KATHMANDU,
The central bank has been resisting continued pressure from bullion traders to increase the quota. Only commercial banks are allowed to import gold .
While the central bank is concerned that a hike in the quota
Showing posts with label Commercial Banks. Show all posts
Showing posts with label Commercial Banks. Show all posts
Wednesday, December 18, 2013
Gold import quota comes down to 15 kg a day
The central bank has been resisting continued pressure from bullion traders to increase the quota. Only commercial banks are allowed to import gold .
While the central bank is concerned that a hike in the quota
Thursday, December 12, 2013
Financial institutions scramble to hold AGM
KATHMANDU: Dec 12, 2013
About two and a half dozen financial institutions are scrambling to conduct their annual general meetings (AGM) in the next one month to meet the regulator’s fixed deadline.
About 31 financial institutions — commercial banks, development banks and finance companies — will be holding their AGMs between early December and early January. Moreover, during this period share investors are particularly flush with cash as the AGMs of the financial institutions give a final approval for the dividend distribution.
Nepal Rastra Bank (NRB)’s — financial sector regulator — regulations require financial institutions to conduct their AGM within five months of the completion of the fiscal year. However, if they place a request for extension of the deadline, the central bank allows them three more months.
About two and a half dozen financial institutions are scrambling to conduct their annual general meetings (AGM) in the next one month to meet the regulator’s fixed deadline.
About 31 financial institutions — commercial banks, development banks and finance companies — will be holding their AGMs between early December and early January. Moreover, during this period share investors are particularly flush with cash as the AGMs of the financial institutions give a final approval for the dividend distribution.
Nepal Rastra Bank (NRB)’s — financial sector regulator — regulations require financial institutions to conduct their AGM within five months of the completion of the fiscal year. However, if they place a request for extension of the deadline, the central bank allows them three more months.
Monday, May 20, 2013
Banks see increased profits in 3rd quarter
KATHMANDU, MAY 20, 2013
Profits of commercial banks have almost increased by half as they have enjoyed fewer bad loans in the third quarter.
Class ‘A’ financial institutions have recorded profit growth of 45 per cent by the third quarter of the current fiscal year, according to the third quarter financials published by the banks. The cumulative profit of 32 banks amount to Rs 12.9 billion. They had recorded a profit of Rs 8.85 billion in the corresponding period last year.
Everest Bank, Nabil Bank, Nepal Investment Bank and Rastriya Banijya Bank were able to increase their profits to more than Rs one billion. Nabil is the biggest profit making bank in the third quarter with a profit of Rs 1.5 billion.
Machhapuchchhre Bank has increased its profit by 13 times in the third quarter as compared to the same period last fiscal year by generating a profit of Rs 98.3 million. Kist Bank has recorded a loss of Rs 55.01 million.
Along with increased profits, banks have also seen their non-performing assets (NPA) go down this quarter. The average NPA of the banks has come down to 2.26 per cent of the total loans in this quarter against an average of 3.02 per cent in the corresponding period last year.
The shrinking bad loans have contributed in increasing the profits of the banks. Since banks did not have to set aside a large chunk of its income to provision against bad loans, profits were less affected last quarter due to loans gone sour.
Nepal SBI Bank, Everest Bank, Sanima Bank, Janata Bank and Standard Chartered Bank are among those with NPA less than one per cent. However, Kist Bank has even overtaken the three government promoted banks in terms of highest NPA with 7.89 per cent bad loans, while Agriculture Development Bank, Nepal Bank Ltd and Rastriya Banijya Bank have reduced their non performing loans to 6.27 per cent, 5.19 per cent and 5.95 per cent, respectively.
The banks have recorded good profits this quarter as the amount of loans floated is more than deposit collection as reflected by the increased credit to deposit ratio this quarter. Their average CD ratio amounts to 76.16 in the third quarter which was less than 73 in the previous year. Even in the second quarter, the ratio stood at 75.5. The higher lending interest being charged for loans than being offered for deposits has increased the interest income of the banks further swelling their profits.
However, things might not be equally gleeful for banks as the tightening liquidity has already compelled a lot of them to increase deposit rates to attract deposits. The increased deposit rates have already pushed the base rate of 18 banks higher than what it was in the second quarter.
Source: THT
Thursday, May 9, 2013
Commercial banks facing liquidity tightness
KATHMANDU, MAY 07 - 2013
Although the banking system usually sees higher liquidity during the last quarter of the fiscal year, commercial banks are facing liquidity tightness in recent days.
Generally, banks reduce lending, while deposit collection grows due to increased government spending in the last quarter of the fiscal year. But the government’s failure to expedite spending this year has resulted in liquidity tightness, according to bankers.
As of mid-April, Rs 57 billion has been stuck in the government’s treasury, which is Rs 16 billion higher than that as of mid-March, according to the Nepal Rastra Bank (NRB).
The banking system is facing tighter liquidity situation this fiscal after a year’s gap. After an acute liquidity crunch in 2010-11, banks enjoyed excess liquidity in 2011-12.
Besides government’s failure to spend, other factors responsible for the liquidity tightens are tax payment by banks and financial institutions and other taxpayers who withdraw deposits from BFIs and increased bank lending compared to deposit growth.
According to the NRB, bank lending grew by 16, percent while deposit growth remained at 6 percent as of mid-April. Total deposit collection of banks reached Rs 927 billion, while lending stood at Rs 723 billion. “Aggressive lending compared to deposits also brought the tightness in liquidity,” said an NRB official.
The tightening liquidity situation has also forced BFIs to increase interest rates on deposits, particularly on fixed deposits. According to bankers and depositors, interest rate on fixed deposits has crossed 10 percent.
The tightness in liquidity is also evident with the fact that the inter-bank lending rate reached as high as 7 percent last week, but has come down below 6 percent this week. An NRB official said about half dozen banks ’ credit-to-deposit ratio is above 80 percent in recent days, which also reflects the tightness in liquidity.
