KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
The economic updates highlight key developments across Nepal’s financial, insurance, and investment sectors, reflecting both progress and challenges.
The Supreme Court’s approval for a second stock exchange could introduce healthy competition and deepen Nepal’s capital markets. The surge in margin lending suggests excess liquidity, though concerns persist over weak credit demand.
The life insurance sector’s strong growth indicates increasing financial security, while NRB’s concerns about bank governance highlight regulatory gaps. Hydropower remains a key investment priority, with calls for Indian investors to tap into Nepal’s energy potential.
Meanwhile, labor disputes at Upper Tamakoshi and regulatory changes in the brokerage sector suggest ongoing structural adjustments. Overall, Nepal’s economic landscape is evolving with promising opportunities, but governance and compliance remain critical.
NRB Raises Concerns Over Bank CEOs’ Performance Evaluations
The Nepal Rastra Bank (NRB) has criticized commercial banks for failing to evaluate their CEOs’ performances as outlined in their contracts. The central bank’s latest Supervision Report highlights the absence of performance assessments, delays in board decisions, and undisclosed policies affecting banking sector growth.
Additionally, some banks have failed to categorize risk-weighted assets in line with Basel III standards. NRB has taken corrective measures against banks violating capital adequacy rules, while also identifying discrepancies in deposit, loan, and capital reserve reporting, along with insufficient efforts to reduce non-performing loans.
Gold and Silver Prices Rebound After Decline
After four consecutive days of losses, gold prices rose by Rs 200 today, reaching Rs 173,500 per tola, as per the Nepal Gold and Silver Dealers Federation.
This increase follows a Rs 200 drop yesterday and a Rs 600 decrease on Monday. Silver prices also saw an uptick, rising by Rs 10 per tola to Rs 1,990. These fluctuations reflect ongoing market volatility.
Life Insurance Industry Surpasses Rs 1 Trillion in Business
Nepal’s life insurance sector has exceeded Rs 1 trillion in total business volume, with 14 major insurance providers reporting strong growth.
Data from the Nepal Insurance Authority for the first eight months of FY 2081/82 shows insurers collected Rs 108.71 billion in premiums, marking a 10.33% increase from the previous year.
Nepal Life leads the market with a 27.04% share, followed by National Life (12.53%), LIC Nepal (11.55%), and Himalayan Life (10.32%). Reliable Nepal and Citizen Life reported the highest growth rates, exceeding 20%, while Rastriya Beema Company experienced a 14.37% decline in premium collection.
SC clears way for Nepal’s second stock exchange
Nepal’s Supreme Court Constitutional Bench has rejected a writ petition that sought to block the government’s initiative to launch a second stock exchange, eliminating the last legal obstacle.
The ruling, led by Chief Justice Prakash Man Singh Raut, supports the issuance of new licenses. With this decision, the Securities Board of Nepal (SEBON) is now expected to move forward with licensing, introducing competition to the Nepal Stock Exchange (NEPSE), which has been the country’s only stock market since 1994.
This could bring significant changes to Nepal’s financial sector.
Agreement Reached on Equal Benefits for Upper Tamakoshi Workers
An agreement has been finalized between Upper Tamakoshi Hydropower Project management and its Dolakha-based employees to ensure equal benefits for all workers.
The dispute, triggered by claims of discrimination in allowances, ended after the company agreed to increase the additional allowance for all employees to 75%, up from 50% for local workers.
The agreement also guarantees full-time contracts and proper job categorization for contract employees. The project, managed by Upper Tamakoshi Hydropower Ltd., has faced several disruptions, including a fatal landslide in October that claimed four lives.
Surge in Margin Lending by Commercial Banks Due to High Liquidity
Margin lending by Nepalese commercial banks has risen by nearly 40% as of mid-February 2024, reaching Rs 93.12 billion.
This increase is linked to surplus liquidity, low credit demand, and the Nepal Rastra Bank’s (NRB) relaxed monetary policies. Institutions such as Nepal SBI, Machhapuchhre, and Kumari Bank have expanded their loan portfolios, while Nabil Bank remains the largest lender. The rise is driven by a strong stock market, readily available credit, and improved liquidity conditions, especially after NRB lifted the Rs 200 million cap on institutional margin loans.
