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Senior leaders of the three major political parties—Prime Minister and CPN (Maoist Center) Chairman Pushpa Kamal Dahal, Nepali Congress President Sher Bahadur Deuba and CPN-UML Chairman KP Sharma Oli—held a meeting the at the prime minister’s office in Singha Durbar on Wednesday. During the meeting, they discussed the fake Bhutanese refugee scam. The trio held a discussion after police started arresting the leaders of the major political parties in the case of fake Bhutanese refugees. A source said that they also discussed the issues of transitional justice. The prime minister’s Secretariat said that they also discussed the ways to make the ongoing budget session of the Parliament effective.    

In what can be seen as a measure to offer some relief to the borrowers affected by the persistently high-interest rates, the Nepal Rastra Bank (NRB) has allowed the banks and financial institutions (BFIs) to make changes to the lending rates on a monthly basis. Issuing a new circular on Monday, NRB said that BFIs can change interest rates on loans every month from now on abolishing the arrangement that required BFIs to change lending rates only once a quarter. While BFIs have been allowed to make changes in deposit interest rates every month, they had to wait till the end of the quarter regarding the lending rates. "While changing the interest rate of the loan, it should be changed monthly up to the limit of the increase or decrease in the average base rate of the last three months," reads the NRB circular. According to NRB, BFIs can change the loan interest rate for the month of Jestha (mid-May to mid-June), based on the change in the average base rate of the months of Falgun, Chaitra, and Baisakh. Bankers have said that lending rates will decrease from Jestha. Commercial banks have reduced the fixed deposit interest rate from 11 percent to 9.99 percent in Baisakh (mid-April to mid-May). The interest rate of institutional fixed deposits has also been reduced from 9 percent to 7.99 percent. Savings account interest rates have also been reduced. However, lending rates have remained unchanged due to the previous arrangement of NRB. With the central bank introducing a new provision, the deck has been cleared for the BFIs to change the loan interest rate from Jestha. Everest Bank CEO Sudesh Khaling said that banks would reduce the loan interest rates starting from mid-May. "We have already reduced the deposit interest rate in Baisakh but due to the obligation to calculate the base rate on a quarterly basis, we had to wait until July to reduce the lending rates," he said. "After the central bank came up with the new arrangement, lending rates will decrease from mid-May." When BFIs hike the interest rate on deposits, their cost of funds also increases, pushing the base rate to go up. Currently, the base rate is the main tool to determine the lending rate in Nepal. Banks have been determining the lending rate by adding a premium to the base rate. Banks started reducing interest rates on deposits in mid-January. As their cost of funds decreased, the base rate also decreased accordingly. According to the latest decision of the Nepal Bankers' Association, banks can determine the interest rate by adding a maximum of 5 percent premium to the base rate. Bankers say that the demand for loans has been subdued due to higher interest rates. With the base rate starting to decline, borrowers can get loans at cheaper interest rates in the coming days. According to Everest Bank CEO Khaling, the new provision will benefit customers more than the banks.  

The acute shortage of liquidity, rising interest rates, and declining demand have badly affected the operational efficiency of industries in Bagmati Province. As industries grapple with multiple issues, their capacity utilization grew marginally in the first half of the current fiscal year. According to the latest report of the Nepal Rastra Bank (NRB), the average capacity utilization of industries in Bagmati Province stood at 47 percent in the first half of FY 2022/23 compared to 45.6 percent during the same period of the last fiscal. The report titled "Provincial Economic Activities Report-Bagmati Province", states capacity utilization of the noodles industry was highest at 95.02 percent while it was lowest for the ointment industry at 6.58 percent. In the review period, the production of the processed milk industry grew by 18.6 percent, soft drink industry by 7.3 percent, cigarette industry by 6.7 percent, pashmina industry by 10.5 percent, garment industry by 8.1 percent, tablet industry by 83.5 percent, and dry syrup industry by 4.9 percent. However, the production of animal feed declined by 3 percent, noodles by 4.5 percent, beer by 13 percent, paint by 23.5 percent, capsules by 27.8 percent, ointment by 34.9 percent, soap by 20.1 percent, and cement by 9.1 percent, according to the report. Meanwhile, the disbursement of loans by banks and financial institutions (BFIs) to the industrial sector also dipped in the first half of FY 2022/23. The BFIs' loan disbursement to industries decreased by 7.2 percent to Rs 902.87 billion in the first half of the current fiscal year compared to a growth of 24.3 percent during the corresponding period of FY 2021/22. In the first six months of the last fiscal year, BFIs disbursed a total of Rs 973.12 million to the industrial sector. According to the report, of the total loans, Kathmandu district has the highest share of 87.7 percent. The BFIs disbursed Rs 791.38 billion in loans to the industries in Kathmandu while Sindhupalchowk district has the lowest share of 0.1 percent (Rs 630 million). In the review period, the BFIs' loans to mining industries surged by 178.3 percent, the electricity sector by 16.3 percent, and the agriculture sector by 13 percent. However, loan disbursement to the construction sector fell by 51.5 percent. Though the Bagmati Province accounts for the largest share of the country's real estate business, the number of real estate registration decreased by 57.3 percent in the current fiscal year. The revenue collection from realty transactions also plunged by 64.1 percent to Rs 5.66 billion in the first half of this fiscal. Such revenue increased by 115.3 percent during the same period last year.