Banks have particularly increased interest rates for institutional fixed depositors. According to Rishi Ram Gautam, executive director of Citizen Investment Trust (CIT), one of the big institutional depositors, the CIT has been receiving three percent higher interest rate now compared to three months ago. “We received interest rate as high as 10.6 percent — up from 7.5 percent three months ago,” he said.
Bankers said they were forced to increase the interest rate on deposits in the wake of slow deposit growth and the government’s failure to spend despite huge revenue collection.
“We have increased the interest rate on fixed deposit to 9 percent,” said Sashin Joshi, chief executive officer of NIC Bank. “As the government delayed releasing the budget for completed work, it resulted in liquidity tightness.”
NMB Bank has increased interest on fixed deposit to 8.5 percent from earlier 7 percent. NMB Bank CEO Upendra Poudel said the current tightness in liquidity is momentary and a majority of banks have increased the interest rate on deposits on short-term deposits.
Laxmi Bank is also planning to increase its interest rate for individual fixed depositors. “We are increasing the interest rate for retail fixed depositors to 9 percent. We have offered as much as 9.5 percent to institutional depositors,” said Laxmi CEO Suman Joshi.
He said it is necessary to bring individual depositors to the banking system as they were diverted to the share market and other sectors after the interest rate decreased. “With individual depositors moving away from banks , institutional depositors have been assertive to claim higher interest rates,” he said.
Given the banks ’ boards seeking higher returns at the end of the fiscal, banks have increased lending aggressively while deposit growth has remained sluggish.
Source: The Kathmandu Post
Although the banking system usually sees higher liquidity during the last quarter of the fiscal year, commercial banks are facing liquidity tightness in recent days.
Generally, banks reduce lending, while deposit collection grows due to increased government spending in the last quarter of the fiscal year. But the government’s failure to expedite spending this year has resulted in liquidity tightness, according to bankers.
As of mid-April, Rs 57 billion has been stuck in the government’s treasury, which is Rs 16 billion higher than that as of mid-March, according to the Nepal Rastra Bank (NRB).
The banking system is facing tighter liquidity situation this fiscal after a year’s gap. After an acute liquidity crunch in 2010-11, banks enjoyed excess liquidity in 2011-12.
Besides government’s failure to spend, other factors responsible for the liquidity tightens are tax payment by banks and financial institutions and other taxpayers who withdraw deposits from BFIs and increased bank lending compared to deposit growth.
According to the NRB, bank lending grew by 16, percent while deposit growth remained at 6 percent as of mid-April. Total deposit collection of banks reached Rs 927 billion, while lending stood at Rs 723 billion. “Aggressive lending compared to deposits also brought the tightness in liquidity,” said an NRB official.
The tightening liquidity situation has also forced BFIs to increase interest rates on deposits, particularly on fixed deposits. According to bankers and depositors, interest rate on fixed deposits has crossed 10 percent.
The tightness in liquidity is also evident with the fact that the inter-bank lending rate reached as high as 7 percent last week, but has come down below 6 percent this week. An NRB official said about half dozen banks ’ credit-to-deposit ratio is above 80 percent in recent days, which also reflects the tightness in liquidity.
Banks have particularly increased interest rates for institutional fixed depositors. According to Rishi Ram Gautam, executive director of Citizen Investment Trust (CIT), one of the big institutional depositors, the CIT has been receiving three percent higher interest rate now compared to three months ago. “We received interest rate as high as 10.6 percent — up from 7.5 percent three months ago,” he said.
Bankers said they were forced to increase the interest rate on deposits in the wake of slow deposit growth and the government’s failure to spend despite huge revenue collection.
“We have increased the interest rate on fixed deposit to 9 percent,” said Sashin Joshi, chief executive officer of NIC Bank. “As the government delayed releasing the budget for completed work, it resulted in liquidity tightness.”
NMB Bank has increased interest on fixed deposit to 8.5 percent from earlier 7 percent. NMB Bank CEO Upendra Poudel said the current tightness in liquidity is momentary and a majority of banks have increased the interest rate on deposits on short-term deposits.
Laxmi Bank is also planning to increase its interest rate for individual fixed depositors. “We are increasing the interest rate for retail fixed depositors to 9 percent. We have offered as much as 9.5 percent to institutional depositors,” said Laxmi CEO Suman Joshi.
He said it is necessary to bring individual depositors to the banking system as they were diverted to the share market and other sectors after the interest rate decreased. “With individual depositors moving away from banks , institutional depositors have been assertive to claim higher interest rates,” he said.
Given the banks ’ boards seeking higher returns at the end of the fiscal, banks have increased lending aggressively while deposit growth has remained sluggish.
Source: The Kathmandu Post
Sunday, December 2, 2012
Banks cautious about business with Chinese companies
KATHMANDU, DEC 02 - 2012
Commercial banks are adopting a cautious approach while doing business with Chinese construction companies after two banks risked losing around Rs 1.30 billion for giving counter guarantee to a Chinese bank that had given guarantee to the Chinese contractor involved in Melamchi Drinking Water Project.
After the China Construction Bank refused to release the guarantee amount citing the court order, two Nepali counter guarantors—Himalayan Bank Limited (HBL) and Bank of Kathmandu (BoK)—are in a big trouble.
A meeting of the Nepal Bankers’ Association (NBA) on Friday concluded that doing business with Chinese contractors is risky and asked all member banks to adopt caution while giving counter guarantee.
A majority of banks also agreed not to do business with the China Construction Bank, according to a NBA source.
“There will not be any transactions with the China Construction Bank henceforth,” said HBL CEO Ashok Rana, who is also the president of NBA. “We will have to be careful if a similar problem arises in other projects, in which Chinese contractors are involved.”
China Railway 15 Bureau Group, with which the Melamchi project terminated the contract for bad performance, has filed the case in the Chinese court arguing it would not pay the guarantee amount as it had to give up the job due to bad work environment in the project site and Nepal.
The two banks have given counter guarantee to the Chinese bank for performance security of $6.62 million and guarantee for advance payment of $6.62 million and 1.4 million euro (Rs 1.3 billion).
