Liquidity Crunch, NRB real-state loan restrictions, High interest rate on deposits are some of the factors which Top 20 banks are blaming for not so good year. So far we have SCB, BOK, CZBIL, BOAN who have annouced their proposal of profit sharing in the form of Dividend, Bonus Shares, Right Shares, etc.

Click here to see Profit & Returns Table of Top 20 Banks.

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Courtesy: NEFINSCO

In the fiscal year 2009-10, the IPOs and further issuance of ordinary shares worth more than Rs 3.1 billion were approved of 37 companies. Majority of them being development banks. At present there are 179 listed companies, among which 147 companies are banking and insurance. There are 24 listed commercial banks, 62 finance companies and 42 development banks whose shares are traded in the secondary market –Nepse. It appears that Nepali financial system has initiated the transition towards market-oriented system from bank-dominated one.

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Source: THT

The police had found the illicitly imported gold while inspecting a Santo car with registration number Ba 7 Cha 6344 entering the country from Birgunj on Thursday.

“We found 4.299 kgs of gold in the car and took it in our control,” said Deputy Superintendent of Armed Police Force, Krishna Prasad Koirala. The gold is worth around 13 million rupees.

Amit Daruka, a resident of Birgunj- 7 has been identified as the owner of the gold. He was transporting the precious metal hiding it under the front seat.
According to Koirala, the gold was wrapped in four different packets shaped like biscuits. The gold, car and their owner as well as the driver of the car have been handed over to Birgunj Costume Office.

Why is gold smuggled from India?

The gold dealers said that a substantial chunk of gold supplied in the market is imported illegally from India, as it generates handsome returns because of the expensive pricing in Nepal.

Because of the shortage, the dealers are charging prices higher than the international rate and this fetches a profit of as much as Rs 500 hundred rupees per tola (11.66 grams) of gold.

The dealers blamed the central bank for the situation. “Nepal Rastra Bank (NRB) is presently supplying just 10 kgs gold per day in the market,” a gold trader in Birgunj said, adding that the quantity can hardy meets 50 percent of the regular demand. Currently, the price of gold in the international market stands at Rs 34,000 per 10 gram, but in Nepal dealers have fixed its price at Rs 37,000.

Clearly, by smuggling just 10 grams of gold, one can reap instant profit of Rs 3,000. “This is a huge margin. No wonder smuggling is on rise,” said a dealer, seeking not to be named.

And the black marketing has soared mainly as demand for yellow metal has jumped in the market with the arrival of the festive season.

Dealers further disclosed to Republica that traders purchase gold in the bordering markets and bring it to Nepal, dodging revenue officials. Such imports then easily find way to cities like Kathmandu and Pokhara, where the demand for gold is high.

Till few months ago, the trend of gold trade was just the opposite. Because of tariff difference, which made gold cheaper in Nepal than India, a huge volume of gold was smuggled out to India.

Source: Republica

Despite some good financial reports published by the banks this year, banks are still in the mood for the wait and watch. Even the ones who announced something are giving out dividends like pinch of salt (~10%). April Budget has been washed out with political doldrums. The Big Six (SCB, NABIL, NIB, HBL, EBL, BOK) are yet to make any kind of firm announcement, but as per their financial reports there wont be much of bonus shares this time. Even the dividend amount is expected to get lower this time. While one group of trade pundits are busy speculating their pessimistic views which is obviously mere reflection of the current state of country, another group is busy investigating FIs paradigm shift from deposits to the right shares. [click here to read an exclusive Deposits to Right Shares Strategy Adopted by Nepali FIs]

Looking just a year or two back, the bulk announcement of right shares by FIs in order to raise their capital rather than deposits and investments clearly indicates similar thing could repeat once again. Even the good banks like SCB, NABIL, HBL, EBL who have always been generous towards its shareholders by distributing Bonus Shares/ Good Dividends rather than right shares might come out with right share plan this year.
Considering the current liquidity crunch situation and festive season ahead traders are fearing instead of return from investment (in form of good dividend & bonus shares), they might have to once again shed off greens in the name of right shares.

If you think Right shares are good form of investment then please do think properly. Look, the current situation of KIST Bank and its future outlook.
Despite huge network around the valley, it has some of the lowest ROI in terms of net profit. Reason, huge operating cost. If today, KIST is to share its profit to its shareholders, they will face difficulty to give more than Rs. 2/unit of share. You think that’s good investment ?

Right share is like a trap.
If I would have to put it more loosely, its like a marriage for the guys. Those who gets married repents, and those don’t whines.

If you have a share worth Rs. 200 (On particular date) and right share of 2:1 is announced, as soon as the book closes the price will go down as low as Rs. 80-90 depending upon future volume of shares that will be floated after right share issue. Plus you will have to shed off extra 100 bucks for each unit to buy.
If you buy it you will eventually lose money, unless the company makes more than 100% profit next year so that it would be able to distribute anything to their shareholders. Looking, the current situation of the country that looks hugely unlikely.

Now, if you think why to waste another Rs. 100/share when it will eventually get below Rs. 100 in future and don’t buy it. Believe me you will find some other people who will be buying it for more than Rs. 100 in an auction released by the company for outstanding right shares that you didn’t buy. Plus whether you buy it or not your currently held share price will DEFINITELY go down due to the right share release.

Only question with the Right Share is would you like to be DUMB or the DUMBER ?

SEBO commission is the commission taken by Dhitopatra Board (Securities Board of Nepal). This charge is apart from broker’s commission and capital gain tax. SEBO commission is charged as 0.015% of the transanction amount. In other words, it is 15 rupees for every 1 lakh of transaction.

i.e. SEBO Commission = 0.015% x 1,00,000 = 0.00015 x 1,00,000 = 15 rupees

If you transaction amount is 50000, then SEBO commission is 7.50 rupees, etc.

This is simple. Hope you understood. And please raise your confusions and queries often, no matter how simple and minor they are, because it not only benefits you but also all the other forum users.

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