Sunday, June 30, 2013

NIC Asia Bank comes into operation

The first merged entity between two commercial banks NIC Bank and Bank of Asia Nepal – NIC Asia Bank – came into operation from today.
The merger between two class ‘A’ financial institutions in the history of the banking system has created an entity with a paid up capital of Rs 2.31 billion, though, its capital base – including reserve and retained earnings – is around Rs 5 billion.
“After a merger, NIC Asia Bank has now become a systemically important bank in the financial system due to its size,” central bank governor Dr Yubaraj Khatiwada said during the inauguration, here today.
The bank has also become a trendsetter in terms of merger between big institutions, he said, adding that mergers are meant to make the merged entity more competitive and able to run cost-effectively. “Its better for the banks and financial institutions, and they should not feel like they are merging for the central bank.”
The financial institutions should not keep on demanding more facilities to get merged, as merger itself provides opportunities for their own business expansion, Dr Khatiwada added. “Merger of banks and financial institutions are not like a cement industry in Souther part of Nepal that seek more benefit from the government.”
The governor, on the occasion, also informed that the time has come for the banks to increase their capital further. “Though higher capital does not guarantee better performance, it gives banks cushion and confidence.”
NIC Bank and Bank of Asia, which had started the merger procedure in May 2012, were granted Letter of Intent (LoI) for merger by the central bank on July 23, 2012.
The Office of Company Registrar granted the final approval for the two banks to merge on May 14.
Following the merger, NIC Asia Bank now has more than 270,000 customers with deposits worth Rs 38 billion and loans worth Rs 33 billion with 53 branches.
The central bank has been suggesting the banks and financial institutions to get merged if they have common directors and promoters.
“Though, the centran bank doesnot force them to merge, we suggest them to merge also for the financial stability,” Dr Khatiwada said.
The chief executive of the merged entity NIC Asia Bank Sashin Joshi said that the merger was not an easy process. “However, provided better facilities like tax breaks and clear legal provisions, mergers will be more attractive,” he said, adding that better legal arrangements will also facilitate acquisition. “The financial sector would see more acquisitions, if the central bank would bring Acquisition law," said Joshi, who was the chief executive of NIC Bank.
He also believed that the Nepal Stock Exchange (Nepse) that had halted trading of their shares due to the merger process since the last one year will resume the trading of the new NIC Asia Bank soon.
Shareholders of Bank of Asia Nepal will be issued new share certificates equivalent to one share of NIC Asia Bank for two shares of Bank of Asia Nepal as the due diligence audit of the banks had determined 1:2 share swap ratio between NIC Bank and Bank of Asia Nepal.
Coordinator of the Joint Merger Committee Rajendra Aryal, on the occasion, thanked for the support during the merger process of the two commercial banks.

Binod Chaudhary felicitated in Bangladesh

Political stability in the country is a must to accelerating economic growth in South Asian countries, Chaudhary Group president and the first Forbes-listed billionaire of the country Binod Chaudhary said speaking at a felicitation programme hosted by International Chamber of Commerce-Bangladesh in Dhaka today.
“Small countries still find it very difficult to deal with each other,” he said, adding that dealing with India is easy. “But it is not easy for one small nation to deal with another like Nepal dealing with Bangladesh and Bangladesh with other smaller nations continues to be a challenge.”
Chaudhary, on the occasion, lamented power crisis in Nepal and its compulsion to import power from India. “We are still struggling,” Chaudhari, said. “We can light up the whole of India, given the hydro power resources of Nepal.”
But today Nepal is a net importer of power due to the lack of sense of economy in the mainstream politics.
 He also appealed businessmen of SAARC to join politics as he feels politics revo
lve around economy at the centre.
“We are proud to honour Binod Chaudhary,” said president of the chamber Mahbubur Rahman. “The only unexplored area for business is the Antarctica and I am sure it will not be long before he ventures there as well," he added.
Chaudhary was in Dhaka recently to participate in fourth Social Business Day 2013 organised by Yunus Center on June 28 that witnessed over 150 guests from 30 countries.

Budhi Gandaki hydropower to start from next fiscal year

The government has committed to allocated budget for the Budhi Gandaki Hydropower Project in the budget for the next fiscal year 2013-14.
The government has recognised Budhi Gandaki as one of the projects of national pride, said secretary at the Prime Minister’s Office Krishna Hari Baskota, here today.
The 600 MW hydropower project to be constructed along the border side of Dhading and Gorkha districts, will help end load shedding in the country, he said, adding that the construction cost of the project is also comparatively lower.
He also informed that the project would be developed soon once the French company Tractebel Engineering SA submits its reports on feasibility study, DPR and tender. “The project is expected to complete by 2022.”
Likewise, chairman of Budhi Gandaki Hydropower Proejct Development Committee Dr Laxmi Prasad Devkota said that it would be completed within eight years if the existing legal provisions were cut short.
Former minister Gangalal Tuladhar, on the occasion, said the project would be one of the examples in the country.
Budhi Gandaki Hydropower Project – a storage type project on the Budhi Gandaki River – was identified during the Gandaki Basin Study in late 70's. In 1984, a pre feasibility study of the project was prepared. The pre feasibility study of the project has recommended 600 MW capacity plant with FSL 520 masl.

Saturday, June 29, 2013

CIB arrests Siddhartha Development Bank chairman

The Central Investigation Bureau of Nepal Police today arrested Siddhartha Development Bank chairman Shekhar Aryal for insider lending and over valuating the collateral of Jamko Publications.
The CIB has already arrested former director of the development bank Madhusudan Silwal and Jamko proprietor Kishor Dhakal and partner Gauri Khanal Gywali.
The CIB is also investigating on Siddhartha Development Bank’s former chief executive Deependra Karki, the sources informed. 

Central bank plans internal borrowing in last fortnight of the fiscal year

Government is planning to raise internal debt worth Rs 17 billion at a time, when the fiscal year is coming to an end in less than 15 days.
Earlier, government’s inability to spend in the current fiscal year has made the budget surplus making ti unnecessary to issue government bonds.
According to the central bank’s internal debt calendar, it will also be issuing treasury bills worth Rs 13 billion and foreign employment bonds worth Rs 1 billion in the last 10 days of the fiscal year.
In the budget for the current fiscal year, announced late in April, the government had planned to issue debt instruments worth Rs 38 billion to finance budget deficit, though there is a huge budget surplus of around Rs 40 billion.
Though, the earlier foreign employment bond had received a lukewarm response, the central bank is issuing Foreign Employment Bond 2075 worth Rs 1 billion aimed at Nepali migrant workers and Non-Resident Nepalis (NRNs) targeting to sell in 11 countries through six designated agents.
The bond offers a coupon rate of 10.5 per cent for a five-year tenure.
The issue is opening from July 2 to July 10, whereas the fiscal year will come to an end on July 15.
The NRNs and migrant workers in Malaysia, Saudi Arabia, Qatar, Kuwait, Bahrain, UAE, US, UK, Australia, Japan and Israel can purchase the bonds in multiples of Rs 5,000 through the agents, apart from those Nepali workers, who have returned from India
Migrants who have returned from foreign jobs within the last four months and family members of migrant workers can also purchase the bonds.
In the fiscal year 2011-12, of the total issue worth Rs 1 billion, agents were able to sell foreign employment bonds worth Rs 8.6 million only.
Likewise, in the fiscal year 2009-10 — when the foreign employment bonds was issued for the first time — bonds worth only Rs 4.6 million of the total issue of Rs 1 billion were subscribed.
Similarly, in the fiscal year 2010-11 too, only Rs 4 million worth bonds – out of the total issue worth Rs 5 billion – were sold.