As per existing mechanism, the Chinese bank should have released that amount to the Nepali banks, which would have been paid to the Melamchi Project.
With the Chinese bank refusing to release the guarantee amount, the two Nepali banks are facing trouble after the Melamchi
Water Supply Development Board asked them to release the guarantee amount.
“We are holding discussion with all relevant
parties, including the Melamchi Board and Nepal Rastra Bank, after the Chinese bank refused to release the guarantee amount, citing court’s order,” said Ajaya Sharestha, CEO of BoK. “We are
also exploring legal options on what can be done in
such cases.”
He said the process of giving counter guarantee is similar internationally. “This is a rare case and has alarmed us,” he added.
As work on many other projects in which Chinese contractors are involved has not been encouraging, Nepali banks are suspicious about the possibility of emergence of similar situation in future. That’s why they said they had to take such a decision.
Melamchi Board of Krishna Acharya said they have asked the two Nepali banks to pay the guar-
antee amount, but also acknowledged the banks’ problem.
“That’s why we have also sent a letter to the Nepal Rastra Bank to help recover the amount,’ said Acharya.
Source: The kathmandu Post
Commercial banks are adopting a cautious approach while doing business with Chinese construction companies after two banks risked losing around Rs 1.30 billion for giving counter guarantee to a Chinese bank that had given guarantee to the Chinese contractor involved in Melamchi Drinking Water Project.
After the China Construction Bank refused to release the guarantee amount citing the court order, two Nepali counter guarantors—Himalayan Bank Limited (HBL) and Bank of Kathmandu (BoK)—are in a big trouble.
A meeting of the Nepal Bankers’ Association (NBA) on Friday concluded that doing business with Chinese contractors is risky and asked all member banks to adopt caution while giving counter guarantee.
A majority of banks also agreed not to do business with the China Construction Bank, according to a NBA source.
“There will not be any transactions with the China Construction Bank henceforth,” said HBL CEO Ashok Rana, who is also the president of NBA. “We will have to be careful if a similar problem arises in other projects, in which Chinese contractors are involved.”
China Railway 15 Bureau Group, with which the Melamchi project terminated the contract for bad performance, has filed the case in the Chinese court arguing it would not pay the guarantee amount as it had to give up the job due to bad work environment in the project site and Nepal.
The two banks have given counter guarantee to the Chinese bank for performance security of $6.62 million and guarantee for advance payment of $6.62 million and 1.4 million euro (Rs 1.3 billion).
As per existing mechanism, the Chinese bank should have released that amount to the Nepali banks, which would have been paid to the Melamchi Project.
With the Chinese bank refusing to release the guarantee amount, the two Nepali banks are facing trouble after the Melamchi
Water Supply Development Board asked them to release the guarantee amount.
“We are holding discussion with all relevant
parties, including the Melamchi Board and Nepal Rastra Bank, after the Chinese bank refused to release the guarantee amount, citing court’s order,” said Ajaya Sharestha, CEO of BoK. “We are
also exploring legal options on what can be done in
such cases.”
He said the process of giving counter guarantee is similar internationally. “This is a rare case and has alarmed us,” he added.
As work on many other projects in which Chinese contractors are involved has not been encouraging, Nepali banks are suspicious about the possibility of emergence of similar situation in future. That’s why they said they had to take such a decision.
Melamchi Board of Krishna Acharya said they have asked the two Nepali banks to pay the guar-
antee amount, but also acknowledged the banks’ problem.
“That’s why we have also sent a letter to the Nepal Rastra Bank to help recover the amount,’ said Acharya.
Source: The kathmandu Post
Tuesday, September 4, 2012
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
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
Wednesday, August 8, 2012
Banks compete to reduce home loan rates
KATHMANDU, Aug 8, 2012
On Monday, Himalayan Bank launched home loan scheme at fixed interest rate of 10.90 percent for at least three initial years, as against the rate of 12.75-16 percent that the bank was slapping in the past.
On Tuesday, Nepal Investment Bank went a step further and introduced similar scheme at 10.50 percent interest - at least 30 percent down from the previous rates of 15-16 percent.
These instances, many bankers say, are the prelude to falling home loan rates - at least for a short period of time - as these banks are among the trendsetters in the market.
"Home loans rates are expected to come down in the days to come as the cost of fund of most of the banks is going down," a high-ranking official of Nepal Investment Bank told Republica on condition of anonymity.
At the end of last fiscal year´s third quarter, the average cost of fund of commercial banks stood at a high of 8.31 percent, with Civil Bank reporting the highest of 10.91 percent in the industry. This was because many banks were paying high rates on fixed deposits.
"Now since most of those deposits have matured, the cost of fund of many banks has come down, giving them the leeway to bring down the rates even for the time being," the official of Nepal Investment Bank said.
This development has also caused Everest Bank, one of the top five private-sector led commercial banks in terms of assets, to mull over slashing home loan rates.
The bank, which claims to have mobilized Rs 1.5 billion from the housing market last fiscal year by launching one- and two-year fixed interest rate schemes, is currently mulling over reducing home loan rates by at least one percentage point from existing 13.5-15.5 percent.
Some time ago, Citizens Bank and Mega Bank had also brought down home loan rates by at least two and one percentage points, respectively.
The latest competition in reducing interest rates is also the upshot of declining exposure to the real estate market, according to bankers.
Many banks have now brought down their exposure to the real estate sector to below 20 percent of their credit portfolio from previous high of as much as 35 percent - meaning credit extended to the sector are being recovered.
"This has injected liquidity in banks and many may have opted to take the approach of funneling that money into the housing sector - mainly due to lack of other secure avenues that can absorb credit - rather than in treasury bills that give yield of less than a percent," a high-ranking official of Nabil Bank said. And since home loans are considered secure as they are backed by collateral, many banks are jumping into the bandwagon, the official of Nepal Investment Bank said.
