7.37%Cash Dividend: Professional Bikash Bank

The BOD meeting of the Professional Bikash Bank Ltd has decided to provide 7.37% cash dividend to share holder which is subject to approval from NRB & upcoming AGM.

Source:
nepalstock

10.14%Bonus Share & 11.06%Cash Dividend of Reliable Finance Ltd

The 81 the BOD meeting of the Reliable Finance Ltd dated 2068/07/06 has decided to provide 10.14 % bonus share and 11.06% cash dividend. The proposed dividend and bonus share is subject to approval from NRB and upcoming AGM

14% Cash Dividend of Araniko Development Bank Ltd.

The BOD meeting of the Araniko Development Bank Ltd dated 2068/07/03 has decided to give 14% cash dividend subject to approval from NRB and its upcoming AGM.

Source:
jamb

30% Cash Dividend & 40% Bonus Share of Chilime Hydropower Co. Ltd.

The 216th BOD meeting of the Chilime Hydropower Co. Ltd dated 2068/07/02 has decided to give 30% Cash Dividend and 40% Bonus share subject to approval from its upcoming AGM.

Source:
jamb

7.37% Cash Dividend of Bank Of Asia Nepal Ltd.

The 81th BOD meeting of Bank Of Asia Nepal Ltd dated 2068/7/6 has decided to provide 7.37% cash dividend to its share holders from the porfit of fiscal year 2067/068. The porposed dividend is subject ot approval from NRB and its upcoming AGM

Source:
Nepse News.

Commercial banks raise home loans rate

More than half a dozen commercial banks have hiked home loan rates by as much as 1.5 percentage points - a move which will disappoint borrowers deeply, citing increase in cost of capital. Banks like NMB Bank, Global Bank, Nepal Industrial and Commercial (NIC) Bank and KIST Bank have enforced the new rates from the new fiscal year, starting from Sunday this week. Following the change, NIC Bank´s home loans rate has jumped to as high as 16.49 percent. Similarly, rate of NMB Bank also stands at over 16 percent, while that of KIST Bank has gone up to the range of 14 to 16 percent.

The fresh hike has also jacked up the industry average rate of home loans to just over 16 percent. So far, the industry average rate was over 15 percent. "We had to raise the rates mainly because the central bank´s directives sought us to close the interest rate gap between different savings schemes to 2 percent or less. This raised our cost of capital," said Upendra Paudel, chief executive of NMB Bank. The central bank has asked the banks and financial institutions to bridge the gap in rate between different savings products, mainly as bankers, while luring fresh deposits, offered higher rates to new depositors only, leaving old accounts holders deprived of due interest return.

Banks were offering as high as 10 percent interest return to new depositors, whereas older depositors were offered as low as 3 percent. "This is not fair. The banks must bridge the gap to 2 percent or less," NRB had said in its directives. Though a few banks had instantly complied with the directives, most of the BFIs are just gearing up to implement it. As a result, sources told Republica that more banks may follow the suit and raise lending rates because they are ´left with no choice´ as they have raised the rate of minimal interest rate to bridge the gap.

"As liquidity problem has not faded away in a large number of banks, they cannot lower the higher rates. And the unwanted raise of lower savings rate has gone up to increase cost of capital," said the source. Interestingly, the latest hike in lending rate has come contrary to what Nepal Bankers´ Association (NBA) had announced about a month ago. With the ease in liquidity in leading banks, NBA had said they have lowered the interest return to corporate clients by as much as a percentage point. "We believe this will eventually lead to drop in lending rates," NBA president Ashok Rana had told Republica then.

Source:
myrepublica

No bonus for Rastriya Banijya Bank staff

Citing on the directive issued to Nepal Oil Corporation last August, the Commission for Investigation of Abuse of Authority (CIAA) said that the demand of receiving bonus of Rastriya Banijya Bank (RBB) staff could not be justifies. Appearing before State Affair Committee under legislature parliament today, CIAA secretary Bhagawati Prasad Kafle said that the bonus should not be distributed unless the bank recovers its accumulative loss. The anti-graft body last August had directed Nepal Oil Corporation (NOC) to revoke its decision of bonus distribution. "The corporation cannot distribute bonus citing profit for one year since it is reeling under accumulative loss," the CIAA had said.

The anti-graft body had also instructed the government not to distribute bonus at any other public entities suffering accumulative loss, even if they recorded profit in a specific fiscal year. "The directive issued to NOC should be taken an example for all the other public enterprises, if they are incurring accumulative loss," Kafle reiterated, adding that the decision will save state coffer.
Source:
tht

Chilime Hydro Power Co. Ltd Initial Share Allotment Result

Chilime Hydro Power Co. Ltd. Initial Share Allotment Result
CLICK FOR ONLINE RESULT OF Chilime Hydro Power Co. Ltd

Purnima Development Bank Initial Share Allotment Result

>>> Purnima Development Bank Initial Share Allotment Result
CLICK FOR ONLINE RESULT

NIC Bank & Brihat Investment to promote home loan products

NIC Bank and Brihat Investment entered into and agreement today to promote home loan products. "The trained agents from Real Estate Marketing Agents (REMA) from Brihat Investment will be working as direct selling agents for the NIC Bank to sell home loan products," said Purnima Rajbhandari, CEO of Brihat Investment that has been advocating and lobbying with the banks, the government and Nepal Land and Housing Developers' Association (NLHDA) to establish REMA profession.

Brihat Investment has trained the REMA professionals for ethical buying and selling of houses, she said, adding that they have the expertise to asses and the ascertain quality of an asset and help buyers find good value for their investments. Under the agreement, REMA will facilitate the prospective buyers for acquiring home loan from NIC Bank for purchase of residential houses/apartments.

NIC Bank has demonstrated its leadership in the home loan league through its popular product NIC Ghar Subidha for its comprehensive product bundling. "The Bank believes that the arrangement with Brihat Investment-REMA, our customers will have better access to our services and quick turn around time in availing home loans," said the bank. The licensed agents for the real estate sector will help boost the sector as they can bring professionalism in the sector that has been facing slowdown recently, Rajbhandari said, adding that the NIC Bank and REMA both can work jointly to facilitate the home buyers.

Currently, the real estate and housing sector has around Rs 200 billion investment and the central bank has also been seriously working on to help the sector that creates employment. Though, the land plotting and land transaction has been discouraged, the central bank has also accepted contribution of the real estate and housing sector to gross domestic product (GDP). Meanwhile, the central bank governor has also urged the developers to build houses that are under common people's purchasing capacity. "The housing products should be within the purchasing capacity of the people," he said in an interaction recently.

Source:
tht

Commercial banks' Q2 NPA almost doubles

The Non-Performing Assets (NPA) of commercial banks seem to have almost doubled in the second quarter of the current fiscal year. According to the unaudited financial figures of the second quarter of the current fiscal year, the average ratio of NPA to the performing loans in the second quarter of the current fiscal year is at 0.88 per cent which was 0.48 per cent in the corresponding quarter of the previous fiscal year.

