NRB prepares to issue Foreign Employment Savings Bond

Nepal Rastra Bank (NRB) is planning to issue the Foreign Employment Savings Bond targetting the Nepali citizens working abroad.
This bond will be sold only to the Nepali citizens working in North Korea, Malaysia, United Arab Emirates, Saudi Arabia and Qatar, at present, said the central bank. Each bond will yield 9.75 per cent of interest and the issuing agency will get the commission of 0.25 per cent of the total amount while floating the primary issue.
The NRB has asked for the applications from licensed remittance service providers to work as an agent in the foreign countries to undertake the trading of this particular foreign employment bond. Only those remittance service providers that have a valid licence to operate its business in those any one or all of the five countries are allowed to apply.
The central bank spokesperson Gopal Kafle said that the Foreign Employment Bond will be able to bring the money earned by foreign employees in the formal channels. According to Kafle, "the workers can be able to earn higher interest from the purchase of this bond."
"This bond will help achieve multiple targets like it will help in increasing capital inflow to the nation and the cash will come through proper channels instead of going through hundis and other informal channels,” he said adding that due to some procedural technicalities the central bank has been little late. "But we are hopeful that the bonds will be sold in the primary market before the end of the fiscal year,” he added.
The Foreign Employment Bond (FEB) visualised in the budget for the fiscal year 2009-10 had targetted to collect Rs 7 billion. However, it seems the target has to be revised and the bond worth Rs 1 billion will be sold till the end of the fiscal year. The budget has promised to utilise remittance in productive sector. However, the fiscal year coming to an end in two months.
"The bond will be utilised to develop big projects,” said Purna Chandra Bhattrai, joint secretary of Ministry of Labour and Transport Management (MoLTM), who is also the member of FEB committee. "The committee has suggested the government to offer 9.75 per cent interest rate."
"As the banks and financial institutions are offering higher interest than offered by the FEB, we have to revise it," he said adding that conditions of tax rebate will also come in action plan.
"It will come soon after implementing process will be selected,” Bhattarai added. Bank and financial institutions will get 0.25 per cent commission when selling the bond.
Foreign Employment Promotion Board (FEPB) has conducted series of consultation meetings with banks, financial companies and remittance companies to implement the bond. However, its already the 11th month of the current fiscal year and the bond issuance might take another couple of months making it an ambitious and yet another paper-plan of the government. Around 1.2 million Nepalis are working in South Korea, Malaysia, United Arab Emirates and Qatar. The government is targeting around 10 to12 per cent of migrant workers to sell the bond.