Nepal, tourism heaven

New Banks Going Remote, Old Ones City-Centred

All Nepali banks and financial institutions (BFIs) carry one objective in common: “We want to go remote areas and mobilize the small deposits of rural Nepal”. That is at least what they say in record. However, all the commercial banks, development banks and finance companies are city-centred. On top of that, only around 40 per cent of Nepali citizens have access to modern banking facilities till now. If the state-owned banks are left aside, one can clearly see negligible presence of commercial banks from the private sector in the remote areas. (See the accompanying table) 

 

The table shows that some big banks have less than five branches in remote areas. Nabil Bank, which is operating 47 branches across the country in total, has only three branches in remote areas. It is the same case with Himalayan Bank, Nepal Investment Bank and Nepal SBI bank with Standard Chartered Bank having not even a single branch in remote as well as hilly areas. 

 

However number of branches of newly established banks is growing in remote areas as well. Civil Bank, NMB Bank and Citizens’ Bank are operating five branches each in distant parts of the country. Likewise, Century Bank, Global IME and Prime Commercial Bank are also following the former three institutions for opening branches in remote areas.

 

Despite the incentives provided by the Nepal Rastra Bank (NRB), commercial banks are reluctant to open branches in districts such as Rolpa, Rukum, Bhojpur, Salyan, Humla, Manang etc. The central bank has been providing interest-free loan of between Rs. 5 million and Rs. 10 million to banks for opening branches in remote areas. Still the old and big banks are not interested in opening branches in those areas. 

 

This is despite the fact that the established banks have much higher financial and human resource strength compared to the new ones. They have low cost deposit, higher spread, higher client base, huge profit and ability to spend. So the leading BFIs should take this as one of their responsibilities to open branches in remote areas. They should provide modern banking facilities to the needy people of such areas even if profitability from such branches is difficult. One can understand that investors ask for return, but does it mean that the remote people have no right to expect anything from BFIs? Of course they have and banks and financial institutions need to start thinking about it.

Share market in Nepal

Stock market has been growing day by day in Nepal as many companies have been issuing shares and debentures. However the growth is not satisfactory as well as not steady. If we look at the history of share market index, there is sharp incline and decline in short period. There are many reasons behind this unbelievable fluctuation.

First, most of the investors pour their hard earned money without knowing the stock and stock market. They have been following the crowd. If the stock market start to increase they start investing in those stock whose price have increasing. But after someday, the price starts to fall without any valid reason and they got trapped. This type of investment can be regarded as nearly gamble investment where odds of gain is less.
Second, large investor normally can manipulate the Nepalese share market by buying and selling the stock within own circle. A simple example: If A hold 100000 shares of Nabil bank and want to manipulate the market he starts selling small number of shares to his own circle in higher price. In some days when the price is its peak then he sales in bulk and earn profit. However the market will come in its real situation after selling all the shares by A and small investor who have purchased the share will lose their investment.

Third, Nepalese investors lack stock market knowledge and share pricing. They don’t know what the real value of a certain share is and how much they can earn by investing. Another simple example: If Nabil offers 50% cash dividend, and current market price is Rs.1500.00 then the real return will be 3.33% if somebody hold the stock for one year. This rate can be earned without taking any risk if somebody make deposit in bank. There are many other factors but this applies only to those investors who hold the stock only for dividend.

What can be done to avoid such risk and get the higher return from stock market? There are many ways. First look thoroughly the financial statement of the company. Give importance to the rate of return, earning per share, general reserve. Further analyze the future growth potential of the company. If the company in its saturation then it can’t earn abnormal profit and it can’t provide higher dividend. Third, keep open your eye and ear open because there are many information related to the company which directly or indirectly affect the share price and return of the company. Rumor of merger & acquisition, change in management team, abnormal income etc. also affect the share price of the company.

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When i returned at around 15:00 hrs from the office, i didn’t have mood to go home. I do not know why. I was coming with a sub way train and suddenly I saw very beautiful place with endless blue flowers. I was excited to visit that place and got off from the subway. The place was on the bank of Rheine river located in Düsseldorf. Weather was warm, which is hard in these days in Germany. Temperature was around 15 degree and sunny. At first I thought there is a small garden with some flowers but to my surprise I can see the garden and flower as much as I can. I sat in one bench and started to write these words.
Unfortunately I forgot to take camera so I could not take any photos but I can take any time because I have to come in this place twice a week. Further now a days every sunday I am coming here. So next time I will take the photos..
The beauty of the place can not be expressed in words. A warm sunny day on the bank of Rheine river and beautiful garden with thousand of blue flowers. I do not know the name of flowers and I even do not want to know because I want to enjoy the beauty of the place without having any tension.
Many people are taking photos and enjoying the place but I am alone here. Being alone in such a place is not bad but better when you have somebody to express your feeling regarding the beauty of this place. I lacked this opportunity today. I can see two huge and long bridges over the Rheine river and a TV tower standing like Dharahara tower in Katmandu. The trees are having no leaves seems little bit disappointing. But now summer has started and we will see greenery in some days here. The environment will be much more beautiful in summer. Düsseldorf being the capital of the North Rheine Westphalia, a lot of vehicles are running. So this noice is making me angry which is hindering me to enjoy the scene. But to avoid this noise I have used my MP3 player and listening to some nice music. Three small kids are playing with their dog and their parents are little bit concerned. Some are enjoying jogging and cycling. In my right side there is one huge building looks like a palace. Such buildings are very common here in Germany.
The place is so neat and clean that perople can sit anywhere without any hesitation. Now I am comparing such parks in Nepal and in Germany. People also prefer having such place here and care themselves as well. They do not throw waste anywhere like in Nepal. In Nepal I had many experience that people through waste and garbage from window just like that. And they yale to the government to clean that garbage. What a irresponsible behavior.
Oh, I moved from one topic to another. I am enjoying the place. Ok lets stop writing and enjoy the place more.


Suvas
17th March 17, 2009
Düsseldorf
North Rheine Westphalia
Germany

Merger and Acquisition

Buying and selling goods are the most common phenomenon of business. But many companies are involved in buying and selling of companies. In business terms it is called merger and acquisition. Merger are of three kinds: Horizontal, Vertical and conglomerate.
Horizontal merger means buying the same kind of company or two companies with same kind of business come together under one umbrella. For example Vodafone acquired German telecommunication giant Mannesmann, J P Morgan acquired Chase Manhattan bank.
Another type is vertical acquisition. In this type a company acquires another direction of business. Either it goes to raw material side of goes to forward direction of customer. For example walt Disney acquired ABC television to reach to large size of customer.
Finally, conglomerate merger includes random acquisition of companies. There is no direct link between the parent company and subsidiary or acquired company. For example AT&T acquired NCR .
However most acquisitions are failed like an abnormal marriage . Daimler had to divorce with Chrysler after many years of merger. Other big companies were also in trouble because of unusual merger and acquisition.

Management conferences

Being a business management student,i am always curious about management conferences. Currently, a huge conference is going on in Davos, Switzerland. This conference is more important because of global recession. People are hoping that it can recommend some solution to get rid of the recession.
Many economists, business tycoons are there to propose new insight and thought so that their long experience and expertise can make this planet better in terms of wealth. So lets hope this conference will be corner stone to save our economy.