Brief News

Paddy Production Projected to Increase by 7 percent
Nepali farmers are expected to harvest 5.48 million tons of paddy this fiscal year, up 7 percent from 5.13 million tons last year. It has been estimated that the paddy harvest will produce around 3.52 million tonnes of rice after milling. Nepal requires 4 million tonnes of rice annually to feed its population, and there could be a deficit of 480,000 tonnes this fiscal year, according to a report published by the Ministry of Agriculture and Livestock development. Generally, rice imported from India covers this shortfall.

In FY 2021/22, the country’s paddy harvest dropped 8.74 percent to 5.13 million tons due to unseasonal October rainfall. Nepal recorded a historic high paddy harvest of 5.62 million tons in FY 2020/21.

ADB’s USD 200 million for education and women’s welfare
The government and the Asian Development Bank (ADB) have signed a concessional loan agreement of USD 200 million (Rs. 26.51 billion). Issuing a press statement, the Ministry of Finance said that the fund will be utilized for supporting the first five years of the School Education Sector Plan (2022–2030) and a Grant Agreement of USD 12 million to implement the Strengthening Systems to Protect and Uplift Women Project.

“The project will benefit survivors of gender-based violence (GBV) across Madhesh, Lumbini, and Sudurpaschchim provinces through the establishment of long-term rehabilitation centers, development of survivor-friendly facilities for the women, children and senior citizen service centers within selected districts and area police offices and strengthening of survivor-friendly services in these provinces,” reads the statement. The project will also build a new national long-term rehabilitation center in Bhaktapur.

Govt Allows Banks to Continue Count Local Governments’ Funds in Deposits 
The government has allowed banks to consider the majority of reserves funds of local government as bank deposits till the end of the current fiscal year offering a much-needed respite to the banks and financial institutions (BFIs) stricken by the shortage of investible liquidity.

In December 2021, the government allowed commercial banks to count up to 80 percent of the reserve funds of the local governments deposited in commercial banks as deposits till the end of the last fiscal year 2021/22. Earlier, banks could count only 50 percent of such funds as deposits.

In September this year, the deadline for counting such funds as deposits was extended till mid-January 2023. The measure helped commercial banks to keep their credit-to-deposit (CD) ratio to the statutory limit of 90 percent. But with the approaching due date for taxpayers to clear their tax dues, bankers were concerned that a huge amount of money would go to government coffers as taxes and that the severe shortage of liquidity would again grip the banking system.

Nepal Bank and NIFRA Submit Action Plan to work as hedging Facility Provider 
Two banks have submitted proposals to provide hedging facilities. Nepal Bank and Nepal Infrastructure Bank (NIFRA) have submitted a proposal to the Ministry of Finance to provide hedging facilities.

The Finance Ministry on the first week of December published a notice calling government-owned commercial banks and infrastructure development banks that want to work as hedging facilities providers to submit commercial action plans.

Ramesh Kumar KC, Chief of the Financial Sector Management and Institutional Coordination Division of the Ministry of Finance, said that only two banks submitted proposals.

After evaluating the proposals of the two banks, the government will appoint one of the banks to provide a hedging facility.
Rule 6 of the Hedging Regulations, 2079 stipulates that infrastructure development banks or commercial banks that are fully or partially invested by the government have to submit a proposal to the ministry along with their business plan.

The government published the Hedging Regulation 2079 in the Nepal Gazette in the second week of September. The regulation was endorsed by the Cabinet on July 6. With the new regulation, the government is going to provide hedging facilities for six different types of projects. Now hedging facilities will be given for health institutions, educational institutes, agriculture, tourism, and IT sector companies as well as industries and urban development infrastructures with more than Rs 2 billion investment.

DoED Floats Tenders for Study of 3 Hydropower Projects
The Department of Electricity Development (DoED) has floated tenders for feasibility and environmental impact assessment (EIA) studies of three hydropower projects. The department has issued tenders for the study of the Manahari Multipurpose Project, Madi Siti Hydroelectric Project, and Syarkhola Hydroelectric Project.

According to the DoED, applications can be submitted till January 5, 2023. The company that gets the contract will have to complete the study in a year. An Environmental Impact Assessment (EIA) report should also be prepared along with the feasibility study.

Suryajyoti Life Insurance Commences Operations
In the first successful merger between life insurance companies in Nepal, Surya Life Insurance and Jyoti Life Insurance started a unified business on December 22 as the Suryajyoti Life Insurance Company.

After the Nepal Insurance Authority hiked the paid-up capital requirement for life insurance companies to Rs 5 billion and non-life insurance to Rs 2 billion in 2021, Surya Life and Jyoti Life decided to go for a merger in the last week of June. The new entity Suryajyoti has a paid-up capital of Rs 4.54 billion.

Nepal Telecom Announces 40 percent Cash Dividend
Nepal Telecom has announced a 40 percent dividend to its shareholders. The meeting of the company’s board of directors on December 21 proposed to distribute a 40 percent dividend to the shareholders from the profits of the last fiscal year. Unlike last fiscal year, Nepal Telecom has announced a 40 percent cash dividend this time. Nepal Telecom had given a 20 percent cash dividend and 20 percent bonus share in the last year.

