‘Reform needed to prevent financial crisis’

Post Report

KATHMANDU, Jan, 17 - Deependra Purush Dhakal, Governor of Nepal Rastra Bank (NRB), has said that the decision of the government to handover the management of Nepal Bank Limited (NBL) and Rastriya Banijya Bank (RBB) is purely an attempt to revive their ailing financial position.

Addressing an interaction program on Financial Sector Reform, organized by Society of Economic Journalists - Nepal here today, he said that financial sector reform is the need of the hour to safeguard the domestic economy from the crises similar to that seen in East Asian economy in 1997. The two banks, which captures more that 60 percent of the total domestic transaction, are in deep financial problem. "The main reason why we started with the management handover is to prevent an uncontrollable financial crises in future," he said.

He said that banking reform scheme is only a part of total financial sector reform announced in the fiscal budget for 2000/01 with an aim to address worsening financial situation of the country. "This is the right time to initiate such reforms since all macro economic variables are showing healthy signs," he said.

He further reiterated that the government would not take any decision against the interest of employees and depositors, well as creditors, and assured that no employees would be removed and no existing branches of the banks would be closed or withdrawn.

Speaking on the occasion, Dr Bimal Koirala, Secretary at the Ministry of Finance, said that serious institutional and policy failures necessitated speeding up the financial sector reform. Apart from the handover of the two largest commercial banks, establishment of Credit Rating Agency and Assets Restructuring Company are other two major steps to be materialized soon. He said that NRB Act would also be amended to enhance monitoring capability of the central bank to cope with mounting problems in the liberalized banking system.

Justifying the reforms initiated by the central bank, he said that the present reform is undertaken to overcome three main problems: saving interests of small depositors, squeezing cost of capital to control lending rate; and maintaining the pace of economic growth.

Jagdish Agrawal, Chairman of Revenue Committee of FNCCI, said that private sector broadly welcome the proposed management handover of banks to private parties and blamed weak financial discipline of the banks as the root cause for such poor performance. He also expressed deep concern over the existing collateral oriented lending system of the banks and urged upon the need to promote both individual and project oriented financing in a balanced way to insulate themselves from such chronic financial problems in days to come.

He also opined that the two years period is too small to produce well trained Nepali manpower and to develop the desired professionalism in the unhealthy banking system.

Basu Dev Giri, President of Federation of Small and Cottage Entrepreneurs, said that as long as exiting investment policy of the government is not revised, the economy would not be able to achieve the desired goals. He also expressed the view that Nepali professionals are also equally capable of handing financial institutions. "Bank of Kathmandu was facing loss under the Thai management. But the bank started earning profits soon after it was taken over by Nepali professionals," he reminded.

The management contract of the two banks is being carried out under the Nepal Financial Sector Reform Project, financed by World Bank’s International Development Association, which was initiated soon after KPMG Barnet Group, an international auditing firm, declared the two banks as "technically insolvent."

Uniform rules contract for int'l carriage of goods by rail

(contd. From Know ICD- 53)

Art. 27. - Transit Periods

1. The transit periods shall be specified either by agreement between the railways participating in the carriage, or by the international tariffs applicable from the forwarding station to the destination to the destination station. For certain special types of traffic and on certain routes these periods may also be established on the basis of transport plans applicable between the railways concerned: in that case they must be included in international tariffs or special agreements which, where appropriate, may provide for derogation’s from 3 to 9 below.

Such periods shall not in any case exceed those, which would result from the application of the following paragraphs.

2. In the absence of any indication in regard to the transit periods as provided for in 1. And subject to the following paragraphs, the transit periods shall be as follows:

(a) for wagon-load consignments;

(i) by Grande vitesse:

period for despatch.....12 hours

period for carriage, for each 400 km or fraction thereof ......24hours

(ii) by petite vitesse:

period for despatch......24 hours

period for carriage, for each 300 km or fraction thereof ........24 hours

(b) for less than wagon-load consignments:

(i) by grande vitesse:

period for despatch.....12 hours

period for carriage, for each 300km or fraction thereof ....24 hours

(ii) by petite vitesse:

period for despatch .....24 hours

period for carriage, for each 200 km or fraction thereof.........24 hours

All these distances shall relate to the kilometric distances contained in the tariffs.

