Nepal seeks to regulate money withdrawals in India

Nepal seeks to regulate money withdrawals in India
Sify.com, 22-Jun-02

Faced with a growing shortage of Indian currency, Nepal's apex bank has introduced a new regulation to govern the withdrawal of money from Indian banks.

From this week, Nepalis or people living in Nepal who have accounts with Nepali banks can withdraw up to Rs.200,000 per month in India using automated teller machines (ATM).

Earlier, they could withdraw only Rs.25,000 per visit to India.

'We introduced the regulation from June 18 to ease the shortage of Indian currency in Nepal and to facilitate things,' said Gopal Prasad Kafle, spokesman at Nepal Rastra Bank, the regulating authority.

As per the new regulation, an ATM user can withdraw a maximum of Rs.25,000 at a time or Rs.200,000 within a month.

'However, if the user submits documents with his bank in Nepal to show a valid reason as to why he needs the money - for medical treatment, education or business - then he can withdraw as much as he wants, depending on the discretion of his bank,' Kafle told IANS.

Two Nepal banks are joint ventures with Indian banks. Nepal SBI, which is a joint venture of the State Bank of India, and Everest Bank Ltd, a JV of Punjab National Bank, enable their account holders to use their ATM cards and withdraw money from the partner banks in India.

Standard Chartered Bank account holders can use their ATM cards directly while many other Nepali banks have relations, direct or indirect, with other Indian banks for the benefit of their ATM card holders.

A ballooning trade deficit with India, Nepal's biggest trading partner, has caused a dearth of Indian currency in Nepal.

On the eve of trips to India, bona fide travellers find it difficult to acquire Indian currency from their banks and there are growing allegations that unauthorised money changers have been charging exorbitant commission.

Money changers at Indian airports, who used to accept Nepali currency, have stopped doing so nearly five years ago.

The NRB regulation is also intended to stop the flight of capital from Nepal.

As per Nepal's laws, Nepalis can't invest outside Nepal. However, the law is flouted with impunity by thousands who have investments in India, often under the names of relatives or friends.

Revenue target likely

Revenue target likely
TKP, 19-Jun-10

The government is most likely to meet the revenue collection target this year. However, it may face tough challenges ahead in meeting the revised target of an additional Rs. 13 billion in the mid-term review of the budget.

The target set by the budget is Rs. 176.50 billion and the revised target is Rs.189.60 billion. The government aims to pay re-adjusted salary to government employees with the surplus revenue collection.

The revenue collection over the first 11 months of the current fiscal year was Rs. 153.59 billion, which is a surplus of Rs. 2.76 billion against the target of Rs. 150.83 billion until mid-June. The same has grown by 27 percent against the revenue collection during the same period last year. The government had collected Rs. 121.23 billion in the first 11 months last year. “We will definitely exceed the target set by the budget,” said Krishna Hari Baskota, revenue secretary at the Ministry of Finance (MoF).

He, however, added that he was not sure whether the revised target would be met, but he said the collection would reach somewhere near the revised target.

The government’s biggest success has been mobilsing the excise duty. The annual target of Rs. 19.64 billion has already exceeded in 11 months with a collection of Rs. 20.85 billion. Value added Tax was collected at Rs. 47.84 billion against the annual target of Rs. 51.56 billion. The revenue from customs duty was Rs. 31.26 billion in the 11 months against the annual target of Rs. 33.13 billion. “We will exceed the target in all these three areas,” said Baskota.

However, the collection of income tax has been relatively low with just Rs. 26.24 billion until mid-June against the annual target of Rs. 36.42 billion. “The income tax target will be met easily as 40 percent of this tax is collected in July,” said Baskota. The government will struggle to meet the target in the non-tax sector. It has collected Rs. 20.54 billion in 11 months against the annual target of Rs. 26.26 billion.

According to Baskota, the failure of public enterprises to pay revenue to the government as a result of their “precarious situation” resulted in the low collection of revenue through non-tax measures. Non-tax sectors include royalties, sales of government properties and dividends.

The government has collected Rs. 4.73 billion until mid-June as registration fees against the annual target of Rs.6 billion. It means the government will have to struggle to collect the targeted amount, according to the revenue secretary.

