SOUND

STRONG
STABLE

Annual Report 2009/10

our Vision
To be the most preferred provider of fi nancial services in Nepal.

Mission Statement
We aspire to be the leading Nepali bank, delivering world
class service through a blend of state-of-the-art technology
and visionary management in partnership with competent
and committ ed staff , to achieve sound fi nancial health with
sustainable value additi on to all our stakeholders. We are
committ ed to fulfi lling this mission while ensuring the highest
levels of ethical standards, professional integrity, corporate
governance and regulatory compliance.
Contents
Financial Highlights 2 Management Team 25
Last 8 years at a glance 3 Domesti c Network 26
Chairman's Statement 4 Global Network 28
Management Review 8 Board of Directors Report 31
Corporate Governance 14 Corporate Social Responsibility 40
Risk Management 16 Financial Statements 45
Board of Directors 20 Principal Accounti ng Policies 76
Senior Management Team 22 Notes to Account 78

nepal Investment Bank Annual Report 2009/10 1

 Financial Highlights

1. No. 1 lender in Nepal with total loans and advances over NPR 40 billion.
2. No. 1 private sector bank in deposits with over NPR 50 billion.
3. Highest net profit of NPR 1.26 billion.
4. Highest paid up capital among the financial institution in Nepal at Rs. 2.41 billion.
The highest capital base (including debentures) with NPR .64 billion
5. 5th Largest Taxpayer in Nepal.
6. 25% cash dividend.
7. Customer base of over 370,000.
8. Return on shareholder’s equity (ROE) of 28%
9. Non-Performing Loans Ratio at 0.62%.
10. Return on shareholder’s equity (ROE) of 28%

NPR in millions
S. No. Particulars 2008-09 2009-10 Growth in Growth
NPR in %
1. Total Assets 53,010 57,305 4,295 8.1
2. Total Deposit 46,698 50,094 3,396 7.3
3. Total Loans and Advances 36,827 40,948 4,121 11.2
4. Total Investments 7,399 8,635 1,236 16.7
5. Total Operating Profit 1,477 2,021 544 36.8
(before provision for possible loss)
6 Total Net Profit 901 1,265 364 40.6
7. Non-performing Assets (%) 0.58 0.62 - 0.04

Shareholder Information
Management Efficiency Highlights
Particulars 2005-06 2006-07 2007-08 2008-09 2009-10

Return on Assets (ROA) 1.64% 1.82% 1.79% 1.70% 2.2%

Return on Shareholder's Equity (ROE) 24.77% 26.68% 25.93% 23.05% 28%
Cost to income ratio* 32.44% 31.20% 30.33% 30.22% 26.09%
* Cost to income ratio is calculated as operating cost over operating income

Valuation Highlights
Particulars 2005-06 2006-07 2007-08 2008-09 2009-10

Earning Per Share (EPS in NPR) 59.35 62.57 57.87 37.42 52.55
Book Value per Share (in NPR) 240 234 223 162 190
Market Price Per Share (in NPR) 1260 1729 2450 1388 705
P/E Ratio 21.23 27.63 42.34 37.09 13.42
Effective Dividend Yield 4.40% 1.74% 1.67% 1.44% 3.55%

Leverage Ratio
Particulars 2005-06 2006-07 2007-08 2008-09 2009-10

Debt to Equity Ratio 38.86 42.60 39.08 12.72 23.71

2 Nepal Investment Bank Annual Report 2009/10

 03 1.98% 03 216 03 5,922
04 2.47% 04 247 04 7,399

05 2.69% 05 201 05 10,453

06 2.07% 06 240 06 13,178

07 07 07 17,769
2.37% 234
08 27,5 29
08 1.12% 08 223
09 36,827
09 0.58% 09 162

+0.04%
10 40,318
+11.25%
Total Lending Growth
(In millions of rupees)

+17.28%
Book Value Per Share
0.62%

Non- Performing Assets

10 10 190
Last 8 Years at Glance

03 795 03 639 03
04 940 04 729 04

05 800 05 1,180 05 232

06 1,415 06 350
06 1,260
07 1,878 07 501
07 1,729
08 2,687 08 697
08 2,450
09 3,908 09 901
09 1,388

+17.34%
Shareholder's Fund growth
(In millions of rupees)
10 4,585 10 1,265
+40.56%
Total Profit Growth
(In millions of rupees)

-49.21%
Market Price Per Share
10 705

03 18.29%
03 39.56
04 20.93%
04 51.7 03 7,932
05 19.67%
04 11,525
05 39.50
06 24.77% 05 14,255
06 59.35
07 26.68% 06 18,927
07 62.57 07 24,489
08 25.93%
08 57.87 08 34,452
09 23.05%
+7.27%

09 46,698
09 37.42
Total Deposit Growth
(In millions of rupees)

28%
+21.48%
Return on Equity

10 10 50,094

+40.43%
Earning Per Share
10 52.55

Nepal Investment Bank Annual Report 2009/10  3

 Chairman's Statement

4  Nepal Investment Bank Annual Report 2009/10

 NIBL achieved the highest industry growth in terms of deposits,
assets and capital base this year.
Dear Shareholders,
The year 2009/10 has been an eventful year for Nepal
Investment Bank Limited in terms of achievements and
performance. We have continued our strategy of growth
and consolidation while delivering quality services and
shareholders returns.
In spite of the growing number of banks, we’ve succeeded
in retaining our growth. This year, Nepal Investment Bank
Limited emerged as the number one taxpayer among the
Nepali Banks contributing Rs. 790 million also making us the
fifth largest taxpayers in the country.
NIBL achieved the highest industry growth in terms of
deposits, assets and capital base. Our Deposit base grew from
Rs 46.69 billion to Rs 50.09 billion making us the largest private
sector bank in deposits. We also added 83,000 new clients,
the highest addition of Customers in Nepal. NIBL also earned
the highest net profit among all commercial banks of Rs. 1.26
billion. NIBL also has the highest loan portfolio amounting to
Rs 40.95 billion. Similarly, our Tier 1 capital is also the largest
of any bank in Nepal at Rs 4.55 billion. Our Assets grew from
Rs 53.01 billion to Rs 57.30 billion, the highest volume growth
and highest level in Nepal.
We have ventured into the Remittance sector with exclusive
partnerships with Maybank in Malaysia and Bank Al Bilad in
Saudi Arabia. We have a substantial presence in the Middle
East making NIBL one of the largest players in the Remittance
industry. Bank Albilad has awarded NIBL the Best Remittance
Partner Award 2010. The award was given on the basis of
NIBL’s steady performance level, outstanding support and
excellent customer relations.
Our capital base is now significantly higher than our nearest
competitors and we are in a position to grow our assets at
a higher rate than our competitors. NIBL has maintained
a consistent rating of Nepal [A] from Indian Credit Rating
Agency, ICRA, an affiliate of Moody’s Investor Group, reflecting
our strong creditworthiness and our position as the first and
only bank in Nepal to have a credit rating, which adds extra
transparency to our shareholders.
This year alone the bank added 10 more branches with (18)
new ATM kiosks alongside. At present, the bank has sum total
of 40 branches and (70) ATMs throughout the country. For
the FY 2067/68, the main strategy relating to branches will be
consolidation and increased profitability.
The bank has also introduced three new products: NIBL
Special Fixed Deposit with interest rate of 11% and Saving
Bonanza with 7.5% and Karmachari Bachat Khata with 6%
interest rate.
NIBL added a record of 110,954 customers in the past
15 months. The Bank added (300) domestic remittance
disbursement agents during this period. NIBL added 14,000
new users to the ebanking platform totaling the highest
base of ebanking customers in Nepal at 28,000. New and
innovative features were added to the ebanking product such
as online airline ticket booking and payments, Online and ATM
pre/post paid bill payments for Telecom companies including
PSTN landline payments throughout Nepal. NIBL also tied up
with Nepal Derivatives Exchange allowing ebanking users to
conduct derivative transactions.
NIBL also released an electronic payment gateway, enabling
secure VISA, MasterCard and PayPal transactions and
e-commerce on the internet for the ebanking customers.
American Life Insurance Company, ALICO has also tied up
with NIBL to offer its life Insurance Products through NIBL’s
Bancansurance program.
NIBL also qualified to join the Global Trade Finance Program
offered by the International Finance Corporation IFC, enabling
the bank to conduct international finance arrangements with
a wider range of correspondent banks greatly benefitting our
corporate clients. NIBL has received a trade finance facility
of $5million, the largest extended to any Nepali bank which
will enhance our support for local enterprises and boost
international trade opportunities.
NIBL also entered into an arrangement with China
Development Bank CDB to promote project relationships
in infrastructure finance in terms of project cooperation,
financial consultancy, credit grants and currency swaps. This
Nepal Investment Bank Annual Report 2009/10  5
 arrangement will enable NIBL to finance hydropower projects
in Nepal and enable the bank’s corporate clients to access
international capital markets.
We recognize the important role of human resources to
successfully meet our business goals. The Bank is committed
to provide quality learning and working environment for
our staff and to help them develop their knowledge & skills
required in their career.
With the increase in the number of branches and customer
base, the bank is committed to prompt and reliable customer
service. The Bank’s total workforce has reached 877 compared
to 766 in the previous year. Of the total staff strength, 41% are
female staffers and 80 staff members have completed more
than 10 years of service in the institution.
We continue to place great value in quality and service and
our development objectives ensure staffs are motivated
with high levels of productivity and loyalty. During the year,
533 participants attended 75 training courses/ workshops
in various areas such as SME Lending, Risk Management,
Anti Money Laundering, Signature verification & counterfeit
notes, Customer Service, Operations and NRB guidelines. Six
staff members attended workshops in India and abroad. The
Bank also supports team-building activities like sports, yoga
meditation and participation in the art of living program to
promote wellness among staff.
We successfully conducted the 2nd NIBL Heritage Marathon,
an initiative geared towards the conservation of our cultural
heritage. The Heritage Marathon whose intention is to support
heritage and architectural preservation of Kathmandu Valley,
raised over 70 lakhs rupees. The Bank has donated this fund
to help build cremation pyres at Bhas Meshwor, Aryaghat
Pashupatinath and for restoration work at the Bhaideval
Temple at Patan Durbar Square.
The Bank sponsored the Extreme Everest Expedition, a
cleanup campaign that cleared out over 1800 kilos of garbage
from 8,000 meters above Mount Everest, often referred to as
the death zone. The event roused wide international concern,
6 Nepal Investment Bank Annual Report 2009/10
and was extensively reported by all local media as well as
renowned international media like BBC, Reuters and AFP.
Apart from cleaning up the death zone, the campaign also
successfully rescued the body of two mountaineers - Swiss
climber Gianni Goltz, who died last year, and Russian climber
Sergey Duganov. The visual documentation of the expedition
highlighting the role of NIBL’s contribution will also come out
the following year.
The Bank also gave away five lakhs rupees to support the
second Microfinance Summit 2010. The summit focused on
converging the role of varied stakeholders from policymakers,
regulators, to commercial banks and other microfinance
practitioner, to reach to the broader spectrum of rural
demography. The summit also worked on providing improved
financial services to 3 million people, especially women, by
2010.
Nepal Investment Bank Limited focuses on looking ahead to
the future with great confidence. We will continue to strive
towards our vision of being the preferred provider of financial
service in Nepal, exploring new business opportunities and
always diversifying into new sectors.
I would like to express my gratitude and appreciation to our
energetic and hardworking staff and efficient management
team. They have provided outstanding performance throughout
the years that has led the growth and reputation of our bank.
I would like to thank the Nepal Rastra Bank, the Ministry of
Finance and all other concerned government agencies for
providing us their full support in our endeavors.
I also would like to express my gratitude to my colleagues on
the Board for their support and valuable contribution.
Sincerely,
Prithivi B. Pandé
Chief Executive Director
The Bank has also introduced three new products: NIBL Special
Fixed Deposit, Saving Bonanza and Karmachari Bachat Khata.

Nepal Investment Bank Annual Report 2009/10  7

 Management Review
Economic recovery continued to strengthen during the first
half of 2010, but global financial stability suffered a major
setback with the turmoil in sovereign debt markets in the
second quarter of 2010. Global activity expanded at an
annual rate of about 5¼ percent––about ½ percent higher
than anticipated in the July World Economic Outlook (WEO)
Update. The extent of economic recovery differs importantly
across regions, with Asia in the lead. The United States
and Japan experienced a noticeable slowdown during the
second quarter of 2010, while growth accelerated in Europe
and stayed strong in emerging and developing economies.
Financial conditions have begun to normalize, but institutions
and markets are still fragile. In general, volatility in financial,
currency, and commodity markets remains elevated.
IMF chief economist Olivier Blanchard forecast that the world
economy would grow by 3.0-4% this year and by about the
same amount next year. At the beginning of October the
IMF forecast in its six-monthly assessment that the global
economy would grow by 4.8% this year and by 4.2% in 2011.
We can expect differences between growth in regions, with
economies in advanced countries growing by 1.0-2% and in
emerging countries by 6-8% or more.
Oil prices are expected to be less volatile in the next 2
years. Demand for oil from countries in the Organisation for
Economic Co-operation and Development (OECD) is forecast
to decline somewhat, but this will be tempered by a rise in oil
demand from non-OECD countries, particularly the People’s
Republic of China (PRC). Given the countervailing oil demand
trends and the strengthening of the US dollar, oil prices are
seen fluctuating within a narrow band.
Unemployment in advanced economies has receded only
modestly from peak rates. Estimates are that more than 210
million people across the globe are unemployed, an increase
of more than 30 million since 2007.
Financial turbulence led to sharp currency movements in
the first half of 2010. The euro depreciated by about 15% in
real effective terms, although it has partially recovered and
is currently trading at a level broadly in line with medium-
term fundamentals, according to IMF staff estimates. The
US dollar appreciated in real effective terms as risk aversion
rose during May–June, but it has since returned to levels
8  Nepal Investment Bank Annual Report 2009/10
seen earlier in the year, on the strong side of medium term
fundamentals. The yen weakened briefly in April but has
been appreciating since and now stands more than 25%
above 2007 levels, prompting the authorities to intervene
in exchange markets due to concerns about disruptive
yen movements. At current levels, the yen remains
broadly in line with medium-term fundamentals. With a
few exceptions, emerging Asian currencies, including the
Chinese renminbi, appreciated modestly in real effective
terms. However, many remain undervalued relative to
medium-term fundamentals.
On the domestic front, the budget speech of 2009/10
had targeted economic growth of 5.5% according to the
preliminary estimate of the Central Bureau of Statistics and
the gross domestic product (GDP) is likely to expand at 4.5%
in the current fiscal year 2009/10. (table 1)
The double digit inflation recorded in the last two consecutive
fiscal years has moderated to 8.9% in the first three months
of the current Fiscal Year. Expected inflation for the current
year is 7 percent. The increase in the price of the agricultural
commodities due to slash in the production caused by
unfavorable weather condition and poor supply condition,
power crisis, increase in salary and wages, and a higher rise
in the price of food grains in India are attributed to exert
pressure on inflation in Nepal. However, the price level in the
later months has shown some improvements. In May/June
of 2010, the y-o-y consumer price index grew by 9.6%, which
had grown by 12.3% in May/June 2009. The y-o-y price index
of food and beverage group increased by 11.3% and that of
non-food and service group grew by 7.3 percent. In the same
period of the previous year, the prices of these two groups
had increased by 19% and 5.1% respectively. The price of food
and beverage group is witnessing a declining trend as against
an increasing trend in prices of non-food and service group.
(table 2)
The performance of the external sector of the Nepalese
economy, which had remained satisfactory even in the
period of global financial crisis originated in 2008, remained
weak in 2009/10. In the 11 months of 2009/10, the overall
BOP deficit stood at Rs.15.07 billion due the higher current
account deficit of Rs.34.59 billion. Such deficits are on
account of the slowdown in exports and acceleration in
 1 2
imports during the period. The BOP registered a surplus of
Rs. 39.06 billion in the same period of the previous year.
On the other hand, remittance rose by 15.2% to US$ 2.83
billion in the review period as compared to US$ 2.46 billion
in the corresponding period of the previous year. The
growth rate of private sector remittance decelerated due
to the decline in the number of people going abroad for
foreign employment in consequence of the global financial
crisis for some months, the foreign employment and the
inflow of remittance both are improving in recent months
on account of increasing demand of labor in world labor
market. (table 3)
Nepalese currency vis-à-vis the US dollar appreciated by
4.85% in mid-July 2010 compared to that of mid-July 2009.
It had depreciated by 12.24% in the corresponding period of
the previous year. The exchange rate of one US dollar stood
at Rs.74.44 in mid-July 2010 compared to Rs.78.05 in mid-
July 2009.
Up to July 2010 the total numbers of Commercial Banks are
27, Development Banks are 79, Finance Companies are 79,
Micro Finance Institutions are 18, NRB Licensed Cooperatives
(undertaking limited banking transactions) are 16, NRB
Licensed NGOs (undertaking micro finance transactions) are
45, and Insurance Companies are 25.
General Manager's Review
The Bank has delivered another year of good performance.
Our net profit has jumped from Rs.901 million in FY 2008/09
to Rs.1.26 billion in FY 2209/10 making the Bank the No. 1
profit maker amongst all commercial banks in the country –
an increment of 40.4% over last year. This jump in net profit
can largely be attributed to the hard work of our staff and
patronage from our valued customers. Over the past one year,
we have increased our assets base from Rs.53 billion to Rs.57
billion, a jump of around 8.1% during the period. Our total
lending has also surged from Rs.36.8 billion to Rs.40.9 billion.
Our total paid up capital of Rs.2.41 billion is also the highest
amongst all commercial banks in the country. (table 4)
Because of the growing number of commercial banks and
financial institutions, the year ahead is a great challenge for us.
Though Nepal’s domestic economy was largely untouched by
the global financial crisis, energy crisis, political uncertainty, and
high inflation pose threat to overall business confidence. These
uncertainties and crisis have reduced investment opportunities in
our country. Amidst this background, the entry of new commercial
banks and financial institutions is expected to undermine profit
margins in the months ahead. The only option left with us is to
grow within an acceptable risk framework. To support increasing
business volume, additional capital has been raised from the
debt capital markets as well as from retention of profits.
Nepal Investment Bank Annual Report 2009/10  9
 3 4
In the review year, the Bank increased the shareholders
fund from Rs. 3.91 billion to Rs. 4.58 billion and at the
same time maintained the shareholder’s return on equity
at a healthy rate of 28 percent. Similarly, our cost-to-
income ratio has also decreased showing that our income is
growing at a higher rate than our cost indicating improved
efficiency. (table 5)
Performance Overview: Retail Bank
Our new and innovative deposit products have propelled us
to become the largest deposit holder among private sector
banks in Nepal. At the end of FY 2008/09, our deposit base
stood at Rs. 50.09 billion compared to Rs. 46.7 billion at the
end of the previous year. Our customer base has also grown to
355,511 at the end of 2009/10 from 268,345 during previous
year, a considerable growth of 32.5 percent.
Customer mapping is being done on a regular basis that
has helped the Bank to study and identify locations for new
branches and installation of new ATMs. Currently, we have
67 ATMs in various locations throughout the country. After
opening 10 new branches in the FY 2009/10, our total branch
network is at 40.
Card Centre
The Bank has issued over 250,000 cards, and continues to
be the leader in card issuance in Nepal. As of the end of the
10 Nepal Investment Bank Annual Report 2009/10
review period, there were more than 400,000 card holders in
our network -VISA Associate and NPN members.
We have successfully launched our proprietary Network – National
Payment Network and 15 financial institutions have already joined
the Network. Furthermore, the Bank is in the final stage of launching
Master Card related products. This will provide wider coverage in
availing ATM and POS related services to our customers.
Remittance
In order to tap into the burgeoning remittance market and
strengthen its position in workers’ remittance inflows, the Bank
joined hands with Transfast International, USA and Samsara
Financial Services, UK. Disbursement agents were appointed in
300 different locations during the year raising the total number
of the Bank’s remittance disbursement locations to 500. During
the year, UAE Exchange started sending transactions through
Prithivi Express online system. To further broaden its remittance
network, the Bank plans to increase the number of remittance
disbursement agents in Nepal to 700 by the end of the current
fiscal year. Our Bank plans to depute one more staff member
in Saudi Arabia and one more in Malaysia and increase the
number of our representatives in Qatar and the UAE.
Corporate Banking
The total loans and advances at the end of 2009/10 stood at
Rs. 40.94 billion with a growth of 11.2% during the review
5
year. With our total loan portfolio size, the Bank has become
the highest lender in the country. The branch network of the
Bank possesses a satisfactory share of the Bank’s lending and
growth. In order to diversity our loan portfolio and tap into
emerging and profitable sectors. We have been focusing on
cement, hydropower and infrastructure projects.
Trade Finance
Nepal Investment Bank Ltd. also qualified to join the Global
Trade Finance Program offered by the International Finance
Corporation (IFC), enabling the Bank to conduct international
finance arrangements with a wider range of correspondent
banks greatly benefiting the Bank’s corporate clients. NIBL
has received a trade finance facility of USD 5 million, the
largest extended to any Nepali Bank and it will enhance our
support for local enterprises and boost international trade
opportunities.
Treasury
This year the Bank’s profit from treasury operations was Rs.
224.057 million compared to last year’s figure of Rs. 185.33
million, an increase of 20.90%. The T-bill portfolio of the Bank
at the end of 2009/10 was Rs. 3911 million compared to
last year’s figure of Rs. 2531 million. The interest earned on
this portfolio was Rs. 167.87 million compared to Rs. 140.69
million in the last fiscal year.
The treasury department is fully equipped with state of the
art technology for day-to-day dealings. Among other things,
the Bank’s treasury department is involved in checking foreign
currency position, fund management, forward contract
execution and inter-bank placement.
Information Technology
NIBL aims to add value to both clients and to shareholders
via a technology based portfolio of products different from
those used by the bank’s competitors. Branch network of
the Bank has reached 40, which allows our Bank to cover
areas spread over Mechi to Mahakali zones and surrounding
districts. For the coming fiscal year, we will be mainly focusing
on consolidation, control and to increase profitability of
branches.
The existing eBanking offers a list of features that may be
developed as an individual product or even brands. The Bank
has developed a system that alerts the customers of their
transaction and daily balances, which could be one of the very
important value added services.
NIBL has been utilizing a state of the art software technology
which enables us to reduce the number of manual work, which
in turn is made automated, offering more efficient outcomes.
The Bank has achieved highest level of automation in various
manual operations and reporting mechanisms. Cost reduction
initiative will be undertaken by offering central back office
operations for the processes like clearing and remittances to
leverage on the system capabilities.
The Bank intends to establish a 24 hour call center in order
to facilitate the member banks and their customers. And
after successful migration, NIBL has aggressively marketed
National Payment Network (NPN) members.
Nepal Investment Bank will be launching Electronic Payment
Gateway (EPG) for online purchases which will be the first of
its kind in Nepal. Further, the plan to develop loyalty programs
like EMI, Cash Back offers to increase the bank’s card base.
Moreover, during the review year the Bank deployed additional
ATMs at nine different locations in Gongabu, Birgunj, Parsa,
Palpa, Lalbandhi, Dhumbarai, Bhotaiti, New Baneswor and
Nepal Investment Bank Annual Report 2009/10  11

Snapshot of the Nepali Economy
2009 / 10 2008 / 09
GDP at Producers Price (Rs Billion) 619 586
GDP Growth Rate 3.50% 4.7
Exchange rate (USD) 74.44 78.05
Gross Foreign Exchange Reserves USD Billion 3.58 3.59
Rate of Inflation % 10.5 13.2
Growth in Money Supply (M2) % 14.5 27
Lagankhel, taking the total number of NIBL’s ATMs to 67.
NIBL’s card network is also the largest in the country.
Human Resources
Nepal Investment Bank has recognized the important role of
human resources to successfully meet the Bank’s business
goals. The Bank is committed to provide quality learning and
working environment for the staff and help them develop
their knowledge, skills and attitude required to perform well
in their career. The Bank has been able to inculcate a strong
performance based culture where staff is rewarded for
achievement of annual performance targets. Ultimately, the
quality of NIBL’s human resources should be the source of
competitive advantage for the bank.
With the increase in the number of branch representation and
customer base, the Bank has to ensure that we continue to
provide prompt and reliable customer service. The Bank’s total
workforce has reached 877 compared to 766 in the previous
year. Of the total staff strength, 41% are female staffers and 80
staff members have completed more than 10 years of service
in the institution.
NIBL also continue to place great value in quality and service
and the bank’s development objectives ensure that the
12 Nepal Investment Bank Annual Report 2009/10
staffs are motivated with high levels of productivity and
loyalty. During the year, 533 participants attended 75 training
courses/ workshops on various areas like SME Lending, Risk
Management, Anti Money Laundering, Signature verification
& counterfeit notes, Customer Service, Operations and NRB
guidelines. Six staff members attended workshops abroad.
The Bank also supports team-building activities like sports, yoga,
meditation focusing on job satisfaction and personal growth.
NIBL believes that the staff members are our most valuable
asset and their development, motivation, recognition,
reward and welfare are very important to the success
of this Bank. Therefore, the bank looks into attracting,
retaining, and motivating staff who can deliver efficient
service to the clients.
Conclusion
The fiscal year 2009-10 was another successful year for the
Bank. Despite the difficult market conditions, continuing
political stalemate, increased competition, liquidity
problems, the Bank were able to deliver strong overall
performance. Nepal Investment Bank Limited consolidated
its position as one of the premier banks in Nepal. The
market share taken by our Bank in deposits and advances
are substantial and the Bank is striving to achieve its aim
of being the most preferred provider of financial services
in Nepal. The Bank is committed to maintaining its current
position and is striving hard to progress even further.
Thank You,
Jyoti Prakash Pandey
General Manager
The market share taken by NIBL in deposits and advances are
substantial and the Bank is striving to achieve its aim of being
the most preferred provider of financial services in Nepal.

