Global IME Bank to merge again

KATHMANDU, NEPAL

Global IME Bank has geared up for another merger — this time with Gulmi Bikas Bank.

The class ‘A’ bank signed a memorandum of understanding (MoU) with Gulmi Bikas Bank on Tuesday. Two weeks back, Global IME Bank and Social Development Bank had signed a MoU for their merger.

Global IME Bank was formed last year following a merger between commercial bank — Global Bank — and two finance companies — IME Financial Institution and Lord Buddha Finance.

After the completion of the current merger process, Social Development Bank will be the fourth entity to get merged with Global IME Bank, while Gulmi Bikas Bank will be the fifth.

At present, Global has a paid up capital of Rs 2.25 billion and has been able to earn Rs 361 million as profit in the third quarter of the current fiscal year. After the merger with Gulmi Bikas Bank, its paid up capital will increase to Rs 2.5 billion, excluding Social Development Bank.

Gulmi Bikas Bank that had started operations in September 2007, has a paid up capital of Rs 25 million. It had earned a profit of Rs 932,070 in the third quarter of the current fiscal year. However, Social Development Bank that started operations in 2010 October, has been struggling for some time.

Following signing of MoU, Global IME Bank’s share trading has been suspended by Nepal Stock Exchange until the conclusion of the merger. Gulmi Bikas Bank, that has 250,000 units of ordinary shares listed at Nepse, will also be suspended for the time being. Its shares were last traded at Rs 141 per unit.

Source: The Himalayan Times, 30th May 2013
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Banks increase interest rates on institutional deposits 

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Banks increase interest rates on institutional deposits

KATHMANDU, NEPAL

Interest rates on institutional deposits are continuing to go up as liquidity shortage triggered by government´s lower capital spending has compelled some commercial banks to quote higher prices to maintain regulatory credit to deposit ratio.

However, some bankers say this is a short term phenomenon and rates will come down once the new financial year begins. As per information obtained by Republica, commercial banks are currently offering over 11 percent interest on institutional deposits -- money parked by companies in banks -- from around 9.5 percent one and half months ago.

Some of the banks that are offering higher interest rates include established institutions like Nepal Investment, Himalayan and Bank of Kathmandu.
One of the reasons why few commercial banks are paying more on deposits is the central bank´s provision that makes it mandatory to maintain a credit to core-capital-cum-deposit (CCD) ratio of 80 percent.

Since this provision bars banks from extending loan of more than Rs 80 from every Rs 100 collected as deposits, some of them are now trying to attract as much deposit to maintain the ratio.

In the third quarter ended April 13, average CCD ratio of commercial banks stood at two-year high of 75 percent.
The last time when CCD ratio had hovered at this level was in the third quarter of financial year 2010/11. Since then quarterly CCD ratio has moved in a band of 68 percent to 74 percent.

“Yes, many commercial banks are maintaining tight CCD ratio. This is because of liquidity shortage,” Ajay Shrestha, CEO of Bank of Kathmandu, told Republica. Krishna Prasad Sharma, CEO of state-owned Rastriya Banijya Bank (RBB), also held the same view.

A look into unaudited third-quarter financial results of commercial banks shows that at least 10 commercial banks are maintaining CCD ratio of over 78 percent, with CCD ratio of Nepal SBI Bank and Mega Bank standing at 79.89 percent and 79.34 percent, respectively. The CCD ratio of state-run Agricultural Development Bank has even crossed the regulatory limit and spiked to 81.33 percent.

Such a situation means these banks either have to completely stop extending loans or lure more deposits to be able to provide credit to customers.
“We are facing this situation because of lower capital spending of the government (expenditure made on development activities like infrastructure building),” Shrestha said. “This, in turn, was the result of failure to introduce full budget on time.”

He held the view that whenever the government fails to introduce budget on time the country faces liquidity shortage.

“For instance, during fiscal year 2010/11, when budget announcement was delayed the country faced liquidity crisis. A year later, when the full budget was introduced on time, the banking sector witnessed liquidity surplus. Now, many banks are reeling under liquidity stress because of failure to introduce a full budget on time,” Shrestha said.

The government failed to introduce a full budget this fiscal year due to differences between political parties during the rule of Babu Ram Bhattarai-led government. Although a full budget was introduced on April 9 following collapse of the Bhattarai-led government, it was already too late.
This, on one hand, hampered capital spending of the government -- the largest spender in the country -- while, on the other hand, flooded government´s coffers with cash due to surge in revenue collection.

The government´s treasury currently holds cash of over Rs 50 billion, while capital spending in the first 10 ten months of the current fiscal year stood at around Rs 22.49 billion -- around 34 percent of the total budget of Rs 66.1 billion allocated for capital expenditure this fiscal year.

Since the Ministry of Finance is not expecting surge in capital spending in the remaining one and half months of this fiscal year, it is almost certain money allocated by the government for development activities will not be fully utilized.

Many say lower capital spending coupled with piling of more cash in the government´s treasury at the end of the fiscal year -- due to payment of last installment of income taxes by companies -- will be a double whammy for banks.

“But we are hopeful of the government launching full budget on time for the next fiscal year. So situation will change within one and half months, as at around that time remittances for Dashain festival will gradually start to enter the country,” Shrestha said.

RBB´s Sharma is also hopeful of fall in institutional deposit rates as “there is not much demand for loans at the moment”.

Source: myrepublica, 29th May 2013
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Minimum wage of Nepal is highest in South Asia

KATHMANDU, NEPAL

The minimum wage in Nepal as agreed by the employers and trade unionists on Monday is the highest in South Asia. Though Nepal’s minimum wage was the highest in South Asia until two years ago, it had dropped to third after Sri Lanka and the state of Uttar Pradesh in India raised theirs above Nepal’s. The average minimum monthly salary of India at US$ 47 still was lower than that in Nepal.

Entrepreneurs believe that the problem of scarcity of workers in Nepal will decrease after the salary hike. “Our minimum wage has become the highest in South Asia and we hope that it will solve the problem of lack of workers to some extent,” Vice President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Pashupati Murarka stated. “We also hope that flight of workforce will be stopped as we have also significantly raised the daily wage along with the minimum monthly salary,” he added. The Nepali wage rate will be the highest in South Asia if the agreement to provide at least Rs 8,000 a month to workers at the industrial enterprises is implemented. It will be implemented once the government publishes it in the Nepal Gazette. Nepal’s minimum monthly salary as agreed will be US$ 90.23 while that in Uttar Pradesh, India is US$ 88 and Bihar is US$ 70.

Sri Lanka pays the highest in this region after Nepal at US$ 77, according to the International Labor Organization (ILO), while that in Pakistan is US$ 70. Indian workers do not want to come to Nepal to work despite higher wages here due to social security programs there. The trend of workers from Uttar Pradesh and Bihar coming even to Kathmandu has stopped in the past few years due to the rising wages there. Entrepreneurs claimed that the Indian workers can now be attracted as the minimum daily wage has been increased to Rs 318 from Rs 230. “We have only agreed on minimum wages. But the workers will benefit as those getting a higher salary previously will also not see their pay reduced,” he added.

