Submit your Article

Amid the precarious economic outlook of the country, growing fiscal imbalance, rising bank default cases, and threats to the banking sector, Prime Minister Pushpa Kamal Dahal on Sunday sat down with the representatives of the private sector for the first time after he took charge of the Singha Durbar. The Prime Minister, who is also overseeing the Finance Ministry, discussed the problems in the economy and banking sector with the private sector representatives and senior government officials at his office in Singha Durbar. During the interaction, Dahal discussed the issues related to bank interest rates, microfinance problems, concerns of the private sector, and the attempts to create financial disorder in the country. During the meeting, Dahal said that the government has taken recent incidents to cause financial disorder seriously and is taking initiatives to resolve the problems in the banking and financial sector. "The government is worried about the current situation," a government official who participated in the meeting quoted the prime minister. "After discussions with the stakeholders, the government will move quickly and take concrete decisions." "The government is serious about resolving the challenges of the economy. I am aware and aware of people's complaints in the field of banks and microfinance," said Dahal. Seeking suggestions from the private sector, he further said that a high-level commission may have to be formed to resolve the problems. However, Sunday's discussion ended without a concrete decision. The Prime Minister came late to the meeting by an hour. While the meeting was called for 12.30 pm, Dahal reached only at 1.30 pm. "As the Prime Minister has another program to attend, the meeting lasted for one hour only," said a businessperson who attended the meeting. According to him, the representatives of the private sector put forward their concerns. According to Rajendra Malla, President of Nepal Chamber of Commerce (NCC), the private sector demanded a reduction in the bank's interest rate. "We have requested the Prime Minister to reduce the interest rate and premium rate of banks," he said. During the interaction, Nepal Rastra Bank Governor Maha Prasad Adhikari briefed the latest situation of the country's economy. Adhikari reported that the economy is in recovery mode following improvement in the country's external sector. Shekhar Golchha, President of Federation of Nepalese Chambers of Commerce and Industries (FNCCI) touched on the issues of banks' higher interest rates as well as rising non-performing loans. Vishnu Kumar Agrawal, president of the Confederation of Nepalese Industries (CNI) demanded the early appointment of the finance minister. Agrawal was of the view that the new finance minister should be a technocrat who understands the economy well. Nepal Bankers' Association President Sunil KC drew the PM's attention to recent anti-bank agitation by a vested interest group.

In recent weeks, the plights of borrowers of microfinance institutions (MFIs) have made numerous headlines. Particularly those who had availed loans from multiple MFIs have suffered badly after failing to repay the loans amid business losses and a decline in income due to the Covid-19 pandemic and economic slowdown in the country. But banks and financial institutions (BFIs) are now concerned about whether the cases of willful defaults will rise following the campaign launched by controversial businessman Durga Prasain against repaying the loans. Besides political demands for the restoration of the monarchy and Hindu nation status, Prasain has been demanding that the BFIs should waive loans up to Rs 2 million and reduce the interest rates. Bankers say with the slowdown in business activities, rising inflation, and high-interest rates, borrowers' ability to repay the loans has weakened and this has led to a surge in the number of 'blacklisting' of the people by banks and government authorities who are unable to repay the loans. According to bankers, due to the drastic slowdown in the real estate market, banks are not able to recover loans easily even through auctioning the real estate properties. "Small and medium enterprises, agricultural enterprises, hotels and tourism firms, schools/colleges, and companies in the construction sector are unable to repay their debts," said a banker. Prasain's campaign has alarmed