Big things come in small packages for Mega Bank Nepal Limited. When the bank was established around two years back, its vision to be a bank for every Nepali grabbed the attention. Driven by the slogan ‘Halo to Hydro’ (Plough to Power), the bank started its journey as a commercial bank with 1219 promoters from 63 of the country’s 75 districts.
Financial inclusion is one of the major objectives and vision of the bank which strives to become a truly people’s bank. This objective also provides the bank with a route to profitability. It is such simple and small visions and objectives which make the guiding policy of Mega Bank.
‘We will make a path through the jungle, not through a six lane highway and show others that there is a business there as well’
According to Anil Shah, Chief Executive Officer of Mega Bank, the Small and medium enterprises (SMEs) segment is a priority for the bank. “The SME segment is one of the good opportunities for the bank. It is in fact the best investment sector for any bank. Mega Bank has continuously tried to reach out to small enterprises and individual clients,” he says. Similarly, micro credit and rural lending, too, are at the top of the bank’s priority list. “We want to invest 40 per cent out of our total lending of Rs 13 billion in the SMEs,” Shah adds.
Shah believes that SMEs are the backbone of Nepal’s economy as almost every village and every street of every town has small shops. He thinks that these shops need to be supported by the banking system. According to him, Mega Bank dreams to create numerous Bhatbhatenis – an epitome of SME success - across the country. That’s why the bank has focused on SMEs right from its commencement. “We have a branch which has lent micro credits to around 20 thousand sugarcane farmers. They need fertilizers. So, our corporate customers import fertilizers and sell it to these farmers. The farmers are able to pay them by taking micro loans. So, we have a value chain with SMEs in the middle,” Shah explains.
Although it is mandatory for a commercial bank to issue initial public offerings (IPO), Mega Bank perceives this provision as a means to be more financially inclusive. Shah opines that it is always better when wealth is distributed among people rather than being concentrated among a handful of corporate promoters or big joint ventures outside the country. “Our vision is to issue IPO to as many Nepalis as possible and make them our shareholders. That is part of our aim to spread wealth,” he shares.
The bank is planning to issue its IPO worth Rs 700 million in the third quarter of the current fiscal year. This will increase the bank’s paid-up capital to Rs 2.3 billion from Rs 1.63 billion at present. Around 70 per cent of the bank’s stakes are owned by the promoters while the remaining 30 per cent with the general public. Interestingly, Mega Bank’s promoters, too, are the general public, unlike in any other commercial bank where the ownership remains with a handful of corporate houses or joint ventures. According to Shah, the bank has 1291 promoters from 63 districts and they have invested from Rs 1 million to Rs 10 million in Mega Bank.
“The wealth that the bank creates goes to Nepali families spread across the country,” says Shah. That was something that inspired Shah to be a part of the bank since its initial days. He believes that Nepal should have a banking model that is original – not copied from north, south, east or west. “It has to be intrinsically Nepali. Let the world copy it,” he says, adding that the ‘Mega Model’ is essentially a start towards that journey.
The Mega Model is a different attempt of the bank to serve the entire economic pyramid. This pyramid, according to Shah, has corporate and high class banking clients on the top and SMEs in the middle and general customers – rural farmers, SME owners and other micro credit seekers - at the base. The bank has a separate unit named ‘Mega Micro’ that reaches out to the villages to serve the ‘Halo’ level. He says, “This is neither a Bangladeshi model nor a private bank model. When we make this successful, this is the model which is going to be followed regionally as well as globally.”
Within the first two years its commencement, the bank has earned over 87,000 customers who have deposited more than Rs 11 billion there. The bank’s total investment is around Rs 10.5 billion. Shah is quite content with the bank’s achievements in its initial two years.“In these two years, Mega Bank has reached where we wanted it to. However, the foundation is still being laid and there is a long way to go,” he says, adding that it would take three to five more years before the bank has a well-built foundation. “In 100 to 150 years from now, people will be happy to be a part of this bank. Banking is not a short-term industry. The decisions that I as a CEO or the board takes now must add long-term values to the bank. Decisions should be taken with the at least the next 10 or 20 years in mind,” he explains.
One of the greatest achievements of the bank in its first two years is the creation of a well known brand name. Shah who has helped create larger-than-life brand images in the past has proved his mettle at Mega Bank as well. “People should be forthcoming to say that they want to be part of this bank either - be it as a customer, staff or a shareholder,” says he, “An excellent brand image can do that and that is our destination. Everything we have done in the first two years is a step towards that destination.”
Shah gives credit to the management team which the bank calls the ‘Mega Team’ and the promoters’ vision for everything the bank has achieved till date. He says that the bank has got the team that believes in the ‘Mega Model’. “I don’t claim that we have the best banking team in the country, but for our vision, there isn’t a better team,” boasts Shah. The Mega Team has 429 employees. The bank’s working environment is guided by the philosophy of ‘professionalism with a personal touch’. He believes that the working environment has to be comfortable and friendly along with the respect for organisational hierarchy. “Our work culture is finally translated into the customer services. We offer the best professional service with a personal touch,” claims Shah.
The bank’s management mantra is people, people and people. “It is all about leading people and finding out their strengths. Know what their strengths are and give them roles accordingly,” says Shah. He adds that the bank always gives priority to qualified people. Another management mantra is time management. The bank keeps its employees always prepared to accept any challenge or changes that may come out of the blue.
Any organisation is constantly surrounded by numerous seen and unseen challenges and forces. Shah states, “Mega Bank and Mega Team do not use the current political environment as an excuse.” That is one of the reasons why the bank brought in the concept of branchless banking in a country like Nepal where it’s not possible for any bank to have a branch in every village. However Mega Bank wants to have its services available in every village through branchless banking. He explains, “A person working in Doha can send money to his/her family in Dolpa with just a cost of around Rs 300 in less than three minutes. Why can’t a bank situated in Kathmandu provide its financial services to the people in remote Nepal?”
The bank began its branchless services last year and is now planning to expand them to across the country this year. As of now, the bank has 28 branches and offers branchless banking from 16 points and is planning to add 30 more such pints this year. “We want to have hundreds of digital branches in the future because having physical presence in the urban areas alone won’t help the vision of Halo to Hydro.”
Rural banking is one of the top agenda of Mega Bank. At a time when a majority of commercial banks are based in the urban areas, Mega envisioned being a partner in rural banking. “We will make a path through the jungle, not through a six lane highway and show others that there is a business there as well. Once we do that, other financial institutions will follow us and together we will build a six-lane highway,” says Shah.
- 1291 Promoters
- The vision of Halo to Hydro
- Young team that is relatively new to banking
- Rural areas
- External environment
- Political environment