Monday, December 31, 2007
In the liberal market policy the central bank also could not restrict any financial institutions from operating unless they break the rule. So, it increased the authorised capital, for commercial banks to Rs 2 billion and for development banks to Rs 640 million and for finance companies to Rs 30 million.
But with increasing number of these institutions, the central bank has to increase its supervisory capacity also, which has become a major challenge for itself lately.
However, still only the 20 per cent has access to banking services, according to the NRB data. The banks have recently been penetrating the semi-urban areas. Some of them have even brought innovative banking and non-banking services and instruments to expand their market.
One of the major reasons of flooding the finance institutions is the flow of remittances that has increased by 21.4 per cent to Rs 9.36 billion in Q1 of 2007-08 compared to a growth of 29.9 per cent last year. Meanwhile some bankers are afraid of non-banking professionals' dominance in this field making the whole sector vulnerable.
The increase in number of financial institutions set fire in Nepali capital market this year as Nepse crossed the historic high of 1064-point mark in December. Last year, the Nepse was hovering around 500-point mark.
Securities Board of Nepal (SEBON) has approved more that Rs 2.48 billion worth rights and ordinary shares issue of 17 companies — about 95 per cent of which are finance institutions — within the first five months of this fiscal year till December, whereas it had approved Rs 2.75 billion worth issuance of 31 companies during the whole year in 2006-07.
Similarly, within this first five months, the market capitalisation has also increased to more than three trillion rupees from last year's Rs 1.8 trillion. The total market capitalisation has reached to 27.78 per cent of GDP.
Capital market is considered a barometer of national economy. But in Nepal's context, it does not reflect the real economic growth as it is largely dependent on financial institutions only. Lately the Insurance, Hydropower and Hotels group is also picking up by the involvement of real sector is still far.
However, this year Nepse has automated the capital market, started providing real time information and WAN services.
The absence of real sector, effective monitoring of SEBON, the regulatory body of the capital market and lack of transparency in the listed companies — that stands at 142 at present — inside trading and manipulation have also been suspected in the secondary market, which is not a good sign.
Meanwhile, by the end of December, the market has started corrections, which is not bad.
SEBON is bringing some more regulations to modernise capital market for its transparency and involvement of institutional investors like mutual fund and CDS that will help control market volatility which could make Nepali capital market the real barometer of national economy.
Sunday, December 30, 2007
The government expenditures had increased by 9.9 per cent in the corresponding period of the previous year.
On debt servicing, expenditure on principal repayments increased by 83.0 per cent to Rs 4.39 billion as compared to a rise of 35.2 per cent in the corresponding period of the previous year.
Out of the total payment, Rs 2 billion went for repaying domestic debt and Rs 2.39 billion for the external debt.
Of the total exports, export to India decreased by 7.8 per cent compared to a marginal growth of 0.2 per cent in the same period of 2006-07. Exports to other countries also posted a decline of three per cent in contrast to a rise of 3.9 per cent in the comparable period of the previous year.
The decline in the exports of vegetable ghee, toothpaste, textiles, chemicals and pulses to India and woolen carpet, pashmina, readymade garments, Nepali paper and paper products and tanned skin to other countries contributed to the decline in exports in the review period, states the first four-month's report of the central bank.
Total imports grew merely by one per cent compared to a growth of 10.8 per cent in the corresponding period last year. "While imports from India went up by 2.2 per cent in the review period compared to a growth of 10.4 per cent in the previous year, imports from other countries fell by 0.9 per cent in contrast to a rise by 11.5 per cent in the previous year," the report states.
A rise in the import of vehicles and spare parts, MS billet, hot rolled sheet in coil, cold rolled sheet in coil and pipe and pipe fittings, among others, from India and substantial increase in the import of gold followed by telecommunication equipment and parts, electrical goods, transport equipment and parts and other machinery and parts, among others, from other countries led to the slight rise in total imports in the first four months of 2007-08.
Similarly, the overall balance of payments (BoP) recorded a deficit of Rs 3.61 billion in the first four months of 2007-08. The BoP had registered a surplus of Rs 180.8 million in the corresponding period of the previous year.
The gross foreign exchange reserves declined by 1.2 per cent from the level of 2007 and stood at Rs 163.12 billion in mid-November 2007. According to the report, such reserves had declined by 0.4 per cent in the corresponding period of the preceding year. In terms of US dollar, gross foreign exchange reserves rose by 1.6 per cent to $2.59 billion in mid-November, 2007. In the same period of the previous year, such reserves had risen by 2.1 per cent.
On the basis of the import figures for the first four months of 2007-08, the current level of reserves is sufficient for financing merchandise imports of 10.4 months and merchandise and service imports of 8.1 months.
This announcement was made by Dubai Tea Trading Centre (DTTC), an initiative of Dubai Multi Commodities Centre (DMCC). More than 35 tea consuming and producing nations are expected to participate in the forum that will be held on February 19-20, 2008. Since its inception in early 2005, the DTTC has expanded its range and reach to process teas from 13 tea producing countries including India, Kenya, Sri Lanka and China.
"The global tea trade is today somewhat fragmented, and we believe that networking forums such as the Global Dubai Tea Forum will prove beneficial in fostering increased transactions among developed and emerging tea markets," said Sanjay Sethi, head of DTTC. DTTC also facilitates sales to buyers in the Gulf Cooperation Council (GCC) states, Iran, Iraq, Jordan and CIS countries, and has plans to expand its services to other markets.
India is among the largest tea exporters to the Gulf region and the largest tea producing country in the world.
Saturday, December 29, 2007
The directive, to be enforced from tomorrow, directs category A, B, and C financial institutions — commercial banks, development banks and finance companies respectively — to stop margin lending and renewal of loans against shares.
“The actual impact will be on the capital market but it will also hit those financial institutions whose portfolio of lending against shares is big,” said Radhesh Pant, managing director of the Bank of Kathmandu and president of the Nepal Bankers’ Association.
“The directive is aimed at stopping manipulation and insulating the stock market,” said National Planning Commission member Dr Posh Raj Pandey.
“If the market is not corrected, more stringent measures will be used.”
Chiranjivi Nepal, chairman of the Securities Board of Nepal, also agreed: “The directive is for market correction. The capital market is said to be fuelled by margin lending on shares that the banks provide subscribers against their shares.”
Since the financial institutions are more vulnerable due to margin lending, this directive could save them from a crisis and stabilise the capital market, Nepal said. “Nepse needs to be cut down to size. If the share market crashes after reaching a sky high, not only will the investors find themselves on the streets but it will also hit the financial institutions and the national economy ,” he said.
“The directive may bring some correction,” said stockbroker Rabindra Pradhan. The capital market, dominated by financial institutions, has recently posted a whopping growth and margin lending is attributed to Nepse’s 'abnormal rise'.
But some challenge this directive. “NRB cannot issue any such directive as it is against the Company Act,” said capital market analyst Rabindra Bhattarai. “Banks can lend on collateral, be it shares or anything.”
NRB’s Legal Department Director Dharmaraj Sapkota dismissed Bhattarai’s argument.“The Nepal Rastra Bank Act-2058, clause 79, gives the central bank special power to issue such directives in order to manage the monetary market," he said.
Saturday, December 22, 2007
Singapore's strong showing this year underscored a more general recovery in the region since the 1997 Asian financial crisis, said The Global Property Guide. "Singapore is attracting and admitting more foreign-born workers, which is positive for prices," said the online report.
Residential property prices in the city-state surged by 24.3 per cent after adjustments for inflation to emerge as the world's hottest this year, Global Property said, followed by Shanghai, up by 20 per cent.
Robust economic growth accounted for the performances, the report stated. In Asia, it recommended Singapore, Thailand, Cambodia, Japan, Australia and New Zealand to investors.
Global Property cautioned against investing in Europe, with the exception of a handful of Eastern European states, because of high valuations after a long period of price appreciation.
The report found Egypt attractive for its high rental yields and low taxes but warned of a possible oversupply in Dubai, United Arab Emirates.
Every single investor, due to less investment opportunities, has found capital market more lucrative. But the apex regulatory body, Securities Board of Nepal (SEBON) and front-line regulator and secondary market, Nepse, time to time issue notices warning the investors to be more aware before putting their hard-earned money on any company.
The abnormal behaviour of the Nepse calls for more awareness among the investors and what could be a better idea than to publish a book on Nepali stock market and its nitty-gritty. Rabindra Bhattarai, a lecturer at the Shankerdev Campus and trainer of share market has come up with a book Nepalko Share Bazar (Nepal's share market).
The testimony of the book's popularity is that in a short span of time the author is forced to publish its updated third edition. Afterall, its a Bible to the investors.The author being a lecturer of finance has explained — in 19 chapters — Nepali capital market's modus operandi like how share price increases and decreases, acts and laws related to capital market and relation between capital market and monetary policy, in a plain language. The book also has a glossary section, which is very useful to the students and investors alike.
