Customers pay more due to traders dispute

Customers paid 'heavily' for traders' dispute as the Gold and Silver Management Committee failed to fix the price unanimously for the second day today.
The consumers paid Rs 1,125 more in the domestic market compared to the international price due to their dispute and low supply of gold and traders dispute.

Due to very low gold supply in the market, Nepal Gold and Silver Dealers’ Association (Negosida) has differed from fixing gold and silver price. But Nepal Gold and Silver Art Association (Negosaa) president Rudra Bahadur Baraili said that the two associations -- Negosaa and Nepal Gems and Jewellery Association (Negja) -- fixed the trading prices of gold for the domestic market.

"We fixed the price at Rs 31,370 per 10 gram and silver at Rs 514 per 10 gram for Monday," he said, adding that they are aware of less supply of gold but the committee has the responsilbilty to fix the price for domestic market. The domestic market witnessed different prices -- yesterday and today -- as the negosida traders didnot follow the price fixed by the committee.

The committee was formed after the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) brokered a settlement between three warring trade associations -- Negosida, Negosaa and Negja last Wednesday.

As per the agreement, the Gold and Silver Management Committee will develop an effective working policy to fix the price and study the domestic market demand of precious yellow metal. According to agreement the general secretary Maniklal Shakya of Negosida will work as secretary of the commitee that was the demand of Negosaa and Negja.

But Negosida thinks that they were betrayed by the central bank. "We are not going to fix gold price until we have a joint meeting with the central bank, Negja and Negosaa," said Tej Ratna Shakya, president of Negosida.

They blame the Nepal Rastra Bank (NRB) for not increasing the present quota of gold even after the formation of the management committee including the warring associations. "We were told to come unitedly," he said adding that they were united but the 10-kg quote per day is not increased by the central bank as promised.

Posibility of getting share brokers' licnece doubles

The possibility of getting share brokers' licence increased to double as half of the aspirant-broker-applicants did not turn up by the end of the last day today to verify their willingness to appear in the exam.

"Though the number might still decrease, 159 applicants -- around half of the total 316 applicants -- contacted Nepse till the last day for verification," informed Shambhu Pant, deputy general manager of the Nepal Stock Exchnage (Nepse). The final list of aspirant share brokers to appear for exam will be published in 10 days.

Nepse is planning to take the exam for the remaining 25 marks next month. "However, the date for the test will be announced after the selection committee meets soon," he said adding that by then the final list of eligible applicants will also be ready.

The 75 marks has already been awarded on the basis of educational qualification, experience and paid-up capital of the brokerage company.

Nepse had published the notice for resumption of the share brokers' selection process on August 10 -- for 27 share brokers -- after a long hiatus of over two years. It has asked the applicants to restate their eligibility for the exam. In the past two years, the status of some applicants might have changed due to various reasons, he added.

When the process was halted in February 2008, Nepse had already selected 316 applicants from a total of 336 applicants but Commission for Investigation of Abuse of Authority (CIAA) asked it to halt the process, questioning transparency. Nepse was under pressure to restart the process.
Currently there are 23 share brokers, out of which only a dozen are actively trading daily. With the increase in number of investors that is estimated at around 100,000 at present the existing number of share brokers is not enough.

BoAN dividend

KATHMANDU: The Board of Director of Bank of Asia Nepal (BoAN) meeting on Sunday decided to give 10.53 per cent cash dividend subject to approval from the central bank and its AGM.

PAF, WFP join hands to alleviate poverty

The United Nations World Food Programme (WFP) and Poverty Alleviation Fund (PAF) signed a Memorandum of Understanding (MoU) to form a strategic alliance to alleviate poverty and food insecurity in the Mid and Far-Western Hills and Mountain regions.
"WFP and PAF will collaborate to provide vital food and nutrition assistance whilst engaging beneficiaries in income generating and community infrastructure projects through food and cash-for work," the MoU said.
They are planning to work together for small scale irrigation, cash crop plantation, enhanced farming techniques and poultryfarming apart from WFP's plans to provide food for training activities that wouldbenefit members of community organisations of PAF.
"The alliance between PAF and WFP Nepal, together with the commitment of the government, demonstrates something can and is being done to empower the rural poor and end hunger and poverty that has plagued lives of people for too long,” said Dominique Hyde, Officer in Charge, WFP Nepal.
Leveraging the capacity and experience of both organisations joint projects look to effectively maximize the coverage and impact of humanitarian and development interventions. "This partnership is to effectively reach the most vulnerable and isolated communities in the country," said Vidyadhar Mallik, vice-chairman at the PAF.
The agreement follows a partnership agreement signed between WFP and the Ministry of Local Development and will see WFP receive $35.8 million to help the government provide a social safety net.
All three organisations are supported by the World Bank and the agreements mark a significant step forward in development partner and government collaboration to address poverty and food security in the remotest areas.
The first phase of collaboration will beginin in 16 VDCs of Mugu, Jumla and Bajura.

NAC New Delhi flight to resume soon

The suspended Kathmandu-Delhi-Kathmandu flights of Nepal Airlines Corporation (NAC) will resume in a week, according to the national flag carrier.

NAC flights on the sector have been suspended due to repair works of the 180-seater Boeing aircraft’s faulty gear some 10 days ago.

"It took a little more time to find the spare parts as NAC planes are of old model," said a source at the national flag carrier. "After a long search, the spare parts were found in Canada," the source said adding that NAC has placed the order. The spare parts will reach Kathmandu within five days.