The slowdown in realty and housing sector can be accounted for the surge in NPA of the commercial banks this season. The bankers have been suggesting the central bank Nepal Rastra Bank (NRB) to relax the ceiling on housing and real estate lending, citing the slowdown in realty to have affected the performance of banks as most of the commercial banks' loan portfolio is dominated by these sectors.

Among the unaudited financial statements released by the twelve commercial banks Bank of Asia Nepal (BoAN), Kumari Bank Ltd (KBL), Kist Bank Ltd (KIST), Siddhartha Bank Ltd (SBL), Global Bank Ltd (GBL), Laxmi Bank Ltd (LBL), Citizens International Bank Ltd (CZBL) and Prime Bank Ltd (PBL) are the commercial banks expected to report an increased NPA for the second quarter in comparison to that of corresponding quarter in the previous fiscal year. Standard Chartered Bank (SCBL), Nepal SBI Bank (SBI) and DCBL Bank Ltd (DCBL) are expected to report a drop in NPA in the review.

NPAs are one of the key indicators that gauge the financial strength of any bank or financial institution. NPAs for banks are nothing but loans gone sour. It is a loan that can not be recovered from the customer within stipulated time, especially those exceeding 90 days of the predetermined period. The NPA does not yield any income to the banks in the form of principal and interest payments. NPAs eat into the income of the financial institutions as the primary source of income of financial institutions are the interest payments by borrowers.

Source:
tht

Citizens Investment Trust to double paid-up capital to Rs 250m

The Finance Ministry has approved a budget of Rs 12.5 million to be invested in the Citizens Investment Trust (CIT) to increase its paid-up capital to Rs 250 million. The government has a 10 percent stake in the CIT with Rastriya Beema Sansthan holding 26 percent, Nepal Rastra Bank 13 percent, the Nepal Stock Exchange 10 percent and the public 20 percent of its shares.

The CIT gives options to people for their savings and benefits them by investing their savings in the capital market and other businesses. The CIT aims to increase its paid-up capital to Rs 250 million from Rs 125 million. It is planning to issue rights shares on the basis of 1:1 ratio within the current fiscal year to increase the capital. "Given an increase in our business, we are in greater need of increasing our paid-up capital which paves the way for further business," said CIT executive director Rishiram Gautam.

The CIT may have to increase its paid-up capital to Rs 500 million to continue its mutual fund type Citizens Unit Scheme because the newly brought mutual fund regulation has provisioned that a mutual fund should have a paid-up capital of Rs 500 million. "This is another reason that we are set to increase our paid-up capital," said Gautam. The CIT's activities related to the capital market are governed by the Securities Board of Nepal.

It has been mobilising financial resources of around Rs 22 billon currently. Of that amount, it has deposited more than Rs 9 billion in commercial banks, Rs 3 billion in finance companies and Rs 2.5 billion in development banks. It has invested Rs 1.62 billion in government bonds, it has issued credit worth Rs 3.22 billion to its members, and put Rs 2 billion in debentures and Rs 650 million in term loans. Currently, it is also planning to diversity its investments in the infrastructure sector including hydropower, housing and road projects.

Source:
ekantipur

Team studying Nepal Bangladesh Bank, NCC merger

NB Group has initiated a study to merge Nepal Bangladesh (NB) Bank and Nepal Credit and Commerce (NCC) Bank, the two commercial banks that the group promoted. "A taskforce formed under the leadership of our Chairman Prithvi Raj Ligal is studying how the merger can be accomplished and where the bank will stand following the merger," Ratna Raj Bajracharya, chief executive of NCC Bank, said. The taskforce is yet to finalize its report. The group took the initiative for the merger mainly considering present market conditions, the position of both banks in the market and also the incentives promised by the government and the central bank for facilitating mergers.

Both NB Bank and NCC Bank have been slow performers with their financials in the red at different intervals, and experts attribute this to undue interference and anomalies on the part of the promoters. "Instead of competing with each other, it is better that the two banks be merged. It will instantly enhance our capacity, assets base and branch network, enabling us to become more competitive in the market," said Bajracharya. Recently, the group had managed to get final nod from the regulator -- Nepal Rastra Bank -- for the merger of Nepal Sri Lanka Merchant Bank (NSLMB), another financial institution promoted by the group, into NB Bank.

Interestingly, the financial health of all three banks and financial institutions promoted by the group had turned bad at different intervals, and this, according to NRB, was due to irregularities by bank promoters themselves. While NSLMB is still in bad financial shape and is facing difficulty paying back depositors even after the maturity of their accounts, NB Bank was also declared a troubled bank by the central bank, which took over its management in 2007. It was only in mid-January, 2010 that the central bank released its control and handed over the management to a newly elected board of directors.

NCC Bank had also nearly faced intervention by the central bank. However, this was avoided after promoters withdrew from the board and handed over management to Bajracharya, promising not to intervene in bank operations. Since then, the bank´s net worth has turned around from a negative net worth of Rs 510 million to a positive net worth of Rs 1.61 billion. Its non-performing assets have dropped from 31.7 percent to 3.69 percent. Currently, NCC Bank is operating with 17 branches. NB Bank has a similar number of branches.

Source:
myrepublica

Kumari Bank & Oxfam team up to help farmers

Kumari Bank Limited (KBL) and Oxfam International, Nepal have joined forces to provide credit financing to farmers in the Mid-Western Region under Oxfam's Enterprise Development Programme (EDP). Radhesh Pant, chief executive officer of Kumari Bank, and Scott Saiia, country director of Oxfam, signed a memorandum of understanding in this regard on Thursday. As per the agreement, the bank will provide revolving credit facilities (up to the defined limit) to agricultural cooperatives identified by Oxfam.

The bank will provide loans to 1,050 farmers through the Janakalyan Agricultural Cooperative, Surkhet. The project aims to boost high-value vegetable seeds and develop market access for their products at both domestic and international levels. The major objective of the project is to encourage women's participation for farmer-led enterprises and boost their income level.

Speaking on the occasion, Pant said that the move would narrow the existing gap between rural people and banking services. "Despite a significant growth in the number of banks and financial institutions in the country, a majority of rural people are deprived of financial access; and such initiatives will help rural people to benefit from financial services," said Pant. He added that they aimed to institutionalise and develop other projects in the coming days.

Source:
ekantipur

5% Cash Dividend of Annapurna Bikas Bank

The BOD meeting of the Annapurna Bikas Bank Ltd company dated 2067/10/24 has decided to give 5% cash dividend subject to approval from NRB.

Source:
nepalstock.com

Nepal Rastra Bank to amending gold guideline

The Nepal Rastra Bank (NRB) is preparing to recommend the Ministry of Commerce and Supplies to review the guideline on gold and silver management. The revision is targeted at simplifying the existing gold distribution provision. The guideline introduced on Dec. 27, 2010 has allowed commercial banks to import 15 kg of gold per day and release it in the domestic market.

