Laxmi Capital News
NRB floats foreign employment bonds worth Rs 250 million

Nepal Rastra Bank (NRB)has opened the subscription of the Foreign Employment Bond with an offer of  10 percent interest rate. Through the ‘Foreign Employment Bond 2080’with the maturity period of five years, the central bank plans to collect Rs 250million from the Nepalese workers who have been working abroad, nor residentNepali or those who returned from the foreign employment. This is the third andlast edition of the foreign employment bond that the central bank plans toissue in the current fiscal year -- FY2017/18 on behalf of thegovernment. 

The government hasalready issued two rounds of foreign employment bonds worth a total of Rs 750million. 

Nepali workers abroador returnee workers can subscribe for the bonds until July 5, according to theNRB notice. Only those who have returned from foreign employment not beforefour months can apply for the bonds. The bonds are tradable in the secondarymarket while they can be pledged as collateral in bank and financialinstitutions for loan. According to the NRB, any worker can fill up the form bydownloading it from its website and submit it in the nearby agent office. TheNRB has appointed sales agents for the foreign employment bonds in variouscountries like Qatar, Kuwait, the UAE, Japan, Saudi Arabia, Korea, Malaysia,Iraq, India, the USA and Israel. 

Copy of passport, visawhere the worker is working, identity card of employer and evidence of the useof formal channel to bring foreign currency inside the country are documentsthat are needed while applying for the bonds. According to the NRB, it plans tocarry out allotment on July 11. The interest of the bonds will be paid on eachsix months. 

Despite higher return,there has not been much interest toward the bonds from the workers in foreignemployment. 

The bonds had remainedlargely undersubscribed in both rounds, indicating less attraction toward thesafer investment instrument.  Out of the foreign employment bonds issuedworth Rs 50 million in December last year, only Rs 28.23 million of bonds, 5.65percent, were subscribed. Another round of offer of foreign employment bondsworth Rs 250 million also remained largely undersubscribed. 

According to the NRBdata, only 8.95 million worth of bonds was purchased by workers who are inforeign employment or returnee workers. 

The central bank hasbeen issuing foreign employment bonds since FY2009/10 in a bid to bring foreigncurrency savings of Nepalis working abroad through a formal channel andencourage them for investment in Nepal so that their capital can be utilizedfor ‘nation building’.

The foreign employmentsaving bonds is one of the instruments that the central bank issues on behalfof the government to raise domestic debt for deficit financing of the budget.The government plans to raise Rs 145 billion in domestic debt for deficitfinancing of the budget worth Rs 1,278 billion. In line with the government’splan, the NRB has floated Rs 500 million of foreign employment saving bonds.

Source:MyRepublica, 16th June 2018

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