"It will take another couple of days to fix spare parts and tentatively flights on New Delhi route -- one of the most lucrative routes -- will resume in a week."

Despite being a lucrative route New Delhi always suffers due to lack of NAC aircraft. The airline had suspended its flight in 2008 for almost seven months due to technical problem in one of the aircraft.

The national flag carrier has two age-old Boeings 747s that have been flying on New Delhi, Dubai, Kuala Lumpur, Doha, Qatar, Hong Kong and Bangkok route.

NAC has been shifting its passengers to other flight operators in New Delhi.

According to the Immigration Office, Tribhuvan International Airport (TIA) data, visitor arrivals in July, compared to the same month last year, have increased by 26.1 per cent to 29,338 fuelled by the Indian tourists arrivals. Indian tourists arrivals increased by 26.5 per cent in July compared to the same month in 2009.

Though, there are over one dozen airlines in Nepal, only national flag carrier and Buddha Air — that has recently started its flights to Paro, Bhutan — fly on international routes.

Buddha prepares Kolkata flight

KATHMANDU: Buddha Air expects a clearance from the Bureau of Civil Aviation Security (BCAS), India, next week and the from Directorate General of Civil Aviation (DGCA), India, by September-end to start daily flight operations on the Kathmandu-Kolkata-Kathmandu route from the first week of October. The private airline officials said that the airline will operate a 48-seater ATR 42 plane and hope to do a good business as it is one of the lucrative routes. Currently, only Air India flies three to four times a week on the route. "We expect BCAS approval to come in a week and DGCA nod within a month," the airline said. Under the revised Air Service Agreement between Nepal and India, Nepali private airlines can now fly to Kolkata, Lucknow and Patna. Buddha Air is designated by the government to operate flights on these routes. While the airline hopes to start flights between Kathmandu and Lucknow in November, Patna will take some time. The daily flights will be convenient for Indian tourists as Nepal-bound Indian tourists are on rise since the beginning of this year.

DCGC may have to wait to start deposit gurantee

Deposit and Credit Guarantee Corporation (DCGC) may have to wait before it starts deposit guarantee scheme.

In the Monetary Policy for 2010-11, the central bank has made it mandatory for class-D micro finance institutions to guarantee deposits up to Rs 200,000. But class-D micro finance institutions were not allowed to collect deposit from the public except from their members till July 16.

The central bank allowed them to collect deposit from public from July 17. From the same date, DCGC has also started the deposit guarantee scheme for the deposits of up to Rs 200,000 of these institutions.

According to the central bank, only those class-D institutions can collect deposit from the public which have been posting profits for last three consecutive years.

Some of the institutions, which have fulfilled the central bank's criterion, have applied for the approval from the central bank to collect deposit from the public claiming that they have fulfilled the criterion fixed by the central bank to collect deposit from the public.

"Once they get approval from the central bank, they come to us for the deposit guarantee," said Jagdish Chalise, deputy general manager at DCGC that is planning to guarantee the deposits to safeguard the small depositors. "DCGC is fully prepared to entertain them."

The fiasco of Nepal Development Bank (NDB) that has been sent to liquidation by the Patan Appellet Court has compelled the central bank to guarantee the small deposits to prevent such incidents, where small depositors could lose their hard-earned savings.

Though, almost all the depositors of the bank got their deposit back, NDB is the first bank in the history of Nepal to be sent to liquidation after its financial health deteriorated and was beyond revival.

ADB's first president Watanabe passes away

Takeshi Watanabe, the first President of the Asian Development Bank (ADB), passed away in Tokyo, Japan, on Monday, 23 August at the age of 104.
Watanabe played a pivotal role in moving ADB from an idea into a reality, and was unanimously elected as first President at ADB’s inaugural meeting in Tokyo in 1966. He served in the role for six years until 1972.
Watanabe was in many ways considered to be the “father” of ADB, as it was under his leadership that many of ADB’s policies and targets were established, the first bond was issued in the Federal Republic of Germany in 1969, and in September 1972, donors agreed to set up ADB’s multilateral source of concessional lending, the Asian Development Fund.
He was also instrumental in establishing in the public consciousness ADB’s role as a development agency distinct from others, once likening the organization to a “family doctor” that has an intimate knowledge of his patients, and helps them in their “hour of need”.
“He combined idealism with practicality and can be credited with both helping to create ADB’s identity, as well as putting it on a sound financial footing,” said ADB President Haruhiko Kuroda.
It was under Watanabe’s leadership as well that ADB emerged as a key source of multilateral assistance in the region. In 1971, he oversaw a 150% increase in ADB’s capital. And by the time he left ADB in 1972, ADB had raised over $200 million from the private capital markets.
After resigning from ADB, Watanabe took on a number of roles including advisor to the Bank of Tokyo, President of the Japan Credit Rating Agency, and honorary chairman of Japan Silver Volunteers Inc. His book of memoirs of ADB 'Towards a New Asia' was published in 1973.

World Investment Forum to meet on September 6-9

Some of the greatest minds and movers in the field of investment will assemble in Xiamen, China, on September 6-9 at UNCTAD’s World Investment Forum 2010 (WIF 2010) to discuss how to promote sustainable investment and development in the new phase of globalisation and take advantage of opportunities that could arise across the globe.

