New FM vows financial institutions strengthening

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KATHMANDU, June 12 : Dr Prakash Chandra Lohani, after his appointment as a new finance minister today expressed commitment to strengthen financial institutions to safeguard public deposits and investments.

"The government would discourage the attitude of misusing funds collected from the public," he said while giving necessary instructions to the ministry officials at the ministry today.

Minister Lohani expressed the views while disclosing his eleven point economic and financial agenda today.

"The major focus would be on balancing and consolidating the fiscal and monetary policies for better productivity," Dr Lohani said, adding that all the measures would ultimately aim at maintaining fiscal discipline.

Effective management of government expenditures, devising suitable mechanism to check the efficiency of state-owned enterprises and creating conducive environment to economic revival would be other major concerns, he said.

Several aspects of privatisation would be reviewed, he said assuring that all the decisions related to the financial matters would be made transparent. "This will help in maintaining fiscal discipline," he said.

His economic agenda also includes encouraging the private sector for national investment. "The avenues of employment generation would be opened and suitable strategies for uplifting economic and social status would be adopted," he said.

During the programme, Dr Tilak Rawal, Governor of Nepal Rastra Bank, Bhanu Prasad Acharya, Secretary at the Ministry of Finance appraised the new Minister of the ongoing activities in their respective institutions.

"We have recently initiated some measures to ensure better monitoring capacity of the central bank," said Dr Rawal, adding that the central bank believes that the bad intention of the banking sector would be curbed with the implementation of the measures.

Similarly, Finance secretary Acharya said that the ministry was busy with preparing the budget for the next fiscal year. "At this crucial hour the minister’s instructions would be beneficial for the budget formulation," he said.

NIDC to undertake reforms

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KATHMANDU, June 12 : Nepal Industrial Development Corporation (NIDC) is considering undertaking sweeping reforms and internal restructuring to convert the loss-making enterprises into profitable ventures.

Officials of the entity, which presently has a negative net worth with an accumulated loss of Rs 690 million, has claimed to take the state-owned financial institution into operating profit from the fiscal year 2003/04.

"No operating losses would be incurred during the current fiscal year (which ends mid-July 2003). We would go into profit from the next fiscal year," asserted officials of the NIDC today.

NIDC officials made such a claim at a press conference organised in the capital. The meet was held to brief media personnel on the current state of the public enterprise and the planned course of future action.

The reforms have been planned in the context of stiff competition that NIDC is presently facing from various quarters, including the internal insufficiency of capital and the need for more investment.

During the occasion, officials said that efforts are being made to convert the loss-making branches of the state-entity in four different development regions into profit centres and close down those that perennially incur losses.

Officials of the entity, which has been incurring losses for over six years now, claimed that greater emphasis laid on debt recovery presently could pave way for profitable business opportunities in the future.

Stating that debt recovery during the period mid-August 2002 to mid-May 2003 touched Rs 120 million, officials informed that the same is expected to go as high as to Rs 180 million in the corresponding period next year.

Furthermore, a cut down in the size of staff through a golden handshake initiated some time back has increased the operational efficiency of the entity, stated officials. As of present, there are 180 employees, down from the earlier 224.

NIDC is even contemplating to approach various domestic and international agencies for loan investment and is further mulling to obtain permission of Nepal Rastra Bank for the mobilisation of scattered capital from the financial market.

NIDC, since its establishment almost 43 years ago, has mobilised over Rs 14.5 billion in over 1500 small, medium and large-scale industries, both state-owned and private sector managed.

As of present, NIDC’s liabilities stand at Rs 1.8 billion. The central bank has a stake of Rs 770 million, while institutional depositors and the government have Rs 520 million and Rs 510 million respectively.

NRB’s monitoring capacity weak: Governor

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KATHMANDU, June 12 : Governor of Nepal Rastra Bank (NRB), Dr Tilak Rawal today said that the central bank has failed to enhance its monitoring capacity, while the number of commercial banks has soared sharply in recent years.

"The NRB’s technical capacity enhancement has been on a lower side as compared to the rate with which private players emerged in the field," he said. According to him, lack of adequate manpower was the prime reason behind the central bank’s failure in carrying out evaluation and monitoring at a desired level.

"And such constraint is apparent in overall operation of the NRB," he said, further stating that the problem could be resolved by tying up the work with professionals active in the private sector.

Dr Rawal said this while speaking at a workshop on "Asset-Liability Management" which kicked off in the capital today. The workshop is organised by Megha Ace Consultancy and will continue for four days.

Moreover, highlighting the attitude of the banking sector, he said that commercial banks are unnecessarily disturbed by the NRB’s presence and activities. "They tend to get disturbed even when the central bank issues minor directives. But these are issued to maintain sound financial health and ensure fair competitive environment in the sector," he said.

Referring to the country’s most likely accession to the World Trade Organisation (WTO), he said that it would bring forth more challenges to the banking sector. "Globalisation and liberalisation have brought challenges along with opportunities. The banks need to increase their competitiveness to face these challenges," he said.

Dr Rawal further asked the bankers to evaluate their asset and liabilities and confine their risks within an acceptable level. "It is high time for commercial banks to pursue such acts," he said.

Referring to problems seen in the financial sector in India, he said that erosion of financial base has become more common in southern neighbour as well. "But owing to higher economic growth rate there, the government there can afford to inject capital and revive them, while we are not in such condition," he stated.

