Tastes like HELL but Feels GOOD

So many times in our life we develop strange habits backed by some events or circumstances. Everyone have some unique habit to them developed by a series of events that occur in life. I have been here in Kathmandu for around six years now. Kathmandu is just an amazing and wonderful place. It’s a heaven and hell at the same time. It’s a beautiful dream of thousands and a nightmare for thousands. Whatever people call it, I bet it’s a great place to learn. I am not talking only about studies – it’s a lesson for life. I learned a lot from this place, especially to struggle and to always be positive in every situation. I cannot call this place a heaven throughout my life, but it’s a great teacher and I’ll always be grateful for this place.

“Yo khaldo ma jati paisa haleni sakinxa” (No matter how much money you pour in, it’ll always be less in Valley) is one of the common saying among people who come to Kathmandu from other parts of Nepal. And it’s true. Money always seem to be insufficient. This has helped me develop many habits that will help me a lot in the future.

I wonder how many of you like drinking black coffee without sugar in it. If you are still in Nepal, I bet no one. But that’s a taste I have been addicted to by now.

One of my weakest point – among many – is taste for coffee. Many times even when I had only Rs. 100 in my pocket to go on for some days for my food and all expenses I would go to a finest coffee shop available and have a cup of coffee. I would be willing to stay hungry for it. However, I couldn’t continue this because it had side effects. It caused weakness. Later I discovered that making coffee at home would be very economical, but again there were numerous problem. So at the end I developed a habit of drinking it black without sugar, and in time got addicted to it. Its bitterness is wonderful of tastes I had ever had. I always wondered why people going abroad develop a taste for such a bitter thing, and now I got the answer. No matter where you are, human face same type of problems. We all are same.

The taste of the coffee always reminds me of one thing. Life is harsh, life is difficult and it tastes as bitter as the coffee without sugar. But there are two ways to live a life. First, take it as something bad – always be sad about it, live a life like hell, don’t ever enjoy. Second, develop a taste for it – life is not always sweet - accept it. Learn to enjoy – whether you be happy or sad you have to face it. Let the devil see you smiling even the worst of your time. At the end of the day it’ll make a great difference in your life and the life of those around you. Whenever I drink black coffee without sugar, it inspires me to look into things more positively. This is a great lesson for life which will help me be cool and stay composed in many turnings of life. I will always be drinking black coffee without sugar. It tastes like hell but feels so good.

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Beauty of Future!

While I walk in the street, my friends and relatives complain that I walk like I am going to beat someone. I guess the saying, “Walk as if you rule the world” made a deep impact on me from my very childhood. Not only that, I love observing people, their body language, their expressions and I also love to make guess of the situation that they might be in the current point of time. If you have never done this give it a try. Its so much fun.

Last Thursday while I was returning from gym at around 6:30 pm, on my way I saw a couple sitting in the steps of a closed shutter. Couple as in a boy and a girl. The girl was carrying a baby, was saying something and her face were covered in tears. Though it was dark, I managed to look into her face with the help of the light of vehicles passing by. The boy was listening keenly. They were sitting as close as possible and at the same time, not trying to touch each other. I could look into them for only a few seconds. I couldn't stand there and intervene their privacy.

This made me think, its not only me but everyone has some hidden story (secrets) in their life. This brought another thought in my mind, “all human being go through similar circumstances in their life. No matter how different we all are – we all are same”.

By the way they were seated, I made following guesses about their relation:

• They might have been in relation when they were in college and or school. All of a sudden, the girl was proposed to be married by her family. The boy was not independent enough and they parted their ways.
• Both of them loved each other but were too shy to express. They found out about the fact after the girls marriage. And now, nothing could be done.
• Both loved each other, were independent and in a position to lead their independent life. However, due to any of the social issue that are prevalent in Nepal like caste and race system, they couldn't be together.
• Or any of the reason you might find appropriate.

But one thing I am sure of them was they were not relatives (brothers - sisters). It seemed that the boy tried to move on and is no longer bind by that relation. Else, he would have at least wiped off her tears with his hand or provided a handkerchief (to wipe off her tears) or wrap his arms around the girl to give her some comfort. His body language would not have shown resistance. And in regards to the girl, I don’t think she was also so sure whether what she was doing is wright or wrong.

The beauty of future is - it’s so much subjective. One seconds of difference in making decision, a yes and/or no few seconds before and/or few seconds after can create an entirely different future. Past is past. It should only make us strong or make us wiser or both. Past experience help in future decision making. If only they had made a right decision in the past, which may be accepting their love in any circumstances and living it or letting each other go they would have lived a different life.

