;agreed time;political circumstances;

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Citation

Nepal - Financial Sector Restructuring Project (English). Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/754261468758133757/Nepal-Financial-Sector-Restructuring-Project