Bhattarai, who has other books like Stock Market in Nepal (english version), Investments: Theory and Practice, Capital Structure Management and Fundamentals of Financial Management and Corporate Financial Management to his credit is bringing another book Share Markets: Some queries soon.Since the market is getting mature, Nepali investors need more of such books.
Book: Nepalko share Bazar (Nepal's share market)
Author: Rabindra Bhattarai
Publisher: Buddha Academic Enterprises Pvt Ltd
Pages: 116Price: Rs 125
Wednesday, December 19, 2007
More than 133 million of the world's poorest people — 60 per cent of them women — received micro loans in 2006 to start or expand micro businesses, according to a report, 'State of the Microcredit Summit Campaign Report 2007', which is prepared with data gathered from more than 3,316 institutions worldwide.
In total, the institutions reported the number of beneficiaries soared to more than 133 million clients, with 93 million individuals falling into the campaign's focus poorest clients, from 13 million nine years ago. The focus group of clients has been identified those people living below $1 a day.
In Nepal, the Rural Microfinance Development Centre Ltd (RMDC), an apex wholesale agency for microfinance, released the report. RMDC stated that it has disbursed $31.8 million to the women of the poor families through its 60 partner organisations or micro-finance institutions (MFI) during its eight years of operation.
Targeting to the poor including the poorest of the poor, lending at their doorsteps without physical collateral, bi-weekly repayment schedules are basic characteristics of the MFIs, said Shanker Man Shrestha, CEO at the RMDC, adding that one of the most admired beauties of micro-credit is its 100 per cent repayment rate and RMDC's partners have maintained over 99 per cent recovery rate.
Shrestha said that micro-credit has yet to reach some of the most deprived areas of mid-western and far-western regions of the country. RMDC has taken appropriate steps and strategies to cover most of the poor population left out from the institutional microfinance services in the next 10 years.
Sunday, December 16, 2007
Soaltee Hotels Ltd is giving 10 per cent cash dividend — that is subject to the approval from its annual general meeting (AGM) — to its share holders from the profit it has registered during the fiscal year 2006-07.
Soaltee Hotels Ltd that is holding its 33rd AGM on January 9, will be the second hotel to hold its AGM. Two months back, Oriental Hotels (Radisson Hotel) held its 10th AGM.
The encouraging tourists inflow — in the past year due to peace accord between the government and Maoists — has helped the hotel industry to grow, lately.
However, Yak & Yeti Ltd has applied for delisting of its shares from the Nepse that had earlier freezed its share transactions after the former failed to pay its renewal fee for this fiscal year. "Yak & Yeti has requested us to be delisted," said Rewat Bahadur Karki, general manager of the Nepse.
Yak & Yeti Ltd's special AGM on December 14 has also decided to delist its shares from the Nepse. It is holding its regular AGM within this month.
According to the rule, the listed companies must pay their renewal fee within the first three months of the fiscal year. Hotel Yak & Yeti was the only hotel among the listed four hotels that has not paid its renewal fee.
Oriental Hotels has in its 10th AGM announced Rs 36,47,959 profit for the fiscal year 2006-07 from Rs 2,78,80,557 loss in 2005-06. It has earned Rs 15,17,00,000 from room charge only.
Oriental Hotels also become the third company — after Unilever and Nabil Bank — to hold its AGM this year. It held its 10th AGM on October 11. Oriental hotels has 28,000 share holders. The shares of Oriental Hotels Ltd (Radisson Hotel) has been hovering around Rs 122 per unit.
"Investment on assest-based industry like hotel has a bright and secure future," Bidhya Krishna Shrestha, managing director of Radisson Hotel, Kathmandu said, adding that Radisson has become the highest foreign currency earner among 5-star hotels for this year. "We also got ICAN best accounts runner-up awards," he added.
The hotel group, especially Soaltee and Oriental Hotels Ltd, has set an example at a time when the real sector has no contribution in the current bullish capital market.
"There is no transparency and good governance in the real sector," Shrestha said, explaining the reason behind real sectors absence from the Nepse.How comfortable is Hotel Group
1. Yak & Yeti Ltd — listed shares 2209208 units — paid up value Rs 100 per share — total paid up capital Rs 220920800*
2. Soaltee Hotel - listed shares 8697187 units — paid up value Rs 10 per share — total paid up capital Rs 86971870
3. Taragaon Regency Hotel Ltd — listed shares 7449875 units — paid up value Rs 100 per share — total paid up capital Rs 744987500
4. Oriental Hotel Ltd — listed shares 5000000 units — paid up value Rs 100 per share — total paid up capital Rs 500000000
Total listed shares of Hotel group 23356270 units — total paid up capital Rs 1552880170
Saturday, December 15, 2007
A five-member delegation led by Abdul Rahaman Mohammed Al-Khulaisi, joint secretary at the Qatari Labour Ministry today held discussions with the senior officials at Ministry of Labour and Transport Management (MoLTM) today. The meeting agreed to implement the bilateral labour pact after signing of the addendum protocol for which a Nepali official delegation has been invited to Doha.
"The protocol has no major changes or additions to the existing one but it will come into implementation once it is signed," said Keshar Bahadur Baniya, director general at the department of Labour and Employment Promotion. A high level Nepali team will go to Doha to ink the protocol following the approval of the ministerial council here, he added.
The meeting finalised the contents of the protocol, which specifies the responsible authorities of both the countries to oversee labour related issues and implement it as per the spirit of the accord.
A joint committee including representatives from both the countries will be formed to review employment opportunities in the recipient country. The review meet will be held twice a year alternately in Nepal and Qatar.
Nepali workers will be provided the remuneration and facilities according to the labour law of the host country. The protocol will remain an integral part of the labour pact and be effective as long as the pact exists.
Qatar has recently emerged as the most popular destination among Nepalis and has already employed over 1,50,000 Nepali workers.
During the first four months of current fiscal year, a total of 26,732 Nepali workers left for Qatar. This Gulf country has recently overtaken Malaysia as the most popular destination for Nepali jobseekers among the Gulf countries.
Nepal and Qatar had signed the bilateral labour pact on March 21, 2005 in Doha.
Friday, December 14, 2007
Nepali coffee is soon going to have its own logo to represent the Himalayan organic flavour in the global market.
The National Tea and Coffee Development Board (NTCDB) — a government agency for development and promotion of tea and coffee farming and marketing — has already prepared a logo for the Nepali coffee.
The logo, which depicts beans and steaming coffee with mountain in background and 'Himalayan Specialty' written on top and 'Nepal Coffee' on bottom, will come into practice following the approval of a board meeting of NTCDB scheduled for next week.
"The national logo will help the product for branding and creating its niche market," says Binaya Kumar Mishra, executive director at the NTCDB, adding that the demand of Nepali organic coffee in the international market has gone up significantly in the last couple of years.
According to him, the board is also planning to issue directives for the implementation of the National Coffee Policy-2060. It will spell out a numerous issues related to coffee farming, plucking of coffee beans, processing, production, quality control and packaging. All these should be at par with the international standards and guidelines issued by the International Coffee Organisation (ICO), adds Mishra, while talking to this daily.
The directive also has highlighted a need for creating database of coffee related institution, cooperatives, setting up mechanism for product development, market promotion and branding and providing training farmers, supporting on human resource development activities and consultation.
It also envisions Coffee Development Fund to provide technical and financial help to the concerned stakeholders. The fund will be jointly administered by the government and private sector.
Although Nepal has seven decade long history of coffee plantation, the commercial farming began only 25 years ago. Today coffee is commercial grown in 23 districts that covers 1400 hectares of land.
The mountain slopes of Nepal's mid-hill region with an altitude ranging from 800m to 1600m is climatically suited for coffee plantation. Arabic species of coffee is grown in Nepal, mostly in western hilly districts of Gulmi, Arghakhanchi and Palpa.
With growing popularity of the Nepali organic coffee in domestic as well as international markets, the production is also steadily growing. According to NTCDB figures, the production of dry cherry jumped to 115 metric tonnes (MT) in 2005 from 85 MT in 2003. It is expected to cross 272 MT this year.
The demand for Nepali coffee is ever growing, as 65 per cent of the total production of coffee is already being exported to the international markets like Japan, EU, Korea and USA. Considering the future potential, the board has already launched a pilot programme to promote commercial coffee farming in hilly districts of western Nepal.The coffee exports, in volume, began from 2002 and Nepal exported coffee worth Rs 40.11 million during the fiscal year 2006-07.
Thursday, December 13, 2007
"SEBON's board meeting today has decided to revoke the firm's licence," Chiranjivi Nepal, chairman of SEBON, said, adding that an investor Krishna Prasad Adhikari had filed complaint against the firm some three years back.