Ball in workers’ court
The entrepreneurs have agreed for a greater hike in minimum salary than the Nepal Rastra Bank’s (NRB) inflation data despite taking it as benchmark and have agreed for a rise of over 29 percent despite the NRB data putting the cumulative inflation in the past two years at just 19 percent. Murarka, who is also the chairman of FNCCI’s Employers’ Council said that the entrepreneurs have exercised maximum flexibility to address the rising inflation and flight of workforce. “We have agreed for a 29 percent hike after compromising on a lot of issues. The ball is in the court of trade unionists now,” he stated. Entrepreneurs believe that the agreement reached this year will not be disputed as the previous one as the agreement has been reached in mediation of the government this time.

Minimum Monthly Salary
Country                                  in US$
Nepal                                     90
Sri Lanka                               77
Bangladesh                          38
Pakistan                                70
Uttar Pradesh (India)           88
Bihar (India)                          70

Source: Karobar Daily, 28th May 2013
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MInimum Wage in Nepal increased to Rs.8,000 per month

KATHMANDU, NEPAL

After one-and-a-half month-long negotiations, a tripartite committee consisting employers, trade unions and the government on Monday agreed to increase the minimum monthly salary of workers by Rs 1,800.

After Monday’s agreement, workers’ basic monthly salary has been increased by 43.66 percent, dearness allowance by 9.44 percent and daily wage by 37.66 percent. “Overall, workers’ minimum monthly wages has been increased by 29 percent,” said Bishnu Rimal, president of the General Federation of Nepalese Trade Unions (GEFONT).

Now, industrial workers will get a minimum monthly salary of Rs 8,000 — a basic salary of Rs 5,100 a month and dearness allowance of Rs 2,900. Earlier, the basic salary was Rs 3,550, while the dearness allowance was 2,650.

The Minimum Wage Determination Committee has recommended the new wage structure to the government for its final approval.

In the negotiations, the trade unions were represented by the Joint Trade Union Coordination Centre (JTUCC), a common forum of 11 trade unions.

“The Minimum Wage Determination committee decided to this effect on Monday. The board will recommend the new wage structure to the Labour Ministry,” said Krishna Hari Puskar, director general of the Department of Labour. According to Puskar, the government is planning to implement the new wage structure within a week by publishing it in the Nepal Gazette.

The pay structure was last revised in March 2011 and was hiked to Rs 6,200 per month. Similarly, Rs 281 and Rs 158 had been fixed as the daily wage for agriculture workers and workers at tea estates, respectively. As per the Labour Act 1992, workers’ minimum salary is reviewed every two years. In Monday’s agreement, employers and trade unions have agreed to give continuity to the agreement on social security. “We have agreed that the Social Security Act should be brought through an ordinance and should be implemented,” said Rimal.

Manish Agrawal, vice-chairman of the Employers’ Council at the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), said the new salary structure will be implemented in those enterprises where salary is below the limit.

With the agreement, trade unions said they will start collective bargaining agreement (CBA) with enterprises making common negotiation committee.

Interestingly, the agreement on new wage structure has been reached at a time when a trade union affiliated to Mohan Baidya-led CPN-Maoist is still protesting demanding its inclusion in the wage review negotiation process. Accusing the government of excluding it from the wage hike talks, the Nepal Revolution Trade Union Federation (ANRTUF) had launched a protest programme from May 15. On Friday, the ANRTUF organised a one-hour long sit-in on the premises of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI). It has demanded the minimum monthly wage be fixed at Rs 15,000 and daily wage at Rs 700.

Source: ekantipur 28th May 2013
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Massive increase in internet users in Nepal

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Nepali Business Delegation leave for Egypt to Boost Trade Ties

KATHMANDU, NEPAL

To increase trade activities an 18-member business delegation led by the senior vice president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Bhaskar Raj Rajkarnikar has left for Cairo, Egypt.

The three-day official visit arranged by Nepali embassy in Cairo will focus on increasing trade and bilateral relationships between Nepal and Egypt. The FNCCI team will meet representatives of Cairo Chamber of Commerce, on Monday, it said, adding that the team will also attend a programme to be organised by Federation of Chamber of Industry and Businessman’s Association the same day. Similarly, representatives of Federation of Egyptian Chamber of Commerce will hold bilateral trade talks with the FNCCI team on May 28.

The talks will be mostly focused on bringing foreign direct investment in the country in sectors like infrastructure development, energy generation, commercial agriculture, tourism and service sector, FNCCI said.
  
Source: The Himalayan Times, 27th May 2013
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Massive increase in internet users in Nepal

KATHMANDU, NEPAL

Nepal has achieved a 24.51 percent internet penetration, according to the latest figures released by the Nepal Telecommunications Authority (NTA).

Driven by a significant growth in GPRS, ADSL, CDMA, optical fibre and 3G internet services, the number of data subscribers has increased to 6.4 million as of mid-April from 4.6 million a year ago (as of mid-April 2012). According to the NTA, a majority of the internet subscribers are cell phone users who use GPRS — a mobile data service — in the GSM mobile network of Ncell and Nepal Telecom.

Rising demand for data service and stiff market competition has compelled internet service providers (ISPs) to come up with newer schemes at competitive prices to attract customers.

Easy access to GPRS service, tariff cut, increased trend of using smart phones, social media craze among youngsters and increasing ICT knowledge are some of the major factors responsible for the growth in the number of data users.

After NT launched its new high-speed WiMax wireless internet service, ISPs too have slashed their tariffs with attractive schemes. For the growing competition in the data market, the state-owned company recently the slashed prices of almost of all of its data services, including GPRS, 3G and leased line services, with a target of “retaining existing customers and attracting new ones”.

NT is also working to take its new “Sky Pro” mobile data service, which is combined with voice, nationwide under the IP-CDMA project. “We are focusing more on data service as per the demand trend,” said Rajesh Joshi, joint spokesperson for NT. He said customers can use the Sky Pro service in laptop and desktop computers using a USB device.

ISPs, which earlier used to concentrate more on the corporate segment, have started to come up with attractive packages for general uses. According to the ISP Association of Nepal, there is a rapid growth in demand from individuals (30 percent a year) compared to that (10-15 percent a year) in the corporate segment.

Around 90 percent of the country’s data customers are mobile GPRS users. The remaining 10 percent are the users of 3G service, ADSL, optical fibre, cable modem, EDVO, CDMA 1X, dial up and WiMax services.

Ncell commands a 52 percent of the Nepali data market, while Nepal Telecom has a 46 percent share. The remaining two percent is shared by United Telecom Limited (UTL) and internet service providers (ISPs).
Although the growth in the overall internet service subscription is increasing, customers are shying away from dial-up data services for the availability of high-speed cable internet , wireless 3G internet , ADSL and WiMax.

The NTA said the dial-up user base declined to 15,445 users by mid-April from 18,747 users last year. Dial-up is nearly a two-decade-old technology and provides slow connectivity compared to wireless and optical fibre services.

Source: ekantipur, 26th May 2013.
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Riddhi Siddhi Jewellers and Geetanjali cheating customers

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Riddhi Siddhi Jewellers and Geetanjali cheating customers

KATHMANDU, NEPAL:

Shree Riddhi Siddhi Jewellers at Bishal Bazar and Geetanjali Jewellers at Durbar Marg are found to be cheating customers through the use of weighing machines without certification from the Nepal Bureau of Standards and Metrology (NBSM).

