GABV calls on banks to put people before profit

- Post Report, Kathmandu

Mar 8, 2017-

The Global Alliance for Banking on Values (GABV) called on banks and financial institutions to put people before profit to create jobs and help communities become self-reliant as it kicked off its ninth annual meeting on Tuesday.

The conference brings together 120 participants including CEOs and senior executives of 43 financial institutions operating in 28 countries across Africa, Asia, Australia, Europe, Latin America and North America. It is jointly organised by the GABV and Nepal-based NMB Bank and will continue till Thursday.

The GABV is an independent network of banks that use finance to deliver sustainable economic, social and environmental development, with a focus on helping individuals fulfil their potential and build stronger communities. 

“Banks and financial institutions have an enormous responsibility to help attain desirable economic growth, particularly industrial growth. In this regard, the role of value-based banking remains even more critical,” Prime Minister Pushpa Kamal Dahal told the inaugural session. Value-based banking, which is championed by the GABV, basically refers to strengthening local communities and supporting local entrepreneurs to help create jobs and improve the livelihoods of the people. This principle, according to the GABV, helps banks and financial institutions to grow in a sustainable manner.

“Sustainable banking helps the economy to add value and generate employment opportunities, which are essential for overall development of the country. Most importantly, sustainable banking necessitates, among others, mobilising long-term loans in the productive sector,” Dahal said. 

“In this context, the principles of sustainable banking as adopted by the Global Alliance for Banking on Values have become highly relevant for the banking system in a country like Nepal,” he added.

The history of banking in Nepal dates from 1937 with the establishment of Nepal Bank Limited. However, the sector could not grow in a desired manner for a long time, largely due to restrictions put on the operation of private banks. In the mid-1980s, the government launched the first phase of the financial sector reform programme and partially liberalised the sector. 

This policy shift led to the establishment of a bevy of foreign joint venture banks—Nepal Arab Bank Limited (currently known as Nabil Bank) in 1984, 

Nepal Indosuez Bank (currently known as Nepal Investment Bank) in 1985 and Nepal Grindlays Bank (now known as Standard Chartered Bank Nepal) in 1987.

Nepal’s banking sector made a big leap forward after the restoration of democracy in 1990. Since then, successive democratic governments have adopted open and liberal economic policies and focused on liberalisation of the financial sector. As a result, the country’s banking sector witnessed rapid growth.

Today, the country has 28 commercial banks, 57 development banks, 38 finance companies and 48 micro finance development banks. These institutions together maintain 4,589 branches, with each branch serving 6,196 persons.

Banks and financial institutions may have proliferated, but most of them are bunched up in urban areas. Around 44 percent of the branches are located in the Central Region where the capital, Kathmandu, is located. 

In contrast, only 5 percent of the branches are located in the country’s Far Western Region. “Banking cannot be left alone to bankers and should be made to connect and communicate with communities,” said Peter Blom, GABV chairman and CEO of Triodos Bank of the Nethe-rlands. “We have to change finance to finance change.”

NMB Bank CEO Upendra Poudyal said, “Banks that follow value-based principles do not face problems during economic downturns. This helps them expand their balance sheets even during adverse situations.”

The theme of the annual meeting is ‘Shifting the Financial Paradigm – Courage to Act Together’.

Published: 08-03-2017 09:17

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