However, only few traders approached to designated commercial banks to buy gold. After the implementation of the guideline, three commercial banks have imported 150 kg of gold so far. Of the quantity, only 60 kg has been procured by traders. "We will soon recommend the Ministry of Commerce and Supplies to review the guideline," said Chinta Mani Shiwakoti, director at the Foreign Exchange Department of NRB. He said the NRB will soon hold a meeting with ministry officials in this regard.

Recently, the NRB had held a discussion with traders and bankers regarding import of the yellow metal and its distribution in the market. In the meeting, traders had strongly demanded revision of the guideline, saying it was `impractical'. It has been more than a month since the government implemented the new guideline. However, only 2-4 kg of gold is sold from banks per day. Currently, the gold demand is around is 25-30 kg per day and gold imported illegally from India fulfills a large portion of the demand.

Tej Ranta Shakya, president of Nepal Gold and Silver Dealers Association, said although gold brought from India is expensive by some Rs 300 per 10 gm, traders opt for Indian gold as there are no hassles in acquiring it. "Over the last month, we only recommended for 15 kg of gold," he added. A total of 16 commercial banks are listed by the Nepal Bankers' Association to import gold. With low response from traders, only three banks¿NIC, Bank of Kathmandu and Laxmi¿have imported 50 kg of gold each as of Feb. 8.

"Demand from traders is low," said Saroj Guragain, head of the Financial Market and Commodities division of NIC Bank. He said traders are reluctant to procure the yellow metal from banks. Due to low sales, banks are also facing the burden of increasing holding cost of gold. Therefore, many banks are not interested in importing gold. As per the guideline, commercial banks can sell 1 kg of gold at a time. But traders said small traders are finding it difficult as their requirements are low. The provision to submit the details of at least 50 percent of gold bought earlier to buy new gold is also not practical, they said.

"The guideline was targeted for small traders. However, from the looks of things, it has only helped big traders," said Shakya. He said the government should make a provision that allows banks to sell gold to wholesalers too, so that they could distribute gold to small traders.

Source:
myrepublica

Agricultural Dev. Bank's branch earns 12.3 million in 6 months

The Agricultural Development Bank, Kawasoti Branch, made more than Rs. 12.3 million profits during the first quarter of the current fiscal year, said Branch Manager Sombilash Devkota. He said the farmers visit the bank for banking services due to its minimum interest rate offer compared to other private banks. He said the bank was providing loan at 12 per cent interest rates to the farmers which, he said, is lower than other banking institutions. Similarly, the bank collected Rs. 13.3 million deposits during the same period of this fiscal year. The Kawasoti branch of the bank has provided loans to as many as 1,472 local customers.

Source:
tht

Nepal Rastra Bank to liquidate Samjhana Finance

Nepal Rastra Bank (NRB) on Monday decided to send Samjhana Finance Company (SFC) into liquidation and declared United Development Bank (UDB) a ´troubled bank´. The central bank has also asked the management of SFC to furnish clarification within 15 days. SFC, which has mobilized deposits of Rs 180 million from general public, has a total liability of Rs 640 million. "The NRB board meeting took the decision, keeping in view the financial position and management status of the two financial institutions," an NRB official told Republica. The financially ailing SFC has mobilized Rs 20 million in deposits from the Army Welfare Fund operated by the Nepal Army. It has an outstanding loan worth Rs 210 million and its non-banking assets have been calculated at Rs 300 million. Headquartered in Banepa of Kavre district, SFC has two branches in Lalitpur and Kamalakshi of Kathmandu.

Saroj Bajracharya, manager of SFC´s Lalitpur branch, is in police custody for investigation, as most of the non-performing loans of SFC have been found issued by the branch. Bijay Mani Acharya, manager of SFC´s Kamalakshi branch, has left for greener pastures abroad after tendering resignation. Sources say the company is facing difficulty in preparing financial statement in the absence of experience manpower. The company has been found operating financial transactions through fake accounting statement after NRB, a year ago, directed it not to mobilize deposits and issue loans.

The central bank initiated investigation against the bank after depositors, whose money the company had deposited into fake accounts, asked the management to return their deposits. Though NRB has decided to send the company into liquidation, deposits of general public are not at risk as the collaterals pledged against loans issued are under its possession. The company has around 5,000 depositors.

The company managed to recover loans worth Rs 70 million over the past six months and returned the amount to depositors. NRB had declared Samjahana Finance a ´troubled´ financial institution about a year ago on the basis of its weak capital base and high non-performing asset (NPA).

Source:
myrepublica

Sebon guidelines for share structure of merged firms

The capital market regulator is working on bringing in new regulations regarding the determination of share structure of the merged public companies. As the merger and acquisition (M&A) of various banks and financial institutions has been gaining momentum since some time back, Securities Board of Nepal (Sebon), the securities market regulator, has also felt the need for introducing a new regulation that will clarify how the share structure of the merged companies has to be determined.

"Sebon is doing internal homework on the regulation for the merged companies regarding the determination of share structure," said Niraj Giri, director of Sebon. "There is a need for clarifying how the merging companies will distribute the shares to the common shareholders so that the minority shareholders' interest is not damaged," he added.

There is no clear-cut rules set by any authority that dictates how the share should be distributed in case of the merger. Since Sebon is the apex body to regulate share market, the responsibility of preparing the guidelines regarding the matter falls on it. Moreover, most of the banks and financial institutions that are in the process of merger are listed in the secondary market. Before the merger is accomplished, the companies need to finalise the share structure. If both the merging companies have issued shares to the public then determining the new share structure has to be more carefully done so that the shareholders of the two entities will not feel duped.

There have already been four mergers of the financial institutions have taken place in the history of Nepali financial institutions. The recent merger is the one between class `A' financial institution Nepal Bangladesh Bank and Nepal Sri Lanka Merchant Banking and Finance Ltd that took place last month. Apparently, the shareholders of NSLMB are entitled to get the shares of NBBL in the 2:1 proportion that is for every two units of NSLMB's shares the shareholders will get one unit of NBBL's share.

Both the fiscal and monetary policies for the present fiscal year has encouraged merger of financial intermediaries such as banks and financial institutions (BFIs). The central bank specially has made it clear that it will support the merger of financial institutions rather than opening of new banks and financial institutions in the present scenario that has been crowded with the banks and financial institutions. The fiscal policy had even introduced some incentives to encourage mergers. The merger is supposed to facilitate the capital requirement of the financial institutions and reduce their operational costs as well along with creating space in the crowded financial institutions.