The irrigularities were found when a joint team from the Department of Commerce and Supply Management (DoCSM) and NBSM inspected three jewelry outlets in the New Road area and one at Durbar Marg, Tueday.

The monitoring team inspected Shree Riddhi Siddhi Jewellers, Shalimar Jewellers and Shagoon Diamonds at Bishal Bazar and Geetanjali Jewellers at Durbar Marg.

“The team found that Shree Riddhi Siddhi Jewellers had been selling diamond jewelry without license and was also using an uncertified weighing machine while Geetanjali Jewelers was likewise using uncertified weighing machines. We have instructed both establishments to stop selling diamond jewelry until they show proof of authorization and certification of their weighing machines,” said Hari Narayan Belbase, director of DoCSM.

Under existing rules, weighing machines should be certified by NBSM and the certification renewed annually.

However, Shree Riddhi Siddhi Jewellers denied any irregularity on their part and said their weighing machines were duly certified and they had full authorization to sell diamond jewelry.

The team did not find any irregularities at Shalimar Jewellers and Shagoon Diamonds.

“We have collected samples of gold jewelry from all four shops for determining if they are cheating on quality. NBSM has taken the samples and we are awaiting the quality test report,” said Belbase.

Earlier, the government had carried out market monitoring on April 22 and bullion traders had protested the way this was done. They submitted a memorandum to the government, demanding regulations for monitoring, and closed their shops protesting that the monitoring they were subjected to was unsystematic and a terrifying experience.

The monitoring team inspected Ganapati Jewellers at New Road and RB Diamond Jewelers and Tejmin Jewelery at Pyukha.

The monitors found that the shops were using dodgy weighing machines and a high amount of fillers and additives in gold and diamond jewelry. In the case of silver articles, it was found that cadmium use was involved.

Source: myrepublica, 21st May 2013

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Price of Gold drops again

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Price of Gold drops Again

KATHMANDU, NEPAL:

The price of gold once again dropped today to reach a year low of Rs 49,099 per tola (11.664 gram).

On the first day of trading today, the domestic market witnessed a fall of Rs 651 per tola in gold price, according to Nepal Gold and Silver Dealers’ Association. On Friday, the precious yellow metal was traded at Rs 49,750 per tola in the domestic market.

The gold price is fixed in

the domestic market on the basis of international market price. “A drop of $20 per ounce today in the international market has pulled the price down in the domestic market,” the association added.

The international market is expected to witness a fall in gold price to $1,320 per ounce, which will further bring down the price in the domestic market, it said, adding that the strong dollar has also contributed to the lowering of the price of gold.

The price started to drop from mid-April. On April 15 and 16, prices dropped by Rs 6,300 per tola — on April 15 it dropped by Rs 3,300 and on April 16 it further plunged by Rs 3,000 — due to prices decreasing in the international market. The price of the precious yellow metal had touched a record high of Rs 62,000 per tola in the domestic market on September 14, 2012.

Source: The Himalayan Times, 20th May 2013

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Nepal's foreign reserves rises to over Rs.474 billion

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Nepal's foreign reserves rises to over Rs.474 billion

KATHMANDU: The total foreign currency reserve has increased by 7.9 per cent to Rs 474.16 billion during the first nine months of the current fiscal year, according to the Nepal Rastra Bank (NRB).

Earlier, the foreign currency reserve was Rs 439.46 billion during the same period of the fiscal year 2068/069.

Of the total reserve, the NRB owns Rs 387.56 billion which is 3.2 percent more than of the last fiscal year.

Likewise, the reserve of Indian currency reached 64.52 billion with an increase by 6.8 percent against the same period of the last fiscal year.

According to the NRB, the reserve of the foreign exchange is sufficient to import goods and service of 9.2 months.

Similarly, the revenue mobilisation of the government during the review period has reached Rs 210.47 billion increasing by 22.3 per cent, thanks to rise in exports. The revenue mobilization was Rs 172.9 billion in the last fiscal year.

Likewise, value added tax (VAT) revenue has reached Rs 60.64 billion increasing by 15.7 per cent as compared to the last fiscal year.

During the review period, customs tax contributed Rs 41.64 billion which is more by nearly 39 percent than the review period of the last fiscal year.

According to the central bank, the income tax revenue has also increased by 31.1 percent contributing a total of Rs 48.26 billion due to reform in income tax administration and positive impact of taxpayer education.

Similarly, the excise duty revenue collection has reached Rs 26.19 billion during the review period contributing 20.5 percent increase than the same period of the last fiscal year.

However, the non-tax revenue has deceased to Rs 23.82 billion in the review period against Rs 25.25 billion of the same period of the last fiscal year, according to the NRB.

Source: The Himalayan Times, 14th May 2013
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Nepal's Inflation comes down to 9.5 percent

KATHMANDU, NEPAL

Inflation moderated to 10-month low of 9.5 percent in April, as prices of non-food items and services rose at a slower pace in the month. Inflation last hovered at this level in May 2012.

Consumer price hike eased on the back of deceleration in rise in prices of clothes, footwear, furniture and household equipment, the latest macroeconomic report of Nepal Rastra Bank shows. Slower hike in transport and health costs also helped inflation to ease in the month, the report states.

In one-year period to April, prices of clothes and footwear went up by 10 percent than 15.1 percent recorded in the same period last year. Hike in prices of furniture and household equipment also eased to 12.1 percent in the one-year period, as against 13.6 percent registered in the same period a year ago.

Similarly, transport and health costs rose by 7.6 percent and 5.4 percent, respectively, in one-year period to April, in comparison to hike of 17.8 percent and 7.7 percent seen a year ago.

During the period, prices of most of the food items, however, surged, exerting pressure on low-income group which spends significant portion of disposable income to purchase rice, lentil, vegetables, cooking oil and spices.

In the period, prices of cereal grains and their products surged by 13.5 percent, while prices of legume varieties shot up by 11.8 percent. Similarly, prices of meat and fishes climbed by 16.2 percent and prices of ghee and oil rose by 10.3 percent in the period.

Price hike in Nepal is generally attributed to rise in prices of commodities in India, from where Nepal imports most of the goods.

Imports from India went up by 22.9 percent in the first nine months of the current fiscal year, shows the report, as against the increment of 13.1 percent recorded in the same period last year. Similarly, imports from other countries rose by 15.5 percent in the nine-month period compared to a hike of 28.3 percent reported in the same period a year ago.

Overall, Nepal´s merchandise imports surged by 20.3 percent to Rs 408.83 billion in the first nine months of the current fiscal year.

In contrast, Nepal´s exports in the period went up by marginal 3.5 percent to Rs 57.16 billion, the report shows. In the same period last fiscal year, exports had gone up by 15.9 percent to Rs 55.24 billion.

Nepal´s total exports grew at a tepid pace as exports to India increased by a marginal 0.4 percent during the period, as against a rise of 18.4 percent recorded in the same period last year.

Exports to other countries, on the other hand, went up by 10 percent in the nine-month period.

As imports surpassed exports, Nepal´s trade deficit surged by 23.6 percent to Rs 351.67 billion in the period. This, in turn, played a major role in causing the country´s current account surplus-difference between exports and imports of goods and services and transfers from the country and aboard-to shrink to Rs 22.23 billion in the nine-month period as against a surplus of Rs 41.95 billion recorded in the same period last year.

