Construction of 40 MW Upper Chameliya Hydropower project starts

 The construction of the 40 megawatt (MW) Upper Chameliya Hydropower project in Darchula district has started. 

The project that will be carried out by Api Power Company will be built with an estimated cost of Rs 7.40 billion, according to the company. “The project is planning to issue rights shares to its stakeholders to secure 30 per cent of the total investment which accounts for Rs 2.22 billion in two phases,” the preee note reads, adding that the company has signed a financing agreement with Himalayan Bank for the financial management for the remaining 70 per cent investment. “A consortium of Employees Provident Fund (EPF), Rastriya Banijya Bank (RBB), Nepal Bank, Nepal Bangladesh Bank and Century Commercial Bank has been prepared to flow loan for an investment of approximately Rs 5.18 billion.”

The company has received approval from the Securities Board of Nepal (Sebon) for the issuance of rights share of Rs 567 million in order to raise the capital from the shareholders for the construction of the project, the press note reads.

The hydel project in Chameliya river that flows through Sudur Pashchim Province, Darchula district, Api Mountain and Marma Rural Municipality will generate 264.1 million units of electricity annually. Of the electricity generated, 30 per cent will be generated in the six months period of winter and the remaining 70 per cent will be generated in the six months period of monsoon, the Api Power Company said, adding that the dam of the project will be constructed at Okhal of Api Himal Rural Municipality and the water from the Chameliya river will be rerouted with the help of a 6-kilometer-long 3.2-meter diameter penstock pipe.

According to the project, a powerhouse will be constructed at Ghattegadh and the generated 40-MW electricity will be brought to Walanch Substation through a 16-kilometer long 132 kV transmission line to connect to the national grid. “The project aims at earning Rs 1.62 billion in the first year by selling electricity and the income will continue to grow at an annual rate of three per cent for eight years.”

Commercial banks record low profit growth

The profit growth rate of the commercial banks has dropped in the first quarter of the current fiscal year compared to the same period of the last fiscal year, though they have posted profit as usual.
The commercial banks recorded a total of Rs 16.17 billion profit – in the first quarter of the current fiscal year – an increase by 6.25 per cent compared to the same period in the last fiscal year, according to the unaudited financial statements of the commercial banks.
During the first quarter of the last fiscal year, the 28 commercial banks collectively had recorded Rs 15.4 billion profits, revealed the statement that shows Rastriya Banijya Bank (RBB) as the top profit earner – with Rs 1.127 billion profit – in the first quarter of the current fiscal year. In the first three months of fiscal year 2018-19, the wholly-state owned bank had recorded Rs 1.119 billion profit.
Nabil Bank followed Rastriya Banijya Bank in the race to earn highest profit with Rs 1.123 billion in the first quarter of the current fiscal year. Nabil had posted Rs 1.05 billion profit in the last fiscal year’s first quarter. The third bank to be in the billionair club is NIC Asia Bank that has earned Rs 1.009 billion in the first three months of the current fiscal year 2019-20.
Likewise, Nepal SBI Bank, Citizens Bank, Siddhartha Bank, Bank of Kathmandu, NCC Bank, Nepal Investment Bank, Civil Bank and Nepal Bank profit growth rate has dropped compared to the first quarter of the last fiscal year.
Among the eight commercial banks Nepal Investment Bank had earned Rs 1.05 billion in the first quarter of last fiscal year but posted only Rs 844 million profit in the same period this fiscal year. Likewise, Nepal Bank’s profit has also dropped to Rs 581.8 million in first quarter of the current fiscal year compared to Rs 913.88 million profit in same period last fiscal year. The profit of Nepal SBI Bank has also come down to Rs 437.23 million in the first quarter of 2019-20 from Rs 489.77 million during the same period last fiscal year, whereas Bank of Kathmandu’s (BoK) earning has also been limited to Rs 383.7 million from Rs 386.82 million in the first quarter of last fiscal year.
Among, the 28 commercial banks, Civil Bank ranks the lowest in the profit earning. According to the bank’s unaudited financial statement, the bank has posted Rs 158.9 million profit in the first quarter of this fiscal year against Rs 185 million profit in the last fiscal year’s first quarter.

