Gold Hits all time high Price

Gold hits Rs 60000 a tola

KATHMANDU, Sep 5, 2012

The price of gold reached Rs 60,000 per tola (11.664 grams) in the domestic market, today.

The price of gold shot up worldwide as it continued to remain above $1,690 per ounce in international bullion market on possible monetary easing by US Federal Reserve to boost its economy.

The third round of quantitative easing means increased money supply to keep interest rates at near zero level which leads to inflation. To hedge against probable inflation, investors globally have revved up investment in precious metals.

Here, on August 17, 2012, the price of gold crossed Rs 50,000 per tola as the global bullion market saw the yellow metal surging to $1,775 per ounce on intra-day trading. Eurozone debt troubles and downgrading of US credit rating by Standard & Poor’s had pushed investors towards gold and other precious metals.

Source: THT

Rs.1.17 billion revenue collected

HETAUDA, SEP 5, 2012

The Inland Revenue Office, Makawanpur, collected Rs 1.17 billion in revenue under different sources in the last fiscal year-2068/069 BS. The Office collected Rs 676 million from excise duty, Rs 268 million from VAT and Rs 206.4 million from income tax.

Similarly, Rs 115.9 million was collected from the interests and Rs 7.1 million from house rent, according to the Office.According to senior officer at the Office, Arjun Prasad Dhakal, and revenue collection was increased by Rs 117 million in the last fiscal year as compared to the previous year.

Source: THT

Four banks plan IPO within fiscal year

KATHMANDU, SEP 4, 2012

The season of large initial public offerings (IPO) has begun with four commercial banks -- Civil Bank, Commerz and Trust Bank, Mega Bank Nepal and Century Commercial Bank -- set to issue Rs 3.02 billion worth of shares within the current fiscal year.

Commerz and Trust Bank on Monday signed a joint agreement with Citizen Investment Trust (CIT), Nabil Investment, Civil Capital Market and Growmore Merchant Banker making them its issue and sales manager for 6 million units of ordinary shares worth Rs 600 million.

These four institutions will also act as underwriter which means they will mop up any unsold stock. Commerz and Trust Bank plans to complete the IPO by the end of the third quarter of the current fiscal year.

Meanwhile, Civil Bank has appointed Citizen Investment Trust (CIT), Nabil Investment, NCM Merchant Bank and Ace Capital as the issue and sales manager for its public offering of 8 million units of shares worth Rs 800 million.

Century Commercial Bank is making an IPO worth Rs 920 million, the largest ever public offering by a private sector commercial bank. The bank plans to issue 9.2 million ordinary shares by fiscal 2012-13. As per its share structure, the promoters will hold 54 percent while the public will hold the rest. Likewise, Mega Bank has planned an IPO worth Rs 700 million for 7 million shares.

Although the public has not been very enthusiastic about investing in the capital market recently, a bevy of banks making IPOs reflects their confidence that there will be buyers.

"It is a company’s performance that motivates investors to purchase its stocks," said Anal Bhattarai, CEO of Commerz and Trust. "Our balance sheet has portrayed a gradual and sustainable growth which will definitely lure investors."

Capital market experts, however, said that investors first look at the overall secondary market before making investment decisions. "Then only will they evaluate the performance of a company," said Rabindra Bhattarai, stock analyst. "The situation in the capital market is not very ideal at present. So all the shares on offer may not be bought."

Bankers, however, said that commercial banks had shown good performance during the last fiscal year with a majority of them registering good profits, and that it would entice investors to invest in the shares of commercial banks. "Also, the capital market is not as bad as it was a year ago, and it has been recovering constantly," said Ganesh Kumar Shrestha, CEO of Century Commercial Bank. "So, there is a high possibility that the public offerings by the commercial banks will be fully subscribed."  