"Hence, the banks and other financial institutions here must limit their risks and increase competitiveness," he said. Referring to the financial sector reform programme, the governor further said that the central bank would commence reforms in Agricultural Development Bank (ADB/N) and Nepal Industrial Development Corporation (NIDC) in the second phase of the programme.

Speaking on the occasion, Poonam Kumar, Managing Director of Ace Consultancy said that the financial sector is facing serious challenges across the globe in recent time. "Good governance has become the major issue in the sector," she said, further stressing on a need to ensure transparency in the sector.

"Also these are required to focus more on liability management and minimise risks," she added.

Among others, Santosh Gharti, executive director of the NRB too shared his views during the inaugural session of the workshop. The workshop will train banking officials and officers of the central bank in asset-liability management.

Industrial exports from Makawanpur plummet

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HETAUDA, June 12 : Largely driven by the economic downturn, the export of industrial products of Makawanpur district has dropped by almost 12 per cent during first nine months of the current fiscal year against the corresponding period last year.

While the industrial goods exported during first nine months of the current fiscal year valued around Rs 964.35 million, the export value in the first nine months of last fiscal year was over Rs 1.07 billion.

The whopping downfall is caused by gloomy economy and also tariff and non-tariff barriers among others imposed by the Indian government, according to Madhav Risal, an official of Makawanpur Chamber of Commerce and Industry.

The slipping export from the district clearly reflects the export quantity of leading industries of the country that are based at the district. Colgate Palmolive, a leading exporting company of the district covering almost 58 per cent of the district’s total export also suffered. While Colgate Palmolive’s export during the first nine months slipped by almost 13.66 per cent, export of Nepal Lever Ltd (NLL), another leading joint venture based at Hetauda, dropped by 3 per cent in the same period.

Hetauda based industries including the two giants, Colgate Palmolive and NLL contribute almost 23 per cent of overall export of industrial goods from the country.

Movement of tractors banned during rainy season

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PALPA, June 12 : Thirteen of the rural roads in the district will find no tractors plying on them for three months, starting July 6. The ban on operating tractors in these roads is being imposed to protect the roads from possible damage caused by large wheels of tractors during the rainy season.

According to District Development Committee (DDC) Palpa, the periodic ban was imposed in order to protect the roads constructed with active participation and contribution of millions of rupees by the locals. It was also necessary to keep the public and food transporting vehicles operating, the DDC added.

An all-party meeting including local administration, former people’s representatives took the decision.

The ban on tractors during the rainy season is, however, not new to the people in the district. The ban is being imposed for the past three years. The district has about 213 kilometres of motorable roads in the rural areas.

Employees demand to rescue RBB

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KATHMANDU, June 12 : Employees of the Rastriya Banijya Bank (RBB) have demanded progressive and revolutionary steps in order to bailout the largest commercial bank of the country from its present financial crisis.

This was made public during a press meet held here today to outline the conclusions and decisions reached in a two-day national convention of RBB Employees’ Association that ended Sunday.

The Association’s General Secretary Narayan Subedi revealed that one of the main points raised at the convention was the effectiveness of the foreign team appointed for RBB management. He said that the convention decided to ask the team to make its last four and half months’ activities public.

The employees also demanded the details of the management contract, he said. "It is the tax payer’s money that they will be using and everyone has a right to know the details like remuneration of the team members," he said.

The convention has also decided to demand the management form a clear organisational structure for the designation and appointment of employees to the various branches and other offices of the Bank.

Subedi further said that the convention also agreed not to accept any VSR (Voluntary Retirement Schemes) that would put pressure on the staff to resign. "But that doesn’t mean we will stop people who want to resign on their free will," Subedi added.

Meanwhile, a press release issued today by the Association lists out some of suggestions made during the convention for pulling RSS out of troubles. The suggestions would be forwarded to the management team, the release states.

A more realistic policy from the Nepal Rastra Bank for RBB; a proper reward and punishment system; and effective law for loan recovery were said to be necessary for any progress of RBB.

Meanwhile, bad loans, corruption and the flaws present in the bank policy and operational system were accepted as the reasons for RBB’s financial crisis.

The convention has also elected a new executive committee headed by Shankar Kumar Rayamajhi.

NFC to open new depot at Arughat

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GORKHA, June 12 : With an aim to supply food to the northern part of the district, Nepal Food Corporation (NFC) is going to open a new food depot at Arughat. The locals of this area have faced food shortage after closure of both depots at Sidribas and Machhikhola, citing security reasons.

"We couldn’t resume the previous depots because nobody bid for the tender due to the fear of the Maoists and low transportation cost of the corporation", said Madhav Prasad Ojha, chief district officer. He added that new depot will be set up at Arughat as the alternative means of food supply to the locals.

District administration office had suggested the NFC to set up a new food depot at Arughat, since it was almost impossible for the public to fetch food from the headquarters and there was no possibility to resume the previous depots at Sirdibas and Machhikhola.

Previously the corporation had decided to supply food from the district headquarters after the closure of both the depots. However, it couldn’t be continued as it was impractical and the locals didn’t come to purchase foodstuff all the way to the district headquarters.

In the absence of the food depots, people of 13 Village Development Committees are facing food shortage.

Last year, the depots were compelled to shut down even before distributing foodstuff due to insecurity and thereafter the employees of both the depots were called back to the headquarters.

The NFC has decided to send 200 quintals of rice to Arughat depot and depute the employees of the closed depots for the purpose.

However, the NFC Gorkha branch is unaware of the decision taken last week by the central office to open a depot at Arughat.

"Till now the head office has not informed us about opening the new depot at Arughat", said Ambika Ghimire, acting chief of the branch.