Nepal Investment Bank Annual Report 2009/10  13

 Corporate Governance

Board Structure and Members
Nepal Investment Bank Ltd (NIBL)’s share structure is divided
among four groups. A group of companies holding 50%
of the capital, Rastriya Banijya Bank and Rastriya Beema
Sansthan holding 15 % each and the remaining 20%, held
by the general public. During the last fiscal year, Mr. Rajesh
Rajkarnikar, nominee Director from Rastriya Beema Sansthan,
vacated the office of Director and in his place, Mr. Binod Aryal,
Administrator, was nominated as Director on the Board of the
Bank by Rastriya Beema Sansthan.
Currently, the Bank’s Board of Directors comprises of Mr.
Prithivi Bahadur Pandé, Mr. Prajanya Rajbhandari, Mr. Deepak
Man Sherchan, Mr. Krishna Prasad Sharma, Mr. Binod Aryal,
Mr. Surendra Bahadur Singh, Mr. Janardan Dev Pant and Mr.
Damodar Prasad Sharma Pandey. Among these, Mr. Damodar
Prasad Sharma Pandey is an independent board member
and Mr. Surendra Bahadur Singh represents the public
shareholders. Mr. Prithivi B. Pandé is the Chairman of the
Bank’s Board.
Internal Control Mechanism and various Committees
The Bank has an independent Internal Audit and Compliance
Department headed by an experienced auditor. The
Department performs its functions under the direct
supervision and control of the Audit Committee and submits
its reports directly to the latter. To supplement the in-house
internal audit department, the Bank has also hired a firm of
Chartered Accountants to conduct internal audit functions in
the review year. In addition, the Bank has also constituted a
‘Compliance Committee’ comprising of various departmental
heads to further strengthen compliance and internal control
systems of the Bank. Besides these committees, the Bank has
a number of high level committees, namely Executive Credit
Committee, Human Resource Development Committee,
Construction Committee and Asset Liability Management
Committee, each with a defined scope and terms of reference.
These Committees comprise of Board members and senior
management officials.
The Bank’s Audit Committee, under the chairmanship of
a non-executive director, Mr. Damodar Prasad Sharma
Pandey, comprises of Mr. Deepak Man Sherchan and Mr.
Binod Aryal as Member Directors along with the Bank’s
Head of Internal Audit, Mr. Binod Upadhyay, as its Member
Secretary. The Committee reviews the Bank’s financial
condition, its internal control and risk management
systems, statutory and regulatory compliances, audit
programmes, etc. After detailed discussion on the findings
of the internal audit as well as external audit reports,
the Committee initiates necessary corrective action. The
Committee periodically apprises the Board of Directors of
the issues and the corrective measures initiated. During
the year, seven such meetings were held.

Name of the Committees Members

Audit Committee Deepak Man Sherchan, Damodar Prasad Sharma Pandey,

Binod Aryal, Head Internal Audit (Member Secretary)

Human Resource Development Prithivi Bdr. Pandé (Chairman), Krishna Pd. Sharma,
Committee (HRDC) Deepak Man Sherchan, Binod Aryal

Executive Credit Committee (ECC) Prithivi Bdr. Pandé (Chairman), Surendra Bdr. Singh, and
Prajanya Rajbhandari

Construction Committee Deepak Man Sherchan

14  Nepal Investment Bank Annual Report 2009/10

The Bank has established an adequate system for monitoring
and reporting risk exposures and assessing how the Bank’s
changing risk profile affects the need for capital.

Nepal Investment Bank Annual Report 2009/10  15

 Risk Management
Being a financial institution, risk management is an integral
part of Nepal Investment Bank Limited (NIBL). With the
continuing increase in the scale as well as complexity of the
banking sector and the rapid growth in the volume of financial
transactions, risk management has become a core part of
business. Moreover, the current financial crisis due to financial
institutions' high exposure to risky assets, and the collapse of
large financial institutions such as Lehman Brothers, Wachovia
and Bear Stearns due to their inability to manage risky assets
has further emphasized the need for prudent and effective
risk management. The management team and board of NIBL
manages the overall risk profile, aiming for a balance between
risk and returns.
Risk management includes risk identification, measurement
and assessment, and its objective is to minimize negative
effects that risks can have on the financial result and capital
of a bank. Risk management strategies include the transfer
of risk, avoidance of risk, reduction of the negative effect of
the risk and acceptance of the consequences of a particular
risk. The design of our risk management system depends
on parameters such as size, capital structure, complexity of
functions, technical expertise, and quality of Management
Information System (MIS) and is structured to address both
banking as well as nonbanking risks to efficiently maximize
shareholder value.
The risk management system ensures that the Bank takes
well-calculated business risks while safeguarding the Bank’s
capital, its financial resources and profitability. The Bank’s
primary business activity is commercial banking whereby
substantial risk comprises of credit risk. To a lesser extent,
commercial banking activities also expose the Bank to market
risk arising from repricing, maturity and currency mismatches
of assets and liabilities. These mismatches give rise to interest
rate risk, liquidity risk and foreign exchange risk. The Board of
Directors of NIBL recognizes that a critical factor in the Bank’s
continued growth, profitability and stability lies in its effective
risk management capabilities and risk-return trade-off. In this
respect, the Bank ensures its risk management capabilities and
promotes pro-active risk management in the Bank.
Operational Risk Management
Operational risk is the risk of loss resulting from inadequate
internal processes, people, and systems, or from external events.
16 Nepal Investment Bank Annual Report 2009/10
Operational risk itself is not a new concept, and banks have been
addressing it in their internal controls and corporate governance
structures. However, applying an explicit regulatory capital charge
against operational risk is a relatively new and evolving idea. Basel
II requires banks to hold capital against the risk of unexpected loss
that could arise from the failure of operational systems.
The most important types of operational risk involve breakdowns
in internal controls and corporate governance. Such breakdowns
can lead to financial losses through error, fraud, or failure to
perform in a timely manner or cause the interests of the Bank
to be compromised in some other way, for example, by its
dealers, lending officers or other staff exceeding their authority
or conducting business in an unethical or risky manner.
Other aspects of operational risk include major failure of
information technology systems or events such as major fires
or other disasters. The failure to properly manage operational
risk can result in a misstatement of an institution’s risk/return
profile and expose the institution to significant losses. Gross
income, used in the Basic Indicator Approach is only a proxy
for the scale of operational risk exposure of a bank and in some
cases can underestimate the need for capital.
NIBL has developed a framework for managing operational
risk and evaluating the adequacy of capital covering the
Bank’s appetite and tolerance for operational risk, as specified
through the policies for managing this risk, including the
extent and manner in which operational risk is transferred
outside the Bank. It also includes policies outlining the Bank’s
approach of identifying, assessing, monitoring controlling and
mitigating the risk.
Credit Risk Management
Credit risk is the major risk that banks are exposed to during
the normal course of lending and credit underwriting. Within
Basel II, there are two approaches for credit risk measurement:
the standardized approach and the internal ratings based
(IRB) approach. Due to various inherent constraints within
the Nepali banking system, the standardized approach in its
simplified form, Simplified Standardized Approach (SSA), has
been prescribed in the initial phase.
Credit risk is the probability that a Bank’s borrower or
counter party will fail to meet its payment obligations in
accordance with the terms of approval of the credit. This
includes non-repayment of capital and/or interest within
the agreed time frame, at the agreed rate of interest and
in the agreed currency. The goal of credit risk management
is to maximize a bank's risk-adjusted rate of return
by maintaining credit risk exposure within acceptable
parameters. The effective management of credit risk is a
critical component of a comprehensive approach to risk
management and is essential to the long-term success of
any banking organization.
For most banks, loans are the largest and most obvious source
of credit risk; however, other sources of credit risk exist
throughout the activities of a bank, including in the banking
book and the trading book, and both on and off the balance
sheet. Banks increasingly face credit risk in various financial
instruments other than loans, including acceptances, interbank
transactions, trade financing, foreign exchange transactions,
and in the extension of commitments and guarantees and the
settlement of transactions.
NIBL has developed methodologies to assess the credit risk
involved in exposures to individual borrowers or counterparties
as well as at the portfolio level. The credit review assessment
of capital adequacy, at a minimum, covers risk rating systems,
portfolio analysis/aggregation, large exposures and risk
concentrations. Internal risk ratings are an important tool in
monitoring credit risk and supporting the identification and
measurement of risk from all credit exposures, and are integrated
into our overall analysis of credit risk and capital adequacy. The
ratings system provides detailed ratings for all assets, not only for
problem assets.
Our various branches are the business units of our bank.
Each branch forwards business proposals to the head of
credit division, Head Office. The credit division critically
analyzes the proposal from different perspectives in line with
statutory, regulatory and internal guidelines. Thereafter, if the
business proposal is found to be credit worthy, it is placed
in the credit committee. The Credit Committee is comprised
of seasoned bankers who evaluate credit proposals. The
committee analyzes in depth financial as well as non financial
information regarding the borrower such as business history,
market situation, future prospects of the market, managerial
capabilities, cash flow and then declines or recommends
approval of the designated credit authorities. To ensure proper
and adequate risk analysis and timely customer service, our
credit policy and procedures guide (CPPG) provides various
layers in the credit approval process. The CPPG has conferred
specific discretion ranging from the General Managers to the
Executive Credit Committee, the penultimate credit authority
of the Bank.
• Adoption of international standards via our in-house
Credit Policy and Procedures Guide.
• Formation of Credit Quality Control (CQC) unit for
monitoring the quality of credit, both at the account level
and portfolio level.
• Regular review of the credit portfolio by the senior
management with periodic reporting to the Board of
Directors.
• Separate independent audit and inspection of
borrowers by internal auditors in addition to audit and
inspection by statutory auditors.
• Strict adherence to the guidelines of the Central Bank
on Loan Classification, Interest Recognition, Asset
Classification, Single Obligor Limit, Sectoral Exposure
etc.
• Establishing suitable exposure limits for borrowers and
sectors and monitoring the limits on a regular basis.
• Risk mitigation steps with a special emphasis on
collateral.
• Setting counterparty limits based on their financial
strength.
• Training of lending and legal officers on documentation
and professional valuations.
• Developing skills and expertise of lending officers to
scientifically assess project viability and customer
integrity.
• Educating the staff on provisions in the Banks and
Financial Institution Act and other relevant statutes and
the regulatory guidelines of the Central Bank.
• Seeking external legal opinion and advice.
• Identifying Early Warning Signals (EWS) and taking
prompt action thereon.
• Constant posts sanction monitoring with special
independent team for verification of current assets.
Market Risk Management
Market risk is defined as the risk of losses in on-balance
sheet and off-balance sheet positions arising from adverse
movements in market prices. The major constituents of market
risks are:
a. The risks pertaining to interest rate related instruments.
b. Foreign exchange risk (including gold positions)
throughout the Bank.
c. The risks pertaining to investment in equities and
commodities.
Market risk is also the uncertainty in the future value of the
Bank’s on-balance sheet and off-balance sheet financial items
resulting from interest rates, foreign currency, equity, and
commodity risks. The Asset Liability Management Committee
(ALCO) serves as the primary oversight and decision making
Nepal Investment Bank Annual Report 2009/10  17
 body that provides strategic directions for the Bank’s
management of market risk. The key elements in the market
risk management framework are principles and policies, risk
limits and risk measures.
The prescribed approach for the computation of capital charge
for market risk is very simple and thus may not be directly
aligned with the magnitude of risk. Likewise, the approach
only incorporates risks arising out of adverse movements in
exchange rates while ignoring other forms of risks like interest
rate risk and equity risks. NIBL has taken measures to address
these various forms of risk and at the same time perform
stress tests to evaluate the adequacy of capital using internal
models for the measurement of market risk.
Important Risk Management measures of the Bank to address
Market Risk includes:
• A pro-active Asset Liability Management Committee
(ALCO) that meets on a weekly basis.
• Review of ALCO decisions by top management and
Board of Directors.
• Conduction of gap analysis, timely re-pricing of products
and hedging of exposures.
• Risk management via forward contracts, swaps and
currency options.
• Daily monitoring of Credit to Deposit (CD) ratio.
• Maintaining the Liquid Assets Ratio with a contingency
buffer.
• Constant monitoring of dealer, broker, counterparty,
transaction, product and currency exposure limits.
• Regular monitoring of competitor behavior and building
competitor intelligence.
• Maintaining strong relationships with correspondent
banks.
• Enhancing fee based income to reduce dependence on
fund based income.
• Non-engagement in large scale transactions on a
speculative basis.
• Separation of front and back offices at the treasury
department.
Foreign Exchange Risk Management
Foreign exchange rate risk arises from exchange rate
movements which affect the profit of the Bank from its foreign
exchange open positions. Because of a bank’s exposure to
foreign currency, foreign exchange risk management is a
fundamental component in market risk management of the
Bank. It involves prudent management of foreign currency
positions in order to control, within set parameters, the
impact of changes in exchange rates on the financial position
18  Nepal Investment Bank Annual Report 2009/10
of the Bank. The frequency and direction of rate changes,
the extent of the foreign currency exposure and the ability
of counterparties to honor their obligations to the Bank are
significant factors in foreign exchange risk management. This
risk is managed by setting pre-determined limits on open
foreign positions, the monitoring of the open positions against
these limits and the setting and monitoring of our stoploss
mechanism. In order to manage the foreign exchange risk
and protect the Bank’s financial position, the Bank follows the
following procedures:
• Establish and implement sound and prudent foreign
exchange risk management policies.
• Develop and implement appropriate and effective
foreign exchange risk management and control
procedures.
Liquidity Risk Management
Liquidity is crucial to the ongoing viability of any financial
institution. The capital positions can have a telling effect
on an institution’s ability to obtain liquidity, especially in a
crisis. NIBL has adequate systems for measuring, monitoring
and controlling liquidity risk. We evaluate the adequacy of
capital given their own liquidity profile and the liquidity of the
markets in which they operate. We also make use of stress
testing to determine their liquidity needs and the adequacy
of capital.
The objective of liquidity management is to ensure that
the bank has sufficient funds to meet its contractual and
regulatory financial obligations at all times. Liquidity risk is
the probability of loss arising from a situation where (1) there
will not be enough cash and/or cash equivalents to meet the
needs of depositors and borrowers, (2) sale of illiquid assets
will yield less than their fair value, or (3) illiquid assets will not
be sold at the desired time due to a lack of buyers. Liquidity risk
relates to the ability of the Bank to maintain sufficient liquid
assets at a reasonable cost to meet its financial obligations as
and when they fall due. Liquidity risk arises from situations
in which a party interested in trading an asset cannot do it
because nobody in the market wants to trade that asset.
Liquidity risk becomes particularly important to parties who
are about to hold or currently hold an asset, since it affects
their ability to trade.
The Bank’s liquidity policy is to ensure that all contractual
commitments can be met by readily available sources of funding.
In addition, liquid assets are maintained in relation to cash flows
to provide further sources of funding in the event of a crisis. The
Bank also has excellent access to financial markets to ensure the
availability of funds.
Monitoring and Reporting
The Bank has established an adequate system for monitoring
and reporting risk exposures and assessing how the Bank’s
changing risk profile affects the need for capital. The Bank’s
senior management or board of directors receives on a regular
basis reports on the Bank’s risk profile and capital needs.
These reports allow senior management to:
• Evaluate the level and trend of material risks and their
effect on capital levels;
• Evaluate the sensitivity and reasonableness of
key assumptions used in the capital assessment
measurement system;
• Determine that the Bank holds sufficient capital against
the various risks and is in compliance with established
capital adequacy goals; and
• Assess its future capital requirements based on the
Bank’s reported risk profile and make necessary
adjustments to the Bank’s strategic plan accordingly.
NIBL conducts periodic reviews of its risk management process
to ensure its integrity, accuracy, and reasonableness. Key areas
that are reviewed include:
• Appropriateness of the Bank’s capital assessment
process given the nature, scope and complexity of its
activities.
• Identification of large exposures and risk concentrations.
• Accuracy and completeness of data inputs into the
Bank’s assessment process.
• Reasonableness and validity of scenarios used in the
assessment process.
• Stress testing and analysis of assumptions and inputs.
SUPERVISORY REVIEW:
Nepal Rastra Bank regularly reviews the process by which a
bank assesses its capital adequacy, risk positions, resulting
capital levels and quality of capital held by NIBL. Supervisors also
evaluate the degree to which NIBL has in place a sound internal
process to assess capital adequacy. The emphasis of the review
is on the quality of the Bank’s risk management and controls.
The periodic review can involve any or a combination of:
• On-site examinations or inspections.
• Off-site review.
• Discussions with bank management.
• Review of work done by external auditors (provided it is
adequately focused on the necessary capital issues).
• Periodic reporting.
Nepal Investment Bank Annual Report 2009/10  19
 Board of Directors

Prithivi B Pandé
Chairman & CED
Mr. Pandé has over 20 years
experience in the field of banking
in Nepal with both the public and
private sectors. After obtaining a
degree in Chartered Accountancy
from India in 1978, he worked
at various departments of the
departments of the Nepal Rastra
Bank (Central Bank of Nepal) for till
1990, during which he was seconded
to the IMF head-office in Washington
for two years.
Deepak Man Sherchan
Director
Mr. Deepak Man Sherchan is
an architect by profession. He
holds a B Tech Architecture
degree from IIT Kharagpur,
West Bengal, India, and has
also received a diploma in
real estate development from
Harvard Design School, USA.
Mr. Sherchan is the Managing
Director and Chief Architect
of CBC (P) Ltd.
Prajanya Rajbhandari
Director
Mr. Prajanya Rajbhandari is
an industrialist who holds
an engineering degree
from Punjab University. He
has held directorships at
National Structures, Everest
Poultry and Enviroplast. Mr.
Rajbhandari has actively served
in organizations like Nepal
Jaycees, ROTARY and FNCCI in
various capacities.
Surendra Bahadur Singh
Director
Public Shareholders
Mr. Surendra Bahadur Singh has
a Diploma in Hotel Management
from the Institute of Tourism
& Hotel Management,
Klessheim, Salzburg, Austria,
and specialized in Hotel
Management from the
International School of Tourism,
Rome, Italy and completed his
MBA degree from Tribhuvan
University.

He was appointed in 1990 as the

general manager of Rastriya Banijya
Bank – the largest commercial
bank in Nepal. After financial
liberalization started in 1991, Mr.
Pandé established ‘Himalayan Bank’,
the first private sector commercial
bank in Nepal and a joint venture
with Habib Bank. He served as a
Stakeholder and Executive Director
for a period of 10 years propelling it
to the top tier of Nepali banks.

In 2001 leading a diverse

private equity group he took on
management responsibilities from
the Credit Agricole Group of Nepal
Indosuez Bank to manage Nepal
Investment Bank which has resulted
in the Bank’s phenomenal growth in
capital, assets and profits.

20 Nepal Investment Bank Annual Report 2009/10

Mr. Krishna Prasad Sharma
Director
Mr. Krishna Prasad Sharma,
Deputy General Manager of
Rastriya Banijya Bank has
extensive experience of working
in the banking sector for over
24 years. Mr Sharma holds a
Master Degree in Management
and Social Science and also a
BSc in Agriculture Science.
He holds the position of
Chairman of NLG Insurance
Company and RBB Retirement
Fund, and the position of
director at National Life
Insurance Company.He has also
served as a director in the Credit
Information Centre, Purbanchal
Grameen Bikas Bank,
Paschimanchal Grameen Bikas
Bank, and Sudur Paschimanchal
Grameen Bikas Bank.
Janardan Dev Pant
Director
Mr. Janardan Dev Pant is Director
of Nepal Investment Bank Limited.
He is Chairman of Quantum
Capital Limited, a management
and investment company. He is a
Director of Nirdhan. Pant began
his Commercial Banking career
with Himalayan Bank Limited
(HBL) in the Credit Department,
and spent 11 years in various
managerial positions and one year
in Sunrise Bank Ltd. Prior to his
career with HBL, Pant held Office
Chief position in District Irrigation
Office, Rupendehi, Government of
Nepal and Technical Officer with
Nepal Industrial Development
Corporation. He earned a B.S. Civil
Engineering degree from Adamson
University and an MBA-Finance
from Oklahoma City University.
Dr. Binod Aryal
Director
Mr. Binod Aryal serves as an
Administrator, at Rastriya
Beema Sansthan. Mr. Aryal
who has been associated with
Toyota Motors in the capacity
of Senior General Manager
from 2006 to 2010 has an
extensive experience in the
automobile industry in Nepal.
Mr. Aryal is currently pursuing
PhD degree in Public Transport
and its impact on pollution
from Kathmandu University.
He also serves as a board
member of Upper Tamakoshi
Hydropower and St. Xavier’s
College.
Nepal Investment Bank Annual Report 2009/10  21
Damodar Prasad Sharma Pandey
Director
Mr. Damodar Prasad Sharma
Pandey has 23 years of experience
in various departments within
the Nepal Rastra Bank; serving
as an Executive Director in the
Department of Mint. Furthermore,
he has significant experience
working in Bank Supervision,
Economic Research, Banking
Operations, Finance and in the
Credit Information Bureau. Mr.
Pandey has a B.A. from the
University of Southampton, U.K.
and an M.Sc. in mathematical
statistics from Lucknow, India. He
has also served as the Chairman
of Paschimanchal Grameen Bikash
Bank, Director at the Deposit
Insurance and Credit Guarantee
Corporation and a director of
the National Productivity and
Economic Development Centre.
 Senior Management Team

Mr. Jyoti P Pandey

General Manager

After completing his MBA in India, Mr. Pandey joined

Nepal Indosuez Bank in 1988 and became Head of the
International Banking Department. In 1992, he joined
Himalayan Bank and worked as the Head of Marketing,
Branch Manager and Head of the Credit Department
over a period of 9 years. In 2002, Mr. Pandey joined
Nepal Investment Bank as its Deputy General Manager
and now handles general bank operations comprising
of Human Resources, Administration, Client Relations,
Retail, Trade Finance and Corporate Banking.

