Exodus of people from villages soared when conflict heightened in rural hinterlands about a decade ago with Maoists and Nepal Army entering in a war.

While people constantly lived in fear, Mesh Gurung, a local of Machchhapuchchhre Village Development Committee (VDC), then living in Japan, thought he was safe and free from difficulties that people faced back home in his village.

But the sense of safety shattered when oneday he heard that the Maoists killed his father Tek Bahadur Gurung, who was then chairman of Machchhapuchchhre VDC. Shaken by the news, Mesh immediately packed his belongings and returned to Nepal permanently.

“Many houses were padlocked and there were fewer people in the village,” recalls Mesh of the day when he reached the village 10 years ago. In the absence of working population, farmland in the village was barren.

In his bid to earn a livelihood, Mesh took up some odd jobs. But deep inside, he was unhappy. As a person who moved to Japan after completing BCom and worked on the sales counter of a vegetable farm for five years, he was unhappy to see large tracts of productive land left unused.

Thanks to motivation of technical experts, senior villagers and friends, he eventually quit the job and started an agricultural farm, teaming up with people like former Secretary Baburam Acharya, who were eager to work in farms.

Today, Mesh´s farm is spread over 500 ropanis (62.86 acres) in Sardikhola. He has planted vegetables on a large chunk of land and also started livestock farming. He is planning to start fishery and pig farming as well very soon.

“Acres of fertile land that was left barren always pinched me. So, I committed to myself that I will make commercial use of it and also restore greenery in the village,” he told the Republica.

For the purpose, he acquired a defunct savings and credit cooperative and renamed it as Hilly Agricultural Cooperative Society and through it he started acquiring barren land of Sardikhola on lease for 20 years at a cost of Rs 2,100 per ropani (5,476 square feet) per annum.

“The cooperative model has worked wonders and investment has started to pay off just within six months,” said Mesh, chairman of the cooperative.

For the good yield of two varieties of tomato – Themes 1 and 6 – which he planted in 65 different plastic tunnels that was spread over 50 ropanis, Mesh has already sold 18 tons of tomatos over the last six months. The plants will continue to generate yield for next 5 months.

“The return it generated is very encouraging,” said Mesh, adding that he plans to further expand tomato plantation.

Apart from that, he has also planted cauliflower, cabbage, green vegetables, onion, French beans, lady´s finger and cucumber, among others. The cooperative is already selling the vegetable output in Pokhara. In a bid to establish a strong market link, the cooperative has even opened a sales outlet in Chipledhunga vegetables market in Pokhara.

The farm has developed an ´agriculture calendar´ for pursuing different vegetable varieties round the year.

Currently, the cooperative has planted vegetables in 200 ropanis and also initiated livestock farming in the remaining 300 ropanis. Though the number of goats and cows at present stands at 60 and 13 respectively, it has already taken initiative to add more livestocks. The cooperative is also preparing ponds for fishery and pens for pig farming.

“Vegetables and livestock farming complement each other well. While animals will feed on the waste generated from vegetable farms, use of excreta of animals enhances productivity of vegetable farms,” said Mesh.The cooperatives have particularly avoided using chemical fertilizer and pesticides.

The agricultural farm is meeting the demand in Pokhara and has created employment opportunities for locals as well. The farm currently has 45 full-time salaried staff and is paying Rs 6,000 to men and Rs 5,000 to women staff every month. During the plantation season, it hires as many as 80 locals.

“The monthly expenditure to run the farm is Rs 300,000 a month. Thankfully, its yield is already generating this amount,” said Mesh.

The share capital of the cooperative too has jumped to Rs 5 million from initial figures of Rs 700,000. According to Gurung, the cooperative´s investment in the farm has soared to around Rs 7 million.

“The prospects shown by the farm are immense. More than that, it has revived hopes and liveliness among villagers who previously remained bogged down with income issues,” said Mesh.

Villagers of Machchhapuchchhre VDC in the past used to rely on foreign employment for earning their livelihood. But the vegetable farm has put a check on this trend. If everything goes well, Mesh says the farm will soon take the shape of a model agro-enterprise that can motivate people in other parts of the country to start similar enterprises.

The impact of the farm is already felt in the VDC. At least two to three groups of students and development workers visit the farm every day to observe it, and the impact it has had in the locality.

Citizens Bank International, for instance, said it is now offering short-term lending rates at 12 percent, down from 14 percent.

Laxmi Bank has also done the same. It recently extended loans to Nepal Electricity Authority for six months at 10 percent interest, which is far too low than the prevailing rates. Commerz and Trust Bank too provided loans to the state-owned utility company at 11 percent.

