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The Nepal Stock Exchange (NEPSE) gained 1.85 points to close at 1,953.06 points on Tuesday. Similarly, the sensitive index plunged by 0.17 points to close at 386. 32 points. A total of 3,318,108 unit shares of 255 companies were traded for Rs 1. 13 billion. Meanwhile, Unique Nepal Laghubitta Bittiya Sanstha Limited was the top gainer today, with its price surging by 10. 00 percent. NIC Asia Balanced Fund was the top loser as its price fell by 5.64 percent. At the end of the day, total market capitalization stood at Rs 2. 82 trillion.

After failing to supply fertilizers on time, the government has cut down the subsidies, making chemical fertilizers costlier for farmers. The government has reduced the overall subsidies on chemical fertilizers by 11.78 percentage points. By slashing the subsidy, the government has decided to increase the market price of chemical fertilizers. The Ministry of Agriculture and Livestock Development (MoALD) on Monday increased the prices of Urea, DAP, and Potash fertilizers. The price of Urea has been increased by about 78 percent while that of DAP and Potash by 16 and 29 percent, respectively. The meeting of the Fertilizer Supply and Distribution Management Committee on March 13 increased the sales price of Urea at the import point to Rs 25 per kg from earlier Rs 14 per kg. Similarly, the price of DAP has been increased to Rs 50 per kg from earlier Rs 43. The price of Potash has been increased to Rs 40 per kg from Rs 31. Among the chemical fertilizers imported into Nepal, the share of Urea is 56 percent while that of DAP and Potash is 42 percent and 2 percent, respectively. Earlier, the government used to provide an 80 percent subsidy on Urea fertilizer which has now been reduced to 64.5 percent. Similarly, the subsidy on DAP has been reduced to 52.4 percent from 59 percent earlier. And, subsidy on Potash has been reduced to 46 percent from 58 percent. Earlier, the government was subsidizing 70.82 percent on the import of chemical fertilizers earlier, which has now been reduced to 59.04 percent. MoALD has said that fertilizer subsidies will also be reduced further gradually. As the ministry plans to limit the subsidies to 50 percent, the price of fertilizers will further increase in the future. According to the ministry, the fertilizer price has been adjusted due to the rising price of chemical fertilizers in the international market and the decline in the exchange rate of Nepali currency with the US Dollar. "Nepal has to spend a lot of budget on subsidy amounts due to ever-increasing purchasing costs and low sales prices," said the ministry in a press statement. The government had allocated Rs 15bn for the import of chemical fertilizers in the current fiscal federal budget. Since the amount was insufficient, the MoALD said that an additional Rs 23.5bn has been managed to ensure the fertilizer imports. According to the ministry, the annual demand for chemical fertilizer in the country is 520,000 tons. However, the government has been failing to supply fertilizers as per the demand. According to the ministry, there is an agreement to import 333,500 tons of chemical fertilizers for the current financial year. So far 237,500 tons have been imported and the remaining 94,000 tons are under process. Despite this, there will be a shortage of 90,000 tons for the paddy plantation season.

Amid the news of three banks in the United States collapsing in the last one week, the Nepal Rastra Bank (NRB) on Sunday called Lender of Last Resort Policy 2023. The NRB has issued a Lender of Last Resort Policy whereby banks and financial institutions (BFIs) can take such a facility from the central bank paying an additional two percent penal rate to the prevailing bank rate. According to NRB Executive Director Prakash Kumar Shrestha, the policy has been amended to amend the regulation which was introduced in 2011. "The issuance of the policy has nothing to do with the collapse of the US banks," said Shrestha, "It's just a coincidence. The NRB board had already endorsed the policy in the last week of February." A lender of last resort facility is a financial instrument used by BFIs in case of extreme liquidity crisis when they are unable to return the deposits of the general public. Till now, only the then Vibor Development Bank has used it. The NRB, acting as a lender of last resort, extended a short-term loan of Rs 500m to the troubled Vibor Development Bank in 2011 and rescued it from an acute liquidity crunch under the Lender of Last Resort Policy 2011. The central bank provides the lender of last resort facility to BFIs, especially when they face a severe shortage of investment-grade liquidity. Earlier, the central bank used to provide such a facility at the prevailing bank rate. Now, NRB has said that a two percent penal rate will be added to the prevailing rate while providing a lender of last resort facility. According to the NRB, if BFIs are unable to manage the necessary liquidity through the interbank market, daily liquidity facilities, open market transactions, and standing liquidity facility (SLF), they can get such a facility from the central bank. The facility will be provided even if the BFIs are unable to meet their immediate obligations due to a lack of marketable assets. Similarly, even if the BFIs are unable to make payment of a large amount in deposits, they can ask the central bank for such a facility. Similarly, the NRB policy talks of providing this facility to BFIs if the economy and financial system face challenges due to systemic risk posed by a single bank, or if there is a decline in the trust of the general public towards the banking system, or if a bank is unable to pay immediate obligations due to natural disasters, and if it is unable to fulfill its immediate obligations due to national and international crisis and the bank is liquidated. Getting the lender of a last resort facility is not easy. The board of the problematic bank must submit an application to the central bank with reasons for seeking a lender of last resort as well as an action plan to revive the bank. The central bank will provide the facility only after it finds the bank can operate smoothly in the long run. Along with the application, a 6-month cash flow projection, statement of assets and liabilities of different periods, statement of deposits and other short-term liabilities, and an action plan for revival should also be submitted.

The price of gold has increased by Rs 1, 600 per tola in the domestic market on Tuesday. According to the Federation of Nepal Gold and Silver Dealers’ Association, the precious yellow metal is being traded at Rs 105, 700 per tola today. The gold was traded at Rs 104, 100  per tola on Monday. Meanwhile, tejabi gold is being traded at Rs 105, 200 per tola. Similarly, the silver is being traded at Rs 1,300 per tola today.