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

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

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

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

Rastriya Banijya Bank's ATM in Bhairahawa

Rastriya Banijya Bank (RBB) on Wednesday installed an ATM counter in Bhairahawa. The new ATM was inaugurated by Nagendra Jha, chief district officer of Rupendehi district.With this, the bank has 18 ATMs across the country, states a press release of the bank. It has plans to expand ATM counters to 50 locations. The bank had posted a net profit of Rs. 2.3 billion in the last fiscal year.

Rastriya Banijya Bank launches Mobile Pay

Rastriya Banijya Bank (RBB), the state-owned commercial bank, has launched ´Mobile Pay´ a new service under which customers can recharge their mobile accounts from the bank´s outlets. Issuing a press statement on Wednesday, the bank said its branches in Kathmandu valley as well as in Biratnagar, Birgunj, Pokhara and Nepalgunj will provide the newly introduced service to the customers. The bank´s customers holding Nepal Telecom´s Prepaid and CDMA service will be entitled to enjoy the new service. The bank has also said that it is also introducing another service that facilitates the customers to pay the bill of internet and telephone. The country´s largest commercial bank in terms of deposits and branch network has
already computerized its 116 branches and is providing internet banking and SMS banking services besides ATM services from 20 branches.

Source: Myrepublica.com

RBB like to get huge capital injection from govt

REPUBLICA
KATHMANDU, Oct 6: Rastriya Banijya Bank (RBB), the largest bank of the country in terms of deposits and coverage, has floated a plan to make its net-worth positive and lower Non-Performing Assets (NPA) to less than 5 percent within the next two years.
According to the plan forwarded to the central bank for final approval, the RBB has set a target to recover around 50 percent of the outstanding Rs 4.82 billion, which was categorized as bad loan, within the next two years.
"If the plan of recapitalizing and recovering the bad loans gets implemented, RBB will emerge as the strongest bank in the country," said Janardan Acharya, the chief executive officer of the bank.
The NPA ratio of the second oldest bank in the country with largest branch network came down to 15.68 percent by the end of last fiscal year ending mid July from 21.63 percent a year earlier. The total value of negative net-worth of the bank currently stands at Rs 14.66 billion.
Along with extra efforts made on recovery of bad loans, the bank has no NPA on the loans that were extended after the management of the bank was handed over to private management, he said. Acharya also informed myrepublica.com that the government is seriously looking into all options to make the net-worth of the RBB, which at the moment is negative by over 14 billion, positive. "Issuing special bond and divesting 15 percent share of Nepal Investment Bank that the RBB holds are two major options that are on the table to raise the capital base of the bank,” said Acharya.
According to concerned government official, a recent meeting of High Level Committee on Financial Sector Reform, chaired by the Finance Minister Surendra Pandey, agreed in principle to issue such bonds and the Nepal Rastra Bank (NRB) has been asked to detail procedures of bond issuance.
Though the amount is yet to be decided, the total value of the special bonds is likely be to around Rs 10 billion, said the official. "Along with the special bond, the total negative net-worth of the bank can be made positive if we become successful in divesting 15 percent share of Nepal Investment Bank that is valued at around Rs 4 billion at the current market price," said Acharya. He further said that the bank has a plan to offer 30 percent of its paid-up capital to general public.
The bank that was able to manage a record net profit of Rs 2.04 billion during the last fiscal year is also planning to set up offices in major Indian cities to tap remittance business opportunities.
"First we are planning to open an office in Indian capital New Delhi soon and if things go as plan, we will open our offices in Chennai and Mumbai within a year," Acharya elaborated.