Overall, interest rates on short-term loans – which include demand loans, overdrafts and export bills, among others – have now come down to an average of 12 percent from around 14 percent earlier.

“We had to cut the rates due to suppression of credit demand whereas liquidity surplus continued to soar,” Rajan Singh Bhandari, CEO of Citizens Bank International, told Republica.

Nepal Rastra Bank said deposit collections of 31 commercial banks in the first two months of the current fiscal year jumped by Rs 14 billion to Rs 701.85 billion whereas their credit flow dropped to Rs 522.25 billion in mid-September from Rs 522.85 billion in mid-July. Bankers said this trend continued in the third month (mid-October) as well.

Commercial banks, which suffered from liquidity crunch for almost two years, witnessed a sudden rise in deposits over the last three months after depositors started shifting money from development banks and financial companies to big banks due to erosion in trustworthiness of development banks and finance companies. But these commercial banks – currently flush with excess liquidity of around Rs 27 billion – have not been able to find substantial borrowers.

Bankers attributed the sudden drop in credit demand to slump in real estate business – which has trapped investments of many businessmen – and gloomy industrial climate, among others. As a result, banks had invested on short-term Treasury Bills at rates that hardly fetched them interest return of 1 percent.

The latest reduction in interest rates will bring some relief to traders and short-term borrowers, but will make situation no different for industries and general consumers that rely on long-term borrowing.

“They (long-term borrowers) might have to wait for a couple of months to enjoy similar cuts,” indicated Radhesh Pant, CEO of Kumari Bank. “The banks are currently not in a position to reduce long-term lending rates because they need to bring down credit-deposit (CD) ratio to 80 percent by mid-January 2012,” he told Republica.

Since many commercial banks are struggling to bring the CD ratio to the level set by the regulator, they are not eager to lend rapidly and hence are not interested in slashing long-term lending rates now.

“But if the credit market remains the same after mid-January, banks may finally revisit their strategies and make long-term credit cheaper,” Pant stated.

Source: Republica

Nepal Gold and Silver Dealers Association (Negosida) on Tuesday fixed the price of gold at Rs 46,900 per 10 grams, up from Rs 46,040 of Monday, attributing the decision to sharp rise in prices of gold in the international market.

“Worries about Italy´s debt problems are mounting and primarily this caused the international price to go up. This affected domestic bullion market,” said Tej Ratna Shakya, president of Negosida.

He also said gold price in the international market had jumped by around $ 25 per troy ounce (31.103 grams) overnight when the association fixed the rate.

Agencies reported that the fresh development in euro zone crisis, which soared Italian government bond yield to near 15-year high, caused the gold price to jump by 2 percent in the international market on the day.

On the day, gold had jumped to as high as $ 1,795 per troy ounce in the international trading. Although the price was not a new high, Shakya said it caused price in Nepal to touch new high because of weakening of rupee against US dollar.

Though gold prices in the mid-day trading eased to $ 1,786 per troy ounce, it settled at $ 1,792 later in the day.

Given the nature of problem, which soared safe haven demand, analysts have even predicted that gold could easily cross over $ 1,800 per troy ounce in the short-term.

Source: Republica

With the double-digit growth in Nepse index, Nepse had to impose circuit break – a temporary suspension of transactions put in place to control unnatural fluctuation of share prices during the trading – three times during the trading session.

As per the existing provision, Nepse can announce circuit break for 15 minutes if the index surges over 3 percent in the first hour, for 30 minutes in the second hour if Nepse rises over 4 percent and for the whole transaction period if Nepse goes up more than 5 percent in the third hour of the transaction session.

However, analysts are skeptical about the sustainability of the surge in Nepse index amid exorbitant interest rates in bank lending and confusion over fate of the peace accord.

“This surge in Nepse index is based on market sentiment backed by positive political development. We can´t expect continued growth in coming days given the high interest rates in banks and absence of new investment in stock market,” said Nanda Kishore Mundada, former president of Stock Brokers Association of Nepal (SBAN).

Stating that the rise in Nepse is temporary, Anjan Raj Poudel, president of SBAN, said stock market can´t revive until bank interest rates are not moderated and Central Depository System (CDS) – online trading system – is not enforced.

Stock Analyst Rabindra Bhattrarai said investors are on a ´wait and watch´ mode despite positive political development in the country. The current slowdown in Nepse index climaxed to a six-year low to 292 points in June.

Meanwhile, a delegation from SBAN met Babu Ram Shrestha, chairman of Securities Board of Nepal (Sebon), and apprised him of the current situation in the capital market.

According to Poudel, the delegation demanded from the Sebon chief to allow brokers to work as Depository Participant (DP) without any condition and prioritize implementation of Mutual Fund and CDS to boost trading in stock market.