Source:
tht

Employees Provident Fund gives 1.5%dividend

Employees Provident Fund (EPF) has distributed Rs 1.09 billion dividend to the 450,000 provident fund depositors. The Board meeting of the Employees Provident Fund on January 26 has decided to distribute 1.5 per cent dividend to the depositors. The fund has posted Rs 1.45 billionnet profit last year. From the profit, the EPF has also deposited Rs 50 million and Rs 198.37 million in Depositors' Welfare Fund and Reserve Fund respectively.

Source:
tht

Number of blacklisted loan defaulters on rises

The number of blacklisted bank loan defaulters has begun to rise again after a three-year declining trend. The number started to rise from the second half of the last fiscal year after a new Nepal Rastra Bank (NRB) directive allowed Banks and Financial Institutions (BFIs) to include defaulters in the blacklist irrespective of loan amount, provided that they meet the basic inclusion criteria. Although this is an alternative provision, defaults of loans worth more than Rs 2.5 million should be compulsorily blacklisted.

How the number of blacklisted firms and individuals is peaking is evident from the fact that a total of 156 names were blacklisted as of Jan. 26 of the current fiscal year compared to 171 in the entire last fiscal year, according to the Credit Information Bureau (CIB) which keeps records of those blacklisted by BFIs. Since fiscal year 2006-07, the number of blacklisted firms and individuals had been falling until fiscal year 2008-09. "After the new NRB provision, the number of blacklisted firms and individuals started to go up," said Anil Chandra Adhikari, chief executive officer of CIB.

Among the major firms blacklisted over the last six months are Cosmic Air, Avco International, Memento Apparels, Mount Everest Brewery and Triveni Cement. No BFI can lend to a blacklisted firm or an individual. Not even the remaining installments of loan, says the NRB directive. The government can also cancel passports of blacklisted individuals as per the recommendation of BFIs. According to the NRB directive, banks may blacklist individuals or firms in the event of cheque bouncing and write-offs. "These kinds of additional provisions have resulted in increase in the number of blacklisted defaulters in FY 2009-10," states CIB's annual report.

BFIs should blacklist any firms or individuals if their cheques bounced for three consecutive times. The NRB directive has also provisioned that BFIs should blacklist those involved in fraud¿use of counterfeit cheques, drafts, debit and credit cards and bills. Those not repaying credit card debts should also be blacklisted. However Adhikari of CIB said the NRB provision that BFIs could blacklist defaulters of loans worth below Rs 2.5 million only after blacklisting defaulters of loans worth more than the amount has created confusion. As of FY 2009-10, there were a total of 2,152 blacklisted defaulters with total outstanding amount of Rs 29.81 billion.

Sudhir Khatri, chief executive officer of DCBL Bank, said it was natural to see rise in the number of blacklisted defaulters given the increased number of BFIs. "Current political and economic situation of the country also resulted in increased loan defaults," he added. During the first quarter of the current fiscal year non-performing loans of commercial banks went up by Rs 2.93 billion. The NPL level rose by 0.61 percent to 3.15 percent. "The default rate will further go up with stagnation in the real estate sector, and industrial sector facing acute power outrage and higher interest rate," said Khatri. Bankers say that that there has not been 100 percent payment of interest too in recent days. Not only the number of blacklisted defaulters, number of new borrowers also increased by more than 25% in FY 2009-10 compared to the previous year, as per the record of CIB.

Source:
ekantipur

Nepal Rastra Bank no to mutual fund operations

An effort of two commercial banks to establish a mutual fund has hit a snag after the central bank refused to permit them to jump into the business, stating that Bank and Financial Institutions Act (BAFIA) does not include mutual fund operations as areas of activities for the banks. Nabil Bank and Kumari Bank had recently sought permission from the central bank to set up mutual fund. "We had to say no to them because BAFIA, the law governing banks and financial institutions that defines areas of operations, lacks ´mutual fund´ in the list of activities that the banks can venture into," said a source at the Nepal Rastra Bank (NRB).

NRB´s denial, meanwhile, has almost closed the new investment avenue for small investors, because capital base and other requisites provisioned in the existing Regulations on Mutual Fund make only the commercial banks eligible to kick-start the business. According to Mutual Fund Regulations enacted a year ago, any corporate entity interested to establish a mutual fund must have a minimum paid-up capital of Rs 1 billion. Apart from that, the interested institution must also have completed five years of operations, earned profit for last three consecutive years and have paid-up capital not less than its net worth.

"Clearly, only commercial banks are eligible institutions to establish mutual fund. We are surprised over the central bank´s denial to let the banks jump into the business," a senior official of Securities Board of Nepal (Sebon) said, preferring anonymity. The official even argued that BAFIA was not a hindrance, because the act also has a clause whereby the central bank can authorize banks and financial institutions to undertake financial activities, even if it is not clearly stated in the law. "It´s just a matter of will. There are ample examples of banks operating mutual funds all round the world," the official added. NRB officials, however, said that they were not negative toward banks venturing into mutual fund operations. "It is just that we need policy clearance. Once we get that, we will readily allow banks to set up mutual fund," said the NRB official.

Sebon in recent years had pushed for mutual fund -- an instrument of collective investment in which money from a large number of investors is pooled -- in a bid to widen the capital market and also to pledge additional investment opportunities to the small investors. The pool is managed professionally and investment is made in securities, like stocks, bonds and short-term money market instruments among others. Typically, the fund manager buys and sells the fund´s investments in accordance with the fund´s investment objective. Sebon - the stock market regulator -- is entrusted with the responsibility of overseeing the operations of the manager, ensuring that it is managing the fund appropriately in the best interests of the investors.

Source:
myrepublica

Cooperatives contribute 10pc GDP

The cooperatives run in various parts of the country have helped improve the economic situation of the country, increasing contribution every year to the growth of Gross Domestic Product (GDP). The contribution by the cooperatives to the financial sector has reached 10 per cent, according to the Department of Cooperative. Public interest and attraction have been increased towards cooperatives with its easy expansion and wide outreach and subsequently it has discharged significant role for the economic transformation of the society, according to the Department.

Over 2,000 cooperatives have been registered across the country during the first five months of the current fiscal year, the Department informed. The number of cooperatives stood at 20,000 in the country as of last year, according to Registrar of the Department, Sudarshan Dhakal. ´Number of cooperatives immoderately went up during the last three years, we are now mulling to render quality´, said Registrar Dhakal, adding that the future of cooperative is bright since it has the strength to cover all sections of society and economic transformation of the country through cooperative is not a far cry if it gets support from all sides.

Financial transaction worth over 100 billion is being carried out through cooperatives every year, according to the Department source. The share capital of cooperatives working in different sectors has touched Rs. 9.36 billion. Similarly, the cooperatives have accumulated savings Rs. 58 billion and made investment of Rs. 61.54 billion, the Department made public. The statistic of the Department reveals that some 200,000 office-bearers are associated and more than 50,000 are in direct employment in the cooperatives.

The State should put the cooperatives on priority while making investment to steer ahead the national economy to growth and reform, recommended cooperative activists. The cooperatives got an environment conducive to its flourishing following the adoption of open market economy in 1995. Though cooperative marked its start many years back, its promotion was not witnessed for a long time.

