Deposit collection soars by 10 percent

Deposit collection soars by 10 percent
eKantipur.com, 22-Jun-2007

Total deposits at the banking sector grew by over 10 percent during the first nine months of the current fiscal year as remittance inflow continued to flood the banks.

The data of Nepal Rastra Bank shows that the total deposits stood at Rs 321 billion by mid-April, up from Rs 291 billion in last mid-July.

Flushed with money caused by healthy inflow of remittance, more people are saving money in banks, bankers said. Besides, tough competition among banks to lure depositors by reducing the cost for opening accounts also helped to expand people's access to financial services, they said.

Terming the growth as normal, Sashin Joshi, chief executive officer of NIC Bank, said banks are setting up new branches even outside the Kathmandu Valley. “In addition, more people have put their money in financial institutions due to perceived security problem at home,” he said.

Of the total deposits, Rs 39.8 billion was kept in current account while Rs 166.2 billion was deposited in savings account. Likewise, 30 billion rupees was saved in fixed deposit.

During the period, the banks reported an impressive growth of over 27 percent in loan extensions. They gave loans amounting to Rs 221 billion by mid-April, compared to Rs 173 billion in last mid-July.

Almost all loans went for the private sector. Banks issued loans amounting to Rs 214 billion to private parties. Loans extended against government-owned enterprises fell by around 22 percent to almost seven billion rupees, down from Rs 9.21 billion.

Bankers said despite the end of armed conflict, industrial sector has not revived. “Demand for loans for this sector has not gone up considerably. Still, banks are managing their deposits and investing on retail lending more aggressively,” said a banker.

The investment of commercial banks on government securities was almost same at around Rs 57 billion during the period.

On the account of steady rise in deposit mobilization, total liquidity at the banking sector increased by 22.93 percent. The liquidity that was Rs 38.8 billion rupees in the beginning of the current fiscal year reached Rs 47.7 billion by the mid-April.

In order to reduce liquidity, the bankers said, mega projects should come into operation.

Citizens Bank begins operations

Citizens Bank begins operations
eKantipur.com, 20-April-2007

Citizens Bank International Ltd came into operation from Friday, becoming the 20th commercial bank in the country.

The bank offers home loan for a tenure of 25 years -- the longest duration of payment among financial institutions -- with interest rate ranging from 8 to 10.5 percent annually.

The new bank's other products include small and medium enterprise (SME) loan for up to five years at interest rate of 7.75 percent to 10 percent, and mortgage loan for up to 10 years with interest rate between 9 percent to 9.5 percent. Likewise, the bank has auto and education loan schemes. Finance Minister Dr Ram Sharan Mahat inaugurated the bank, which has begun its services with a slogan 'Your Partner for Progress'. Its paid-up capital totals 560 million rupees and its authorized capital stands at two billion rupees.

Speaking at the inauguration function, Mahat said that banks need to reverse their trend of confining their services to urban areas and urged them to expand into rural sectors. “Lots of opportunities are in the rural areas,” he said. Noting the importance of the financial sector for development, he said that the sector has to lead development efforts rather than becoming a follower. “The banks should focus on providing long-term finance to invest in infrastructure,” he said.

He noted that banks cannot sustain if they fail to provide quality services, are not professionally sound, and do not have a huge capital base.

Radhesh Pant, president of Nepal Bankers Association said vast number of people still do not have access to banking services. “The banking sector has grown faster than other sectors although its sustained growth remains a challenge,” he said.

Dr Shankar Sharma, chairman of the new bank, said the institution has strategies to enhance its financial intermediary efficiency to raise deposit rate and reduce lending rate.

“We are also attempting to contribute to reenergize the real sector,” he said. Rajan Singh Bhandari, chief executive officer of the bank, said it would strive to provide financial services targeted at giving a push to development.

BoK's projects 20 pc increase of profit

BoK's projects 20 pc increase of profit; gives priority to small investors
Nepalnews.com, 18-April-2007

Bank of Kathmandu (BoK) has informed that its operating profit this year is set to grow by 20 percent compared with the previous fiscal year.

A press statement by the bank, issued on the occasion of 13th anniversary of the establishment of the bank, states that while it posted profit of Rs 400 million last fiscal year, the same for the first nine months of the current fiscal year has already crossed Rs 330 million.

Likewise, the total deposits and lending amount of the bank has increased from Rs 10.49 billion and Rs 7.49 billion, respectively, last year, to Rs 12.03 billion and 8.94 billion till mid-April this year. The bank also distributed 18 percent cash and 30 percent bonus share dividend to its shareholders last year, the press statement adds.

"The BoK's target group does not only include urban customers, big businesses and projects. General public, small and medium-scale entrepreneurs and rural areas comprise the bank's priority service area," adds the statement.

The bank has 80,000 customers and it also operates BoK Money Transfer – a remittance service – through 180 outlets across the country.

In order to shoulder the Corporate Social Responsibility, the BoK has continued to contribute to health, education and environment sector, the statement says.

It added that the BoK wishes to contribute to the building of new Nepal and be able to face international competition in future when banking sector will be opened up.