NRB unveils monetary policy for FY 2002/03

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KATHMANDU, July 16:In a first-ever annual Monetary Policy and Programmes after the enactment of Nepal Rastra Bank Act 2058 that was unveiled today, the central bank has slashed down the mandatory Cash Reserve Ratio (CRR) by one percentage point to accelerate the sluggish economy by injecting extra capital.

The policy level change regarding CRR is in line with flexible monetary policy of the central bank adopted since last fiscal year to boost the fragile economy, which would come into effect with the onset of new fiscal year. As per the new provision, the CRR would be brought down to 6 and 3.5 per cent for saving and current deposits and fixed account liabilities respectively from 7 and 4.5 per cent. As a result of CRR cut, the central bank expects that an extra capital worth Rs 1.85 billion would released from the NRB’s vault of the central bank.

Releasing the annual policy, Dr Tilak Rawal, Governor of NRB, expressed the hope that the extra injection of capital would be helpful in lowering cost of fund, which ultimately will bring down the existing lending rates of the commercial banks. He was, however, hopeful that such a lowered cost of fund wouldn’t drag down the deposit interest rates.

The policy, among others, sketches a plan of tuning other major economic variables to achieve budgetary economic growth target of 4.3 per cent for the upcoming fiscal year. "To achieve the target and to realize a surplus of Rs 3.5 to 4 billion in the Balance of Payment by limiting the inflation rate within 4 per cent, the growth rates of broad and narrow money supplies in the coming fiscal year would be12 and 11.8 per cent respectively," said Dr Rawal. He was also quick to stress that the central bank has taken due consideration in maintaining the inflation rate within the desired level while fixing growth rates of money supply for coming year.

He also said that the new policy would continue the earlier plan of transferring the management of two largest ailing commercial banks to the private sector. "Despite some obstacles, the management hand-over process would be completed within the first four months of the coming fiscal year," he stressed.

Establishment of Asset Management Company (AMC), which would be a concrete step to address the soaring Non-Performing Assets (NPAs) in the banking system would be within the coming fiscal year, states the policy. The policy also unveils its plan to issue directives related with Loan Information Bureau and Anti-money Laundering Act in coming fiscal year.

In order to ensure autonomy in monetary policy, the central bank has recently signed an agreement with the government under which the total amount of annual overdraft to the government should not exceed 5 per cent of the total revenue mobilization of the previous fiscal year.

"If the amount exceeds the limit, it would be immediately brought within the limit by converting it into treasury bills and the government is also compelled to repay the overdraft within specific time," says the policy. In order to encourage private parties’ more participation in the banking business, the NRB would accept applications to establish new commercial banks from the new fiscal year.

Responding to the long-due demand of the development banks, the new policy allows the development banks to operate saving accounts, albeit it should be less than the total authorized limit of resource collection and the deposited amount would not be allowed to withdraw through cheque.

The new policy has also announced a plan to manage long-term funds necessary to intensify and diversify its priority sector investments by allocating five per cent of gross profit of the NRB. The mandatory priority sector investment scheme from commercial banks would be scrapped in the coming five years and such role would be extended to development banks and micro credit programmes.

With an aim to gear up the inspection and supervision capacity of the central bank nation-wide, a policy of establishing inspection and supervision offices would be adopted and such an office would be materialized in Chitwan within the coming fiscal year.

According to the new policy, the NRB will issue financial cooperatives and micro-credit directives in coming fiscal year. In line with the policy of withdrawing direct representation of central bank in the board of directors of private commercial and development banks, such appointment would be scrapped. The privatization of the regional development banks would be accelerated from the coming fiscal year under which shares of the banks would be gradually sold to private sectors.

Similarly, the new policy also plans to bring inflows of remittance through the banking channels with greater participation of private sectors and to encourage foreign employment, the NRB would take necessary measures to simplify the flow of low-interest loans from commercial banks.

Entrepreneur dedicated to betterment of women

By Maina Dhital

KATHMANDU, July 16:Most elderly people worry about dependence for their survival, but 65-year-old Indira Sapkota is an exception to it. She is worried about others rather than herself. There has been no erosion in her audacity and she is as energetic as young people. Her activeness has put her old age at bay.

The slowdown witnessed in the tourism, trade and industry sectors has affected her Grihani Udyog, industry meant for the housewives. She is worried about her employees as the slowdown could cost them their job. "I am not worried about my earning rather about the grassroots women", she says.

Besides working in her office and home, Indira also attends industrial exhibitions, workshops and seminars. Taking out time from her busy schedule, she also visits different parts of the country and teaches housewives to be self-reliant. She wants to share her knowledge and experiences with other women.

Currently she runs three organizations: Nepali Grihani Udyog, Bishwas Achar and Masala Udyog. She employs 20 people out of them four are men. She says that she employed some boys, as they wanted to pursue their higher studies if they got a job. At one time, she hired some 200 women directly and indirectly, but as the tourist arrival declined, it also affected her industry, resulting in job losses.