the bankers. Issuing a joint statement on March 2, Nepal Bankers’ Association, Development Bankers Association Nepal, Nepal Financial Institutions Association, and Nepal Microfinance Bankers’ Association drew the government's attention amid threats and manhandling of the staff of BFIs by unidentified people. The associations said that calling not to repay loans and inciting violence will invite anarchy which would not benefit anyone in the country. According to them, it will further complicate the situation and affect economic activities. "It is the responsibility of borrowers to repay the principal amounts and interest of the loans they've availed. It is anarchy to refuse to settle the financial liabilities," reads a joint press release issued by the umbrella organizations of the BFIs. According to a senior official at the Nepal Rastra Bank, Prasain’s campaign could cause some of his followers to default on the loans. “But the ultimate victims of following such a campaign will be those who fail to repay the loans regularly,” the official said. “BFIs will recover their loans anyway because almost all the loans in the country have been provided against the collateral.” The NRB official claimed that Prasain has been making an effort to make his campaign a springboard to elevate his political ambitions but his followers who will be inspired not to pay the loans would suffer finally. “It may take some time to recover the loans, but BFIs will definitely recover the debts,” he said. While the debt default rate in Nepal is relatively low so far but the worrying sign is, the rise in the non-performing loans (NPLs) of the banks. As of mid-January, the NPLs of commercial banks stood at 2.54 percent while development banks' NPLs stood at 2.47 percent and finance companies at 5.79 percent. “NPL level of banks in Nepal is relatively lower compared to their South Asian peers,” the NRB official said. But the quality of loans has become a concern for the central bank as well as international agencies like the International Monetary Fund (IMF). The IMF’s Article IV consultation mission which concluded its visit last month has stated in its initial observation report that bank asset quality in Nepal has deteriorated, reflecting a decline in the repayment capacity of borrowers due to higher lending rates and rising leverage, a concern that is moderated by banks’ capital-adequacy ratios that are above the regulatory minima. “The discussions recognized the need for the Nepal Rastra Bank to ensure appropriate reclassification of loans and close monitoring of the impact of a potential deterioration in repayment capacity of borrowers,” the IMF said. Continuing to advance reforms on banking regulations and supervision and ensuring bank asset quality, and further strengthening NRB’s governance by amending the NRB Act in line with best international practices are the commitments Nepal made to the IMF to receive funding under the Extended Credit Facility (ECF). As international agencies like the IMF have been warning about the quality of the loans, the central bank is concerned that the campaign run by Prasain can cause an increase in debt defaults further. How the defaults affect the bank can be gauged from painful rehabilitation measures taken to rescue Rastriya Banijya Bank and Nepal Bank in the early 2000s. The credit rating agency ICRA Nepal in its recent report has also pointed out a looming challenge to the Nepali banking sector. "While the rise in NPAs during the first half of the financial year can be partly attributed to the industry seasonality, the ongoing challenges led by increased interest rates, erosion in the credit profile of the borrowers as discussed in earlier sections, the inability of the banks to extend credit facilities under a new regulatory regime, etc have exacerbated the liquidity concerns and weakened the debt-servicing ability of the borrowers; which could continue the pressure on banking sector asset quality going forward," reads the report. According to the report, the probable deterioration in asset quality of banks in subsequent quarters could result in the need for recapitalization, given the moderate capital cushion of many banks. “However, the ability of the banks to recapitalize through equity issuance could remain a challenge given the weak to moderate profitability outlook for the banking sector," states the report.  