No matter what you do, no matter where you are, remember to make right choice and choose a right and different future world of yours. At the end, choice that we make throughout our life is the only thing that will rise us high or shatter us completely. The beauty of future is - it is subjective and a single decision make a world of a difference. Life is too short to be small. Make it big, choose right.

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नया बाटो

बेमत्लब एकानतमा भौतारीएको मन लिई

कुनै गल्लि सुन्यतामा पाईला यो चाल्दै छु

सपनिमा-बिपनिमा कहिँ पनि मेल नखाने

ढुङ्गा-माटो-भित्तोलाई आफ्नो साथि ठान्दै छु॥

नकाब भित्र छेलिएको वर्तमानको अन्धकार

छिया-छिया पारेर भित्र हेर्न खोज्दै छु

पट्टि कालो लाइएको तराजुको मुर्त मुनि

आफ्नो पट्टि खोलेर सबै कुरा हेर्दै छु॥

ऐना जस्ता छर्लङ्ग बिगतका सबैकुरा

ऐना जस्तै झर्याम-झुरुम भत्किएको देख्दै छु

पुराना दाग छेउ फेरि अर्को चिरा पारि

चित्कारमा रमाउने अनुबार ति चिन्दै छु॥

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बहाना

Project गर्ने बाहानामा laptop कुर्न पाएँ

कुर्दा-कुर्दै एउटा novel पढ्न पुरै पाएँ।।

साथमा थिए संगि गफ-गाफ गर्दे

तिनिहरुको गफ पनि सुन्न पुरै पाएँ।।

चप्पल किन्छन्, जुत्ता किन्छन्, पालिस के-के अरे

कहा पाउछ-कस्तो पाउछ जान्न पुरै पाएँ।।

फोटो खिच्छन्, facebook हेर्छन्, के-के गर्छन्-गर्छन्

मलाई हेर्दै गिज्यएको थाहा पुरै पाएँ।।

Twitter, skipe, mig, सबै चलाउँछन् अरे

किन confuse हँदारैछन् proof पुरै पाएँ।।

गफै-गफमा भन्दै थिए नितेस किन यस्तो

मेरो नाम किन लिए पत्तो पुरै पाएँ।।

Project गर्छु भनेर libraryमा कुर्दा।

Laptop बिहेक अरुकुरा मैले पुरै पाएँ।।

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प्रतिक्ष्या

आउँछौ तिमी भनी ढोका हेरी रहेँ

छट्पट्टीएको मनलाई मैले बेरी रहेँ।।

धेरै अबेर भई सक्यो, अत्तो-पत्तो छैन

छल्किएको मनलाई मैले सोरी रहेँ।।

भेट्छु मलाइ भन्ने बाचा तिम्रो थियो

त्यस्कै आशमा धेरैबेर तिमीलाई पर्खी रहेँ।।

Message छ कि कहिँ-कतै facebookमा तिम्रो

Net खोलि mobile मा मैले हेरी रहेँ।।

‘Network busy’ mobile मा कती try गर्ने

तिम्रा ती message हेरी सास भरी रहेँ।।

Traffic जाम मा फस्यौ कि कहीँ तिमी प्रिए

तिम्रै तस्बिर आखाबरि मैले कोरी रहेँ।।

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Is Remittance Really Good for Nepal?

I had been to Jhapa, my birthplace, to celebrate my annual festive-vacation for a month. Jhapa, it’s always awesome, lovely and growing. I just love to be there. My home at Jhapa is close to the border with India. The transit point is Kakarvitta, which is one of the largest port of Nepal. One fine morning I got chance to go to the entry point. I saw many Indians coming by bicycle to Nepal. I asked one of the locals, "who are they? where are they going?" He said, “All of our brother – sisters, sons – daughters, dad – mom, uncles – aunts are abroad. We need someone to work in fields and factories in our country, right? They are labors. They help to run our economy”. I was shocked. There were almost a hundred people. They come to Nepal everyday for employment. They reside in India, consume in India and come to Nepal for work. And these many people were coming only through one entry point. We have free border of 1690 km (Wikipedia). Guess the statistics for yourself.

I was already concerned about the impact of foreign employment in Nepal when I heard a program featuring the families of foreign employed in Nepal in BBC. Most of the families that were featured were devastated due to absence of family head. Children were following wrong path and most of the income was spent in luxury items. They don’t aid to economic development rather increase BOP deficit because all of those items are imported. Now, this situation of Jhapa forced me to analyzing the impact of foreign employment in my locality, which would in term reflect the status of the country as a whole.