More than 1,000 people from 90 countries are expected to attend the WIF 2010, including investors and representatives of governments, businesses, international organizations,investment promotion agencies, and civil society. Among the participants will be 11 Heads of State, 53 ministers and ministerial-level officials, 200 senior business executives, 46 senior academic experts, 20 senior representatives of international organisations, and numerous chiefs of national investment promotion agencies.

The biennial event will see world leaders investment summit, in which political leaders and CEOs of the world's largest transnational corporations will discuss the new international investment landscape in the post-crisis era. They will identify policy options for maximising the developmental benefits of foreign investment and for taking advantage of new opportunities as the world emerges from recession.

Ministers in charge of investment policies from leading investment source and recipient countries, as well as heads of international organisations, will address such issues as balancing investment liberalisation and regulation and enhancing coherence between national and international investment policies.

Similarly, there will be a high-level tripartite conference, where CEOs and chief strategists of global corporations, senior government officials, and heads of investment promotion agencies will join leading experts in identifying key issues affecting FDI and in discussing the impacts of investment on sustainable development that will include world investment prospects, finding new strategies for investment promotion, and promoting green investment.

The 2010 International Investment Agreements Conference will bring together policymakers, negotiators, and investors to discuss challenges facing the international investment agreement (IIA) regime. These include policies for generating tangible development benefits in the post-crisis investment landscape; the interaction of the IIA regime with key public policies and the systemic evolution of the IIA regime and the investor-State dispute settlement system.

At the Sustainable Stock Exchanges Conference 2010, CEOs of stock exchanges, large institutional investors and issuers, and senior securities regulators will examine how stock exchanges can promote sustainable business practices and responsible capital markets.

A special conference on 'Promoting Responsible Sovereign Lending and Borrowing' will provide an occasion for senior government officials, central bank governors, and high-level representatives of international organisations to discuss the promotion of responsible lending and borrowing.

During the eighth meeting of the UNCTAD-International Chamber of Commerce (ICC) Investment Advisory Council, heads of State, government ministers, executives of global companies, and heads of international institutions will debate practical means for addressing obstacles to achieving the Millennium Development Goals (MDGs) through investment. Investment Showcase events will include 'investment climate' presentations by government ministers from Cambodia, Jordan, Lao People's Democratic Republic, Namibia, Viet Nam, and Zambia to investors.

There also will be presentations on the investment guide programmes of UNCTAD and the China Investment Promotion Agency (CIPA).

Bhairahawa SEZ to create over 9,000 jobs

Bhairahawa Special Economic Zone (SEZ) would create some 9,100 employment in 10 years.

"In the worst case scenario, Bhairahawa SEZ will create 9,100 jobs," according to a report by the members of the World Bank Group.

Meanwhile, in progressive case scenario, the SEZ could generate around 13,300 employment and in the best case scenario, it could employ 20,500, said the report 'Creating Competitive SEZ Regime' prepared jointly by the International Finance Corportaion (IFC), Foreign Investment Advisory Service (FIAS) and IFC-SouthAsia Enterprise Development Facility (IFC-SEDF).

Bhairahawa SEZ -- the first SEZ in the country that is going to come into operations soon -- is also expected to attract Rs 427.86 million investment in a decade in conservative scenario. "Meanwhile, in progressive case, it could attract Rs 625.34 million investment and in best case scenario, it could attract 883.94 million investment over a decade period," the report said.

SEZ not only creates the employment and attracts investment, it will also earn revenue for the government. "In a decade, it could earn Rs 4.5 million revenue to the operator in the worst case scenarios," the report said, adding that in the middle case scenario, it could generate Rs 6.65 million and in the best case scenario, it would earn Rs 10.25 million for the operator in 10 years time period.

Though the Bill to operate SEZ is pending in the parliament, entrepreneurs are optimistic of its benefits, once it comes to operations.

"Development of SEZ is appreciable but the bill is still pending," said Uday Raj Pandey, first vice president of Garment Association Nepal (GAN).

"Developing SEZ is not enough, facilites like bank finance, lease facility, special labour Act for effective operation of industries in SEZ are key to its success," he said, adding that Bhairahawa SEZ could be little more costlier that Birgunj SEZ that is still under planning phase.

"Cost wise SEZ at Birgunj will be more beneficial for exporters as there is a dry port," Pandey said.

GAN has also been insisting for a Garment Processing Zone at Birgunj Sugar Factory area.

The SEZ project office has given IFC a list of businesses that have expressed their interest in locating in BHairahawa SEZ. Motorbikes, Toys, Textiles, Silk, Knitted Fabric, Carpets, Craft, Tea, Plastics, Plastic Packaging material, Polyster thread, polyster bags and materials, Ghee, plastics, floriculture related firms have expressed their interest to shift their bases in the Bhairahawa SEZ that was started construction in 2008.

If SEZ Bill is passed with a mandatory export requirement, some of the companies interested in SEZ would not be able to locate there because thier business models are set to produce predominantly for the Nepali market.

Construction of SEZ in Bhairahawa and Birgunj represent positive steps towards creating additional serviced industrial land for foreign and local investors in Nepal.