Govt Introduces Trade Logistics Policy 2022
In a bid to reduce the costs for the country’s internal and external trade, the government has endorsed the Trade Logistics Policy 2022.

According to Narayan Prasad Regmi, Spokesperson of the Ministry of Industry, Commerce, and Supplies (MoICS), the policy has been aimed at building trade-related infrastructure and will help to reduce the trading costs of entrepreneurs.

The new policy has incorporated three objectives and 13 strategies related to the development of trade-related infrastructure, service, and good governance. The policy has envisioned developing Nepal as an economic corridor through the development of various transport networks. For effective implementation of the policy, a 14-member task force has been formed under the MoICS secretary.

The policy aims at developing and operating trade-related infrastructure in an integrated way. To facilitate domestic and foreign investment to build such infrastructure, coordination with stakeholders to improve the quality of trade infrastructure, capacity building of the service providers, increase access of micro, small and medium industries in trade logistics, use of innovative technologies to enhance supply chain and development of a master plan for construction of infrastructure for integrated trading system.

JICA to invest USD 10 million in Dolma Impact Fund
Japan International Cooperation Agency (JICA) will invest Rs 1.32 billion (US$10 million) in the private equity investment fund Dolma Impact Fund (DIF). This is JICA’s first investment in the private sector in Nepal.

An investment agreement has been signed between Dolma Fund Management and JICA. JICA’s investment will primarily be used in private sector-promoted healthcare, information/digital technology and renewable energy companies in Nepal.

JICA has invested in co-financing with the Netherlands’ Entrepreneurship Development Bank FMO, the UK Government’s Development Bank, the British International Investment Bank, the Sweden Fund, the Swedish Government’s Development Finance Institute and the Development Finance Commission of India. US government.

Banks’ Margin Loans stood at Rs 59.91 billion
Commercial banks’ exposure to margin lending stood at Rs 59.91 billion in the first four months of the current fiscal year. The margin loans of 26 commercial banks decreased by Rs 436 million or 0.72 percent in Kartik (mid-October to mid-November) compared to Ashoj (mid-September to mid-October).
Banks have given margin loans worth Rs 60.34 billion Ashoj (mid-September to mid-October), Rs 60.31 billion in Bhadra (mid-August to mid-September), and Rs 61.56 billion in Shrawan (mid-July to mid-August).

As per Nepal Rastra Bank (NRB) data, the margin loans of 8 commercial banks have increased in Kartik. The margin loans of Rastriya Banijya Bank, Nabil Bank, Nepal Investment Bank, Kumari Bank, Laxmi Bank, Siddhartha Bank, Agriculture Development Bank, and NMB Bank have increased in Kartik.
As of mid-November, Nabil Bank’s exposure to margin loans is the highest among the Nepali commercial banks, followed by Global IME Bank and Rastriya Banijya Bank.

The margin loans of Nabil, Global IME, and Rastriya Banijya Bank stood at Rs 6.79 billion, Rs 4.97 billion, and Rs 4.53 billion respectively.

South Korea to Employ 40,000 Nepalis in 2023
South Korea has decided to take additional 40,000 Nepali workers for jobs in the country in 2023.

According to Dandaraj Ghimire, Spokesperson of the Ministry of Labor, Employment and Social Security, the Korean government will be taking the workers under the Employment Permit System (EPS). As of now, the country has permitted 69,000 workers on its land under the EPS system. “They have agreed to increase the number to 110,000 in the next one year,” he said.

South Korea is one of the lucrative destinations for Nepali migrant workers. 7,000-8,000 Nepali workers every year have gone to the east Asian country between 2016 and 2019. However, due to the Covid-19 pandemic, there was a sharp fall in intake to 955 workers in 2020 and 389 in 2021.

NRB ask MFIs to publish base rate on monthly basis Microfinance financial institutions (MFIs) now have to publish the base rate on monthly basis. Issuing a directive on Wednesday, the Nepal Rastra Bank announced this provision in accordance with the first quarterly review of the monetary policy.

As per NRB directives, MFIs have to publish their base rate on their website from Magh. Previously, MFIs used to submit the base rate to the central bank only.

EIA of Sunkoshi-3 Hydropower Project Receives Govt Clearance
With the approval of the Environmental Impact Assessment (EIA) report by the Ministry of Forests and Environment, the deck has been cleared for the construction of the Sunkoshi-3 Hydropower Project.

Nepal and Bangladesh during the energy secretary-level meeting in the third week of August had agreed to finalize the investment and construction modality of the Sunkoshi-3 hydropower project. Nepal Electricity Authority and Bangladesh Power Development Board agreed to establish a joint company to advance Sunkoshi-3.

The proposed project will spread over four districts – Ramechhap, Sindhuli, Sindhupalchowk and Kavrepalanchowk. According to the feasibility study report, the project will cost an estimated Rs 159.72 billion. The project is scheduled to start construction in 2025 so as to be completed in 2031.