While I was shopping for goods, there was a product whose marked price was INR 10 i.e. NPR 16 but the shopkeeper had priced it NPR 20. NPR 4 more than its maximum retail price - I was bargaining.

While I was demanding for fair price a lady came to the shop and purchased same product at NPR 20 without a word. The shopkeeper laughed at me and said, “If I mark it NPR 22, I will be able to sell it faster……… Her husband is abroad to earn as well………… So people like her receive money without any labor. It’s free………. People of Nepal don’t know the value of money. They want to show their friends that they can make larger expenses then those around them.” And he is true, the price is inflated far too above the marked price and people are paying for it because they receive money without any cost. They don’t respect money, they have no idea how difficult it is to earn a penny,  and don’t know how to use it. As for me, I never receive money for free so I couldn’t purchase the product.

Next day I went to India, got same product at INR 9 (whose marked price was INR 10). I got INR 1 discount at retail purchase. Not only me, its a trend in border areas of Nepal to purchase goods from India. However, it’s not because people bother about the price of the product or quality. They perceive that goods purchased in India is better in terms of price and quality. They are right to some extent, only to some extent. Moreover, to purchase goods from India is a culture now. The money that comes to Nepal through remittance is not spent in home country or any home product. In fact we don't have much as home prouct.

Concretization is another issue that has come along with the remittance flow. Concretization: converting cultivatable land to plots for residential housing. On top of that, because there are no youth in the villages, most of the land that were cultivated in the past are barren. We are driving ourselves to food crisis. We are also creating a generation that know how to purchase but not how to produce. Most of the under aged don’t go to school as well. Its because studying is a tough task and there are abundance of job for illiterate in gulf countries.

I asked a kid in my neighbor, why aren't you going to school. His answer was shocking, “Why should I study. It’s useless.” I then asked, “Who said? What will you do for living?” “After 18 I will go to Quarter for earning.” was his simple and sincere answer. "My father and my elder brother are abroad and they earn lot of money", he added. On my quest as to how the money was utilized, he said that they made a better house, they purchased a TV, DVD player, a laptop (which is used to play games in our villages) and a motorcycle.

There are almost 15 FM stations that operate in Jhapa. The content they play as advertisements are not helping as well. The media and communication sector claim themselves to be the fourth pillar for the development of our nation but instead they are driving the nation into dark. The advertisements are all about work in gulf countries, EDV and individual focused real state (for housing). The advertisements are so convincing that it would lure anyone to follow what they say. I couldn't see any positive and sustainable impact of those advertisements in the development of our country. Especially when we are facing the crisis of human resource and the money sent from abroad is used for meeting useless expenditure rather then investing. This trend will further create a poorer, dependent and backward Nepal.

People are not going to school, the cultivable fields are barren, there are no labors for our factories and industries, people love to shop abroad, there are no youths in villages – they are empty – and no one is interested to address the problem. Not even the media and communication sector who claim to be the agent for positive social change.

Most amazingly, in the duration of a month of my stay in Jhapa, none of the FM stations ever played any news about IPO of any company, no news about any development works, there were no interviews of any entrepreneurs or businessperson or teachers, there were no adds that would request people to send their children to school, no advertisements about job vacancies in home country.......... nothing at all that would reflect that our society is prospering or that would give a hint that our society would prosper in coming future.

"Is remittance really good for Nepal?"
Remittance are always good, there's no doubt about it. They are earnings of our citizen. Its a source by which our country is running. "What are we doing with the remittance?" is the question that all of us must be asking. Until we make any effort to learn a habit of investment in productive sector and saving, and until the responsible people and sources of our society act responsibly and if this trend of using remittance to purchase luxury items, concretization or purchase from abroad continues - the impact of remittance will not be good in our country. No matter how much money we earn, we will still be poor, our country will still be undeveloped.

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Changing Future!!

The total banked population of Nepal is approximately 30%, which means that 70% of the population is stilled unbanked (the population that don’t use banks or don’t know how to use the banking facility). In spite of the workout of the central bank to inspire banks to provide banking services to larger population, the ratio of banked and unbanked population is same since five years. Its stagnant over the years. It’s not changing. This is a proof that the central bank’s effort is not sufficient to change the statistics and banks are not motivated enough to improve anything. They are indifferent about providing desired services to the public. Its seems they are just focused on short term profit.

Many of the analyst (from Nepal) claim that constant ratio of unbanked population is due to illiteracy and the poverty (of population that are unbanked). But the statistics from other countries with similar economic status suggest different. The proof that illiteracy and poverty cannot hinder the usage and development of the banking service is Kenya. The economic and literacy status of Kenya is similar – not equally good as – to ours. Still the number of banked population has surged over the years. And, to this date, almost all of the population use the banking system for almost all of their transaction of the fund. Kenya has seen the transformation in the banking usage and we too can revert the number (70% being the banked population).