Global gold demand trend

Recent developments in China are likely to have positive longer-term implications for the increasingly important gold market, said the report from Word Gold Council (WGC).The council view that there is huge potential for gold ownership to increase among Chinese consumers, in amarket with tight domestic supply, as discussed in our China Gold Report –Year of the Tiger, March 2010.On the supply side, supportive factors suggest that total mine supply is likely to trend higher, particularly as the scope for producer de-hedging continues to diminish. "Growth in gold demand during the second quarter (+36 per cent Year-on-Year to 1,050 tonnes) largely reflected robustgold investment demand compared to the second quarter of 2009," said the WGC.The climate was more favourable forgold investment with strong growth in most countries. Investment demand surged in second quarter in 2010 due to uncertaintyin the global economic recovery and the spill over of European sovereign debt concerns.As a result, gold investment represented the majority of total gold demand during the quarter. Net retail investment and gold ETF demand increased by 29 per cent and 414 per cent respectively, compared with second quarter of 2009. The total mine output net of producerhedging increased by a moderate six per cent YoY despite a 30 per cent YoY increase in the average gold price. Mine supply, which remains the largest contributor on the supplyside, has failed to track the increase in gold price sincemine supply last peaked in fourth quarter of 2005.On the other hand, recycling flows increased by 35 per cent YoY to 496 tonnes inthe second quarter of 2010. However, this level is stillbelow the record quarterly supply achieved in first quarter of 2009 of 606 tonnes.

South Asia houses half of world's poor

Among the 104 countries, five nations in South Asia is the home to half of the poor people, according to the Multidimensional Poverty Index (MPI).

"The 51 per cent of the poor populace live in the five countries of the South Asia," it said. South Asia is followed by Sub-Saharan Africa, while Arab States and Central and Eastern Europe compose only two per cent and one per cent of MPI poor population, respectively.

According to MPI measurement -- an innovative new measure that gives a vivid 'multidimensional' picture of people living in poverty -- 1.7 billion people are living under multidimensional poverty which is greater than World Bank's measure of extreme income poverty that states that 1.3 billion people of the world are living below the daily income of $1.25.

Oxford Poverty and Human Development Initiative (OPHI) and the UNDP Human Development Report has recently launched the Multidimensional Poverty Index (MPI), 65 per cent of Nepalis are suffering from multidimensional poverty indicating that majority of the population is deprived in terms of health, education and maintaining basic standard of living.

However, Nepali economist are doubtful that MPI will able to correctly measure the composition or situation of Nepali poor people, despite the index tapping into different dimensions of poverty besides income and consumption.

"MPI is supposed to give a vivid multidimensional picture of people living in poverty as this delves deep into other factors besides income and consumption pattern to measure poverty," said Dr Sabina Alkire, director of Oxford Poverty and Human Development Initiative, Oxford University.

"It measures the condition of people with respect to a range of deprivations that afflict a person’s life at the same time," she said adding that the measure assesses the nature and intensity of poverty at the individual level in education, health outcomes, and standard of living.

Since this method studies acute poverty, this is more applicable to find the nature of poverty of least developed countries.

MPI assesses the nature and intensity of poverty at the individual level. According to this measure, poor people are those who are multiply deprived and extent of their poverty depends on the extent of deprivations. MPI can be used to identify the most vulnerable people and they can be helped by the national policies. Thus, this will help policy makers to target resources and design policies more effectively.

The MPI measures poverty using 10 key indicators based on three dimensions – health, education and standard of living. The ten indicators directly measures deprivations in health and educational outcomes as well as key services such as water, sanitation, and electricity reveal not only how many people are poor but also the composition of their poverty. Among these indicators eight are related to Millennium Development Goals (MDGs), thus MPI also demonstrates the direction the countries are taking in the matter of attaining MDGs.

The UNDP's 20th Anniversary edition of Human Development Report -- to be released in November will be based on the MPI reflecting a range of deprivations that afflict a person’s life at the same time.

Revenue collection posts growth

The care-taker government has been able to collect Rs 13.16 billion revenue in the first month of the current fiscal year.

"The collection exceeds Rs 1.46 billion or 12.1 per cent in comparison to the same period of the last fiscal year," said Revenue Secretary Krishnahari Baskota. "The collection is encouraging as there has not been any changes in the tax structure in absence of full-fledged budget," he said adding that the first month (Shrawan) of last fiscal year, the government had collected Rs 11.74 billion.

As usual, Value Added Tax (VAT) has contributed the highest in the total revenue collection as its contribution stands at 44 per cent to Rs 5.77 billion followed by customs tax that contributed Rs 2.55 billion or 19 per cent; income tax contributed Rs 2.21 billion or 17 per cent; excise contributed Rs 1.59 billion or 12 per cent; non-tax, registration and vehicle tax contributed Rs 1.04 billion or eight per cent to the government coffer.

"Following the collection trend of last six months, the revenue collection is satisfactory," he added.

Since last four fiscal years, the revenue collection has seen consistent growth due to changes in tax policy, entrepreneurs and government's consistent effort that has been successful in controlling leakages, according to the Finance Ministry.

In the last fiscal year too, the government had exceeded revenue collection target by over three per cent to Rs 181.6 billion. In the budget for the fiscal year 2009-10, the government had targetted to collect Rs 176.5 billion revenue. The collection was 26 per cent higher than in the fiscal 2008-09, when the government had collected Rs 143.47 billion.

Though, the government had -- in its mid-term budgetary evaluation of 2009-10 -- revised the revenue collection target upwards to Rs 190 billion encouraged by the robust growth in the first quarter, it could not meet the revised target.