Nepal managed to post a current account surplus despite widening trade deficit because of 21.9-percent growth in workers´ remittances to Rs 302.58 billion. In the same period last year, workers remittance had surged by 36.5 percent, indicating lower growth rate this year.

At the same time, the net service income posted a surplus of Rs 4.56 billion in the nine-month period compared to a surplus of Rs 12.49 billion in the same period last year.

As current account surplus shrank due to widening trade deficit, the overall balance of payments -- the country´s total transaction with other nations -- surplus narrowed to Rs 30.77 billion in the first nine months as against Rs 92.55 billion recorded in the same period last year.

Source: myrepublica, May 13th 2013

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NRB will notify promoters about CEOs who underperform

KATHMANDU, NEPAL

 The Nepal Rastra Bank (NRB) will inform the board of directors concerned about the under-performing chief executive officers (CEO) of the banks and financial institutions. The central bank feels that the financial health of not just the banks and financial institutions but the whole country can be affected as the CEOs will always be involved in their private business and will only serve their personal interest no matter how well they are paid.

NRB will inform the boards of under-performing banks and financial institutions about their CEOs as per the standards set on the basis of supervision by the central bank’s as it does not just raise the cost of the institutions but affects the whole financial sector in the long run. “This has been done as per the regular supervisory role of the central bank,” Deputy Governor Maha Prasad Adhikari stated and mentioned that good governance of the banks and financial institutions has been targeted to make the management more responsible. NRB argues that informing the boards will create an environment like that of surprise inspections and will make the management more responsible.

NRB has evaluated the managerial efficiency of CEOs on the basis of policy directives, operating cost, management of staffers, professional agenda, timely meetings and work-place activities. The central bank has not revealed the names of inefficient CEOs on the basis of those standards but NRB sources claimed that Shovan Dev Pant of Lumbini Bank, Ratna Raj Bajracharya of IME Global, Anil Gyawali of Nabil, Ajay Shrestha and other two are among the better CEOs. NRB officials claim that this provision will allow the boards to know about the supervision of the management and even make necessary interventions.

The central bank earlier had introduced the provision banning the board members from playing a managerial role stating that governance of some banks and financial institutions was weakened due to unnecessary interference of the board members. This provision of informing the boards about the performance of CEOs after separating the roles of promoters and managers is said to have targeted the management heads. The central bank, however, claims that prior information to the boards provided with an aim of not letting the banks and financial institutions fail due to managerial inefficiency will help improve the banks and financial institutions.    

Source: Karobar Daily, May 4th 2013

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Nepal's Money Exchangers Cheating Customers

KATHMANDU, NEPAL

 Mahendra Thapa of Myagdi, who had returned back home from Malaysia, exchanged 1,600 ringgit at one Jayanti Money Changer in Mitranagar, Gongabu on Thursday. He should have got Rs 45,456 as per the exchange rate of Rs 28.41 per ringgit for the day, but he got just Rs 44,000 as the money exchanger gave him Rs 1,456 less at the rate of Rs 27.50 per ringgit.

The money exchangers, that have got permission from the Nepal Rastra Bank (NRB), have been fleecing customers in lack of monitoring by the central bank. They do not just exchange the currency at the fixed rate but also do not provide a bill for exchanging. They cheat the consumers by Rs 1-4 per unit of foreign currency exchanged. Though the commercial banks can make some minor adjustments based on the state of demand and supply, money exchangers have to exchange at the rate set by NRB.

The Foreign Exchange (Regulation) Act, 1962 of NRB states that the licensed firm or individual shall not do transactions making changes in the fixed exchange rate but a majority of money exchangers in the capital are not just changing the exchange rate but not even providing any document for exchanging foreign currency. Customers have to produce a photocopy of passport, and fill the numbers printed on the currency notes and personal details while exchanging foreign currency from commercial banks but money exchangers are doing so without giving or asking for any document from the customers though they are also required to keep records as per the NRB Money Changer Guidelines.

Thapa had also exchanged his hard earned money without submitting a copy of passport and individual form. “They did not take my passport even when I insisted. I required money and exchanged it from there as it was near the hotel where I was staying,” he reasoned. Sai Money Changer, also of Gongabu, has also been exchanging money at a different rate without any document. Purna Bahadur Roka of Myagdi, who was also staying at a hotel in Mitranagar, also got less while exchanging Qatari riyal from Sai without any document. “I protested that the amount was less but they argued that it was the prevailing rate. I thought they may be right but later found that I was cheated,” he revealed.

Promoter of Jayanti Shankar Oli claimed that there was a difference in the exchange rate as even they have to exchange at the commercial banks. “We have to invest Rs 5 million. What is the use of working if we do not make some money?” he asked. Sudip Sharma, who works at a money exchanger in Thamel, said the foreign currency they exchange are deposited later at the commercial banks using others’ passports. “This is done to exchange money at the time when the exchange rate has increased and for commission,” he explained. Hotelier in Thamel Sushant Aryal revealed that the money exchangers also exchange the foreign currency of tourists staying at the hotels. “Even I have exchanged on their behalf on many occasions. The guests do not know about the regulations and we get benefits,” he added.

 Customers go to money exchangers as the commercial banks ask for documents and exchange only at the rate fixed by NRB. Chief Executive Officer (CEO) of Mega Bank Anil Shah stated that NRB should monitor even the money exchangers and take action against those violating regulations. NRB Spokesperson Bhaskar Mani Gyawali insisted that the money exchangers should function as per the circular issued by NRB and its regulations and said they will be punished if found doing anything differently. “We have also formed regulations for inspection and supervision. They will be immediately punished if found to be doing anything during inspection,” he assured.

Source: Karobar Daily, April 28th 2013

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NRB has relaxed KYC provisions for small depositors

KATHMANDU,NEPAL

 The Know Your Client (KYC) provision for banks and financial institutions has been relaxed for small depositors with bank accounts of up to Rs 500,000.

The banks and financial institutions had been urging the Nepal Rastra Bank (NRB) to think on the issue stating that it is creating problems in opening new accounts and updating the existing ones. But those with deposits of over Rs 500,000 will have to provide citizenship certificate number of three generations, profession, estimated annual income and other information while opening a bank account or have to update their existing accounts by mid-June. The central bank, however, has stated that the banks and financial institutions can also seek information from small depositors if deemed necessary.

The bankers claimed that the NRB’s definition of small depositors is not practical and argued that this alternative is not suitable as even the small depositors will have to fulfill the KYC provision if they come with big deposits. “These provisions are impractical when the banks and financial institutions are already informing NRB about suspicious transactions,” a banker told Karobar. But NRB Spokesperson Bhaskar Mani Gyawali stated that the banks and financial institutions will not have any problem to expand their client base when it has already exempted the deposits of up to Rs 500,000.

The banks and financial institutions had been claiming that they were facing problems in making clients in newly opened branches due to the KYC provision. NRB had issued the KYC directive to the banks and financial institutions to discourage money laundering and financial investment in terrorism.

NRB had issued the circular as per the clause 79 of the NRB Act, 2002 which provides all regulatory authority to the central bank. NRB has also allowed Nepali commercial banks to open their branch abroad. The banks that have maintained paid-up capital as fixed by the central bank and for the past one year also maintained a buffer capital of additional one percent can open contact office abroad.

