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

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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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

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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