Ohm Securities and Allied Services — registered in the name of Mohan Sharma Lamsal, Reshma Sharma and Rajesh Sharma Poudel — had bought shares of Beema Sansthan in the name of Krishna Prasad Adhikari without his information. "The name of the client's father, grandfather and his signature are different in different forms," informed P N Poudyal, director at the Market Regulation Department of SEBON. "The broker had been buying shares in the fake clients' names also," he added.
"SEBON will not spare any foul play," Nepal said, adding that it will take action and penalise the culprits. Initially, there were 32 brokers at the Nepse but now only 21 are left. "Broker number 23 was under suspension from some time back," Poudyal said, adding that yet another broker is also under suspension.
SEBON has recently got regulations to act against malpractise of brokers, investors and market makers. Similarly, it is bringing Initial Public Offering (IPO) amended regulation, Merchant Banking regulation and Mutual Fund regulation to make the Nepali capital market more transparent, managed and investor friendly.
SEBON has also started market surveillance via Real Time Surveillance System and onsite inspection.
Bull run continues, trading halted
KATHMANDU: Nepse has today after registering a double digit rise in its index and posting 1025.91 points, halted trading almost half an hour before the regular trading hour. Normally, the trading hour starts at 12 noon and continues till 2 PM but today the secondary market closed half an hour before. Shares of Standard Chartered Bank were traded today at Rs 5260 after almost three weeks break. The market leader Development banks group's index has registered a rise of 100. 33 to 1919.45 points.
Monday, December 10, 2007
Nepal, meanwhile, was the region's poorest by both measures. The report by regional statistical agencies, coordinated by the Asian Development Bank (ADB), showed wide disparities in Asia's living standards.
It found that the tiny, oil-rich sultanate of Brunei has a per capita gross domestic product (GDP) 13 times higher than the regional average of $2,621 and more than 40 times larger than the lowest-ranked Nepal.
Brunei is followed by Singapore, Macau, Hong Kong and Taiwan. Apart from Nepal, the poorest have-nots include Bangladesh, Cambodia, Laos and India.
The study covered 23 economies, excluding Japan, South Korea and East Timor. India, one of the world's fastest growing economies, has a per capita income of $1,551, still behind the regional average and also below Sri Lanka and Pakistan. China, meanwhile, ranked above average with its per capita income of $2,986.
Meanwhile, Hong Kong residents were the biggest spenders, according to a measure of household living standards called the per capita actual final consumption expenditure index. Taiwan and Brunei came in second and third.
In terms of spending, China and India both lagged behind the regional average, the study found. "The study shows the growth and developmental challenges facing the region," said Ifzal Ali, ADB's chief economist.
"The region has miles to go before celebrating its economic success." The study, called '2005 International Comparison Program in Asia and the Pacific: Purchasing Power Parity and Real Expenditure,' is part of a global initiative spearheaded by the World Bank that allows cross-country comparison of purchasing powers of currencies and living standards.
Sunday, December 9, 2007
“Rights and bonus shares have fuelled the capital market,” capital market analyst Rabindra Bhattarai said. “The boom will sustain for some time.”
“However, small corrections here and there are evident any time due to the book closures of the financial institutions like Standard Chartered Bank that had pulled the market down a couple of weeks ago,” he added.
“Around 90 per cent of the shares traded on Nepse floor is of financial institutions,” CEO and managing director of Nepal Investment Bank, Prithvi Bahadur Pande, said, adding that it does not justify the market fundamentals. “If the banks have tremendous growth, it could be rational,” he added. “But the profit-to-earning (PE) ratio is abnormal and there has to be a correction sometime and the small investors could lose.The PE ratio should not be more than 20.”Now the PE ratio of most of the banks is over 40.
The Nepse floor is dominated by the development banks. The major market boosters in today’s trading were also the Development banks group that surged by 56.24 points or 3.72 per cent to 1566.12 points, Hydropower companies group flared by 25.36 points or 1.73 per cent to 1494.79 points and Finance companies group that flared by 9.66 points or 1.11 per cent to 881.16 points.
“People have also started holding the shares — that are in high demand but low supply in recent days — leading to a market boom,” Bhattarai said.
“Some investors are exploiting the market and controlling the price, so that they can borrow money from the banks against the shares,” Pande cautioned.
Chiranjivi Nepal, chairman of Securities Board of Nepal (SEBON), also suspected the sustainability of the current bullish trend. “Bearish trend is evident,” he said, warning the investors not to be affected by noise creators as they could spoil the market.
“Globally the trend is faster,” he said, adding, “But the shares of companies that have negative net worth and unbelievable PE ratio are also flaring, which could be fatal for the small investors.”
“The investors should go through performance of any institutions, before buying their shares,” he suggested.“The instruments are weak to check the market manipulation. So, only a limited number of people are enjoying the benefits,” Nepal accepted.
Why it’s a bit fishy
• Last December, Nepse index was hovering around the 500-point mark and the commercial banks group’s index was hovering around 590 points. Within a year i shot up to 500 ore points, whereas it took more than a decade to reach 500 points.
• Initially there were 32 brokers, but their number is now only 23 and soon Nepse is adding 27 brokers.
• Globally a standard PE ratio of a bank is not more than 20, but in Nepal, almost all the banks have a PE ratio over 40.
• Nepse started automated trading from September and now nine brokers transact from their office via Wide Area Network and soon Nepse will launch online trading.
Saturday, December 8, 2007
The World Bank (WB) has sanctioned its biggest ever support package to Nepal with $253 million in grants. The support package is designed to improve access to basic and primary education, build irrigation facilities, expand rural roads, improve livelihoods and empower the rural poor.
The new support package doubles the amount of development resources currently available from the bank, states a press release.
Earlier, briefing executive directors of the World Bank Group and their advisers, Praful Patel, WB vice-president for South Asia, said the grant programme intends to help Nepal implement its development programmes that enjoy the backing of the seven-party coalition in its efforts to bring about sustainable peace and build a new Nepal. “We all know that peace is needed for development. But in Nepal we have experienced that development is also needed for peace,” he said, adding that addressing root causes of the conflict will be key to ensuring lasting peace.
“Inequality and social exclusion are among Nepal’s foremost development challenges,” Susan Goldmark, WB country director for Nepal, said, adding that the package approved demonstrates the WB’s commitment to ensure social and economic inclusion of the poor, marginalised and less developed regions.
“Through improved schools, roads, water provision, and income-generating activities, we hope these projects will help the country step up the delivery of basic services,” she added. Out of the total amount, $100 million is for the Poverty Alleviation Fund Project II (PAF II), a community-driven development programme that has reached over nine lakh rural Nepalis over the last three years. The PAF II will cover all 75 districts and be accessible to some one million rural households.
A sum of $60 million is for the Education for All Project and $50 million for the Irrigation and Water Resources Management Project.The sum of $42.60 million is for the Road Sector Development Project.
Tuesday, December 4, 2007
Tom Wright, general manager of Cathay Pacific — with which Dragonair has merged last September — for India, Middle East, Africa & Pakistan, thinks it is the right time to resume Nepal flight. "There couldnot be any better time than this," he said, adding that the situation in Nepal is improving and tourism business is booming.
He stands correct as the very first flight was 100 per cent full with 150 economy passenger plus eight business class.
Last September Dragonair merged with Cathey Pacific. But it still operates its own brand. "Dragonair brand is an established brand," said, Rick Symington, manager — Bangladesh and Nepal, "so it kept its brand even after merger."
With its four flights a week between Hong Kong and Kathmandu — on Sundays, Mondays, Wednesdays and Fridays — Dragonair expects 50 per cent Hong Kong-bound and 50 per cent other countries passenger. "We are eyeing a major market share on Hong Kong-Kathmandu route with 50 per cent Nepali and rest international passengers," Wright said.
As a member of the Cathay Pacific Group, Dragonair flies to niche markets in Asia in addition to its core Mainland China market. The airlines operates a fleet of 31 passenger aircraft and six freighters serving 31 destinations including 21 cities in Mainland China."
As a subsidiary of the Cathay Pacific Group, Dragonair provides seamless connectivity for its passengers to more than 100 cities across the globe," he added."Supported by Cathay Pacific's international network, passengers flying with Dragonair will have better connectivity to major international destinations," Symington supported him."
This will be able to draw international tourists — specially Chinese tourists — to Nepal through its Hong Kong hub," Wright said, adding that Nepali passengers flying by Dragonair and further by Cathay Pacific via Hong Kong to some destinations in the UK, Europe, Schenzen countries, the US, Canada, Japan, Korea, Australia and New Zealand would not require transit visa.
Dragonair, jointly with the Cathay Pacific, operates a fleet of 152 aircraft and flies to 126 destinations. "Nepalis will have better option to fly to the US and Europe," Symington said, adding that Australia-bound and US-bound passengers will benefit more."