Source: Karobar Daily, April 6th 2013

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14 firms bribe NEA officials to get 24-hr electricity

KATHMANDU, NEPAL:

A government probe has concluded that 14 firms along the Itahari-Biratnagar industrial corridor saved energy bills worth at least Rs 50 million over the past three months ending mid-April by influencing officials of five distribution centers of Nepal Electricity Authority (NEA) to provide them round the clock electricity even during load-shedding.

The firms paid just Rs 6 for a unit of electricity. Power generated from generators would have cost them around Rs 25 per unit.

“As the irregularity is of large scale, the investigation team has recommended that the government probe further in order to identify the NEA officials who unlawfully supplied electricity to private firms,” a member of the investigation team told Republica on Sunday.

Ministry of Energy (MoE), which looks after NEA, had formed a five-member probe to look into the issue following widespread criticism.

According to sources, owners of the firms ensured round the clock electricity to their production facilities by paying kickbacks to officials of different distribution centers of NEA. Those firms had managed to get uninterrupted power supply from NEA´s distribution centers in Itahari, Duhabi, Biratnagar, Dhankuta and Siraha.

The team submitted its report to the ministry last week after conducting field study.

“The probe team looked into electricity supply scheduled of the five distribution centers. We found that those distribution centers supplied electricity to the 14 firms going against the nationwide load-shedding schedule,” the member added.

According to MoE officials, locals had complained about the issue last year as well. But their complaints were not entertained. “No one showed interest to look into the issue then,” an official at MoE said preferring not to be named.

The firms that enjoyed round the clock power supply by influencing NEA officials are Raghupati Jute Mill, Baba Jute Mill, Maruti Cements and Asian Thai Food, among others.

“Owners of 14 firms are found to have bribed officials at the distribution centers to ensure 24-hour power supply,” the probe committee member told Republica.

The member said the firms saved Rs 19 per unit of electricity consumed in the three-month period.

“Now, it is up to board of directors of the NEA to take actions against the perpetrators," the member said.

The investigation team led by Sundar Shyam Shrestha, deputy director general of the Department of Electricity Development (DoED), comprised three officials from the ministry and a representative from the NEA.

Source: myrepublica, 13th May 2013

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Nepali consumers paying more than stated price for Fizzy drinks 

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Nepal's Commodity Market expected to remain Unregulated

KATHMANDU, NEPAL

 The commodity market is unlikely to be regulated anytime soon as the Law Ministry has rejected the idea of controlling it by issuing a regulation. Speculative trading in commodity like precious and industrial metals, petroleum products and agricultural goods, among others, has been the major highlight of the commodity exchange.

Prompted by reports of gullible investors being deceived in the unregulated market, the government has been working to monitor the sector through a regulation as there is no act and there is no Parliament to pass legislation. According to a study conducted by the Securities Board of Nepal (Sebon), 80 percent of the investors in the commodity market have lost money.

However, the Law Ministry has told the Finance Ministry that there should be a separate act to regulate the sector as a regulation would not be strong enough to keep the market in line.

The Finance Ministry had suggested preparing a draft of the regulation based on the rights bestowed by Administrative Procedures (Regulation) Act 1956 which allows the government to frame rules to smoothly regulate administrative matters adopted by various government offices related to finance, accounts and auditing.

The Law Ministry’s joint secretary Tek Prasad Dhungana said that this act only allows the government to frame working procedures to ease service delivery. “As the commodity market needs a strong supervisory and licensing body, and there should be a provision for penalty for unlawful acts, we told the Finance Ministry that only an act would be effective,” Dhungana said. He added that there was a need for a separate act to regulate the sector as commodity were different from stocks.
The Finance Ministry had sent a draft of the regulation to the Law Ministry after  Sebon made an initial draft which would allow it to regulate the commodity market by introducing the regulation under the Administrative Procedures (Regulation) Act.

According to a Finance Ministry official, the Law Ministry had rejected an earlier draft of the regulation that sought to open the door through clause 116 of the Securities Act enabling the Securities Board of Nepal (Sebon) to regulate the sector. The clause has given Sebon the power to frame rules stating that it may, in order to implement the objectives of this act, frame necessary rules with the approval of the government.

Although this clause has given Sebon the authority to frame regulations for various tasks related to securities trade, it has not mentioned anything about the commodity market. “The Law Ministry has rejected framing the regulation based on this clause in the Securities Act as it does not say anything about the commodity market,” said the Finance Ministry official involved in drafting the regulation.

 The Sebon study also found that the commodity market had been conducting transactions in foreign exchange without the central bank’s approval as required by the Foreign Exchange Regulation Act. It also pointed out that there was high probability of capital flight and high chances of investors suffering losses.

Source:ekantipur.com May 13th 2013

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Canadian Investors now in Nepal and looking to invest in Nepal
 

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Canadian Investors now in Nepal and looking to Invest in Nepal

KATHMANDU, NEPAL

 Big investors from Canada have showed interest toward Nepal at a time when foreigners are disenchanted by political uncertainty in Nepal. Foreign investors, who were staying away from Nepal following the dissolution of Constituent Assembly (CA), have started to arrive in Nepal even as the activities for fresh election gather momentum.

A 14-member Canadian team including eight entrepreneurs and six high ranking representatives reached Nepal on Sunday. The team that is in Nepal on invitation of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) will hold discussions on investment possibilities in Nepal. The team will study about banks, hospitals, education consultancies, hydropower projects, residential colonies, hotels, resorts, urban designing and handicrafts while in Nepal.

The team includes Canadian Ambassador to Nepal Stewart Beck, representative of the High Commission of Canada in India Archana Mirajkar, Nadira Hamid from Indo-Canadian Business Chamber, Harsha Dhingra from Bombardier, Debaissh Guha from Arcop Associates among others.

Source: Karobar Daily, May 5th 2013

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Nepali Consumers paying more than stated price for Fizzy drinks

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Nepali Consumers paying more than stated price for Fizzy drinks

KATHMANDU, Nepal

 Consumers have been forced to pay more despite the Bottlers Nepal advertizing that the retail price of a 250 ml bottle of Coca Cola, Fanta and Sprite has been reduced by Rs 5 to Rs 20.

Consumers are forced to pay Rs 25-30 for a bottle of these cold drinks at different places. Neither the retailers have answers for this, nor has the company, or consumer rights groups for that matter, shown interest about it. Coca Cola SABCO, through Bottlers Nepal, had received rights for bottling the beverages of the multi-national company in Nepal in 1971. The retailers claimed that the company charges Rs 20 per 250 ml bottle with them. “The company sells to us at Rs 20. How can we sell at that price? We also have to add the cost of running the refrigerator round the clock to keep it cold,” a retailer in Baneshwore said.  Not just him but all the retailers across the Kathmandu Valley charge Rs 25-30 for every 250 ml bottle of these beverages.

Botlers Nepal has been claiming through big hoarding boards and advertisements in all forms of the media that the retail price of 250 ml bottle of Coca Cola, Fanta and Sprite has been reduced by Rs 5 to Rs 20. “We must get it a lower rate to be able to sell at Rs 20,” a retailer at Thamel fumed. “The price is above Rs 30 in many small/big shops in Thamel,” he added. All retailers, with a few exceptions, are selling these beverages charging at least Rs 5 more for every 250 ml bottle. Owner of one Shiva Shakti Store in Buddha Nagar stated that he is selling at Rs 20 per bottle as he gets two bottles free while buying a crate (24 bottles). “I get a bottle at Rs 18 if I also account for the two bottles received for free. Though all retailers around here are selling at Rs 25, I am not doing so. I can sell more at a lower rate,” he explained.  

