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There has been a sharp decline in the profits of national-level development banks in the first six months of the current fiscal year 2022/23. According to the unaudited financial reports published by the banks for the second quarter, their net profit has decreased by an average of 20.90 percent. Currently, there are eight national-level development banks operating in Nepal. The second quarter reports of the banks show their profit stood at Rs 2.53 billion in the review period compared to Rs 3.20 billion during the same period of FY 2021/22. The net profit of the banks declined by Rs 669.3 million in this fiscal year which is much higher than that of commercial banks. The profit of 22 commercial banks decreased by 1.34 percent during the first half of the current fiscal. Among the development banks, Jyoti Bikas Bank has the highest profit decline in terms of percentage. The bank saw its profit plunge by 89.91 percent in this fiscal year. Jyoti Bikas earned a profit of Rs 34.7 million in this fiscal compared to Rs 344 million during the same period of the last fiscal. Similarly, Kamana Sewa Bikas Bank saw its profit decline by 43.01 percent during this period. The bank's profit reduced to 195.8 million in the first half of this fiscal compared to Rs 343.6 million in the same period of the last fiscal. Sangrila Development Bank's profit decreased by 36.4 percent. The bank's profit plunged to Rs 166.5 million in the first six months of the current fiscal year from Rs 261.8 million in the corresponding period of the last fiscal year. Similarly, the profit of Mahalakshmi Bikas Bank and Lumbini Bikas Bank decreased by 30.73 percent and 25.78 percent respectively. Profits of 3 development banks increase  The second quarter reports show profits of three national-level development banks surged in the first half of the current fiscal year. The net profit of Muktinath Bikas Bank increased by 3.91 percent, Garima Bikas Bank by 1.86 percent and Shine Resunga Development Bank by 23.15 percent. The net profit of Muktinath Bikas Bank stood at Rs 626.2 million in this fiscal compared to Rs 602.4 million in the last fiscal. Similarly, the profit of Garima Bikas Bank increased to Rs 502.1 million in this fiscal from Rs 492.9 million in the last fiscal. The profit of Shine Resunga increased to Rs 429.6 million this fiscal from Rs 348.83 million in the last fiscal. The decline in profits of development banks in the current fiscal year is attributed to the severe liquidity crunch and high-interest rates. As banks struggle to recover loan installments and interest, their profit took a beating. This resulted in an increase in non-performing loans for which development banks had to arrange additional money for loan-loss provisioning.