ATM (Automated Teller Machine), that accepts deposit and provided withdrawal facility was developed to address the then problem - customers not being able to use the banking channel on holidays and off – office hours. The problem of working hour of banking being similar to those of other business and time needed to process the order of the customer was addressed through the machine. Since then, apart from ABBS and DBMS, major innovation targeting the customers (innovation that customers feel) has not been developed. The services the banking industry offer to the customers are same over the years. They have turned boring. There are lots of paper work to carry out a small transaction adding to the unwillingness of the customers to go to banks. On top of that, the increasing busy life style of people don’t allow them to spend their valuable time standing in queue to obtain the service anymore.

If we look around the world - statistics of banked population is stagnant almost in most part of the world. Even in USA, some research shows that the banked population is only 30%*. There may be various reasons behind this like

• unwillingness of the banks to address the market demand
• inability of the banks to offer right products or services to the public
• inability of the banks to blend with the changing technology
• inability of the central bank to provide proper guidance to the banks about their operation

However, the major reason behind stagnant (worse, decreasing) banked population may be banks not being able to shape the product to meet the life style of its customers and their products being costly (borrowing) or too cheap (deposits). In other words the major issues are, ‘wrong market promotion strategy’ or ‘inability of the banks to follow right channel of providing services at the time the customers want’.

So, what can be done to improve the banking habit of people of our country? The answer is pretty simple and obvious in this era of technology, E-Banking (system that allows customers to use banking facility via mobile network and internet).

Why?

Some of the research of Nepalese banking shows that one reason behind people not going to banks is the bank’s building and the infrastructure look too modern and sophisticated to match the living status of people. They fear to enter into banks. On the contrary, they do not fear to use the mobile (smart) phones. The Census of Nepal states that 64% percent of the population in Nepal carry mobile phone and the network access of the major companies that provide the telecom services (Nepal Telecom, Ncell and Smart Cell ) is good throughout Nepal (all 75 districts). The number of mobile using population will further increase. The transformation in the banking usage pattern in Kenya was possible due the usage of this channel (mobile banking), the easiest and most customer friendly way of banking. Not only Kenya, many of the developing and the developed economy are using the channel to diversify and widen their products and customer base. There is a good prospect of usage of this channel in Nepal too.

How?

E-banking system is simple and easy system to use. It is customer friendly. The customers, whether they use smart phones or normal phone, can use this system. For smart phones and normal phone that support applications there are applications developed to be used to access banking facility. For those phone that don’t support such applications, banking facility can be used through commands that can be sent through SMSs. Since, most of the people use compatible sets that accept such application the system can be used easily throughout Nepal. According to the census of Nepal, 2068 the literacy rate of Nepal is 76.92% so everyone that uses mobile phone can read and write. And for simplicity, the application can be made language convertible, i.e. usable in English and Nepali.

What Can be Done?

Banks can integrate their daily transaction system and e-banking channel, like they did when they introduced ATMs to support the withdrawal and deposits. Since e-banking supports the transfer of fund and payment of money through any place and time, it is more complex then just integrating ATMs. E-Banking is available 24 hours a day and throughout the year hence availability of systems and security of data is always an important issue. Any unauthorized access to data or any disturbances in systems can result in deterioration of relation with the public. Also, threats from computer viruses, frauds and terrorism are increasing. This requires considerable budget for IT development and management for fraud prevention and disaster recovery systems, which may include investment in encryption technologies, other security measures and maintaining two parallel sets of systems to ensure full time availability.

Some of the things that banks can do to prevent e-banking frauds are

• information security controls
• internal controls
• dual control: one person can make a mistake, other can find the error - the possibility of two persons making the same mistake at the same time is negligible
• control of suspicious activities: controlling the withdrawal up to some limit. If an account is dormant for years and the transaction is unexpected the account holder must be informed.

Development of e-banking acquires high-value customers and it enables the execution of time-sensitive financial transactions anywhere - anytime, provides the opportunity to strengthen relationships with existing customers and encouraging them to become loyal. E-banking helps the enhancement of the banks brand loyalty by granting customers flexible access to financial information and accounts. Also, in Nepal, ATMs don't guarantee consistency, reliability and availability. E-banking can help address this issues, offering significant potential to grow market awareness through word-of-mouth. 

How will it help?

