Unenviable distinction

The health sector has always been a matter of serious concern. But successive governments have failed to come up with a radical approach, which would have brought health for all closer to reality. The neonatal mortality rate has increased to fifty out of every thousand. Maternal mortality in this country is the highest in the South Asia subcontinent. Every summer preventable diseases claim thousands of lives, crippling daily economic activity. And every year a total of over fifty thousand people develop tuberculosis in this country. The reasons for this sorry state are poor sanitation, poor medical facilities and illiteracy, besides debilitating poverty in rural Nepal. This raises a host of questions. What have successive governments done to improve the quality of life of the poor? Is access to health not a fundamental right of all? Doesn’t the poor health policy of the government undermine other rights as well? The political parties, particularly the NC, the RPP and UML, have failed to recognize this as a major problem.

A study on the ‘State of the world’s new borns’, conducted by Save the Children US, underlines that the mortality rate of newborn babies has placed this country on the top in the subcontinent and fourth place in the world. This is an unenviable distinction. The survey has highlighted just how effectively the government has implemented health policies and programmes. It also projects negligence and
a lack of seriousness on the government’s part towards improving public health. Had there been some measures taken that aimed at reducing the infant mortality rate in this country, the overall picture would have been much better than what it is today. Low birth weight, infection, birth asphyxia and congenital anomalies are other factors that have led to a high neonatal mortality rate in this country. This apart, ninety percent of child births take place in the home with the help of family or neighbours, instead of at hospitals.

The annual budget allocated for the health sector does not reach rural Nepal. Part of the budget is misdirected by parliamentarians for their personal benefit, and part of it by bureaucrats, including medical personnel manning the primary health centres or district hospitals. The medicines allocated for health centres and hospitals end up in private clinics, pharmacies and nursing homes. This is the main reason why district hospitals or primary health centres remain without medicines and medical personnel throughout the year. Besides, the doctors working at state-run hospitals and health centres prefer to work in Kathmandu rather than in rural Nepal. The government must recognize that health is as important as education for the public weal. It cannot ignore this by citing poverty and illiteracy. It must educate the poor, improve their quality of living and reduce neonatal mortality.

Maoists at low ebb : Real or illusory?

By Hari Bhujel

The third round of talks between the government and Maoists insurgents are likely to take place within the first week of October. According to a report, the upcoming talks are likely to give a ‘definite direction’ to the six-year-old insurgency. Meanwhile, the Maoists are planning to release all the policemen and private citizens in their captivity at a mass meeting in Surkhet. The government has also initiated a process for releasing Maoist cadres except central leader Matrika Yadav.

Since the start of the insurgency in 1996, the government of Nepal has treated the Maoist war as a law and order problem to be contained by police operations. The police in many places have killed more innocent civilians than guerrillas, a fact noted by several human rights organisations, including Amnesty International. Faced with increasing pressure from local and international human rights organisations for a negotiated settlement of the conflict, the government and insurgents both occasionally pay lip service to dialogue. In early November 2000, the government wanted to end the violence and bring the insurgents into the mainstream of politics through dialogue. However, when the government dramatically released a central committee member of the Maoist party after forcing him to denounce the insurgency, a mediation effort at dialogue failed.

The Maoist strategy is army lai na chhu, police lai na chhod (don’t touch the army, don’t spare the police). The police have been unable to cope with the insurgency. They were promised new military hardware, including hand grenades and a fresh training package, but most of this has not materialized. The police are low in morale and military capability. An armed police force trained by the army is being raised to deal with the Maoists. According to some newspaper opinions, analyzing the present mood of the Maoist insurgents and their "above ground" statements, what is for sure is they will not settle for anything less than, firstly, the formation of an all party government; secondly, a substantial change in the existing Constitution, and finally, a referendum to ascertain whether the public is content with the present monarchical system or would wish to jump onto the republicanism bandwagon.

