NIC ASIA English Annual Report 2017.18 PDF

21st Annual Report
2017/18
BANKING
THE UNBANKED
THE UNBANKED
BANKING
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NIC ASIA Bank Limited /fd|f] klg, xfd|f] klg
VISION
To ensure creation
of optimum
MISSION
values for all the
stakeholders. To be a bank of 1st
choice for all the
stakeholders.
CORE
VALUES
The Bank strongly
believes in Meritocracy,
Transparency,
Professionalism, Team
Spirit and Service
Excellence.
These core values are internalized by
all functions within the Bank and are
reflected in all actions the Bank
takes during the course of
its business.
BANKING
THE UNBANKED
OUR FOOTPRINT IN FY
2015-16
RURAL AND SEMI-
URBAN AREAS 66
In Nepal, a huge section of population is still FY FY
2016-17 2017-18
unbanked as only an estimated 45% Nepalese have TOTAL
231
bankaccountswithformalfinancialinstitution.The
BRANCH
unbanked population, who largely resides in rural
areas,isleftoutofbankingbenefitsduetolack OPENED
offinancialliteracyandunavailabilityofbanking
networks.
NIC ASIA Bank believes that huge banking networks

53 112
helpsinensuringwiderfinancialinclusionandis
therefore strategically trying to penetrate remote
populationwithatirelessstrategyof‘BankingTHE
UNBANKED’inordertoensurefinancialaccessfor 15 RURAL 8 34 RURAL 30
allmembersofeconomy.Basedonthisstrategy,the
Bank is vehemently expanding its touchpoints and
74 SEMI-URBAN
39 71 SEMI-URBAN 63
footprint to rural and semi-urban population where 11 URBAN 6 7 URBAN 6

theaccesstofinanceislow.
MIX (PERCENTAGE)
Infiscalyear2017-8,theBankincreaseditsrural
presenceby325%year-on-yearwithestablishment
of 34 new branches after undertaking the goal of
‘BankingTHEUNBANKED’.Also,itsfootprintin
semi-urbanareasroseby82%.Approximately94%
ofthenewbranchadditionduringfiscal2017-8was
centered in rural and semi-urban areas, indicating the
bank’sfocusonbringingtheunbankedpeopleinto
bankingfold.Thisexpansionstrategyundertakenby
NIC ASIA Bank is in coherence with the government
andNepalRastraBank’saimtochannelizemore
financialtransactionsthroughfinancialinstitutions.
BRIEF ABOUT ANNUAL REPORT
This annual report of NIC ASIA Bank Limited presents comprehensive information relating to
NIC ASIA’s activities during FY 2017/8. It aims to provide information about the activities and
financialperformanceofNICASIABankanditssubsidiariestotheBank’sshareholderandother
stakeholder. It presents how NIC ASIA, as a growing organization, has effectively managed to
deliver values to its stakeholders and to contribute towards economic growth of the
country, increase financial access, and enhance the well-being of society via Corporate Social
Responsibility(CSR) .
SCOPEANDBOUNDARY
ThisannualreportforFYcovers
2017/8 theperiodfromJulyto
2017,6 JulyUnless
2018.6,
indicatedotherwise,alldatapertainstotheNICASIAgroup,whichincludesfinancialoperation
ofNICASIABankanditssubsidiaries.
For presenting group operations and financial performance, financial information has been
extracted from respective financial statements for FY 2017/8 with relative comparative
information.Thefinancialstatementsconsistentlycomplywiththerequirementsof:
• NepalFinancialReportingStandard(NFRS)andNepalAccountingStandard(NAS)
• Relevant rules, regulations, guidelines, and directives of Nepal Rastra Bank
• CompaniesAct,2063
• BanksandFinancialInstitutionsAct,2073
• SecuritiesAct,2063
• IncomeTaxAct,2058
• Other applicable laws and regulations of Nepal
MATERIALITY
Thisannualreportaimstopresentabalancedandconciseanalysisofourstrategy,performance
governance,internalcontrol,riskmanagement,andprospects.Indeterminingthecontenttob
included in this report, we considered the issues that are material to maintain the commercial
viabilityandsocialrelevancerequiredtoachieveourmission,vision,andobjectives.
Based on our leadership engagement, governance processes, internal control, and risk
management practices, and our formal and informal stakeholder engagement initiatives,
particularly with investors, we are confident that all material matters have been ident
disclosed herein this report. Management of group functions and business units approved th
relevantcontentintheannualreport.
EXTERNALASSURANCE
Assurance On External Assurer
ConsolidatedandSeparateFinancialStatements
TRUpadhya
ofNICASIA
&Co.,CharteredAccountants,amemberfirm
BankLimited ofPKFInternational.
FinancialStatementsofNICASIACapitalLimited S.R.Pandey&Co.,CharteredAccountant
FinancialStatementsofNICASIALaghubittaBittiya
Bashyal
Sanstha
&Associates,CharteredAccountant
Limited
ANNUAL REPORT 2017/2018
CONTENTS
1
3
BRIEF ABOUT NIC ASIA BANK
1. NICASIAinFY2017-8 .. 9
1.2 MilestonesofNICASIABank . 12
1.3 MessagefromtheChairman .. 15
1.4 ProfilesofDirectorsofthe. Board 2
1.5 MessagefromtheCEO .. 25 CORPORATE GOVERNANCE
1.6 TheManagementeam. T . 30
1.7 OrganizationStructureofNICASIA . Bank 32 3.1 ShareholdingStructure
.. 9
1.8 DNAOversightCommittee .. 34 3.2 BoardCommitteesandManagement
1.9 CodeofConductGuidingPrinciples . 35 Committees.. 10
1.0 SuccessStory .. 38 3. StatementofCorporateGovernance
. 103
1. CorporateInformation . 39 3.4 Directors’Report
. 1
1.2 GroupStructure .. 40 3.5 AuditCommittee
.. 130
1.3 SubsidiariesofNICASIABank .. 41 3.6 RiskManagementCommittee
.. 13
1.4 BusinessDivisionsofNICASIABank . 46 3.7 KarmachariSewaSuvidhaSamiti
. 135
1.5 ProductsandServices . 52 3.8 Assets(Money)LaunderingPrevention
1.6 Product ortfolio
P .. 56 Committee. . 137
1.7 AnEventful ear Y forNICASIABank . 58 3.9 StatementofDirectorsResponsibility
. 139
1.8 A wardsandRecognitions . 60 3.10 ResponsibilityStatementofCEO
1.9 CreditRating .. 61 andCFO . . 14
2 2.1
2.

