LAHORE, May 21: A substantial part of restructuring of the Agriculture Development Bank of Pakistan (ADBP) is expected to be completed by September in the light of the findings of the bank’s portfolio audit to be finalized within next couple of years.

“We’re getting 75 per cent of our portfolio audited with the (financial) assistance of the Asian Development Bank in order to restructure and revamp the bank. However, it doesn’t mean that we are sitting idle waiting for the audit report to start work on our restructuring plans. We have already started work to build up the tarnished image of the bank and improve its unhealthy balance sheet,” ADBP chairman Istaqbal Mehdi told a group of journalists during a briefing at his Islamabad offices last week. The impact, he added, of the restructuring plan would be felt in two to three years. “We’re working on the principle of providing good services to our customers and make money. If you don’t offer good services you don’t make money.”

Half of the bank’s Rs95 billion portfolio is infected. Some 36 per cent of the non-performing portfolio is 90-day default and the rest of it is hardcore default. Both the central bank and finance ministry have been involved in its financial restructuring.

As part of its restructuring programme, the ADBP management is looking different possibilities of amending the bank’s “extremely bureaucratic charter under which it was set up in 1961 to make it a self-sustaining autonomous body.” One possibility is to make it a private limited company within the public sector ownership.

“We have not decided yet. The aim is to make the bank a viable commercial body that caters to the needs of its clientele,” Mehdi said. The bank has already reconstituted its board taking all new members from the private sector save one in order to “quicken the decision-making processes.”

The ADBP employs some 8,000 people in a countrywide network of 49 regional offices and 343 branches spread all over the country. Over 70 per cent branches are located in Punjab — 45-50 per cent in South Punjab. “Over the years, the staff has become too large. Some 15 per cent are stationed at head offices, 66 per cent in the branches, 13 per cent in the regional offices and six per cent in the audit department. We’ve surplus staff at our offices while we face shortage of young energetic people in the field. It’s due to lopsided recruitment in the past. We are trying to rationalize it as part of our organizational restructuring,” the chairman said.

He said managers of 24 regions had already been transferred to make the regions more efficient and corruption-free. In answer to a query, he said, the new managers had been chosen after “careful study of their careers.”

Replying to a question, he didn’t rule out downsizing of the bank staff, adding: “It’s also being reviewed but any decision will be taken after some time once the audit of portfolio is completed.”

The ADBP advances farm loans to the tune of Rs30 billion every year. Some 65 per cent of the credit is given for crop production — seeds, fertilizers, etc., and 35 per cent for development items like tractors, tubewells, etc.

This year, Mehdi said, the bank has “chalked out a special Rs4 billion credit disbursement plan for on-the-farm storage of crop, and water sharing or construction devices. Water (shortage) has become a major problem. We are focussing on it. This year we have financed 7,000 tubewells,” he stated.

Furthermore, the chairman said, the ADBP had planned to hold three conferences of stakeholders for feedback from the farmers as well as to rope in banking sector in to the business of farm credit as it offers them a big business opportunity. Moreover, the insurance and leasing firms are also being “induced” to come into this field for covering risk and to lease equipment to farmers.