One of the reason that people don’t go to bank is the branches and ATMs are located at some specific places and people need to separate time from their schedule to go to the banks. Like people ‘do’ shopping, they want to ‘do’ banking as well. They don’t want to go to the banks. They want a banking facility that they can use 24*7, whenever and wherever they want for any activities like shopping, transfer of fund, recharge of accounts, payment and transactions. The e-banking provides exactly what the customer wants. Hence in terms increase the customer base of the banks. Through e-banking banks can have access to remote places where the construction of the physical infrastructure like ATM or branches are not possible. In fact, at current times, there are banks that don’t have physical existence but are very popular among its customers.

*As per the article presented by Bret King, Father of modern banking, 2009.

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Candy Crush Saga going Public

What are you doing? Let me guess, playing Candy Crush???

Candy Crush, developed by the UK based company, King, is currently the most played game of the world. It is estimated that it is played 30 billion times in a month. The game can be played on iOS, Android, Facebook and the website of the company.

King has filed for a public offering in United States. The offering is to be of a multibillion-dollar value (some guesses are about $5 billion), a biggest Initial Public Offering (IPO) for years. The company has files the IPO materials confidentially, taking advantage of Jumpstart Our Business Start-Up Act, commonly known as JOBS Act. The law passed last year allows companies below $1 billion in revenue to begin the listing process in secret.

Some of the games offed by King are Candy Crush, Pet Rescue, Farm Heroes etc. While the game can be played and downloaded in free, the company offers extra lives and bonuses to help clear levels through in-game purchases. The offer starts from $ 0.99. Users of Facebook can also seek help from friends to solve the game. It is estimated that Candy Crush Sage alone brings in $ 850,016 of daily revenue which amounts to about $310 million a year.

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No Travellers Cheque (TC) Anymore!!

Previously, when you were visiting abroad to have some fun or for any purpose, you would not carry cash but purchase a travellers cheque from banks that made them available. Now, if you go to bank and ask for TC, they are going to say, 

“We are extremely sorry, they are no longer available”.

They say this because American Express Travel Related Services (AMEX) that used to sell traveller cheque (TCs) in Nepal has stopped selling those from 27 August 2013. So, banks could not provide TCs to their customers.

Does that mean you need to carry cash for such purpose? Definitely not.

The demand for the US dollar did not decrease. The demand surged and banks needed to find an alternative. To address the problem, banks launched US$ denominated International Prepaid cards in MasterCard brand and Visa Cards. Currently the prepaid cards are available through Nabil Bank Ltd., Himalayan Bank Ltd., Civil Bank Ltd. and Standard Chartered Bank Nepal Ltd. There are different cards for those visiting India and other countries of the world.

The features of the Prepaid International Remittance Card (PIRC)

• Card is Valid Worldwide except Nepal and India
• Provided against Travel Facility by Nepal Rastra Bank
• Cash Withdrawal option up to 100% of available balance
• No Interest charges
• Recharge available as per the regulations of NRB
• No need to have a bank account
• Electron/Un-embossed card accepted in ATM & POS terminals
• Can be used for Cash Advance and Retail Purchases
• Balance Enquiry Options
• Personalized Cards
• Quick Turn Around Time- Card issued within 10 to 15 Minutes
• Balance can be topped up within the card validity
• Monthly statement issued
• Easy to Apply
• e-Statement service

 The cards are issued against

• Travel Quota- As per Central Bank’s rules
• Export Account
• FCY Account
• NRB Permit/Letter
• No Objection Letter from Ministry of Education & Sports

 For Nepal and India

• As per the applicants request for use in Nepal & India
• For use in India – Limit determined as per Central Bank’s rule

Requirements

• Completed Application forms
• Passport and Confirmed Air Ticket
• Authority Letter, NRB permit, as applicable

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Changing Insurance History

For the first time in the history of Nepal, Lumbini General Insurance has issued an insurance policy worth Rs. 280 million, under the category of Agriculture and Birds Insurance on Bhadra 29, 2070 (September 14, 2013). The policy was issued to Ostrich Nepal Pvt. Ltd. It is largest insurance policy ever issued for the coverage of Agricultural Product (Birds) in Nepal. 700 ostrich were valued to be worth Rs. 280 million by Lumbini Insurance and accordingly the policy was issued. The policy is issued for six months and the premium is 2.62% of the total amount. The policy can be renewed after the duration of six months.

Ostrich Nepal Pvt. Ltd. is located in Rupandehi district and it is going to expand its branch in Dang. Currently there are more than 2000 ostrich with the company and it is helping two farmers of Rupandehi to breed Ostrich.