Nevertheless, excess liquidity in the financial system and record low returns from the money market are likely to benefit the planned IPOs. "The interest rates offered by banks and financial institutions are declining at a rapid pace and have fallen below the inflation rate," said Bhattarai. "Generally, in such a situation, money flows to the capital market with two motives -- long-term investment and short-term speculative investment."

Last April, the IPO of Janata Bank Nepal had received an overwhelming response from the public and it was over-subscribed three-fold. The bank issued 6 million ordinary shares worth Rs 600 million. Currently, its shares are trading at around Rs 130. "For those who purchased Janata Bank shares, the value of their investment appreciated by 30 percent within four months, which is a very good return," said Bhattarai.

Source: The Kathmandu Post

Gold roars to a new high; nears Rs 60,000 per tola

KATHMANDU, Sep 3, 2012

After a brief reprieve last week, gold continued its record-setting spree climbing to a new high of Rs 59,900 per tola (11.664 grams) in the domestic market on Sunday - the first trading day of the week.

Nepal Gold and Silver Dealers´ Association (Negosida), which fixes gold and silver prices in the domestic market, increased gold price by Rs 900 per tola on Sunday compared to Friday when the yellow metal was traded at Rs 59,000 per tola.

“International bullion prices determines gold and silver prices in the domestic market. We had to raise price of gold after the yellow market rallied in the international market on Sunday,” said Diyesh Ratna Shakya, secretary of Negosida. “Glittering gold is turning shoppers away ahead of the festive season.”

Gold, which was priced at US $1,655 per troy ounce during early trading on Friday, gained $36 per troy in the international bullion market on Saturday.
According to Shrestha, gold price is increasing in international market as investors are looking to safe haven due to slowing global stock market.

Traders said demand for gold in the capital has dropped to around 10 kg a day, almost half of average daily demand recorded a month ago.

“It would be difficult for bullion traders to sustain business if gold sales did not pick up during upcoming festive season of Teej, Dashain, Tihar and Chhath,” Pramod Ratna Shakya, proprietor of New Road-based Tejmin Jewelers, said.

Price of silver has also increased by Rs 40 per tola. Silver was traded at Rs 11,145 per tola on Sunday.

Source: Republica

Finance companies deposits slump by 7%

KATHMANDU, SEP 03, 2012

Even as commercial and development banks are enjoying excess liquidity due to surge in deposit, finance companies are struggling to lure depositors, suggests a report from the Nepal Rastra Bank.

According to the central bank’s annual macro economic report, deposit mobilisation by the finance companies decreased by 7.5 percent over the last fiscal year compared to the previous fiscal. On contrary, the deposit collection by commercial banks and development banks surged by 26.7 and 34 percent respectively during the last fiscal year compared to previous year.

In aggregate, deposit mobilisation of the banks and financial (BFIs) increased by 22.9 percent to an addition of Rs 188.59 billion in the fiscal year 2011-12.

According to the report, the surge in deposit collection was the result of expansion in economic activities compared to the previous fiscal year and the rise in remittance income. However, the commercial and the development banks were the ones to benefit the most from the increased supply of fund in the financial system, not the finance companies.

According to the NRB, the major reason for the slump in finance companies’ deposit mobilisation is the fall in number of finance companies. Over the last fiscal year, the number of finance companies decreased to 70 from 78 a year earlier. Three finance companies merged with commercial banks and five others merged with development banks. “Such mergers contributed to the growth in deposit of commercial and development banks whereas there was negative growth in finance companies,” said Maha Prasad Adhikari, deputy governor at the NRB.

However, another senior NRB official was of the opinion that not only merger but also the crisis of confidence among people towards these ‘C’ class financial institutions affected deposit flow.

“The main reason behind the negative growth in deposit mobilisation is people’s lack of confidence in finance companies. The issues like bad corporate governance, concentrated credit and misappropriation of funds by the top-management and board members surfaced at various finance companies,” said the official, citing examples of some of the companies that sullied the image of the whole of the finance companies.