However, PK Mohapatra, CEO of Everest Bank, said the latest rate reductions made by few big banks may be difficult for newer banks to imitate, as cost of fund for those institutions are still at higher end.
Anil Gyawali, CEO of Nabil Bank, the largest private-sector led bank, on the other hand, said: "We have not considered on launching a new product aimed at triggering a price war. This is not our strategy."
Source: Republica
On Monday, Himalayan Bank launched home loan scheme at fixed interest rate of 10.90 percent for at least three initial years, as against the rate of 12.75-16 percent that the bank was slapping in the past.
On Tuesday, Nepal Investment Bank went a step further and introduced similar scheme at 10.50 percent interest - at least 30 percent down from the previous rates of 15-16 percent.
These instances, many bankers say, are the prelude to falling home loan rates - at least for a short period of time - as these banks are among the trendsetters in the market.
"Home loans rates are expected to come down in the days to come as the cost of fund of most of the banks is going down," a high-ranking official of Nepal Investment Bank told Republica on condition of anonymity.
At the end of last fiscal year´s third quarter, the average cost of fund of commercial banks stood at a high of 8.31 percent, with Civil Bank reporting the highest of 10.91 percent in the industry. This was because many banks were paying high rates on fixed deposits.
"Now since most of those deposits have matured, the cost of fund of many banks has come down, giving them the leeway to bring down the rates even for the time being," the official of Nepal Investment Bank said.
This development has also caused Everest Bank, one of the top five private-sector led commercial banks in terms of assets, to mull over slashing home loan rates.
The bank, which claims to have mobilized Rs 1.5 billion from the housing market last fiscal year by launching one- and two-year fixed interest rate schemes, is currently mulling over reducing home loan rates by at least one percentage point from existing 13.5-15.5 percent.
Some time ago, Citizens Bank and Mega Bank had also brought down home loan rates by at least two and one percentage points, respectively.
The latest competition in reducing interest rates is also the upshot of declining exposure to the real estate market, according to bankers.
Many banks have now brought down their exposure to the real estate sector to below 20 percent of their credit portfolio from previous high of as much as 35 percent - meaning credit extended to the sector are being recovered.
"This has injected liquidity in banks and many may have opted to take the approach of funneling that money into the housing sector - mainly due to lack of other secure avenues that can absorb credit - rather than in treasury bills that give yield of less than a percent," a high-ranking official of Nabil Bank said. And since home loans are considered secure as they are backed by collateral, many banks are jumping into the bandwagon, the official of Nepal Investment Bank said.
However, PK Mohapatra, CEO of Everest Bank, said the latest rate reductions made by few big banks may be difficult for newer banks to imitate, as cost of fund for those institutions are still at higher end.
Anil Gyawali, CEO of Nabil Bank, the largest private-sector led bank, on the other hand, said: "We have not considered on launching a new product aimed at triggering a price war. This is not our strategy."
Source: Republica
HIDC in talks with commercial banks on consortium financing
KATHMANDU, AUG 08, 2012
Hydroelectric Investment and Development Company (HIDC) has got off to a running start by holding talks with commercial banks on the possibility of joining them as a consortium partner. The central bank has allowed HIDC to finance hydropower projects identified by banks as a consortium partner initially while it gains technical expertise.
The government-owned company has been in talks with a number of commercial banks planning to finance hydropower projects after they asked if it wanted to join them.
“We are talking with Nabil Bank out of the four banks that approached us with potential projects,” said Ejendra Prasad Luitel, management coordinator of HIDC. “Himalayan Bank, Prime and Laxmi have sent us the names of the projects, but they have not provided any details.”
According to HIDC, Nabil has proposed financing the 42 MW Mristi Khola Hydropower Project located in Myagdi district. HIDC and Nabil have held two rounds of talks over the project.
After finding the project to be attractive, the HIDC board has decided to invite Nabil and the developers of the project to give a presentation this week. The rate of the power purchase agreement signed with the Nepal Electricity Authority is Rs 5.40 per unit which HIDC has found attractive.
A senior Nabil official who wanted to remain unnamed said they were at the initial phase of discussions. “It is, however, good that an institution focused on hydropower development is ready to finance projects initiated by us,” said the Nabil official.
HIDC officials said it would also look at financing other projects after the other banks provide the details. According to them, Himalayan Bank has proposed the 42.9 MW Anku Khola while Prime Bank has proposed the 25 MW Khani Khola I whose capacity is being enhanced to 40 MW. Laxmi has proposed two projects, 23.5 MW Upper Solu and 2.6 MW Shisa Khola. HIDC had asked seven commercial banks and two development banks to recommend projects above 25 MW in which it could invest as a consortium partner.
Meanwhile, an HIDC official said that financing the project proposed by Laxmi Bank was not possible as it was below 25 MW. As per its memorandum of association, it can only finance projects above 25 MW.
Established a year ago, HIDC possesses funds in the amount of Rs 6.7 billion obtained by various ministries and other government agencies. The company intends to generate resources from bilateral and multilateral donor agencies and other international organisations besides issuing debentures and bonds in the domestic market. It has a paid-up capital of Rs 8 billion, issued capital of Rs 10 billion and authorised capital of Rs 50 billion.
Source: The Kathmandu Post
Hydroelectric Investment and Development Company (HIDC) has got off to a running start by holding talks with commercial banks on the possibility of joining them as a consortium partner. The central bank has allowed HIDC to finance hydropower projects identified by banks as a consortium partner initially while it gains technical expertise.
The government-owned company has been in talks with a number of commercial banks planning to finance hydropower projects after they asked if it wanted to join them.
“We are talking with Nabil Bank out of the four banks that approached us with potential projects,” said Ejendra Prasad Luitel, management coordinator of HIDC. “Himalayan Bank, Prime and Laxmi have sent us the names of the projects, but they have not provided any details.”
According to HIDC, Nabil has proposed financing the 42 MW Mristi Khola Hydropower Project located in Myagdi district. HIDC and Nabil have held two rounds of talks over the project.