Meeting the vehicle tax target will also be tough as the government has failed to distribute smart licence cards and introduce computerised vehicle registration system. The government has collected Rs. 2.13 billion until mid-June against the annual target of Rs.3.50 billion in vehicle tax.

BBC Nepali Service Discussion Politics in Hydropower Development

BBC Nepali Service's Mr. Surendra Phuyal moderates discussion between Kantipur's Bikas Thapa and Maoist CA member Mr. Hari Rokka as to why there is so much politicization in hydropower develoment in Nepal on June 12, 2010.

Travel Warning from US Department of State

Travel Warning
U.S. DEPARTMENT OF STATE
Bureau of Consular Affairs

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Nepal
June 15, 2010

The Department of State warns U.S. citizens of the potential risks of traveling to Nepal and urges caution when traveling in that country. The Department of State remains concerned about the security situation in Nepal. U.S. citizens are urged to obtain updated security information before traveling and they should be prepared to change their plans on short notice. This replaces the Travel Warning for Nepal dated November 19, 2009, to update information on the security and political situation, and to advise travelers about the continuing possibility of political demonstrations and unrest.

Political violence has occurred sporadically throughout Nepal in the past and may escalate due to recent political tensions. Protests, demonstrations, and disruptions continue to occur, often without advance notice. In a recent indefinite strike imposed by the Unified CPN-Maoist Party on May 3-7, 2010, business and transportation were brought to a standstill. During this strike, large demonstrations were held and incidents of localized violence occurred. During past demonstrations, some protestors forcibly closed businesses, damaged vehicles, threw rocks, and burned tires to block traffic. Given the nature, intensity and unpredictability of past disturbances, you are urged to exercise special caution during announced demonstrations, avoid areas where demonstrations are occurring or crowds are forming, avoid road travel, and maintain a low profile. Curfews can be announced with little or no advance notice. U.S. citizens are urged to consult media sources and register with the Embassy (see instructions below) for current security information. The U.S. Embassy in Kathmandu continues to monitor the political situation in Nepal closely, and advises U.S. citizens that the potential remains for spontaneous demonstrations and political unrest, which could escalate into violence. You should stay current on media coverage of local events and be aware of your surroundings at all times.

Crime in the Kathmandu Valley and in the major cities of Nepal continues and includes violent crimes, robberies by armed gangs, and harassment of female travelers. Police resources to combat such crimes are limited. Theft and muggings occasionally occur in popular tourist and trekking areas such as Chitwan, Pokhara, the Annapurna region and the Thamel area of Kathmandu. Trekkers have been robbed by small groups of young men, even on popular trails.

Visitors to Nepal should practice good personal security when moving about and avoid walking alone after dark, carrying large sums of cash, or wearing expensive jewelry. Women are advised to pay attention to local customs and dress appropriately in public. In several reported incidents, tourists have had their belongings stolen from their rooms while they slept. There has been an increase in the number of fraudulent schemes perpetrated against tourists. These schemes involve requesting the traveler's assistance, particularly financial assistance, in establishing shipping routes, or business contacts with the United States or other countries, involving jewelry, antiquities, or carpets, promising huge returns.

The U.S. Embassy in Kathmandu strongly recommends that you do not hike alone or become separated from larger traveling parties while on a trail. Solo trekking is dangerous, has contributed to injuries and deaths, and makes an individual more vulnerable to criminals. Foreign trekkers have gone missing while trekking alone. The safest option for trekkers is to join an organized group and/or use a reputable trekking company that provides an experienced guide and porters who communicate in both Nepali and English. Destruction of telephone services in many trekking areas has complicated efforts to locate U.S. citizens and make arrangements for medical evacuations when needed. U.S. citizens are strongly encouraged to contact the U.S. Embassy in Kathmandu for the latest security information and to register their itinerary before undertaking treks outside the Kathmandu Valley (see Registration/Embassy Location section below). Trekkers also are advised to leave their itinerary with family or friends in the United States and to check in at police checkpoints where trekking permits are logged.

Travel via road in areas outside the Kathmandu Valley is hazardous due to erratic drivers, poor road conditions, and frequent road accidents. Public transportation, such as microbuses and tuk tuks, should be avoided because they are often overfilled, driven unsafely, and mechanically unsound. You should use taxis with meters or negotiate a price with the taxi driver before starting a trip. However, there have also been instances of taxi drivers tampering with the meters in order to charge higher fares.