Finance companies, including Nepal Share Market and Finance Company, Samjhana Finance, Capital Merchant and Finance, Nepal Sri Lanka Marchant Bank faced troubled due to bad governance on the part of top management, leaving thousands of depositors in lurch.

Finance companies, however, maintain that people still have faith in them. “It’s true that a few cases of anomalies surfaced in the past have hit the people’s confidence to some extent,” said Rajendra Man Shakya, president of the Nepal Finance Companies Association. “But large chunk of withdrawal from the finance companies was done by the institutional depositors like insurance companies, Employee Provident Fund and Citizens Investment Trust among others.”

Claiming that such downfall in deposit collection has not bothered finance companies much, Shakya said almost all the companies are in comfortable liquidity position. “Currently, there is no investment opportunity at all. In this situation, growth in deposit means rise in idle fund which hits the profitability of the finance companies,” he said.      

Source: The Kathmandu Post

Beema Sansthan to face Insurance Board action

KATHMANDU, Sept 3, 2012

The Insurance Board, which has lately stepped up action against insurers violating norms set for the sector, has set its sights on the state-owned Rastriya Beema Sansthan.

The insurance sector regulator is contemplating action against the insurance company for running the business illegally without renewing its operating license in time.

The government-owned insurance company has failed to renew its license for few years now due to its failure to audit financial reports of the last several years. The state-owned company has also failed to establish life and non-life businesses as separate entities.

Calling these gross violations of rules, the Board had recently given a 15-day time to the company to clarify why it failed to comply with the regulator´s instructions. After the company could not furnish satisfactory explanation, the Insurance Board has now sought clarification on why the regulator should not take action against it.

“The notice issued last week has asked the company to submit answers within seven days . If not, the regulator can take severe action against it,” a high-ranking official of the Insurance Board told Republica on condition of anonymity.

According to Board officials, these actions may include temporary suspension of business activities to seizure of operating license.

Despite being a listed company, Beema Sansthan has not completed audits of its financial reports since fiscal year 2003/04 due to frequent change in top level staff and frequent protests by employees. This goes directly against the provision in the Insurance Act that specifically says insurance companies must have their balance sheets audited by an authorized chartered accountant within 10 months of completion of every fiscal year.

“Since its balance sheets are not updated it has become almost impossible for us to trace its investment and how premium amount collected from the public is being utilized,” the Insurance Board official said.

Acknowledging the mistake, Beema Sansthan Acting General Manager Omkar Nidhi Tiwari, during a gathering to mark the 45th anniversary of the company in February, had announced to complete these tasks “soon”.

At that time Tiwari had also promised to hold annual general meetings of 2003/04 to 2005/06 in mid-April and of another four years till 2009/10 by mid-April next year. But the company has failed to keep its promise.

In another instance, the insurer has also not separated its life and non-life businesses. This violates a law introduced more than a decade ago, which makes it mandatory for insurance companies operating both life and non-life businesses to create independent units to conduct their activities.

Following introduction of the law, National Life and General Insurance Company, for instance, which was conducting both life and non-life businesses, has already established National Life Insurance Company to conduct life insurance business and set up a subsidiary company called NLG Insurance to operate non-life insurance business.

Yet Beema Sansthan has been taking advantage of its status as government-owned company and continuing to run the business violating the rules set forth by the regulator.

“We cannot continue to tolerate this attitude of the company, which has set a bad example in the insurance sector,” the Insurance Board source said.

Source: Republica

NMB Capital gets mutual fund license

KATHMANDU, Sept 3, 2012

The Securities Board of Nepal (Sebon) -- the stock market regulator -- has licensed NMB Bank to operate mutual fund. NMB Capital, a subsidiary of NMB Bank, has also applied at Sebon for permission to work as fund manager and depository for the mutual fund. Issuing a press statement, NMB Bank said it plans to come up with investment scheme in the capital market collecting Rs 500 million-Rs 1 billion from small and big individuals as well as institutional investors in the current fiscal year.

Source: Republica