Central bank to issue new banknotes for Dashain from mid-September

The central bank is preparing to distribute new banknotes targeting Dashain festival from mid-September.
Spokesperson for the central bank Laxmi Prapanna Niraula confirmed that Nepal Rastra Bank (NRB) is preparing to finalise the date to distribute new banknotes for the festive season as always. “The central bank will most probably begin to supply new banknotes from mid-September or 15 days before Dashain festival starts,” he said, adding that it is expected to circulate new banknotes of different denominations worth almost Rs 14 billion for the festive season this year. “The central bank had issued new banknotes equivalent to the same amount for Dashain last year.”
After circulating the new bank notes, the central bank scraps old currency notes of the equal amount to maintain money supply.
Last Dashain, the central bank had distributed lower denomination notes of up to Rs 27,000 for each person from the central bank banking office in Thapathali, Rastriya Banijya Bank and Nepal Bank Ltd. The central bank had also allowed individuals to get 100 units of banknotes of Rs 100 and 200 units each of Rs 50, Rs 20, Rs 10 and five-rupee denominations from the central bank and designated branches of Rastriya Banijya Bank and Nepal Bank Ltd.

Seven banks submit central bank written commitment for 'big' merger

Seven commercial banks submitted their written commitment to the central bank for ‘big’ merger in line with recent instruction.
Nepal Investment Bank, Citizens Bank International, Sunrise Bank, Mega Bank, Sanima Bank, Laxmi Bank and Civil Bank submitted their written commitment for 'big' merger, according to a source at the central bank that has – a week ago on June 27 – summoned the chairmen and chief executive officers of all commercial banks for discussion on merger.
The central bank governor Dr Chiranjivi Nepal, on the occasion, had directed the commercial banks to come up with merger commitment by July 4 and start looking for partner for amalgamation.
“Responding to the governor's instruction, seven commercial banks have come to the NRB with their written commitment for merger, confirmed the source, who also informed that the remaining commercial banks will also follow the suit before the central bank announces Monetary Policy for next fiscal year. The central bank is scheduled to unveil Monetary Policy for next fiscal year 2019-20 by the second week of July.
The government – in its fiscal policy – announced to encourage merger among the financial institutions.
In his budget speech for the next fiscal year 2019-20, finance minister Dr Yuba Raj Khatiwada, said that the government is bringing a policy to merge banks and financial institutions.
Some of the banks, however, has said that the ‘big’ merger is not possible in a week’s notice, though some of the banks have committed to merge. “It will take at least three or four months to find the appropriate partner,” according to the president Nepal Bankers' Association (NBA) Gyanendra Dhungana.
The central bank should come up with various facilities and policy relaxations to encourage merger of Class 'A' banking institutions, he said.
After the governor's diktat on merger, the NBA – during a meeting on Wednesday – asked Nepal Rastra Bank (NRB) to come up with incentives including relaxations on prudential lending limits, ratios and directed sector lending requirement, flexibility in terms of composition of the board of directors of the merged entity as well as remove the cooling period for the CEOs.
But it will be challenging for the government banks including Rastriya Banijya Bank (RBB), Nepal Bank and Agriculture Development Bank to merge as they will face a huge opposition from their employees. Likewise, the joint venture banks – including Standard Chartered Bank Nepal and Nepal SBI Bank that have with more than 50 per cent foreign investment – will also find it difficult to get a partner to merge.