3. The period for carriage shall be calculated on the total distance between the forwarding station and the destination station. The period for despatch shall be counted only once, irrespective of the number of systems traversed.

4. The railway may fix additional transit periods of specified duration in the following cases:

(a). consignments handed in for carriage, or to be delivered, at places other than stations:

(b). consignments to be carried:

(i). by a line or system not equipped to deal rapidly with consignments:

(ii). by a junction line connecting two lines of the same system or of different systems:

(iii).by a secondary line:

(iv).by lines of different gauge:

(v). by sea or inland navigable waterway:

(vi).by road if there is no rail link:

(c). consignments charged at reduced rates in accordance with special or exceptional internal tariffs:

(d). exceptional circumstances causing an exceptional increase in traffic or exceptional operating difficulties.

5. the additional transit period provided for in 4(a) to (c) shall be shown in the tariffs or in the provisions duty published in each State. Those provided for in 4 (d) must be published and may not come into force before their publication.

6. The transit period shall run from midnight next following acceptance of the goods for carriage. In the case, however, of traffic consigned grande vitesse, the period shall start twenty-four hours later if the day which follows the day of acceptance for carriage is a Sunday or a statutory holiday and if the forwarding station is not open for grande vitesse traffic on that Sunday or statutory holiday.

7. Except in the case of any fault by the railway, the transit period shall be extended by duration of the period necessitated by:

(a) verification or ascertainment in accordance with Article 21 and Article 22, 1, which reveals differences from the particulars shown in the consignment note;

(b) completion of the formalities required by customs or other administrative authorities;

(c) modification of the contract of carriage under Article 30 or 31;

(d) special care to be given to the goods;

(e) the trans-shipment or reloading of any goods loaded defectively by the consignor;

(f) any interruption of traffic temporarily preventing the commencement or continuation of carriage.

The reason for and the duration such extensions shall be entered in the consignment note. If necessary proof may be furnished by other means.

8. The transit period shall be suspended for:

(a). petite vitesse, on Sunday and statutory holidays;

(b). grande vitesse, on Sundays and certain statutory holidays when the provisions in force in any State provide for the suspension of domestic railway transit periods on those days;

(c) grande vitesse and petite vitesse, on Saturdays when the provisions in force in any State provide for the suspension of domestic railway transit periods on those days.

9. When the transit period ends after the time at which the destination station closes, the period shall be extended until two hours after the time at which the station next opens.

In addition, in the case of grande vitesse consignments, if the transit period ends on a Sunday or a holiday as defined in 8(b) the period shall be extend until the same time on the next working day.

10. The transit period is observed if, before its expiry:

(a) in cases where consignments are to be delivered at a station and notice of arrival must be given, such notice is given and the goods are held at the disposal of the consignee;

(b) in cases where consignments are to delivered at a station and notice of arrival need not be given, the goods are held at the disposal of the consignee;

(c) in the case of consignments which are to be delivered at places other than stations. The goods are placed at the disposal of consignee.

Art. 28. - Delivery

1. The railway shall hand over the consignment note and deliver the goods to the consignee at the destination station against a receipt and payment of the amounts chargeable to the consignee by the railway. Acceptance of the consignment note obliges the consignee to pay to the railway the amounts chargeable to him.

2. It shall be equivalent to delivery to the consignee if, in accordance with the provisions in force at the destination station:

(a). the goods have been handed over to Customs or Octroi authorities at their premises or warehouses, when these are not subject to railway supervision;

(b). the goods have been deposited for storage with the railway, with a forwarding agent or In a public warehouse.