Dragonair is also thinking of freight operations in future, as it is the sixth largest freight carrier apart from being the sixth largest profitable airlines in Asia and the tenth largest profitable in the world," said Wright.
Recently, freight forwarders have urged the government to make the air cargo terminal 24-hour operational to boost trade. "For smooth freight operations, TIA air cargo terminal should be operational 24-hour," he said.
All the international airlines that have once pulled out of Nepal are resuming their flights at present forcing the only international airport TIA for upgradation to accomodate all the international airlines. "If it upgrades its facilities, TIA can lure more international flights and freight operators that would not only boost Nepal's export trade but also increase tourist arrivals," Wright said.
Dragonair — which has Amrawati Tours and Travels as its GSA for Nepal — first started serving on Kathmandu-Hong Kong route in 1989.
Saturday, December 1, 2007
In the first quarter of this fiscal year, total government spending has increased significantly by 53.7 per cent to Rs 30.03 billion, states a macro-economic report of Nepal Rastra Bank (NRB). It had increased by only 17.7 per cent in the corresponding period last year. The upsurge in total expenditure is blamed at substantial increase in government expenditure, including principal repayment.
"In the first three months, recurrent expenditure rose by 35.6 per cent to Rs 21.32 billion in comparison to an increase of 28.5 per cent in the same period last year," stated the report.
The central bank's report blamed the high growth of recurrent expenditure on increased expenditure on relief-related activities, salary-hike, a rise in peace related expenditure and additional expenditure relating to the preparation for the election of constituent assembly.
According to the central bank, the government budget also showed a deficit of Rs 9.40 billion as against the surplus of Rs 352.9 million in the corresponding period last year. A whopping rise in government expenditure and significant deceleration in the growth of non-debt resources have resulted in a budget deficit, claimed the report.
Similarly, revenue mobilisation has grown by 18.8 per cent to Rs 19.26 billion in comparison to a higher growth of 26.7 per cent in the corresponding period of the previous year. "The low growth of revenue is due to frequent bandhs and strikes in Tarai, problems in revenue collection in bordering customs and closure of some customs offices as well. The low collection of VAT and income tax has also pulled revenue growth down."
Exports have also declined by 0.6 per cent in comparison to a decrease of 0.3 per cent in the same period last year. "Of the total exports, export to India decreased by 0.2 per cent," according to the report. Exports to other countries also declined by 1.2 per cent in contrast to a rise of 7.1 per cent in the same period last year.
Imports have increased by 8.1 per cent in comparison to a slightly higher increase of 9.9 per cent in the corresponding period of last year. "While imports from India went up by 7.2 per cent compared to a growth of 13.1 per cent in the same period last year," stated the report. However, imports from other countries rose by 9.5 per cent compared to a growth of just 4.9 per cent last year.
The report stated that overall BoP recorded a deficit of Rs 5.88 billion. In the corresponding period last year, it has recorded a surplus of Rs 1.13 billion.
The gross foreign exchange reserves stood at Rs 158.08 billion in mid-October 2007, a decline by 4.3 per cent from Rs 165.11 billion in mid-July 2007.
In terms of US dollar, gross foreign exchange reserves declined by 1.8 per cent to $2.50 billion in mid-October 2007. In the same period last year, it had gone up by 1.9 per cent. However, the current level of reserves is sufficient for financing merchandise imports of 9.6 months and merchandise and service imports of 7.5 months.
Indian currency equivalent to Rs 20.58 billion was purchased through the sale of $320 million in the review period compared to a purchase of Rs 13.32 billion by selling $180 million in the same period last year. "The rise in the purchase of IC was due to widening trade deficit with India in the review period," stated the report.
Friday, November 30, 2007
Last month, a group of six motorcyclists — including a lady rider from Australia with a Nepali Road captain — completed a road trip of over 2000-km from Kathmandu to Lhasa and returned via Everest Base-camp in 16 days.
From dirt to high altitudes, rough roads and to newly black topped road from Gyantse via Gandrock, on new Royal Enfield Bullet 500cc motorcycles, the bikers led by Stewie McLean — who has been organising such adventure riding trip since 2004 — experienced an euphoria that cannot be described in words.
Though McLean has been bringing adventure groups to Nepal every April and taking them on a ride on rough mountainous roads in Nepal from Kathmandu to Pokhara to Chitwan, and back to Kathmandu, its the first time he attempted a ride to Lhasa with his groups of motorcyclists including Chris Abbot (a businessman), Wayne Skues (a farmer), Helen Travers, Stephen Brand (a doctor) and Binod Chettri a road captain.
Himalayan Riders — the local co-ordinator of the trip — has been organising such bike trips to different places in Nepal to make holidays of the tourists most memorable ever. It is organising such bike trips to Ladakh and Bhutan and planning to start a trip to Mangolia soon.
"Its more free to travel on bike," McLean, said, adding that the trend is picking up as the number of bikers is increasing every year. However, its very interesting to know that all these motorcyclists are 40-plus people. "Older folks like such trips," he added. According to him the younger people don't have enough money for such trips.In a long bike tour, the riders develop a certain comaraderi among themselves. "The group must be clear when to stop and how to communicate essentials like 'stop', 'slow down', or 'I have a problem'," he said, adding that one should make sure to have protective gear and use it properly."
Riding in a group requires a bit more skill than riding solo. A new rider may not have experience and the group will have to face the problem together," he added. Apart from that its challenging not only because of rough roads but also due to unwanted stray animals on the road," McLean said. "Its difficult to keep the speed and the riders have to blow horn all the time.
"But how did it all start? "When I invited my friends to Nepal for trekking, some of them didn't like to walk," he said, adding that then an idea occured. "Can I arrange a riding trip, I asked them and they immediately said 'ye'.
"Unlike most of the Nepalis, for whom bikes are means of transportation, McLane and his rider friends take it as sport. "Its a group sport," McLane added.
Thursday, November 29, 2007
"We sent the draft to the central bank long ago but they are sitting on it," Dr Chiranjivi Nepal, chairman of the SEBON, the regulatory authority of capital market said, adding that Mutual Fund — with a face value of Rs 10 per unit — is the most suitable investment for a common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.
"Once we get it back, SEBON will approve it and sent it immediately to the Finance Ministry," he added. "After getting the clearance from the ministry, the regulation will come into effect." After the regulation, Mutual Funds are expected to fuel capital market as many commercial banks have shown keen interest in it. "It will create institutional investors also — something that the capital market lacks at present," Nepal added.
In an absence of the regulation also, NIDC Capital Markets Ltd and Citizen Investment Trust (CIT) had issued NCM Mutual Fund and CIT unit trust. But, the first one had a bitter experience in the absence of transparency and regulation.
"The proposed regulation has all the tools that a transparent and professional fund must have," Paristha N Poudyal, director at the Market Regulation Department, SEBON, said, adding that besides the sponsors that issue Mutual Funds, the draft envisions an Assest Management Company (AMC) that will manage the fund, a Trustee that works like a watchdog, a Custodian and a Depository; all of whom has to get separate licence from the SEBON.
"Commercial Banks and financial Institutions can sponsor the Mutual Fund and sponsors will appoint AMC," he added. According to the draft, Mutual Funds can also invest 50 per cent of their funds in foreign country.
A Mutual Fund is a trust that pools the savings of many who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realised are shared by its unit holders in proportion to the number of units owned by them.
"They can be traded at the Nepal Stock Exchange (Nepse) as well," Poudyal said, adding that these funds are convertible and has liquidity also. Unlike other institutions, it can be stopped or liquidated or transferred to a new scheme, if 75 per cent of the unit-holders complain about mismanagement of the fund or any foul play is suspected," Poudyal said.
Thursday, November 22, 2007
The price rose in Tarai, the Hills and Kathmandu valley by 7.5 per cent, 6.8 per cent and 6.3 per cent respectively.
However, the salary and wage rate index have also gone up by 12.5 per cent in mid-September 2007 compared to a rise of 7.6 per cent a year ago. Due to the rise in prices, year-on-year inflation has risen to seven per cent in mid-September 2007 from 6.6 per cent in mid September 2006.
However, remittance has decreased as it posted a rise of only 17.3 per cent against an increase of 30.6 per cent, in comparison to the corresponding period of the last fiscal year, according to NRB. Similarly, in the first two months of 2007-08, total government spending has increased by 13.5 per cent to Rs 11.14 billion. The government expenditure had increased by 22.5 per cent in the corresponding period of the previous fiscal year. The decline in the growth was due to a decrease in the growth of recurrent expenditure.
However, revenue mobilisation has decelerated in the review period. Revenue mobilisation has pos-ted 15.4 per cent to Rs 12.42 billion in comparison to 22.3 per cent in the corresponding period last year.