In the later months of the fiscal, the growth rate of revenue collection had not seen consistency in growth making the revised target impossible.

However, the entrepreneurs blame government for being more revenue-centric. "The import-based revenue has taken a toll on our export competitiveness," they blame, adding that the whopping trade imbalance has not only pulled the Balance of Payment (BoP) to deficit, but also hurt the domestic industries.

Financial sector oversight committee in the offing

For a beetter policy coordination among the regulatory authorities, the finance ministry has decided to form a Financial sector oversight committee headed by the finance minister.
The committee will have the chiefs of all the regulatory auhtorities -- Nepal Rastra Bank (NRB), Securities Board of Nepal (Senon) and Beema Samiti (Insurance Board) apart from finance secretary as the members to chalk out a uniform regulation and have regular policy interaction among themselves.
"The regular coordination among the money market, capital market and insurance market has been felt," said Keshav Acharya, senior advisor at the Finance Ministry. "In the last one decade, the financial market has expanded and there needs a policy coordination to better manage them," he said, adding "as their decisions affact each other, there should be a regular interaction among themselves to better develop the financial market."
"The committe could have been formed by the minsiterial decision but the finance ministry wanted it to make a permanent structure," Acharya said adding that the committee is going to get cabinet approval.
Currently, there has been a lots of confusion among the institutions on whose guidelines to follow -- due to lack of coordination among the regulatory authorities -- as there are some contradictory regulations.
According to the central bank -- the regultor of the banks and financial institutions (BFIs), they have to publish their financial reports within a month. But according to the Securities Board of Nepal (Sebon) regulation, a listed company has to publish its financial report within 35 days. Most of the BFIs are listed in the secondary market and they have to follow both the regulator -- the central bank and Sebon and most of them are following the Sebon regulation on financial statements publications.
Simalarly, the central bank wants to end cross holding of shares but according to Sebon, the issue manager has to underwrite the 50 per cent share, if all the primary issue is not subscribed. "The committee will look after such contradictory regulations and make them uniform," Acharya said.

Commercial banks major indicators

Return on Assets (ROA) in per cent
Commercial Bank 2009-10 2008-09

Nepal Bangladesh Bank Ltd 7.35 15.00

Lumbini Bank Ltd 4.10 4.40

NCC Bank Ltd 3.53 3.72

Standard Chartered Bank Nepal 2.69 2.55

Nabil Bank Ltd 2.39 2.50

NIC Bank Ltd 2.32 1.88

Bank of Kathmandu Ltd 2.25 2.32

Nepal Investment Bank Ltd 2.2 1.7

Everest Bank Ltd 2.09 1.99

Laxmi Bank Ltd 1.65 1.21

Kumari Bank Ltd 1.59 1.47

DCBL Bank Ltd 1.57 1.34

Bank of Asia Nepal Ltd 1.34 0.53

NMB Bank Ltd 1.34 0.76

Himalayan Bank Ltd 1.26 1.89

Nepal SBI Bank Ltd 1.12 -

Sunrise Bank Ltd 1.12 0.51

Siddhartha Bank Ltd 1.10 1.37

Machhapuchehhre Bank Ltd 0.80 0.92

KIST Bank Ltd 0.74 0.80

Global Bank Ltd 0.61 0.89

Return on Equity (ROE) in per cent

Commercial Bank 2009-10 2008-09

Nepal Bangladesh Bank Ltd 47.77 194.03

NCC Bank Ltd 41.92 60.64

Nabil Bank Ltd 36.62 42.30

Everest Bank Ltd 33.52 28.99

Nepal Investment Bank Ltd 28.00 28.00

NIC Bank Ltd 27.13 24.23

Standard Chartered Bank Nepal 26.24 33.58

Bank of Kathmandu Ltd 24.65 28.70

Lumbini Bank Ltd 23.49 30.31

Nepal SBI Bank Ltd 20.11 -

Laxmi Bank Ltd 20.01 14.86

Kumari Bank Ltd 17.43 16.86

Himalayan Bank Ltd 15.46 25.75

Siddhartha Bank Ltd 14.42 16.51

Bank of Asia Nepal Ltd 13.86 6.15

Sunrise Bank Ltd 12.83 6.34

NMB Bank Ltd 9.36 5.28

DCBL Bank Ltd 7.91 5.51

Machhapuchehhre Bank Ltd 7.00 9.66

Global Bank Ltd 6.47 7.62

KIST Bank Ltd 6.45 4.38

Non-Performing Assets (NPA) in per cent

Commercial Bank 2009-10 2008-09

Rastriya Banijya Bank Ltd 9.81 15.64

Agriculture Development Bank 8.22 9.71

Nepal Bank Ltd 4.98 5.91

Lumbini Bank Ltd 4.53 9.06

Nepal Bangladesh Bank Ltd 4.06 19.30

Himalayan Bank Ltd 3.52 2.16

NCC Bank Ltd 2.72 2.74

Bank of Kathmandu Ltd 1.51 1.27

Nepal SBI Bank Ltd 1.47 2.02

Nabil Bank Ltd 1.47 0.80

DCBL Bank Ltd 1.44 1.62

Machhapuchehhre Bank Ltd 1.42 2.75

Sunrise Bank Ltd 1.12 0.07

Global Bank Ltd 0.82 0.09

NIC Bank Ltd 0.72 0.90

NMB Bank Ltd 0.70 0.51

Nepal Investment Bank Ltd 0.62 0.58

Standard Chartered Bank Nepal 0.61 0.66

Siddhartha Bank Ltd 0.53 0.45

Kumari Bank Ltd 0.50 0.44

Bank of Asia Nepal Ltd 0.27 0.01
KIST Bank Ltd 0.19 0.22
Everest Bank Ltd 0.16 0.48

Laxmi Bank Ltd 0.12 0.08

Banks defy crisis, post profits

Despite liquidity crunch almost leading to credit crunch, the commercial banks have increased their profit in the last fiscal year.