PM Oli vows to increase social security allowances to senior citizens

Prime Minister KP Sharma Oli today announced that the government will increase the social security allowances to senior citizens through the budget for the next fiscal year.
While inaugurating a national campaign for health insurance of senior citizens and opening of bank accounts of all Nepali, on the occasion of the Nepali New Year 2076 BS in Kathmandu, he also claimed that the incumbent government is sincere for the well-being of the senior citizens. "I assure you that the government will increase the social security allowances to senior citizens through the budget for fiscal year," he said, adding that the government has been paying attention to every sector of the social security. "Nobody should remain poor in the country because the government is working for the well-being of people from all walks of life,” said the prime minister who, on the occasion, also distributed health insurance cards to some senior citizens.
The campaign for health insurance of senior citizens will provide great relief to the medication of the senior citizens, the premier said, adding that entire Nepal will be completely healthy in the next couple of years.
Likewise, PM Oil handed over check to his father Mohan Prasad Oli and mother-in law Dhanmaya Shakya after opening banking account – under the campaign 'opening of bank accounts of all Nepali' – at the Rastriya Banijya Bank (RBB).

Central bank to issue fresh notes from October 7

The central bank is issuing fresh bank notes from October 7 through 22 different branches in the Kathmandu Valley for the Dashain festival.
The new paper money goes into high demand as traditionally they given as gifts during the festival. The Nepal Rastra Bank (NRB) also said that there would be no shortage of fresh bank notes this year. Last Dashain, the central bank had brought Rs 40 billion worth of new notes into circulation to meet demand.
The central bank has also set up counters at its currency management department at Thapathali, and also set up services at 21 branches of Rastriya Banijya Bank (RBB), Nepal Bank and Agricultural Development Bank to circulate the notes.
Outside the valley, fresh currency notes can be obtained from the central bank's branch offices located in Biratnagar, Janakpur, Birgunj, Pokhara, Siddharthanagar, Nepalgunj and Dhangadhi. However, private banks and financial institutions are not so keen on distributing fresh bank notes as they would need to assign extra personnel and pay additional insurance charges. The central bank said it will also be providing the new paper notes outside the valley through the branches of three government-owned banks that are authorised for maintaining the currencies reserves.
The central bank is providing exchange facility for up to Rs 27,000 per person in denominations of Rs 5, Rs 10, Rs 20, Rs 50 and Rs 100, according to the Nepal Rastra Bank.

Central bank removes 30-year retirement provision, saves 200 million

After a long debate on the retirement provision, the central bank has proposed to remove the 30-year service period from the Nepal Rastra Bank (NRB) Employees’ Bylaws and make uniform retirement provision for all.
The board of directors meeting of the central bank on Sunday has decided to retain a single provision regarding retirement of NRB employees at the age of 58. According to the existing Employees’ Bylaws, NRB employees will be retired based on age factor and completion of 30-year service period, whichever comes first.
The central bank has proposed to remove the 30-year service period provision citing that a large number of experienced staff will be retired by next year under the provision and it wants to retain them.
It will also bring uniformity in retirement provision at par with civil servants, said central bank deputy spokesperson Rajendra Pandit, who also informed that the central bank has also formed a committee that will suggest on professional development of the NRB staffers as according to the federal structure of the country.
The central bank has sent the proposal to the Public Service Commission (PSC), which is the constitutional body that is mandated to select meritorious candidates for the government, he said, adding that altogether 233 officer-level – including special class, first class, second class and third class – staffers will be retired by next year as they will meet the 30-year service period despite having few years left before they meet the compulsory retirement age. It will also be the loss to the central bank as it will not only lose its experienced staff but will also have to pay some Rs 200 million extra.
The number of staffers to be retired by next year is one-fourth of the total staffers of the central bank, he said, adding that the new entry has to be taken immediately. "If the commission is unable to finalise selection process on time, the remaining staffers, even those who do not meet the promotion criteria, will automatically get promoted," according to the central bank. "Keeping the 30-year provision will not only increase pension liability but also lose trained human resources."
According to the NRB Employees’ Bylaws, a central bank staff, who retires after completing 30 years of service will get one layer promotion along with monthly pension calculated as per the last salary scale multiplied by service period plus remaining age before turning 60, divided by 50.
The central bank currently has a workforce of around 1,125 people. Of these people, 385 are retiring in the next three years. Majority of these employees are retiring because they have completed 30 years of service. Likewise, a total of 2,700 former central bank staffers are receiving pensions at present.
The Employees Union has been opposing the central bank move claiming that it will bar fresh blood from entering the NRB – in contradiction to the spirit of the Financial Sector Reform Programme (FSRP) – and the employees of government banks will also seek uniformity in retirement with the central bank. The 30-year service period provision was introduced in the central bank – under the FSRP – from 2000 aiming at mainly to inject fresh blood in the central bank to strengthen its regulation and supervision capacity and to improve the quality of service. The provision was also introduced in government banks – Rastriya Banijya Bank, Agricultural Development Bank and Nepal Bank – under the FSRP funded by World Bank.
The Employees Unions have, however, launched a protest to oppose the central bank move. They have today picketed the Governor’s Office two hours and shut down many branch offices for one hour. We will shut down all branches of the NRB for one hour and picket the Governor’s Office tomorrow also, said general secretary of the Nepal Financial Institutions Employees Association, a trade union close to the Nepali Congress, Rajiv Regmi.
Of the three trade unions at the central bank – Nepal Rastra Bank Employees Association, which is close to the CPN-UML; National Employees Organisation, which is close to CPN (Maoist Centre) and Nepal Financial Institutions Employees Association, which is close to the Nepali Congress – only National Employees Organisation is in favour of the central bank move, while the remaining two have denounced it.
Central Bank former governor Dr Yuba Raj Khatiwada had formed a committee led by then board member Dr Parthibeshwor Timilisina, who had advised to scrap 30-year provision. But Dr Khatiwada retired before implementing the suggestion.