IPPAN Urges Indian Investors to Explore Nepal’s Hydropower Opportunities
The Independent Power Producers’ Association, Nepal (IPPAN) has invited Indian investors to capitalize on Nepal’s hydropower potential.
Speaking at the Nepal-India Energy Conference, IPPAN President Karki emphasized Nepal’s goal of generating 28,500 MW of electricity by 2035, requiring an investment of $46.5 billion.
With private firms already accounting for 80% of Nepal’s installed hydropower capacity and favorable policies in place, Karki encouraged Indian investors to explore opportunities in hydropower, solar energy, and cross-border electricity trade.
SEBON Introduces Broker Merger Directive to Meet Capital Requirements
The Securities Board of Nepal (SEBON) has issued a Broker Merger Directive, enabling brokerage firms to merge to meet new capital requirements.
In 2022, SEBON increased the minimum paid-up capital for brokerage firms from Rs 2 crore to Rs 20 crore.
While newly licensed firms have complied, many older brokers are struggling to meet the threshold. Of the 50 firms operating before the rule change, 28 are still undercapitalized and may now consider mergers to fulfill the regulatory requirements.
Kulman Ghising Challenges His Removal as NEA Managing Director
Kulman Ghising has filed a writ petition at the Supreme Court against the government’s decision to remove him as the Managing Director of the Nepal Electricity Authority (NEA). Represented by Advocate Lokmani Pokharel, the petition seeks a stay order on his dismissal and requests reinstatement.
The case names the Office of the Prime Minister, the Council of Ministers, and the Ministry of Energy as respondents. Ghising was replaced by Hitendra Dev Shakya, who has already taken over the role.
Finance Minister Promotes Investment in Lumbini Province
Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel has highlighted Lumbini Province as a key investment destination.
Speaking at a discussion organized by Kantipur Media Group in Rupandehi, he encouraged private sector investments, assuring government support for a business-friendly environment.
Paudel expressed optimism that Lumbini could drive economic growth through advancements in urban development, education, healthcare, and industry. He also reassured that Gautam Buddha International Airport would soon be operating at full capacity.
Ruling Parties Discuss New Land Ordinance
Nepal’s ruling parties are in discussions over a new land management ordinance, aiming to introduce it in parliament. A meeting at the Prime Minister’s official residence in Baluwatar focused on concerns raised by the Janata Samajbadi Party Nepal (JSP).
Nepali Congress Chief Whip Shyam Kumar Ghimire indicated that a consensus is near, with Prime Minister KP Sharma Oli addressing JSP’s issues. The meeting was attended by key political leaders, including Sher Bahadur Deuba, Upendra Yadav, and others.
Itahari’s Centre Plaza Fire Contained After Six Hours
A fire at Centre Plaza in Itahari was extinguished after six hours of effort by around 300 personnel from the Nepal Police, Armed Police Force, and Nepali Army, along with 12 fire engines.
Eleven individuals, including Bangladeshi national MD Jay and several Nepali citizens, were safely rescued. The Ministry of Home Affairs deployed a Nepali Army helicopter for assistance. Authorities are currently investigating the cause and assessing the extent of the damage.
11 Indian Nationals Arrested for Online Gambling and Cryptocurrency Transactions
Nepalese authorities have arrested 11 Indian nationals for their involvement in online gambling and cryptocurrency transactions worth Rs 2.96 billion.
The suspects were apprehended in Deula Tol, Budhanilkantha Municipality, on Chaitra 12. The group was allegedly running online betting operations and crypto trading, with transactions totaling over Rs 96 million. Police confiscated mobile phones, laptops, notebooks, and bank documents during the raid.
The arrested individuals, originally from Rajasthan, India, are currently under investigation, with the Kathmandu District Court extending their custody for further inquiries.
Nabil Bank Accepts CEO Gyanendra Dhungana’s Resignation, Appoints Interim CEO
Nabil Bank’s Board of Directors has officially accepted the resignation of CEO Gyanendra Prasad Dhungana during its 677th board meeting on Chaitra 13, 2081.
His resignation took effect from Chaitra 10. To ensure smooth operations, the bank has appointed Senior Deputy CEO Manoj Kumar Gyawali as the Acting CEO.
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