Market Manager of Bottlers Nepal Pranaya Sthapit also claimed that the company has set the retail price providing a profit margin to the retailers. “We are providing every bottle to retailers for Rs 18 at most. We have, therefore, requested them to sell to consumers at Rs 20. We have not deceived the consumers from our side,” he elaborated. He opined that the consumers themselves have to be aware about that. “We have provided such margins precisely because using refrigerator to cool it increases the cost as it is sold only after being cooled. No one can sell at a rate higher than that printed on bottles,” he stated.

 General Secretary of the Consumers’ Rights Protection Forum Jyoti Baniya claimed that consumers cannot be forced to pay more if the company has mentioned Rs 20 as the maximum retail price on the bottle or packet. “The consumers have asked even us about this. If the company as not been able to provide it to the consumers at the stated price, it cannot broadcast such misleading advertisements,” he stated. If the company has fixed the retail price at Rs 20 providing any profit margin to the retailers, he added, and the retailers are maintaining a bigger margin raising the price, the retailers are guilty.

Source: Karobar Daily, May 9th 2013

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Commercial Banks in Nepal facing tighter liquidity situation

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Jewellers claim 85 percent of Gold from Black Market

CHITWAN, Nepal
Jewelers in Chitwan have audaciously declared that 85 percent of the gold comes through black marketing and challenged the state to investigate and take action if it can at a time when there have been widespread accusations of black marketing in bullion trade.

 Organizing a press conference in Narayangadh they claimed that they are forced to buy gold from the black market due to the imposition of quota system in gold by the state. “The government is giving less gold imposing the quota system. It is natural for black marketing to rise in scarcity,” reasoned central member of the Nepal Gold and Silver Dealers’ Association Arjun Rasaily. The jewelers even reached the district administration office and submitted a memorandum to the government.  

The Gold and Silver Dealers’ Association, Chitwan revealed that Chitwan gets just two kilograms of gold a day through the quota system while the daily demand is seven kilograms. The entrepreneurs are still selling gold to the customers. “85 percent of gold comes from the black market and even the government knows that,” was Rasaily’s straightforward answer to the journalists question as to where the rest of the gold comes from. President of the association in Chitwan Bipin Ramudamu went further and accused the government of encouraging the entrepreneurs to indulge in black marketing. “Not giving gold is tantamount to asking one to do black marketing. Why would one buy gold from outside if adequate quantity is to come legally?” he argued.

The entrepreneurs cannot freely buy gold now with the government imposing a national quota of 15 kilograms a day. There is a huge demand of the yellow metal now due to the wedding season. Stating that the entrepreneurs have to pay Rs 2,000- 3,000 more in purchase of every kilogram of gold from commercial banks according to the quota system, they have asked the government to make arrangements to ensure that every entrepreneur can easily get up to 100 grams of gold a day. “Black marketing will not stop if that is not done and the state must pay attention to it,” central member of the association Gyanendra Man Shakya said.

The association sent a memorandum including these demands to the government through the district administration office. They also demanded modern equipment for measuring the quality of gold and fixing the standards for measuring it, establishment of a body for measuring weight and quality in Chitwan, and security for the entrepreneurs. Ramdamu said a meeting of the presidents of the district chapters across the country has been called in Chitwan on Wednesday for discussions on the problems in their trade. “We will decide how to move forward in the coming days in that meeting. The remaining protest programs will also be decided,” he added. The entrepreneurs already have threatened to shut down all the jewelry stores if their demands are not met by Wednesday. “No jewelry stores will open from Thursday if our demands are not fulfilled,” Rasaily said.

 

Source: Karobar Daily, 30th April 2013

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Trishuli set to become a major hydropower site

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Happy Mother's Day 2070

Shankha Binayak Saving and Credit Cooperative family would like to wish all mothers a very Happy Mother's Day 2070 (Mata Tirtha Aunsi 2070).

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Trishuli River set to become a major hydropower site

NUWAKOT: Trishuli River is set to become a major hydropower corridor in the country in the next three years if implementation of all the projects goes smoothly.

About a dozen hydropower projects are planned to be implemented along Trishuli River, between Rasuwagadhi of Rasuwa and Galchhi of Nuwakot, by the end of 2016. Upon completion, these projects are estimated to generate a total of 1,500 MW of electricity. Of them, Chilime, Trishuli and Debighat have already started power generation.

Similarly, other projects such as Bhotekoshi, Trishuli-3A and Trishuli-3B are in the process of generating power.

“Investors are interested to put money in hydropower projects in Nuwakot. We only need to create environment conducive for investment and boost confidence of the investors,” Saran Utsuk Sapkota, president of Nuwakot Chamber of Commerce and Industry (NCCI), said.

Source:myrepublica.com, 7th May 2013.

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Commercial Banks in Nepal facing tighter liquidity situation

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Commercial Banks in Nepal facing tighter liquidity situation

KATHMANDU-
Although the banking system usually sees higher liquidity during the last quarter of the fiscal year, commercial banks are facing liquidity tightness in recent days.

Generally, banks reduce lending, while deposit collection grows due to increased government spending in the last quarter of the fiscal year. But the government’s failure to expedite spending this year has resulted in liquidity tightness, according to bankers.

As of mid-April, Rs 57 billion has been stuck in the government’s treasury, which is Rs 16 billion higher than that as of mid-March, according to the Nepal Rastra Bank (NRB).

The banking system is facing tighter liquidity situation this fiscal after a year’s gap. After an acute liquidity crunch in 2010-11, banks enjoyed excess liquidity in 2011-12.

Besides government’s failure to spend, other factors responsible for the liquidity tightens are tax payment by banks and financial institutions and other taxpayers who withdraw deposits from BFIs and increased bank lending compared to deposit growth.

According to the NRB, bank lending grew by 16, percent while deposit growth remained at 6 percent as of mid-April. Total deposit collection of banks reached Rs 927 billion, while lending stood at Rs 723 billion. “Aggressive lending compared to deposits also brought the tightness in liquidity,” said an NRB official.

The tightening liquidity situation has also forced BFIs to increase interest rates on deposits, particularly on fixed deposits. According to bankers and depositors, interest rate on fixed deposits has crossed 10 percent.

The tightness in liquidity is also evident with the fact that the inter-bank lending rate reached as high as 7 percent last week, but has come down below 6 percent this week. An NRB official said about half dozen banks ’ credit-to-deposit ratio is above 80 percent in recent days, which also reflects the tightness in liquidity.

Banks have particularly increased interest rates for institutional fixed depositors. According to Rishi Ram Gautam, executive director of Citizen Investment Trust (CIT), one of the big institutional depositors, the CIT has been receiving three percent higher interest rate now compared to three months ago. “We received interest rate as high as 10.6 percent — up from 7.5 percent three months ago,” he said.

Bankers said they were forced to increase the interest rate on deposits in the wake of slow deposit growth and the government’s failure to spend despite huge revenue collection.

“We have increased the interest rate on fixed deposit to 9 percent,” said Sashin Joshi, chief executive officer of NIC Bank. “As the government delayed releasing the budget for completed work, it resulted in liquidity tightness.”