Now there are 8,888 savings and credit cooperatives, 3,465 multipurpose cooperatives, 2,964 agricultural, 1,205 consumers, 82 science and technology (transportation, communication) 66 coffee, 50 health, 75 tea, 35 herbal and 41 bee-keeping cooperatives in operation in Nepal, according to the data provided by the Department.

Source:
myrepublica

IPOs worth Rs 580m okayed this FY

The combined value of initial public offerings (IPOs) made during the first six months of the current fiscal year was up significantly compared to 2009-10 despite a fall in the number of issuing companies. The Securities Board of Nepal (SEBON) gave its nod to nine companies to make IPOs amounting to Rs 580.03 million during the review period compared to 11 companies permitted to make IPOs worth Rs 395.40 million in the previous fiscal.

According to the stock market regulator, two finance companies, five development banks, one hydropower company and one insurance company received SEBON's go-ahead to IPO during the first half of this fiscal year. Among the nine companies getting SEBON's approval, Gurans Life Insurance Company made the largest IPO of 1.08 million shares.

Meanwhile, the value of rights shares approved was half that of 2009-10. SEBON okayed the issue of rights shares by 16 companies worth Rs 3.37 billion against Rs 6.13 billion previously. Nine finance companies, four development banks, two commercial banks and one insurance company were cleared to issue rights shares in the first six months of this year. Sanima Bikas Bank's rights issue was the largest among the development banks. Dhruba Timilsina, corporate finance department chief at SEBON, said that the supply of shares in the capital market had surged after Nepal Rastra Bank instructed BFIs to increase their paid-up capital by 2012-13.

Source:
ekantipur

Chilime allots 960,000 shares to project-affected locals

The Chilime Hydropower Company on Wednesday allotted 960,000 ordinary shares to 31,123 applicants residing in the area affected by the hydropower project. Chilime had offered 10 percent of its total share issue to the local residents through an initial public offering (IPO). Of the total shares issued, residents of three village development committees (VDCs) subscribed to 180,000 shares at the par value of Rs 100 per share and 156,000 shares at the premium value of Rs 237.70 per share. The company had issued the remaining 624,000 shares to residents of 15 other VDCs. The company had allotted the shares in odd lots to issue shares to all the applicants.

Source:
ekantipur

Rastriya Banijya Bank & NIDC all set to merge

At a time when private banks and financial institutions (BFIs) are engaged in homework for the proposed merger among them, the government is planning to merge two state-owned financial institutions. Work is on to merge the Rastriya Banijya Bank (RBB) and Nepal Industrial Development Corporation (NIDC) within this fiscal year. The RBB-NIDC merger is on line with the central bank's suggestion that came around three months ago. The plan is an alternative mooted by the government instead of injecting capital in the RBB.

With the government's reluctance to inject fresh capital in the RBB, the merger is now being taken as a measure to turn the bank's capital from negative to positive. Currently, the RBB's net worth is negative by Rs 10 billion. The government has been reluctant to inject capital in the RBB saying that the budget for development purposes cannot be used to rescue a bank. Addressing the RBB's 46th anniversary programme, Finance Minister Surendra Pandey and Nepal Rastra Bank (NRB) Governor Yubaraj Khatiwada on Monday suggested the RBB go for merger.

Despite implementation of the financial sector reform programme for eight years, the RBB has failed to turn into a healthy bank. As per the government plan, RBB's net worth can be turned positive by selling the assets of the NIDC if both institutions are merged. The NIDC has plots of land in Kathmandu, Pokhara, Biratnagar, Bharatpur, Mahendra Nagar, Surkhet and Dhangadi, whose estimated worth is Rs 10 billion. If the RBB-NIDC merger happens, it will be the first instance of government-owned financial institutions getting merged. Unlike the RBB, the NIDC's financial health is gradually improving with its net worth that was negative by Rs 1.22 billion in 2006 turning positive by Rs 900 million by the end of the last fiscal year. "NIDC's status has improved as a result of recovery of loans and sales of shares in another bank," said a senior NIDC official. The NIDC that has paid up capital of Rs 410 million had earned profits of Rs 450 million last fiscal year. The NIDC recently submitted its audit report of the past eight years to the NRB.

With the government having a majority stake in the NIDC, it won't have hiccups in getting the merger decision endorsed by the annual general meeting (AGM) of the NIDC. As per laws, the AGM will have to endorse the merger decision. The government has given priority to mergers through the budget for the current fiscal year. However, RBB's employee unions are not positive about the proposed merger plan. During the 46th anniversary of the RBB, representatives of employees unions had expressed reservations on the merger plan.

The NIDC has also initiated the voluntary retirement scheme (VRS) to pave way for a smooth adjustment of employees after the merger. "The VRS has been designed to give more than the normal benefits to employees retiring," said a source at the NIDC. The NDIC employees, however, have not shown interest in the VRS till now. The deadline to apply for VRS is Jan. 31. There are 49 permanent employees in the NIDC and the VRS is targeted at 33 of them who have served over 15 years at the NIDC. The government will opt for compulsory retirement scheme if the employees don't leave the NIDC under the VRS. "Such a provision can be implemented for those who have crossed 20 years of service in the NIDC," said the source.

The central bank is also planning to give certain incentives for merger while reviewing the monetary policy in February. The budget has already announced changing the existing provision of taxing assets and liabilities as disposal after mergers, making it non-taxable to encourage mergers amongst the BFIs. Of late, more BFIs are in the process of merging. Banks and finance companies promoted by the NB group are in the process of merger. They include Nepal Bangladesh Bank and Nepal Credit and Commerce Bank. Birgunj Finance of Birgunj and Himchuli Finance of Pokhara also recently signed an agreement for merger.

Source:
ekantipur

New ATMs -Bank of Kathmandu

Bank of Kathmandu (BoK) has installed ATMs at Civil Mall in Sundhara and Bluebird Mall in Tripueshwor. "With the addition, the bank now has a total of 47 ATMs, 23 inside Kathmandu Valley and 24 outside Kathmandu Valley," said the bank.

Source:
tht

Citizens Bank provides Cricket Kit

Citizens Bank International has provided Nepal Cricket Association-Bardiya with cricket kit and dress as part of its corporate social responsibility (CSR). The bank that provides services to its 90,000 customers through its 26 branches across 12 zones of Nepal has plans to extend its service to all 14 zones of Nepal by the end of the current fiscal year, it said in a press release.

Source:
tht

Nabil agree to Adopt-A-School

Nabil Bank signed an agreement January 21 with Save the Children, Dalit NGO Coordination Committee and School Management Committee of Ratri Primary School in Dhaunauri VDC ¿ 9, Dang under the Adopt-A-School programme of Save the Children. Under the partnership, Nabil Bank will support the infrastructure development of the school which will include constructing two class rooms for the school. "The agreement which will be valid for one year will see the bank directly investing Rs 500,000 in Ratri Primary School to ensure children have a better environment to learn," says bank CEO Amrit Shrestha.