In the review period, the budget remained at a surplus of Rs 2.56 billion. However, the report stated that exports have declined by 5.9 per cent in contrast to a rise of two per cent in the corresponding period of the previous year.
“Export to India has decreased by 8.7 per cent and exports to other countries remained at a similar level in contrast to a rise of 1.2 per cent in the comparable period of the previous year. The decline in the exports to India was mainly attributed to the decrease in the exports of vegetable ghee, thread, textiles, toothpaste and wire. Similarly, exports to other countries took a downward trend owing to the lower exports of woolen carpet, pashmina, and tanned skin.Total imports increased by 10 per cent in comparison to 9.7 per cent hike in the corresponding period of the previous year. While imports from India went up by 3.5 per cent in the review period compared to a growth of 14.5 per cent in the corresponding period of 2006-07.
A rise in the import of vehicles and spare parts, cold rolled sheet in coil, MS billet, thread and hot rolled sheet in coil from India and substantial increase in the import of gold followed by telecommunication equipment and parts, transport equipment and parts, electrical goods and silver among others, from other countries led to the rise in total imports.
The overall balance of payments (BoP) recorded a deficit of Rs 2.68 billion. However, it had registered a surplus of Rs 758 million during the corresponding period of last fiscal year.
Indian currency equivalent to Rs 11.71 billion has been purchased through a sale of $180 million in the review period. “The purchase of IC went up due to widening trade deficits with India,” the report stated
Friday, November 16, 2007
Three months ago, when the foreign management team walked out, the central bank sent a team headed by Dr Atreya. The unaudited report for the first qu-arter shows that Nepali ma-nagement team is capable in handling NBL and its financial health is improving.
Established in 1937, November 20, NBL has — in its seventy years of operations — seen many ups and downs and learnt lessons from the past mistakes. After being declared a sick institution due to chr-onic bad loans and continuous political interference, government tho-ught of reforming it and services of The Bank of Scotland (Ireland) Ltd, ICC Consulting was hired. However, the foreign management remained always controversial.
“The situation is different now and unions are cooperative,” Atreya said adding that cordial relation between the management and unions is very important in the progress of the bank. “Downsizing staff, computerising 44 branches, preparing operational and HR manual were some of the positive outcomes of reforms,” Dr Atreya said. Reform has also helped modernise the ailing bank and made it more professional and reduced Non-performing Assets from 59 per cent.
In the recent days, the pioneer financial institution has to compete with new private banks that are competitive, aggressive and technologically advanced. “We are also upgrading our services,” he said adding that NBL offers all the products that the private banks offer and that also in competitive rates. It offers many kinds of loans and has ABBS. “NBL is planning to add ATMs and e-banking soon,” he added.
However, the operating cost of the bank is — 62 per cent in interest income — the highest among all the commercial banks. “We are again bringing VRS to reduce it,” he said adding that injecting fresh blood is also necessary for the soundh health of the oldest bank.
At present, the bank is serving with its 97 branches that were once more than 200. “It is reinstating its five branches — that were displaced due to lack of security — soon,” Atreya added.
The bank, which has Rs 38.71 billion deposit, is trying to win back its customers. “NBL is a business partner,” Atreya claimed thanking depositors, borrowers, employees and stockholders of the bank for their continued support throughout its seventy years of service. He also promised to provide competitive and customer-oriented banking services through competent and professional staff in efficient way.
Wednesday, November 14, 2007
Dr Pant is the first Nepali to be awarded the Doctorate in Economics in 1952 and the Doctorate in Literature in Economics in 1976. He has held several positions in different national and international organisations including senior economist at the UN ESCAP (Bangkok), finance and planning secretary, senior member of the National Planning Commission, governor of the Nepal Rastra Bank Bank, Royal Nepalese ambassador to Japan, chairman of the Economic Commission and the minister for Industry, Commerce and Supplies, Finance and Water resources.
He also served as the chairman of several government-owned corporations, including Nepal Industrial Development Corporation (NIDC), National Trading Ltd, Royal Nepal Airlines Corporation and Nepal Oil Corporation.
He was the visiting professor in a number of institutes like UN Institute Bangkok, Institute of International Studies, Tokyo and Korean Development Institute, Seoul.
He served as the vice-president World Federation of United Nation Association in 1991-1999. Dr Pant was district governor of Lions Clubs International, District 325 – B. He was also Excom member of the world Federation of the United Nation Association, Geneva, Founder president of both the Nepal-Japan Friendship and Cultural Association, and Nepal – Scandinavian Chamber of Commerce and Industry.
Avid reader Dr Pant was the author of more than two dozen books including 'Problems in Fiscal and Monetary Policy', 'Trade and Co-operation in South Asia' and 'Some aspect of Economical Planning' and has contributed many articles to various national and international journals.
Dr Pant was the president of Society for International Development, vice-president of Nepal Red Cross Society and also served as Charter president, Lions club of Nawalparasi and served as Zone chairman and vice-district governor of Lions club International District 325 – B, in 1999-2000 and governor in 2000-2001.
He was decorated with the highest decorations by the government Nepal and Her Majesty Queen Elizabeth, Emperor of Japan and president of Republic of Korea.
He is survived by his wife Rama Devi Pant and three sons Dr Girish Pant, Dr Bhuwanesh Pant and Radhesh Pant (managing director of Bank of Kathmandu and president of Nepal Bankers' Association) and a daughter Meera Arjyal.
They received the award for their contribution in promoting exports, creating more employment opportunities.
Kiran Sakha, president of Garment Association of Nepal (GAN) speaking on behalf of the winners asked the government to provide security. "Political instability, labour dispute and regular bandh have hit the industries hard," he complained.
Similarly, welcoming the participants, Dinesh Chandra Gupta, executive director of Trade and Export Promotion Centre (TEPC) said that the award will boost businessmen's confidence and competitive edge.
The CIP award — started in 2004-05 — would allow winners claim various facilities like special passes that would entitle them to gain easy access to government offices and receive special treatment. They could also enjoy the CIP lounge at Tribhuvan International Airport (TIA). The CIP award will be valid for two years.
Chandi Raj Dhakal, president of FNCCI
Surendra Bir Malakar, president of NCC
Binod Chaudhary, president of CNI
Kiran Prakash Sakha, president of GAN
Kabindra Nath Thakur, president, CEIA (Nepal)
President of Central Carpet Industry Association
Subrat Dhital of Cotton Comfort Pvt Ltd
Poonum Danawat of J D Apparels
Harsha Garg of Rara Apparels
T G Shrestha of Samling Carpet Industries
Deepak Kumar Bhattarai of Paramount Carpet Industries
Shiva Ratan Sharada of Pioneer Carpet Industry
Manish Kumar Agrawal of Shree Krishna Oil Refinery and Vegetable Ghee Industry
Diwakar Golchha of Arihant Multifibres Ltd
Uddyan Ganguly of Dabur Nepal Pvt Ltd
Rohit Uthithan of Arati Stripes Pvt Ltd
The Gap Inc, USA
Wall Mart Store Inc, USA
Ludwing Wissanbach GmbH, Germany
Teppich Kibek-GmbH, Germany
The Cashmere Co, UK
Mrs Meena Karki of New Himalayan Akash Exports
Krishna Bahadur Kunwar of Shree Krishna Pashmina Arts
Raju Shrestha of Asiatic Traders and Exports
Parmeshworlal Agrawal of Narayani Leather Manufacturing Industries
Swayambhu Ratna Tuladhar of Yak and Yeti Enterprises
Hemlal Kapri of HLK Pvt Ltd
Eric Anthony Wiele of Plum Traders Inc, Atlantic Avenue
Leather M Trading Co Ltd, Shenzhen Longgang Centre
Mac Mccoy (DZI Tibet Collection), Washington DC
Protolano Products Inc, 840, Walker street, Prescott Ontario
Nature Et Decouvertes 1 Avenue de L'europe, Air Park
Sunday, November 11, 2007
The grant will be without any conditionality as requested by Nepal to show the bank's commitment that it stands with the people of Nepal on the mission of peace building and state restructuring.
Speaking on the Nepal Day today Ad Melkert, UN under-secretary general and associate administrator, UNDP said that Nepal faces a challenge to bridge gap between the rich and poor. "As time is running out, we need to do something concrete," he said adding that the hard days will be overcome by national reconciliation and engagement of international community.
"Equality in policy and equal opportunity in practice can only ensure the MDGs and international community is ready to help Nepal in development, peace process and stability," he added.
Dr Ram Sharan Mahat, finance minister expressed commitment on scaling up the quality of physical infrastructures in the rural areas so that people can create and take advantage of economic development. "Community approach to development works best during conflict period," he said.