Most U.S. official travel outside the Kathmandu Valley, including by air, requires specific clearance by the U.S. Embassy's Regional Security Officer. Active duty U.S. military and Department of Defense contractors must obtain U.S. Embassy clearance in advance for official and personal travel to Nepal.

The U.S. Government's designation of the Communist Party of Nepal (Maoist) as a "Specially Designated Global Terrorist" organization under Executive Order 13224, and its inclusion on the "Terrorist Exclusion List" pursuant to the Immigration and Nationality Act, remain in effect. These two designations make Maoists excludable from entry into the United States without a waiver and bar U.S. citizens from contributing funds, goods, or services to, or for the benefit of, the Maoists.

U.S. citizens who choose to visit or remain in Nepal despite this Travel Warning are encouraged to register with the U.S. Embassy through the State Department's travel registration website, and to obtain updated information on travel and security within Nepal. U.S. citizens without Internet access may register directly with the U.S. Embassy during the hours of 1:30 p.m. and 4:30 p.m., Monday to Friday, when the American Citizens Services section is open to the public. Registering makes it easier for the Embassy to contact U.S. citizens in case of emergency. The U.S. Embassy is located at Maharajgunj. The Consular Section can be reached at 977-1-400-7200, 400-7201. The number for after-hours emergencies involving U.S. citizens is 977-1-400-7266, 400-7269. The fax number is 977-1-400-7281. The Consulate's email address is consktm@state.gov.

Current information on travel and security in Nepal may also be obtained from the Department of State by calling 1-888-407-4747 toll free in the United States and Canada or, for callers outside the United States and Canada, a regular toll line at 1-202-501-4444. For further information, please consult the Country Specific Information for Nepal and the current Worldwide Caution, which are available on the Bureau of Consular Affairs Internet website.

Ministers' foreign junkets bleeding national coffer

Ministers' foreign junkets bleeding national coffer
The Himalayan Times, 15-Jun-10
By Bishnu Prasad Aryal

The national coffer may get emptied, but foreign junkets won’t stop.

At least, this is the impression one gets by visits abroad both by the Madhav Kumar Nepal-led cabinet in a year and the visits of the erstwhile Pushpa Kamal Dahal ‘Prachanda’-led cabinet in nine months are taken into account.

There are 43 members in the present cabinet while the Maoist-led government comprised 24 ministers. The incumbent ministers visited foreign countries 133 times from May 2009 to April 2010, while ministers in the previous Maoist-led government went on 92 foreign junkets between August 2008 and April 2009.

A record of the Finance Section at the Office of the Prime Minister and Council of Ministers shows around Rs 4.45 million is spent on salaries for the present 43-member cabinet every month.

The PM receives 306 litres of fuel; a minister gets 207 litres and a state minister is provided 180 litres per month. They take cash in lieu of fuel.

Dhruba Prasad Sharma, secretary at OPMCM, said the expenses for each foreign visit varied according to the size of the team, distance and number of days spent abroad. A minister gets per diem US$ 200 excluding bills for travel, food, treatment and accommodation, said Sharma.

Around Rs 1.2 million was spent on a minor treatment for Deputy Prime Minister Bijaya Kumar Gachhadar in Singapore a few months ago.

Global Prospective: India - A strong, well-balanced recovery

India’s cantilevered economy: Taking a high road
Economist, 1-Jun-2010

A strong, well-balanced recovery

ATHLETES competing in this year’s Commonwealth Games held in Delhi will travel to the stadium along the Barapullah Elevated Road, one of many transport projects sprouting up in India’s capital city. Half-built sections of the road loom dramatically over the streets below, as if straining to reach the concrete supports on the other side.

India’s economy has taken a similarly elevated route through the global financial turmoil. Its growth never fell below 5.8% (see chart), thanks to a timely fiscal splurge. But just as a cantilever cannot extend too far before it buckles, so an economy cannot place too much weight on a single source of support. India’s merits special caution, its budget deficit topping 10% of GDP in the fiscal year that ended on March 31st.

The growth figures released on May 31st were therefore doubly welcome. They showed that India’s GDP expanded by 8.6% in the year to the first quarter. And as heartening as the rate of growth was its source: investment in fixed assets (such as elevated roads) accounted for more than half of it; government consumption contributed hardly at all.