Source:
tht

Narayani National Finance 10.5% dividend

Narayani National Finance has decided to distribute 10.5 per cent dividend to its shareholders in its AGM. The finance company has earned a net profit of Rs 114.4 million in the fiscal year 2009-10. The finance company has been able to reduce its Non Performing Assets to 1 per cent. The company has 10 branches across Nepal.

Source:
tht

Nepal Express Finance Ltd 10% bonus shares

Nepal Express Finance Ltd has decided to distribute 10 per cent bonus shares to its shareholders in its AGM on Friday. The finance company has collected 40 per cent more deposits to Rs 492.4 million in 2009-10. The company has floated loans to the tune of Rs 407.3 million, which is 6 per cent higher compared to the previous fiscal year. The company also earned a net profit of Rs 26.5 million.

Source:
tht

Merger : Nepal Bangladesh Bank & Nepal Sri Lanka Merchant Bank

After four years of twists and turns, the merger between Nepal Bangladesh Bank Limited (NBBL) and Nepal Sri Lanka Merchant Bank Limited (NSLMB) is finally taking place. The Nepal Rastra Bank gave the go-ahead for the merger last week. In the event of the merger taking place, it will be the first in 2011 and the fourth in the country's banking history. About three weeks ago, the central bank had disqualified the institutions' merger announcement, saying that they did not follow due procedures as per the as per the Bank and Financial Institution Act (BAFIA) prior to announcing the merger.

"The merger will be effective from Jan. 23," said Prithvi Raj Ligal, chairman of the merger committee formed by the two financial institutions. The central bank will issue a notice of merger after receiving request from the institutions. NRB officials, however, said that they were yet to receive a formal letter from the institutions, requesting the central bank to issue a merger notice. NRB has told the institutions to complete the merger process within next 90 days.

This will be the second merger of the financial institutions promoted by the NB group. NBBL and NB Finance had merged four years ago. Other mergers that took place in the country are between Laxmi Bank and Hisef Finance¿both promoted by Khetan Group¿and Narayani Finance and National Finance. "The NBBL-NSLMB merger will encourage other financial institutions to go for merger," said Ligal, who is also the chairman of Nepal Credit and Commerce Bank. The government and the central bank have given high priority to mergers of bank and financial institutions (BFIs). The government has changed the existing provision of taxing assets and liabilities as disposal after mergers, making it non-taxable. The central bank is also mulling facilities to be provided to encourage mergers.

Following the NBL-NSLMB merger, the paid-up capital of NBB will surpass Rs 2 billion mark, a requirement which banks should meet by fiscal year 2012-13. Currently, NBB has a paid-up capital of Rs 1.86 billion and the paid-up capital of NSLMB is Rs 300 million. However, NBBL has to bear the liabilities of NSLMB as per the BAFIA. NSLMB owes Rs 60 million to Madhyamanchal Grameen Bikas Bank and Rs 149.2 to the Nepal Army.

"We decided to allow the merger to save NSLMB form collapse," said a senior NRB official. "The merger may affect the financial situation of NBBL. However, in the event of NSLMB's collapse, depositors' confidence in the financial system, which is already coping with acute liquidity crisis, would weaken." After the merger, the head office and branches of NSLMB will be converted into NBL branches. NSLMB staff will be assimilated to the NBB staff.

Boards of both the institutions have agreed to appoint NSLMB staff in posts two levels lower than those they currently hold. However, some of the NBBL employees are opposing this provision, saying that the NBBL board had assured them that NSLMB staff would be appointed in posts four levels lower than those they currently hold. "The management has assured us in writing," said Rabin Shakya, president of Employees Union of NBBL. On the other hand, NSLMB employees are saying that the appointments have to be made according the decision taken by the boards of the two institutions. "If not done as per the boards' decision, it will be our humiliation," said a senior NSLMB officer. The NBBL will not be changed even after the merger. "NRB did not allow us to change the board as per the changed shares structure," said Laxmi Bahadur Shrestha, director of NBBL

Source:
ekantipur

Premier Finance Company's 15% dividend

Premier Finance Company has approved 15 per cent bonus share and seven per cent cash dividend to its share holders from the profit of fiscal year 2009-10 in the 14th AGM of bank held on Wednesday. The company has increased its profit to 109.58 per cent compared to last fiscal. According to chairman of the company Bharat Narsingh Joshi, after 15 per cent bonus share the company's paid up capital will be Rs 120.66 million. It is issuing 2:1 rights shares to increase the paid up capital. It has collected the deposit worth Rs 1.03 billion and floated Rs 1.02 billion loan by the end of last fiscal year.

Source:
tht

Janaki Finance Company earns Rs 46 million

Janaki Finance Company has been able to earn Rs 46 million in the fiscal year 2009-10. This Janakpur-based finance company collected deposits worth Rs 6.2 billion and floated loans worth Rs 6.5 billion in the same period. The finance company has also made a payment of Rs 19 million as tax to the government, making it one of highest tax payers in the district.

Source:
tht

New branch of Prime Commercial Bank

Prime Commercial Bank has opened a new branch at Kalimati in Kathmandu. This branch is the bank's 19th branch. The bank said it has plans to widen its network by opening more branches in the near future.

Source:
tht

Standard Finance 5.5% cash dividend

Standard Finance has decided in its AGM to distribute 5.5 per cent cash dividend to its shareholders on Tuesday. The bank had earned Rs 57 million as net profit in the fiscal year 2009-10. The finance company provides all kinds of modern banking services to its customers including ATM, SMS banking, E-banking, 365 days banking, any branch banking among others.

Source:
tht

New NIC Bank branches

NIC Bank opened four new branches at New Baneshwor, Thankot, Thamel and Maharajgunj in Kathmandu on Tuesday, taking the number of branches to 32. The bank has 28 ATMs in the country. The new branches will provide a full range of products and services including loans, deposits, card payments, Internet and mobile banking. The bank recently distributed cash dividend at the rate of 26.32 per cent, the highest dividend, among banks for 2009-10, the bank claimed.

Source:
tht

Rastriya Banijya Bank staff may not get bonus

The staff of Rastriya Banijya Bank (RBB) may not get a bonus this year from the profit the bank made in fiscal 2008-09 as the Commission for Investigation of Abuse of Authority (CIAA) has barred public enterprises (PEs) with a cumulative loss from doing so. RBB had sent a proposal to the Finance Ministry recently asking for its approval to distribute bonuses worth Rs 182.4 million to its staff. The bank had earned a profit of a little over Rs 2 billon in 2008-09. It has been paying a bonus to its staff since the last five years from its annual profits. The bank's net worth, however, is still negative by Rs 10 billion.