NMB Bank has increased interest on fixed deposit to 8.5 percent from earlier 7 percent. NMB Bank CEO Upendra Poudel said the current tightness in liquidity is momentary and a majority of banks have increased the interest rate on deposits on short-term deposits.

Laxmi Bank is also planning to increase its interest rate for individual fixed depositors.  “We are increasing the interest rate for retail fixed depositors to 9 percent. We have offered as much as 9.5 percent to institutional depositors,” said Laxmi CEO Suman Joshi.

He said it is necessary to bring individual depositors to the banking system as they were diverted to the share market and other sectors after the interest rate decreased. “With individual depositors moving away from banks , institutional depositors have been assertive to claim higher interest rates,” he said.

Given the banks ’ boards seeking higher returns at the end of the fiscal, banks have increased lending aggressively while deposit growth has remained sluggish.

Source: ekantipur.com, 7th May 2013

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Real Estate Expo in Kathmandu attracts huge crowd

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Real Estate Expo in Kathmandu attracts huge crowd

KATHMANDU-
Visitors thronged the NLHDA Kantipur Real Estate Expo at Bhrikuti Mandap on Friday, pulled by the promise of “unbelievable prices” for homes and apartments.

Most of the companies which had half a dozen personnel at their stalls on day one were forced to assign more staff on Friday due to a surge in the number of visitors. “The number of interactive visitors has gone up massively this year. This is why all the stalls are packed with enthusiasts enquiring about real estate,” said Om Rajbhandary, coordinator of the expo. 

As many as 16 realty property developers, who make up 80 percent of the total in the country, have featured apartments at prices ranging from Rs 1.79 million to Rs 42 million, and stand-alone houses for Rs 4.9 million to Rs 30 million at the expo. Apart from this attractive price range, there are various extra facilities on offer.

Mero City Apartment has offered a flat discount of 10 percent on the purchase of apartments. Apartments at Mero City start from Rs 1.79 million.

Likewise, another prominent developer Brihat Investment has come up with a scheme that offers buyers of stand-alone houses a hefty cash discount or a four-wheeler equal in value. Customers buying homes costing up to Rs 10 million at the project situated at Ramkot, Sitapaila will receive a flat discount of Rs 1 million or a Tata Nano car. Likewise, those purchasing property worth Rs 1.5 million or more will receive a cash discount of Rs 1.5 million or a Hyundai Eon car and discount of Rs 2 million or a Hyundai i10 car respectively.

Another name in the domestic real estate market, Civil Homes, has also offered a flat discount of 10 percent to those making bookings or purchases during the expo. “We will offer an additional discount of 15 percent to those making full cash payment while buying,” said a Civil Homes official. She added that the company has featured stand-alone houses ranging from Rs 6.9 million to Rs 30 million and apartments in the range of Rs 4.7 million to Rs 7 million. Meanwhile, a monthly management charge of Rs 1.65 per sq ft will be levied for the various facilities available at the residential location.

Likewise, Ambe Housing, which has two apartment projects located at Chabahil and Kuleshwor, is offering a cash discount of 5 percent. Apart from this, a modular kitchen will be given away free. As for the monthly maintenance cost, the company will charge Rs 300,000 at the beginning to establish a community welfare fund which will be mobilized for all the necessities.

Westar Residency too is giving away a modular kitchen that costs Rs 200,000 to Rs 250,000. It is the only property in the country to have facilities such as cinema hall with a capacity of 100 seats, gym hall, swimming pool and restaurant, among others. “Rs 200,000 will be charged as maintenance fee,” said a company employee.

These facilities will also be available to the general people. They will be charged a certain amount which will be put into the community welfare fund. A Westar employee said that the property would be managed by a star hotel management company. Downtown Apartment has offered a modular kitchen along with exclusive pricing during the expo period, while Comfort Housing has offered a 10 percent discount on its entire product range.

Apart from attractive prices, various new initiatives at this year’s expo like Property Tour and Property Clinic have helped to pull in the crowds. “We had to arrange additional vehicles for the property tour,” Rajbhandary said.

Organised by the Nepal Land and Housing Developers’ Association and Kantipur Publications, the expo will conclude on Sunday. Tickets for the event have been priced at Rs 50. One lucky winner will get an apartment costing Rs 1.8 million at Mero City Apartment as a bumper prize through a lucky draw on Sunday.

Source: ekantipur.com, 4th May 2013

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Gold Price Falls by Rs.800 per tola

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Rastriya Banijya Bank to hire young employees

KATHMANDU: Rastriya Banijya Bank is looking forward to hiring more young employees in order to transform the bank into a more competitive and modern structure.

“At present, the average employee age of the bank is 49, and the bank is planning to bring new and young manpower that will bring down the average employee age to 37 within three years,” said CEO of Rastriya Banijya Bank (RBB) Krishna Prasad Sharma during a training programme for the bank staff.

“We have to emerge as a strong and modern bank in terms of technology, financial resources and manpower,” he said.

RBB had recently hired five financial analysts, 15 deputy financial analysts, agriculture officers and

legal officers through open competition.

“When other banks are suffering from high credit to deposit ratio, ours stands at around 50 per cent,” pointed out Sharma.

“We have enough disposable financial resources to expand credit, and due to low cost of fund we can offer credit at competitive rates as well,” said Sharma, informing that RBB will

focus on quality and productive projects to finance.

RBB — a wholly government owned bank — had undergone a decade-long financial restructuring programme for being on the verge of a meltdown. The bank’ non-performing assets, which was higher than 60 per cent a decade back, has finally come down to six per cent and its net worth has become positive.

The bank, which has 141 branches, has collected

deposits worth Rs 85 billion and floated loans worth

Rs 43 billion along with

investments of Rs 24 billion till first quarter end.

Source: The Himalayan Times, 3rd May 2013

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Everest Bank Slashes interest rate on Home Loans

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Gold Price falls by Rs.800 per tola

KATHMANDU: Gold prices retreated by Rs 800 a tola (11.664 grams), today, after rising through the week in the domestic market.

Its price was fixed at Rs 52,000 a tola, which stood at Rs 52,800 yesterday. In the international bullion market, gold fell to $1,455 per troy ounce after HSBC cut its gold forecast for the coming years.

Moreover, the sudden cashing in on gold prices two weeks back has supposedly hit the safe haven appeal of the yellow metal and investors do not seem to be lured by gold at the moment.

Likewise, profit booking by investors on the eve of the US’ Federal Open Market Committee (FOMC) meeting and European Central Bank meeting also affected the price of gold. FOMC meeting will decide whether to cut back the Quantitative Easing programme and will help in gold prices further dwindling.

On April 16, the price of gold in the domestic market dropped to Rs 49,500 a tola. However, Nepali consumers were not able to take advantage of the drop as bullion traders decided to shut shop instead of selling gold jewellery at a lowered rate.

Following the closure of shops, on April 21, the Department of Commerce and Supply Management and Nepal Bureau of Standards and Metrology inspected jewellery shops in Kathmandu.

The inspection found that the weighing machines and quality of gold and silver

in many of the well-known shops were substandard.

However, gold traders affiliated to Nepal Gold, Silver, Gem and Jewellery Federation closed their shops to protest the inspection. They asked the government bodies to prepare a standard mechanism to regulate and inspect jewellery shops. They withdrew the strike on Friday after the government assured them of forming a task force to formulate regulation.

