NRB Asks Banks to Get Ready for Basel III
Nepal Rastra Bank (NRB) has asked commercial banks to get ready for Basel III framework. The central bank last week directed commercial banks via a circular that it will enforce the regulatory standard from next month. NRB has decided to introduce the framework a year after the expiration of Basel II which was administered for Nepali commercial banks in 2004. When Basel III comes in full implementation, most of the Nepali banks will be required to increase their paid up capital by up to Rs 5 billion depending on their exposure on risky assets.
As per the Basel II framework, the paid up capital requirement for the commercial banks in Nepal is currently capped at Rs 2 billion. After the implementation new provision, banks are required to increase their minimum capital, equity capital ratio and buffer capital.
Bankers Say the Framework Won’t Hurt Their Profits
While the central bank is in last minute preparations to implement the Basel III, commercial bankers are looking more confident on the new regulatory framework. They are expecting Nepali banking sector to be more effective, strong and competitive.
Currently, NBR is gathering suggestions from the banking sector regarding the new regulatory standard. “NRB’s decision and preparation to enforce Basel III is very timely and appropriate,” said Bhuwan Dahal, CEO of the Sanima Bank. “It won’t hurt the profit of banks, the framework will further strengthen Nepal’s entire financial system.” According to him, many of the Nepali banking system’s current provisions will remain intact even after the implementation of new framework, due to which the chances of decline in banks profit is minimum.
Another CEO of a commercial bank also agreed with Dahal’s view. “Short-term profits of banks may come down after the enforcement of Basel III but it is likely to rise on the long-term,” he said under the condition of anonymity adding,” Distribution of dividend and profit may be affected for some time, however, these impacts will gradually lessen after the full implement of the regulatory framework.” However, some bankers are also voicing their concerns. Upendra Paudel, Vice- President of Nepal Bankers Association (NBA) said that if the new standard is enforced in the current scenario it may reduce the commercial capabilities of Nepali banks. “It is good to introduce the global framework in our country, however, some practical problems may persist,” he said. Paudel informed that NBA will submit its suggestions to NRB to solve such problems.
| What is Basel III Framework? Basel III (or the Third Basel Accord) is a global, voluntary regulatory standard on capital adequacy, stress testing and market liquidity risk of banks. It is a set of standards and practices created to ensure that banks across the world maintain adequate capital to sustain themselves during periods of economic strain. It was agreed upon by the members of the Basel Committee on Banking Supervision in 2010-11, and was scheduled to be introduced from 2013 until 2015; however, changes from April 1, 2013 extended implementation until March 31, 2018. Basel III was developed in response to the deficiencies in financial regulation revealed by the global financial crisis of 2008-09 followed by the sovereign debt crisis of Eurozone. The name for the accord is derived from Basel, Switzerland, where the committee, that maintains the accord, meets. |
NIC ASIA Bank awarded “Bank of the Year-Nepal 2013”
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NIC ASIA Bank has received ‘Bank of the Year 2013- Nepal’ award from The Banker-Financial Times Publication, London. ‘Bank of the Year’ is the world’s longest running prestigious international banking title. Earlier, NIC Bank was also awarded with Bank of the Year-Nepal in 2007. The award was announced by The Banker in the UK, amid a ceremony at the Hotel Intercontinental, Park Lane, London on 28th of November. The award was presented by the Editors of The Banker Magazine and Michael Buerk-former BBC Correspondent to Lokmanya Golchha, director of the bank and Sashin Joshi, CEO. NIC ASIA Bank is amongst the largest private sector commercial banks in the country interms of capital base, balance-sheet size, branch/ATM network, customer base and employees. It has a total of 50 ATMs and 53 branches and in the verge of expanding It to 66 branches within a year.
Century Bank and CAN Forge Agreement
Century Bank has made an agreement with Cricket Association of Nepal (CAN), and has provided cash incentives to the members of the national cricket team who were selected for ICC T20 World Cup 2014 The Bank awarded all the members of the national team with cash prize of Rs 11,000. According to the agreement, batsman hitting a century in future international matches will be awarded with Rs 100,000. Similarly, batsman completing half century, bowlers taking three wickets and completing a hat-trick will be awarded with Rs 50,000 each. Bowler to take five wickets will receive Rs 100,000. The agreement has also established the Bank as the official bank of CAN.