"No PE with a cumulative loss can distribute bonuses as per our direction," said CIAA spokesperson Ishwori Poudyal. "PEs whose capital has eroded cannot claim a bonus even though they may have been making a profit operationally for a few years." On July 31, the CIAA had directed the chief secretary and other concerned government agencies not to allow distribution of bonuses in PEs with a cumulative loss. Earlier, the anti-graft body had ruled likewise when Nepal Oil Corporation (NOC) had decided to distribute Rs 198.8 million as bonus to its staff for fiscal 2008-09 from its profit of Rs. 3.31 billion. Despite the profit, NOC was still in the red by Rs. 7.92 billion, according to the Finance Ministry. According to the annual performance review of PEs prepared by the Finance Ministry, 18 out of 36 PEs incurred losses in fiscal 2008-09.

However, RBB chief executive officer Janardan Acharya said that RBB and NOC should not be seen in the same light. "Unlike NOC, we have been providing dividends and revenue to the government and we have not taken any financial support from the government to make this impressive profit," added Acharya. He argued that the new "energetic" staff should not be punished for the mistakes made by past employees. Acharya also warned that the bank's staff may lose enthusiasm to work resulting in a decline in profits next year. The Bonus Act allows private firms to pay a bonus amounting to 10 percent of the net profit for the year while the limit for public enterprises is 8 percent. Terming the Bonus Act impractical, the government has already moved to amend it while banning distribution of bonuses until the cumulative loss is recovered.

"The Bonus Act allows RBB to pay a bonus; but in practice and in principle, it cannot do so as NOC has been prevented from paying extra money to its staff," said Tanka Mani Sharma, joint secretary of the Finance Ministry. He, however, added that he could not confirm whether RBB would be allowed to distribute bonuses until the government takes a definite decision in this regard.

Source:
ekantipur

NMB Bank Education Plan

NMB Bank launched Education Plan ¿ a recurring deposit account ¿ especially for children. It offers a fixed maturity period of three to 15 years at a fixed interest rate with a minimum monthly deposit of Rs 500. Parents can open the account for their children as young as one day to 12 years. "Educating children is a major expense for parents," said Upendra Paudyal CEO of the bank that also unveiled its new corporate campaign called `With you Always'.

Source:
tht

Banks resume gold import with 100 kg

The gold import has finally resumed after four-month long halt as the two commercial banks imported 100 kg of gold to supply in the domestic market. "NIC Bank and Nabil Bank have imported 50 kg each to supply in the Bagmati zone," said an official associated with gold trade. "Laxmi Bank is also in the line to bring the gold," he informed. The imported amount of gold will be able to provide for the bullion traders of Bagmati zone for 11 days as per the designated quota. "The daily demand for gold in Bagmati zone exceeds 20 kg a day in the off season. Therefore, this amount of gold will not be enough," he said, adding that it will only increase the illegal trafficking of the gold from India.

The ban imposed on gold import was formally lifted after three and half months ¿last month after the central bank issued guidelines to the commercial banks and the traders regarding conditions for gold import. The central bank has fixed 15 kg per day as the quota for gold import solely through authorised commercial banks. However, the gold traders are lobbying for the free import under the provisions of Open General License (OGL) so that there will not be any quota restriction regarding the import. Likewise, the traders are still voicing their discontent with the provisions regarding the distribution among the different gold and silver trading associations.

"The new provisions will create some more disputes among the traders as the quota is so small no dealer will be satisfied with the amount they will get," he said. The bullion traders have been asserting that the distribution will only cause another dispute in the market like one in August 2010 which kept the jewellery market shut for a week. To control escalating Balance of Payments (BoP) deficit caused by excessive gold import, the government had increased the customs duty in March to match with that of India's through an ordinance which expired in September, stopping the supply of fresh gold and silver in the domestic market. The budget of this year then determined the new customs rate for gold at Rs 1,000 for 10 gm and Rs 2,400 for a kg of silver.

Source:
tht

Bankers brief PM on liquidity scene

Leading bankers of the country today met caretaker Prime Minister Madhav Kumar Nepal and informed him about problems being faced by the banking sector including liquidity crunch and their investments in the crusher industry. The commercial banks are currently facing liquidity crunch due to a delayed budget coupled with diversion of deposits to other financial institutions offering higher interest rates. According to the central bank, in the first four months of current fiscal year (mid-November), total government spending increased by only 1.8 per cent to Rs 51.54 billion, compared to an increase of 36.5 per cent in the same period last year, creating tight liquidity situation in the market.

Nepal Rastra Bank (NRB) data reveals that the deposits, which stood at around Rs 620 billion in mid-July 2010, is currently at around Rs 623 billion. The government spending has dropped squeezing the liquidity in the market due to a delayed budget. The government spending creates ease of liquidity in the market as the money pumped in by the government attracts private sector money too.

Due to liquidity crunch, the Credit to Deposit (CD) ratio of commercial banks has also gone up from the central bank-fixed ratio of 85 per cent. Not only the much-delayed budget but also the higher interest rates offered by finance companies and cooperatives ¿ that are offering over 15 per cent interest ¿ have squeezed liquidity from the commercial banks.

According to the central bank, the deposit mobilisation of commercial banks has declined by Rs 4.5 billion during the first four months of 2010-11 against a growth of Rs 19 billion in the same period last year. The central bank attributed the decline in deposit mobilisation by commercial banks to the diversion of deposits to other financial institutions on account of higher interest rate offered by them. The bankers also requested the Prime Minister to bring a clear policy about the crusher industry. "Commercial banks have given Rs 6 billion in loans to the crusher industry. The total loan is at Rs 10 billion if lending from other financial institutions is included, said president of Nepal Bankers Association (NBA) Sashin Joshi.

Source:
tht

Himalayan Bank's expansion plans

Himalayan Bank plans to install 10 ATM terminals and three branches in the next seven months of the current fiscal year. The bank has already established three branches with an ATM each at Gorkha and at Satdobato and Kalanki in Kathmandu. Currently, the bank has 33 branches and 53 ATM terminals across the country. The bank further plans to issue EMV debit and credit cards soon. Similarly, the 18th annual general meeting (AGM) of Himalayan Bank on Wednesday endorsed issuing 11.84 percent cash dividend and 25 percent bonus shares to its shareholders. Following the distribution of 25 percent bonus amounting to Rs 783.78 million, the bank's paid-up capital will reach Rs 2 billion.

The bank posted a net profit of Rs 508.79 million in 2009-10. During the review period, the bank's deposit base and lending portfolio amounted to Rs 37.61 billion and Rs 29.12 billion respectively. The deposit base and lending portfolio have witnessed a growth of 8.44 percent and 14.12 percent respectively against the previous fiscal year. However, the bank's non-performing loans in the review period have gone up to 3.52 percent, which it plans to lower to 3 percent during 2010-11. Meanwhile, the deposit base and lending portfolio have climbed to Rs 39.46 billion and Rs 32.53 billion respectively in the first five months of the current fiscal year. Likewise, the operating profit reached Rs 574.85 million.