RBB, NIDC merger talks gathers momentum

The merger process between state-owned Rastriya Banijya Bank (RBB) and NIDC Development Bank has once again gathered speed.
The separate merger committees formed by both the banks have agreed to form a joint merger committee led by joint secretary of the Finance Ministry Nirmal Hari Adhikari.
"We have formed a joint merger committee, which will be responsible for finalising all the merger related issues,” said RBB chief executive officer Kiran Shrestha. "The committee has set a target to finalise the merger process by October 17 this year," he said, adding that the long Dashain vacation in between will surely affect the merger process. "We will do our best to meet the deadline."
Earlier, the individual merger committees formed by the two banks has finalised a first draft of the memorandum of understanding (MoU) yesterday. They have now given the authority to finalise the MoU to the joint merger committee.
The banks have yet not yet discussed into technical issues of the merger like capital ratio and management of employees. "Technical issues are yet to be solved," Shrestha added.
NIDC has already finalised the Due Diligence Audit (DDA) to begin the merger process with RBB. RBB has also already calculated its net worth before starting the merger process.
Expecting merger soon, the Finance Ministry has asked NIDC Development Bank not to extend the agreement of the staffs, who have been hired on contract basis. The ministry has – issuing  a letter on May 7 – also asked NIDC not to appoint any new staff on contract.
A cabinet meeting on January 27 had also urged both the institutions to expedite the merger process. A committee that had been formed under the leadership of former secretary Prithvi Raj Ligal had also suggested NIDC to merge with RBB or to establish itself as an investment bank in collaboration with Hydropower Investment and Development Company.
The RBB has, however, planned to widen its branch network after the merger process is completed. The bank, which already has a presence in 68 districts with a network of 166 branches, has planned to add 43 new branches.
The RBB has paid-up capital of Rs 8.5 billion and NIDC has Rs 650 million.