The cost incurred on the management of combatants is a capital investment as it brings good to the country by raising optimism, improving investment confidence and industrial environment. But as the government has not made any budgetary allocation for such a purpose, Prime Minister´s Office has instructed the Ministry of Finance (MoF) to instantly approach donors for financial support.

“We will soon formally request with the development partners for the support as we have little scope in the existing budget to meet the integration and rehabilitation cost, which is estimated to add up to Rs 10 billion,” said a senior MoF official.

Such a liability has been generated as the peace deal has pledged three major offers for managing combatants. First, the government will integrate up to 6,500 Maoist combatants in the national army. Second, it will provide rehabilitation package in a range of Rs 0.6 million to Rs 0.9 million to a combatant depending on his rank. Rehabilitation package includes the cost of training. Third, it has offered cash incentive in a range of half million to 800,000 million rupees to combatants eager to escape integration as well as rehabilitation package.

The number of Maoist combatants in cantonment was numbered at around 19,500 in the past, but the government believes the number is less now as some of the combatants have left the cantonment while others are facing actions for criminal activities.

“Nonetheless, we believe the slot allotted for integration will be completely fulfilled,” said Rameshwore Prasad Khanal, economic advisor of the Prime Minister. The government further anticipates that it might need to offer rehabilitation and exit package, which have been promised in two tranches, to 12,500 combatants.

Though the prevailing recruitment cost estimates, which include annual salary, army gear and accessories including weapon and trainings, suggest recruiting an armyman exerts a financial burden of Rs 300,000 on the government, the government believes integration will jack up the cost by just around Rs 100,000.

“That is because we were already paying some Rs 100,000 in annual perks to a combatant and they will not need weapons as well,” said a senior MoF official, estimating that integration process will exert additional burden of around Rs 650 million on the national treasury.

Likewise, officials estimate rehab cost will probably average at Rs 700,000 per combatant, and thus the rehabilitation package will generate another extra-budgetary liability of around Rs 9 billion.

“We will request the development partners to pledge the support either in the form of budgetary support or through the Peace Trust Fund,” said the MoF official. Though bilateral donors like United States have denied support for direct handover of cash to combatants, the government is hopeful European countries will respond to its call positively.

“We are in a crucial phase of peace process. How the donors respond to our request will test the reliability of donors as well,” said the source.

Some of the officials like Bodh Raj Niraula, chief of Budget Division, MoF, opined the government might need to come up with Supplement Budget to arrange the finances. But Khanal opined that might not be necessary as the government will not need all the money now.

“Foremost and immediate liability that the government will need to fulfill will be ´payment of money to Nepal Army´, as going by the peace deal, the process of integration will start immediately after December 1,” said Khanal. “Otherwise, rehab packages can be implemented in a phasewise manner.”

Besides, the government can buy time by offering initial tranche of committed package, and manage the rest through the budget of next fiscal year.

Officers arrested Yogendra Prasad Shrestha, 55, chairman of Nepal Share Market and Finance bank, on Wednesday in the western city of Mahendranagar.

He is accused of stealing 2.66 billion rupees ($34 million).

“We arrested him after the central bank’s investigation found out the fraud,” said Upendra Kant Aryal, head of the Central Investigation Bureau, which deals with organised crime and large-scale fraud.

“We have already filed a case in the district court. We have also blocked the passports of his two sons.”

The case is widely understood to be the largest financial fraud in Nepal’s history, and Shrestha faces a five-year jail sentence and a fine double the amount embezzled if he is convicted.

Nepal, one of the poorest countries in the world, was placed 146th out of 178 in Transparency International’s 2010 corruption perception index, which ranks the worst countries lowest.

Earlier this year, a government minister was jailed for 18 months jail for corruption while in office, in a first for the country

Source: Kantipur

So, far SCB, NABIL, NIB, CZBIL have annouced the returns they are going to give to shareholders. While shareholders of EBL, BOK, HBL are still awaiting for Annual BOD meetings.

Click here to see the TOP 20 Banks of 2067/68 & Returns.

The price of yellow metal has gone down ahead of the festive season, bringing relief to potential buyers.

Mahedra Ratna Shakya, newly elected president of Nepal Gold and Silver Dealers´ Association´s (Negosida) Kathmandu district chapter, said increasing appreciation of US dollar against rival currencies coupled with lack of demand for worked gold were the major reason behind drop in gold prices.

Gold was traded at $1656.10 per troy ounce in the international market on Friday. The yellow metal had crossed the $1,900 per troy ounce barrier in the first week of September. Gold had hit an all time high of Rs 54,200 per tola in the domestic market on September 6.