Rajan Amatya Mr. Bijendra Suwal Mr. Anuj Timilsina Ms. Manju Basnet
Deputy General Manager Assistant General Manager Assistant General Manager Assistant General Manager

22 Nepal Investment Bank Annual Report 2009/10

With the increase in the number of branches and customer base,
the bank is committed to prompt and reliable customer service.

Nepal Investment Bank Annual Report 2009/10  23

24  Nepal Investment Bank Annual Report 2009/10
 Management Team
Head-Corporate Banking Head-Cards & Remittance Head- Credit Administration
Anuj Timilsina Bikash Thapa Sammit Bhattarai

Head- Trade Finance Head – Finance Head – Research & Development

Deepak K. Shrestha Sachin Tibrewal Shivanth Bahadur Pandé

Head – Legal Head – Cash & Transfer Head- Internal Audit and Compliance
Deepak Shrestha Sanjeev Karki Binod Upadhyaya

Head – Operation Head- Reconciliation Head- General Service

Rabin Sijapati Tul Jung Pandey Usha Pandey

Head – Branch Co-ordination Cell Head- Human Resources Head- Share

Shreechandra Bhatta Prabir SJB Rana Rekha Pant

Head- Treasury
Santosh Ghimire

Branch Managers
Uttam Bdr. K.C Krishna Raj Joshi Radhika Singh
Seepadole Branch Nepalgunj Branch Dhumbarahi Branch

Ratna Kumar Limbu Ramraj Upadhyay Mahesh Lal Shrestha

Birjung Branch Thamel Branch Bhotahity Branch

Prakash Subedi Bhaskar N. Joshi Dhiraj Singh

Pulchowk Branch Kalimati Branch Tulsipur Branch

Kumar Thapa Sanjit Pokhrel Lok Ram Bhattarai

Banepa Branch Birtamod Branch Tripureshwor Branch

Niraj Bhatta Bandana Thapa Naresh Jung Pandey

Jeetpur Branch Battisputali Branch Damauli Branch

Nikita Maskey Subin Sijapati Rakesh Mally

Newroad Branch Dhangadi Branch Krishnanagar Branch

Bishal Thapa Purushottam Chalise Kailash R. Acharya

Biratnagar Branch Gongabu Branch Gaighat Branch

Ajay K. Kafle Sanket Dhungel Suraj Jung Thapa

Butwal Branch Surkhet Branch Lazimpat Branch

Gokarna P. Duwadi Eka Raj Mahat Pragyan Dhungana

Bhairahawa Branch Jumla Branch Parsa Branch

Dhiraj Thapa Shobha Shrestha Ajar Bajracharya

Pokhara Branch Boudha Branch Maharajgunj Branch

Manju Basnett Shekhar Singh Sajan Sah

Putalisadak Branch Hetauda Branch Lalbandi Branch

Prakash Dhungana Baburam Kandel Navin Bir Basnyet

Narayangarh Branch Palpa Branch Lagankhel Branch

Vivek Kumar Jha Keshab Prasad Mainali Mahesh Thapa

Janakpur Branch Lukla Branch Waling Branch

Sujan Ranjit Barun Shrestha

Naya Baneshwor Branch Regional Branch Manager Lalitpur

Nepal Investment Bank Annual Report 2009/10  25

 Domestic Network

KATHMANDU HEAD OFFICE: Durbar Marg

P.O. Box 3412, Tel: 4228229, 4242530 (DISA)
Fax: 977-1-4226349, 4228927,Swift: NIBL NP KT

SEEPADOLE BRANCH: Suryabinayak, Bhaktapur

Tel: 6615617, 6612832
Fax: 6616617

BIRGUNJ BRANCH: Adarshanagar BHAIRAHAWA BRANCH: Maitri Road, Bhairahawa

P.O. Box 101, Tel (051) 523327, 525277 Tel: (071) 526991, 526992
Fax: (051) 525297, 534271 Fax: (071) 526990

PULCHOWK BRANCH: Pulchowk, Lalitpur POKHARA BRANCH: Chiple Dunga, xPokhara KALIMATI BRANCH: Kalimati Chowk, Kalimati
Tel: 5010188, 5010042 Tel: (061) 538919, 539276 Tel: 4672493, 4672494, 4672495, 4672548
Fax: 5010142 Fax: (061) 538920 Fax: 4272612

BANEPA BRANCH: Banepa, Kavre PUTALISADAK BRANCH: Putalisadak, Kathmandu BIRTAMOD BRANCH: Traffic Chowk, Birtamod
Tel: (011) 664315, 662401 Tel: 4445302, 4445303 Tel: (023) 543810, 543811
Fax: (011) 662402 Fax: 4445304 Fax: (023) 543815

JEETPUR BRANCH: Jeetpur, Bara NARAYANGARH BRANCH: Pulchowk, Narayangarh BATTISPUTALI BRANCH: Battisputali, Kathmandu
Tel: (053) 520297 Tel: (056) 571921, 571922, 571923, 571924 Tel: 4471690, 4471790
Fax: (053) 520877 Fax: (056) 571925 Fax: 4470202

NEWROAD BRANCH: Newroad, Kathmandu JANAKPUR BRANCH: Mills Area, Janakpur DHANGADI BRANCH: Chauraha Chowk, Dhangadi
Tel: 4242858, 4230374 Tel: (041) 527331 Tel: (091) 523620, 523706
Fax: 4227050 Fax: (041) 527332 Fax: (091) 524090

BIRATNAGAR BRANCH: Golcha Chowk, Biratnagar NEPALGUNJ BRANCH: Dhamboji, Nepalgunj GONGABU BRANCH: Gongabu Chowk, Kathmandu
Tel: (021) 534523, 534524, 534525 Tel: (081) 525978, 525682 Tel: 4365318, 4365077
Fax: (021) 534526 Fax: (081) 521664 Fax: 4365302

BUTWAL BRANCH: Traffic Chowk, Butwal THAMEL BRANCH: Chaksibari, Thamel SURKHET BRANCH: Neta Chowk, Surkhet
Tel: (071) 549991, 549992, 549993 Tel: 4218431, 4218434, 4218485, 4218486 Tel: (083) 524330, 524331
Fax: (071) 549888 Fax: 4218434 Fax: 524332

26 Nepal Investment Bank Annual Report 2009/10


JUMLA BRANCH: Khalanga Bazaar, Jumla
Tel: (087) 520132
Fax: 520304
BOUDHA BRANCH: Boudha, Kathmandu
Tel: 4480121, 4480122
Fax: 4480123
HETAUDA BRANCH: Bank Road, Hetauda
Tel: (057) 526001, 525946
Fax: (057) 526005
PALPA BRANCH: Tansen, Palpa
Tel: (075) 520832, 520833
Fax: (075) 520891
LUKLA BRANCH: Chaurikharka, Lukla
Tel: (038) 550120
Fax: (038) 550220
TRIPURESHWOR BRANCH: Tripureshwor,
Kathmandu
Tel: 4259780, 4259980
Fax: 4260324
Damauli Branch: Safasadak, Damauli
Tel: (065) 562500, 562600
Fax: (065) 562700
KRISHNANAGAR BRANCH: Krishnanagar,
Kapilvastu
Tel: (076) 520764, 520765, 520766
Fax: (076) 520354
GAIGHAT BRANCH: Gaighat, Udayapur
Tel: (035) 420952, 420953
Fax: (035) 420954
LAZIMPAT BRANCH: Lazimpat, Kathmandu
Tel:4005058, 4005069, 4005068
Fax:4005065
NAYA BANESHWOR BRANCH: Naya Baneshwor, PARSA BRANCH: Parsa, Chitwan
Kathmandu Tel: (056) 583623, 583624
Tel: 4785529, 4782289, 4782520 Fax: (056) 583625
Fax: 4785537
Maharajgunj Branch: Maharajgunj,
DHUMBARAHI BRANCH: Pipalbot Chowk, Kathmandu Kathmandu
Tel: 4009006, 4009007 Tel: 4016151, 4016152
Fax: 4009009 Fax: 4016155
BHOTAHITI BRANCH: Bhotahiti, Kathmandu LALBANDHI BRANCH: Lalbandhi, Sarlahi
Tel: 4230797, 4230788 Tel: (046) 501583, 501584
Fax: 4230771 Fax:(046) 501585
TULSIPUR BRANCH: Tulsipur, Dang LAGANKHEL BRANCH: Lagankhel, Lalitpur
Tel: (082) 521613, 521614 Tel: 5552980
Fax: 521615 Fax: 5552990
Nepal Investment Bank Annual Report 2009/10  27
 Global Network

Westpac Banking Corporation, Sydney

Royal Bank of Canada, Toronto
JP Morgan Chase, London
Danske Bank, Copenhagen
JP Morgan Chase, Frankfurt
Commerz Bank, Frankfurt A.M.
Credit Agricole, Paris
SNS Bank, Amsterdam
Standard Chartered Bank, Frankfurt
Bayerische Hypo-Und Vereins, Hamburg
Standard Chartered Bank, London
Habib Allied International Bank Plc, London
Standard Chartered Bank,Kolkatta
HDFC, Mumbai
ICICI Bank, Mumbai

28  Nepal Investment Bank Annual Report 2009/10

Citibank, New Delhi
Standard Chartered Bank, Mumbai
Bank of Tokyo, Mitsubishi
Standard Chartered Bank, Tokyo
Svenska Handelsbanken,Stockholm, Sweden
United Overseas Bank Ltd. Singapore
Citibank, New York
Bank Of China, Beijing
Commerzbank, Frankfurt
Standard Chartered Bank, New York
Mashreque Bank, New York
JP Morgan Chase,New York

Nepal Investment Bank Annual Report 2009/10  29

 In spite of facing tremendous competition in terms of deposit and
lending rates, NIBL has still maintained its market share.

30  Nepal Investment Bank Annual Report 2009/10

 For the Financial Year 2066/67 (FY 2009/2010)
Board of Director's Report Presentation by the Chairman to the 24th Annual General Meeting
Dear Shareholder,
It is our pleasure to welcome you at this 24th Annual General Meeting of
Nepal Investment Bank Ltd (NIBL). On this occasion, I present to you the
Bank’s activities, Balance Sheet and Profit & Loss account for financial year
2009-10.
1. Review of Bank’s performance for FY 2009-10:
The fiscal year 2009-10 was another successful year for the Bank. Despite
the difficult market conditions, continuing political stalemate, increased
competition, liquidity problems, our Bank was able to deliver strong
overall performance. An overview of the Bank’s performance during the
review year is presented hereunder:
NPR in Million
S.No. Particulars FY FY Growth in Growth
2008-09 2009-10 NPR in %
1. Total Assets 53,010 57,305 4,295 8.1
2. Total Deposit 46,698 50,094 3,396 7.3
3. Total Loans and Advances 36,827 40,948 4,121 11.2
4. Total Investments 7,399 8,635 1,236 16.7
5. Total Operating Profit (before 1,477 2,021 544 36.8
provision for possible loss)
6. Total Net Profit 901 1,265 364 40.4
7. Non-performing Assets (in %) 0.58 0.62 - 0.04
8. Return on Paid-up Capital (in %)* 49.8 52.6 - 2.8
9. Return on Shareholders’ Fund (in %)* 27.3 27.8 - 0.5
10. Total Customer Base (in Nos.) 268,345 355,511 87,166 32.5
11. Market Share in Deposit (in %) 8.3 7.9 - (0.4)
12. Market Share in Lending (in %) 9.3 8.9 - (0.4)
* Average
2. Impact, if any, of the national and international situation upon
the business of the company
Most of the countries across the world have faced the contagion impacts
of global financial crisis. The growth rate of world output is expected
to be negative in 2009 for the first time after the Second World War.
Governments and central banks of economically problematic countries
made efforts to minimize the effects of crisis through the adoption of
conventional as well as non-conventional measures.
The updated version of World Economic Outlook issued by the
International Monetary Fund on July 8, 2009, has mentioned that the
severity of recession has ended. World economy is gradually beginning to
come out of severity of recession. But the improvement is uneven among
the countries and the recovery is reported to be sluggish.
Based on the preliminary estimate of the Central
Bureau of Statistics, the gross domestic product
(GDP) has witnessed a growth of 3.5 percent at
basic price and 4.6 percent at producer's price in
2009/10. Such growth rates were 3.9 percent and
4.9 percent respectively in 2008/09. The annual
inflation is in double-digits though it moderated
to 10.5 percent in 2009/10 compared to 13.2
percent in 2008/09.
The balance of payments (BOP) posted a loss of
Rs. 2.62 billion in 2009/10 as against a surplus of
Rs. 44.76 billion last year.
The workers' remittances grew meagerly by 10.5
percent to Rs. 231.73 billion compared to its
significant growth of 47.0 percent a year ago.
The gross foreign exchange reserves dropped by 7.0
percent to Rs. 266.57 billion in mid-July 2010 from a
level of Rs. 286.54 billion as at mid-July 2009. Such
reserves had grown by 34.8 percent last year.
Recent increase in the number of commercial
banks in Nepal as well as commercial banks’
branches coupled with the global financial crisis
and difficult market conditions at home is posing
diverse problems to our domestic banking sector.
With the increase in the number of commercial
banks and other financial institutions, the
banking sector in Nepal is facing tremendous
competition in terms of deposit and lending rates
- resulting in lower spread and directly effecting
profitability. Hence, managing the interest rates
on deposit and loans and advances is a major
challenge faced by banking industry.
Moreover, the threat going forward is that due to
the global financial crisis and economic contraction
in major labor destinations of migrant Nepali
workers, remittance flow will either subside or
there won’t be significant increase in remittance
flow like before. This will in turn affect the deposit
growth in our banking system.
Nepal Investment Bank Annual Report 2009/10  31
 This year alone the Bank added ten more branches of which four are
within the Valley and six are outside the Valley. With these additions,
the Bank now has a network of 40 branches throughout Nepal.
3. Achievements/New Products & Services/ New
Branches during current fiscal year 2067-68
There were no significant events till the date of this report.
4. Industrial and professional relations of the
Company
The Bank has established a cordial and professional
relationship with all the stakeholders. We believe that this
cordial relationship with all the stakeholders developed on
the basis of professionalism and transparency will be fruitful,
and prove to be a successful medium for future progress of
the Bank.
5. Changes made in the Board of Directors, and reasons
therefore
During the review year, Mr. Binod Aryal, nominee Director
from Rastriya Beema Sansthan, vacated the office of
Director and in his place, Mr. Binod Aryal, Administrator, was
nominated as Director on the Board of the Bank by Rastriya
Beema Sansthan.
The promoters representing Group ‘A’ appointed Mr. Janardan
D. Pant as Director representing the Group, thereby filling up
the vacancy from the Group, which was lying vacant since past
few years.
On behalf of the shareholders, I would like to convey my sincere
thanks to the outgoing Director for his invaluable contribution
and support for the development of the Bank, and also welcome
the incoming Directors who have joined the Bank.
6. Main factors affecting the business
The main factors affecting the Bank’s business are:
• The continuing political stalemate is affecting all sectors of
the economy and the financial system is no exception.
• Heightened competition in the banking sector has led to
shrinking margins.
• The ongoing liquidity crisis has led to challenge in asset
liability management and has significantly pushed up
cost of funds and increased interest rate risk.
• The double digit inflation has caused sharp increase in
overheads.
• Due to mushrooming financial institutions, staff retention
has become a major human resource challenge.
32  Nepal Investment Bank Annual Report 2009/10
7. Board Of Directors’ reaction to the remarks made, if
any, in the Audit Report
There are no adverse remarks in the audit report except
comments on routine matters arising in the normal course
of business. The Board of Directors has taken note of such
comments and recommendations, and has already initiated
requisite steps to regularize the same.
8. The amount recommended for distribution as
dividend
The 338th meeting of the Board of Directors of the Bank has
proposed 25% cash dividend from the profit of fiscal year
2009-10 on the Bank’s paid up capital.
9. Number of shares forfeited, if any, and particulars
thereof
During the year, no shares have been forfeited. The Bank
issued 20,288 number of unsubscribed right shares with face
value of NPR 100 on which a premium of NPR 11,849,422 was
collected.
10. Progress made in the business of the Company and
its subsidiary company during the previous financial
year
The Bank does not have any subsidiary company. As regards
the progress of the Company during the previous financial
year, please refer to Section 1 above.
11. Main transactions between the Company and
its subsidiary company during the financial year and
important changes, if any, therein
The Bank does not have any subsidiary company.
12. Information furnished to the Company by its basic
shareholders during the previous financial year
None.
13. Particulars of the ownership of shares taken up
by the Directors and office-bearers of the Company
during the previous financial year
None.
14. Particulars of information furnished by any
Director/close relative about his personal interest in
any agreement signed by the Company during the
previous financial year
There is no any such agreement and consequently, no
disclosure in this respect has been made.
15. Particulars of buy-back of shares, if any
There was no buy-back of shares during the year under
review.
16. Whether or not there is an Internal Control System,
and if there is any such system, details thereof
The Bank has an independent Internal Audit and Compliance
Department headed by an experienced auditor. The
Department performs its functions under the direct
supervision and control of the Audit Committee and submits
its reports directly to the latter. To supplement the in-house
internal audit department, the Bank also outsources audit
service from independent audit firms to review specific areas
of operation. In addition, the Bank has also constituted a
‘Compliance Committee’ comprising of various departmental
heads to further strengthen compliance and internal control
system of the Bank. Besides these Committee, the Bank has
a number of high level committees, namely Executive Credit
Committee, Human Resource Development Committee,
Construction Committee and Asset Liability Management
Committee, each with a defined scope and terms of reference.
These Committees comprise of Board members and senior
Management officials.
17. Particulars of the total management expenses of
the previous financial year
Employee Expenses during
the Previous FY: NPR 279.85 million
Administrative Expenses
during the Previous FY: NPR 433.59 million
Total: NPR 713.44 million
18. Names of the members of the Audit Committee,
remuneration etc. being received by them and functions
discharged/suggestions offered by the Committee
The Bank’s Audit Committee, under the chairmanship of a
non-executive director, Mr. Damodar Prasad Sharma Pandey,
comprises of Mr. Deepak Man Sherchan and Mr. Binod Aryal as
Member Directors along with the Bank’s Head of Internal Audit,
Mr. Binod Upadhaya, as its Member Secretary. The Committee
reviews the Bank’s financial condition, its internal control and
risk management systems, statutory and regulatory compliances,
audit programs etc. After detailed discussion on the findings of
the internal audit as well as external audit reports, the Committee
initiates necessary corrective action. The Committee periodically
apprises the Board of Directors of the issues and the corrective
measures initiated. During the year, seven such meetings were
held. The Chairman of the Committee is paid NPR 10,000 and
member Directors are paid NPR 8,000 each, per meeting, by way
of Audit Committee meeting fee.
19. Payments due, if any, to the Company from any
Director, Executive Chief or basic shareholder of the
Company, or their close relatives, or their related
entities
No such payments are due to the Company.
20. Amount paid as remuneration, allowances and
facilities to the Directors, the Executive Chief and
other office bearers
As per Annexure “A” below.
21. Dividend yet to be collected by shareholders
Dividends declared by the Bank but not claimed by
the shareholders till the end of 2009-10 stood at NPR
16,822,327.
22. Any other matters
a. New Branches, Products and Services During FY
2066-67:
• Branch Network: This year alone the Bank extended
ten more branches, of which four are within the Valley
(namely Tripureshwor, Lazimpat, Maharajgunj and
Lagankhel) and six are outside the Valley (namely Tulsipur,
Damauli, Krishnanagar, Gaighat, Parsa and Lalbandi).
With this addition, the Bank now has a network of 40
branches throughout Nepal.
• New Products: The Bank introduced two new products-
NIBL Special Fixed Deposit with interest rate of 11% and
Saving Bonanza with 7.5%. Both these products received
good response from the customers.
Nepal Investment Bank Annual Report 2009/10  33
 • Ebanking: NIBL now has 14,000 new users in the
ebanking platform giving the highest base of ebanking
customers in Nepal at 28,000. There have been new
and innovative added features in the ebanking product
such as online airline ticket booking and payments,
alongside enabled Online and ATM pre/post paid
bill payments for Telecom companies including PSTN
landline payments throughout Nepal. NIBL also tied up
with Nepal Derivatives Exchange allowing the ebanking
users to conduct derivative transactions. NIBL released
an electronic payment gateway, enabling secure VISA,
MasterCard and PayPal transactions and e-commerce on
the internet for ebanking customers.
• Cards: The Bank successfully migrated to new switching
system Electra Card System. Our card base has increased
to more than 250,000 cards till the year end. We have
successfully launched our proprietary Network – National
Payment Network and 15 financial institutions have
already joined the Network. We have added 18 more
ATMs making a total of 70 NIBL owned ATMs. We have
200 plus ATMs and 400,000 plus cards in our network
-VISA Associate and NPN members.
• Remittance: The Bank has started remittance business
from USA and UK and also expanded its remittance
business team in Saudi market and Malaysia. This has
registered strong growth and success in the first year of
operation, making NIBL the largest Nepali Bank remitting
money back to Nepal. Bank Albilad has awarded NIBL
the Best Remittance Partner Award 2010. The award was
given on the basis of NIBL’s steady performance level,
outstanding support and excellent customer relations.
The Bank added 300 domestic remittance disbursement
agents during this period making the total number of
remittance disbursement agents to 500 throughout
Nepal.
• Business Tie-ups: All American Life Insurance Company,
ALICO has also tied up with NIBL to offer its life insurance
products through NIBL’s Bancansurance program. NIBL
has entered into an arrangement with China Development
Bank (CDB) to promote project relationships in
infrastructure finance in terms of project cooperation,
financial consultancy, credit grants and currency swaps.
This arrangement will not only enable NIBL to finance
hydropower projects in Nepal but will also enable the
34  Nepal Investment Bank Annual Report 2009/10
Bank’s corporate clients access to international debt
markets.
• Other Achievements: NIBL also qualified to join the
Global Trade Finance Program offered by the International
Finance Corporation (IFC), enabling the Bank to conduct
international finance arrangements with a wider range
of correspondent banks greatly benefiting our corporate
clients. NIBL has received a trade finance facility of USD
5 million, the largest extended to any Nepali Bank and it
will enhance our support for local enterprises and boost
international trade opportunities.
b. Human Resources:
We recognize the important role of human resources to
successfully meet our business goals. The Bank is committed
to provide quality learning and working environment for our
staff and help them develop their knowledge, skills & attitude
required to perform well in their career. The Bank has been able
to inculcate a strong performance based culture where staff is
rewarded for achievement of annual performance targets.
Ultimately, the quality of our human resources should be the
source of competitive advantage for us.
With the increase in the number of branch representation and
customer base, the Bank has to ensure that we continue to provide
prompt and reliable customer service. The Bank’s total workforce
has reached 877 compared to 766 in the previous year. Of the total
staff strength, 41% are female staffers and 80 staff members have
completed more than 10 years of service in the institution.
We continue to place great value in quality and service
and our development objectives ensure that our staffers
are motivated with high levels of productivity and loyalty.
During the year, 533 participants attended 75 training
courses/ workshops on various areas like SME Lending, Risk
Management, Anti Money Laundering, Signature verification
& counterfeit notes, Customer Service, Operations and NRB
guidelines. Six staff members attended workshops in India
and abroad. The Bank also supports team-building activities
like sports, yoga, meditation focusing on job satisfaction and
personal growth.
Our staff members are our most valuable asset and their
development, motivation, recognition, reward and welfare
 NIBL donated the fund raised by NIBL Heritage Marathon 2009 to
help build cremation pyres at Bhasmeshwor ghat, Pashupatinath and
for restoration work at the Bhaideval Temple,Patan Durbar Square.
are very important to the success of this Bank. Our aim is to
attract, retain, and motivate staff who can deliver efficient
service to our clients.
c. Social and Community Works:
Nepal Investment Bank Limited successfully conducted NIBL
Heritage Marathon 2009, an initiative gesture towards the
conservation of our cultural heritage. Our second Nepal
Investment Bank (NIBL) Heritage Marathon 2009, whose main
objective was to help preserve heritage and architecture of
Kathmandu Valley, raised over 70 lakh rupess far exceeding
our target of fifty lakhs rupees. The Bank donated this fund
to help build cremation pyres at Bhasmeshwor Aryaghat
Pashupatinath and for restoration work at the Bhaideval
Temple at Patan Durbar Square.
The Bank also gave away 25 lakh rupees for Extreme Everest
Expedition, the cleanup campaign that cleared out 1800 kilos
of garbage from above 8,000 meters, often referred to as the
death zone. The event roused wide international concern, and
was extensively reported by all local media as well as renowned
international media like BBC, Reuters and AFP. Apart from cleaning
up the death zone, the campaign also successfully rescued the
body of two mountaineers - Swiss climber Gianni Goltz, who
died last year, and Russian climber Sergey Duganov. The visual
documentation of the same is due for premier in December.
The Bank also gave away five lakh rupees to support the
second Microfinance Summit 2010. The summit focused on
converging the role of varied stakeholders from policymakers,
regulators, to commercial banks and other microfinance
practitioners, to reach the broader spectrum of rural
demography. The summit also worked on providing financial
services to 3 million people, especially women, by 2010.
NIBL sponsored one lakh rupees to Spinal Iinjury Rehabilitation
Center for their golf tournament. The Spinal Injury
Rehabilitation Centre (SIRC) is a unique charitable facility and
the only rehabilitation centre in Nepal that caters exclusively
to the needs of the spinally injured.
The Bank has also been supporting the environmental causes.
Just this year, we gave away 50,000 rupees to National Trust
for Nature Conservation. Similarly, the Bank also donated one
lakh rupees to Nepal Carpet Exporter’s Association.
The Bank gave away three lakh rupees to All Nepal Lawn Tennis
Association to aid with their annual lawn tennis match. Our
Bank has also been keen on promoting Nepali art and artists.
This year alone we gave away one lakh rupees to Siddhartha
Art Gallery. Siddhartha Art Gallery strives to promote both
contemporary Nepalese art and artists from around the globe.
d. Future Plans
• NIBL aims to add value to both clients and to shareholders
via a technology based portfolio of products different
from those used by our competitors. Branch network
of the Bank has reached 40, which allows our Bank to
cover areas spread over Mechi to Mahakali zones and
surrounding districts. For the coming fiscal year, we
will be mainly focusing on consolidation, control and to
increase profitability of branches.
• The existing eBanking offers a list of features that may
be developed as an individual product or even brands.
We have developed a system that alerts the customers of
their transaction and daily balances, which could be one
of the very important value added services.
• Our Bank has been utilizing a state of the art software
technology which enables us to reduce the number of
manual work, which in turn is made automated, offering
more efficient outcomes. The Bank has achieved highest
level of automation in various manual operations and
reporting mechanisms. Cost reduction initiative will be
undertaken by offering central back office operations for
the processes like clearing and remittances to leverage
on the system capabilities.
• We intend to establish a 24 hour call center in order
to facilitate the member banks and their customers.
And after successful migration, we have aggressively
marketed National Payment Network (NPN) members.
However, an entirely separate cell is required in order to
make it an independent entity.
• We will be launching Electronic Payment Gateway (EPG)
for online purchases which will be the first of its kind in
Nepal. Further, we plan to develop loyalty programs like
EMI and Cash Back offers to increase our card base.
Nepal Investment Bank Annual Report 2009/10  35
 • Increase in competition in the banking industry has
made Banks look for additional areas for investments
to continue to keep up the revenue stream. NIBL is
contemplating commencing insurance and micro-finance
business, which are expected to help us in improving our
revenue streams and shrinking margins.
• NIBL would complete 25 years of banking operation in
Nepal in 2011. We have come a long way from being the
first bank to be entirely funded by Nepali investors to
being one of the leading commercial banks of Nepal. The
25th Anniversary will be marked by special celebration
and schemes, which will be incorporated in the near
future.
• Lastly, the Bank has continued its long term strategy to
be the leading bank in the country by pursuing a strategy
of growth and delivery of quality services.
and guidance. I would also wish to thank the management
and staff of Nepal Investment Bank Ltd for their dedication
and hard work.
Lastly, we thank all our customers for giving the Bank an
opportunity to serve them and without whose support, the
development of the Bank and growth in business would not
have been possible.
Thank you,
Prithivi B. Pandé
Chairman Chief Executive Director