Nepal Grihani Udyog is an excellent example of employing the illiterate housewives. Established in 1975, the Udyog provides training to the unemployed and also gives jobs to the trained people as far as possible and Indira shoulders the responsibility of marketing the products of the trainees. She is making efforts to render deprived women self-reliant by providing them training. "I do not train educated women. They can find job themselves", Indira explains.

The Udyog produces apparels for newborn babies and for the nursing mothers. Recently, they have started producing entire costumes necessary for the naming ceremony of the newborn babies. It has also begun producing fenugreek coffee and powder of caraway seed, popularly known as Jwano, a widely used spices by the nursing mothers. Besides catering to the need of the local market, Indira also exports apparels of the newborns to the US.

Indira receives training to produce new products and she passes the knowledge to other women by producing specimens. "What could this woman do after receiving training at this old age" Indira recalls passes made by young women while undergoing training. How can one teach others without knowing the skills? she questions.

Indira began her venture producing pickles and preparing clothes for newborn babies employing four orphan women. Now she is involved in knitting sweaters, stitching clothes, making papad, incense, pickles, chalk, titaura, and gundruk, dehydrated green vegetable leaves. Big hotels like, Annapurna, Bluebird, Dwarika’s and department stores like Navadurga and Bhatbhateni supermarkets deal in her pickles and spices.

Indira collected Rs 50 thousand and went to the Social Welfare Council to get her industry registered, but she returned from there without getting the industry registered as the officials of the Council demanded a bribe of Rs 50 thousand. "Then I went to the Department of small and Cottage Industry and got the industry registered", she recalls her bad experience.

The woman with a motto of "Let’s use domestic products and let’s make the nation prosperous" has been with the Gharelu Mahila Uddyami Puraskar 2057, International Year of Volunteers 2001 and others. She believes that the entire women of the kingdom should be enterprising.

Indira says that the money earned from her industries is spent on social works and providing training to deprived and illiterate women. However, she is finding it difficult event to pay the monthly house rent of Rs 21 thousand and to pay the salaries of her employees at present. "If you approach the minister, he will talk about globalization and the World Bank, better you should help each other", she says.

The industry begun with an investment of Rs 50 thousand is worth Rs 500 thousand now. The major problems of the industry are raw materials and market. It has become increasingly difficult for her products to compete with Indian products.

Indira Sapkota is a social worker as well. She has established a social organisation named jointly after her and her husband: Bhotu Indira Social Welfare Society. The Society runs multi-dimensional skill development and enhancing programmes expressly for women with the help of national and international social welfare organisations.

She has also been involving the backward deprived rural women in income generating activities, skill development, creating atmosphere for independent enterprises, encouraging rural women in small-scale enterprises and sharing knowledge and experiences with the deprived women through this organization.

Married off at 13, Indira gave birth to four children by the age of 20. She opted for income generating activities with a view utilizing her spare time after raising her children. Her sons are self-dependent and her daughter is in Australia now. She does not have to work for her sustenance, but what prompts her to keep herself in the afternoon of her life is her desire to keep herself busy for the sake of others.

CFG Project to be operational soon

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KATHMANDU, July 16: The government has selected two international consulting firms for the implementation of two project components under the Asian Development Bank (ADB) funded Corporate and Financial Governance Project (CFG Project) and is currently negotiating with the selected parties.

"The selection of the consulting firms for the implementation of the CFG Project has been made and the government is presently negotiating with the selected parties for the implementation of the project," a government official told The Kathmandu Post. "The negotiations will be completed within this week, and a contract will be signed soon."

PriceWaterHouse-Coopers has been selected for the implementation of the Corporate Governance and Capital Markets project and Uniquest Pvt. Ltd. for the implementation of Improving Legal Enforcement Mechanisms and Judicial Capacity.

Concerned government offices selected the international consulting firms after due evaluation of the proposals submitted by them a few months back. Eight parties, four for each of the project component, had submitted their technical and financial proposals after having cleared the preliminary round of selection procedures. The evaluation of the proposals was initially expected to be completed within the first week of June, but was delayed by over a month.

The companies that had made up to the shortlist for the first component of the CFG project include The Aries Group Ltd., PriceWaterHouseCoopers, Arthur Anderson India Pvt. Ltd. and Maxwell Stamp PLC. Likewise, the other four parties vying for the second component were Checchi and Company Consulting Inc, Ernst and Young, International Development Law Institute and the Asia Foundation and Uniquest Pvt. Ltd.

The party selected for the first component, PriceWaterHouse-Coopers, would support for institutional strengthening of the Securities Board, mutualisation/privatisation of Nepal Stock Exchange, establishment of Central Depository System and capacity building of Company Registrar’s Office.

Likewise, the second party for the second CFG project component would provide support for the establishment of a National Judicial Academy, Legal Information Centre, Secured Transaction Registry and a Commercial Bench, including the setting up of Dispute Resolution Mechanisms.

The government had reached an agreement with the ADB in December 2000 for the implementation of the US$ 10 million-plus CFG Project. With the latest selection, the protracted full-fledged implementation of the CFG project is likely to kick off early next fiscal year that begins on July 17. The project is expected to be completed by December 2004.