3. The provisions in force at the destination station or the terms of any agreements with the consignee shall determine whether the railway is entitled or obliged to hand over the goods to the consignee elsewhere than at the destination station, where in a private siding, at his domicile or in a railway depot. If the railway hands the goods, or arrange for them to be handed over in a private siding, at his domicile or in a depot, delivery shall be deemed to have been effected at the time when they are so handed over. Save where the railway and the user of a private siding have agreed otherwise, operations carried out by the railway on behalf of and under the instructions of that user shall not be covered by the contract of carriage.

4. After the arrival of the goods at the destination station, the consignee may require the railway to hand over the consignment note and deliver the goods him.

If the loss of the goods is established or if the goods have not arrived on the expiry of the period provided for in Article 39, 1, the consignee may assert, in his own name, any rights against the railway which he may have acquired by reason of the contract of carriage.

5. The person entitled may refuse to accept the goods, even when he has received the consignment note and paid the charges, so long as an examination for which he has asked in order to established alleged loss or damage has not been made.

6. In all other respects, delivery of goods shall be carried out in accordance with the provisions in force at the destination station.

(To be continued in KNOW ICD - 55) Source : COTIF/ CIM Rules

DTT’s Nepali associate inaugurated

KATHMANDU, Jan 17 (PR)- Nepal BRS Neupane & Co (NBRSNC), associate office of Deloitte Touche Tohmatsu (DTT), was formally inaugurated at a function here today.

According to a press release issued here today, inaugurating the company, Todd Smith, Deputy Managing Partner of DTT Asia Pacific Region, highlighted the services provided by DTT worldwide.

DTT falls among the five largest accounting firms in the world with offices in over 130 countries. It provides consulting services in many areas including auditing, corporate advisory, taxation, health care management, private sector development and Information Technology, among others, the release says.

According to the release, the Nepali partner of DTT, NBRSNC was selected as an associate firm by DDT last November. The selection was made on the basis of professional services and the firm’s standard, the release says.

The firm has provided consultancy services to most public enterprises and government-owned departments, and continues to cater to the needs of multi-lateral agencies such as UNDP, USAID, Helvetas and Swiss Agency for Development and Cooperation, among others, concludes the release.

Poor affected most by violence: FM

KATHMANDU, Jan 17 (PR)- Minister for Finance and Defense, Mahesh Acharya, has said that lower section of the society has been the most severely affected by violence and disturbance.

Speaking at a function organized on the occasion of the 34th anniversary of the Agriculture Development Bank (ADB/N), Acharya said, "An increase in violence will kill our drive against poverty. Disruption of the normal course of life hits the poor daily wage earners."

Stating that violence is not a solution to a problem, he said, "In the age of globalization and development, Nepal should not lag behind engrossed in domestic violence."

At a time when a major part of the total Nepali populace is still hungry and lacks a roof over its heads, commotion and violence will only lead Nepal further away from realizing its goals of poverty alleviation and economic growth, he said.

Though political differences do exist, all parties should have common goals and a single vision, he said. He also lauded the role played by ADB/N in loan disbursement at the grassroots level and mobilization of national financial resources for social upliftment. In addition, he praised the contribution of the bank in constituting the Small Farmers Cooperatives, which has been largely successful in its endeavors.

On the same occasion, Deependra Purush Dhakal, Governor of Nepal Rastra Bank (NRB), stressed the need to further strengthen Small Farmers Cooperatives to achieve greater lending at the lowest levels.

Representing the Small Farmers Cooperatives, Chairman of Uttar Ganga Cooperatives of Surkhet, Chadni Dhakal said that administrative costs of cooperatives is less than 3 per cent and the loan recovery rate is over 87 per cent.

On the occasion, Minister Acharya awarded the seven best-performing Small Farmers Cooperatives of the total 101 in the country.

To date, ADB/N has invested Rs 38.9 billion and recovered Rs 27.24 billion. The bank, as of mid-December 2000, had collected deposits of Rs 15.33 billion.