Though there is provision of 5% premium and 50% subsidy by the government in the premium amount, the insurance of the ostrich is currently done only by the company. Insurance company has provided deductions in the premium. The reason for unavailability of the subsidy by the government may be due to the availability of provision for insurance amounting only to maximum of 10 million. If the company could get subsidy, the revenue generated from it is expected to be more than that from all the exports of the country.

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Prepaid Remittance Card: What to Expect!!

For the management of foreign exchanges, Nepal Rastra Bank (NRB), the central bank of Nepal has proposed “Prepaid Remittance Card” which is to be issued by the remitting companies and will be used by the family members of the remitter to receive the amount remitted. However, further whatsoever about the features, function and usage of card has not yet been disclosed. And, there are all types of assumption going around.

The features the remittance card that will be issued as per the monetary policy for fiscal year 2013-2014 may be:

• Used by the beneficiary of the remitter.
• Card valid throughout Nepal.
• No need to have bank account.
• Cash withdrawal up to 100% of available balance.
• No interest charges.
• Accepted in ATM and POS terminals.
• Monthly statement issued (e statements).
• Balance enquiry option.
• Balance can be topped within card validity.
• Quick Turn Around Time- Card issued within 10 to 15 Minutes.

The benefit of the prepaid remittance card will be easy access, usability, convenience and safer than carrying cash (security). 

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Rising Non-perfroming Assets

Non-performing assets (NPA) are those assets whose interest and or installment of principal is delayed and not received before a stipulated time. An asset becomes nonperforming when it stops to generate income; whether it is interest or principle. The international standard for an asset becoming non-performing is 90 days mark beyond normal installment reception day. The same standard has been followed by Nepal Rastra Bank in Nepal. That means when loan becomes 90 days overdue or outstanding, it is said to be non- performing.

NPA has been evergreen nightmare for the banking industry around the world. Banking industry is used as measure of economic growth of any country. Effect in banking industry has a great impact in the economy of country. NPA can paralyze the entire economy; the health of banking industry is reflected by NPA. Higher the NPA, greater will be risk of banks’ failure.

Impacts of Rising NPA

Financial performance of banks and financial institutions (BFIs) is affected severely by rising NPAs; because most of the time and effort (resources) are diverted by BFIs for the recovery process. This will further impact on the business functioning because BFIs are concentrating somewhere else. Also, BFIs get scared to lend money and make less risky investment that generates less income. Rising NPA has also serious impact on perception of customers, depositors and shareholders.

Rising NPA indicates operational inefficiency (poor performance) of banking institutions as well. The effects of rising NPAs in Nepalese banks are highlighted as under:

• Focus on recovery of loan and not on major business function
• Change bank’s psychology - restrict loan to productive sectors - choose risk free investment
• Affect customer, depositors and shareholders
• Reduces profitability of the bank and affects liquidity and solvency of the bank
• Disturbs capital adequacy ratio and cost of capital
• Reduces Economic Value Addition (EVA=Net Operating Profit after tax -
• Cost of capital)
• Creates negative image of the banks
• Affects stock price of the bank

Strategies to deal with NPA

The strategy to deal NPA can be categorized as

1. Preventive Measures
2. Curative Measures

1. Preventive Measures 

• Early Warning Signals
• Proper Credit Appraisal
• Organizational Restructuring
• Other Sources of Income
• Impact of Economic Changes

2. Curative Measures

• Recovery Department
• Debt Recovery Tribunal

1. Preventive Measures

They are used while approving loans or monitoring the loan facility. They prevent an asset to turn into non-performing.

Early Warning Signals

The situation of the client’s financial position and performance, operational efficiency, management, banking transaction, external factors that affect the customers must always be monitored and early warning must be provided.

Proper credit assessment of the client must be done. It can be done by properly analyzing 6 C’s (character, capacity, capital, collateral, condition, cash flow) of customer. Also, the credit auditing and the directives and policies of the regulators and organizations should be strictly followed.

Organizational Restructuring

Organizational restructuring includes improving managerial efficiency, skills up gradation for proper assessment of credit worthiness and a change in the attitude of the banks towards legal action, which is traditionally viewed as a measure of the last resort.

Alternate Sources of Income

Alternate sources of income for banks may be commission and charges that are obtained from different activities such as bank guarantees, letter of credit, and remittance services etc. This will decrease dependency of banks in interest income and NPAs will have less impact on profitability.

Analysis of Economic Changes:

The banks should prepare watch list of clients vulnerable to becoming non performer because of adverse economic or business condition as they are exposed to these conditions.