Banks drop in Non-Performing Loan

Kantipur Report
KATHMANDU, Sept 7 - The commercial banks are doing fine by and large in terms of reduction in their Non-Performing Loan (NPL) in the previous fiscal year, according to the central bank.
While 16 of the 25 banks witnessed a drop in their NPL, three saw it rising, states a recent report of Nepal Rastra Bank (NRB).
Financial institutions with NPL hovering below five percent are considered sound.
The NPL of Nabil, Machhapuchhre and Development Credit Bank Limited went up slightly but it is still manageable with Nabil having 0.8 percent at the lowest and Machhapuchhre with 2.8 percent at the highest.
The rise and fall of the NPL in case of Global Bank, Citizens Bank, Prime Bank, Sunrise Bank and Bank of Asia could not be assessed as they have not reported their their NPL status to the
central bank either in the last fiscal year or the previous year or both years.
NIC bank's NPL remained constant at 0.9 percent in both years.
NCC bank has been able to reduce its NPL significantly last year from 16.36 percent to 2.7 percent during the 12-month period.
Chief Executive Officer of NCC Bank Ratna Raj Bajracharya said recovery of loans from some major groups - including the N.B. group, which is also the promoter of the NCC bank - was the principal reason behind sharp decline in the NPL of NCC.
"The Harisiddhi Brick Factory owned by N.B Group itself had owed the bank five percent NPL," he said. "We acquired its lands as a part of recovery." The bank was to recover loans of Rs. 330 million from Harisiddhi.
The bank also acquired
the lands owned by Tribeni Distillery to recover around Rs. 60 million loans last year, Bajracharya said.
"We will reduce the NPL to one percent within the next six months," he said.
There are still five banks whose NPL level is higher than five percent: Nepal Bank Limited, Rastriya Banijya Bank, Nepal Bangladesh Bank, Lumbini Bank and Agriculture Development Bank.
RBB CEO Janardan Acharya said they would reduce the NBL below five percent within
the next two years. The government owned bank has still 15.7 percent NPL which represents
Rs. 4.9 billion.
"We have plans to recover around Rs. 2.5 billion this year and recovery of the remaining amount in the next year," he said. The bank recovered Rs. 2.4 billion in the last fiscal year.NPL Change in TOp 20 Banks
2007/08 2008/09
Bank NPL (%) NPL (%)
NBL 8.05 5.9
RBB 21.63 15.7
Nabil 0.79 0.8
NIBL 1.12 0.8
StanChart 0.92 0.7
HBL 2.36 2.2
NSBI 3.65 2.0
NBBL 31.11 19.3
Everest 0.64 0.5
BoK 1.76 1.3
NCC 16.36 2.7
NIC 0.90 0.9
Lumbini 14.87 9.1
MBL 1.04 2.8
Kumari 1.35 0.4
Laxmi 0.13 0.1
Siddhartha 0.60 0.5
ADBL 10.40 8.8
DCBL 1.26 1.6
NMB 1.52 0.5

Banks' deposit touches Rs 565 billion

REPUBLICA
KATHMANDU, Sept 5: Propelled mainly by an astonishing rise of over 50 percent in remittance income, deposit mobilization as well as lending volume of Nepal´s 26 national level commercial banks recorded impressive growths of over 30 percent at the end of last fiscal year.
A central bank statistics released recently revealed that total deposit mobilization rose by 32.27 percent to reach Rs 563.6 billion by the end of mid-July 2009. Total deposit mobilization was Rs 426.08 billion at the end of the last fiscal year. Similarly, the total lending volume, that includes loans and advances, touched to Rs 398.14 billion, which was 31 percent more than last year´s lending worth Rs 302.91 billion.
State-owned Rastriya Banijya Bank (RBB) continued to be the largest bank in terms of deposit volume. According to the central bank, the RBB has mobilized deposit worth Rs 67.98 billion, which was a rise of 17.2 percent against last year´s figure. The semi-state-owned bank Nepal Bank Limited consolidated its second position whereas Nepal Investment Bank (NIB), which has a total deposit worth of Rs 46.70 billion, emerged as the third largest depositor. However, in the private bank category, the NIB remained as the largest bank in terms of deposit mobilization volume.
The NIB, which has made an impressive progress by expanding its banking base, emerged as the largest lender of the country. According to the data, the total volume of loans and advances extended by the bank has touched Rs 36.25 billion against Rs 27.14 billion recorded at the end of Mid-July 2008.
Among the major deposit categories, saving deposits that is a popular saving instrument among middle class continued to attract largest deposit worth of Rs 260 billion against Rs 211.45 billion recorded last year. Likewise, time deposits, popularly known as fixed deposit, also recorded a whopping rise of 34.8 percent to 141.26 billion followed by current deposits -- widely used for business transactions -- that witnessed a growth of 27.7 percent to Rs 71.65 billion.
Among of the major lending sector, private sector lending rose by 34.45 percent to Rs 387.45 billion against Rs 288.28 billion recorded during the preceding fiscal year.However, the volume of investment in securities declined by 3.12 percent to Rs 69.26 billion from previous year´s Rs 71.5 billion.