The CPN-UML on Wednesday suspended its Secretary Top Bahadur Rayamjahi after he was dragged into the fake Bhutanese refugee scam. Issuing a statement this afternoon, party General Secretary Shankar Pokharel said that the party suspended Rayamajhi to help in the investigation. “A Central Secretariat meeting of the party held on Tuesday took the issue seriously and directed Rayamajhi to present himself before the concerned authority at the earliest to help the investigation,” read the statement. “Keeping in mind the decision of the Central Secretariat, the party suspended Rayamajhi from the post until the police took the investigation to a logical conclusion.” UML Chairman KP Sharma Oli, however, has been expressing his dissatisfaction over the arrest warrant issued against Rayamajhi. Rayamajhi has been absconding since May 4 after the Kathmandu District Court issued an arrest warrant against him for his alleged involvement in helping the racketeers to make fake documents to send Nepalis to the United States in the guise of Bhutanese refugees.  

Rastriya Prajatantra Party Chairman Rajendra Lingden demanded that the government make public its progress made so far in the fake Bhutanese refugee scam. Speaking at a Parliament meeting on Wednesday, Chairman Lingden demanded a ruling to inform the activities made by the government in the fake Bhutanese refugee scam at the earliest. “This is not financial corruption. This is a heinous crime against the state,” he said, “People involved in the scam should not be spared.” Saying that high profile people are accused of being involved in the scam, he said that it was an insult of the country. “We urged the government to inform the Parliament about its commitment actions taken so far,” he said. He said that arguments were making rounds that whether police would launch an investigation into the case. Chairman Lingden also warned the government not to make a mistake by submitting the case to the Commission for the Investigation of Abuse of Authority (CIAA).  

Police have brought Nepali Congress leader and former Minister for Home Affairs Bal Krishna Khand to the District Police Range, Kathmandu for further investigation into his alleged involvement in the fake Bhutanese refugee scam. Khand was held from his personal residence and brought to the Range for further investigation, said Range Chief Senior Superintendent of Police Dan Bahadur Karki. Police have already arrested 11 persons for their alleged involvement in the creating fake documents to send people to the United States as Bhutanese refugees. Earlier, police had arrested Indrajit Rai, who served as security advisor to the then Minister of Home Affairs Ram Bahadur Thapa, the then Secretary at the Ministry of Home Affairs Tek Narayan Pandey, Sandeep Rayamajhi, Keshav Dulal, Sanu Bhandari, Tanka Gurung, Sandesh Sharma and Sagar Thulung, in connection with the scam. Police said that they are also searching for CPN-UML Secretary Top Bahadur Rayamajhi, one of the high-profile accused in the racket. So far, 106 victims of the fake Bhutanese refugee scam have filed complaints at the police office. They lodged complaints saying that the middlemen or fraudsters fleeced over Rs 230 million from them at different time giving them a false hope to send to the United States in the guise of Bhutanese refugee.  

Two mergers in the insurance sector are coming to a logical conclusion this week. After completing the merger process, Prime Life Insurance, Gurans Life Insurance, and Union Life Insurance started an integrated operation as Himalayan Life Insurance Company on Tuesday. Similarly, IME General Insurance and Prudential Insurance will begin integrated operation on Wednesday as IGI Prudential Insurance. The mergers are among the eight successful unions in the Nepali insurance sector after Nepal Insurance Authority (NIA) pushed for consolidation. Of the 10 MoUs signed between various companies for mergers, eight have been concluded. With the successful merger between IME General and Prudential, there have been five successful mergers among non-life insurers and three among life insurance companies. The consolidation in the insurance sector has brought down the number of insurance companies; the number of non-life insurance companies has declined to 15 from earlier 20, while the number of life insurance companies came down to 15 from 19. Prime Life, Union Life, and Gurans Life signed a final merger agreement to form Himalayan Life Insurance Company Limited in the second week of January on a swap ratio of 1:1:1. The paid-up capital of Himalayan Life Insurance has reached Rs 7.69 billion. Sulav Agrawal has been named as the chairman of the new entity formed after the merger and Manoj Lal Karn has taken charge of the company as the CEO. The IME General and Prudential Insurance have agreed to merge on an equal basis of a 1:1 swap ratio. Hem Raj Dhakal and Yugesh Bhakta Bade Shrestha have been named as chairman and CEO of IGI Prudential Insurance, respectively. Among the insurance companies having inked merger MoUs, only Ajod Insurance and United Insurance have yet to begin their integrated business. They are planning for integrated business by the first week of June. With NIA pushing for a consolidation drive by raising the minimum paid-up capital requirements for both life and non-life insurers, insurance companies have ratcheted their merger initiatives. The regulator has increased the paid-up capital of non-life insurance companies to Rs 2 billion while it is Rs 5 billion for life insurance companies. "The merger drive will bring a synergetic effect in the insurance sector," said Shamba Raj Lamichchhane, Deputy Director at NIA. "We have set the mid-July deadline for insurance companies to increase their paid-up capital. While those completing mergers will get some flexibility to increase their capital, others will have to increase their capital within the deadline."

The price of gold has increased by Rs 400 per tola in the domestic market on Wednesday. According to the Federation of Nepal Gold and Silver Dealers’ Association, the precious yellow metal is being traded at Rs 111, 600 per tola today. The gold was traded at Rs 111,200 per tola on Tuesday. Meanwhile, tejabi gold is being traded at Rs 111, 050 per tola. Similarly, the silver is being traded at Rs 1,445 per tola today.