2. Curative Measures

These are the steps taken to recover the asset once it becomes non-performing. Curative measures are medicine used in order to minimize the bad debt or recover the loan

Recovery Department

The major role of recovery department is recovering the substandard, doubtful and bad loans. It is a department within the credit department of a bank. It prepares delinquency report (report that includes clients whose installment or interest is due). It also continuously monitors delinquent client and follow up them by calling and visiting their sites, offices or home.

Debt Recovery Tribunal

Banking institutions can file a case against delinquent client in Debt Recovery Tribunal (DRT). It is however done only when there are no other ways to recover the bad asset. DRT has authority and power to give decision regarding the case. DRT is established under Bank and Financial Institution Debt Recovery Act, 2058 by Nepal Government. All the procedures regarding the legal processing is governed by this act itself.

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Human Resource issues

The banking industry is the most stable and glamorous industry of Nepal. Most of the graduates tend to pursue their career in Banking industry. This may be due to the stability, compensation and facilities and the respect that those working in banking industry get in Nepalese Society. In one hand banking industry pose numerous career opportunities and in the other the banks are complaining about the human resources produced by the colleges. They claim that the graduate lack the skills and appropriate knowledge to work as a banker. The human resource issues that are related with the banking industries can be discussed as:

1. Turnover
2. Nepotism and Favoritism
3. Skilled Manpower
4. Performance Management System
5. Workplace Safety and Health
6. Professionalism
7. Others

1. Turnover

Turnover means employee leaving the organization. The action may be conducted due to better job offers elsewhere or due to frustration in the current job. There is also an increasing trend of new generation not sticking to the job they are offered. After a person joins a bank, he/she receives better job offer from other banks and tend to hop the job. Also there is increasing problem of people moving out of banking industry.

2. Nepotism and Favoritism

Though banking industries are most regulated and transparent among the industries, it has not been free from nepotism and favoritism. Most of the time internal hiring is done on the basis of nepotism. Favoritism plays major role in promotional opportunities.

3. Skilled Manpower

The supply of manpower in the lower level of banking industry is high, however the number is low in top and middle level of management. The level of job vacancies in the entry level also shows that people are keenly interested to join the industry.

4. Performance Management System

There is a huge gap in the compensation level between the higher level (management) and lower level employees. Research shows that the difference between the CEO’s salary and the salary of lower level employee is more than 25 times in Kumari Bank Ltd. (Shrestha et.al. 2011).

5. Workplace Safety and Health

Healthy employees can have great contribution for the profitability of any organization. However, the banking industry seems indifferent about the workplace safety and health of the employees.

6. Professionalism
Leaking information to other organization, negative communication about organization violating rules and regulations are taken as unprofessional behavior. It is very difficult to ensure that employees are adhering to the code of conduct and maintaining high degree of professionalism.

7. Others
There are various other issues relating to human resources in banking industry. They are

• Lack of organizational citizenship behavior.
• Managing work-life balance.
• Succession Planning.
• Employee Diversity Management.
• Unionism.

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Anti Money Laundering

Money Laundering is the process of transferring illegally obtained money to conceal its sources. It is an act of converting dirty money into clean money. Money Laundering has been major issue since the end of 1980s. However, it started getting high priority after the event of 9/11, when it was connected to fight against fighting  terrorism financing. The preexisting anti money laundering (AML) measures were expended.

In Nepal, Anti Money Laundering (AML) and Combating Financing of Terrorism (CFT) came into highlights after getting the membership of Asia Pacific Group on Money Laundering, which was established in 1997. Nepal became its member in 2002. This membership helped Nepal to realize the importance of AML/CFT regime in the system and raised awareness about its responsibility towards international community in this regard. Money Laundering Prevention Act, 2008 and Rules, 2010 came in force.

Financial Information Unit (FIU) was established as per the provision of this Act by Nepal Rastra Bank. FIU is a central agency which collects, analyzes and disseminates financial information. For the purpose, FIU has issued different directive to financial and non-financial institutions. It receives different Threshold Transaction Reports and Suspicious Transaction Report from them. It also conduct different workshops, interactions and training programs for different stakeholders to make them familiar with the concepts of AML/CFT.

In the year 2010, Nepal received correspondence from International Cooperation Review Group (ICRG) stating Nepal could be listed as non-cooperative country. In July, 2011 Mutual Legal Assistance and Extradition Bills were drafted by the Government. They were passed by the Interim Constitution acting as Parliament according to its Provision of Section 83 in October, 2012. Bill Against Organized Crime was passed in February 2013. The bills has provided the government with the power to act against money laundering.