While Nepal has bilateral trade with 154 countries, it enjoys a trade surplus with only 33 countries. According to the Department of Customs (DoC) statistics, Nepal has a trade surplus with countries including Denmark, United States, Algeria, Cambodia, Norway, Romania, Chad, Uruguay, Afghanistan, and Latvia. However, this does not hold much significance in terms of the monetary value as the trade surplus is pretty low as the country does not have large bilateral trade with these countries except the United States. Nepal has the highest trade surplus of Rs 395.62 million with Denmark. The country exported goods worth Rs 594.45 million while imported goods worth Rs 204.33 million from Denmark in the first seven months of the current fiscal year. The United States is another country with whom Nepal enjoys a trade surplus in this fiscal. Nepal has a surplus of Rs 87.62 million in bilateral trade with the world's largest economy in this fiscal year. The country exported goods worth Rs 10.73 billion while imported goods worth Rs 10.64 million during this period. While the country's total trade deficit has declined in the current fiscal, Nepal has a huge trade deficit with the countries with which it has large bilateral trade with the United States being an exception. The impact of import restrictions and cash margins on imports, the measures that were introduced a year ago to check the depleting foreign currency reserves, is still visible in the country's foreign trade. Nepal's foreign trade has decreased by 20.84 points in the first seven months of the current fiscal year. With both imports and exports declining, the overall trade deficit has also decreased by 18.71 percent. As per the DoC data, Nepal's exports declined by 29.03 percent to Rs 93.43 billion in the first seven months of the current fiscal year, particularly due to the dramatic decline in the exports of palm oil, soyabean oil, and sunflower oil to India. The exports of edible oils have slumped massively in the first seven months of FY 2022/23. The exports of palm oil slumped to Rs 13.92 billion from Rs 34.15 billion. Likewise, exports of soyabean oil also dipped to Rs 8.27 billion in the first seven months of this fiscal from Rs 36.85 billion in the same period last fiscal year. Similarly, the country's imports have also decreased by 19.90 percent to Rs 919.16 billion. The eight-month-long import restrictions as well as the provision of cash margin have put a brake on the imports in this fiscal year. India is Nepal’s largest trade partner with the highest share of both exports and imports. According to the statistics, Nepal exported goods worth Rs 66.23 billion and imported goods valued at Rs 570.97 billion in this fiscal. The trade deficit with the southern neighbor currently stands at Rs 504.74 billion The second largest trading partner is China. Exports to the northern neighbor stood at Rs 422.65 million billion while imports stood at Rs 125.05 billion. According to DoC, India, United States, Germany, United Kingdom, Canada, Turkey, France, Australia, Japan, and Italy are the top 10 export destinations of Nepal. In terms of imports, India, China, Indonesia, United Arab Emirates, Argentina, Malaysia, United States, Ukraine, Australia, and Qatar are the top 10 import destinations of Nepal.

Established in 1923 in Nagold, Germany, Hafele is a leading manufacturer of furniture fittings, door hardware and electronic locking systems with a diverse range of product portfolio and has been providing services to customers in many countries of the world. The company has been expanding its footprints across the South Asia region and is also present in the Nepali market for some time now. Frank Schloeder is the Managing Director, South Asia Region of Hafele Design Studio recently visited Nepal for the opening of the Hafele outlet in Gairidhara, Kathmandu. ApEx caught up with Schloeder to talk about the objectives of opening the Hafele Design Studio, the company's expansion in Nepal and market opportunities, among other topics. Excerpts: Tell us about this exclusive Hafele Studio in Kathmandu and what can the customers find here. This concept can be found across South Asia. We have around 190 of these types of studios in the region and we have teams that are operated directly by Hafele also. Our studios will make people feel at their home. The idea is to create a 360-degree approach to interior solutions. We are a provider of interior solutions, wardrobes, or any other place in the house. We work together with architects and with developers in these kinds of designs for our customers and we then provide all the hardware required. What is the market of supplies you provide in the context of South Asia?  We started in the region 20 years ago and are now an established player. We started very small but now it’s a big organization and we are a dominant player in this market. The furniture market is not highly organized in the region. There are no big producers of modular kitchen and wardrobe systems and we want to support the professionalization of the entire business by creating really high-quality solutions that are out of the space of modular kitchen and module wardrobe systems and we provide complete solutions on that. It is estimated that the organized market is less than 20 percent of the overall market, and the rest 80 percent is unorganized. So, you can see the gross potential that we have because it’s very aspirational. Everyone wants to have a beautiful house and kitchen, and different designs have their own functionality and quality. I think this is a part of the beginning of the journey where we will see strong growth of the market in Nepal and also in South Asia as well. How do you see the prospect of Hafele in the Nepali Market?  