UML STANDING COMMITTEE MEETS FRIDAY TO DISCUSS NATIONALL CONSENSUS GOVT. Kathmandu 21 Sept.: Big Three and Madeshbadi parties meet Friday after Wednesday’s decision to go for constituent assembly (CA) election by what has been called a ‘four-party syndicate’ who have been monopolizing power for more than four years They were elected only for two years to promulgate a constitution—a task in which they failed miserably. There’s no way in determining and knowing the hold of parties with the people. The parties are attempting to cash a blank cheque believing or arguing they still have a support base amongst people. Opposition UML standing committee is meeting ahead of the meeting of UCPN Maoist, NC,UML and Madeshbadi parties to discuss an election process, Secretary Yubaraj Geywali said. “Other issues can’t be discussed without discussing a national consensus government,” he added/ Opposition parties have said a decision taken by the four Wednesday was unacceptable CPN Maoist which split from UCPN Maoist said they won’t participate in a national vote calling Wednesday’s decision a deception. The party took the decision at an informal decision of the central committee chaired by Mohan Baidhaya. Nnnn FOUNDATION STONE FOR TALLEST SUSPENSION BRIDGE OVER KALIGANDAKI LAID Kathmandu, 21 Sept.: ARs.19.6 million bridge over Kaligandaki river linking Belawa in Baglung and Kushma in Pabat will be the tallest bridge suspension bridge over the river. Finance Minister Barsha Man Pun laid its foundation Thursday. Nnnn HARI PRASAD SHARMA APPOINTED COMMISSION CHAIRMAN Kathmandu, 21 Sept.: Government has appointed Hari Prasad Sharma Chairman for a four-year term of a commission to determine price of drinking water. The cabinet appointed Sharma Thursday. Nnnn MEDIA GOOGLE “India is in favou of one Madesh, one province. This is the reason why there has not been any consensus on NC’s proposal to go for five provinces. The Chinese have started saying that Nepal should not have many provinces.” (NC leder Shashank Koirala, Republic, 21 Sept.) Nnnn ‘The prime called officials and directed them to reduce load-shedding. Is his directive a miracle that will reduce the hours of power cuts? Will his directive immediately increase power generation? The PM should take decisions instead of issuing directives.” (Industrialist Rabi Bhakta Shrestha, Nagarik, 21 Sept.) Nnnn NEW BANKS PROTEST BASE RATE Kathmandu, 21 Sept: The central bank´s plan to introduce base rate in the banking sector has faced opposition, as new banks have objected to the plan saying such a system would not create a level playing field for them, Rupak D. Sharma writes in Republica.. Nepal Rastra Bank is planning to introduce base rate to make the practice of credit pricing more transparent and enhance efficiency of banks and financial institutions that would ultimately force them to make credit cheaper to compete with peers. To give a demo of what the system would be like, the central bank on Wednesday invited bankers to its office and explained the concept. But following the meeting, chiefs of new banks said such a system would make it difficult for them to compete with established banks having ability to mobilize deposits at cheaper rates. Base rate basically sets the floor for credit rates and denotes the lowest lending rate banks can offer to borrowers. Once such rates are announced, banks and financial institutions cannot extend loans at below this rate, except in exceptional cases like credit extended to the deprived sector. If any bank or financial institution violates this rule, the central bank can take action against them. As of now, the central bank has decided to initially introduce the system in commercial banks, which have to revise these rates every month. This allows borrowers to tally credit rates every now and then and complain or move base if the rates being charged are too high. “We know the system creates transparency in the banking sector and is beneficial to borrowers. But the system also has its drawbacks, as new banks with higher cost of fund, will not be able to draw customers because their base rates will be higher than that of established banks,” a CEO of relatively newer bank told Republica on condition of anonymity. The banker´s concern stems from the fact that the formula coined by the central bank has given more weight to cost of fund, or average deposit rate, in calculation of base rate, which, like the banker said, can prove detrimental to newer players. As of last fiscal year ended July 15, Standard Chartered had the lowest cost of fund of 3.44 percent in the banking industry, while newer banks like Civil and Century had cost of fund of 10.52 percent and 10.44 percent, respectively. Simply put, Standard Chartered was paying an average 3.44 percent interest on deposits, while Civil and Century were paying average interest rates of 10.52 percent and 10.44 percent, respectively, to depositors. This means base rate of newer banks like Civil and Century will be higher than that of Standard Chartered. This will be the same for at least nine other banks whose cost of fund hovered at above nine percent. This, however, does not mean cost of fund is the only factor responsible for nudging up base rate. Other variables like cash reserve ratio, statutory liquidity ratio, operating cost and return on assets are also taken into account while determining the base rate. “But since the cost of maintaining six-percent cash reserve ratio and 15-percent statutory liquidity ratio is also calculated by factoring in cost of fund (coupled with deposits that can be extended as loans), we don´t see how we´ll be able to get leverage,” the banker said. “This means new banks that don´t have huge deposit base and big network will continue to be left behind as