Ian Martin, special representative of the UNGS moderated the second session on 'Securing the Peace', where Dr Minendra Rijal, a seasoned democrat, highlighted the importance of reform in agriculture and land for the development of Nepal.
"Nepal being an agriculture country should focus on agriculture," Dr Baburam Bhattarai, one of the chief ideologues and second-in-command of Maoists said adding that industrialisation and more employment creation is key to Nepal's progress.
"We should build the basis for future growth in income and employment for the reduction of poverty," Prakash Chandra Lohani, former finance minister, said adding that investments in infrastructure, power generation, irrigation and telecommunication are a must for development.
Dr Dilli Raj Khanal, Member of Parliament from CPN (UML), stressed on security for investment and infrastructure development.
Earlier, welcoming the participants, Praful Patel, vice-president of World Bank for South Asia asked Nepal to come forward with what it wants.
Susan Goldmark, country director of the World Bank — a long-time development partner — for Nepal, on the occasion, expressed solidarity with the Nepali people. And Mac Maharaj, member of African National Congress, South Africa shared the South African experience of peace process.
Saturday, November 10, 2007
For instance, I have heard that an NRB official who had responsibilities to regulate or supervise the NB Bank had a close relative working at one of the NB Group banks (the NB Group owns NB Bank, NCC Bank, and two finance companies). There were speculations that this has led to some leniency in the way the NB Bank was treated.
Friday, November 9, 2007
"Capital market needs transparency and effective regulation to develop it as a vibrant economic driver," he said adding that technological advancement and modernisation can only help it develop.
SEBON has on Sunday brought the long-awaited three regulations — Securities Board Regulation-2064, Stock Exchange Licensing Regulation-2064 and Securities Businessperson Regulation-2064, according to the Securities Act 2063, (clause 116).
The Stock Exchange Licensing Regulation-2064 has provisions that Nepse can now invite applications for new brokers. In Nepal Stock Exchange's (Nepse) recommendation SEBON will give licence to the new brokers. However, the existing brokers also have to take new license to improve their competence and quality at par with the new brokers, according to the new regulation.
The small investors will benefit from this as there will be more brokers and they can cater to the needs of all the investors. To make the brokers more deciplined, professional and check fake investors, the regulation has also provisions that they must keep records of proper identification of their clients.
The regulation — has already come into effect from Monday — has also reduced brokers' commission to maximum one per cent to 0.7 per cent. Earlier brokers used to charge 1.5 per cent to one per cent.
Though, it is too soon to expect any one to come forward for new stock exchange, the new regulation has paved the way for new stock exchange also. It has however, laid emphasis on sound infrastructure and investors' reputation.
"The new regulation will help professionalise the market, market -makers and brokers," said Nepal adding that SEBON can now act like a real regulator as the Securities Board Regulation has given it right to investigate and punish the wrong-doers.
It will also get 0.015 per cent of every transaction; from both buying and selling. The Nepse will collect the amount and give to SEBON every month, states the regulation.
Parista N Poudyal, director of the Marketing Regulation Department at SEBON did the presentation on the regulations while chief of SEBON Nepal replied the questions raised by the media at the press meet. Nepal also informed that SEBON is bringing IPO Registration regulation and planning more investors awareness programme throughout the country.
Brokers' commission reduced
Stock brokers' commission has been reduced to one per cent to 0.7 per cent, according to the new regulation that is going to be implemented from Monday. Earlier brokers used to charge 1.5 per cent to one per cent commission depending on the amount of the transaction.
"The new regulations are more market-friendly and liberal for the investors," said Dr Chiranjibi Nepal, chairman of SEBON, the regulatory body, adding that SEBON has recommended the regulation eight months ago. "It is the best in whole South Asia," Nepal added.
"The small investors will benefit from the new regulation," Rewat Bahadur Karki, general manager and CEO of the Nepal Stock Exchange (Nepse) said adding that it will be implemented from Monday.
Similarly, SEBON will also get 0.015 per cent amount of every transaction; from both buying and selling.
Saturday, November 3, 2007
Some of the mega issues are: Rs 300 million worth initial public offering (IPO) of Global Bank, Rs 300 million worth IPO of Citizens’ Bank, Rs 500 million worth debenture of Salt Trading Corporation (STC) and Rs 250 million worth debenture of Himalayan Bank Ltd and Rs 128 million worth IPO of Nepal Development and Employment Bank Ltd, totalling to over one billion rupees. They are likely to be announced by February 2008.
Nepal Telecom (NT) is also planning to issue IPO amounting to Rs 1.5 billion — in two phases of Rs 750 million each. The first phase would be for its employees and the second, for the public. The NT’s IPO would be the biggest ever offering in the Nepse’s history.
However, NT should have issued its IPO long ago. Bureaucratic hassles delayed the floatation.
Similarly, Chilime Hydropower has also been long planning to raise Rs 240 million through an equity offering by the end of last year but it has not yet floated its IPOs for public till date. Chilime has floated the IPO for its employee and its shares are traded at the Nepse floor for Rs 1380 (on Thursday) per unit share.
Though Chilime is one of the successful hydro power companies that has been constructed with the indeginuous technology, its delay in issuing IPO for public is surprising. Chilime model is no doubt an example how Nepalis themselves can construct hydro power plant by raising money from the domestic market.
Apart from IPOs, some development banks and finance companies are issuing rights shares to increase their paid up capital according to the new directives of Nepal Rastra Bank (NRB), the regulatory body.According to the data of Securities Board of Nepal (SEBON), two development banks — Paschimanchal Bikas Bank Ltd and Bhrikuti Bikash bank Ltd, seven finance companies and Sagarmatha Insurance Company Ltd, an insurance company are in the pipeline to issue rights shares issue.
However, Invest Finance Company is planning to issue IPOs worth Rs 16 million and Arun Valley Hydro is also planning IPO with Rs 300 premium, according to the SEBON.
“With all these issues market is expected to cool down,” according to a broker. “The high demand and short-supply condition will be balanced with the new IPOs,” he added.
Friday, November 2, 2007
Nepal Stock Exchange (Nepse) has allowed share transaction of eight companies after they paid their renewal fee. However, only Nepal Bangladesh Bank's shares have been traded at the floor today.
"Some of the companies — whose shares are not being traded at the floor for a long time and have not paid renewal fee from last year — could be delisted," Rewat Bahadur Karki, general manager and chief executive officer (CEO) of the Nepse said adding that after a little wait for them to come to Nepse for renewal, the process of delisting will start.
On Monday, Nepse publishing a notice had freezed share transactions of 24 companies including a commercial bank, Nepal Bangladesh Bank (NBB) and a development bank, Deprox Development Bank after they failed to pay their renewal fees for this fiscal year.
"The listed companies must pay their renewal fee within the first three months of the fiscal year," Karki said. The failure in paying the renewal fee will result in the trading halt at the Nepse floor.
However, Nepse has recorded a whopping growth of 13.97 points today to post 878.86 points. Similarly, banking sub-index has also registered a growth of 16.38 points to post 951.46 points.
"The pertaining issue is what will happen to the small shareholders of those companies when they are delisted," said Mahesh Pandit, an investor adding that there is always a danger of making fool of the small investors by promoters as can amass wealth and declare the company a bankrupt.
"Promoters must be brought to the book to protect the small investors from being cheated," he said adding that Necon Air's shares used to be traded at Rs 700 but now the investors are on the road. "How can investors get their money back and promoters brought to the book?" he asked.
The government must prepare a mechanism for the protection of investors in case the companies like Nepal Med Ltd and Bansbari Leatherage run over night amassing public's money.
Nepal Bangladesh Bank,
Deprox Development Bank,
Delisted companies (in February, 2007)
Juddha Match Factory
Nepal Plywood & Bobin Co Ltd
Himal Cement Co Ltd
Sayapatri Color Lab
Nepal Med Ltd
Ace Laboratories (Nepal)
Necon Air Ltd
Nepal United Co
Plastic Trading Co
Nepal Byapar Bikas Co
Hotel Yak and Yeti is the only hotel, among the listed under the hotels group that has not paid its renewal fee, whereas there are more financial institutions including a commercial bank and a development bank.
"Though they are not declared bankrupt like Necon Air and Nepal Med Ltd, it has still created panic to the small investors," said one investor without wanted to be quoted.
Meanwhile, the Nepse didnot seem to be affected by this decision as it today posted a growth of 5.40 points to 864.89 points and banking sub-index has also posted 7.02 points growth to 935.08 points.
According to the Nepse, these companies have to pay from Rs 15,000 to Rs 50,000 as a renewal fee. But they did not pay the fee despite repeated calls by the Nepse.
However, they will be allowed to resume their shares' transactions if they pay the renewal fee, according to the Nepse.
