VOL. 05, NO. 21, May 18, 2012 (Jestha 05, 2069)

Banking and financial institutions (BFIs) in Nepal are facing problems due to high number of financial institutions in the country.

Governor of the Nepal Rastra Bank (NRB), Yubaraj Khatiwada, at the formal inauguration of Kailash Bikash Bank stressed the need to expand the banking sector without increasing the number of BFIs.

Nepal Rastra Bank (NRB) has also been promoting and encouraging banks to undergo merger. Due to which, the banks that are affected by the realty sector investment are undergoing merger to recover the losses. Not only those banks, but other banks are also choosing the merger option to gain a competitive edge.

The governor also stressed that banks are gaining stability due to various steps taken by NRB like monitoring the effectiveness while opening new banks, discouraging impractical upgrades of the BFIs and others.

He also said that the strict stance taken by NRB in opening branches has helped to increase the reach of BFIs in the rural areas.

Although banks have not been able to remain free from credit overheating, but in general, the banks are heading towards a favorable situation, said the governor.

Nepal Bankers’ Association vice-president Rajan Singh Bhandari said that banks are ready to increase their investment in the agricultural sector, but he added that there is a need to make investment environment more favorable.

At the event, Manoj Goyal, President, Development Bankers Association of Nepal, said that banks should not be compelled to go public by issuing shares in the current uncertain political environment.

Rajendra Man Shakya, president of Nepal Finance Companies Association, said that if any institution is found being involved in any wrong activity then action should be taken against them as per the law.

A special general meeting of Global Bank has given the green signal to the merger plan of the bank with IME Financial Institution and Lord Buddha Finance.

After the merger, the bank will be named Global IME bank and will have a paid up capital of more than NRs. 2.2 billion up from previous NRs. 1.62 billion and it will operate from 58 branches.

Pashupati Murarka, vice-president of FNCCI.

The continuous bandh in the far west region for more than two weeks and bandh in various other areas are causing serious negative impacts in the economic sector. At a time when the whole nation is united in discussions for the economic development, it is obvious that the investors get disheartened by the continuous and gripping bandhs. These strikes are rendering our attempts to bring foreign investments futile.

Due to bandhs, productivity has decreased in the industrial sector. Business sector has also not been able to transport and sell goods and services freely. In the bandh, we have to bear the salary of the employees and the workers and banks also don’t give us discounts in interests because there were bandhs. So, bandhs have made negative impacts in the economic sector along with hitting the daily life. As we have understood, bandh is called and supported but in our context it is forced. Even if the demands of the bandh enforcers are practical, to make any demand fulfilled by the means of bandh might make various negative impacts, so the organizers should understand that as well.

The Ministry of Tourism and Civil Aviation has renewed the operating license (Flying permit) of Yeti International for international fights.

Yeti International was established as a joint venture between Yeti Airlines (which was operating domestic flights) and Air Arabia. The company had operated various international flights from Kathmandu under the brand FlyYeti.com.

Yeti Airlines started international flights in 2064 B.S but it had to stop in 2065 B.S. The operations of the joint venture halted after Air Arabia decided to take back two aircraft without notice.

The ministry has renewed the license after four years from the closure. According to Yeti Airlines, it has already cleared all outstanding dues. Sources say Yeti can operate international flights in around a year after the renewal of license.

“Development budget has not been spent due to changing policies” Dr. Jagadish Chandra Pokharel, former Vice Chairman National Planning Commission.

Although the budget was released on time, development expenditure has been near zero. What are the reasons for this?

There are a lot of reasons. But, the lack of fixed policies is the main reason for the lack of expenditure. The other reason is that money is provided to various projects without preparations and projects are started without any homework and it leads to zero expenditure. There should be a detailed study and fixed plan even before the release of budget. If not, then most of the time will be spent in preparations and there will be no expenditures.

As the government changed in the middle, there are new ministers and the employees are left in confusion-- whether to continue with existing projects or not, which directly affects the development expenditure.

On the other side, the expenditure is also determined by contract awarding process and if the right contractor doesn’t get the right job, there will be unnecessary delay. The CIAA has also stopped haphazard spending.

The contract awarding process is also not carried out within law.

What should the government do to increase the spending?

First, the budget should be released within the stipulated time frame. Second, even if the government changes, there should be no obstruction in the implementation of the projects. Third, the unnecessary transfer of the employees after the change in government should be stopped. Fourth, cartelling should be stopped. Fourth, misuse of money in the local level should be stopped.