After finding the project to be attractive, the HIDC board has decided to invite Nabil and the developers of the project to give a presentation this week. The rate of the power purchase agreement signed with the Nepal Electricity Authority is Rs 5.40 per unit which HIDC has found attractive.
A senior Nabil official who wanted to remain unnamed said they were at the initial phase of discussions. “It is, however, good that an institution focused on hydropower development is ready to finance projects initiated by us,” said the Nabil official.
HIDC officials said it would also look at financing other projects after the other banks provide the details. According to them, Himalayan Bank has proposed the 42.9 MW Anku Khola while Prime Bank has proposed the 25 MW Khani Khola I whose capacity is being enhanced to 40 MW. Laxmi has proposed two projects, 23.5 MW Upper Solu and 2.6 MW Shisa Khola. HIDC had asked seven commercial banks and two development banks to recommend projects above 25 MW in which it could invest as a consortium partner.
Meanwhile, an HIDC official said that financing the project proposed by Laxmi Bank was not possible as it was below 25 MW. As per its memorandum of association, it can only finance projects above 25 MW.
Established a year ago, HIDC possesses funds in the amount of Rs 6.7 billion obtained by various ministries and other government agencies. The company intends to generate resources from bilateral and multilateral donor agencies and other international organisations besides issuing debentures and bonds in the domestic market. It has a paid-up capital of Rs 8 billion, issued capital of Rs 10 billion and authorised capital of Rs 50 billion.
Source: The Kathmandu Post
Monday, June 25, 2012
Dramatic Lending Hike In Agri Sector Raises Eyebrows
KATHMANDU, June 25, 2012
A dramatic hike in commercial banks´ lending to the agricultural sector has raised eyebrows of many, raising question whether the growth is real.
A total of 32 commercial banks extended loans of Rs 7.27 billion in the first 10 months of the current financial year, marking a growth of 51.3 percent since mid-July, Nepal Rastra Bank (NRB) figures show. In the same period last year, credit extended by commercial banks to the agricultural sector had gone down by Rs 744.4 million.
A dramatic hike in commercial banks´ lending to the agricultural sector has raised eyebrows of many, raising question whether the growth is real.
A total of 32 commercial banks extended loans of Rs 7.27 billion in the first 10 months of the current financial year, marking a growth of 51.3 percent since mid-July, Nepal Rastra Bank (NRB) figures show. In the same period last year, credit extended by commercial banks to the agricultural sector had gone down by Rs 744.4 million.
Source: Republica
Tuesday, May 29, 2012
Bankers worried CA death will scare away investors
KATHMANDU, MAY 29, 2012
The banking sector is worried that recently rejuvenated investor interest will dissipate as the Constitution Assembly (CA) is dead.
Bankers said the banking sector, which has been struggling to extricate itself out of a mess marked by degrading assets, increasing non-performing loans and a credit crunch, will get deeper into trouble as a prolonged political transition will damage the investment climate. The uncertainty which was prevailing in the country for the last four years is now likely to continue for at least a couple of years more.
Commercial banks in the country have around Rs 50 billion ready for investment. Bankers said this amount would remain with them as investors will be unwilling to start new ventures following the dissolution of the CA. Banks will be in double trouble as they have to pay interest on the deposits received from the general public but they cannot earn a good rate of interest on the loans they issue. Bankers said that the growth in deposits which has been impressive in the last six months will take a hit if uncertainty persists for a long time.
“I am still unable to assess the current situation. This is not a scenario we had been expecting,” said Ajay Shrestha, chief executive officer of the Bank of Kathmandu. “In my opinion, this situation will slow down economic growth as the confidence of the private sector, the engine of growth, is low,” said Shrestha.
Bankers are worried that their clients who were showing interest in borrowing capital may postpone their plans. “We had a few prospective clients in regular contact with us willing to invest in long-term projects like hydroelectricity and manufacturing enterprises expecting that the country will get a new constitution and it will head towards stability,” said Bhuvan Dahal, chief investment officer at Nabil Bank. “Under the current circumstances, it is very likely that they will postpone their investment decisions and we will miss an opportunity to make much needed investments.”
NIC Bank CEO Sashin Joshi said that uncertainty and a fluid situation was not conducive for investment, and that it would further harm the performance of the banking industry. Joshi, however, welcomed the government’s decision to hold new elections stating that, in a way, going for a fresh mandate was always positive.
“At least, it has cleared some uncertainty about where the country is heading towards,” said Joshi. “But there has been statements of protest regarding the government’s decision, and if they develop into strikes and lockouts, it will be difficult for the banks even to carry out routine operations.”
Shrestha also feared that if the protests spill over on to the streets, their impact will be very negative on the health of banks. Most bankers said that if the political debates and differences didn’t change into street protests, strikes and lockouts and law and order was maintained, their regular business would not be affected.
Source: The Kathmandu Post
The banking sector is worried that recently rejuvenated investor interest will dissipate as the Constitution Assembly (CA) is dead.
Bankers said the banking sector, which has been struggling to extricate itself out of a mess marked by degrading assets, increasing non-performing loans and a credit crunch, will get deeper into trouble as a prolonged political transition will damage the investment climate. The uncertainty which was prevailing in the country for the last four years is now likely to continue for at least a couple of years more.
Commercial banks in the country have around Rs 50 billion ready for investment. Bankers said this amount would remain with them as investors will be unwilling to start new ventures following the dissolution of the CA. Banks will be in double trouble as they have to pay interest on the deposits received from the general public but they cannot earn a good rate of interest on the loans they issue. Bankers said that the growth in deposits which has been impressive in the last six months will take a hit if uncertainty persists for a long time.
“I am still unable to assess the current situation. This is not a scenario we had been expecting,” said Ajay Shrestha, chief executive officer of the Bank of Kathmandu. “In my opinion, this situation will slow down economic growth as the confidence of the private sector, the engine of growth, is low,” said Shrestha.