The companies that failed to pay renewal fee
Nepal Bangladesh Bank
Nepal Bangladesh Finance,
Deprox Development Bank,
Shreeram Sugar Mills,
Morang Sugar Mills,
Biratnagar Jute Mills,
Butwal Spinning Mills,
Harisiddhi Bricks Tiles Factory,
Birat Shoe Ltd,
Hotel Yak and Yeti,
National Productivity and Economic Development Centre,
Nepal Trade Development Co (Koshi),
Nepal Trading Ltd,
Friday, October 26, 2007
The retail price of petrol per litre is Rs 73.50 for Kathmandu valley which is dearer by Rs 6.25 from the earlier price of Rs 67.25, according to a press release of NPDA. Similarly, a litre of diesel costs Rs 56.25, dearer by Rs 3.10 and kerosene is Rs 51.02, which is dearer by Rs 3.57 now.
Shiv Prasad Ghimire, president of NPDA, addressing the press meet said that the prices will vary places to places as the private dealers will fix the retail prices after adding their commission in the wholesale prices. "Besides commission, the dealers add shrinkage charge and working loss, insurance and transportation cost, while they fix the retail price," he informed.
The retail price of petrol per litre is at Rs 72.29 from Rs 66.19 for Birgunj. "Similarly, diesel costs Rs 55.03 from Rs 52.03 and kerosene costs Rs 50.12 from earlier Rs 47.17 per litre in Birgunj," according to the NPDA's press note. Whereas in Dipayal, per litre petrol costs Rs 75.66 and kerosene costs Rs 52.94 per litre, the most expensive among all the places."
The retail price is applicable within the 15 km of depos and further than that the price attracts seven per cent transportation cost per km," added Ghimire.
Yesterday, in the late evening press meet, Nepal Oil Corporation (NOC) has raised the prices of petroleum products. Lately, NOC has not only been posting a whopping loss every year, it is also dogged by controversies as there is no transparency in dealing with its sole buyer Indian Oil Corporation (IOC).
Thursday, October 25, 2007
"According to the new price list, kerosene and diesel will be dearer by Rs 3 and petrol by Rs 6 per litre," said Purushottam Ojha, secretary at the ministry of industry, commerce and supplies adding that the price of cooking gas will cost Rs 1100 per cylinder. "There is no change in the price of air turbine fuel (ATF) as it has already been adjusted."
"However, the prices may vary as the private dealers will fix the retail prices after adding their commission in the depo price," Ojha said. Besides commission, the dealers are allowed to charge shrinkage and working loss, insurance and transportation cost while they fix the retail price.
The NOC made a hike on the wholesale prices of all petroleum products citing whopping losses resulted from widening disparity between domestic and international price. "Government has given the freedom to adjust the price of petro-products," said Ojha adding that NOC has been continuously in touch with all the political parties and request their support.
Digamber Jha, acting chairman of the NOC said that the price hike was an obligation to avert a looming crisis on smooth supply of petroleum products.
In August 2006, the government had in a dramatic move scrapped its own decision within 48 hours of hiking prices of all major petroleum products.
NOC had hiked the wholesale price of petrol by Rs 15.77 per litre, diesel by Rs 4.98, kerosene by Rs 10.16 (open), air turbine fuel (ATF) by Rs 21.38 and cooking gas by Rs 100 per cylinder.
However, the cabinet decision has replaced the price hike with the earlier price of Rs 67.25 for petrol, Rs 53.15 for diesel, Rs 47.65 for kerosene, Rs 55 for ATF per litre and Rs 900 for a cylinder of cooking gas.
NOC had in last six months failed to pay many a times the outstanding dues to the Indian Oil Corporation (IOC) that stands at Rs 5 billion, resulting in the drastic cut in the supply lately. Earlier, students and poor people used to get subsidised kerosene. "However, there is no such provision as NOC has a single pricing now," said Ojha adding that the NOC is thinking of fixing separate prices for commercial use and non-commercial usage.
According to NOC, it has been incurring a huge loss of about Rs 400 million a month after the crude price skyrocketed in the international markets and touched a record high of $90 a barrel.
NOC owes about Rs 12 billion in total to various financial institutions in home and its sole supplier IOC.
Tuesday, October 23, 2007
The Basel Committee, established by the central-bank Governors of the Group of Ten countries at the end of 1974, meets regularly four times a year. It has four main working groups which also meet regularly.
The Committee's members come from Belgium, Canada, France, Germany, Italy, Japan, Luxembourg, the Netherlands, Spain, Sweden, Switzerland, United Kingdom and United States. Countries are represented by their central bank and also by the authority with formal responsibility for the prudential supervision of banking business where this is not the central bank. The present chairman of the Committee is Nout Wellink, President of the Netherlands Bank, who succeeded Jaime Caruana on 1 July 2006.
The Committee does not possess any formal supranational supervisory authority, and its conclusions do not, and were never intended to, have legal force. Rather, it formulates broad supervisory standards and guidelines and recommends statements of best practice in the expectation that individual authorities will take steps to implement them through detailed arrangements - statutory or otherwise - which are best suited to their own national systems. In this way, the Committee encourages convergence towards common approaches and common standards without attempting detailed harmonisation of member countries' supervisory techniques.
The Committee reports to the central bank Governors of the Group of Ten countries and to the heads of supervisory authorities of these countries where the central bank does not have formal responsibility. It seeks their endorsement for its major initiatives. These decisions cover a very wide range of financial issues. One important objective of the Committee's work has been to close gaps in international supervisory coverage in pursuit of two basic principles: that no foreign banking establishment should escape supervision; and that supervision should be adequate. To achieve this, the Committee has issued a long series of documents since 1975.
In 1988, the Committee decided to introduce a capital measurement system commonly referred to as the Basel Capital Accord. This system provided for the implementation of a credit risk measurement framework with a minimum capital standard of 8% by end-1992. Since 1988, this framework has been progressively introduced not only in member countries but also in virtually all other countries with internationally active banks. In June 1999, the Committee issued a proposal for a revised Capital Adequacy Framework. The proposed capital framework consists of three pillars: minimum capital requirements, which seek to refine the standardised rules set forth in the 1988 Accord; supervisory review of an institution's internal assessment process and capital adequacy; and effective use of disclosure to strengthen market discipline as a complement to supervisory efforts. Following extensive interaction with banks, industry groups and supervisory authorities that are not members of the Committee, the revised framework was issued on 26 June 2004. This text serves as a basis for national rule-making and for banks to complete their preparations for the new framework's implementation.
Over the past few years, the Committee has moved more aggressively to promote sound supervisory standards worldwide. In close collaboration with many non-G10 supervisory authorities, the Committee in 1997 developed a set of "Core Principles for Effective Banking Supervision", which provides a comprehensive blueprint for an effective supervisory system. To facilitate implementation and assessment, the Committee in October 1999 developed the "Core Principles Methodology". The Core Principles and the Methodology were revised recently and released in October 2006.
In order to enable a wider group of countries to be associated with the work being pursued in Basel, the Committee has always encouraged contacts and cooperation between its members and other banking supervisory authorities. It circulates to supervisors throughout the world published and unpublished papers. In many cases, supervisory authorities in non-G10 countries have seen fit publicly to associate themselves with the Committee's initiatives. Contacts have been further strengthened by International Conferences of Banking Supervisors (ICBS) which take place every two years. The last ICBS was held in Mexico in the autumn of 2006.The Committee's Secretariat is provided by the Bank for International Settlements in Basel. The fifteen person Secretariat is mainly staffed by professional supervisors on temporary secondment from member institutions. In addition to undertaking the secretarial work for the Committee and its many expert sub-committees, it stands ready to give advice to supervisory authorities in all countries.
Basel II: Revised international capital framework
The Basel II Framework describes a more comprehensive measure and minimum standard for capital adequacy that national supervisory authorities are now working to implement through domestic rule-making and adoption procedures. It seeks to improve on the existing rules by aligning regulatory capital requirements more closely to the underlying risks that banks face. In addition, the Basel II Framework is intended to promote a more forward-looking approach to capital supervision, one that encourages banks to identify the risks they may face, today and in the future, and to develop or improve their ability to manage those risks. As a result, it is intended to be more flexible and better able to evolve with advances in markets and risk management practices.
The efforts of the Basel Committee on Banking Supervision to revise the standards governing the capital adequacy of internationally active banks achieved a critical milestone in the publication of an agreed text in June 2004.
Basel II: An introduction to the Capital Adequacy Accord and the Capital Requirements Directive. It is based on an international agreement. It was written in February 2006.
Capital requirements rules state that credit institutions, like banks and building societies, must at all times maintain a minimum amount of financial capital, in order to cover the risks to which they are exposed. The aim is to ensure the financial soundness of such institutions, to maintain customer confidence in the solvency of the institutions, to ensure the stability of the financial system at large, and to protect depositors against losses.