The 25 commercial banks' -- including newly opened Janata Bank but except Nepal Bangladesh Bank (NBB) and Nepal Credit and Commerce (NCC) Bank -- reported that they have churned a total of Rs 12,838.872 million profit in the fiscal year 2009-10 -- an increase by Rs 1842.32 million than a fiscal ago. In 2008-09, they have registered Rs 10,996.55 million profit.

"But average percentage growth in aggregate is much lower than in 2008-09," said Nepal Bankers Association president Sashin Joshi. "Looking at absolute numbers only may be misleading," he said adding that average Return on Equity (RoE) and Return on Assets (RoA) has reduced compared to 2008-09.

The profit will go up after NBB and NCC Bank that have not yet published their reports, will publish their reports in a couple of days.

Banks and financial institutions (BFIs) are the most transparent institutions in the country. BFIs have to publish their financial reports every three months, according to the diretives of the central bank.

The highest groser among them is the Rastriya Banijya Bank (RBB) that has posted Rs 2101.68 million profits. The bank is undergoing restructuring under the financial sector reform programme due to its bad financial health in the past. "Due to massive recovery of bad loans worth Rs 1.76 billion, RBB could post huge profit," said Janardan Acharya, CEO of the RBB. "Though, the government bank still has the largest Non-Performing Assets (NPA) at 9.81 per cent that was 15.64 per cent a fiscal year ago, it has reduced its negative networth to Rs 9 billion from Rs 22 billion a fiscal ago."

However, among the private commercial banks, Nepal Investment bank Ltd has registered the highest profit of Rs 1.26 billion.

Only few banks' profits have slowed down in 2009-10 compared to a fiscal year ago.

Though, there are 28 commercial banks, only 24 commercial banks are listed in the secondary market after Agriculture Development Bank listed 30.37 million-unit shares. Nepse delisted Nepal Bank Ltd couple of years ago.

Commercial Banks -- Peofit in 2009-10 -- Profit in 2008-09

1. Rastriya Banijya Bank Ltd -- Rs 2010.68 million -- Rs 1923.68 million
2. Agriculture Development Bank -- Rs 1450.05 million -- Rs 1057.60 million
3. Nepal Investment Bank Ltd -- Rs 1265.95 million -- Rs 900.61 million
4. Nabil Bank Ltd -- Rs 1146.39 million -- Rs 1031.80 million
5. Standard Chartered Bank Ltd -- Rs 1085.87 million -- Rs 1025.11 million
6. Everest Bank Ltd -- Rs 831.76 million -- Rs 638.73 million
7. Bank of Kathmandu Ltd -- Rs 509.26 million -- Rs 461.73 million
8. Himalayan Bank Ltd -- Rs 522.86 million -- Rs 742.42 million
9. NIC Bank Ltd -- Rs 452.71 million -- Rs 316.64 million
10. Nepal SBI Bank Ltd -- Rs 400.15 million -- Rs 316.37
11. Nepal Bank Ltd -- Rs 357.09 million -- Rs 794.40
12. Laxmi Bank Ltd -- Rs 327.03 million -- Rs 188.99 million
13. Prime Commercial Bank Ltd -- Rs 325.51 million -- Rs 142.71 million
14. Kumari Bank Ltd -- Rs 317.02 million -- Rs 258.37 million
15. Lumbini Bank Ltd -- Rs 304.06 million -- Rs 332.20 million
16. Siddhartha Bank Ltd -- Rs 238.24 million -- Rs 217.91 million
17. Bank of Asia Nepal Ltd -- Rs 207.90 million -- Rs 61.49 million
18. Citizens Bank International-- Rs 193.56 million -- Rs 95.81 million
19. Sunrise Bank Ltd -- Rs 192.27 million -- Rs 84.77 million
20. DCBL Bank Ltd -- Rs 161.66 million -- Rs 103.05 million
21. NMB Bank Ltd -- Rs 154.85 million -- Rs 62.95 million
22. KIST Bank Ltd -- Rs 141.07 million -- Rs 89.66 million
23. Machhapuchehhre Bank Ltd -- Rs 128.04 million -- Rs 123.25 million
24. Global Bank Ltd -- Rs 105.19 million -- 26.30 million
25. Janata Bank Ltd -- Rs 9.7 million -- --

Totalprofit -- Rs 12,838.872 million -- Rs 10,996.55 million (In 2009-10 Rs 1842.32 million more profit compared to 2008-09, when there were less banks.)

Jyoti Bikas Bank primary issue oversubscribed

Primary shares of Jyoti Bikas Bank Ltd (JBBL) that has been oversubscribed by over six times to above Rs 1.78 billion closed yesterday evening.

"Some 121,000 applications came for the 2.92 million-unit of Jyoti Bikas Bank's Initial Public Offerings (IPOs)," according to the issue manager Ace Development Bank.