Bankers are worried that their clients who were showing interest in borrowing capital may postpone their plans. “We had a few prospective clients in regular contact with us willing to invest in long-term projects like hydroelectricity and manufacturing enterprises expecting that the country will get a new constitution and it will head towards stability,” said Bhuvan Dahal, chief investment officer at Nabil Bank. “Under the current circumstances, it is very likely that they will postpone their investment decisions and we will miss an opportunity to make much needed investments.”
NIC Bank CEO Sashin Joshi said that uncertainty and a fluid situation was not conducive for investment, and that it would further harm the performance of the banking industry. Joshi, however, welcomed the government’s decision to hold new elections stating that, in a way, going for a fresh mandate was always positive.
“At least, it has cleared some uncertainty about where the country is heading towards,” said Joshi. “But there has been statements of protest regarding the government’s decision, and if they develop into strikes and lockouts, it will be difficult for the banks even to carry out routine operations.”
Shrestha also feared that if the protests spill over on to the streets, their impact will be very negative on the health of banks. Most bankers said that if the political debates and differences didn’t change into street protests, strikes and lockouts and law and order was maintained, their regular business would not be affected.
Source: The Kathmandu Post
Saturday, May 19, 2012
Banks report 16% drop in profit, NPL up 10%
KATHMANDU, May 19, 2012
The net profit of commercial banks dipped 16.01 percent and at least two banks posted net loss in the first nine months of the current financial year, as the process of recovering debt absorbed by the now stagnant real estate sector moved ahead at a tardy pace.
The unaudited financial reports published by 32 commercial banks till Friday showed category ´A´ financial institutions generated a net profit of Rs 9.14 billion in the nine-month period till April 12 compared with Rs 10.88 billion in the same period last fiscal year.
The reports of top five private banks in terms of assets show mixed results. For instance, Nabil posted a profit of Rs 1.12 billion, up 19 percent, while Standard Chartered and Nepal SBI scooped up Rs 850 million and Rs 319 million in profit, a hike of 1.62 percent and 0.65 percent, respectively. Profits of two other top five banks - Himalayan and Nepal Investment - however, dropped 14.34 percent and 16.53 percent to Rs 570.22 million and Rs 801 million respectively.
The worst performers in the nine-month period were Kist Bank, which reported a net loss of Rs 153.73 million, and Century Bank, which was Rs 36.20 million in red.
“Profits of most of the banks shrunk in the review period and some even posted losses as they had to allocate bigger amount on loan loss provisioning as borrowers, especially those exposed to the real estate sector, failed to repay debts on time,” a renowned banker told Republica on condition of anonymity.
The country´s real estate sector has absorbed around Rs 100 billion in bank loans so far, according to Nepal Rastra Bank. Any problem in recovery of this debt means banks have to provision up to 100 percent of the amount extended as loans, unless credits extended by the banks are insured.
In the nine-month period, commercial banks allocated around Rs 5 billion for loan loss provisioning, from around Rs 4 billion in the same period last fiscal year, with Agricultural Development Bank Limited putting aside the highest amount (Rs 1.64 billion) for the purpose. Other banks such as Nabil assigned Rs 516.58 million and Standard Chartered Rs 144.40 million for provisioning.
Along with hike in provisioning amount, the portion of bad debts also went up at commercial banks. On average, the proportion of non-performing loans (NPL) of banks to the total credit went up 10.28 percent to hit 2.82 percent. This means 2.82 percent of total loan extended by commercial banks has turned into bad debt - a term which is used to explain loans, whose installments have not been paid for more than a year.
Some of the banks that saw the portion of NPL skyrocket in the third quarter were Sanima, NMB, Kist, Citizens and Kumari. Sanima Bank´s portion of bad debt, for instance, shot up 1,640 percent to 0.87 percent, while proportion of NPL at NMB Bank went up 889 percent to 2.77 percent. Likewise, Kist Bank reported NPL of 4.81 percent, up 651 percent, Citizens recorded bad debt proportion of 3.1 percent, up 588 percent, and Kumari Bank saw its NPL rise 312 percent to 4.46 percent.
“The hike in portion of non-performing loans suggests additional money went into provisioning that ate into banks´ profitability,” the banker said.
The profits of many banks also fell as they reported drop in interest income due to lethal combination of liquidity surplus and credit crunch.
Citizens Bank is one such institution. Although the bank´s provisioning for possible losses also went up by over 100 percent, the bank said it was also hit hard by 14.29 percent drop in interest income.
This happened after it attracted more money in forms of deposits but failed to give away this cash in form of loans to borrowers. “Because of this we spent too much amount paying interest on deposits parked in our bank,” Rajan Singh Bhandari, CEO of the bank, told Republica.
Since banks make most of their income by borrowing money from customers at a cheaper rate and then distributing it in forms of loans at a higher rate, failure to draw borrowers can eat away their profits.
Source: Republica
The net profit of commercial banks dipped 16.01 percent and at least two banks posted net loss in the first nine months of the current financial year, as the process of recovering debt absorbed by the now stagnant real estate sector moved ahead at a tardy pace.
The unaudited financial reports published by 32 commercial banks till Friday showed category ´A´ financial institutions generated a net profit of Rs 9.14 billion in the nine-month period till April 12 compared with Rs 10.88 billion in the same period last fiscal year.
The reports of top five private banks in terms of assets show mixed results. For instance, Nabil posted a profit of Rs 1.12 billion, up 19 percent, while Standard Chartered and Nepal SBI scooped up Rs 850 million and Rs 319 million in profit, a hike of 1.62 percent and 0.65 percent, respectively. Profits of two other top five banks - Himalayan and Nepal Investment - however, dropped 14.34 percent and 16.53 percent to Rs 570.22 million and Rs 801 million respectively.
The worst performers in the nine-month period were Kist Bank, which reported a net loss of Rs 153.73 million, and Century Bank, which was Rs 36.20 million in red.
“Profits of most of the banks shrunk in the review period and some even posted losses as they had to allocate bigger amount on loan loss provisioning as borrowers, especially those exposed to the real estate sector, failed to repay debts on time,” a renowned banker told Republica on condition of anonymity.