23. Acknowledgments Prajanya Rajbhandari

On behalf of the Board, I wish to thank the external auditors Director
for their timely completion of audit and professional
suggestions. I also extend sincere thanks to our shareholders Binod Aryal
for their continued support and encouragement. We sincerely Director
convey our thanks to the Government of Nepal, Ministry of
Finance and Nepal Rastra Bank for their continued support Date: Asoj 5, 2067 (September 21, 2010)

36  Nepal Investment Bank Annual Report 2009/10

NIBL will complete 25 years of banking operation in Nepal in 2011. We will
have journeyed to become one of the leading commercial banks in Nepal.

Nepal Investment Bank Annual Report 2009/10  37

NIBL aims to add value to both clients and to shareholders via an
innovative blend of technology based products different from those
used by our competitors.

38  Nepal Investment Bank Annual Report 2009/10

Annexure A

Amount Paid as Remuneration, Allowances and Facilities to b) Annual Salary, Allowances and other
the Directors, the Executive Chief and Other Office-bearersa) Facilities provided to CED and other Executives
Directors: /Managers
a) Directors: NPR in Thousand
1 Prithivi B. Pandé Chairman / S.N. Particulars CED Other
Chief Executive Executives/
Director Managers
2 Prajanya Rajbhandari Director 1 Basic Salary 7,564 24,476
3 Deepak Man Sherchan Director 2 Allowances 7,920 23,400
3 Dashain Allowance 1,290 3,973
4 Janardan D. Pant Director 4 Provident Fund 756 2,448
5 Krishna Prasad Sharma Director
Total Number 1 40
6 Binod Aryal Director
7 Surendra B. Singh Director Besides Salary and Allowances, following facilities are provided
8 Damodar Prasad Sharma Pandey Professional to CED and Other Executives/ Managers:

Directors: 1 Water/ Electricity & Telephone Bills are reimbursed as per

1. Meeting Fee- Chairman Rs. 10,000 and Directors Rs. actual to CED & GM.
8,000 per meeting 2. Vehicle with driver and fuel is provided to CED & GM. For
2. Mobile Phone bill reimbursement on actual basis. other Executives and Managers, vehicle loan/ facilities
3. Fuel facility – 50 ltrs per month. provided as per Human Resource Policy of the Bank.
3. Bonus - as per Bonus Act.
4. Accident Insurance, Medical Insurance, Life Insurance - as
per Service Regulations and Human Resource Policy of the
Bank
5. Newspapers & Periodicals are provided to CED & GM

Nepal Investment Bank Annual Report 2009/10  39

 Corporate Social Responsibility

Ours is the age when Corporate Social Responsibility has

become part and parcel of corporate business. However,
Nepal Investment Bank Limited does not see this corporate
responsibility as a mere obligatory duty but an opportunity to
help build the nati on and give back to society.

Since the early days of its incepti on, Nepal Investment Bank
Limited has been investi ng heavily on the issues of social
causes, whose profi t will go to each individual and even
nati on at large. We have tried to lend our hands on diverse
issues from environment conservati on, health care, educati on
to natural disaster victi ms. NIBL sponsored three extra cremation pyres at Bhasmeshwor, Pashupati

We have briefl y listed some of the major events supported by

Nepal Investment Bank Limited.

nIBl Heritage Marathon 2009

Nepal Investment Bank Limited successfully conducted NIBL
Heritage Marathon 2009, an initi ati ve gesture towards the
conservati on of our cultural heritage. Our second Nepal
Investment Bank (NIBL) Heritage Marathon 2009, whose main
objecti ve was to help preserve heritage and architecture of
Kathmandu Valley, raised over 70 lakh rupess far exceeding
our target of fi ft y lakhs rupees. The bank donated this fund Reconstruction of Pavement
to help build cremati on pyres at Bhasmeshwor, Pashupati nath
and for restorati on work at the Bhaideval Temple at Patan
Durbar Square.

Five added Dhunge Dhara

NIBL Heritage Marathon 2009` Bhaideval Temple at Patan Durbar Square (Before and After)

40 Nepal Investment Bank Annual Report 2009/10

 Nepal Investment Bank Limited does not see this corporate
responsibility as a mere obligatory duty but an opportunity to
give back to society.

Restoration project at Sundari Chowk Restored Sundari Chowk courtyard

Extreme Everest Expedition

The bank also gave away 25 lakh rupees for Extreme
Everest Expedition, the cleanup campaign that cleared
out 1800 kilos of garbage from above 8,000 meters, often
referred to as the death zone. The event roused wide
international concern, and was extensively reported by
all local media as well as renowned international media
like BBC, Reuters and AFP. Apart from cleaning up the
death zone, the campaign also successfully rescued the
body of two mountaineers - Swiss climber Gianni Goltz,
who died last year, and Russian climber Sergey Duganov.
The visual documentation of the same is due for premier
at December. Rescuing the body of two mountaineers

Micro Finance Summit 2010

Bank also gave away five lakh rupees to support the second
Microfinance Summit 2010. The summit focused on converging
the role of varied stakeholders from policymakers, regulators,
to commercial banks and other microfinance practitioner,
to reach to the broader spectrum of rural demography. The
summit also worked on providing financial services to 3 million
people, especially women, by 2010.

Spinal Injury Rehabilitation Center

NIBL sponsored one lakh rupees to Spinal injury Rehabilitation
Cleanup campaign at Mt. Everest
Center for their golf tournament. The Spinal Injury Rehabilitation

Nepal Investment Bank Annual Report 2009/10  41

The bank sponsored 25 lakh rupees for Extreme Everest Expedition,
the cleanup campaign that cleared out 1800 kilos of garbage from
8,000 meters above Everest with funds raised from our Marathon.
Spinal injury Rehabilitation Center
Centre (SIRC) is a unique charitable facility and the only
rehabilitation centre in Nepal that caters exclusively to the
needs of the spinally injured. At SIRC, the patient undergoes
an intensively engaged period of rehabilitation which includes
specialized therapy, counseling, vocational training, and medical
care. The event was observed by golfers as well as non golfers.
Bank has also been supporting the environmental causes. Just
this year, we gave away 50,000 rupees to National Trust for
Nature Conservation. Similarly, the bank also donated one lakh
rupees to Nepal Carpet Exporter’s Association.
All Nepal Lawn Tennis
Association
The bank gave away three lakh rupees to
All Nepal Lawn Tennis Association to aid
with their annual lawn tennis match.
Siddhartha Art Gallery
NIBL sponsored one lakh rupees to Siddhartha Art Gallery.
Siddhartha Art Gallery strives to promote both contemporary
Nepalese art and artists from around the globe. Hosting
exhibitions in various mediums including photography,
pottery, installation art and printmaking, the gallery appeals
to different artistic tastes and interests. Committed towards
social responsibility, they focus on socio-cultural and political
issues, have initiated community art projects and donate to
many causes such as Earthquake Relief Fund, construction of
maternity wards for underprivileged mothers and renovations
of historic temples.
42  Nepal Investment Bank Annual Report 2009/10
Nepal Carpet Exporter’s Association
The bank donated one lakh rupees to Nepal Carpet Exporter’s
Association, which is a non-profit trade organization of
exporters of hand-woven and knotted carpets and area rugs.
NCEA was established to protect the interests and aspirations
of Nepalese carpet exporters through a process of effective
policy lobbying and worldwide market promotion of Nepalese
carpet.
The bank donated 50,000 rupees to National Trust for Nature
Conservation. NTNC was established in 1982 by a Legislative Act
as an autonomous and not-for-profit organization, mandated
to work in the field of nature conservation in Nepal.
Nepalese Society For Children's Literature
NIBL supported Nepalese Society for Childrens Literature by
donating one lakh rupees. NESCHIL was established with a
view to promote children's literature and reading activities
in Nepal bringing together the writers, illustrators, editors of
children's books as well as publishers, librarians, teachers, and
experts in children's activities.
Press Chautari
NIBL sponsored 50,000 rupees to Press Chautari. Press
Chautari.com is a dedicated internet based online media site
to bring us news, events, interactions, discussions and forums
to the Nepalese from abroad and Nepal, it is based in New
York, US. Their primary objective is to make this site as a
“complete media access” for all Nepalese people around the
globe and promote relationships and explore the potentialities
for growth and opportunities.
Donation for Curable Blindness
The bank gave away 77,000 rupees to the center for Lion’s
Eye Cure Center to support their mission to eradicate curable
blindness. Lions Eye Care Center was established in response
to alarming statistics revealed in a national survey in 1981
which discovered approximately 80,000 people in Nepal
who were needlessly blind from Cataract alone. To combat
this problem; Lions Eye Care Center has had notable success.
Over the period 2000/2003, LECC has conducted 46 surgical
eye camps performing sight restoring operations on the total
3099, people in the Rural Regions of Nepal. Since last ten years,
it has also expanded its hospital facilities to accommodate
inpatients and introduce regular operating facilities.
National Senior Citizen
Organization, Nepal
As a part of its corporate social
responsibility project the bank
aided the National Senior Citizen
Organization Network Nepal
(NSCONN) with 25,000 rupees. The
organization is dedicated towards
the protection and enhancement of
citizen’s rights in Nepal and is working extensively on including
the issue of senior citizen’s right as an integral part of the to-
be-drafted constitution.
South Asian Institute of Management
The bank donated 50,000 rupees to South Asian Institute
of Management (SAIM) to support their Management
Development Program. SAIM is an independent, academic
institution established in Kathmandu, Nepal in 2005 to
provide need-based management education and engage
in management development, research and consulting
to facilitate the growth and development of managers,
entrepreneurs, and business leaders in South Asia which
is emerging as the most dynamic Asian regional economic
center for global trade, investment and technology
innovation.
Nepal Agricultural Research Council
NIBL has been actively involved in agricultural promotion
too. This year alone, we gave away 25,000 rupees to Nepal
Agricultural Research Council. Nepal Agricultural Research
Council (NARC) was established in 1991 as an autonomous
elderly organization under "Nepal Agricultural Research Council Act -
1991" to conduct agricultural research in the country to uplift
the economic level of the people.
Nepal Body Building & Fitness Association
Given the context of our society, where sedentary lifestyle
is becoming an obligation, the need for physical activities is
pivotal. Taking this into consideration, the need to balance
these obligations with physical activities is more important
than ever. Hhence, NIBL has been actively promoting healthy
lifestyle. With the same motive, the bank donated 50,000
rupees to Nepal Body Building & Fitness Association
GAEKWAD Golf Tournament
Nepal Investment Bank contributed one lakh rupees to
GAEKWAD Golf Tournament 2009. The two-day event was
organized by GAEKWAD Baroda Golf Club (GBGC). GBGC is
situated in the Lukshmi Villas Palace grounds at Vadodara, the
industrial and cultural capital of Gujarat. Owned and operated
by Gaekwad Services Ltd, it is affiliated with the CCI Club of
India, Mumbai. Apart from the golf tournament, the event
also helps promote tourism.
Nepal Investment Bank Annual Report 2009/10  43
TO THE SHAREHOLDERS OF NEPAL INVESTMENT BANK LIMITED

1. We have audited the accompanying Balance Sheet of Nepal Investment Bank Limited as on Ashadh 32, 2067 (July 16, 2010) and the
related Profit and Loss Account and Cash Flow Statement for the year then ended. These financial statements are the responsibility
of the bank’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the generally accepted auditing standards in Nepal and the directives issued by the
Nepal Rastra Bank. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.

3. On examination of the financial statements as aforesaid, we report that:

a) We have obtained all information and explanations, which to the best of our knowledge and belief were necessary for the purpose
of our examination.

b) In our opinion, proper books of account as required by law have been kept by the Bank, in so far as appears from our examination
of those books of account and the financial statements dealt with by this report are in agreement with the books of accounts.

c) In our opinion, the statements received from the respective branches are adequate for the audit purpose.

d) In our opinion and to the best of our information and according to the explanations given to us and from our examination of the
books of accounts of the Bank, we have not come across the cases where the Board of Directors or any member thereof or any
employee of the Bank has acted deliberately contrary to the provisions of the law relating to accounts or caused loss or damage to
the Bank or committed any misappropriation or violated any directive of Nepal Rastra Bank or acted in a manner to jeopardize the
interest and security of the Bank and its depositors.

e) In our opinion, adequate capital fund and provisions for losses have been made and the business of the Bank has been conducted
within its authority.

4. In our opinion and to the best of our information and according to the explanations given to us, the said financial statements
referred to above, read together with the notes attached thereon give a true and fair view:

a) In the case of the Balance Sheet, of the state of affairs of the Bank as on Ashadh 32, 2067 (July 16, 2010) and

b) In the case of the Profit and Loss Account and the Cash Flow Statement, the profit of the Bank and its cash flow for the year ended
on that date.

Sundar Man Shrestha, FCA

Chartered Accountant
For Sundar & Co.

Date: September 17, 2010

Nepal Investment Bank Annual Report 2009/10  45

 Balance Sheet
As at Ashad end 2067 (July 16, 2010)
Capital & Liabilities Schedule Current Year Rs. Previous Year Rs.

1. Share Capital 1 2,409,097,700 2,407,068,900

2. Reserve & Fund 2 2,176,295,392 1,500,770,808
3. Debentures and Bonds 3 1,050,000,000 1,050,000,000
4. Borrowings 4 37,314,826 38,800,000
5. Deposits Liabilities 5 50,094,725,497 46,698,100,065
6. Bills Payable 6 38,143,836 82,338,018
7. Proposed Dividend 602,274,425 481,413,780
8. Income Tax Liabilities 37,195,255 38,296,736
9. Other Liabilities 7 860,366,551 714,014,819
Total Liabilities 57,305,413,482 53,010,803,126

Assets Schedule Current Year Rs. Previous Year Rs.

1. Cash Balance 8 1,525,441,872 1,833,462,494

2. Balance with NRB 9 3,237,217,030 4,411,133,083
3. Balance with Banks/ Financial Institution 10 2,053,230,931 1,673,408,313
4. Money at Call and Short Notice 11 - -
5. Investments 12 8,635,530,125 7,399,811,700
6. Loan, Advances & Bills Purchased 13 40,318,308,062 36,241,206,558
7. Fixed Assets 14 1,136,247,319 1,060,752,482
8. Non-Banking Assets 15 - 375,000
9. Other Assets 16 399,438,143 390,653,496
Total Assets 57,305,413,482 53,010,803,126

Contingent Liabilities Schedule 17

Directors’ Declaration Schedule 29
Statement of Capital Fund Schedule 30 (A1)
Statement of Risk Weighted Assets Schedule 30 (B) (C) (D) (E)
Principal Indicators Schedule 31
Principal Accounting Policies Schedule 32
Notes to Accounts Schedule 33
Details of Loan Against Promoters Shares Schedule 34
Comparision Between Audited & Unaudited results Schedule 35
Fourth Quarterly Unaudited Results Schedule 36

Schedules 1 to 17 form integral parts of the Balance Sheet.

Prithivi Bahadur Pande Prajanya Rajbhandari Deepak Man Sherchan Janardan Dev Pant
Chairman & Chief Executive Director Director Director Director

Krishna Prasad Sharma Surendra Bahadur Singh Damodar Prasad Sharma Pandey Binod Aryal
Director Director Director Director

As per our report of even date

Jyoti P. Pandey Sachin Tibrewal
General Manager Head- Finance Auditor
Sundar Man Shrestha, FCA
For, Sundar & Company
Chartered Accountants

46  Nepal Investment Bank Annual Report 2009/10

Profit & Loss Account
for the period July 16, 2009 to July 16, 2010 (Shrawan 1 2066 to Ashad 32 2067)
Particulars Schedule Current Year Rs. Previous Year Rs.

1. Interest Income 18 4,653,521,338 3,267,941,142

2. Interest Expenses 19 (2,553,847,497) (1,686,973,130)
Net Interest Income 2,099,673,841 1,580,968,012
3. Commission and Discount 20 242,886,274 183,041,778
4. Other Operating Income 21 168,312,660 113,974,099
5. Exchange Profit 22 224,056,830 185,327,111
Total Operating Income 2,734,929,605 2,063,311,000
6. Staff Expenses 23 (279,851,360) (225,721,490)
7. Other Operating Expenses 24 (433,596,280) (360,533,174)
8. Exchange Loss 22 - -
Operating Profit Before Provision for Possible Loss 2,021,481,965 1,477,056,336
9. Provision for Possible Losses 25 (93,056,584) (166,201,383)
Operating Profit 1,928,425,381 1,310,854,953
10. Non-operating Income/ Loss 26 10,606,049 2,953,012
11. Loss Provision Written Back 27 50,000,462 114,653,009
Profit from Regular Operations 1,989,031,892 1,428,460,974
12. Profit/ Loss from extra-ordinary activities 28 - -
Net Profit after considering all activities 1,989,031,892 1,428,460,974
13. Provision for Staff Bonus (180,821,081) (129,860,089)
14. Income Tax Provision
- Current Year (532,898,521) (389,580,266)
- Upto Previous Year - 7,477,673
- Deferred Tax Income / (Expense) (9,362,702) (15,879,221)
Net Profit (Loss) 1,265,949,588 900,619,072

Schedules 18 to 28 form integral part of this Profit & Loss Account.

Prithivi Bahadur Pande Prajanya Rajbhandari Deepak Man Sherchan Janardan Dev Pant
Chairman & Chief Executive Director Director Director Director

Krishna Prasad Sharma Surendra Bahadur Singh Damodar Prasad Sharma Pandey Binod Aryal
Director Director Director Director

As per our report of even date

Jyoti P. Pandey Sachin Tibrewal
General Manager Head- Finance Auditor
Sundar Man Shrestha, FCA
For, Sundar & Company
Chartered Accountants

Nepal Investment Bank Annual Report 2009/10  47

 Profit & Loss Appropriation Account
for the period July 16, 2009 to July 16, 2010 (Shrawan 1 2066 to Ashad 32 2067)
Particulars Current Year Rs. Previous Year Rs.