Jyoti Bikas Bank had floated 2.92 million-unit of ordinary shares to public at the face value of Rs 100 per unit on August 16. The development bank that has Rs 740 million of authorised capital will add Rs 740 million. The IPO is worth Rs 292 million. "The promoters have already paid their share of Rs 448 million," according to the bank.

Currently, 40 development banks' 88.49 million shares worth Rs 8.84 billion are listed at Nepse. Besides, 24 commercial banks, 62 finance companies and 19 insurance companiesare also listed on the stock exchange.

Development Banks' group is one of the key market propellers in the secondary market that is dominated by the financial institutions including commercial banks, development banks and finance companies apart from insurance companies. Their trading constitutes above 85 per cent of Nepse's overall business.

Gold traders internal feud costs nation, customers bear burnt

Precious yellow metal price touches sky high to Rs 36,500 per tola

The internal feud among the gold traders is hurting the national coffer and creating more shortage of Indian Currency (IC).

"Apart from customers', who are forced to pay more due to gold shortage, the government is losing revenue and losing the IC too," said Tej Ratna Shakya, president of Nepal Gold and Silver Dealers’ Association (Negosida). The customers are forced to pay Rs 2000 more than the international market.
The central bank, after some traders' complaint, directed the banks on Tuesday to stop gold supply 'temporarily' fuelling the price hike in the domestic market on the eve of Teej -- the festival of Hindu women, when the gold trading picks up.

But central bank governor Dr Yubraj Khatiwada assures that Nepal Rastra Bank (NRB) will take decision in a couple of days and won't let the customers suffer before the festive season. "The central bank took the decision after some traders complained that they didnot get gold," he added.

"We have tried to manage the gold supply among the traders by recommending maximum 200 gram per day but due to surging daily demand tha thas gone up to 35 kg, it is not possible," Shakya said adding that the NRB-prescribed 20 kg per day is not enough to meet market demand.

"To meet the demand traders are forced to buy gold from Indian market," Shakya said adding that around Rs 1.87 million IC goes to India, if the central bank does not take the decision back immediately.

"During last Teej, around 25 kg of gold was traded and Negosida expects above 35 kg daily demand this Teej that is two weeks away," he added. But due to scarcity in the domestic market the price of precious yellow metal is climbing up.

Today gold was traded at Rs 36,500 per tola (11.664 gram) -- Rs 50 more than yesterday. Yesterday it jumped by Rs 510 than a day ago and traded at Rs 36,450 per tola.

Though, the price has been increasing continuously since the starting of the week due to international market, yesterday and today's price hike is due to shortage of gold in the domestic market. This week alone, gold price surged by Rs 750 from Sunday's opening price of Rs 35,750 per tola.

There is growing suspicion over the increased gold import. "The demand is picking up every year, where is it being consumed," governor said.

Scarcity spurs gold price to sky high

Precious yellow metal traded at Rs 36,450 per tola on Wednesday

Scarcity pushed the gold price up to Rs 36,450 per tola (11.664 gram) -- Rs 510 up from yesterday -- today in the domestic market.

"Though, domestic gold price is dependent on International market price and currency exchange rate between the US dollar and Nepali rupee, today it has nothing to do with exchange rate or international price, scaricity in the domestic market has lifted the price of the gold today," said said Tej Ratna Shakya, president of Nepal Gold and Silver Traders Association (Negosida). The banks -- on central bank's 'verbal directives' -- stopped the supply of the precious metal in the market leading to high demand.
"The central bank has asked the banks not to supply gold until furthe notice," he said adding that the Nepal Rastra Bank (NRB) has suspected 'misuse' of gold. "Negosida has forwarded the total gold trading record, which has ever detail of amount of gold traded and traders' PAN number for last three months -- Baishak, Jestha and Asad," said the president of the association that has network in 35 districts in the country.
Earlier also, the central bank has directed the banks to sell only 10 kg of gold to traders. "But after the traders complained the central bank that it could not meet the market demand, the central bank had increased the amount to 20 kg," he added.
According to Negosida, the demand of gold in the domestic market is around 35 kg. "However, we were managing with 20 kg, as it was not to less to meet the demand," Shakya said adding that the recent 'verbal directive' of NRB to banks not to sell gold has adverse impact in the market swelling the price.
Shakya was surprised on the new development as the Monetary Policy 2010-11 has clearly stated that the gold could be imported as per the demand prescribed by the traders.

Top ten tax payers

Top ten tax payers for the fiscal year 2009-10

1. Nepal Telecom -- Rs 9.66 billion
2. Surya Nepal -- Rs 5.93 billion
3. Gorkha Brewery -- Rs 3.09 billion
4. Spice Nepal -- Rs 2.07 billion
5. Nepal Investment Bank Ltd -- Rs 778.00 million
6. Nabil Bank Ltd -- Rs 747.44 million
7. Standard Chartered Bank Nepal Ltd -- Rs 655.67 million
8. Rastriya Banijya Bank Ltd -- Rs 611.95 million
9. Rastriya Beema Sansthan -- Rs 542.33 million
10. Everest Bank Ltd -- Rs 535.00 million

Nepse lists ADBL shares

Nepal Stock Exchange (Nepse) listed 30.37 million-unit shares of Agriculture Development Bank Ltd (ADBL) today.