Cabinet okays RBB, NIDC merger proposal

The cabinet today approved a proposal for merger between Rastriya Banijya Bank (RBB) and NIDC Development Bank.
Deputy Prime Minister and finance minister Krishna Bahadur Mahara had tabled the proposal to merge the two state-owned financial institutions in the cabinet.
While RBB is a commercial bank, the objective of NIDC was to support industrial sector of the country. But with the changed scenario in the banking sector, the government transformed developed NIDC into a development bank.
Both the institutions had huge defaulted loans in the past. The RBB – along with Nepal Bank Ltd (NBL) – recovered under the financial sector reform programme (FSRP). But NIDC failed to work according to its objective and also could not compete with the mushrooming privately owned development banks, and was in loss till 2011.
Like all the other financial institutions, both the state-owned class 'A' and class 'B' financial institutions come under the purview of the central bank. Thus, they have to now follow merger rule like other financial institutions. The merger of both the government-owned financial institutions is expected to create a stronger class 'A' bank which is also planning to float shares like other financial institutions.
According to the chief executive officer of the RBB Kiran Kumar Shrestha, a merger committee comprising representatives from both the institutions will be formed now to finalize the merger process. "The merger committee will then form two teams to look into technical and managerial issues to execute the merger," Shrestha said, adding that the technical team will conduct valuation of assets of the two financial institutions and also appoint an independent auditor to conduct a due diligence audit (DDA). "It might take around six months to complete the merger process."
RBB has a paid-up capital of Rs 8.58 billion, while NIDC has a paid-up capital of Rs 415 million and a reserve and surplus of Rs 3.02 billion.
The merger of the two state-owned financial institutions has been discussed for long. In 2012, the Finance Ministry wanted the two institutions to undergo merger. But NIDC was not happy with the idea. Then again, the government – through the budget in the fiscal year 2013-14 – tried to turn NIDC into an infrastructure development bank. But the plan failed to take off after the central bank advised the government that NIDC does not have financial and managerial capacity to become an infrastructure development bank.
Again, in the budget for the fiscal year 2015-16, the government announced merger of NIDC with Hydroelectricity Investment and Development Company Ltd (HIDCL). However, the plan again failed to materialise.

PEs profits up, dividend down

Though Public Enterprises (PEs) recorded impressive profit in the fiscal year 2014-15 compared to a fiscal year ago, their return has decreased.
They posted net profit of Rs 33.92 billion in the last fiscal year compared to Rs 5.5 billion, some Rs 29 billion in 2013-14 more, according to a report published today by the Finance Ministry. But they paid Rs 6.45 billion to the government as dividend, which is less compared to what they had paid a fiscal year ago.
Of the 37 PEs, some 20 posted net profit, whereas other 14 are still in net loss compared to 15 in 2013-14. NOC, which was in net loss in 2013/14, logged impressive profit in the last fiscal year.
"The net profit of these PEs was Rs 5.5 billion in 2013/14. In 2012/13, they had reported net profit of Rs 11.4 billion," the report added.
Despite regular political bickering, increasing red tape and weak governance, PEs were in green due to huge profit churned by Nepal Oil Corporation (NOC), Nepal Telecom, Rastriya Banijya Bank Ltd (RBBL) and Agriculture Development Bank Ltd (ADBL).
NOC, which used to be in loss in the past years, recorded profit of Rs 15 billion in the last fiscal year, whereas Nepal Telecom, RBBL and ADBL have been contributing huge revenue to the state coffer after they successfully underwent reforms.
In 2013/14, NOC had had reported loss of Rs 6.25 billion.
Though profits of PEs have increased, their return to the government has decreased. In 2013/14, five PEs -- Nepal Telecom, Industrial District Management Ltd, Hydroelectricity Investment and Development Company, ADBL and Citizens Investment Trust -- had paid Rs 6.61 billion as dividend to the government. However, in the last fiscal year, only Nepal Telecom, Industrial District Management and National Housing Company paid Rs 6.45 billion dividend -- some 1.59 percent of GDP -- to the government.
"The return is only 5.12 percent of the government investment on PEs," the report said, adding that the rate of return is lower than the current interest rate. But PEs also pay income tax, Value Added Tax (VAT), and other non tax revenue to the government.
The government has made share investment of Rs 126.16 billion on PEs, according to the report.
Likewise, total operating income of 37 state-owned enterprises increased by 5.06 percent to Rs 270.48 billion in the last fiscal year from Rs 257.81 billion in 2013/14 -- 15.48 percent up from Rs 223.26 billion in 2012/13.
Though it alone cannot gauge the overall efficiency of PEs, the rise in operating income reflects improvement in efficiency of state-owned enterprises.
According to the report, three PEs -- Nepal Engineering Consultancy Service Center, National Construction Company Nepal and Janakpur Cigarette Factory have not submitted any financial data to the government as they have already paid off their employees.