Income
1. Accumulated Profit up to last year 156,558,171 67,478,694
2. This year’s profit 1,265,949,588 900,619,072
3. Exchange Fluctuation Reserve - -
4. Transfer from Capital Adjustment Fund - -
Total 1,422,507,759 968,097,766
Expenses
1. Accumulated loss up to last year - -
2. This year’s Loss - -
3. General Reserve Fund (253,189,918) (180,123,815)
4. Contingent Reserve - -
5. Institutional Development Fund - -
6. Dividend Equilization Fund - -
7. Employees Related Funds - -
8. Proposed Dividend (602,274,425) (481,413,780)
9. Proposed Issue of Bonus Shares - -
10. Special Reserve Fund - -
11. Exchange Fluctuation Reserve (3,127,914) -
12. Capital Adjustment Fund - -
13. Debenture Redemption Fund (150,002,429) (150,002,000)
14. Investment Adjustment Reserve (300,000) -
Total (1,008,894,686) (811,539,595)
Accumulated Profit (Loss) 413,613,074 156,558,171

Prithivi Bahadur Pande Prajanya Rajbhandari Deepak Man Sherchan Janardan Dev Pant
Chairman & Chief Executive Director Director Director Director

Krishna Prasad Sharma Surendra Bahadur Singh Damodar Prasad Sharma Pandey Binod Aryal
Director Director Director Director

As per our report of even date

Jyoti P. Pandey Sachin Tibrewal
General Manager Head- Finance Auditor
Sundar Man Shrestha, FCA
For, Sundar & Company
Chartered Accountants

48  Nepal Investment Bank Annual Report 2009/10

 Cash Flow Statement
for the period July 16, 2009 to July 16, 2010
Previous Year Rs. Particulars Current Year Rs.

(a) Cash Flow from Operating Activities

3,803,634,711 1. Cash Receipts 5,288,777,102
3,267,941,142 1.1 Interest Income 4,653,521,338
262,791,664 1.2 Commission and Discount Income 242,886,274
185,327,111 1.3 Exchange Gain 224,056,830
- 1.4 Recovery of Loan Written Off -
87,574,794 1.5 Other Income 168,312,660
(2,589,446,318) 2. Cash Payments (3,676,688,443)
(1,686,973,130) 2.1 Interest Expenses (2,553,847,497)
(225,721,490) 2.2 Staff Expenses (279,851,360)
(301,385,498) 2.3 Office Overhead Expenses (299,626,882)
(375,366,201) 2.4 Income Tax Paid (543,362,704)
- 2.5 Other Expenses -
1,214,188,393 Cash Flow Before Changes in Working Capital 1,612,088,659
(9,885,946,540) Increase/(Decrease) of Current Assets (5,072,285,698)
- 1. (Increase)/Decrease in Money at Call and Short Notice -
(519,363,075) 2. (Increase)/Decrease in Short-term Investment (943,343,425)
(9,297,852,674) 3. (Increase)/Decrease in Loan and Bills Purchase (4,120,157,626)
(68,730,791) 4. (Increase)/Decrease in Other Assets (8,784,647)
12,273,134,884 Increase/(Decrease) of Current Liabilities 2,835,062,947
12,246,373,874 1. Increase/(Decrease) in Deposits 3,396,625,432
- 2. Increase/(Decrease) in Certificate of deposits -
38,800,000 3. Increase/(Decrease) in Short-Term Borrowings (1,485,175)
(12,038,990) 4. Increase/(Decrease) in Other Liabilities (560,077,311)
(240,162,782) (b) Cash Flow from Investing Activities (490,858,185)
(4,325,000) 1. (Increase)/Decrease in Long-term Investment (292,375,000)
(237,443,757) 2. (Increase)/Decrease in Fixed Assets (including Software)/ NBA (202,812,635)
3. Interest from Long-term Investment
1,605,975 4. Dividend Income 4,329,450
801,848,367 (c) Cash Flow from Financial Activities 13,878,222
- 1. Increase/(Decrease) in Long-term Borrowings ( Bond, Debentures etc.) -
801,848,367 2. Increase/(Decrease) in Share Capital/share premium 13,878,222
- 3. Increase/(Decrease) in Other Liabilities -
- 4. Increase/(Decrease) in Refinance/facilities received from NRB -
- (d) Income/Loss from change in exchange rate in cash and bank balances -
4,163,062,322 (e) Current Year’s Cash Flow from All Activities (1,102,114,057)
3,754,941,568 (f) Opening Balance of Cash and Bank Balances 7,918,003,890
7,918,003,890 (g) Closing Balance of Cash and Bank Balances 6,815,889,833

Prithivi Bahadur Pande Prajanya Rajbhandari Deepak Man Sherchan Janardan Dev Pant
Chairman & Chief Executive Director Director Director Director

Krishna Prasad Sharma Surendra Bahadur Singh Damodar Prasad Sharma Pandey Binod Aryal
Director Director Director Director

As per our report of even date

Jyoti P. Pandey Sachin Tibrewal
General Manager Head- Finance Auditor
Sundar Man Shrestha, FCA
For, Sundar & Company
Chartered Accountants

Nepal Investment Bank Annual Report 2009/10  49

 Statement of Changes in Equity
F.Y.
F.Y. 2066/67
2066/67 (FY
(FY 2009/10)
2009/10)
Particulars Share Capital Accumulated General Capital Share Exchange Other Debenture Investment Deferred Total
Profit/(Loss) Reserve Reserve Premium Fluctuation Reserves Redemption Adjustment Tax
Fund Fund Reserve

Opening Balance (as at 16 July 2009) 2,407,068,900 156,558,171 835,980,211 - - 27,839,640 31,500 480,361,285 - 17,820,561 3,925,660,268
Deferred Tax - (9,362,702) - - - - - - - 9,362,702 -

50  Nepal Investment Bank Annual Report 2009/10

Restated Balance 2,407,068,900 147,195,469 835,980,211 - - 27,839,640 31,500 480,361,285 - 27,183,263 3,925,660,268
Surplus on Revaluation of properties - - - - - - - - - - -
Deficit on Revaluation of Investment - - - - - - - - - - -
Currency translation differences - - - - - - - - - - -
“ Net Gains & Losses not recognised in the
income statement “ - - - - - - - - - - -
Net profit for the period - 1,275,312,290 - - - - - - - 1,275,312,290
Transfer to General Reserve - (253,189,918) 253,189,918 - - - - - - -
Declaration of Dividend (proposed) - (602,274,425) - - - - - - - (602,274,425)
Issue of Share Capital 2,028,800 - - - 11,849,422 - - - - 13,878,222
Deficit on revaluation of currencies - - - - - - - - - -
Surplus on Revaluation of Investment - - - - - - - - - -
Transfer to Exchange Fluctuation Fund - (3,127,914) - - - 3,127,914 - - - -
Capital Adjustment Fund - - - - - - - - - -
Debenture Redemption Fund - (150,002,429) - - - - - 150,002,429 - -
Investment Adjustment Reserve - (300,000) - - - - - - 300,000 - -
Closing Balance ( as at 16 July 2010) 2,409,097,700 413,613,074 1,089,170,129 - 11,849,422 30,967,553 31,500 630,363,714 300,000 27,183,263 4,612,576,356
 SHARE CAPITAL & OWNERSHIP Schedule 1
( As at July 16, 2010)
Previous Year Rs. Particulars Current Year Rs.

1. Share Capital
1.1 Authorized Capital
4,000,000,000 A) 40,000,000 Ordinary Shares of Rs. 100 each 4,000,000,000
1.2 Issued Capital
2,409,097,700 A) 24,090,977 Ordinary Shares of Rs. 100 each 2,409,097,700
(of which 13,562,684 Right Share & 9,928,293 bonus shares)
1.3 Paid Up Capital
2,407,068,900 A) 24,090,977 Ordinary Shares of Rs. 100 each 2,409,097,700
(of which 13,562,684 Right Share & 9,928,293 bonus shares)
- 1.4 Proposed Bonus Shares -
- 1.5 Calls in Advance -
2,407,068,900 Total 2,409,097,700

SHARE OWNERSHIP
( As at July 16, 2010)
Share Capital % Particulars % Share Capital

1,927,278,300 80% A. Promoters 80% 1,927,278,300

1.1 Nepal Government
1.2 Foreign Institutions
361,364,600 15% 1.3 “A” Class Liscensed Institutions 15% 361,364,600
361,364,600 15% 1.4 Insurance Company 15% 361,364,600
1,204,549,100 50% 1.5 Organized Institutions 50% 1,204,549,100
- 0% 1.6 Individuals 0% -
- 0% 1.7 Others 0% -
479,790,600 20% B. General Public 20% 481,819,400
- -
2,407,068,900 100% Total 100% 2,409,097,700

Details of Shareholders holding 0.5 percent or above shares are mentioned below:
Organized Institution (Group A) % Amount (Rs. in '000)

Maha Laxmi Investment P. Ltd. 8.83 212,678

Chhaya Investment P.Ltd 8.2 197,622
K.U.P. Investment P. Ltd. 7.81 188,209
Sophia Investment P. Ltd 7.42 178,800
Annapurna Investment P. Ltd 1.56 37,643
Kamala Investment P. Ltd. 1.56 37,643
Noble Investment P.Ltd 1.56 37,643
Prestine Investment P. Ltd. 1.56 37,643
Surya Infosys P. Ltd. 1.56 37,643
Star Holding P. Ltd. 1.17 28,231
P. Shanghai Investment P. Ltd 0.78 18,821
Apollo Investment P. Ltd 0.78 18,821
Lotus Investments P. Ltd 0.78 18,821
Pancha Kanya Investment Co P. Ltd 0.78 18,821
R. Shangai Investment P. Ltd. 0.78 18,821
Singhe Carpets P. Ltd. 0.78 18,821
Shrestha Brothers Investment P. Ltd. 0.78 18,821
Mercantile Investments P. Ltd. 0.63 15,058
Shakya Investments P. Ltd 0.63 15,058
S. Shakya Investment P. Ltd 0.55 13,175
S.R. Investment P. Ltd. 0.55 13,175

“A” Class Liscensed Institution (Group B)

- Rastriya Banijya Bank 15 361,365

Insurance Company (Group C)

- Rastriya Beema Sansthan 15 361,365

Nepal Investment Bank Annual Report 2009/10  51

 RESERVE FUNDS Schedule 2
( As at July 16, 2010)
Previous Year Rs. Particulars Current Year Rs.

835,980,212 1. General Reserve Fund 1,089,170,129

- 2. Capital Reserve Fund -
- 3. Capital Redemption Reserve -
- 4. Capital Adjustment Fund -
- 5. Share Premium 11,849,422
480,392,785 6. Other Reserve Fund 630,695,214
- a. Contingent Reserve -
- b. Institution Development Fund -
- c. Dividend Equalization Fund -
31,500 d. Special Reserve Fund 31,500
- e. Assets Revaluation Reserve -
- f. Deferred Tax Reserve -
480,361,285 g. Debenture Redemption Fund 630,363,714
- h. Other Reserves -
- i. Investment Adjustment Reserve 300,000
156,558,171 7. Accumulated Profit/ Loss 413,613,074
27,839,640 8. Exchange Fluctuation Reserve 30,967,553
1,500,770,808 Total 2,176,295,392

DEBENTURES AND BONDS Schedule 3

( As at July 16, 2010)
Previous Year Rs. Particulars Current Year Rs.

300,000,000 7.5 % Debentures of Rs. 1000 each issued on 24.11.2003 (2060.08.08) 300,000,000
and maturing on 24.11.2010 (2067.08.07)
Outstanding Balance of Redemption Reserve Rs. 300,000,000

250,000,000 6 % Debentures of Rs. 1000 each issued on 26.06.2006 (2063.03.12) 250,000,000
and maturing on 25.06.2013(2070.03.11)
Outstanding Balance of Redemption Reserve Rs.145,837,143

250,000,000 6.25 % Debentures of Rs. 1000 each issued on 26.06.2007 (2064.03.12) 250,000,000
and maturing on 25.06.2014(2071.03.11)
Outstanding Balance of Redemption Reserve Rs. 110,121,857

250,000,000 8 % Debentures of Rs. 1000 each issued on 09.07.2008 (2065.03.25) 250,000,000
and maturing on 08.07.2015 (2072.03.24)
Outstanding Balance of Redemption Reserve Rs. 74,404714
1,050,000,000 Total 1,050,000,000

52  Nepal Investment Bank Annual Report 2009/10

 BORROWINGS Schedule 4
( As at July 16, 2010)
Previous Year Rs. Particulars Current Year Rs.

38,800,000 A. Local
- 1. Nepal Government -
- 2. Nepal Rastra Bank -
3. Repo Obligation
38,800,000 4. Inter Bank and Financial Institutions 37,314,826
5. Other Financial Institutions
- 6. Others
-
38,800,000 Total 37,314,826
B. Foreign
1. Banks
2. Others
- Total -
38,800,000 Total (A+B) 37,314,826

DEPOSITS Schedule 5
( As at July 16, 2010)
Previous Year Rs. Particulars Current Year Rs.

1. Non-Interest bearing accounts

3,756,570,350 A. Current Deposits 4,025,820,180
2,952,365,333 1. Local Currency 3,317,685,897
391,996,113 1.1 Nepal Government 236,953,142
82,099,111 1.2 “Ka” Class Licensed Institutions 125,652,293
245,424,330 1.3 Other Licensed Institutions 146,794,222
1,894,533,204 1.4 Other Organized Institutions 2,483,012,383
223,010,104 1.5 Individuals 215,223,151
115,302,471 1.6 Others 110,050,707
804,205,017 2. Foreign Currency 708,134,284
- 2.1 Nepal Government -
- 2.2 “Ka” Class Licensed Institutions 55,981,005
79,212,781 2.3 Other Licensed Institutions 416,159,761
663,861,746 2.4 Other Organized Institutions 140,910,431
54,971,786 2.5 Individuals 69,572,350
6,158,704 2.6 Others 25,510,737
727,990,479 B. Margin Deposits 779,474,631
- 1. Employess Guarantee -
237,599,202 2. Guarantee Margin 266,480,083
490,391,277 3. Letters of Credit Margin 512,994,548
- C. Others -
- 1. Local Currency -
- 1.1 Financial Institutions -
- 1.2 Other Organized Institutions -
- 1.3 Individuals -
- 2. Foreign Currency -
- 2.1 Financial Institutions -
- 2.2 Other Organized Institutions -
- 2.3 Individuals -
4,484,560,829 Total Non-Interest Bearing Accounts 4,805,294,811

Nepal Investment Bank Annual Report 2009/10  53

 DEPOSITS Continue………… Schedule 5
( As at July 16, 2010)
Previous Year Rs. Particulars Current Year Rs.

2. Interest bearing accounts

17,066,252,467 A. Savings Deposits 14,324,255,897
15,949,380,505 1. Local Currency 13,692,072,691
738,863,616 1.1 Organized Institutions 50,720,466
14,729,221,590 1.2 Individuals 13,627,035,432
481,295,299 1.3 Others 14,316,793
1,116,871,962 2. Foreign Currency 632,183,206
81,677,754 2.1 Organized Institutions 171,749,990
1,026,322,913 2.2 Individuals 395,953,229
8,871,295 2.3 Others 64,479,987
11,633,380,218 B. Fixed Deposits 16,825,148,284
8,144,902,245 1. Local Currency 14,247,276,492
6,229,532,225 1.1 Organized Institutions 9,928,496,879
1,747,561,040 1.2 Individuals 4,227,854,037
167,808,980 1.3 Others 90,925,576
3,488,477,973 2. Foreign Currency 2,577,871,792
3,486,197,755 2.1 Organized Institutions 2,551,787,442
2,280,218 2.2 Individuals 26,084,350
- 2.3 Others -
13,513,906,551 C. Call Deposit 14,140,026,504
13,016,982,339 1. Local Currency 13,402,464,249
836,913,734 1.1 “Ka” Class Licensed Institutions 674,224,593
3,409,196,988 1.2 Other Licensed Institutions 2,832,671,909
7,516,567,599 1.3 Other Organized Institutions 6,627,164,807
1,080,216,606 1.4 Individual 2,510,073,754
174,087,412 1.5 Others 758,329,186
496,924,212 2. Foreign Currency 737,562,255
- 2.1 “Ka” Class Licensed Institutions -
- 2.2 Other Licensed Institutions -
486,030,368 2.3 Other Organized Institutions 698,070,476
10,061 2.4 Individual 6,810,004
10,883,783 2.5 Others 32,681,775
- D. Certificate of Deposit -
- 2.1 Organized Institutions -
- 2.2 Individuals -
- 2.3 Others -
42,213,539,236 Total Interest Bearing Accounts 45,289,430,685
46,698,100,065 Total Deposit 50,094,725,497

54  Nepal Investment Bank Annual Report 2009/10

 BILLS PAYABLE Schedule 6
( As at July 16, 2010)
Previous Year Rs. Particulars Current Year Rs.

47,250,276 1. Local Currency 37,586,297

35,087,742 2. Foreign Currency 557,539
82,338,018 Total 38,143,836

OTHER LIABILITIES Schedule 7

( As at July 16, 2010)
Previous Year Rs. Particulars Current Year Rs.

12,352,678 1. Pension/ Gratuity Fund 12,271,971

- 2. Employees Provident Fund -
- 3. Employees Welfare Fund -
129,860,089 4. Provision for Staff Bonus 180,821,081
47,521,866 5. Interest Payable on Deposits 88,410,081
38,126,172 6. Interest Payable on Borrowings 38,015,890
85,130,289 7. Unearned Discount & Commission 112,883,429
129,467,451 8. Sundry Creditors 150,315,282
- 9. Branch Adjustment Account -
17,820,561 10. Deferred Tax Liabilities 27,183,263
4,039,727 11. Dividend Payable 16,822,327
249,695,986 12. Others 233,643,227
37,529,465 12.1 Matured Time Deposit 59,478,370
300,000 12.2 Statutory Auditor’s Fee 300,000
211,866,521 12.3 Others 173,864,857
714,014,819 Total 860,366,551

CASH BALANCE Schedule 8

( As at July 16, 2010)
Previous Year Rs. Particulars Current Year Rs.

1,763,936,871 1. Local Currency (including coin) 1,487,577,926

69,525,623 2. Foreign Currency 37,863,946
1,833,462,494 Total 1,525,441,872

BALANCE WITH NEPAL RASTRA BANK Schedule 9

( As at July 16, 2010)
Previous Year Rs. Particulars Foreign Currency in Rs. Current Year Rs.
Local Currency Indian Rs. Conv. F.C. Total Grand Total

4,411,133,083 1. Nepal Rastra Bank 3,125,323,770 - 111,893,260 111,893,260 3,237,217,030

4,411,133,083 a. Current Account 3,125,323,770 - 111,893,260 111,893,260 3,237,217,030
- b. Other Account -

Nepal Investment Bank Annual Report 2009/10  55

 BALANCE WITH BANKS/FINANCIAL INSTITUTIONS Schedule 10
( As at July 16, 2010)
Previous Year Rs. Particulars Foreign Currency in Rs. Current Year Rs.
Local Currency Indian Rs. Conv. F.C. Total Grand Total

201,811,480 1. Local Licensed Institutions 73,370,529 - 1,188,369 1,188,369 74,558,898

201,811,480 a. Current Account 73,370,529 - 1,188,369 1,188,369 74,558,898
- b. Other Account -
1,471,596,833 2. Foreign Banks - 768,121,695 1,210,550,338 1,978,672,033 1,978,672,033
1,471,596,833 a. Current Account - 768,121,695 1,210,550,338 1,978,672,033 1,978,672,033
- b.other Account -
1,673,408,313 Total 73,370,529 768,121,695 1,211,738,707 1,979,860,402 2,053,230,931

Note : Total Balance as per the confirmations received from respective Banks (including Nepal Rastra Bank ) Rs. 4,810,027,992.45

MONEY AT CALL AND SHORT NOTICE Schedule 11

( As at July 16, 2010)
Previous Year Rs. Particulars Current Year Rs.

- 1. Local Currency -
- 2. Foreign Currency -
- Total -

INVESTMENTS Schedule 12
( As at July 16, 2010)
Previous Year Rs. Particulars Purpose Current Year Rs.
Trading Others

2,531,300,000 1. Nepal Government Treasury Bills - 3,911,850,000 3,911,850,000

- 2. Nepal Government Savings Bond - 290,000,000 290,000,000
- 3. Nepal Government Other Securities - - -
- 4. Nepal Rastra Bank Bonds - - -
- 5. Foreign Bonds - - -
- 6. Local Licensed Institutions - 370,000,000 370,000,000
4,807,541,200 7. Foreign Banks - 4,000,334,625 4,000,334,625
64,270,500 8. Corporate Shares - 66,645,500 66,645,500
- 9. Corporate Bonds and Debentures - - -
- 10. Other Investment - - -
7,403,111,700 Total Investment - 8,638,830,125 8,638,830,125
3,300,000 Provision - 3,300,000 3,300,000
7,399,811,700 Net Investment - 8,635,530,125 8,635,530,125

56  Nepal Investment Bank Annual Report 2009/10

 INVESTMENT IN SHARES DEBENTURES AND BONDS Schedule 12 (A)
( As at July 16, 2010)
Previous Year Rs. Particulars Current Year Rs.
Cost Price Market Price Provision Rs.

1. Investment in Shares
3,000,000 1.1 Sudur Paschimanchal Grameen Bikas Bank 30,000 Ordinary 3,000,000 3,000,000 -
Shares of Rs.100 paid up
1,500,000 1.2 Paschimanchal Grameen Bikas Bank 16,500 Ordinary 1,500,000 1,500,000 -
Shares of Rs.100 paid up, of which 1500 are bonus shares
3,000,000 1.3 Purbanchal Grameen Bikas Bank 30,000 Ordinary 3,000,000 28,950,000 -
Shares of Rs.100 paid up
33,810,000 1.4 Rural Micro Finance Development Centre Ltd. 338,100 33,810,000 33,810,000 -
Ordinary Shares of Rs.100 paid up
6,600,000 1.5 Swabalamban Bikas Bank 84,150 Ordinary 6,600,000 48,891,150 -
Shares of Rs.100 paid up, of which 18,150 are bonus shares
1,235,500 1.6 Credit Information Centre Ltd. 14,120 Ordinary 1,235,500 1,235,500 -
Shares of Rs.100 paid up, of which 1,765 are bonus shares
15,000,000 1.7 Taragaon Regency Hotel Ltd. Ordinary 150,000 15,000,000 11,700,000 3,300,000
Shares of Rs.100 paid up
125,000 1.8 Nepal Clearing House Ltd. Ordinary 25,000 2,500,000 2,500,000 -
Shares of Rs.100 paid up
- 2. Investments in Debentures and Bonds - - -
64,270,500 Total Investment 66,645,500 131,586,650 3,300,000
3. Provision for Loss
5,400,000 3.1 Up to Previous year 3,300,000
(2,100,000) 3.2 Adjustments this year -
3,300,000 Total Provision 3,300,000 - -
60,970,500 Net Investment 63,345,500 -

Notes:
1. In case of investment in shares which are not listed, the market value has been taken as book value of shares.
2. Following Company has not declared and distributed dividend for the last three years:
- Sudur Paschimanchal Grameen Bikas Bank Ltd.
- Taragaon Regency Hotel Ltd.
- Nepal Clearing House Ltd.

INVESTMENTS (Held for Trading) Schedule 12.1

( As at July 16, 2010)
S.No. Particulars Cost Price Previous Current Current Previous Remarks
Rs. Market Market Year Year
Price Price Profit/ Profit/
Rs. Rs. (Loss) Rs. (Loss) Rs.