"The ADBL shares will be traded from next Monday," according to the Securities Act 2063 that states, "Trading of shares of any companies will start after seven days of listing agreement between the company and Nespe."

ADBL is the 24th listed commercial bank in the secondary market that has a total of 178 listed companies under nine sub-groups -- commercial banks, development banks, finance companies, insurance companies, hydropower companies, trading, manufacturing, hotels and others.

Ace Development Bank -- the issue manager of the ADBL -- had floated the commercial bank's 9.6 million-unit of ordinary shares worth Rs 960 million on April 4-7. It is the largest primary issue in the history of the banking sector in Nepal. ADBL had earlier sold 4.52 million-unit shares to its existing shareholders -- the borrowers of the bank that has 16.25 million-unit promoters shares. "Nepse listed the total of 30.37 million-unit shares -- including promoters and ordinary shares -- of the ADBL today," the bank said.

On May 26, Ace had allotted 96,000-unit ordinary shares of the bank. A total of 138,436 people had applied for 28,510,303 unit shares in the Initial Public Offering (IPO) at the face value of Rs 100 per unit. The selected applicants had been allotted a minimum of 30-unit shares and maximum of 2,960-unit shares.

Meanwhile, the profitability of the banks and financial institutions -- that contributes to over 85 per cent in the total trading -- could not boost the secondary market as it has shed 0.54 point to close the daily trading at 453.7 points.

Risky loans on rise

Coupled with increased lending portfolio, risky loans of domestic banks have also gone up overshadowing profits, according to their financial reports.

With Non-Performing Assets (NPA), loan loss provisioning has shot up eclipsing profits, reveal the unaudited reports of 14 commercial banks published till date.

Nabil Bank -- one of the largest banks that provisioned Rs 45 million in 2008-09 -- provisioned over eight times to Rs 345.98 million in 2009-10. Likewise, Standard Chartered Bank Nepal Ltd -- another bank’s provisioning went up by Rs 200 million by end of 2009-10. “Out of 14 commercial banks, seven banks’ loan loss provisioning have gone up,” according to the report.

“A bank making a small number of risky loans will have a low loan loss provision compared to a bank taking higher risks,” said market analyst Rabindra Bhattarai. “Exposure to risky loans hurts shareholders,” he said, adding, “Had their loan loss provisioning not increased, shareholders would have got more dividends as the banks have posted more profits compared to the previous fiscal.” Provisioning guarantees a bank’s solvency and capitalisation, if and when the defaults occurs, he said, adding that the loan loss provision allocated each year increases with the riskiness of loans a bank floats.

President of Nepal Bankers Association (NBA) Sashin Joshi thinks this could be only the tip of the iceberg. “It could be the outcome of the difficult phase we went through last year,” he said, adding that full impact of asset price correction was yet to be seen.

According to the central bank’s directive, a bank has to provision one per cent as soon as it lends. Similarly, after six months, the loan is dubbed sub-standard and the bank has to provision 25 per cent. If the principle and interest is not paid till one year, it is considered a doubtful loan and 50 per cent of the total loan has to be provisioned. If borrowers don’t pay after one year, it is considered a bad loan and 100 per cent of the loan has to be provisioned. Sub-standard, doubtful and bad loans are calculated in the NPA.

The good loan is not calculated in NPA. But sub-standard, doubtful and bad loans are calculated in the NPA. The largest NPA is registered by Rastriya Banijya Bank that has been reduced to 9.81 per cent from 15.64 per cent a fiscal year ago. RBB has posted Rs 2.01 billion. Among the private commercial banks, Nepal Investment bank Ltd has registered the highest profit of Rs 1.26 billion in 2009-10.

The Myth of prosperity demystified

The Myth of Prosperity: Globalisation and the South is a research on impacts of globalisation on the millions of lives in the South.
Dr Viraj P Thacker in the book provides a deeper sense of understanding on how the modern process like globalisation does not suit the requirements of the people in the South – the house to the one third population of the world.
The book in its eight chapters not only takes stock of global poverty, economic development, WTO and corporate globalisation to prove the both positive and negative aspect of globalisation, it also demystifies a reader from the failed corporate globalisation model for the developing countries.
Social scientists can point out the problems involved in the blind acceptance of globalisation by the South. In this context, books like the present one, `The Myth of Prosperity: Globalisation and the South' can reveal the true intentions behind globalisation and its possible impact on the society in the South. Thacker explains the impacts of globalisation on South – on wages, poverty, inequality, insecurity, migration and on social factors.
The different aspects of globalisation that is explained well in the book makes readers easy to follow the evolution process that has gone wrong somewhere. Thacker has successfully showed that impacts of globalisation on India taking various forms, not immediately apparent to the external analyst. Though, globalisation transformed the global political, social and economic order, globalisation as a process within the capitalist work-system also served to intensify inequality and exploitation of the poor. According to Thacker liberalization and globalization have devastating consequences for many countries in the world as they reject the view that national development can be explained by examining the internal characteristics of nation states.
The volume brings together a group of authors who share a common concern of the impact of globalisation on our society. The nine contributors make us understand the impact of globalisation back home, on Nepali and Indian society.
Nepal has also bear the brunt of globalisation and the book gives us an opportunity to revisit on our economic development policies

BOOK REVIEW
The Myth of prosperity (Globalisation and the South)
By Viraj P Thacker (PhD)
Published by: Manushi (MSD) Publishers Inc