We’ve been in Nepal already for some time providing hardware to projects and hotels. But we have not been here as an exclusive studio where customers can walk in and really discover the Hafele world. We are serious about Nepal and we want to develop this market. We found our support from the right partner i.e. UHS Holdings. It is important to find like-minded people who understand our philosophy and who have the same passion for quality, design, and customer service, and with whom we can go. We have plans to bring the brand closer across the country not only in Kathmandu, but we want to start now from here within this solid foundation and grow step by step as the market develops. How is Hafele different from other companies?  Each company has its own specifics. So far, we haven’t seen any other company that has such a broad 360-degree approach to interior solutions. We can really provide anything from door hardware to furniture fittings to appliances to complete kitchen and wardrobe solutions to lighting systems to faucets and sinks and all of that and hence this becomes a one-stop shop and this becomes easy for the customers to come and own our products. We have also been very strong with German quality products and finding the right product for the market. This is the talent that Hafele has to go and find the right product at the right price points from affordable to luxury items, so there is something for everybody. And in South Asia, if you walk into any of our studios, you feel exactly the same as they have been modules by the same team. We want to ensure that Hafele is the same wherever you go and get the same customer experience and same quality. How has the Covid-19 pandemic impacted Hafele's business?  The Covid-19 pandemic was not an easy one for all of us. Yet, it has for sure driven a trend towards people spending more time in their homes and has let them be more invested in the designs and functionality of their homes and we see a huge number of people investing in home solutions. So, in that sense, the pandemic has also helped us in a way. What are the challenges in the sector that Hafele is in?  The challenges are quite similar across the world. First of all, we need to plan what the customer needs and then we have to manage the supply chain and bring the right goods at the right time in the country because we want to have high availability of the products and make it fast for the customers to have the products. Another big challenge is to ensure consistent quality. This is why we are not just coming here to sell but we are also coming here to install the items that we sell and to service them over a lifetime. For this, we have made a huge investment in training and skills development to make sure that all our partners can deliver the same standard across the markets. Being an entrepreneur, what message would you like to give to the coming aspiring business enthusiasts?  Entrepreneurship is a good idea to develop a professional career. It is because, when you are an entrepreneur you are active. Everyone has the possibility to become an entrepreneur and also it starts in the beginning with nothing, but it gets broad if you are consistent and if your vision is broad and then you need to have the discipline to implement it. There might be ups and downs, but you have to be consistent with it by delivering your promise to the customers which are very important and only then you can have a lot of progress in your business.  

Officers have arrived at the residence of former Prime Minister Imran Khan in a bid to arrest him in a case related to the purchase and sale of gifts, Aljazeera reported. In a series of tweets on Sunday, the police said Khan was “avoiding” arrest after officers arrived at his home in Lahore, adding that a police superintendent had “gone to the room” but the 70-year-old was not there. On Tuesday, an Islamabad sessions court issued a non-bailable arrest warrant for the former PM for avoiding hearings in connection with the illegal purchase and sale of gifts received from foreign dignitaries when he was prime minister. Khan has denied the charges. Khan was removed from power in April last year after he lost a parliamentary vote of confidence and is facing dozens of cases against him, ranging from “terrorism” to corruption. On Sunday, police officials, who had travelled from the capital Islamabad, were seen outside the entrance of Khan’s Zaman Park residence in the eastern city of Lahore. Khan’s supporters and members of his Pakistan Tehreek-e-Insaaf (PTI) party gathered in their hundreds to protest against the arrest of their party head. Islamabad Police Inspector General Akbar Nasir Khan told Geo News TV channel that the team went to Lahore to arrest Khan and not just to serve the warrant. Nasir added that according to the law, the first step of a non-bailable arrest warrant was to serve notice to the accused and make the arrest immediately, according to Aljazeera. During a public event on Sunday, interior minister Rana Sanaullah said the police came to serve the warrant and will subsequently update the court. Speaking to journalists outside Khan’s home, PTI party leader and former information minister Fawad Chaudhry confirmed that the police had come to execute the warrant. “Police says Imran Khan is avoiding arrest. However, the police’s insistence to arrest Khan is illegal,” he said. “They want Imran Khan to go to court where security is lax and there’s a risk to his life.” PTI vice chairman Shah Mahmood Qureshi said discussions with the party’s legal team will take place before deciding on any future course of action later on Sunday. “We are a political party, we will react politically. We will strategise. Imran Khan’s life is at risk. He has already suffered an attack, and we fear there’s another attack planned. We have to protect him from it,” Qureshi told reporters. “Imran Khan has protective bail. The government is trying to create a law-and-order situation.” In November last year, the 70-year-old former national cricket captain was shot in the leg when his anti-government protest convoy came under attack in the city of Wazirabad. One of Khan’s supporters died after sustaining bullet wounds while more than a dozen people were injured.