The eight-months long import restrictions have made quite an impact on the country's foreign trade. Official statistics show Nepal's imports declined by 20.68 percent and trade deficit by 19.15 percent in the first six months of the current fiscal year. While the import restrictions on vehicles, expensive mobile sets, and foreign liquors, helped the country to avert a looming forex reserves crisis, the government's revenue, which is import-centric, took a big beating in the first half of the current fiscal year. Nepal's imports have declined by 20.68 percent while exports slumped by 32.01 percent in the first six months of the current fiscal year. According to the latest foreign trade data released by the Department of Customs (DoC), the country's import bill stood at Rs 792.66 billion in the first half of FY 2022/23 compared to Rs 999.34 billion during the same period of FY 2021/22. Similarly, the export bill stood at Rs 80.80 billion in the review period compared to Rs 118.85 billion in the corresponding period of the last fiscal year. The country's overall foreign trade declined by 21.89 percent to Rs 873.47 billion in the first half of FY 2022/23. With the slowdown in economic activities and a contraction in the overall market demand as a persistently high inflation rate and a squeeze in liquidity in the financial put a dent in the pockets of consumers, the imports of high revenue-generating goods such as industrial raw materials, gold, mobile phones, vehicles, crude soyabean oil, and crude palm oil have declined in this fiscal. On the other hand, the import of agricultural products has increased due to the inability to increase the production of agricultural goods that can be produced domestically. It is not only the imports that have declined; the worrying fact is the country's exports have also decreased during this period. As per DoC data, Nepal's exports have declined by 32 percent to Rs 80.80 billion in the first half of the current fiscal year, particularly due to the dramatic decline in the exports of palm oil, soyabean oil, and sunflower oil to India. In the last 2-3 years, Nepal’s export figure has largely been dominated by two products—palm oil and soyabean oil, which are basically not produced in Nepal. The edible oils are brought in crude form, refined and packaged in Nepal-based refineries and exported to India. It is believed that many producers even import refined oils, repackage and label the products and export them to India which has no to little value addition as products made in Nepal. The ballooning of exports of edible oils led Nepal’s overall exports to touch the Rs 200 billion mark for the first time in history in FY 2021/22. The contribution of edible oils to the country's overall export was Rs 93.69 billion. Nepal export palm oil and soyabean oil worth Rs 89.18 billion in the last fiscal year which accounts for around 45 percent of Nepal’s total exports. However, the exports of edible oils have slumped massively in the first half of FY 2022/23. The exports of palm oil slumped to Rs 13.08 billion from Rs 31.97 billion. Likewise, exports of soyabean oil also dipped to Rs 8 billion in the first six months of this fiscal from Rs 34.26 billion in the same period last fiscal year. Despite the huge drop in the export of edible oils, official data suggest that there has not been a significant drop in other products which are exported on a large scale. The country’s exports of these products suffered after India lowered its customs tariff to help tame the rising inflation in October 2021. The largest South Asian economy lowered the import duty on crude varieties of palm oil, soybean oil, and sunflower oil to zero. However, after taking into account the 5 percent agri cess and 10 percent social welfare cess, the effective duty on crude forms of these three types of edible oil is at 5.5 percent. At the start of 2021, effective customs duty on palm, soybean and sunflower oils reached as high as 35.75 percent. With the Indian government removing the import duty on these edible oils, the duty differential advantage Nepali exporters had was gone. Nepal currently levies a one percent customs duty and a 13 percent VAT on the import of these three types of edible oil. The Indian government’s decision to abolish customs duty on raw soybean oil and palm oil has badly affected Nepal's exports. The producers are currently exporting the edible oils only one-fifth of what they used to export until India abolished the import duty. And, it seems India will not hike duty on the import of these products anytime soon. In late December last year, the Indian government extended the policy of keeping lower tariffs on vegetable oil till March 2024. These products also don’t qualify to get the export subsidies that the government announced through the budget for the current fiscal year. Foreign Trade (First Six Months)

The Nepal Stock Exchange (NEPSE) gained 4.62 points to close at 2,100.70 points on Monday. Similarly, the sensitive index surged by 1.89 points to close at 402. 15 points. A total of 3,922,216 unit shares of 259 companies were traded for Rs 1. 47 billion. Meanwhile, Adarsha Laghubitta Bittiya Sanstha Limited was the top gainer today, with its price surging by 10. 00 percent. Laxmi Bank Debenture was the top loser as its price fell by 9.58 percent. At the end of the day, total market capitalization stood at Rs 3. 03 trillion.

The Investment Board Nepal (IBN) has again called for an Expression of Interest (EoI) from interested firms to conduct a feasibility study for the development, operation, and management of the Electric Bus Rapid Transit (eBRT) in Ring Road of Kathmandu valley. According to IBN, the objective of the proposed feasibility study is to examine the technical, economic, financial, social, and environmental viability of the proposed eBRT system. The notice reads that any single firm or a joint-venture company can apply at the IBN office. The selected firm will have to complete the feasibility study of the eBRT project in 18 months from the date of signing a contract. The firm will have to carry out a feasibility study for the BRT corridor along Kathmandu Ring Road, including the service and operations plan, physical and operational design of the BRT system, traffic engineering improvements, application of ITS technologies, and fare collection mechanisms. Similarly, it has to estimate the scale of environmental benefit while adopting an electric BRT System as well as evaluate the PPP investment modality about the feasibility of the BRT System and recommend the appropriate modality that makes the project attractive and feasible to the investors. The board had earlier issued EoI to study the feasibility of eBRT on November 6, 2022. The deadline for applying for the EoI was December 12, 2022. And, 13 companies from Nepal and abroad submitted proposals. However, it was canceled after the procurement process was found to be inconsistent at the evaluation stage. A senior official of the IBN said that the new EoI was called, canceling the earlier one. The IBN has planned to construct the project under the public-private partnership model. The pre-feasibility study has estimated a cost of USD 153 million (Rs 20.11 billion) to build the infrastructure that will be built under the build-operate-own-transfer (BOOT) model. The government has planned to allocate a lane of Ring Road street for the operation of electric buses. The private sector company will construct modern bus-stop and terminals and smart ticketing, among others. Under the plan, an average of 75 electric buses will be operated on the ring road.