DHONI MEETS PRESIDENT YADAV UPDATE Kathmandu, 17 June; Indian cricket Captain Mahindra Singh Dhoni met President Dr.Ram Baran Yadav Sunday morning at Shital Niwan before emplaning for New Delhi. nnnn NRB EASING REFINANCING PRIVISION Kathmandu, 17 June: The Nepal Rastra Bank (NRB) is all set to ease the refinancing provision for banks and financial institutions (BFIs) by virtually removing all the pre-conditions, Prithvi Man Shrestha writes in The Kathmandu Post. . There has been a negligible lending under the refinancing provision despite the central bank ensuring such a facility for almost all productive sectors, disadvantageous groups, including women and backward communities, and foreign employment and exports. The central bank, under this facility, provides credit to BFIS at a very low interest rate and the latter have to lend the amount to the aforementioned sectors at NRB-fixed rate. “With BFIs complaining about paperwork hassles and complicated conditions for such lending, we are going to remove almost all conditions so as to enable deserving sectors to get credit under this facility,” said a senior NRB official. Among the refinancing conditions were BFIs concerned should have adequate capital adequacy ratio, non-performing loans (NPL) below 5 percent and credit-to-deposit ratio below 80 percent. “The upcoming directive on refinancing will have none of these conditions,” said the official. However, NRB spokesperson Bhaskarmani Gnawali said the central bank would discourage BFIs not maintaining satisfactory capital adequacy ratio from exercising this facility. In the new provision, the central bank will be mum over the existing provision that offers BFIs just 80 percent refinancing of good loans put up as collateral. “This means, we are ready to provide 100 percent refinancing against good loans,” said the NRB official. The central bank will continue the provision that offers refinancing of up to 60 percent of the core capital of BFIs concerned. Another important change in the upcoming directive is that BFIs can lend the refinanced amount only to their borrowers whose good loans have been put up as collateral. Earlier, banks could lend such amount to any of their loanees having investment in the productive sector. “This provision ends the possibility of good borrowers not getting loans at cheaper rates under the refinancing facility,” said the NRB official. The new directive has not changed the list of sectors that are eligible to get the refinancing facility. Sectors that are eligible to the facility are exports, pharmaceutical industry, tourism, manufacturing industries, small and medium level industries, agriculture, cement, iron industry as well as hydropower development, electricity transmission line and cable car. And, the sectors that are not eligible are personal loans, real estate, housing and commercial complex, hire purchase financing, margin type lending (loans against share) and for tobacco and alcohol industry. As per the existing provision, the normal refinancing will be available at an annual interest rate of 7 percent which BFIs will have to re-lend at not more than 10 percent. The rate for hydropower and agriculture sectors will be 6.5 percent. The interest rate for the special refinancing—applicable for export industry, sick industry, small and cottage industry and foreign employment of a specified section of the people—has been maintained at 1.5 percent, and BFIs cannot charge more than 4.5 percent interest from borrowers under this facility. NRB will be changing the provision that penalises BFIs defaulting refinanced amount. The central bank will now charge interest 3 percent higher than its bank rate to defaulting BFIs as penalty. As per the existing provision, NRB charged the maximum interest rate maintained by defaulting BFIs. The NRB bank rate is at 7 percent currently. “Although we deduct the refinanced amount from the accounts of defaulting BFIs, the penalty provision is just a warning,” said the NRB official. nnnn RAMPANT SMUGGLING OF FERTILIZERS ALONG BORDER Kathmandu, 17 June: Smuggling of Indian chemical fertilisers is on the rise in bordering districts of Parsa, Bara and Rautahat, Bhusan Yadav writes in The Kathmandu Post from Birgunj. . Although the local authority claims to have taken initiative to control the illicit trade, it is thriving by the day. Central Region Chief Administrator Tilak Ram Sharma said he has been instructing the police to control smuggling for the last few days. “Our job is only to instruct the police,” he said. People involved in the smuggling use bicycles to import fertilisers from India and stock them in bordering areas before delivering to different parts of the country in trucks. Smugglers are paying porters Rs 100 per sack for bringing fertilisers to godowns in Nepal from Indian markets. A single porter transports up to four sacks at a time. A source with knowledge of the matter said as many as 40 trucks of chemical fertilisers are being imported daily from several border points, including Viswa, Janakitole and Padepur of Parsa district and Simraungadh, Matiarwa and Basantapur of Bara district. Smugglers are using the Bankul border point of Rautahat district to import fertilisers at night in large quantities. Urea, which costs IRs 800 per sack in India, costs between Rs 1,600 and Rs 1,800 in the local market. Similarly, DAP costing IRs 1,300 in India is sold for Rs 2,500-Rs 3,000. “The Indian government provides subsidised fertilisers to Indian farmers and Nepali traders are purchasing the manure by offering higher price,” said Vishal Gupta, a shopkeeper in East Chaparan, Bihar. What is more interesting is that the police administration itself is said to be supporting smugglers ‘to help poor Nepali farmers’. One of the smugglers told the Post that they pay a fixed bribe to the Central Region Police Office in Hetauda, and Bhadrakali division of the Armed Police Force in Piluwa of Bara, besides bribing the police stations that fall on their smuggling route. Other authorities, including the Department of Revenue Investigation Regional Office, District Administration Offices of Bara and Rautahat, and some high ranking police officials are also receiving monetary benefits, according to smugglers. Bara CDO Birendra Yadav, however, said only farmers were importing fertilisers using their bicycles, but not smugglers. “Smuggling is strictly prohibited,” he said. However, a police source said that they were compelled become casual bystanders due to pressure from ‘higher level’. A smuggler said the police was forced to release three trucks of smuggled fertilisers seized by a team led by Makawanpur Police Chief on May 24. “The smuggling cannot be controlled with the lone effort of the police,” said Sushil Shrestha, deputy inspector general, Armed Police Force, Pathalaiya. nnnn