The Basel Committee on Banking Supervision was established at the end of 1974 to provide a forum for banking supervisory matters. The Basel Committee is made up of senior officials responsible for banking supervision or financial stability issues in central banks and other authorities in charge of the prudential supervision of banking businesses. Members of the Basel Committee come from Belgium, Canada, France, Germany, Italy, Japan, Luxembourg, the Netherlands, Spain, Sweden, Switzerland, the UK and the US.
Although the Basel Committee is not a formal regulatory authority in itself, it has great influence over the supervising authorities in many countries. The hope is that by agreeing basic goals, the Committee can achieve common approaches and common standards across many member countries, without attempting detailed harmonisation of each member country's supervisory techniques.
In 1988, recognising the emergence of larger more global financial services companies, the Committee introduced the Basel Capital Accord (Basel I). This sought to strengthen the soundness and stability of the international banking system by requiring higher capital ratios.
Since 1988, the framework contained in Basel I has been progressively introduced not only in member countries but also in virtually all other countries with active international banks. In June 1999, the Committee issued a proposal for a new Capital Adequacy Framework to replace Basel I. Following extensive communication with banks and industry groups, the revised framework was issued on 26th June 2004 and is known as Basel II.
Basel II basics
The objective of Basel II is to modernise the existing capital requirements framework to make it more comprehensive and risk-sensitive, taking account of many modern financial institutions' thorough risk management practices.
The Basel II framework is therefore more sensitive to the real risks that firms face. As well as looking at financial figures, such as how much money the firm controls, it also considers operational risks, such as the risk of systems breaking down or people doing the wrong things.
It reflects improvements in firms' risk management practices, for example by the introduction of the internal ratings based approach ( IRB ). The IRB approach allows firms to rely to a certain extent on their own estimates of credit risk. It also introduced the Advanced Measurement Approach ( AMA ) which allows firms to take account of their operational risks in assessing capital adequacy.
A key aspect of the new framework is its flexibility. It provides institutions with the opportunity to adopt the approaches most appropriate to their situation and to the sophistication of their risk management.
The Basel II framework consists of three 'pillars':
* Pillar 1 sets out the minimum capital requirements firms will be required to meet to cover credit, market and operational risk.
* The rules under Pillar 2 create a new supervisory review process. This requires financial institutions to have their own internal processes to assess their capital needs and appoint supervisors to evaluate an institutions' overall risk profile, to ensure that they hold adequate capital.
* The aim of Pillar 3 is to improve market discipline by requiring firms to publish certain details of their risks, capital and risk management.
Basel II and the Capital Requirements Directive
Basel II applies to internationally-active banks. In the European Union, the new capital requirements framework is being implemented through the Capital Requirements Directive ( CRD ). The CRD will directly affect certain types of investment firms and all deposit-takers (including banks and building societies), except credit unions.
The framework under the CRD reflects the flexible structure and the major components of Basel II. It has been based on the three 'pillars', but has been tailored to the specific features of the EU market. Member States must apply the Directive from the start of 2007, but the more sophisticated risk measurement approaches won't be available until 2008. The CRD is not a stand-alone directive, rather it implements the new framework by making significant changes to two existing directives: the Banking Consolidation Directive and the Capital Adequacy Directive, both of which were based on Basel I.
In the UK , the Financial Services Authority ( FSA ) is working with the Basel Committee, the EU and the banking industry to develop its policies for implementing the new capital adequacy framework via the Capital Requirements Directive.
Measuring operational risk
One of the key changes in Basel II is the addition of an operational risk measurement to the calculation of minimum capital requirements. This has been included in the CRD . Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This definition includes legal risk, such as exposure to fines, penalties and private settlements. It does not, however, include strategic or reputational risk.
In February 2003, the Basel Committee published guidance on the Sound Practices for the Management and Supervision of Operational Risk (20-page / 101KB PDF). In this guidance, the Committee recognised that developing banking practices and the growing sophistication of financial technology meant that banks were facing new and more complex risks other than credit and market risk.
For example, the greater use of more highly automated technology and a greater reliance on globally integrated systems transforms risks from manual processing errors to system failure. The growth of e-commerce brings risks such as internal and external fraud and system security issues. The emergence of banks acting as large-volume service providers creates the need for continual maintenance of high-grade internal controls and back-up systems. The growing use of outsourcing arrangements and the participation in clearing and settlement systems can mitigate some risks but can also present significant other risks to banks. The Committee listed a number of operational risk events which were identified (with co-operation from the industry) as having the potential to result in substantial losses:
* Internal fraud - for example, intentional misreporting of positions, employee theft, and insider trading on an employee's own account.
* External fraud - for example, robbery, forgery, cheque kiting, and damage from computer hacking.
* Employment practices and workplace safety - for example, workers compensation claims, violation of employee health and safety rules, organised labour activities and discrimination claims.
* Clients, products and business practices - for example, misuse of confidential customer information, improper trading activities on the bank's account, money laundering, and sale of unauthorised products.
* Damage to physical assets - for example, terrorism, vandalism, earthquakes, fires and floods.
* Business disruption and system failures - for example, hardware and software failures, telecommunication problems, and power failures.
* Execution, delivery and process management - for example, data entry errors, incomplete legal documentation and unapproved access given to client accounts.
Three approaches for calculating capital adequacy
In calculating operational risk capital charges, Basel II and the CRD set out three different methods which may be adopted:
* The Basic Indicator Approach
* The Standardised Approach
* The Advanced Measurement Approach
The Basic Indicator Approach is the simplest of the three approaches, and will be the default option for most firms. It applies a relatively straightforward calculation based on the firms' income to determine its capital requirements.
The Standardised Approach again relies on calculations based on income, but with different percentages applying across different business lines. To be able to take advantage of the Standardised Approach firms will have to meet certain qualifying criteria.
The Advanced Measurement Approach is the most complicated of the three options. Under this approach, each firm calculates it own capital requirements, by developing and applying its own internal risk measurement system. As with the Standardised Approach the firm must meet certain qualifying criteria, and the risk measurement system must be validated by the FSA before it will be allowed to take advantage of the AMA.
The Advanced Measurement Approach (AMA)
In its consultation paper Strengthening Capital Standards, the FSA stated that given the "potential reduction in capital for firms that qualify for the AMA , we will be looking for evidence that carefully thought-through plans for improving systems in such firms will deliver high standards of risk management and monitoring".
In addition to the general risk management standards which firms employ, a firm must meet certain qualifying criteria to use the AMA :
* The firm's internal operational risk measurement system must be closely integrated into its day-to-day risk management processes. The FSA will be looking, for example, at whether the purpose and the use of the risk management system is limited to determining regulatory capital and whether the use of the system provides tangible benefits to the organisation.
* There must be regular reporting of operational risk exposures and loss experience, and the firm must have procedures for taking appropriate corrective action.
* The firm's risk management system must be well documented. The firm should have routines in place for ensuring compliance and policies for the treatment of non-compliance.
* The operational risk management processes and measurement systems shall be subject to regular reviews performed by internal and/or external auditors.
* The FSA is required to validate the operational risk measurement system including verifying that the internal validation processes operate in a satisfactory manner and ensuring that data flows and processes associated with the risk measurement system are transparent and accessible.
* The FSA requires each firm to show that it has a credible risk management system. It must show that the assumptions, techniques and practices used are appropriate and relevant to managing operational risk in the business. The firm should also be able to show how the individual parts (whether inputs or outputs) of the risk management system are used in the management of operational risk. A firm must be able to demonstrate that data inputs are accurate, reliable and credible and that the firm's validation techniques are robust.
* The operational risk management system should include the following elements: internal loss data; external data; scenario analysis (to evaluate the firm's exposure to high severity risk events); and key business environment and internal control factors (that could change the firm's operational risk profile). The FSA has said that while firms must consider all four elements, they do not necessarily have to consider each in the same way or to give them equal weight, provided that the firm can justify its approach.
General Risk Management Standards
It is sometimes too easy to concentrate on the operational risk standards which apply if firms want to benefit from the AMA . However, the CRD requires firms to have robust governance arrangements for all risks including operational risks. These should include:
* a clear organisational structure with well defined, transparent and consistent lines of responsibility;
* effective processes to identify, manage, monitor and report the risks it is or might be exposed to; and
* adequate internal control mechanisms, including sound administrative and accounting procedures.
The content of these arrangements, processes and mechanisms must be comprehensive and proportionate to the nature, scale and complexity of the firms' activities.
The CRD also requires that firms should have sound, effective and complete strategies and processes to assess and maintain on an ongoing basis the amounts, types and distribution of internal capital that they consider adequate to cover the nature and level of the risks to which they are or might be exposed. These strategies and process should be subject to regular internal review to ensure they remain comprehensive and proportionate to the nature, scale and complexity of the firms' activities.