According to Negosida sources, around half a dozen gold traders have started alternative business after they suffered huge losses due to continuous surge in prices of yellow metal earlier this month.

“Price of gold has been decreasing since last week. But there has been no increase in demand, as people are expecting the price to fall further,” said Uttam Shakya, proprietor of Surya Bahadur & Sons Jewelry shop at Wotu.

Shakya of Negosida expects prices to climb during the upcoming festive season when demand for the yellow metal in South Asia hits peak.

Over the last one month, Nepali rupee has become weaker by Rs 6 per dollar. On Saturday, the rupee was at Rs 78.51 per dollar, weakest in the last one-and-a-half years. It was at Rs 72.75 per dollar a month ago. This week alone, the dollar went up by Rs 3.

Given the high demand for US dollars around the world amid eurozone crisis, it has also posted a significant gain against the Indian currency. And, as the Nepali currency is pegged with India’s, Nepal also witnessed its currency’s devaluation against dollar.

In addition to the rise in import costs, Nepal is entitled to pay more while repaying foreign loans that matured in recent days. People embarking on foreign travel will also have to pay more for air tickets. As India imports about 75 percent of its total petroleum requirement and Nepal imports from India, the high petroleum price fuelled by strong dollar will get transferred to Nepal as well. However, Nepalis sending remittance home and those having dollar account can benefit from this fluctuation in exchange rate.

Traders say the strong dollar will definitely increase price of goods imported from third countries, and goods imported from India by paying US dollars. “As we have to pay valued added tax (VAT) and other charges as per exchange rate maintained on the day of customs clearance, goods imported in recent days have become expensive,” said Suresh Basnet, president of Nepal Chambers of Commerce. “Those opening the letters of credit in recent days should also pay more for imports.”

Of late, the number of items imported by paying dollars has risen significantly, with the Nepal Rastra Bank expanding the list of products that can be imported from India by paying US dollars amid increasing demand for IC in Nepal. This means Nepalis may have to price rise ahead of the festival. “It will mount pressure on inflation to some extent,” said Maha Prasad Adhikari, deputy governor of NRB. “Maintaining inflation at the targeted level will be challenging.”

However, economist Bishwombher Pyakuryal said the recent surge in dollar would not make a huge difference as far as inflation is concerned given a huge size of informal trade. “I don’t think the rising dollar will have a significant impact on inflation,” he said.

Pyakuryal also does not expect a significant rise in the country’s foreign debt liabilities. “Given the long term nature of Nepal’s debt liabilities and their payments are made at the rate maintained on the payment date, our liabilities are not going to increase significantly,” he said.

However, Nepal Electricity Authority, which is facing a cumulative loss of Rs 28 billion, will suffer the most from the rising dollar as it has to pay to Khimti and Bhotekshi hydropower projects in US dollars.

The department has been looking into 518 cases of fake VAT billing, which has emerged as a big challenge to the country´s tax system, inflicting loss of over Rs 10 billion to the national coffer.

“Of the total of Rs 3.2 billion slapped on 294 firms, we´ve collected only Rs 23.3 million so far,” Rajan Khanal, director general of IRD told Republica on Sunday.

The IRD has completed investigation into 40 cases of tax evasion over the past fortnight.

“We are also reviewing the cases following requests by 28 firms for administrative review,” added Khanal.

If taxpayers are not satisfied with tax slapped by the department even after administrative review, they can appeal against the decision at the Revenue Tribunal within 60 days
The department has been looking into fake VAT bill racket through its head office and three area offices in Kathmandu as well as offices in Bhadrapur, Biratnagar, Dharan, Birgunj, Hetauda, Bharatpur, Bhairahawa, Lalitpur, Nepalgunj, Bhaktapur, Krishnanagar, Butwal, Pokhara, Simra, Janakpur, Lahan, Dhangadhi, Mahendra Nagar and Dang.

According to IRD, Large Taxpayers Office (LTO), Lalitpur is handling the largest number of cases (152 cases) and has settled 31 cases. It has slapped tax bills of Rs 1.11 billion on the defaulters. Similarly, IRD Area Office No.1 is investigating 59 cases and has slapped tax of Rs 241.9 million on evaders. The IRD head office, which is looking into 38 cases, has slapped Rs 1.01 billion on evaders in 34 cases.

Similarly, Inland Revenue Office (IRO) Area No.2 and Area No.3 have fixed Rs tax bills of Rs 157.7 million and Rs 148.58 million in 16 and 32 cases respectively.

IRD offices in Janakpur, Lahan, Dhangadhi, Mahendra Nagar and Dang have yet to start any investigation into the cases.

The IRD investigation that started from November, 2010, has found widespread use of fake VAT receipts, especially by big business houses.