our clients will start rushing to bigger banks once the regulator makes it mandatory to announce base rates. At the same time, our existing customers will also start creating pressure on us to reduce lending rates making it even more difficult for us to do business.” Nepal Rastra Bank, the central bank, has, however, said what is real cannot be hidden. “The fact that their cost of fund is higher does not mean they can keep their customers in dark. Every borrower has the right to these information,” a high-ranking official of the Rastra Bank told Republica on condition of anonymity. Nnnn 20 PERCENT RULE COSTS NEPALI PASMINA INDIA MARKET Kathmandu, 21 Sept :Exports of Nepal-made Pashmina products to India dropped by over 60 percent during the fiscal year 2011/12 compared to figure recorded last year after Indian officials fixed maximum retail price (MRP) on its trade making it expensive by 20 percent than ex-factory rates, Republica reports. Traders said the Indian move has weakened the competitiveness of Nepali Pashmina in the Indian market. Trade and Export Promotion Center (TEPC), which is authorized agency to compile trade data, states that exports of Pashmina products to the southern neighbor plunged to Rs 55.35 million during the year 2011/12 from Rs 144 million recorded the year before. "Demand for our Pashmina from India dropped during the fiscal year 2011/12 and the trend still continuing as Indian customs officials marked up the MRP by 20 percent," said Dinesh Tuladhar, who has been exporting Pashmina products to India for the last few years. Tuladhar said demand for Nepali Pashmina has been gradually going down as Indian customers now prefer cheaper Indian Pashmina products. He said 12 percent countervailing tax being imposed by India on Nepali Pashmina for the last few years had already started to dent Nepali Pashmina´s market in India. He also attributed the fall in the exports of Pashmina to the growing number of Pashmina factories in India. "The number of Pashmina factories in India has grown markedly over the last few years," he added. Pushpa Man Shrestha, president of Nepal Pashmina Industries Association, said Nepali Pashmina products will lose the Indian market if the Indian government does not arrange easy entry. However, total export of Nepali Pashmina product including Chyangra Pashmina has gone up by 16 percent to Rs 1.9 billion during the fiscal year 2011/12 compared to the previsous year. Nepal has registered the trademark of Chyangra Pashmina in 41 countries most of them in North America and Europe. Similarly, the process to register the trademark in Brazil, Russia, the UAE and China is going on. Nnnn ________________________________________ DONATION DRIVE BY BOTH MAOIST FACTIONS SPREADS TERROR Kathmandu, 21 Sept.: The donation drives carried out by sister organisations of Unified CPN-Maoist and CPN-Maoist have got traders, entrepreneurs and school operators of Sunsari district terrified, Ratna Prasad Acharya writes in The Himalayan Times from Dharan.. Stating that donation was being collected for the upcoming national conferences, both student unions are terrorising private and government schools and entrepreneurs. Chairperson of Sunsari chapter of Private and Boarding Schools’ Organisation, Dil Kumar Ban, said leaders and cadres of ANNISU-R have been asking for Rs 5,000-50,000 from private schools in the district. Donation terror has become rife in Dharan, Itahari, Tarahara, Duhabi, Khanar, Inaruwa and Jhumka. Ban objected to absence of legal action against those who vandalised the vehicle of Delhi Public School and New Practical English Language Centre. PABSON has asked for security in Sunsari. Ban warned of protests if the donation terror did not stop. Meanwhile, Chairperson of Sunsari ANNISU-R affiliated to CPN-Maoist, Samin Limbu, said they have to hand over Rs 7 lakh for the national conference, so they have speeded up the donation campaign in the district. He said Rs 3 lakh had been collected till now. Sunsari CDO Laxman Thapa said security personnel have been mobilised following complaints of donation terror. He promised to bring those to book who try to collect donation forcefully. Nnnn FIRST CREDIT RATING AGENCY GETS APPROVAL Kathmandu, 21 Sept.: Nepal’s first credit rating agency — Icra Nepal — has received the final approval to start operations from the regulator — Securities Board of Nepal (Sebon), The Himalayan Times reports. “Meeting on Monday approved the company for operation, and only handing over the licence formally is yet to be done,” said director of Sebon Niraj Giri. The regulator had conducted the inspection of the infrastructure of the aspiring rating agency as the final stage of assessment for licence, in July. It had applied for the final licence about three months back after finalising its set up. Icra Nepal Ltd was granted the Letter of Intent to undertake the process to start a credit rating agency in Nepal by Sebon in August 2011. India’s Icra Ltd will have 55 per cent stake in Icra Nepal while remaining stake is held by Credit Information Bureau, Himalayan Infrastructure Fund, and a few Nepali banks. Credit Rating Agency Regulation 2068 states a foreign credit rating agency must have at least 25 per cent stake in a Nepali credit rating agency. The credit rating agencies rate credit worthiness and financial soundness of an entity — individual, company or country — based on their financial indicators. The credit ratings are supposed to be a simple, yet effective indicator aiding ordinary investors to understand the risks involved in the investment process. Regulation says companies planning to issue ordinary shares, bonds, debentures, or preference shares exceeding Rs 30 million in value have to get themselves rated by a rating agency. nnnn