1 Nepal Government Treasury Bills

2 Nepal Government Savings Bond
3 Nepal Government Other Securities
4 Nepal Rastra Bank Bonds
5 Foreign Bonds
6 Local Licensed Institutions’ Shares
7 Local Licensed Institutions’ Debentures & Bond
8 Local Organized Instituions’ Shares, Debentures & Bonds
9 Foreign Bank Placements
10 Inter Bank Lending
11 Other Investment
Total Investments

Nepal Investment Bank Annual Report 2009/10  57

 INVESTMENTS (Held to Maturity) Schedule 12.2
( As at July 16, 2010)
S.No. Particulars Cost Price Amount Amount Current Previous Remarks
Rs. Impaired Impaired till Year
till Previous date Profit/ Profit/
Year Rs. Rs. (Loss) Rs. (Loss) Rs.

1 Nepal Government Treasury Bills 3,911,850,000

2 Nepal Government Savings Bond 290,000,000
3 Nepal Government Other Securities -
4 Nepal Rastra Bank Bonds -
5 Foreign Bonds -
6 Local Licensed Institutions’ Shares -
7 Local Licensed Institutions’ Debentures & Bond -
8 Local Organized Instituions’ Shares, Debentures & Bonds -
9 Foreign Bank Placements 4,000,334,625
10 Other Investment 370,000,000
Total Investments 8,572,184,625 - - - -

INVESTMENTS (Available for Sale) Schedule 12.3

( As at July 16, 2010)
S.No. Particulars Cost Price Previous Current Current Year Previous Remarks
Rs. Market Market Adjustment In Year
Price Price Investment Profit/
Rs. Rs. Reserve Rs. (Loss) Rs.

1 Nepal Government Treasury Bills

2 Nepal Government Savings Bond
3 Nepal Government Other Securities
4 Nepal Rastra Bank Bonds
5 Foreign Bonds
6 Local Licensed Institutions’ Shares
7 Local Licensed Institutions’ Debentures & Bond
8 Local Organized Instituions’ Shares, 66,645,500 103,261,650 131,586,650 300,000 0
Debentures & Bonds
9 Foreign Bank Placements
10 Other Investment
Total Investments 66,645,500 103,261,650 105,636,650 300,000 -

58  Nepal Investment Bank Annual Report 2009/10

 CLASSIFICATION OF LOANS, ADVANCES AND BILLS PURCHASE AND PROVISIONING Schedule 13
( As at July 16, 2010)
Advances Bills Purchased/ Discounted
Domestic Domestic
Priority Priority
Previous year Rs. Particulars Insured Un-insured Other Foreign Total Insured Un-insured Other Foreign Total Current Year Rs.

36,613,250,015 1. Performing Loan - 1,284,003,013 39,202,897,257 2,895,606 40,489,795,876 - - 166,084,189 38,525,516 204,609,705 40,694,405,581
36,576,257,637 1.1 Pass Loan - 1,284,003,013 39,182,597,857 2,895,606 40,469,496,477 - - 166,084,189 38,525,516 204,609,705 40,674,106,181
36,992,378 1.2 Restructured - 20,299,400 - 20,299,400 - - 20,299,400
213,907,394 2 Non Performing Loan - 2,800,395 251,234,058 - 254,034,452 - - - - - 254,034,452
10,765,503 2.1 Substandard - - 55,710,406 - 55,710,406 - - - - - 55,710,406
11,485,860 2.2 Doubtful - - 10,994,950 - 10,994,950 - - - - - 10,994,950
191,656,030 2.3 Loss - 2,800,395 184,528,702 - 187,329,097 - - - - - 187,329,096
36,827,157,409 (A)Total Loan - 1,286,803,408 39,454,131,314 2,895,606 40,743,830,329 - - 166,084,189 38,525,516 204,609,705 40,948,440,033
3. Loan Loss Provision
381,198,976 3.1 Pass - 12,840,030 405,925,290 28,956 418,794,276 - - 1,660,842 385,255 2,046,097 420,840,374
4,661,540 3.2 Restructured - 2,537,425 - 2,537,425 - - - 2,537,425
2,691,376 3.3 Substandard - - 13,927,601 - 13,927,601 - - - - - 13,927,601
5,742,930 3.4 Doubtful - - 5,497,475 - 5,497,475 - - - - - 5,497,475
191,656,030 3.5 Loss - 2,800,395 184,528,702 - 187,329,097 - - - - - 187,329,096
585,950,852 (B) Total Loan Provision - 15,640,425 612,416,493 28,956 628,085,874 - - 1,660,842 385,255 2,046,097 630,131,971
4. Provisioning up to
Previous Year
274,449,428 4.1 Pass - 10,689,143 363,892,842 1,610,174 376,192,159 - - 3,453,357 1,553,460 5,006,817 381,198,976
5,357,559 4.2 Restructured - - 4,661,540 - 4,661,540 - - - 4,661,540
15,434,311 4.3 Substandard - - 2,691,376 - 2,691,376 - - - 2,691,376
10,401,937 4.4 Doubtful - - 5,742,930 - 5,742,930 - - - - - 5,742,930
227,009,243 4.5 Loss - 2,820,576 188,835,454 - 191,656,030 - - - - - 191,656,030
532,652,478 (C). Total Previous - 13,509,719 565,824,142 1,610,174 580,944,035 - - 3,453,357 1,553,460 5,006,817 585,950,852
Year Provision
112,553,009 (D). Written Back 48,875,462
Provision
165,851,383 (E) This Year’s - - - 93,056,584
Addition Provision
53,298,374 Changes in this Year - 2,130,706 46,592,352 (1,581,218) 47,141,840 - - (1,792,515) (1,168,205) (2,960,720) 44,181,122
36,241,206,558 Net Loan (A-B) - 1,271,162,983 38,841,714,821 2,866,650 40,115,744,454 - - 164,423,347 38,140,261 202,563,608 40,318,308,062

Nepal Investment Bank Annual Report 2009/10  59

 SECURITIES AGAINST LOAN, ADVANCES AND BILLS PURCHASED Schedule 13 A
( As at July 16, 2010)
Previous Year Rs. Particulars Current Year Rs.

36,827,157,409 (A) Secured 40,948,440,033

33,045,926,034 1. Collateral of Movable/Immovable Assets 36,897,102,378
- 2. Local Licensed Institutions Guarantee -
- 3. Government Guarantee -
- 4. Internationally rated Foreign Banks Guarantee -
- 5. Export Documents -
149,838,588 6. Fixed Deposit Receipts 183,801,677
(a) Own FDR 183,801,677
(b) FDR of other Licensed Institutions -
13,150,315 7. Government Bonds 2,945,928
- 8. Counter Guarantee -
8,641,047 9. Personal Guarantee 21,034,929
3,609,601,425 10. Other Securities 3,843,555,121

- (B) Unsecured -
36,827,157,409 Total 40,948,440,033

FIXED ASSETS Schedule 14

( As at July 16, 2010)
Assets Current Year
Previous Year PARTICULARS Building Vehicles Machinery Office Equipment Others Total

- 1. At Cost -
800,713,468 A. Previous Year’s Balance 186,400,063 154,680,036 - 169,732,595 468,701,615 979,514,309
192,159,908 B. Addition during the Year (+) 3,675,000 45,275,764 - 54,450,795 94,317,386 197,718,946
- C. Revaluation / Written back
during the Year (+)” - - - - - -
(13,359,067) D. This Year Sold (-) - (17,070,833) - - (188,018) (17,258,851)
- E. This Year Written off (-) - -
979,514,309 TOTAL GROSS VALUE ( A+B+C-D-E ) 190,075,063 182,884,966 - 224,183,391 562,830,984 1,159,974,404
2. DEPRECIATION
244,111,039 A. Previous Year’s Balance 14,889,553 48,810,248 - 52,208,560 216,342,796 332,251,157
96,584,264 B. Depreciation during the Year (+) 3,728,001 24,031,988 - 17,318,130 71,470,828 116,548,948
(8,444,146) C. Total Depreciation on Sold / - (11,395,677) - - (188,014) (11,583,690)
- Written Off Assets (-) -
- D. Depreciation on Revaluation/ - - - - - -
Written back
332,251,157 TOTAL DEPRECIATION ( A+B-C-D) 18,617,554 61,446,559 - 69,526,690 287,625,611 437,216,415
647,263,152 3. REMAINING BOOK VALUE ( 1-2 ) 171,457,508 121,438,407 - 154,656,700 275,205,373 722,757,989
413,489,330 4. Land 413,489,330
- 5. Capital Construction -
- 6. LEASEHOLD ASSETS -
1,060,752,482 Total book value( 3+4+5+6) 171,457,508 121,438,407 - 154,656,700 275,205,374 1,136,247,319

60  Nepal Investment Bank Annual Report 2009/10

 Non-Banking Assets Schedule 15
( As at July 16, 2010)
Previous Year Rs. Date of Total Loss Provision Net Non
Total Loss Net Name and Address of Borrower or Party acquisition of Amount of In percentage In amount Banking
Amount Provision Non Banking Non-Banking Assets Rs.
Assets Assets

1,500,000 1,125,000 375,000 Binayak Feed Industries, Bhaktapur 18/01/2007 - - - -

1,500,000 1,125,000 375,000 Grand Total - - - -

OTHER ASSETS Schedule 16

( As at July 16, 2010)
Previous Year Rs. Particulars Current Year Rs.

1,740,297 1. Stock of Stationery 937,093

107,854,451 2. Income Receivable on investments 59,386,690
153,600,871 3. Accrued Interest on Loan 184,871,197
- (153,600,871) Less: Interest Suspense amount (184,871,197) -
- 4. Receivable Commission -
17,165,694 5. Sundry Debtors 18,263,661
15,091,342 (2,074,352) Less : Provision (2,074,352) 16,189,309
81,289,286 6. Staff Loan and Advances 100,602,317
13,615,079 7. Prepayments 42,959,127
- 8. Cash in Transit -
- 9. Other Transit items (including cheques) -
- 10. Drafts Paid without Notice -
104,631,146 11. Expenses Not Written off 111,013,405
65,858,520 (38,772,626) Less: Amortization (56,193,075) 54,820,330
- 12. Branch Adjustment account -
105,204,521 13. Others 124,543,277
4,994,365 13.1 Receivable from Nepal Rastra Bank 5,117,279
63,218,516 13.2 Premium deposit against Staff Housing Loan 76,295,332
36,991,640 13.3 Others 43,130,666
- 13.4 Deferred Tax Assets -
390,653,496 Total 399,438,143

OTHER ASSETS (Additional Statement) Schedule 16 (A)

( As at July 16, 2010)
Previous Year Rs. Particulars Current Year Rs.
Up to 1 Year 1 to 3 Years Above 3 Years Total

153,600,871 1. Accrued Interest on Loan 49,350,342 4,870,186 130,650,669 184,871,197

- 2. Drafts Paid without Notice
3. Branch Adjustment A/c

Nepal Investment Bank Annual Report 2009/10  61

 CONTINGENT LIABILITIES Schedule 17
( As at July 16, 2010)
Previous Year Rs. Particulars Current Year Rs.

- 1. Claims on Institution but not accepted by the Institution -

6,136,742,629 2. Letters of credit (full amount) 5,240,220,961
4,924,898,407 (a) Less than 6 months maturity 3,578,893,287
1,211,844,222 (b) More than 6 months maturity 1,661,327,674
- 3. Rediscounted Bills -
2,409,149,575 4. Unmatured Guarantees/ Bonds 2,731,695,865
583,820,503 (a) Bid Bonds 516,603,148
1,602,430,478 (b) Performance Bonds 1,780,298,423
222,898,594 (c) Other Guarantee/ Bonds 434,794,294
- 5. Unpaid Shares in Investment -
59,504,763 6. Forward Exchange Contract Liabilities 69,449,078
405,480,033 7. Bills under Collection 256,907,093
799,418,295 8. Acceptance and Endorsements 1,062,466,778
- 9. Underwriting Commitments -
3,567,971,517 10. Irrevocable Loan Commitments 3,574,696,141
1,537,290,444 “11. Guarantee issued against counter guarantee of
Internationally Rated Banks” 1,320,552,365
1,342,961,931 12. Advance Payment Guarantee 1,636,215,202
- 13. Financial Guarantee -
9,209,500 14. Contingent Liabilities on Income Tax -
- 15. Others (Loan under Repurchase Agreement) -
16,267,728,687 Total 15,892,203,483

INTEREST INCOME Schedule 18

for the period July 16, 2009 to July 16,2010
Previous Year Rs. Particulars Current Year Rs.

2,906,054,774 A. On Loan, Advances and Overdrafts 4,303,311,186

1,569,180,560 1. Loan and Advances 2,110,212,027
1,336,874,214 2. Overdraft 2,193,099,159
140,697,625 B. On Investment 169,619,945
140,697,625 1. Nepal Government Securities 169,619,945
140,697,625 a. Treasury Bills 167,872,786
- b. Development Bonds 1,747,159
- c. National Savings Certificates -
- 2. Foreign Securities -
- 3. Nepal Rastra Bank Bonds -
- 4. Debenture and Bonds -
- a.Banks & Financial Institutions -
- b.Other Organization -
- 5. Interest on Inter Bank Lending -
6,826,224 C. On Agency Balances 429,399
- 1. Local Banks & Financial Institutions -
6,826,224 2. Foreign Banks 429,399
175,142,952 D. On Money At Call and Short Notice 120,237,282
3,053,093 1. Local Banks & Financial Institutions 731,370
172,089,859 2. Foreign Banks* 119,505,912
39,219,567 E. On Others 59,923,526
- 1. Certificate of Deposits -
14,536,307 2. Inter-Bank/ Financial Institutions Loan 36,930,920
24,683,260 3. Others 22,992,606
3,267,941,142 Total 4,653,521,338

*Interest received on investment (placements) made in foreign banks is shown under this heading

62  Nepal Investment Bank Annual Report 2009/10

 INTEREST EXPENSES Schedule 19
for the period July 16, 2009 to July 16,2010
Previous Year Rs. Particulars Current Year Rs.

1,596,672,381 A. On Deposit Liabilities 2,402,466,678

436,489,351 1. Fixed Deposits 1,248,185,647
340,950,079 1.1 Local Currency 1,147,123,783
95,539,272 1.2 Foreign Currency 101,061,864
380,818,232 2. Savings Deposits 450,806,780
376,776,488 1.1 Local Currency 446,820,533
4,041,744 1.2 Foreign Currency 3,986,247
779,364,798 3. Call Deposit 703,474,251
769,645,427 1.1 Local Currency 697,576,759
9,719,371 1.2 Foreign Currency 5,897,492
- 4. Certificate of Deposits -
90,300,749 B. On Borrowings 151,380,819
73,230,918 1. Debenture and Bonds 73,313,452
- 2. Loan from Nepal Rastra Bank -
17,069,831 3. Inter Bank/ Financial Institutions Borrowing 78,067,367
- 4. Other Corporate Body -
5. Other Loans
- C. On Others -
1,686,973,130 Total 2,553,847,497

Commission And Discount Schedule 20

for the period July 16, 2009 to July 16,2010
Previous Year Rs. Particulars Current Year Rs.

878,308 A. Bills Purchase and Discount 712,091

- 1. Local -
878,308 2. Foreign 712,091
158,730,075 B. Commission 208,832,991
45,478,281 1. Letters of Credit 61,527,062
49,833,164 2. Guarantees 53,463,224
171,204 3. Collection Fee 134,907
18,328,924 4. Remittance Fee 24,763,972
44,521,757 5. Credit Cards/ Debit Cards 65,954,790
- 6. Share Underwriting/ Issues -
- 7. Government Transactions -
189,279 8. Agency Commission 2,796,619
207,466 9. Exchange Fee 192,417
23,433,395 C. Others 33,341,192
183,041,778 Total 242,886,274

Nepal Investment Bank Annual Report 2009/10  63

 Other Operating Income Schedule 21
for the period July 16, 2009 to July 16,2010
Previous Year Rs. Particulars Current Year Rs.

9,999,769 1. Rental on Safe Deposit Lockers 11,741,468

1,217,089 2. Issue and Renewals of Credit Cards 1,583,668
23,970,845 3. Issue and Renewals of ATM Cards/ Debit Cards 33,063,143
26,381,479 4. Telex/ T.T. 28,208,250
25,314,555 5. Service Charges 56,721,219
1,084,750 6. Renewal Fees 7,119,800
26,005,612 8. Others 29,875,112
113,974,099 Total 168,312,660

Exchange Gain /Loss Schedule 22

for the period July 16, 2009 to July 16,2010
Previous Year Rs. Particulars Current Year Rs.

(7,351,506) (A) Revaluation Gain/ (Loss) 12,511,650

192,678,617 (B) Trading Gain (except Exchange Fee) 211,545,180
185,327,111 Total Income/ (Loss) 224,056,830

EXPENSES RELATING TO EMPLOYEES Schedule 23

for the period July 16, 2009 to July 16,2010
Previous Year Rs. Particulars Current Year Rs.

110,096,807 1. Salary 131,072,050

62,408,691 2. Allowances 95,741,426
8,622,679 3. Contribution to Provident Fund 9,861,850
4,162,374 4. Training Expenses 3,162,162
520,561 5. Uniform 697,222
251,051 6. Medical 112,001
10,512,211 7. Insurance 12,046,802
13,457,093 8. Pension and Gratuity Provision 15,126,638
15,690,023 9. Others 12,031,209
1,058,257 a. Training Course Remuneration 0
697,359 b. Leave Compensation 418,614
7,481,159 c. Staff Lunch 7,591,270
6,453,247 d. Other incentives 4,021,325
225,721,490 Total 279,851,360

64  Nepal Investment Bank Annual Report 2009/10

OTHER OPERATING EXPENSES Schedule 24
for the period July 16, 2009 to July 16,2010
Previous Year Rs. Particulars Current Year Rs.

50,310,973 1. House Rent 62,354,547

14,104,240 2. Electricity and Water 16,651,723
3,407,473 3. Repair and Maintenance 5,101,955
1,074,632 (a) Building 2,427,040
2,063,854 (b) Vehicles 2,325,936
268,987 (c) Others 348,979
9,147,598 4. Insurance 10,203,763
18,305,256 5. Postage, Telex, Telephone, Fax 19,356,837
10,983,266 6. Office Equipment, Furniture and Repair 12,010,718
17,612,631 7. Travelling Allowances and Expenses 15,056,440
26,271,390 8. Stationery and Printing 26,118,590
461,122 9. Periodicals and Books 460,623
29,758,886 10. Advertisements & Business Promotion 31,080,130
1,148,000 11. Legal Expenses 1,455,600
1,375,333 12. Donations 147,909
1,246,879 13. Expenses Relating to Board of Directors 1,845,992
1,143,000 (a) Meeting Fees 1,730,200
103,879 (b) Other Expenses 115,792
596,013 14. Annual General Meeting Expenses 1,023,927
300,000 15. Expenses Relating to Audit 300,000
300,000 (a) Audit Fees 300,000
- (b) Other Expenses -
- 16. Commission on Remittances -
96,584,388 17. Depreciation on Fixed Assets 116,548,948
15,913,870 18. Amortization of Expenses( Software) 17,420,450
4,364,712 19. Share/Debenture expenses 758,699
- 20. Technical Services Fee -
6,291,452 21. Entertainment 6,626,782
- 22. Written Off Expenses -
20,720,008 23. Security Expenses 26,826,641
- 24. Credit Guarantee Premium -
- 25. Commission and Discount -
31,629,686 26. Others 62,246,008
9,122,962 (a) Fees for Services Others 17,105,980
15,636,275 (b) Fuel for Vehicle/Generator 19,462,209
1,000 (c) Losses shortages written off -
1,900,156 (d) Vehicle Renewal and other taxes 19,642,883
427,000 (e) Membership Fee 464,900
2,356,036 (f) Office Cleaning & Maintenance 2,566,076
2,186,257 (g) Misc. Expenses 3,003,960
360,533,174 Total 433,596,280

PROVISION FOR POSSIBLE LOSS Schedule 25

for the period July 16, 2009 to July 16,2010
Previous Year Rs. Particulars Current Year Rs.

165,851,383 1. Increase in Loan Loss Provision 93,056,584

- 2. Increase in Provision for Loss on Investment -
350,000 3. Provision for Non Banking Assets -
4. Provision for Other Assets -
166,201,383 Total 93,056,584

Nepal Investment Bank Annual Report 2009/10  65

 NON-OPERATING INCOME/LOSS Schedule 26
for the period July 16, 2009 to July 16,2010
Previous Year Rs. Particulars Current Year Rs.

- 1. Profit (Loss) on Sale of Investment -

1,347,037 2. Profit (Loss) on Sale of Assets 6,276,599
1,605,975 3. Dividend (net) 4,329,450
a. Commercial Banks
1,605,975 b. Grameen Banks 4,329,450
c. Financial Institutions
d. Other Organized Institutions
(1) Subsidiary Companies
(2) Others
4. Subsidies Received from Nepal Rastra Bank
a. Reimbursement of losses of specified branches
b. Interest Subsidy
c. Exchange Counter
5. Others
2,953,012 Total Non-Operating Income /(Loss) 10,606,049

LOSS PROVISION WRITTEN BACK Schedule 27

for the period July 16, 2009 to July 16,2010
Previous Year Rs. Particulars Current Year Rs.

112,553,009 1. Loan Loss Provision Written Back 48,875,462

2. Provision against Non Banking Assets Written Back 1,125,000
2,100,000 3. Investment Provision Written Back -
- 4. Provision Against Other Assets Written Back -
114,653,009 Total 50,000,462

PROFIT/ LOSS FROM EXTRA ORDINARY ACTIVITIES Schedule 28

for the period July 16, 2009 to July 16,2010
Previous Year Rs. Particulars Current Year Rs.