Sudurpaschim Province Chief Minister Kamal Bahadur Shah won a vote of confidence from the provincial Parliament on Sunday. Shah won the vote of trust by securing 41 votes in the 53-member Provincial Assembly. As many as 11 votes were cast against the vote of confidence motion. Chief Minister Shah was supported by Nepali Congress, CPN (Maoist Center), Nagarik Unmukti Party, CPN (Unified Socialist) and independent lawmakers. CPN-UML and Rastriya Prajatantra Party lawmakers voted against him. In the 53-member Provincial Assembly, Nepali Congress has 19 lawmakers, CPN-UML 10, CPN (Maoist Center) 11 (with Speaker), Nagarik Unmukti Party seven, CPN (Unified Socialist) four, Rastriya Prajatantra Party one and independent lawmaker one. Shah of the Nepali Congress was appointed as the Chief Minister of the Sudurpaschim Province on February 9 after then Chief Minister Rajendra Singh Rawal failed to win the vote of confidence from the provincial Parliament.

The Nepal Stock Exchange (NEPSE) plunged by 30. 77 points to close at 1,938.25 points on Sunday. Similarly, the sensitive index dropped by 4. 86 points to close at 368. 70 points. A total of 3,832,459 unit shares of 259 companies were traded for Rs 1. 39 billion. Meanwhile, Super Madi Hydropower Limited was the top gainer today with its price surging by 10. 00 percent. Likewise, Samling Power Company Limited was the top loser with its price dropped by 10. 00 percent. At the end of the day, the total market capitalization stood at Rs 2. 80 trillion.

The CPN (Maoist Center) has said that its attention has been drawn towards the order of the Supreme Court to its administration to take petitions against Prime Minister Pushpa Kamal Dahal. The Maoist Center expressed its objection after a division bench of Justices Ishwor Khatiwada and Hari Phuyal ordered the Supreme Administration to register writs against Dahal, also the Chairman of the CPN (Maoist Center). Earlier, when advocate duo Gyanendra Raj Aran and Kalyan Budhathoki had filed writs against Dahal, the Supreme Court registrar had ruled that the petition cannot be registered. Then rebels had kidnapped and murdered advocate Aran’s father Tilakraj. Similarly, advocate Budhathoki’s father was displaced. During a program held on January 15, 2020, Dahal had said that out of 17, 000 people killed in the Maoist insurgency, 5,000 were killed by the Maoist and he would take the responsibility for it. Issuing a statement on Sunday, Maoist Center General Secretary Dev Gurung said that the CPN (Maoist Center) would strongly condemn the activities carried out against Nepal's Constitution, people's war, 62/63 people's movement and progressive achievements. He said that the writ petitions were filed in contrary to the principle of judicial review and freedom of thought and expression guaranteed by the Constitution of Nepal. Saying that the Truth and Reconciliation Commission (TRC) and the Commission of Investigation on Enforced Disappeared Persons (CIEDP) were formed under the Comprehensive Peace Agreement to look into the incidents that occurred during a decade-long Maoist insurgency, Gurung said, “As Commissions have been working for a long time to complete the judicial proceedings, we would like to remind that no action can be taken or take decision in this regard which would adversely affect the issues within the jurisdiction.” Gurung appealed to the political parties in favor of the peace agreement, general people in favor of peace and international communities to unite saying that activities against the transitional justice law would create serious challenges to the established peace process in the country. The petitioners demanded that court take necessary legal action against Prime Minister Dahal for killing 5, 000 people he owned up.