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The price of gold has increased by Rs 300 per tola in the domestic market on Tuesday. According to the Federation of Nepal Gold and Silver Dealers’ Association, the precious yellow metal is being traded at Rs 111, 200 per tola today. The gold was traded at Rs 110, 900 per tola on Sunday. Meanwhile, tejabi gold is being traded at Rs 110, 650 per tola. Similarly, the silver is being traded at Rs 1,445 per tola today.

Nepal has reiterated its political commitment to the International Monetary Fund that it would get the country’s 10 largest commercial banks audited by international auditing firms, a senior official of Nepal Rastra Bank said. Sending a joint letter to the IMF on April 10, Finance Minister Dr. Prakash Saran Mahat and Nepal Rastra Bank Governor Maha Prasad Adhikari said that Nepal was committed to ensuring banks’ compliance with prudential requirements. “By the end of April 2024, we will launch in-depth on-site inspections for the largest 10 banks assisted by independent international third-party auditors,” they vowed in the joint letter. Under external auditing, there will be a review of loan portfolios in line with the new regulatory framework and paying special attention to loan and collateral valuation, evergreening, group borrowing, and concentration risks. “We will seek IMF support for the preparation of the terms of reference for the hiring of the third-party international audit firm and the design of the loan portfolio reviews, which we expect to complete by August 2024,” they said. “We will develop a plan to deal with the review’s findings, and any bank with capital shortfalls will be required to submit capital management plans setting out how they will return to full compliance with regulatory requirements.” “Only after Nepal made such a political commitment, the IMF approved the global monetary advisor on May 1 decided to release the second installment of Extended Credit Facility (ECF) worth about $52.8m as the second installment,” said a senior official of Nepal Rastra Bank (NRB). Even though Nepal received about $110m as the first installment, the Washington-based organization had delayed the second installment stating that Nepal did not fulfill the conditions, especially due to its eight-month-long import ban since April 2022 on certain products amid its depleting foreign exchange reserves. “The banks whose auditing will be conducted by the external auditor will be determined after holding consultation with the IMF,” the NRB official said. Even though NRB has been reporting very low defaults of loans in Nepal’s banking system, the IMF is not convinced that defaults are as low as it has been reported. The concern is reflected in the press statement issued at the conclusion of the Article IV mission in late February.“Bank asset quality [in Nepal] has deteriorated, reflecting a decline in the repayment capacity of borrowers due to higher lending rates and rising leverage, a concern that is moderated by banks’ capital-adequacy ratios that are above the regulatory minima,” the IMF said in the statement. As per the IMF, discussions with central bank officials recognised the need for the central bank to ensure appropriate reclassification of loans and close monitoring of the impact of a potential deterioration in the repayment capacity of borrowers. “Prudent monitoring of the impact of unwinding pandemic-related support measures and deterioration in repayment capacity of borrowers on asset quality is critical,” the IMF said. “The NRB should ensure banks vigorously differentiate viable borrowers with temporary liquidity shortages from nonviable ones.” This, according to the IMF, will help the NRB to get a better overview of the health of the loan portfolio of Class A banks prior to launching loan portfolio reviews of the ten largest banks assisted by independent international auditors by end-April 2024. “The global monetary advisor is concerned whether loans were given to the right borrowers and whether there has been evergreening of the loans,” the central bank official said. The government and the central bank have admitted in the joint letter that non-performing loan (NPL) levels are still relatively low, and capital adequacy ratios are above the regulatory minimum, but concerns remain. “Pandemic-related support measures—including debt service moratoria, extension of grace periods and relaxations in provisioning levels and asset classification rules—provided important relief to the economy, and helped maintain relatively low NPL levels,” the government said in the letter. But, the NPLs increased from 1.3 percent in July 2022 to 2.6 percent as of January 2023, reflecting the decline in the repayment capacity of borrowers. “NPLs may increase further and we remain committed to prudently monitoring the banking sector to ensure that loans are appropriately classified, and that provisioning and capital remain adequate for all banks,” the letter states. “The envisaged amendments to the asset classification regulation will encourage banks to engage in restructuring of loans to firms that are viable but have temporary liquidity shortages.”

The Nepal Stock Exchange (NEPSE) plunged by 16. 93 points to close at 1,833.69 points on Monday. Similarly, the sensitive index dropped by 2. 41 points to close at 352. 37 points. A total of 2,810,627-unit shares of 270 companies were traded for Rs 824 billion. Meanwhile, Wean Nepal Laghubitta Bittiya Sanstha Limited was the top gainer today with its price surging by 8. 05 percent. Likewise, Eastern Hydropower Limited was the top loser with its price dropping by 9. 99 percent. At the end of the day, the total market capitalization stood at Rs 2. 67 trillion.

As the country grapples with the economic slowdown, the insurance business has taken a beating in the current fiscal year. Both life and non-life insurance business grew in single digits in the first nine months of the current fiscal year. After a double- digit growth in previous years, the insurance business (life and non-life) grew by a meager 2.66 percent in the first nine months of the FY 2022/23 compared to a growth of 12.29 percent in the same period of the FY 2021/22. Nepal Insurance Authority(NIA)  statistics show  life and non-life companies collected insurance premiums totaling Rs 134.74bn in the first nine months of the FY 2022/23 which was Rs 131.24bn in the corresponding period of the FY 2021/22. The total insurance premiums increased by only Rs 3.50bn in this fiscal year. According to NIA, life insurance companies collected premiums amounting to Rs 104.73bn in the first nine months of the current fiscal year, while it was Rs 30bn for non-life insurance companies. The premium collection of life insurance companies during the same period of the last fiscal stood at Rs 102.54bn and non-life insurance companies at Rs 28.70bn. According to NIA Executive Director Raju Raman Poudel, the ongoing economic slowdown has affected the insurance business. “Insurance business is facing challenges due to the high-interest rates, liquidity crunch, and rising inflation. These factors have reduced the common people’s purchasing power,” he said. According to CEOs of insurance companies, insurance premiums of large amounts are generally paid by borrowing money from banks. As banks are struggling with a liquidity crunch, borrowing from them has become difficult in this fiscal year and customers have not been able to pay the premiums. “As a result, there has been a big decline in the growth rate of the insurance business,” they said. Insurers say that the rise in the non-renewal and surrendering of insurance policies is dragging the business down. “Currently, we are seeing surrender of life insurance policies in large numbers,” said the CEO of a leading insurance company. Among the life insurance companies, Nepal Life Insurance Company (NLIC) has collected the highest premium. The NLIC has collected insurance premiums worth Rs 27.26bn followed by LIC Nepal with Rs 12. 94bn and National Life Insurance with Rs 11.37bn. Similarly, Shikhar Insurance is in the leading position in the non-life sector. The company has collected insurance premiums worth Rs 4.15bn, followed by Sagarmatha Lumbini Insurance with Rs 3.48bn and Siddhartha Premier Insurance with Rs 3.35bn.