Source: The Himalayan Times, 3rd May 2013

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Everest Bank slashes interest rate on Home Loans

KATHMANDU, MAY 03 -
Everest Bank is providing home loans at a minimum interest rate of 10 percent to customers planning to buy homes at the NLHDA Kantipur Real Estate Expo which started in Kathmandu on Thursday. The Nepal Land and Housing Developers' Association (NLHDA) and Kantipur Publications are  the organisers of the event.

The bank's usual interest rate for home loans is 10.5 percent. The bank said it would provide loans at 10 percent interest for up to five years, 10.5 percent from five to 10 years and 11 percent from 10-15 years. Similarly, Standard Chartered Bank Nepal is providing home loans at 9.49 percent interest during the expo with a 0.5 percent concession on the service charge.

Banks and financial institutions (BFIs) which are still reluctant to lend to real estate developers are increasing their lending to end users. Laxmi Bank, NIC Bank and Himalayan Bank, among others, all have brought down the interest rate to 10-12 percent. Under home loans, they offer credit to purchase land, construct homes or buy apartments.

"As home loans are provided based on the income assessment of an individual, there is no risk at all as long as the assessment is good," said Diwakar Poudel, corporate affairs chief at Standard Chartered. "The home loan portfolio is exciting, attractive and inspiring. We see a good future in this sector," he added. Standard Chartered currently has a 25 percent exposure to home loans.
Likewise, Everest Bank's chief executive officer PK Mohapatra said his bank had given high priority to home loans. During last Dashain, the bank provided home loans at a fixed interest rate of 9.99 percent for three years.

However, BFIs have been reluctant to lend to developers despite continued lobbying by them citing risks highlighted by the crisis in the sector in the last four years. "We are much conservative in providing loans to the real estate sector," said Mohapatra whose bank's lending to the pure real estate sector amounts to Rs 2 billion.

However, developers say that despite reluctance on the part of banks to lend to developers, home loans have helped them too. "Those wishing to buy apartments are getting loans which has helped to clear stocks of unsold apartments," said Min Man Shrestha, general secretary of the Nepal Land and Housing Developers' Association. He added that banks would have to lend to developers after all the apartments and housing units currently under construction are sold.

With the central bank increasing the threshold of realty loans to Rs 10 million, a majority of apartment projects could be sold with bank financing, according to developers. Shrestha said a majority of apartments available have price tags of below Rs 10 million which can be sold.
According to the NLHDA, from April 2005 to March 2013, around 65 apartment projects having 6,330 apartment units were implemented. Of the total, 12 apartment projects have acquired completion certificates, making 870 units of apartments ready to move in for buyers, according to realty developers. There are around 1,200 stand-alone housing projects going on currently, according to realty developers. Since the central bank capped realty lending at 25 percent, BFIs have been reducing their exposure to the realty sector.

BFIs have lent Rs 88.19 billion to the realty sector as of mid-February, down from Rs 98.81 billion one and a half years ago, according to Nepal Rastra bank (NRB). This is close to 10 percent of the total loan portfolio of BFIs. As of mid-February this year, BFIs had lent a total of Rs 882.31 billion.
Commercial banks have the highest lending to the realty sector with Rs 65.63 billion, followed by development banks with Rs 12.29 billion and finance companies with Rs 10.27 billion. "Lending to the realty sector came down due to both recovery of loans and NRB's increasing the threshold of real estate loans," said NRB spokesperson Bhaskarmani Gnawali.

Many financial institutions that landed in trouble in recent years had a history of overexposure to the realty sector besides bad corporate governance. However, Gnawali said that the situation had improved much in recent days. "The current situation of the realty sector is satisfactory. Houses and apartments are being sold after developers reduced prices," he added.

 Meanwhile, Sashin Joshi, chief executive officer of NIC Bank, said that there was no panic situation in the sector like until last year. "Borrowers have been repaying their loans by selling their other properties," he said.

Developers said that there was growing demand for low-cost apartments, and that banks' increased interest in lending to end users was helping the sector to recover. They added that they had been selling apartments with fewer facilities but at affordable prices for this reason.

"We ran after various facilities in the past which increased the cost of the apartments," said Shrestha. "Now we have realised that we should focus on affordability."

The central bank, however, had long been asking developers to slash prices so that apartments could be sold. "Apartments in the price range of Rs 1.5 million to Rs 5 million are affordable for Nepalis," said Gnawali. "The housing expo's focus on affordability is praiseworthy."

Source: ekantipur.com, 3rd May 2013

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Merger not really a solution for all financial problems

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Merger not really a solution for all financial problems

KATHMANDU: Despite being touted as a miracle cure for all ailments troubling financial institutions, mergers have failed to improve the performance of almost a dozen financial institutions.

Among the 12 sets of mergers completed in the domestic financial sector within the last two years, only four have so far succeeded in registering profits. Likewise, share prices of half of the listed merged entities are also below face value at Nepal Stock Exchange.

“A merger does not translate to miraculous profits immediately. It takes time for the merged entity to become profitable as they have to deal with additional issues such as effectively managing human resources along with its operations,” said chief executive of Synergy Finance Rajendra Man Shakya.

Synergy Finance that was formed in November 2012 following a merger between Alpic Everest Finance, Butwal Finance and CMB Finance, has recorded a net loss of Rs 35.65 million in the second quarter of the current fiscal year.

“Problems such as low rate of loan recovery and absence of proper projects to finance remain the same even after a merger as it used to be with the concerned individual institutions before the merger,” said Shakya, who is also president of Nepal Finance Companies’ Association. “We have observed that merged companies need to be given time to recover and become profitable.”

However, Narayani National Finance, which was formed after a merger between Narayani Finance and National Finance in November, 2010, has fared well. It has earned Rs 25.74 million in the second quarter. Moreover, the company was able to earn 33 per cent more operational profit even before first year of merger was over.

But at the other end is H&B Development Bank that was formed following a merger between Himchuli Bikas Bank and Birgunj Finance in 2011. The class ‘B’ bank that was performing fairly is now in trouble due to the large scale fraud committed with the involvement of its employees.

Investors are also apprehensive about investing in shares of merged entities and their prices have taken a plunge of late. Among 10 listed merged financial institutions, share prices of only six firms are above Rs 100 — the face value.

“If the merged financial institutions are good then they will perform better and investors will also be willing to bid a higher price,” said acting president of Nepal Investors’ Forum Raj Kumar Timilsina.

Global IME Bank that was formed after merger between Global Bank, IME Financial Institution and Lord Buddha Finance, and Machhapuchchhre Bank following its merger with Standard Finance have been able to increase their profit and subsequently their share prices have also almost doubled in the past six months.

“In most cases, mergers have been taking place just to avoid the regulator’s action when the particular company’s financial health is deteriorating due to which the merger becomes forced and creates more problems,” pointed out Timilsina, adding that investors look forward to mergers between promising companies such as the ongoing merger process between NIC Bank and Bank of Asia Nepal.

According to central bank, 28 financial institutions have already got approval to merge into 13 institutions, and 24 financial institutions have received Letter of Intent (LoI) to merge into 10 institutions.

Source: The Himalayan Times,  2nd May 2013

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