Showing posts with label NRB. Show all posts
Showing posts with label NRB. Show all posts

Friday 24 May 2019

NRB brought Cap on Call Deposit!

As per NRB new circular issued as on 24th may 2019...an "A" class bank can't accept deposit on call account more than 10% of their total deposit liability, like wise B class bank can accept deposit from call account only upto 15% of their total deposit liability. NRB relaxation up to ashad 2077 BS, to maintain the above ratio. 

Before this amendment Banks were allowed to accept deposit from call account up to 25% to their total deposit liability. 

What is Call Deposit Account ?

Call Account is a flexible interest bearing saving account that requires you to maintain a certain amount of deposit to earn you a pre-negotiated interest. Call Account also gives you the flexibility for unlimited withdraw. Furthermore , Current Account can be linked to call Account so that balance exceeding the agreed amount in current account can be transferred automatically to call account on a daily basis and earn you interest.

Why this cap on Call Deposit?

Through this circular NRB is trying to put cap on call deposit but why our central bank is doing so, doubt may arise in your mind?

Through this circular NRB concern seems to be focusing on liquidity issues in BFI, what is your understanding on today's issued circular?

Wednesday 10 April 2019

Free Bank Account With Rs100 bonus balance!

Are you still unbanked ? Are you one of those who have no bank account with any bank? In nepal though bank have reached in most of the rular area, data shows that there are still many people who have no bank account with any bank. Considering unbaked population of Nepal NRB issued a new circular on Bank account opening campaign (#खोलौ_बैंक_खाता)  as on 10th April 2019(2075/12/27) for BFI class A, B & C.
NRB came up following provision to be followed by all BfI on said campaign:

1) KYC and related provision of Bank account opening campaign 2076:

As per this campaign to open bank account for all Nepali unbanked natural person following criteria and process should be obtained for KYC and confirmation.

👉 As per this provision BFI shall use simplified account opening form to open a bank account. Under this provision it is mandatory to obtain no multiple banking declaration during opening a bank account.

👉 For KYC and other confirmation should be based on citizenship certificate or Passport or election ID card with photo or National ID card or Driving license or Government issued photo ID or letter containing photo issued by local authority.

👉The maximum transaction limit shall be 1 lakh. KYC and other related confirmation should be obtained if transaction limit crosses 1 lakh.
 As per this provision BFI can make deposit of Rs 100 after opening the bank account.

Concluding...

NRB though this circular intended to attract all those Nepalese who still have no account with any bank. Now question arises will this circular impact positively and attract all those who have been remained unbanked? So as for this campaign BFI needs to use a simplified account opening form and bank shall deposit Rs100 in all those account meeting above criteria may attract those people towards banking. Certainly this is good step towards the vision of financial conclusion, and this will help to bring those unbanned population into banking Chanel!

Saturday 14 March 2015

Watch List

NRB came with a new directive (as on 29-11- 2071) which direct bank and financial institution to add one additional type of loan in their loan category as "Watch List".
BFI will have to classify their loan and advances into five category including "watch list" as new one.

What is "Watch List"?

As per the new NRB directive- A loan having met all the criteria of standard or good loan but showing sign of vulnerability will have to be categorized under a new type of loan i.e. Watch List.

# Pass loan(Not overdue and over due upto 3 month):
Loan and advances whose interest and principal is being paid by the  client on the regular basis or with in the time period of three month is called pass loan. The provisioning requirement for this kind of asset is 1% of total pass(standard) loan

# Watch list:
As explained above it is new category of loan which posses the characteristics of pass loan but carry/shows some amount of potential risk. The purpose of identification of potential NPL is to ensure that timely appropriate corrective steps could be initiated by BFI to protect against the NPL. As per new directive of NRB, BFI from now afterwards will have to maintain 5 % provision for this category of loan. As per NRB directive under below condition loans/advances shall categories under watchlist category:
a) Principal or intrest overdue by above 1 months
b) All Short term or working capital loan pending for renewal & all temporary extension.
c) All those loan which has been categorised under Bad loan
d) Despite of regular payment of interest & principal by Firm/company but suffering loss for two consecutive FY. But the loan provided to project under construction, these arrangements shall be applicable only after commercial production.
e) As per point numbers 33 of NRB directive all multi Banking loan which has not been converted in to consortium financing.
f) All those loner whose cash flow & week operations of the project & which is directed to keep under Watch List by NRB after  supervision

# Substandard Loan(over due by 3-6 month):
Under this category all those loan whose interest and principal remain unpaid for the period of three to six month is regarded as substandard loan. The provisioning requirement for this kind of loan is 25% of total substandard loan.

# Doubtful Loan (overdue by 6-12 month):
Interest and principle remain due up to six to twelfth month of due date is categorized as doubtful loan. The provisioning requirement is 50% of total doubtful loan.

# Loss Loan( overdue by 1 year and above):
Interest and principle remain due up to 1 year and more is termed as loss loan. 100% provisioning is made for this type of loan.

*Performing loan=
Pass loan+ watch list

*Non-Performing loan=
Substandard loan + Doubtful loan + loss loan

Conclusion...

Non performing loan is one of the major issue faced by BFI in nepal. Increasing level of NPL is putting pressure over banking industry of nepal. In this situation this new directive will have some positive impact in lowering the level of NPL in effective way.