Libertarion Bholanath Chalise passes away

Former secretary and noted economist Dr Bholanath Chalise passed away today morning at the age of 65 due to chronic diabetes and kidney problem.
Dr Chalise breathed his last while at Nepal Medical College, Attarkhel. He is survived by a wife and four sons. His last rites were performed at Pashupati Aryaghat today afternoon. Chief secretary Lilamani Poudel, Auditor General Bhanu Prasad Acharya, former vice chair of National Planning Commission (NPC) Dr Jagdish Chandra Pokharel, former secretaries including Rameshwor Khanal, Shankar Koirala, and Bimal Wagle paid tribute to Chalise at Pashupati Aryaghat.
Born in Bouddha Simaltar in 2008 BS, he had discharged several responsibilities in the National Planning Commission, Ministry of Industry and Ministry of Local Development in different positions before retiring as trade secretary.
Unlike conventional bureaucrats, who are considered anti-reform, he was private sector-friendly and did more reforms in industrial sector during his tenure in Industry Ministry.
The proponent of free market economy, Chalise was one of the key government officials during the economic liberalisation of the 1990s.
Finance minister Dr Ram Sharan Mahat remembers Chalise as a proficient administrator. Recalling his contributions during the first phase of economic reform, Mahata lauded his role in bringing the private sector-friendly Acts including Industrial Enterprise Act 1992, Foreign Investment and Technology Transfer Act and Company Act 1997. "These Acts provided vision for economic liberalisation in Nepal ending the licence regime of earstwhile Panchayat era," he added.
Apart from being a libertarion, he was also an avid reformist, Mahat said, adding that Chalise worked hard for decentralisation of power, when he was secretary in Ministry of Local Development. Decentralisation of power to the local bodies was done during his tenure as local development secretary. Chalise played a leading role in introducing the Local Self-Governance Act 1999.
"He was also a person with high morale and integrity and had professed clear view with action that the private sector should be given impetus for economic prosperity," Mahat remembered. Chalise also believed in the strength of market forces in economic development and empower the local bodies.
Chalise, who had retired from government service about one-and-a-half decades ago, also served at Nepal Electricity Authority (NEA) as executive director and Nepal Banijya Bank (RBB) as the chairman. He started reforms in the state power utility and still considered to be the most successful chief of the NEA so far for executing the reforms agendas.
The champion of liberal economy, Chalise always opined that the government should not run business itself but act as a facilitator to the private sector. He viewed that except security agencies like Army and Police, the government should not operate any agencies but leave them all to the private sector.
Chalise, who holds PhD from University of Vienna, Austria in ‘Liberal Economy’, was an free market economy throughout his life. He was felicitated as the Freedom Champion at the Asia Liberty Forum 2015 held in Kathmandu on January 10.
Lately, he was not happy with the current state of reform as it has been slowed down.  He always wanted the political leaders to take bold steps for reform rather than depending on bureaucrats.

Rastriya Banijya Bank extends application deadline

Rastriya Banijya Bank has extended the deadline – for the third time – for filing applications to purchase its shares in Nepal Investment Bank and Nepal Housing Finance Company until mid-March 2014 making the criterion more flexible.

The state-owned bank has also adopted flexibility in terms of criteria for buyers against its earlier decision of selling the shares to a single highest bidder. It has fixed Rs 594 a unit for Nepal Investment Bank and Rs 101 a unit for Nepal Housing Finance Company stocks. The bidders are required to first deposit 10 per cent of the quoted amount.

The wholly government owned bank is ready to sell its stocks to different bidders, also against its previous criteria to sell to single or a number of firms jointly. "However, one bidder has to buy up to 10 per cent of the total shares," it said, adding that it has 5,652,016 units of shares in Nepal Investment Bank (15 per cent) and 196,027 units of shares in Nepal Housing Finance Company.

Earlier the bank had issued the first auction notice on December 11 with a month to mid-January deadline and again extended to mid-February, after the central bank prevented Rastriya Banijya Bank from distributing dividend due to cross-holding in other banks and financial institution.