- 1. Recovery of write off Loan -

- 2. Voluntary Retirement Scheme Expenses -
- 3. Loan Write-Offs (28 (A)) -
- 4. Other Expenses/ Income -
- Total -

66  Nepal Investment Bank Annual Report 2009/10

STATEMENT OF LOAN WRITTEN-OFF Schedule 28(A)
for the period July 16, 2009 to July 16,2010
S.N. Types of Loan Written off Type of Basis of Loan Approved Initiations Remarks
Amount Security valuation by Name/ madee
of collateral Designation for recovery

1 Working Capital Loan -

2 Project Loan -
3 Fixed Capital Loan -
4 Personal Loan -
5 Other Loan -
Total -

Statement of Loans and Advances Extended to Directors/ Chief Executive/ Promoter/

Employees and Shareholders Holding More Than 1 Percent Shares. Schedule 29
for the period July 16, 2009 to July 16,2010

The Statement of amount, included under total amount of Bills Purchased and Discounted, Loans, Advances and Overdraft,
provided to the Directors, Chief Executive, Promoters, Employees, Shareholders holding more than 1 percent shares and
to the individual members of their undivided family OR against the guarantee of such persons OR to the organizations or
companies in which such individuals are managing agent, are as follows:

Name of Promoter/Director/ Chief Executive Last Years Balance This Year Recovery This year Balance as of Ashad end
Principal Interest Principal Interest Addition Principal Interest
(A) Directors - - - - - - -

(B) Chief Executive - - - - - - -

(C) Promoters - - - - - - -

(D) Employees - - - - - - -
(E) Shareholders holding more than 1% - - - - - - -
Total - - - - - - -

Nepal Investment Bank Annual Report 2009/10  67

 FORM NO.1 CAPITAL ADEQUACY TABLE Schedule 30
for the period July 16, 2009 to July 16,2010
1.1 RISK WEIGHTED EXPOSURES Current Period Previous Period

a Risk Weighted Exposure for Credit Risk 50,041,481 42,975,192

b Risk Weighted Exposure for Operational Risk 2,517,313 1,941,891
c Risk Weighted Exposure for Market Risk 464,836 395,182
Adjustment under Pillar II
Add: 1% of the total RWE as per NRB Directives 530,236 -
Add:5% of the total deposit due to insufficient liquid assets(6.4 a 6) - -
Total Risk Weighted Exposures(After Bank’s adjustment of Pillar II) 53,553,866 45,312,265

1.2 CAPITAL Current Period Previous Period

Core Capital (Tier 1) 4,554,094 3,879,969

a Paid up Equity Share Capital 2,409,098 2,407,069
b Irredeemable Non-cumulative preference shares - -
c Share Premium 11,849 -
d Proposed Bonus Equity Shares - -
e Statutory General Reserves 1,089,170 835,980
f Retained Earnings till last year 156,558 67,479
g Audited current year cumulative profit 257,055 89,079
h Capital Redemption Reserve 630,364 480,361
i Capital Adjustment Reserve - -
j Dividend Equalization Reserves - -
k Other Free Reserve - -
l Less.Goodwill
m Less.Fictitious assets - -
n Less. Investment in equity in licensed Financial Institutions - -
o Less. Investment in equity of institutions with financial interests - -
p Less. Investment in equity of institutions in excess of limits - -
q Less. Investments arising out of underwriting commitments - -
r Less. Reciprocal crossholdings - -
s Less. Other Deductions - -
Adjustments under Pillar II
Less: Shortfall in Provision(6.4 a 1) - -
Less: Loans and Facilities extended to Related Parties and Restricted lending(6.4 a 2) - -
Supplementary Capital (Tier 2) 1,096,951 1,215,385
a Cumulative and/or Redeemable Preference Share - -
b Subordinated Term Debt 1,050,000 1,050,000
Less : 20% discount value to 5YTM Bond/ Debenture (390,000) (230,000)
c Hybrid Capital Instruments - -
d General loan loss provision 405,652 367,514
e Exchange Equalization Reserve 30,968 27,840
f Investment Adjustment Reserve 300 -
g Assets Revaluation Reserve - -
h Other Reserves 32 32
Total Capital Fund (Tier I and Tier II) 5,651,045 5,095,353

1.3 CAPITAL ADEQUACY RATIOS Current Period Previous Period

Core Capital to Total Risk Weighted Exposures (Tier I) 8.50% 8.56%

Total Capital Fund to Total Risk Weighted Exposures (Tier I & Tier II) 10.55% 11.24%

68  Nepal Investment Bank Annual Report 2009/10

FORM NO.2 RISK WEIGHTED EXPOSURE FOR CREDIT RISK Schedule 30 (B)
for the period July 16, 2009 to July 16,2010 Rs. in '000
A. Balance Sheet Exposures “ Book “ Specific “ Eligible “ Net “Risk “ Risk Weighted Previous Period
Value Provision CRM Value Weight Exposures Risk Weighted
a “ b “ c “ d=a-b-c “ e” f=d*e “ Exposures

Cash Balance 1,525,442 - - 1,525,442 0% - -

Balance With Nepal Rastra Bank 3,237,217 - - 3,237,217 0% - -
Investment in Nepalese Government Securities 4,201,850 - - 4,201,850 0% - -
All Claims on Government of Nepal - - - - 0% - -
Investment in Nepal Rastra Bank securities - - - - 0% - -
All Claims on Nepal Rastra Bank - - - - 0% - -
Claims on Foreign Government and Central Bank (ECA rating 0-1) - - - - 0% - -
Claims on Foreign Government and Central Bank (ECA-2) - - - - 20% - -
Claims on Foreign Government and Central Bank (ECA -3) - - - - 50% - -
Claims on Foreign Government and Central Bank (ECA-4-6) - - - - 100% - -
Claims on Foreign Government and Central Bank (ECA -7) - - - - 150% - -
Claims On BIS, IMF, ECB, EC and on Multilateral Development - - - - 0% - -
Banks (MDB’s) recognized by the framework
Claims On Other Multilateral Development Banks - - - - 100% - -
Claims on Public Sector Entity (ECA 0-1) - - - - 20% - -
Claims on Public Sector Entity (ECA 2) - - - - 50% - -
Claims on Public Sector Entity (ECA 3-6) - - - - 100% - -
Claims on Public Sector Entity (ECA 7) - - - - 150% - -
Claims on domestic Banks that meet capital adequacy requirements 390,401 - - 390,401 20% 78,080 9,108
Claims on domestic Banks that do not meet capital adequacy requirements 54,158 - - 54,158 100% 54,158 156,272
Claims on foreign bank (ECA Rating 0-1) 2,489,001 - - 2,489,001 20% 497,800 490,482
Claims on foreign bank (ECA Rating 2) 818,646 - - 818,646 50% 409,323 194,000
Claims on foreign bank (ECA Rating 3-6) - - - - 100% - -
Claims on foreign bank (ECA Rating 7) - - - - 150% - -
Claims on foreign bank incorporated in SAARC region operating with a 2,671,360 2,671,360 20% 534,272 687,746
buffer of 1% above their respective regulatory capital requirement
Claims on Domestic Corporates 26,136,111 16,436 650,182 25,469,493 100% 25,469,493 28,835,429
Claims on Foreign Corporates (ECA 0-1) - - - - 20% - -
Claims on Foreign Corporates (ECA 2) - - - - 50% - -
Claims on Foreign Corporates (ECA 3-6) - - - - 100% - -
Claims on Foreign Corporates (ECA 7) - - - - 150% - -
Regulatory Retail Portfolio (Not Overdue) 3,608,832 1,290 586,532 3,021,010 75% 2,265,758 4,819,572
Claims fulfilling all criterion of regulatory retail except granularity - - - - 100% - -
Claims secured by residental properties 1,189,846 - - 1,189,846 60% 713,908 -
Claims not fully secured by residental properties - - - - 150% - -
Claims secured by residental properties (Overdue) 423 423 - - 100% - -
Claims secured by Commercial Real Estate 5,762,865 - 5,762,865 100% 5,762,865 -
Past due claims (except for claim secured by residental properties) 253,612 206,332 - 47,280 150% 70,920 20,726
High Risk Claims 3,996,751 - - 3,996,751 150% 5,995,127 -
Investment in equity and other capital instruments of institutions 16,500 3,300 - 13,200 100% 13,200 18,300
listed in the Stock exchange
Investment in equity and other capital instruments of institutions 50,146 - - 50,146 150% 75,218 64,006
not listed in the Stock exchange
Other Assets (as per attachment) 2,159,847 624,162 - 1,535,685 100% 1,535,685 1,412,003
Total 58,563,007 851,942 1,236,714 56,474,352 43,475,808 36,707,642

Nepal Investment Bank Annual Report 2009/10  69

FORM NO.2 RISK WEIGHTED EXPOSURE FOR CREDIT RISK CONTINUE..... Schedule 30 (B)
for the period July 16, 2009 to July 16,2010 Rs. in '000
B. Off Balance Sheet Exposures “ Book “ Specific “ Eligible “ Net “Risk “ Risk Weighted Previous Period
Value Provision CRM Value Weight Exposures Risk Weighted
a “ b “ c “ d=a-b-c “ e” f=d*e “ Exposures

Revocable Commitments - - - - 0% - -
Bills Under Collection - - - - 0% - -
Forward Exchange Contract Liabilities 69,449 - - 69,449 10% 6,945 5,950
LC Commitments With Original Maturity Up to 6 months -
domestic counterparty 102,831 - 23,429 79,403 20% 15,881 41,791
foreign counterparty (ECA Rating 0-1) 3,060,600 - 359,298 2,701,302 20% 540,260 762,310
foreign counterparty (ECA Rating 2) - - - - 50% - -
foreign counterparty (ECA Rating 3-6) 415,462 - 25,413 390,049 100% 390,049 445,480
foreign counterparty (ECA Rating 7) - - - - 150% - -
L C Commitments With Original Maturity Over 6 months -
domestic counterparty 146,157 - 21,982 124,174 50% 62,087 102,953
foreign counterparty (ECA Rating 0-1) 1,448,557 - 80,472 1,368,085 20% 273,617 184,956
foreign counterparty (ECA Rating 2) - - - - 50% - -
foreign counterparty (ECA Rating 3-6) 66,614 - 2,401 64,213 100% 64,213 49,678
foreign counterparty (ECA Rating 7) - - - - 150% - -
Bid Bond, Performance Bond and Counter guarantee - -
domestic counterparty 2,731,696 - 131,847 2,599,849 50% 1,299,924 1,204,575
foreign counterparty (ECA Rating 0-1) 150,086 - - 150,086 20% 30,017 44,822
foreign counterparty (ECA Rating 2) 1,133,552 - - 1,133,552 50% 566,776 655,870
foreign counterparty (ECA Rating 3-6) 36,914 - - 36,914 100% 36,914 1,440
foreign counterparty (ECA Rating 7) - - - - 150% - -
Underwriting commitments - - - - 50% - -
Lending of Bank’s Securities or Posting of Securities as collateral - - - - 100% - -
Repurchase Agreements, Assets sale with recourse - - - - 100% - -
Advance Payment Guarantee 1,636,215 - 28,386 1,607,829 100% 1,607,829 1,325,444
Financial Guarantee - - - - 100% - -
Acceptances and Endorsements 1,062,467 - 106,247 956,220 100% 956,220 719,476
Unpaid portion of Partly paid shares and Securities - - - - 100% - -
Irrevocable Credit Commitments (short term) 3,574,696 - - 3,574,696 20% 714,939 713,594
Irrevocable Credit Commitments (long term) - - 50% - -
Other Contingent Liabilities - - - - 100% - 9,210
Unpaid Guarantee Claims - - 200% - -
Total 15,635,296 - 779,475 14,855,822 6,565,673 6,267,550
Total RWE for Credit Risk Before Adjustment (A)+(B) 74,198,304 851,942 2,016,188 71,330,174 50,041,481 42,975,192
Adjustments under Pillar II
Add: 10% of the loan and facilities in excess of - - - - -
Single Obligor Limits(6.4 a 3)
Add: 1% of the Contract(sale) value in case of the sale - - - - -
of Credit with recourse(6.4 a 4)
Total RWE for Credit Risk (After Bank’s Adjustment of Pillar II) 74,198,304 851,942 2,016,188 71,330,174 50,041,481 42,975,192

70  Nepal Investment Bank Annual Report 2009/10

FORM NO.3 ELIGIBLE CREDIT RISK MITIGANTS Schedule 30 (c)
for the period July 16, 2009 to July 16,2010 Rs. in '000
Credit Exposures Deposits Deposits Gold Govt. & NRB G’tee Sec/G’tee G’tee of G’tee of Sec/G’tee of Total Previous
with with other Securities of Govt. of Other domestic MDBs Foreign Period
Bank banks/FI of Nepal Sovereigns banks Total
(a) (b) (c) (d) (e) (f) (g) (h) (i)

Balance Sheet Exposures - -

Cash Balance
Balance With Nepal Rastra Bank
Gold
Investment in Nepalese Government Securities
All Claims on Government of Nepal
Investment in Nepal Rastra Bank securities
All Claims on Nepal Rastra Bank
Claims on Foreign Government and Central Bank
(ECA rating 0-1)
Claims on Foreign Government and Central Bank (ECA-2) - -
Claims on Foreign Government and Central Bank (ECA-3) - -
Claims on Foreign Government and Central Bank (ECA-4-6) - -
Claims on Foreign Government and Central Bank (ECA-7) - -
Claims on Other Multilateral Development Banks - -
Claims on Public Sector Entity (ECA 0-1) - -
Claims on Public Sector Entity (ECA 2) - -
Claims on Public Sector Entity (ECA 3-6) - -
Claims on Public Sector Entity (ECA 7) - -
Claims on domestic banks that meet capital - -
adequacy requirements
Claims on domestic banks that do not meet - -
capital adequacy requirements
Claims on foreign bank (ECA Rating 0-1) - -
Claims on foreign bank (ECA Rating 2) - -
Claims on foreign bank (ECA Rating 3-6) - -
Claims on foreign bank (ECA Rating 7) - -
claims on foreign bank incorporated in SAARC
region operating with a buffer of 1% above
their respective regulatory capital requirement
Claims on Domestic Corporates 95,701 - 184,642 1,568 368,272 - - - - 650,182 398,839
Claims on Foreign Corporates (ECA 0-1) - -
Claims on Foreign Corporates (ECA 2) - -
Claims on Foreign Corporates (ECA 3-6) - -
Claims on Foreign Corporates (ECA 7) - -
Regulatory Retail Portfolio (Not Overdue) 88,101 - 497,053 1,378 - - 586,532 934,540
Claims fulfilling all criterion of regulatory - -
retail except granularity
Claims secured by residential properties - -
Claims not fully secured by residential properties - -
Claims secured by residential properties (Overdue) - -
Claims secured by Commercial real estate - -
Past due claims (except for claim secured - -
by residental properties)
High Risk claims - -
Investments in equity and other capital insturments of - -
institutions listed in the stock exchange
Investments in equity and other capital insturments of - -
institutions not listed in the stock exchange
Other Assets (as per attachment) - -

Nepal Investment Bank Annual Report 2009/10  71

 FORM NO.3 ELIGIBLE CREDIT RISK MITIGANTS CONTINUE..... Schedule 30 (c)
for the period July 16, 2009 to July 16,2010 Rs. in '000
Credit Exposures Deposits Deposits Gold Govt. & NRB G’tee Sec/G’tee G’tee of G’tee of Sec/G’tee of Total Previous
with with other Securities of Govt. of Other domestic MDBs Foreign Period
Bank banks/FI of Nepal Sovereigns banks Total
(a) (b) (c) (d) (e) (f) (g) (h) (i)

Off Balance Sheet Exposures - -

Forware Exchange Contract Liabilities - -
LC Commitments With Original
Maturity Up to 6 months
domestic counterparty 23,429 23,429 11,663
foreign counterparty (ECA Rating 0-1) 359,298 359,298 423,023
foreign counterparty (ECA Rating 2) - - -
foreign counterparty (ECA Rating 3-6) 25,413 25,413 24,226
foreign counterparty (ECA Rating 7) - - -
LC Commitments With Original - -
Maturity Over 6 months
domestic counterparty 21,982 21,982 1,447
foreign counterparty (ECA Rating 0-1) 80,472 80,472 28,920
foreign counterparty (ECA Rating 2) - - -
foreign counterparty (ECA Rating 3-6) 2,401 2,401 1,111
foreign counterparty (ECA Rating 7) - -
Bid Bond, Performance Bond 131,847 131,847 140,140
and Counter guarantee
domestic counterparty
foreign counterparty (ECA Rating 0-1) - -
foreign counterparty (ECA Rating 2) - -
foreign counterparty (ECA Rating 3-6) - -
foreign counterparty (ECA Rating 7) - -
Underwriting commitments - -
Lending of Bank’s Securities or Posting - -
of Securities as Collateral
Repurchase Agreements, Assets - -
sale with recourse
Advance Payment Guarantee 28,386 28,386 17,518
Financial Guarantee - - -
Acceptances and Endorsements 106,247 106,247 79,942
Unpaid portion of Partly paid - -
shares and Securities
Irrevocable Credit commitments - -
Other Contingent Liabilities - -

The total amount of Eligible CRM shall be adjusted for the supervisory haircuts and floors. In this regard banks should disclose the total value of eligible collateral in the respective
column of type of CRM and while summing up the total value necessary adjustments have to be made.

72  Nepal Investment Bank Annual Report 2009/10

RISK WEIGHT EXPOSURE FOR OPERATIONAL RISK Schedule 30 (D)
Rs. in '000
Current Period Previous Period
Particulars 2006/07 2007/08 2008/09

Net Interest Income 899,457 1,202,117 1,580,968

Commission and Discount Income 163,899 215,292 183,042
Other Operating Income 47,319 66,377 113,974
Exchange Fluctuation Income 135,355 165,839 185,327
Additional Interest Suspense during the period 12,499 16,237 46,923
Gross Income (a) 1,258,530 1,665,862 2,110,234
Alfa (b) 15% 15% 15%
Fixed Percentage of Gross Income (c) =(a)*(b) 188,779 249,879 316,535
Capital Requirement for operational risk (d) (average of c) 251,731 194,189
Risk Weight (reciprocal of capital requirement of 10%) in times (e) 10 10
Equivalent Risk Weight Exposure (f)=(d)*(e) 2,517,313 1,941,891

Nepal Investment Bank Annual Report 2009/10  73

 Market Risk Schedule 30 (E)
Rs. in '000
Current Period Previous Period
S.No. Currency Open Position Open Position Relevant Open Relevant Open
(FCY) (NPR) Position (NPR) Position (NPR)

1 AED 50 974 974 146,088

2 AUD 68,843 4,465,865 4,465,865 1,919,913
3 CAD 22,983 1,634,320 1,634,320 997,415
4 CHF 18,483 1,311,721 1,311,721 5,291,016
5 CNY 9,580 103,081 103,081 238,132
6 DKK 52,903 674,513 674,513 1,181,369
7 EUR 80,661 7,725,687 7,725,687 15,679,888
8 GBP 39,459 4,516,115 4,516,115 3,108,396
9 HKD 430 4,094 4,094 44,178
10 INR 501,426,717 802,282,748 802,282,748 452,368,134
11 JPY 15,755,461 13,371,660 13,371,660 8,998,316
12 MYR 1,240 27,454 27,454 21
13 QAR 600 11,778 11,778 48,429
14 SAR 1,882 36,868 36,868 108,785
15 SEK 42,070 424,068 424,068 870,899
16 SGD 49,380 2,661,591 2,661,591 2,623,904
17 THB - - - 237,436
18 USD 1,213,672 90,418,598 90,418,598 296,501,681
Total Open Position (a) 929,671,134 790,363,999
Fixed Percentage (b) 5.00% 5.00%
Capital Charge for Market Risk [c=(axb)] 46,483,557 39,518,200
Reciprocal of Capital Requirement (d) 10 10
Equivalent Risk Weight Exposure [e=(cxd)] 464,835,567 395,181,999
Equivalent Risk Weight Exposure in ‘000 464,836 395,182

74  Nepal Investment Bank Annual Report 2009/10

 5 YEARS PRINCIPAL INDICATORS Schedule 31
Rs. in '000
Particulars Indicators F/Y 2005/2006 F/Y 2006/2007 F/Y 2007/2008 F/Y 2008/2009 F/Y 009/2010
(F/Y 062/63) (F/Y 063/64) (F/Y 064/65) (F/Y 065/66) (F/Y 066/67)

1. Percent of Net Profit/ Gross Income Percent 23.99 25.07 25.33 22.97 23.67
2. Earning Per Share Rs. 59.35 62.57 57.87 37.42 52.55
3. Market Value Per Share Rs. 1,260 1,729 2,450 1,388 705
4. Price Earning Ratio Ratio 21.23 27.63 42.33 37.10 13.42
5. Dividend (including bonus) on share capital Percent 55.46 30.00 40.83 20.00 25.00
6. Cash Dividend on Share Capital Percent 20.00 5.00 7.50 20.00 25.00
7. Interest Income/ Loan & Advances Percent 7.32 7.33 6.93 7.89 10.51
8. Staff Expenses/ Total operating Expenses Percent 38.77 37.39 37.41 38.50 39.23
9. Interest Expenses on Total Deposit and Borrowings Percent 2.52 2.71 2.79 3.53 4.99
10. Exchange Gain/ Total Income Percent 8.60 6.77 6.03 4.79 4.19
11. Staff Bonus/ Total Staff Expenses Percent 41.84 49.76 54.50 57.53 64.61
12. Net Profit/Loan and Advances Percent 2.66 2.82 2.53 2.45 3.09
13. Net Profit/Total Assets Ratio 1.61 1.79 1.77 1.68 2.19
14. Total Credit/Deposit Percent 69.63 72.56 79.91 78.86 81.74
15. Total Operating Expenses**/ Total Assets Percent 1.43 1.38 1.27 1.09 1.23
16. Adequacy of Capital Fund on Risk Weighted Assets
a. Core Capital Percent 7.97 7.90 7.71 8.56 8.50
b. Supplementary Capital Percent 4.01 4.26 3.57 2.68 2.05
c. Total Capital Fund Percent 11.97 12.17 11.28 11.24 10.55
17. Liquidity (CRR) Percent 13.61 10.47 10.91 10.32 7.77
18. Non-performing credit/ Total credit Ratio 2.07 2.37 1.12 0.58 0.62
19. Weighted Average Interest Rate Spread Percent 3.90 3.99 4.00 3.94 4.36
20. Book Net-worth Rs. in ‘000 1,415,440 1,878,124 2,686,786 3,907,840 4,585,393
21. Total Shares No. 5,905,860 8,013,526 12,039,154 24,070,689 24,090,977
22. Total Staffs No. 390 514 622 766 877
23. Book Value Per Share Rs. 240 234 223 162 190
** Total Operating Expenses = Staff Expenses+ Office Operating Expenses