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Products Offered by Banks in Nepal

In Nepal, Banks are regulated by Nepal Rastra Bank (NRB), the central bank of the country which was established in 1956. The banks in Nepal are categorized under four heads namely Class A, Class B, Class C and Class D by NRB. All the commercial banks with core capital more then 2 billion are as Class A bank. Development bank are categorized as Class B, Finance companies as Class C and Micro finance as Class D.

All of the banks in Nepal are involved in retail banking. They make petty lending to individuals and corporations. The banks are strictly regulated by NRB, and there are restrictions for lending and borrowing.

The common products and services commonly offered by the banks in Nepal are:

Credit

• Corporate Banking:

Banks provides short to medium-term commercial lending, structured finance and transaction banking to meet customer’s banking requirements. Besides traditional lending, Banks also engineer tailor-made solutions to meet constantly changing needs. The credit facilities provided by Banks in Nepal are:

·       Funded Facilities

·       Overdraft Loan

·       Hypothecation Loan

·       Structured Overdraft secured against Govt. Bonds

·       Loans against government bonds

·       Loan against fixed deposit

·       Pledge Loan

·       Priority/Deprived Sector Loans

·       Trust Receipt Loan

·       Term Loan

·       Packing Credit (Export) Loan

·       Margin Lending against shares

·       Loan Against First Class Bank Guarantee

·       Hire Purchase Loans

·       Consortium Lending

• Retail Banking

Realizing the dreams may now just be a phone call away. A house of dreams, a brand new car, a great marriage, a MBA degree from the best B-School ... the list is endless. Whatever customer dreams are, it can now be realized by opting for Consumer Loans from Banks. The retail banking facility includes the following:

·       Housing Loan

·       Auto Loan

·       Education Loan

·       Loan against gold silver

Deposit

• Current Account

Everyone has different banking needs, but every business needs a bank account. Banks have tailor made Current account that rightly meets needs of today's fast-paced business. Networked branches of Bank give customer the power to transfer funds in and across cities (where Banks has its offices/branches) in a flash.

Features

·       Withdrawal Below Minimum Balance

·       Extended Banking Hours in Kathmandu Valley Branches

·       Standing Instruction

·       Cash Management

·       Free Cheque book

Limited Liability Company/Social Organization/School

·       Completed Account Opening Form

·       Board Resolution to Open and Operate the Account)

·       Certificate of Registration/Incorporation

·       Articles of Association

·       Memorandum of Association

·  Evidence of Identification of Account Operator (Citizenship/Passport/Driving License/Voter's ID)

·      Two Recent Passport Size Photographs of Account Operator(s)

Proprietorship/ Partnership Firm

·       Completed Account Opening Form

·       Certificate of Registration/Incorporation

·       Income Tax Certificate (PAN Card)

·       Partnership Deed (in case of partnership firm)

·       Evidence of Identification of Account Operator (Citizenship/Passport/Driving License/Voter's ID)

·       Two Recent Passport Size Photographs of Account Operator(s)

• Saving Account

Designed with array of features, Savings account not only ensures attractive returns to customers idle money but also makes personal banking convenient and efficient.

Features

·       Affordable Balance

·       Unlimited Withdrawals/Deposits

·       Withdrawal Below Minimum Balance

·       Extended Banking Hours in Kathmandu Valley Branches

·       Free Cheque book

Documentation

·       Completed Account Opening Form

·  Evidence of Identification of Account Operator (Citizenship/Passport/Driving License/Voter's ID)

·     Power of Attorney (If the account operator is other than the accountholder/applicant)

·      Two Recent Passport Size Photographs of Applicant/Account Operator

• Fixed Account

Tenure ranging from seven days to over two years, Fixed/Call deposit at Bank allows depositors to diversify your portfolio to best suit your investment plan.

Features

·       Attractive Interest Rate.

·       Wide Options of Tenure

·       Convenient Account Opening

·       Auto Renewal Possible

·       Loan Facility up to 90% of Deposit Amount.

Documentation

·       Completed Account Opening Form

·  Evidence of Identification of Account Operator (Citizenship/Passport/Driving License/Voter's ID)

·     Power of Attorney (If the account operator is other than the accountholder/applicant)

·      Two Recent Passport Size Photographs of Applicant/Account Operator

1.1.3       Remittance

Remitters from any part of the world can send money from any bank to an account at many banks on Nepal that provide such facility. The originating bank will send the money through one of bank's correspondent banks.

The remitter must provide the following to the sending bank:

·        Beneficiary's name

·        Beneficiary's bank account number

·        Beneficiary's branch name or address, and

·        Beneficiary's Bank

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