The bank has also not been able to receive Rs 140 million cash dividend – from the Nepal Investment Bank that had approved 10 per cent bonus shares and 25 per cent cash dividend in its recent annual general meeting – due to the central bank’s restriction. The dividends would be released after Rastriya Banijya Bank sells its shares in the two banks and financial institutions.

Banks profit surges on higher interest earnings

Commercial banks posted 18 per cent increment to Rs 9.38 billion profit in the second quarter of the current fiscal year 2013-14 due to higher interest earnings. In the last fiscal year's second quarter they have posted a combined profit of Rs 7.94 billion.

Of the total 30 listed commercial banks, only one posted loss

Despite the low borrowing, the interest earning of the 30 banks – in the half year – swelled up to Rs 21.47 billion from the first quarter's interest earning of Rs 9.79 billion.

The commercial banks have however failed to increase income – compared to the first quarter – from other sources like foreign exchange, service charges and others.

Despite the rising profits, they have also failed to increase returns on equity and assets, apart from yield of investment that has decreased, which is a wake up call for the bankers.

The central bank has been asking the banks to reduce the spread rate – the difference between lending and deposit rates – to five per cent, which will further tighten the profit prospects in the next quarter.

The central bank has also asked the banks not to charge any fees for customer services limiting the scope for the profit expansion of the banks.

The commercial banks have earned Rs 2.03 billion profits – in the second quarter – from foreign exchange, compared to Rs 1.02 billion in the first quarter of the current fiscal year. Likewise, income from various fees stood at Rs 2.81 billion compared to Rs 1.4 billion in the first quarter.

Nabil Bank posted the highest net profit (Rs 1.05 billion) followed by Nepal Investment Bank (Rs 940.39 million), Rastriya Banijya Bank (Rs 717.88 million), Everest Bank (Rs 679.11 million) and Standard Chartered Bank (Rs 633.31 million), whereas Kist Bank posted Rs 198.80 million loss in the second quarter.

Nepal requests World Bank to continue Development Policy Credit-2

Nepal has asked World Bank (WB) to continue loan assistance under Development Policy Credit-2 programme within the current fiscal year.

"As the Development Policy Credit-1 has helped Nepal, the continuation of the programme under budgetary support will make the government easier to prepare budget," said finance secretary Shanta Raj Subedi during a meeting with visiting World Bank mission in the capital here today.

The government will get $70 million (around Rs 7 billion) in loan assistance under Development Policy Credit-2 for the next fiscal year’s budget.

The government and World Bank have been working on budgetary support for Nepal worth $100 million for the last three years.

Last year, the World Bank provided $30 million in credit under Development Policy Credit to help accelerate financial sector reform programme aimed at reducing the banking sector's vulnerability and increase transparency.

The $30 million that came under Development Policy Credit-2 programme was incorporated in the current fiscal year's budget. The $70 million is the second tranche of the budgetary support.

The World Bank mission led by Gabi G Afram said that negotiations for Development Policy Credit-2 can be finalised in October or early November, though the Finance Ministry wants to complete the negotiation earlier to plan the resource distribution for the budget for nest fiscal year 2014-15.

Development Policy Credit comes as financial sector stability credit for financial sector reform programme. The Development Policy Credit-1 has supported Medium Term Financial Sector Reforms Programme that has prepared a long-term financial sector reform strategy, increased financial access and helped recapitalise Nepal Rastra Bank and Rastriya Banijya Bank.

The World Bank will take stock of past performances of the government before committing its continuation.

The Finance Ministry claimed that the reform is on track as it is amending the Nepal Rastra Bank Act and Banks and Financial Institutions Act (Bafia) – both of which are currently in Parliament – apart from drafting Deposit Insurance Act.

Likewise, capitalisation of Nepal Bank and Rastriya Banijya Bank is also underway. Nepal Bank has been selling its assets while Rastriya Banijya Bank is floating shares to increase its capital base, according to the ministry.

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.