Nepal Investment Bank Annual Report 2009/10  75

 PRINCIPAL ACCOUNTING POLICIES
1. BASIS OF PREPARATION OF FINANCIAL
STATEMENTS
a. The financial statements have been prepared in conformity
with generally accepted accounting principles, Nepal
Accounting Standards, Company Act 2063, Bank & Financial
Institution Act, 2063 and Nepal Rastra Bank Directives.
b. The financial statements are prepared on historical cost
convention except where otherwise stated.
c. The bank follows accrual system of accounting for the
preparation of financial statements except where otherwise
stated.
d. All the formats of the financial statements are in accordance
with the directives of Nepal Rastra Bank.
2. INTEREST AND COMMISSION INCOME
a. Interest on loans and advances are recognized on cash basis
as per Nepal Rastra Bank’s (NRB) directives. (Refer NOTES
TO ACCOUNT # 6)
b. Commission and fees are recognized as income on cash
basis except commission exceeding NPR 100,000 earned on
guarantees covering more than a year is accounted for on
accrual basis over the period of the guarantee.
3. FOREIGN CURRENCY TRANSACTIONS
a. Foreign currency assets and liabilities held at Balance Sheet
date have been translated at buying rate of exchange on
that date.
b. Profit or loss arising from difference in buying and selling
rates on foreign currency transactions are recorded as
“Trading Gain or Loss”.
c. Profit or loss arising from the fluctuation of foreign
currencies is recorded as “Revaluation Gain or Loss” as and
when such fluctuation takes place. Out of total Revaluation
Gain if any, 25% is transferred to Exchange Fluctuation Fund
at the end of the year as per NRB directives.
4. LOAN LOSS PROVISION & BAD DEBTS
WRITTEN OFF
a. Provision for loan losses has been made in accordance with
Nepal Rastra Bank’s directives.
76  Nepal Investment Bank Annual Report 2009/10
SCHEDULE 32
b. Provision for loan losses have been deducted from the loan
and advances as per the directives of Nepal Rastra Bank
& accordingly loan & advances net of provision has been
presented in the Balance Sheet.
c. While writing off of Bad Debts it will be charged to Profit
& Loss account and Provision made for the same will be
written back as per NRB directives.
Procedure for writing off of bad debts will be according to
the provision made under Loans Write Off bylaws of the
bank, which has been duly approved by Nepal Rastra Bank.
The bank has taken a policy of settlement of the bad loan by
waiver of reasonable amount of interest. Case to case basis
settlement is made based on the justification of each case.
5. DEPRECIATION
Fixed Assets are depreciated over estimated life of assets on
straight-line basis from the following month of the purchase
date. Maintenance and repairs expenses are charged to
profit and loss account as incurred.
6. EXPENSES NOT WRITTEN OFF
Cost of computer software are classified under “Expenses
Not Written off” as disclosed in Schedule 16 and relates to
cost of computer software which are being amortized over a
period of five years from the date of acquisition.
7. NON CAPITALIZED ITEMS
Capital items of value below Rs.10,000 are expensed off in
the year of purchase itself.
8. NON BANKING ASSETS
a. Non Banking Assets acquired till F.Y. 2061/62 are valued at
amount equivalent to the outstanding amount of principal
and interest due at the time of acquisition. Where the total
outstanding amount of principal and interest in the year of
acquisition of asset exceeds the market value of such assets,
the assets are valued at the market price of assets and the
difference amount is charged to profit and loss account in
the year of acquisition according to then NRB directives.
b. From F.Y. 2062/63 Non Banking Assets will be valued at
amount equivalent to the outstanding amount of principal
due at the time of acquisition and interest receivable of
such loan will be set off against interest suspense. Where
the total outstanding amount of principal in the year of
acquisition of asset exceeds the market value of such assets,
the assets are valued at the market price of assets and the
difference amount is charged to profit and loss account in
the year of acquisition.
c. Where the amount realized upon disposal of the acquired
assets vary at a future date, the difference will be adjusted
to the Profit & Loss Account in the year of disposal.
9. INVESTMENT
a. Investments on securities listed in the Stock Exchange are
valued at the lower of cost or market price.
b. Investments on securities, which are not listed in the Stock
Exchange, are valued at cost and provisions are made as per
NRB directives.
10. RETIREMENT BENEFITS
Provision for liability of gratuity is made on accrual basis,
by calculating actual liability of gratuity for entire staff, at
the end of the financial year. Leave encashment expenses is
recognized on cash basis.
11. INCOME TAX
Provision for Income Tax is made on the total income at
the rate applicable for that year in accordance with the
Income Tax Act. Any excess or shortfall in tax provision is
adjusted to the profit and loss account in the year, when tax
assessment is completed. Further, deferred tax liability has
been calculated in accordance with the provisions of Nepal
Accounting Standard.
12. CONTINGENT LIABILITY
Any liability of contingent nature, if material, is disclosed in
separate schedule, forming the part of Balance Sheet.
Nepal Investment Bank Annual Report 2009/10  77
 NOTES TO ACCOUNTS
1. STAFF PROVIDENT FUND & GRATUITY 4. CHANGES IN DEPOSIT LIABILITIES
PROVISION
Staff Provident Fund has been transferred to NIBL Retirement
Fund as provided by Income Tax Act 2058.
Gratuity provision provided in balance sheet refers to the gratuity
liability as at 15.07.2004. Gratuity payable onwards has been
transferred to NIBL Retirement Fund account as provided by
Income Tax Act 2058.
2. INCOME-TAX LIABILITY
Income tax provision amounting to NPR 532,898,521 made for
the F.Y. 2066-067 (FY 2009/2010) is subject to tax audit.
Deferred tax liability of NPR 27,183,263 for deductible temporary
differences up to F.Y. 2066/67, has been shown under other
liabilities in the Balance Sheet. The figure has been arrived at
by applying the prevailing income tax rate to the Net Temporary
Difference figure of NPR. 90,610,877 which has been arrived at
as follows:
Deferred tax asset: NPR
Provision for other assets: 2,074,352
Gratuity Fund 12,352,678
Provision for Non-banking assets: (11,25,000)
Total Deferred Asset: 13,302,030
Deferred tax liability:
Asset base as per income tax provisions: (673,665,412)
Asset base as per Company Accounts: 777,578,319
Total Deferred Liability: 103,912,907
Net Deferred Liability due to net timing difference: 90,610,877
3. EXCHANGE FLUCTUATION RESERVE
During the year, there is a gain on revaluation of foreign
exchange amounting to NPR 12,511,650.00 Hence, an amount
of NPR.3,127,913.50 equivalent to 25% of such gain has been
transferred to exchange fluctuation reserve as required by NRB
Directives.
78  Nepal Investment Bank Annual Report 2009/10
SCHEDULE 32
The total deposit of the bank has increased by NPR 3,396.66
million to NPR 50,094.70 million, from the previous year’s balance
of NPR 46,698 million as following:
Rs. in million
Particulars FY FY Increase/
2008/2009 2009/2010 (Decrease)
(2065/66) (2066/67) Percentage
Current Deposits 3,756.57 4,025.82 7.16
Margin Deposits 727.99 779.47 7.07
Saving Deposits 17,066.25 14,324.26 -16.07
Fixed Deposits 11,633.38 16,825.15 44.63
Call Deposits 13,513.90 14,140.03 4.63
Total Deposits 46,698.10 50,094.73 7.27
5. LOANS DISBURSED, RECOVERY AND WRITTEN
OFF
During the year, total loan amounting to NPR 112,332.46 million
has been disbursed and NPR 108,211.17 million has been
recovered.
6. INTEREST INCOME
a) Interest income from loans and advances is shown on cash
basis, except on consortium project financing, which has been
capitalized during the construction period.
b) Total interest receivable from loan and advances as at
16.07.2010 amounting to NPR 184.87 million has been
transferred to Interest Suspense Account as per Nepal Rastra
Bank’s directives.
7. TABLE OF LIQUIDITY DETAILS (NPR in ‘000)
Assets 1-90 91-180 181-270 271-365 Above Total Amount
Days Days Days Days one Year
Cash Balance 1,525,442 - - - - 1,525,442
Balance with Banks 5,290,448 - - - - 5,290,448
Investment made with Foreign Banks 2,160,185 894,000 238,400 335,250 372,500 4,000,335
Investment in Govt. Bonds - 1,385,900 626,250 1,899,700 - 3,911,850
Investment in NRB Bonds 290,000 290,000
Investment - - - - 66,646 66,646
Inter Bank Lending 370,000 - - - - 370,000
Loans & Advances 15,108,110 7,326,073 5,530,164 3,521,951 9,462,143 40,948,440
Total Assets 24,454,185 9,605,973 6,394,814 5,756,901 10,191,288 56,403,161
Liabilities
Borrowings 37,315 - - - - 37,315
Current Deposits 1,441,588 480,529 780,794 480,529 1,681,852 4,805,295
Saving Deposits 4,297,277 1,432,425 2,148,638 1,432,426 5,013,489 14,324,256
Fixed and Call Deposits 17,094,671 5,188,628 2,591,811 4,406,542 1,683,522 30,965,175
Debentures - 300,000 - - 750,000 1,050,000
Total Liabilities 22,870,851 7,401,583 5,461,224 6,319,497 9,128,865 51,182,040
Net Financial Assets 1,583,333 2,204,391 933,569 (562,597) 1,062,423 5,221,119
Cumulative Net Financial Assets 1,583,333 3,787,724 4,721,293 4,158,697 5,221,119 -

8. NON BANKING ASSETS
Non banking assets amounting to NPR 1,500,000 was sold during
the year at NPR 1,850,000. The resulting gain thereon and the
provision of NPR.1,125,000 made therefore have been transferred
to Profit and Loss account during the year.
9. EXPENSES NOT WRITTEN OFF
Cost of computer software classified under “Expenses Not Written
off” disclosed in Schedule 16 relates to cost of computer software
which are being amortized over a period of five years from the
date of acquisition. During the year,
NPR 17,420,450 has been amortized by charging to Profit and
Loss account.
NPR 74.40 million is for NPR 250 million Debenture (2072).All
debentures have been issued having maturity period of 7 years
from the date of issue. This year NPR 42.86 million, NPR 35.72
million, NPR 35.72 million, and NPR 35.72 million respectively has
been transferred from Profit and Loss appropriation account to
Debenture Redemption Fund for respective debentures.
13. INVESTMENT IN GOVERNMENT BONDS &
TREASURY BILLS
a. During the year, NPR 290 million was invested in Government
bonds which has been shown under investments at face value.
The amount of NPR.37,31,830 paid as premium on such bonds
has been booked as premium paid in advance and is amortized
over the period of the bonds.

10. PROVISION FOR LOAN LOSS & LOSS
PROVISION WRITTEN BACK
During the year NPR 93,056,585 has been charged to Profit and
Loss account for loan loss provision as required by Nepal Rastra
Bank directives.
Provision amounting NPR 48,875,462 has been written back
during the year.
11. PROVISION FOR OTHER ASSETS
None.
12. DEBENTURE ISSUE
Total Debenture outstanding of NPR 1050 million includes
debenture of NPR 300 million issued on 24.11.2003, NPR
250 million issued on 26.06.2006, NPR 250 million issued on
26.06.2007 and NPR 250 million issued on 09.07.2008.
Out of total NPR 640.40 million in Debenture Redemption Fund,
NPR 300.00 million is for NPR 300 million Debenture (2067),
NPR 145.84 million is for NPR 250 million Debenture (2070),
NPR 110.12 million is for NPR 250 million Debenture (2071) and
b. Investment in treasury bills at discount has been shown at face value
under investment. The amount of discount is booked as unearned
interest and is amortized over the period of the treasury bills.
14. STAFF BONUS
Expense on staff bonus is recognized at ten percent of net profit
before income tax and after bonus provision.
15. VEHICLE RENEWAL & OTHER TAXES
Vehicle renewal & other taxes of NPR 19,642,883 shown in
Schedule 24 include NPR 16,865,926 paid towards land & building
tax., which has been paid pursuant to the provisions of Local Self
Governance Act.
16. COMPARATIVE FIGURES FOR 2008/2009
Previous year’s figures have been regrouped or rearranged
wherever required to make them comparable with the current
year’s figures.
17. ROUNDING OFF
Figures have been rounded off to the nearest rupee.

Nepal Investment Bank Annual Report 2009/10  79

 DETAILS OF PROMOTERS SHARES PLEDGED BY Schedule 34
PROMOTER SHAREHOLDERS OF THE BANK
for the period July 16, 2009 to July 16,2010
S.No. Promoter’s Name Promoters Share Owenership Loan Detail Remarks
Total No. of Percentage Name of the Loan Total
Shares of Total Paid Banks & Financial Amount Numbers of
up Captal Institutions Pledge Shares

1 Star Holdings P. LTD. 282,307 1.17 Citizens Bank International Limited 282,307
2 Annapurna Investment P. Ltd 376,425 1.56 Global Bank Limied 344,976
3 Prestine Investment P. Ltd. 376,425 1.56 Sanima Bikash Bank Ltd. 158,408
4 Kamala Investment P. Ltd. 376,425 1.56 Nepal Bangaladesh Bank Ltd. 92,280
5 Panchakanaya Investment P. Ltd. 188,211 0.78 Himalayan Bank Limited 62,607
6 Shrestha Brothers Investment P. Ltd. 188,211 0.78 Himalayan Bank Limited 62,607
7 Surya Infosys P .Ltd. 376,425 1.56 Sanima Bikash Bank Ltd. 284,145
8 Mercantile Investment P. Ltd. 150,577 0.63 Bank of Kathmandu Limited. 150,577

80  Nepal Investment Bank Annual Report 2009/10

 COMPARISION OF UNAUDITED & AUDITED FINANCIAL
STATEMENT AS OF ASHAD END FY 2066/67 Schedule 35
As at Ashad end 2067 Rs. in '000
S/N Particulars As per As per Variance Reasons for Variance
Unaudited F/S Audited F/S In Amount In %

1 Total Capital and Liabilities (1.1 to 1.7) 57,935,545 57,935,545 - 0%

1.1 Paid Up Capital 2,409,098 2,409,098 - 0%
1.2 Reserve and Surplus 2,778,570 2,176,295 602,274 22% Appropriation of Dividend
1.3 Debenture and Bond 1,050,000 1,050,000 - 0%
1.4 Borrowings 37,315 37,315 - 0%
1.5 Deposit (a+b) 50,094,725 50,094,725 - 0%
a. Domestic Currency 45,249,631 45,249,631 - 0%
b. Foreign Currency 4,845,094 4,845,094 - 0%
1.6 Income Tax Liability 37,195 37,195 - 0%
1.7 Other Liabilities 1,528,642 2,130,917 (602,274) -39% Appropriation of Dividend
2 Total Assets (2.1 to 2.7) 57,935,545 57,935,545 - 0%
2.1 Cash and Bank Balance 6,815,890 6,815,890 - 0%
2.2 Money at Call and Short Notice - - - 0%
2.3 Investments 8,635,530 8,635,530 - 0%
2.4 Loans and Advances (Gross) 40,948,440 40,948,440 - 0%
2.5 Fixed Assets 1,136,247 1,136,247 - 0%
2.6 Non Banking Assets (Net) - - - 0%
2.7 Other Assets 399,438 399,438 - 0%
3 Profit & Loss Account
3.1 Interest Income 4,653,521 4,653,521 - 0%
3.2 Interest Expense (2,553,847) (2,553,847) - 0%
A. Net Interest Income (3.1-3.2) 2,099,674 2,099,674 - 0%
3.3 Fees, Commission and Discount 242,886 242,886 - 0%
3.4 Other Operating Income 168,313 168,313 - 0%
3.5 Foreign Exchange Gain/Loss (Net) 224,057 224,057 - 0%
B. Total Operating Income (A.+3.3+3.4+3.5) 2,734,930 2,734,930 - 0%
3.6 Staff Expenses (279,851) (279,851) - 0%
3.7 Other Operating Expenses (433,596) (433,596) - 0%
C. Operating Profit Before Provision (B.-3.6-3.7) 2,021,482 2,021,482 - 0%
3.8 Provision for Possible Losses (93,057) (93,057) - 0%
D. Operating Profit (C.-3.8) 1,928,425 1,928,425 - 0%
3.9 Non Operating Income/Expenses (Net) 10,606 10,606 - 0%
3.10 Write Back of Provision for Possible Loss 50,000 50,000 - 0%
E. Profit from Regular Activities (D+3.9+3.10) 1,989,032 1,989,032 - 0%
3.11 Extra-ordinary Income/Expenses (Net) - - - 0%
F. Profit before Bonus and Taxes (E.+3.11) 1,989,032 1,989,032 - 0%
3.12 Provision for Staff Bonus (180,821) (180,821) - 0%
3.13 Provision for Tax (542,261) (542,261) - 0%
G. Net Profit/Loss (F.-3.12-3.13 1,265,950 1,265,950 - 0%

Notes:

Nepal Investment Bank Annual Report 2009/10  81

 UNAUDITED FINANCIAL RESULTS (QUARTELY) Schedule 36
as at Fourth Quarter (16/07/2010) of the Fiscal Year 2009/2010
Rs. in '000
S/N Particulars This Quarter Previous Corresponding
Ending Quarter Quarter Previous
Ending Year (Audited)

1 Total Capital and Liabilities (1.1 to 1.7) 57,935,545 57,584,489 53,596,754

1.1 Paid Up Capital 2,409,098 2,409,098 2,407,069
1.2 Reserve and Surplus 2,778,570 2,381,881 1,500,771
1.3 Debenture and Bond 1,050,000 1,050,000 1,050,000
1.4 Borrowings 37,315 2,235,512 38,800
1.5 Deposit (a+b) 50,094,725 47,667,851 46,698,100
a. Domestic Currency 45,249,631 42,727,436 40,791,738
b. Foreign Currency 4,845,094 4,940,415 5,906,362
1.6 Income Tax Liability 37,195 48,778 38,297
1.7 Other Liabilities 1,528,642 1,791,369 1,863,717
2 Total Assets (2.1 to 2.7) 57,935,545 57,584,489 53,596,754
2.1 Cash and Bank Balance 6,815,890 6,804,796 7,918,004
2.2 Money at Call and Short Notice - - -
2.3 Investments 8,635,530 7,899,698 7,399,812
2.4 Loans and Advances (Gross) 40,948,440 41,368,692 36,827,157
a. Real Estate Loan 9,407,342 9,518,477 5,756,691
b. Home / Housing Loan 1,469,473 1,503,184 1,222,480
c. Margin Type Loan 526,465 565,620 701,919
d. Term Loan 4,934,933 4,410,222 4,439,268
e. Overdraft Loan/ TR Loan / WC Loan 20,640,294 21,400,481 20,787,666
f. Others 3,969,932 3,970,708 3,919,133
2.5 Fixed Assets (Net) 1,136,247 1,101,512 1,060,752
2.6 Non Banking Assets (Net) - - 375
2.7 Other Assets 399,438 409,791 390,653

3 Profit & Loss Account Up to This Up to Previous Up to Corresponding

Quarter Quarter Quarter Previous
Year (Audited)

3.1 Interest Income 4,653,521 3,229,057 3,267,941

3.2 Interest Expense (2,553,847) (1,777,252) (1,686,973)
A. Net Interest Income (3.1-3.2) 2,099,674 1,451,805 1,580,968
3.3 Fees, Commission and Discount 242,886 189,210 183,042
3.4 Other Operating Income 168,313 124,338 113,974
3.5 Foreign Exchange Gain/Loss (Net) 224,057 164,899 185,327
B. Total Operating Income (A.+3.3+3.4+3.5) 2,734,930 1,930,253 2,063,311
3.6 Staff Expenses (279,851) (208,946) (225,721)
3.7 Other Operating Expenses (433,596) (307,963) (360,533)
C. Operating Profit Before Provision (B.-3.6-3.7) 2,021,482 1,413,344 1,477,056
3.8 Provision for Possible Losses (93,057) (77,343) (166,201)
D. Operating Profit (C.-3.8) 1,928,425 1,336,001 1,310,855
3.9 Non Operating Income/Expenses (Net) 10,606 5,757 2,953
3.10 Write Back of Provision for Possible Loss 50,000 24,223 114,653
E. Profit from Regular Activities (D+3.9+3.10) 1,989,032 1,365,981 1,428,461
3.11 Extra-ordinary Income/Expenses (Net) - - -
F. Profit before Bonus and Taxes (E.+3.11) 1,989,032 1,365,981 1,428,461
3.12 Provision for Staff Bonus (180,821) (124,180) (129,860)
3.13 Provision for Tax (542,261) (372,540) (397,982)
G. Net Profit/Loss (F.-3.12-3.13 1,265,950 869,261 900,619

82  Nepal Investment Bank Annual Report 2009/10

 UNAUDITED FINANCIAL RESULTS (QUARTELY) Schedule 36
as at Fourth Quarter (16/07/2010) of the Fiscal Year 2009/2010
4 Ratios At the End of At the End of At the End of
This Quarter This Quarter Corresponding Quarter
Previoys Year (Audited)

4.1 Capital Fund to RWA 11.81% 10.89% 11.24%

4.2 Non Performing Loan (NPL) to Total Loan 0.62% 0.48% 0.58%
4.3 Total Loan Loss Provision to Total NPL 248% 318% 274%
4.4 Cost of Funds (LCY) 7.0% 5.9% 4.9%
4.5 CD Ratio (As per NRB Directives) 81% 87% 82%
4.6 Average Yield 11.2% 9.7% 8.9%
4.7 Net Interest Spread 4.2% 3.8% 4.0%
4.8 Return on Equity 28% 27% 28%
4.9 Return on Assets (annualized) 2.2% 2.0% 1.7%

Note: 1) Previous quarters' figures have been regrouped and rearranged whereever necessary.
2) The above figures are subject to change as per the directions, if any, of Nepal Rastra Bank and/or Statutory Auditor.

Nepal Investment Bank Annual Report 2009/10  83

 Note: ...........................................................................................................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
.......................................................................................................................................................................... ...........................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
..... ................................................................................................................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
................................................................................................. ....................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
......................................................................................................................................................................................................................
.....................................................................................................................................................................................................................

84  Nepal Investment Bank Annual Report 2009/10

 Strategic Objectives
• To develop a customer oriented service culture with
special emphasis on customer care and convenience.
• To increase our market share by following a disciplined
growth strategy.
• To leverage our technology platform and pen scalable
systems to achieve cost-effective operations, efficient
Management Information Systems, improved delivery
capability and high service standards.
• To develop innovative products and services that attract
our targeted customers and market segments.
• To continue to develop products and services that
reduce our cost of funds.
• To maintain a high quality assets portfolio to achieve
strong and sustainable returns and to continuously build
shareholders’ value.
• To explore new avenues for growth and profitability.
Designed and Processed by: PowerComm, 5552987
Core Values and Ethical
Principles
Our core values tell us, our customers and the communities
we serve, who we really are; what we are about; and the
principles by which we pledge to conduct business. In
essence, we believe that success can only be achieved by
being true to our core values and principles.
• Customer Focus: At NIBL, our prime focus is to perfect
our customer service. Customers are our first priority
and driving force. We wish to gain customer confidence
and be their trusted partner.
• Quality: We believe a quality service experience is
paramount to our customers and we are strongly
committed to fulfilling this ideal.
• Honesty and Integrity: We ensure the highest level
of integrity to our customers by creating an ongoing
relationship of trust and confidence. We treat our
customers with honesty, fairness and respect.
• Belief in our people: We recognize that employees
are our most valuable asset and our competitive
strength. We respect the worth and dignity of individual
employees who devote their careers for the progress of
the Bank.
• Teamwork: We are a firm believer in teamwork and
feel that loyal and motivated teams can produce
extraordinary results. We are driven by a performance
culture where recognition and rewards are based on
individual merit and demonstrated track record.
• Good Corporate Governance: Effective Corporate
Governance procedures are essential towards achieving
and maintaining public trust and confidence in any
company, more so in a bank. At NIBL, we are committed
to following practices which result in good corporate
governance.
• Corporate Social Responsibility: As a responsible
corporate citizen, we consider it important to act in
a responsible manner towards the environment and
society. Our commitment has always been to behave
ethically and contribute towards the improvement of
the quality of life of our people, the community and
society at large, of which we are an integral part.
About Nepal Investment
Bank Ltd.
Nepal Investment Bank Ltd. (NIBL), previously Nepal Indosuez
Bank Ltd., was established in 1986 as a joint venture between
Nepali and French partners. The French partner (holding 50%)
of the capital) was Credit Agricole Indosuez, a subsidiary of one
of the largest banking groups in the world. When Credit Agricole
Indosuez decided to divest, a group of companies comprising of
bankers, professionals, industrialists and businessmen acquired
50% of the holdings of Credit Agricole Indosuez in Nepal Indosuez
Bank in April 2002. The name of the Bank was changed to Nepal
Investment Bank Ltd. upon approval of the Bank’s Annual General
Meeting, Nepal Rastra Bank and Company Registrar’s Office. The
shareholding structure comprises of:

• A group of companies holding 50% of the Capital.

• Rastriya Banijya Bank holding 15% of the Capital.
• Rastriya Beema Sansthan holding 15% of the Capital.
• The general public holding 20% of the Capital.

We believe that NIBL, being managed by a team of experienced

bankers and professionals with a proven track record, can
match your particular needs. We are sure that your choice of
bank will be guided, among other things, by its reliability and
professionalism.

Over the past 8 years, we have grown to become one of the

biggest commercial banks in Nepal. Our overall growth record in
deposits, lending, net profit and capital base is second to none.

• Highest growth rate among banks in Nepal.

• Experienced management & sound corporate governance.
• No. 1 lender in Nepal with total loans and advances of NPR
40.32 billion.
• No. 1 Private sector bank in Deposits with NPR 50.1billion.
• Highest Net Profit of NPR 1.26 billion.
• Highest paid up capital among the financial institution in
Nepal at Rs. 2.41 billion. The highest capital base (including
debentures) with NPR 5.64 billion
• 5th Largest Taxpayer in Nepal.
• Customer base of over 370,000.
• Maintained a consistent rating from Indian Credit Rating
Agency, ICRA, an affiliate of Moody’s Investor Group,
receiving a rating of Nepal [A].

www.nibl.com.np