Amid conflicting reports about the safety of top Maoist leaders, Kantipur daily has reported that Maoist leaders including Comrade Prachanda and politburo member Dr Baburam Bhattarai have entered Nepal (from their base in India) in a safe way. The news report did not give details. Earlier, the BBC World Service had reported that an unidentified Maoist leader was found dead in North-Western India recently. Officials suspected that the rebel leader might have died in an encounter with security personnel. Officials in Kathmandu said they did not have any details regarding the incident or the identity of the dead leader. Meanwhile, a pro-Maoist daily has reported that Chairman of the underground Maoist party Comrade Prachanda was not among those arrested by Indian police last week. Janadisha reported, quoting highly placed Maoist sources, that the India police had not taken Comrade Prachanda into custody. Reports said the Indian police had taken into custody some one dozen Nepalese in Siliguri on charges of their involvement in girl trafficking. Earlier, media reports said the Communist government of West Bengal state had started cracking down on Nepalese Maoist hideouts in Siliguri. The action came after West Bengal chief minister Buddhadev Bhattacharya visited the area, and said his government would initiate measures to control the ‘terrorist activities’ of Nepalese Maoists. He also said the Nepalese Maoists were getting support from ISI, the Pakistani intelligence outfit.

At a time when the government and Maoist rebels are preparing for the third round of talks, the government has beefed up security after getting information that the Maoists were preparing to mount assaults at the headquarters of the three northern districts of Mugu, Kalikot and Jumla, a private newspaper reported. A secret circular sent by police headquarters in Kathmandu to subordinate offices clearly hinted that there was no possibility of a peaceful solution to the insurgency and asked the police force to check the movements of armed guerrillas towards sensitive areas. Police headquarters also pointed towards the possibility of Maoist attacks in other districts as well. The Maoist party has already dispatched its guerrillas and arms to Siuna and Thirpu in Kalikot district, some seven hours’ trek from the district headquarters, police sources said. They said the Maoists might try to capture the whole district since India refused to provide them shelter. The police have also made necessary arrangements, in cooperation with the Royal Nepal Army, to counter any possible assault by the rebels, a senior police official, who declined to be named, said in Nepalgunj. At a time when the government and Maoist rebels are trying to find a peaceful solution to the six-year-old insurgency, a senior government official said the Maoist activities were purely terrorist in nature. Addressing an interaction programme organised in Lalitpur by the Samata Samaj, Speaker Taranath Ranabhat said if the Maoists were a political force, they would not have been engaged in destroying the very foundation of development. He also warned that the country could take a critical turn if the Maoists did not behave.

Prime Minister Deuba’s repeated calls to the Maoists to halt their undesirable activities forthwith, as per the agreement and the reported continuity of the same, has visibly annoyed government quarters to the extent that the latter has started serving warnings and hinting of "dire consequences". The government is advised to observe restraint so that the situation does not go off the track and the same should apply to the insurgents. Let us again hope that the proposed third round of talks succeeds and the nation breathes a sigh of relief.

Boozed off, where?

By Barsha Rana

Hey Man! This is a modern world. Try to move with the time yaar. Try out a peg of gin, or would you prefer a shot of taquila? Well, you guys must have guessed what I am trying to point out. We usually hear this sort of statement in a teenage get-together. This is a kind of environment we are used to these days in our modernized and sophisticated lifestyle (that is exactly what we call).

Step inside any teenage haunts, and you’ll find yourself in a stuffy room amidst clouds of smoke. A guy unfamiliar with the popular brand, Shikhar, 555, YSL, Surya...... are considered "Half-man". The other day I was astonished to see a conductor of a local cab, between 11- to 12 years of age, fagging away to glory. Let us put on our thinking caps, and question ourselves whether he is a modernized little chap or a juvenile delinquent?

"SMOKING IS INJURIOUS TO HEALTH". Listening to this warning so often and watching it on all our favourite channels, why don’t we try to do justice to it? In spite of being aware of so many wide-ranged diseases why not come out of this stupidity? Alcohol causes F.A.S., leading to mental retardation in children, causes anxiety and loneliness; burning cigarette causes lung cancer, heart diseases, and the wafting fumes not only affect the smoker but also the people near or around him or her.

