Banks urged to increase access to finance for cottage, small firms

The small and cottage industries are still finding it hard to get financial access.

The participants in an interaction here today on 'Access to Finance in Cottage and Small Industries' organised by Federation of Nepal Cottage and Small Industries (FNCSI) complained that the banks have not been easier to access for finance though they have enough liquidity.

Even Agricultural Development Bank Nepal, Nepal Bank and Rastriya Banijya Bank have been extending only 6.4 per cent, 3.7 per cent and 4.4 per cent of their total lending, respectively, to cottage and small industries, they said, adding that they are the banks and financial institutions are charging high interest rates to cottage and small industries. "Banks offer car loan at nine per cent but charge 12 per cent for cottage and small industries,” they added, asking the banks and financial institutions to reduce the rate to eight per cent for small and cottage industries.

Nepal Bank to issue rights shares from May 23

Nepal Bank is floating its rights shares from May 23.

The bank is issuing 36.1 million units of rights shares at 1:9.5 ratio with a face value of Rs 100 to existing shareholders to increase the bank's paid up capital and make its net worth positive. 

The issue, managed by Citizens Investment Trust (CIT) and Civil Capital, will be open for subscription on May 23 to 26. Nepal Bank shareholders can apply for the rights shares from any of the branches of the bank, CIT and Civil Capital. Shareholders who have purchased the bank's shares till May 9 will be eligible to apply for the rights shares.

Following the rights share issue of Rs 3.61 billion, the bank's paid up capital will reach Rs 4 billion and make its net worth positive. 

The government that owns 38.6 per cent stake in the bank has already deposited Rs 1.39 billion to buy the rights shares.

The rest of the shareholders include Nepal Bank employees, big corporate houses and minority shareholders, who own 61.4 per cent stake in the oldest commercial bank of the country.

Nepal Bank's shares were de-listed by Nepse in March 2004 as the bank was heading towards insolvency, yet the bank's share prices then were being traded at about Rs 175.

The bank's 3.8 million unit shares were re-listed at Nepal Stock Exchange (Nepse) in December 2012 to make way for the rights issue. The shares are being traded at Rs 508 per unit following the free fall since the past one month. Investors who are not willing to subscribe the rights shares are dumping their shares after booking profit. The bank's shares debuted at Rs 256 at Nepse that reached Rs 1,295 in less than a month.
The central bank has been handling the bank until the second quarter of the next  fiscal year.

Sebon approves Nepal Bank's right share issue

Securities Board of Nepal (Sebon) has approved the issuance of rights shares of Nepal Bank.

"We are planning to issue rights shares worth Rs 3.61 billion by mid-May," said coordinator of the management team of Nepal Bank Maheshwor Lal Shrestha. "After the rights shares are issued, the bank's paid up capital will be Rs 4 billion. At present, the bank's paid up capital stands at Rs 380 million."

The oldest bank of the country is planning to issue 9.5:1 rights share under its recapitalisation plan. "The government has already paid Rs 1.37 billion as its rights share," he said, adding that the government has 40.49 per cent share in the bank. "The bank's employees have also paid their sum for the rights shares."

Nepal Bank is in final talks with its issue and sales manager — Citizen Investment Trust (CIT). "Immediately after the issue manager's nod, we will go for the issue," Shrestha added.

The bank had recently — after nine years — relisted its 3.83 million units of shares at Nepal Stock Exchange which had earlier delisted the shares.

The bank is under the direct control of Nepal Rastra Bank (NRB) that has recently extended the management control for nine more months to complete the recapitalisation process.

Nepal Bank to issue right share soon

Nepal Bank Ltd (NBL) is planning to float right shares soon.
"Nepal bank will issue right share soon after mid-April," informed the coordinator of Nepal Bank Maheshwor Lal Shrestha breifing the branch chiefs in the two-day regional interaction here today.
"The bank's recapitalisation plan is on the right course," he said, adding that it will be completed soon. "The central bank will continue managing the oldest bank of the country for some nine more months to conclude the recapitalisation plan.
The bank had planned to issue 1:9.5 right shares, which is expected to raise Rs 3.62 billion. The government is ready to pump in Rs 1.5 billion for its right shares as it owns 40.19 per cent stake in the bank.
Asking the branch chiefs — of the Kathmandu valley — to operate each branch in profit, he urged them to minimise the operation risk, apart from promoting good corporate governance. "Only with good corporate governance, the bank can boost its image in the market," Shrestha added. "Nepal Bank is committed to continue organisational reforms to make it the first choice among the customers."
The bank has prepared five-year strategy to improve its organisational capacity in the changed context of information, communication and technology, informed general manager of the bank Kiran Kumar Shrestha, on the occasion.
The bank has held interaction with all the 115 branch chiefs and their staff to unitedly face the challenges the bank is facing also due to increasing competition in the financial market.
The oldest bank of the country with largest branch network has been under central bank management due to bad financial health after the Financial Sector Reform Programme assigned foreign management left the bank without completing its task.

Standard Chartered Bank cheapest, Agriculture Development Bank most expensive according to base rate of commercial banks

The commercial banks have published the base rate for the first time, after the central bank had asked them to calculate the base rate — as reference rate — for lending on the basis of five indicators; cost of fund, Cash Reserve Ratio, Statutory Liquidity Ratio, operational cost, and Return on Assets, to make the interest rate regime transparent for borrowers.

The base rate is expected to ensure the stability of the monetary market in the current volatile situation as interest rates are fluctuating and could hit the sustainability and long-term stability of the financial system, according to the central bank.

Though Nepal Ratra Bank had asked the banks to implement the base rate before Tihar, bankers wanted some more time for calculation and study on its sustainability and started from mid-January. 

Banks — Base rate
Standard Chartered Bank Nepal — 6.80 per cent
Rastriya Banijya Bank — 6.81 per cent
Everest Bank — 7.04 per cent

Nabil Bank — 7.26 per cent
Nepal Investment Bank — 7.8 per cent
Himalayan Bank — 8.23 per cent

Bank of Kathmandu — 8.29 per cent

Nepal SBI Bank — 8.76 per cent

Citizens Bank International — 8.92 per cent
Nepal Bank — 9.19

NB Bank — 9.26 per cent

NMB Bank — 9.32 per cent

Sunrise Bank — 9.5 per cent

Global IME Bank — 9.58 per cent
NIC Bank — 9.58 per cent
Laxmi Bank — 9.65 per cent
Mega Bank — 8.75 per cent

Bank of Asia Nepal — 9.79 per cent

NCC Bank — 9.81 per cent
Kumari Bank — 9.92 per cent
Lumbini Bank — 9.94 per cent
Commerz and Trust Bank — 10.14 per cent
Prime Commercial Bank — 10.19 per cent
Kist Bank — 10.26 per cent
Janata Bank Nepal — 10.29 per cent

Siddhartha Bank — 10.30 per cent

Machhapuchchhre Bank — 10.34 per cent

Sanima Bank — 10.36 per cent

Grand Bank — 10.53 per cent
Civil Bank — 10.91 per cent
Century Commercial Bank — 11.07 per cent

Agriculture Development Bank — 12.35 per cent