Even while it is being said that the number of banks and finance institutions in Nepal has crowded the market, the Nepal Rastra Bank is granting license to new players. The good news, however, is that the new players are coming up with new visions and ideas.The latest new entrant into the market is Nepal Development and Employment Promotion Ltd., a Category B financial institution with Rs. 192 million paid up capital. And as the name suggests, it is going to be dedicated for the promotion of employment - both within and outside Nepal .
In fact NDEP was originally conceived by the promoters as a joint venture with the association of manpower agencies that send Nepalis for foreign employment. However, that could not materialise as the association of the manpower agencies broke up due to wrangling among themselves. Therefore, the promoters approached the Employee Provident Fund offering 15 per cent shares which the fund management readily picked up. Despite that, the promoters are planning to induct selected manpower agencies as shareholders in the company in the near future, according to the company's Chairman and Chief Executive Officer Lok Bahadur Shrestha, a veteran bureaucrat and also former Finance Secretary and Chief Secretary of the Nepali government and former Nepali ambassador to Bangladesh . Meanwhile he was also the Chairman of the Board of Directors of various banks including the state-owned Rastriya Banijya Bank and Nepal Bank Ltd. as well as private sector Nabil Bank and Nepal Indosuez Bank (now Nepal Investment Bank).
The other major names in about five dozen promoters of NDEP include Ganesh Bhakta Saakha (Chairman of Saakha Group), Min Bahadur Gurung (owner of Bhatbhateni Supermarket) and Subarna Bajracharya (Associate Professor of Financial Management).
Being conceived as an employment promotion bank, the focus of NDEP will be to provide loans to those who have to finance their trip to the country where they have found work. "I have seen many villagers coming to Kathmandu with some money by selling off their land or houses and by the time they get selected for foreign employment and get their visa, they are left without money and they can't buy their ticket. That has ruined many families. We want to help to avoid such disasters," says Shrestha.
"In fact, the foreign employment business is such that all the risks are borne by the poor villagers who go abroad and toil in an alien environment while all the others including the manpower agencies, the remittance companies and the banks that take the lion's share of benefit from foreign employment bear little or no risk. NDEP will try to develop a business of protecting these workers," he adds.
To provide such loans for foreign employment, NDEP has developed a system of taking a collateral or a guarantee from the manpower agency. "Unfortunately, we can't help those who can't offer collateral. For this type of people, a guarantee from the manpower agency would be helpful. As the agencies know the employers well, they can arrange to have the amount deducted from the worker's salary and send it here on an installment basis to repay the loan," says Shrestha. This is likely to be accepted by agencies as one manpower agency has already deposited an amount as a standing guarantee against which NDEP would be extending loan to those recommended by the agency.
Also being considered is a proposal to tie up with manpower agencies and set up joint offices at all the major centres abroad where Nepalis are working. These offices can work with the employers and provide a number of services to the workers. Thus these can be made separate entities with the costs and profits shared between the NDEP and the manpower agencies.
For other types of financing, NDEP has offered schemes under the home loan, vehicle loan, education loan, festival loan and all purpose loans targeting middle-class people. For collecting deposits, it has put forward a number of schemes including basic saving (minimum balance Rs. 500 but maximum only up to Rs. 100,000), saving multiplier, fixed plus and recurring deposits. "We also want to provide an ATM facility to those who wish to use ATM but have no access to it as this facility is still limited to only those who can maintain a handsome deposit. Our basic saving account is designed specifically for those people, hence the cap on maximum deposit," Shrestha explains.
Perhaps an equally important plan NDEP has is to introduce lease financing. Though this type of financing is still not picking up in Nepal in the absence of a proper law, an improved draft prepared with the support from the Asian Development Bank is expected to be introduced as a law very soon. Meanwhile, Shrestha himself is planning to visit Mumbai to study how HDFC, a finance institution there, is doing excellent job in lease financing.
Similarly, Shrestha is pinning hope also on the venture capital fund that Asian Development Bank is providing to the Ministry of Industry. "Management of that fund is being entrusted to NDEP," he confides.
In fact NDEP was originally conceived by the promoters as a joint venture with the association of manpower agencies that send Nepalis for foreign employment. However, that could not materialise as the association of the manpower agencies broke up due to wrangling among themselves. Therefore, the promoters approached the Employee Provident Fund offering 15 per cent shares which the fund management readily picked up. Despite that, the promoters are planning to induct selected manpower agencies as shareholders in the company in the near future, according to the company's Chairman and Chief Executive Officer Lok Bahadur Shrestha, a veteran bureaucrat and also former Finance Secretary and Chief Secretary of the Nepali government and former Nepali ambassador to Bangladesh . Meanwhile he was also the Chairman of the Board of Directors of various banks including the state-owned Rastriya Banijya Bank and Nepal Bank Ltd. as well as private sector Nabil Bank and Nepal Indosuez Bank (now Nepal Investment Bank).
The other major names in about five dozen promoters of NDEP include Ganesh Bhakta Saakha (Chairman of Saakha Group), Min Bahadur Gurung (owner of Bhatbhateni Supermarket) and Subarna Bajracharya (Associate Professor of Financial Management).
Being conceived as an employment promotion bank, the focus of NDEP will be to provide loans to those who have to finance their trip to the country where they have found work. "I have seen many villagers coming to Kathmandu with some money by selling off their land or houses and by the time they get selected for foreign employment and get their visa, they are left without money and they can't buy their ticket. That has ruined many families. We want to help to avoid such disasters," says Shrestha.
"In fact, the foreign employment business is such that all the risks are borne by the poor villagers who go abroad and toil in an alien environment while all the others including the manpower agencies, the remittance companies and the banks that take the lion's share of benefit from foreign employment bear little or no risk. NDEP will try to develop a business of protecting these workers," he adds.
To provide such loans for foreign employment, NDEP has developed a system of taking a collateral or a guarantee from the manpower agency. "Unfortunately, we can't help those who can't offer collateral. For this type of people, a guarantee from the manpower agency would be helpful. As the agencies know the employers well, they can arrange to have the amount deducted from the worker's salary and send it here on an installment basis to repay the loan," says Shrestha. This is likely to be accepted by agencies as one manpower agency has already deposited an amount as a standing guarantee against which NDEP would be extending loan to those recommended by the agency.
Also being considered is a proposal to tie up with manpower agencies and set up joint offices at all the major centres abroad where Nepalis are working. These offices can work with the employers and provide a number of services to the workers. Thus these can be made separate entities with the costs and profits shared between the NDEP and the manpower agencies.
For other types of financing, NDEP has offered schemes under the home loan, vehicle loan, education loan, festival loan and all purpose loans targeting middle-class people. For collecting deposits, it has put forward a number of schemes including basic saving (minimum balance Rs. 500 but maximum only up to Rs. 100,000), saving multiplier, fixed plus and recurring deposits. "We also want to provide an ATM facility to those who wish to use ATM but have no access to it as this facility is still limited to only those who can maintain a handsome deposit. Our basic saving account is designed specifically for those people, hence the cap on maximum deposit," Shrestha explains.
Perhaps an equally important plan NDEP has is to introduce lease financing. Though this type of financing is still not picking up in Nepal in the absence of a proper law, an improved draft prepared with the support from the Asian Development Bank is expected to be introduced as a law very soon. Meanwhile, Shrestha himself is planning to visit Mumbai to study how HDFC, a finance institution there, is doing excellent job in lease financing.
Similarly, Shrestha is pinning hope also on the venture capital fund that Asian Development Bank is providing to the Ministry of Industry. "Management of that fund is being entrusted to NDEP," he confides.
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