The country´s real estate sector has absorbed around Rs 100 billion in bank loans so far, according to Nepal Rastra Bank. Any problem in recovery of this debt means banks have to provision up to 100 percent of the amount extended as loans, unless credits extended by the banks are insured.
In the nine-month period, commercial banks allocated around Rs 5 billion for loan loss provisioning, from around Rs 4 billion in the same period last fiscal year, with Agricultural Development Bank Limited putting aside the highest amount (Rs 1.64 billion) for the purpose. Other banks such as Nabil assigned Rs 516.58 million and Standard Chartered Rs 144.40 million for provisioning.
Along with hike in provisioning amount, the portion of bad debts also went up at commercial banks. On average, the proportion of non-performing loans (NPL) of banks to the total credit went up 10.28 percent to hit 2.82 percent. This means 2.82 percent of total loan extended by commercial banks has turned into bad debt - a term which is used to explain loans, whose installments have not been paid for more than a year.
Some of the banks that saw the portion of NPL skyrocket in the third quarter were Sanima, NMB, Kist, Citizens and Kumari. Sanima Bank´s portion of bad debt, for instance, shot up 1,640 percent to 0.87 percent, while proportion of NPL at NMB Bank went up 889 percent to 2.77 percent. Likewise, Kist Bank reported NPL of 4.81 percent, up 651 percent, Citizens recorded bad debt proportion of 3.1 percent, up 588 percent, and Kumari Bank saw its NPL rise 312 percent to 4.46 percent.
“The hike in portion of non-performing loans suggests additional money went into provisioning that ate into banks´ profitability,” the banker said.
The profits of many banks also fell as they reported drop in interest income due to lethal combination of liquidity surplus and credit crunch.
Citizens Bank is one such institution. Although the bank´s provisioning for possible losses also went up by over 100 percent, the bank said it was also hit hard by 14.29 percent drop in interest income.
This happened after it attracted more money in forms of deposits but failed to give away this cash in form of loans to borrowers. “Because of this we spent too much amount paying interest on deposits parked in our bank,” Rajan Singh Bhandari, CEO of the bank, told Republica.
Since banks make most of their income by borrowing money from customers at a cheaper rate and then distributing it in forms of loans at a higher rate, failure to draw borrowers can eat away their profits.
Source: Republica
Saturday, March 31, 2012
Banks credit flow drops 5%
KATHMANDU, March 31, 2012
The credit flow of commercial banks to various sectors dropped 5 percent in the first seven months of the current fiscal year, exposing the lingering problem of suppressed credit demand that has lately hit the banking sector.
Thirty-two commercial banks extended Rs 36.18 billion in loans in the seven-month period through mid-February, as against Rs 38.14 billion recorded in the same period last year, latest figures compiled by the Nepal Rastra Bank show.
The data shows that credit flow in the production sector, which absorbed over 35 percent of the total bank loans, fell by 21 percent to Rs 13.59 billion in the seven-month period from Rs 17.21 billion in the same period last fiscal year.
Loans extended to wholesalers and retailers also slumped to Rs 5.13 billion in the first seven months, as against Rs 10.9 billion in the same period last fiscal year.
The services sector was not any better in absorbing bank credit as loans extended to the sector dipped to Rs 2.78 billion in the review period from last fiscal year´s Rs 3.29 billion.
Among others, credit extended to import vehicle, aircraft and their parts also plunged by over 71 percent to Rs 394.4 million this year from Rs 1.39 billion recorded in the seven-month period last year.
Bankers attributed the cause to stagnancy seen in the real estate market and slump seen in the manufacturing sector that have started affecting various sectors of the economy as well.
However, not all sectors have seen shortfall in flow of credit this year.
Agriculture sector, for instance, attracted Rs 4.74 billion in loans in the first seven months of the current fiscal year. The sector had attracted credit of Rs 822.5 million in last fiscal year.
Although the central bank in January had directed banks to extend at least 10 percent of the total loan to agriculture and energy sectors, few bankers expressed surprise over the huge credit growth in a small period of time.
However, others like Rajan Singh Bhandari, whose Citizens Bank has introduced micro loans of up to Rs 500,000 for farmers and others related with agriculture sector, said there was huge demand for such loans.
“In a week, my bank was able to issue Rs 20 million worth of 500,000-rupee loans,” he said.
Likewise, loans to construction sector also went up by a whopping 141 percent to Rs 4.99 billion from Rs 2.07 billion last year. Similarly, loans to mining sector topped Rs 959.5 million this year, up 431 percent from last year´s Rs 180.4 million.
Source: Republica
The credit flow of commercial banks to various sectors dropped 5 percent in the first seven months of the current fiscal year, exposing the lingering problem of suppressed credit demand that has lately hit the banking sector.
Thirty-two commercial banks extended Rs 36.18 billion in loans in the seven-month period through mid-February, as against Rs 38.14 billion recorded in the same period last year, latest figures compiled by the Nepal Rastra Bank show.
The data shows that credit flow in the production sector, which absorbed over 35 percent of the total bank loans, fell by 21 percent to Rs 13.59 billion in the seven-month period from Rs 17.21 billion in the same period last fiscal year.
Loans extended to wholesalers and retailers also slumped to Rs 5.13 billion in the first seven months, as against Rs 10.9 billion in the same period last fiscal year.
The services sector was not any better in absorbing bank credit as loans extended to the sector dipped to Rs 2.78 billion in the review period from last fiscal year´s Rs 3.29 billion.
Among others, credit extended to import vehicle, aircraft and their parts also plunged by over 71 percent to Rs 394.4 million this year from Rs 1.39 billion recorded in the seven-month period last year.
Bankers attributed the cause to stagnancy seen in the real estate market and slump seen in the manufacturing sector that have started affecting various sectors of the economy as well.
However, not all sectors have seen shortfall in flow of credit this year.