By “stepping up” its investments, “industry has shown its confidence in the economic recovery," said Chandrajit Banerjee of the Confederation of Indian Industry (CII). The biggest bets are being placed by India’s mobile-telephone operators, who bid no less than 677.2 billion rupees ($14.6 billion) between them in the government’s recent auction of the airwaves for speedy third-generation (3G) networks. A second auction now under way may raise another 300 billion rupees from firms seeking to offer broadband internet over wireless networks.

This windfall, far exceeding the government’s target of a total 350 billion rupees, will help it narrow its budget gap this year. But the government’s gain was the telecoms industry’s loss. To compete in the auction, mobile operators have borrowed heavily, some from overseas. Instead of India’s government owing money to sleepy domestic bondholders then, India’s most dynamic companies now owe money to foreign creditors. Whether this helps the economy or not will depend on whether the government spends the auction proceeds better than the telecoms companies would have done.

If a slowdown in government outlays was welcome, a slowdown in private consumption, which grew by only 2.6% in the year to the first quarter, was not. The CII blamed this weakness on high prices, which have dogged the government’s second term. In a press conference on May 24th, Manmohan Singh, India’s prime minister, singled out inflation as a "matter of deep concern", but pointed to signs of a "moderating trend".

He’s right to point out that wholesale-price inflation has eased, from over 10% in February to 9.6% in April, compared with a year earlier. But even as the cost of foods (including manufactured foods, such as sugar and dairy) begins to fall, the price of other manufactured goods is gathering some momentum. The Reserve Bank of India (RBI), which has raised interest rates twice this year, still has work to do.

The pace of rate hikes will be governed by two imponderables: the monsoon, which is now sweeping up the coastal state of Kerala, and the squalls on world financial markets, which have swept outwards from Greece. If the monsoon lives up to expectations, the prospect of a good summer harvest will help to quell food inflation. That will, in turn, lower inflation expectations, making the RBI’s life easier. By the same token, bad financial weather may keep interest rates low around the globe. If so, the RBI will be wary of raising its own rates too far ahead of other central banks.

The RBI worries that higher rates could invite heavier inflows of foreign capital. This would push up the rupee, damaging India’s exporters. Overseas investors traditionally flee emerging markets in periods of global financial angst. But an economy growing at 8.6% may look a safer bet than the moribund markets of Europe and America. Rohini Malkani of Citigroup points out that Indian companies were able to borrow $4.3 billion overseas in March, the most they have in two years. Prominent among the companies raising money were India’s infrastructure firms and its telephone operators.

That leaves India’s policymakers with a big strategic decision. They could rebuff this foreign capital, by tightening caps, regulations and other restrictions on foreign investment. Or they could take advantage of it, betting that a stronger rupee is a worthwhile price to pay for faster telecoms networks and elevated roads over India’s congested city streets.

Global Prospective: Singapore Tourism

Nepal wants to bring in 1 million visitors during Visit Nepal Year 2011. To give a prospective on that number, the tiny Singapore got 10x that in 2010.

News Roundup: May, May be an inflexion month in Nepali politics

Roundup of Nepali Economic and Business News for May 1-June 12
By NepaliEconomy.com
News Archive

For better or for worse, May 2010 could be an inflexion point in Nepali politics. It is the month when CPI (M) experienced its first political setbacks. Following its massive May Day parade, the group launched indefinite general strike but withdrew it only after 6 days following public backlash, and without getting anything in return from the government. On May 28th it made a last minute compromise with the ruling coalition to extend the tenure of the CA by one year, supposedly to prevent a vertical break-up of itself. Again, it got the short-end of the stick because MK Nepal is adamantly clinging to power. It has become obvious that although the Maoists are the most dominant political force they are not powerful enough to impose their will on the country. The result is that the country has multiple centers of powers and is heading towards fragmentation along ethnic/regional lines much like the Warlord era in China in the early twentieth century post-Manchu dynasty and in Afghanistan post Soviet withdrawal. The bottom-line is that political instability in Nepal is likely continue for a long time.

With the bandh over, it is time to take account of the damages. Total economic cost is anyone's guess - Industry Mahendra Raya Yadav estimates Rs. 250 million a month from bandhs - but there are few concrete claims of losses: Tourism Rs 15 billion, Kurintar Cable Car Rs 150 million and movie industry Rs 27 million. And politicians still talk of ending strike culture in Nepal.