Chaudhary’s Firm Buys Majority stake in Union Bank of Colombo
Binod Chaudhary, the only Forbes billionaire from Nepal, has purchased a 71 percent stake in Union Bank of Colombo. Chaudhary’s private equity firm CG Capital Partners Global Pvt Ltd and Culture Financial Holdings Pvt Ltd which holds a major share in Union Bank recently signed an ownership transfer agreement.

“The major shareholder of Union Bank of Colombo PLC has entered into a share sale and purchase agreement with a private equity fund owned by Nepal’s CG Corp Global controlled by billionaire Binod Chaudhary to sell its entire stake in the bank,” reported Daily Mirror, a newspaper from Sri Lanka.

According to Daily Mirror, a stock market filing by Union Bank said the sole shareholder of Culture Financial Holdings Pte Ltd., TPG Asia VI SF Pte Ltd. has entered into a share sale and purchase agreement for the sale of the entirety of the shares held by TPG Asia VI SF Ptd. Ltd. in Culture Financial Holdings Ltd. to CG Capital Partner Global Pte. Ltd. Culture Financial Holdings owns 70.84 percent of Union Bank.

Nepal to Sign ASAs with Rwanda and Switzerland
Nepal is close to signing air service agreements (ASAs) with Rwanda and Switzerland to operate flights connecting the respective countries.

Rwanda will be the second African country after Egypt to sign an air service agreement (ASA) with Nepal. Switzerland wants to sign an ASA as Swiss Air is interested in flying to Nepal, according to Tourism Ministry officials.

While the United States has also sent a formal proposal to sign an ASA, Nepal may sign ASAs with similarly landlocked Rwanda and Switzerland first to strengthen tourism and trade ties. According to Tourism Ministry official Mukesh Dangol a draft of the ASA had been sent to the Finance Ministry for its go-ahead. “After we get the green light from the Finance Ministry, the draft will go to the Law Ministry and finally to the Cabinet,” he said.

NIFRA, IFC sign MoU for PPP Project Development
Nepal Infrastructure Bank (NIFRA) and International Finance Corporation (IFC) signed a memorandum of understanding (MoU) on Friday for the development of infrastructure projects in Public Private Partnership (PPP) modality in Nepal. NIFRA CEO Ram Krishna Khatiwada and Thomas Lubeck, Manager, Asia Pacific PPP Transaction Advisory Services of IFC signed the MoU on behalf of their respective agencies.

As part of the MoU, NIFRA and IFC will collaborate on accelerating the pace of investment in the infrastructure sector by bridging the gap in financial and technical resources required for the country’s infrastructure development. IFC will support NIFRA in project identification and screening; preliminary assessment of the identified projects and project-specific structuring and bidding assistance in addition to capacity building of the public and the private sector.

NPC Devises New Standards to Determine NPPs
The National Planning Commission (NPC) has devised new standards to determine national priority projects (NPPs). Under the new arrangement, the Ministry of Forest and Environment has a reduced role in considering whether specific projects fall under NPP.

As per the Standard on Determining National Priority Projects 2022, it is the responsibility of the NPC to determine whether specific projects recommended by the provincial governments and local governments are NPPs.

A project that has its detailed project report (DPR) prepared, has secured a guarantee of resource availability and falls under the scope of the national priority as per the existing periodic plan, can be categorized as an NPP.

Likewise, the new standard has also mandated that additional criteria such as completion of environmental impact assessment (EIA) or initial environmental examination (IEE) and secretary-level decisions of categorizing the project as a national priority are also met.

A national priority development project receives approval to use the forest area and such a project can also conduct mining, process, and sell the mining materials. As per the new standard, both government and private sector projects can be categorized as NPPs.

The NPC is the recommending body in the case of projects which has been categorized as National Priority Projects-1 or National Priority Projects-2 by the Medium Term Expenditure Framework, a three-yearly expenditure projection, and the Annual Development Program of the government.

Nepse and CDSC Announce 100 percent Dividends
Nepal Stock Exchange (NEPSE) and CDS and Clearing Limited have decided to distribute a 100 percent cash dividend to their shareholders. The board meeting of NEPSE held on December 21 and CDSC board meeting on December 20 decided to give a 100 percent dividend from the profit earned in the last fiscal year.

The government owns 58.66 percent, Nepal Rastra Bank 14.60 percent, Employees Provident Fund 10 percent, and Rastriya Banijya Bank 6.4 percent stake in Nepse.

NRB establishes Money Laundering Prevention Supervision Department.
At a time when a global anti-money laundering body currently reviewing Nepal’s AML regime, Nepal Rastra Bank has decided to establish a separate department for effective supervision of money laundering activities. The central bank has issued a notice stating that it has established Money Laundering Prevention Supervision Department.

Currently, the central bank has Financial Intelligence Unit (FIU) which receives and collects reports on suspicious and prescribed threshold financial transactions and other information relevant to money laundering and terrorist activities financing from government agencies, financial institutions, and non-financial institutions. The new department will start working on January 15, 2023.

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