Agriculture sector, for instance, attracted Rs 4.74 billion in loans in the first seven months of the current fiscal year. The sector had attracted credit of Rs 822.5 million in last fiscal year.
Although the central bank in January had directed banks to extend at least 10 percent of the total loan to agriculture and energy sectors, few bankers expressed surprise over the huge credit growth in a small period of time.
However, others like Rajan Singh Bhandari, whose Citizens Bank has introduced micro loans of up to Rs 500,000 for farmers and others related with agriculture sector, said there was huge demand for such loans.
“In a week, my bank was able to issue Rs 20 million worth of 500,000-rupee loans,” he said.
Likewise, loans to construction sector also went up by a whopping 141 percent to Rs 4.99 billion from Rs 2.07 billion last year. Similarly, loans to mining sector topped Rs 959.5 million this year, up 431 percent from last year´s Rs 180.4 million.
Source: Republica
Sunday, September 18, 2011
Bank staff involved in fake declarations leading to illegal indian currency (IC) withdrawals
Preliminary investigation has shown that employees of some banks have
been involved in misappropriation of huge amount of Indian Currency
(IC) in collusion with traders who produced fake customs' documents.
"Our initial finding suggests that bank staff assisted the business firms that produced fake demand drafts and customs declaration forms to abuse IC," said a source at the Ministry of Finance (MoF).
Officials of the Department of Revenue Investigation (DRI) who are investigating into the cases of IC misappropriation worth Rs 1 billion by eight firms confirmed that almost all customs declaration forms submitted to NIC Bank branch at Birgunj appeared to be fake.
"While studying the documents we found almost all transactions of IC through NIC Bank were based on the fake customs declaration forms," Shanta Bahadur Shrestha, director general of DRI, told Republica on Saturday. Shrestha said investigation team from DRI found that those firms produced 599 fake customs declaration forms to different banks. "However, we are still to calculate the total amount of IC misappropriation from those customs declaration forms," said Shrestha.
He said documents submitted in other banks are also suspected to be fake because the same firms are involved in transactions with those banks as well.
An investigation team that was dispatched by Nepal Rastra Bank (NRB) on Wednesday has already sought clarifications from six commercial banks through which eight firms in Birgunj managed to draw huge amount of IC by producing fake customs documents.
The NRB team led by Deputy Director Chet Prasad Upreti began investigations into the cases in Birgunj-based branches of NIC Bank, Nepal Investment Bank, Nepal Bangladesh Bank, Laxmi Bank, Everest Bank and Siddhartha Bank. Public sector bank, Nepal Bank Ltd is also under the scanner of the investigation after transactions from the bank worth Rs 8 million was found suspicious.
Those firms withdrew Rs 630 million from NIC Bank, Rs 11.8 million from Everest Bank, Rs 32.3 million from Laxmi Bank, Rs 7.7 million from Nepal Bangladesh Bank, Rs 60.4 million from Siddhartha Bank and Rs 16.4 million from Nepal Investment Bank. Those firms are also found to have opened accounts with Sunrise Bank, Nabil Bank, Global Bank and Bank of Kathmandu.
An investigation carried out by DRI had found Maxwell Computer, Shyam Galla Bhandar, Jaya Mata Di International, Digital World and GS Traders of producing fake customs documents to withdraw huge amount of IC from different commercial banks. Five proprietors of those firms have been taken into custody.
In other cases of suspected IC misappropriation, DRI has sealed Nitesh Brothers, Jaibaba Amar Nath and Gangotri Gallaghar in Birgunj and put Dinesh Gupta, proprietor of those firms, behind the bars.
Source: Republica
"Our initial finding suggests that bank staff assisted the business firms that produced fake demand drafts and customs declaration forms to abuse IC," said a source at the Ministry of Finance (MoF).
Officials of the Department of Revenue Investigation (DRI) who are investigating into the cases of IC misappropriation worth Rs 1 billion by eight firms confirmed that almost all customs declaration forms submitted to NIC Bank branch at Birgunj appeared to be fake.
"While studying the documents we found almost all transactions of IC through NIC Bank were based on the fake customs declaration forms," Shanta Bahadur Shrestha, director general of DRI, told Republica on Saturday. Shrestha said investigation team from DRI found that those firms produced 599 fake customs declaration forms to different banks. "However, we are still to calculate the total amount of IC misappropriation from those customs declaration forms," said Shrestha.
He said documents submitted in other banks are also suspected to be fake because the same firms are involved in transactions with those banks as well.
An investigation team that was dispatched by Nepal Rastra Bank (NRB) on Wednesday has already sought clarifications from six commercial banks through which eight firms in Birgunj managed to draw huge amount of IC by producing fake customs documents.
The NRB team led by Deputy Director Chet Prasad Upreti began investigations into the cases in Birgunj-based branches of NIC Bank, Nepal Investment Bank, Nepal Bangladesh Bank, Laxmi Bank, Everest Bank and Siddhartha Bank. Public sector bank, Nepal Bank Ltd is also under the scanner of the investigation after transactions from the bank worth Rs 8 million was found suspicious.
Those firms withdrew Rs 630 million from NIC Bank, Rs 11.8 million from Everest Bank, Rs 32.3 million from Laxmi Bank, Rs 7.7 million from Nepal Bangladesh Bank, Rs 60.4 million from Siddhartha Bank and Rs 16.4 million from Nepal Investment Bank. Those firms are also found to have opened accounts with Sunrise Bank, Nabil Bank, Global Bank and Bank of Kathmandu.
An investigation carried out by DRI had found Maxwell Computer, Shyam Galla Bhandar, Jaya Mata Di International, Digital World and GS Traders of producing fake customs documents to withdraw huge amount of IC from different commercial banks. Five proprietors of those firms have been taken into custody.
In other cases of suspected IC misappropriation, DRI has sealed Nitesh Brothers, Jaibaba Amar Nath and Gangotri Gallaghar in Birgunj and put Dinesh Gupta, proprietor of those firms, behind the bars.
Source: Republica
Subscribe to:
Posts (Atom)