Source:
ekantipur

Commercial banks in Pokhara losing deposits

As the development banks and other financial institutions are introducing different schemes, including high interest rates, to lure clients, deposits in the commercial banks have declined, according to the bankers. "The deposit in our bank has gone down by some 30 pc recently," said a banker, "If the unhealthy competition like this continues, the problem can be even bigger." He told Republica that commercial banks have been seeing drop in deposits collections after development banks and began increasing their interest rates after the liquidity crunch hit banking sector last year. At present, banks under ´B´ category (development banks) have been attracting more deposits than the ´A´ category banks (commercial banks).

Deposit collected by commercial banks is only 49.17 percent of the total deposit collection till mid-October of the current fiscal year. Commercial banks had collected 55.88 percent of the total deposit during the same period last year. According to Nepal Rastra Bank´s Pokhara regional office, commercial banks have lost deposits by some 7 percent over the period of a year. Development banks and financial institutions, however, raised their deposits by 6 percent and 1 percent respectively during the period.

Development banks and financial institutions have been aggressively expanding their network in Pokhara in recent years. Thirteen development banks and 14 finance companies have opened their branch in Pokhara in the last one year. Only six commercial banks opened their branches in Pokhara during the period. The bankers said commercial banks have been losing deposit because of their failure to compete with development banks and financial institutions by involving in unhealthy practices like raising interest rates and offering discounts to clients in account operation and loan flow.

According to Nepal Rastra Bank, deposit collection of development banks till mid-October in the last fiscal year was 23 pc of the total deposit collection. This has climbed to 29 pc during the same period in the current fiscal year. Similarly, financial institutions have also managed to increase their deposits to 21 percent of the total deposit collection. Banks and financial institutions in Pokhara have mobilized Rs 39.04 billion in deposits till mid-October of the current fiscal year.

Source:
myrepublica

Banks to limit savings interest at 4-6pc

Bankers under strong pressure to jack up savings interest rates have agreed to limit interest returns on savings deposits at 6 percent -- a move which goes against the spirit of open market policy. They have also concurred to set the minimum rate of returns on savings deposit at 4 percent, which is lower than what the depositors were expecting, following the central bank´s latest directive that asked banks and financial institutions (BFIs) to limit the gap between different savings rates to 2 percent or less. "A gentleman´s agreement has been reached to limit the savings rate between 4 and 6 percent," said a member of Nepal Bankers´ Association (NBA).

New commercial banks, however, have been given permission to fix higher rate by a margin of as much as 1.5 percentage point, he said, adding that the NBA will soon hold a meeting of chief executives of all 30 banks this week to formalize its implementation. NBA in May had also enforced a similar decision, whereby banks are still limiting interest rates on fixed deposits at 12 percent. Once the new decision comes into effect, depositors who were already enjoying as much as 10.5 percent annual interest returns on savings will find their return drop to 6 percent.

This will also reduce the prospect of salary account holders and other accounts holders enjoying far better returns than now. So far, the banks were providing just 2 percent annual interest returns to such accounts holders. The bankers said their agreement to limit the savings rate had become necessary mainly to avoid unhealthy competition among banks to attract additional deposits. If unstopped, they said it will ultimately drag entire banking industry toward disaster. "Competing on savings rates makes no sense, especially if it is already driving away the borrowers. Besides, our economy is also not productive and competitive enough to cope with higher lending rates," said the NBA official.

As for the rising lending rates, bankers said they will study the possibility of its downward revising only after studying the impact of the new decision. When asked to comment, NBA President Sashin Joshi said, "We had discussions on how to implement the central bank´s new directives on savings rate". He refused to make further comments on the agreement. Some of the bankers, however, noted that the new move could be risky particularly given the latest trend of customers becoming more interest sensitive and their competitors like development banks and financial institutions offering as much as 13.5 percent.

The decision to cap the fixed deposit rate at 12 percent has already caused the banks lose deposits of some Rs 4 billion to the financial institutions. Nepal Bank Limited and Ratriya Banijya Bank -- two public sector banks that offer least savings returns -- said their deposits have dropped by Rs 4 billion and Rs 5 billion respectively over the last five-and-a-half months, as BFIs offering higher returns stole their customers.

Source:
myrepublica

Century's capital structure ratio changed to 54:46

The proposed Century Commercial Bank on Sunday changed its capital structure to a ratio of 54:46 for promoters and the general public from the 70:30 ratio proposed earlier through a special general meeting (SGM). The bank had to change its capital structure as 132 of its proposed 568 promoters failed to put up the pledged money. It means the promoters will have to deposit Rs 1.08 billion instead of Rs 1.4 billion as promised earlier. The general public will put up the rest to meet the required paid-up capital of Rs 2 billion when the bank makes an initial public offering.

"We have changed the capital structure as some shareholders could not meet their commitments," said bank chairman Pradip Man Vaidya. "Due to the unfavourable economic conditions of the country, our promoters could not deposit the committed amount." Century officials have said that big promoters involved in real estate trading had failed to fulfil their commitments. As Century had already received a letter of intent (LoI) for establishment on the basis of a capital structure of 70:30, the central bank had told it to hold a special general meeting to change it. The bank was also rushed to get its operating license as it has to be done within a year from the date of receiving the LoI as per the licensing policy of NRB. Century had received its LoI on Jan. 24, 2010.

After the central bank refused to entertain the presence of two persons in the promoters group as their family members were also involved in another bank as key promoters, pressure had mounted on Century to meet the capital requirement. There were some promoters who could not put up the promised money although they had deposited a certain amount. They were allotted shares as per the revised commitment with the surplus shares being forfeited and included in the general public's quota or distributed among other promoters.

The SGM also endorsed the proposal to reduce the number of promoters groups to four from the existing six so that four directors could be elected to the eight-member board. The bank had to reduce the number of promoters groups because their shares in the total capital structure had decreased. As per the revised board structure, there will be representation of three persons from the public. One will sit on the board from the category of impendent professional board members. Earlier, promoters were categorised into six groups so that six directors could be elected to the nine-member board. Only two people could be elected from the general public. Most of the promoters addressing the function were against the categorisation of shareholders. However, the SGM endorsed the proposal of keeping four groups for now and reviewing the categorisation system at the first annual general meeting after it starts operations. Those who were against the categorisation system said that it could promote groupism.

"The main objective of categorization was to collect capital, but it will be better if the bank dissolves it," said Nirmal Pradhan, a promoter. However, chairman Vaidya defended categorization saying that its absence could result in tussles among the promoters on various issues in the future. "It will be tough to bring all the promoters to a compromise." The SGM also endorsed the board's proposal to authorize the bank's board to amend the memorandum and articles of association in case authorized regulatory bodies ordered it to do so.

Source:
ekantipur