Bank deposits surge 30pc despite slump

Kantipur Report
KATHMANDU, Sept 3 - Deposits in the country's commercial banks increased by an astounding Rs. 128.7 billion in the last fiscal year. Buoyed by a constant growth in remittances, total deposits in Nepal's 25 commercial banks reached Rs. 555.14 billion, a 30.18 percent increment from the previous year.
The fourth quarterly report of Nepal Rastra Bank (NRB) shows that, along with deposits, lending and net profits of commercial banks have also increased significantly. According to the central bank's report, banks in the country have maintained growth despite the global economic crisis.
The NRB report shows that lending and net profits have increased by 29.61 percent and 33.09 percent respectively. The commercial banks provided loans and advances amounting to Rs. 384.31 billion against Rs. 296.51 billion provided by the 25 banks in the last fiscal year.
According to the unedited financial figures of the central bank, Rastriya Banijya Bank (RBB) collected the highest amount of deposits of Rs. 68.09 billion. Nepal Investment Bank (NIB) was close behind with Rs. 46.69 billion. Its deposits surged by 35.52 percent in the last fiscal year. NIB leads private banks in terms of deposits.
NRB's report also shows that NIB is the largest lender among the commercial banks. In the last fiscal year, the bank provided loans and advances worth Rs. 36.82 billion.
The Agricultural Development Bank, Nepal (ADB/N), RBB and Nabil Bank issued loans amounting to Rs. 32.56 billion, Rs. 31.60 billion and Rs. 27.58 billion respectively. The commercial banks jointly earned a net profit of Rs. 14.14 billion during the period against Rs. 10.63 billion last year. Among the 26 banks, five commercial banks have recorded over Rs. 1 billion in net profits in the last fiscal year.
Nepal Bangladesh Bank declared the highest net profit amounting to Rs. 2.47 billion, followed by RBB and ADB/N which posted net profits of Rs. 2.03 billion and Rs. 1.23 billion respectively. The profits of these three banks improved significantly due to write back of their non-performing loans.
Nabil Bank is the leader among private banks in terms of net profit with Rs. 1.03 billion followed by Standard Chartered Bank.Top Ten in terms of lending
Banks
Nepal Investment Bank 36.82
ADB/N 32.56 Rastriya Banijya Bank 31.60
Nabil Bank 27.58 Himalayan Bank 25.51
Everest Bank 24.46 Nepal Bank 19.48
Nepal SBI Bank 15.13 Bank of Kathmandu 14.94
Kumari Bank 14.59

Top Ten in terms of deposits Banks
Rastriya Banijya Bank 68.09
Nepal Investment Bank 46.69
Nepal Bank 44.62
Nabil Bank 37.34
Standard Chartered Bank 35.87
ADB/N 35.15
Himalayan Bank 34.74
Everest Bank 33.32
Nepal SBI Bank 27.95
Bank of Kathmandu 18.08

Commercial banks reduce NPA

KATHMANDU: The Non-Perfoming Assets (NPA) of commercial banks have come down. NPA is one of the key indicators that gaue the financial strength of any bank or financial institution.“By the end of the fiscal year 2006-07, the NPA of A-class commercial banks was 10.3 per cent, which came down to 6.3 per cent by the end of the fiscal year 2007-08,” said the Monetary Policy 2009-10.The NPA decreased to 4.9 per cent by April 13, 2009, according to the unaudited report of the commercial banks.Of the total 25 commercial banks then, except three government and semi-government commercial banks — Nepal Bank Ltd (NBL), Rastriya Banijya Bank (RBB) and Agriculture Development Bank Ltd (ADBL) — 22 commercial banks’ NPA is at 2.4 per cent, the eighth Monetary Policy said. NBL and RBB — by the end of the fiscal year 2007-08 — had 12.4 per cent and 21.7 per cent NPA respectively. They further reduced their NPA to 8.6 per cent and 18 per cent respectively by April 13, 2009. They have succeeded in reducing the NPA under the Financial Sector Reform Programme which had categorically said them to reduce the NPA.However, the number of commercial banks, development banks and finance companies has also increased. Currently, there are 26 commercial banks, 63 development banks, 78 finance companies, 12 micro-finance companies — making it a grand total of 173 banks and financial companies.By April 13, 2009 — the end of fiscal year 2008-09 — the total number of branches of commercial banks also increased to 681 from 555. Within six months, 126 new branches of commercial banks were added, according to the policy that has stated that regionwise the branches of commercial banks stood at 127 in Eastern Development Region, 337 in Central Development Region, 135 in Western Development Region, 51 in Mid-Western Development Region and 31 in Far-Western Development Region.Though commercial banks claim that they are moving towards rural areas, their reach through branches is less in the hilly region. According to the report, the populace in Western Development Region has little access to commercial banks. “The urban-centric banks should go to rural areas,” NRB governor Bijaya Nath Bhattarai said during his reinstating ceremony the other day.
What is NPA?
KATHMANDU: Non-Performing Assets (NPA) is a classification used by financial institutions that refer to loans in jeopardy of default. Once the borrower has failed to make the interest or principal payments for 90 days the loan is considered NPA and also known as Non-Performing Loan (NPL). Non-performing assets are problematic for financial institutions since these institutions depend on interest payments for income. Troublesome pressure from the economy can often lead to a sharp increase in financial institutions’ NPA and often results in massive write-downs. — HNS