Nepal’s economy continues to chug along despite unfavorable political backdrop. World Bank expects 2010 growth to be around 3%. Nepali government revised down its own forecast from 5.5% to 3.5% because of weaker than expected agricultural output; grain output fell 4% this year; not a surprise given the government has not been able to supply enough fertilizer. Given the country’s anemic economic growth, it is mind-boggling that the government is unable to spend allocated development budget. At least on one measure the government claims a success; it has reduced poverty rate from 31.0% to 25.4%.

BOP deficit is the country's top economic problem according to the NRB Governor. Nepal received $42 from the IMF’s rapid credit facility to finance its CA deficit but that is not quite enough or is the long-term solution. The NRB Governor talked about devaluing NRs vs IRs but that idea was officially shot down the very same day. For whatever reason the country suffers from acute shortage of IRs. Without any concrete policy, trade deficit continues to worsen; it widened 58% in the first 10 months of 2009/10 on the back of weaker exports. China is trying to help Nepal's exports by signing an accord that will allow zero-tariff entry facility to 4,721 Nepali exportable items in the Chinese market but that's more PR than anything given Nepal's widening deficit with China. Taking about trade, there is funny war going between CNI-FNCCI over issuing certificates of origin.

Financial sector continues to be under pressure. Deposits were down in Q3 vs Q2 probably because banks are limiting deposits rates to only 12%. Real estate remains weak with realty transactions in Kathmandu down 25% and aggregate loans down 3% in Q3 vs Q2. Auto sector is in the most severe recession in recent memory, the low-end more so than the high-end. Talking about cars, vehicle theft has gone up in the capital. On the regulations side, the NRB penalized 90 development banks and finance companies for not meeting Statutory Liquidity Ratio (SLR) but bankers were able to push back government’s plans to have deposits of Rs 1 million or more verify the source. On the flip side, the NRB rejected request from the NBA to relax terms of collateral for refinancing from the central bank.

Government has endorsed a new industrial policy but not sure what that means. The country has no respect for law and order; case in point despite the government's opposition truckers are forming syndicates to monopolize their routes. The country suffers from lack of power. Load-shedding first came down by half from 12/day to 6hr/day and then rose again to 9 hours/day. Most importantly for business, Nepal is the most corrupt country in South Asia according TI.

Remittances, which are already affected by the global economic slowdown might get hit more by country-specific issues like in Malaysia where Nepalese are going to compete with cheaper Bangladeshi workers. On positive news, Brunei wants to hire more Nepalese in its security agencies but shortage of passports is hampering those who want to get out.

SOE are a suffering bunch. NOC raked up losses of Rs 10 billion in 2066/67, up from Rs 9 billion in the previous year and is seeking Rs 1 billion loan from the government. NEA is losing Rs 4 billion a year and has accumulated Rs 12-14 billion debt and could go bankrupt. The government wants to privatize NAC which has Rs 12 billion asset at Rs 28 billion enterprise value and is expected to lose its monopoly over ground handling at the Tribhuvan International Airport. NAC is key to the success of Nepal Tourism Year 2011 and wants to expand its fleet by acquiring 9 aircraft but is having difficulty getting government’s loan-guarantee. In the east, Udaypur Cement Factory is on the verge of being closed due to mis-management.

The one sector doing well in Nepal is telecommunications and broadcasting. 81 foreign TV channels have applied for downlink permission with the Ministry of Information and Communications (MoIC) to broadcast in Nepal. NT has slashed 3G subscription price by more than 40%, while price wars in telecoms has move to international calls. And the government has unveiled IT Policy 2010.

There was a major financial scandal in Nepal. Unity Life Insurance Company (ULI), a multi-level marketing company, popularly known as a pyramid scheme, got lot of headline as its business practice came under question. ULI boasted that it had 650,000 clients and collected more than Rs 6 billion mainly from the working poor but the government found that it had only Rs 1 billion in assets. After lot of news coverage, the government froze the account on May 17. Before the government closed ULI’s 34 holding companies, had a money losing hospital in Pokhara and a dairy in Chitwan. The government has charged several ULI's managers. The government also issued order banning networking business but that decision was appealed. Supreme Court issued its judgment but one report says SC agreed with the government but another says it did not; go figure!