But why do we jeopardize our lives by drinking and fagging that will give us just a temporary pleasure or relief? Abandoning old habits or pulling oneself out of an addiction is not that easy. But the youths of today, better known as the pillars of the nation, should Let us, at least, keep up to the principles of our cultured society and stay away from alcohol drinks, cigars and drug addiction. It is said: A man takes a drink, the drink takes a man. So you better think and leap.

NPAs at Nepalese financial institutions

By Bishwambhar Neupane

One of the major reasons for the immense NPA volume with Nepal Bank, Rastriya Banijya Bank and NIDC is unnecessary political pressure for the extension of loans. It is stated that many clients were extended loans without any project. Since even the most viable looking project turning out to be NPA cannot be ruled out, it is worthless to discuss the status of loans extended against fictitious projects.

A project’s viability has to be ascertained all the time extending up to the final repayment of the loan. In general practice, if a project is making timely interest and installment payments, it hardly calls for mid-term review. However, in prudent banking practice, constant monitoring and a mid-term review are a must, irrespective of the financial discipline of the project. Ineffective pre-disbursement, post-disbursement review and mid-term appraisal also contribute towards NPA.

This factor may not be that pertinent in the context of the weak Nepalese economy. Giving due consideration to welfare of the economy as a whole, the NRB, in consultation of HMG, has made it mandatory to invest 12 percent of total credit portfolio in priority sector lending. Banks are penalized for failure to invest the stipulated amount in the priority sector. Penalty on such shortfall is levied at the maximum prevailing lending rate of the bank during the examination period, which comes out to be very severe for the banks. In order to avoid the penal interest, banks tend to rush into priority sector lending without giving due consideration towards quality of the loan, credibility of the borrowing client and without any detailed appraisal, which ultimately forces the loan to turn into NPA.

The management and board of a bank are accountable to shareholders, and in order to ensure that shareholder interests are not jeopardized the HMG and NRB should allow minimal interference in bank boards. However, the NRB should also maintain close inspection and supervision for strict adherence to the rules, regulations and norms stipulated. As discussed above, both internal as well as external forces are responsible for the accumulation of NPAs, and there is a close correlation between internal (bankers) activities and outsider (NRBs) supervision. A perfect match between the two parties can help the Nepalese FIs get rid of NPAs to a greater extent. Here are some ways to tackle NPAs.

Strengthening monitoring and supervision activities: Being the central Bank of the country, the NRB shall be responsible for maintaining a close watch on the activities of banks. It must segregate its role from governing to supervising. It must let off its role of influencing the board by appointing one of the
directors. Rather a strong inspection team should be mobilized to supervise, and only if necessary control, the bank’s activities.

Segregation of performing and non-performing assets in balance sheet: As practiced in foreign countries, the NRB should make it mandatory to segregate performing and non-performing assets in the balance sheet itself. This would give a clear picture to investors and shareholders, regarding the actual status of the bank. The investors, then, can elicit their views on investment decisions. Thus, a bank having substantial amount of NPAs, even if registering a tangible accounting profit, cannot fool investors. This methodology shall definitely give commercial banks food for thought and motivation, as well reduce NPAs from their credit portfolios.

Inception of credit rating agencies: This is one of the nineteen points in the strategy the NRB came up with to strengthen Nepalese FIs. Though they have not materialized to date, the inception of credit rating agencies would also be of great help in reducing NPAs.

Formation of Assets Reconstruction Company (ARC): Yet another strategy among the nineteen is formation of ARC. Although ARC is not a control measure, rather a remedy for already existing NPAs. ARCs have really worked even in countries like Japan, Korea, Malaysia etc, and thus, experts have envisaged that they will work in Nepal too. However, the concerned authorities are still silent about their inception.

To conclude, NPAs in FIs are bound to prevail in the total credit portfolio irrespective of the implementation of strong and effective strategies. However, control and regulatory measures shall definitely help lessen NPAs and help prevent further accumulation. FIs are confronted with a serious responsibility of mobilizing resources fundamental for their sustainability and the overall affluence of the economy. At the same time they must insure that the assets of shareholders and depositors are safeguarded. It has, therefore, become essential that both NRB and the FIs move hand in hand, following stipulated prudential norms, in the best interest of society as a whole.

(Concluded)