The central bank is floating foreign employment saving bonds worth Rs 250 million from Wednesday.
On behalf of the government, we are floating the foreign employment saving bonds to pool savings of Nepalis working abroad to finance various development projects in the country, informed the central bank
These five-year securities – which will be on sale till April 6 and allotted to investors on April 12 – guarantee a return of 10 percent per annum, and interest will be paid every six months. The yield on the bond is higher than 9 percent fixed in the last fiscal year.
The return on foreign employment saving bonds was raised to match upward revisions made by banks and financial institutions on interest of deposits, and also to attract more migrant workers investment.
These securities carry zero risk and can be used as collateral to obtain loans.
The foreign employment bonds are exclusively sold to migrant Nepali workers, Non-Resident Nepalis (NRNs) and those, who has returned to Nepal from foreign employment destinations less than four months ago.
The central bank has also appointed nine commercial banks and four remittance companies as agents to sell these bonds abroad. These sales agents have contact persons in most of the countries including Australia, Bahrain, India, Israel, Japan, Korea, Malaysia, Qatar, Saudi Arabia, the UAE, the UK and the US, where large number of Nepalis is working.
The central bank has been selling foreign employment saving bonds for almost seven years to inculcate savings habit among Nepali migrant workers and pool their resources to finance various development projects in the country, but without much success.
The central bank first floated foreign employment savings bonds in July 2010. In 2010, when these bonds were first introduced, only 0.40 per cent of these were sold. The result was even worse in the next fiscal year, when only 0.07 per cent of securities floated were subscribed. However, the demand has been gradually increasing since 2013.
In the fiscal year 2014-15, some 33.5 per cent of foreign employment bonds up for grabs were sold, while subscription rate in 2015-16 hovered around 33 per cent.
Due tolow apetite of the migrant Nepali workers, central bank senior officials have been visitng some of the countries for marketing the bonds and also create awareness among the migrant Nepali workers on how to utilise their hard earned money.
"Due to lukewarm response the central bank has sent its missions to various countries including Qatar (deputy governor Chintamani Siwakoti) and South Korea (executive director Bhisma Raj Dhungana), to sensetise the foreign employment savings bonds," according to the central bank.
Another reason, according to NRNs, for lukewarm response for the bond is regular depreciation of the Nepali currency. Nepali rupee has been weakening by over 3 per cent per year vis-a-vis US dollar for the last one decade. Those working abroad see currency depreciation as a disincentive to invest in foreign employment bonds, as they have to exchange currency of the country where they are working into Nepali rupee to buy these bonds.
On behalf of the government, we are floating the foreign employment saving bonds to pool savings of Nepalis working abroad to finance various development projects in the country, informed the central bank
These five-year securities – which will be on sale till April 6 and allotted to investors on April 12 – guarantee a return of 10 percent per annum, and interest will be paid every six months. The yield on the bond is higher than 9 percent fixed in the last fiscal year.
The return on foreign employment saving bonds was raised to match upward revisions made by banks and financial institutions on interest of deposits, and also to attract more migrant workers investment.
These securities carry zero risk and can be used as collateral to obtain loans.
The foreign employment bonds are exclusively sold to migrant Nepali workers, Non-Resident Nepalis (NRNs) and those, who has returned to Nepal from foreign employment destinations less than four months ago.
The central bank has also appointed nine commercial banks and four remittance companies as agents to sell these bonds abroad. These sales agents have contact persons in most of the countries including Australia, Bahrain, India, Israel, Japan, Korea, Malaysia, Qatar, Saudi Arabia, the UAE, the UK and the US, where large number of Nepalis is working.
The central bank has been selling foreign employment saving bonds for almost seven years to inculcate savings habit among Nepali migrant workers and pool their resources to finance various development projects in the country, but without much success.
The central bank first floated foreign employment savings bonds in July 2010. In 2010, when these bonds were first introduced, only 0.40 per cent of these were sold. The result was even worse in the next fiscal year, when only 0.07 per cent of securities floated were subscribed. However, the demand has been gradually increasing since 2013.
In the fiscal year 2014-15, some 33.5 per cent of foreign employment bonds up for grabs were sold, while subscription rate in 2015-16 hovered around 33 per cent.
Due tolow apetite of the migrant Nepali workers, central bank senior officials have been visitng some of the countries for marketing the bonds and also create awareness among the migrant Nepali workers on how to utilise their hard earned money.
"Due to lukewarm response the central bank has sent its missions to various countries including Qatar (deputy governor Chintamani Siwakoti) and South Korea (executive director Bhisma Raj Dhungana), to sensetise the foreign employment savings bonds," according to the central bank.
Another reason, according to NRNs, for lukewarm response for the bond is regular depreciation of the Nepali currency. Nepali rupee has been weakening by over 3 per cent per year vis-a-vis US dollar for the last one decade. Those working abroad see currency depreciation as a disincentive to invest in foreign employment bonds, as they have to exchange currency of the country where they are working into Nepali rupee to buy these bonds.
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