MANAGEMENT DISCUSSIONS
AND ANALYSIS
FinancialHighlights
Horizontaland
.
erticalV Analysis
. 76
63
4 4.1
4.2

RISK MANAGEMENT
StatementonRiskManagement
..
StatementonCapitalAdequacy
.
143
157
2.3 ValueCreation
. 79 4.3 StatementonNonerforming
P Loan
2.4 F utureProspects
. 82 Management. . 160
2.5 HumanResourceAccounting . 84 4. ReportonGoingConcern
. 163
2.6 StakeholdersAnalysis . 8
2.7 EconomicOutlook
.. 93
2.8 BusinessEnvironmentAnalysis
. 96
l 6 l
5 5.1
5.2
5.3

SUSTAINABILITY
CorporateSustainability
. 167
CorporateSocialResponsibility
Environment
.
-friendlyInitiatives
..
168
170
5.4 ValueAddedStatement
.. 172
5. StatementonContributionto
GovernmentExchequer
.. 175
6 6.1
AUDITED FINANCIAL
STATEMENT OF
NIC ASIA BANK
IndependentAuditor’s
. Report
178
8 8.1
8.2

NIC ASIA CAPITAL
Directors’Report
.
320
. Report 329
6.2 FinancialStatement
.. 180 8.3 FinancialStatement
.. 30
7 7.1
7.2

NIC ASIA BITTIYA LAGHUBITTA
SANSTHA
Directors’Report
.
. Report 290
28
9 9.1
9.2

NETWORK OF
NIC ASIA BANK
Bank’sNetwork
Subsidiaries
..
. 348
350
7.3 FinancialStatement
.. 29 9.3 Business
artners
P .. 351
l 7 l
BRIEF ABOUT NIC ASIA BANK
1. NICASIAinFY2017-8 .. 9
1.2 MilestonesofNICASIABank . 12
1.3 MessagefromtheChairman .. 15
1.4 ProfilesofDirectorsofthe. Board 2
1.5 MessagefromtheCEO .. 25
1.6 TheManagementeam. T . 30
1.7 OrganizationStructureofNICASIA . Bank 32
1.8 DNAOversightCommittee .. 34
1.9 CodeofConductGuidingPrinciples .. 35
1.0 SuccessStory .. 38
1. CorporateInformation . 39
1.2 GroupStructure .. 40
1.3 SubsidiariesofNICASIABank .. 41
1.4 BusinessDivisionsofNICASIABank . 46
1.5 ProductsandServices . 52
1.6 Product ortfolio
P .. 56
1.7 AnEventful ear Y forNICASIABank . 58
1.8 A wardsandRecognitions . 60
1.9 CreditRating .. 61
BRIEF
ABOUT
NIC ASIA BANK
NICASIABankhasitsantecedentsinNICBank,whichwasestablishedonJuly21,98.The
Bank was rechristened as NIC ASIA Bank after the merger of NIC Bank with Bank of Asia Nepal
onJuneThis
2013., wasahistoricmergerintheannalsoftheNepalesefinanciallandscape
as the first-of-its-kind between two successful commercial banks in the country. Today, NIC
ASIA has established itself as one of the most successful commercial banks in Nepal. During
the post-merger integration phase, NIC ASIA was able to manage the transition very smoothly,
receiving accolades from the regulators, as well as the stakeholders, paving the way for other
mergersandconsolidationintheNepalesefinancialsector.
NIC ASIA Bank is now one of the largest private sector commercial banks in the country in
terms of capital base, balance-sheet size, number of branches, ATM network, and customer
base. The Bank has 270 branches, 37 extension counters, 2 branchless banking, and 289
ATMs across Nepal, with a network covering all major financial centers of the country. The
Bank strongly believes in meritocracy, transparency, professionalism, team spirit, and service
excellence.ThesecorevaluesareinternalizedbyallfunctionswithintheBankandarereflect
inallactionstheBanktakesduringthecourseofitsbusiness.
NICASIABankhasobtainedISOcertifi
901:28 cation.NICASIAwasrecognizedas“Bankof
theYear2013-Nepal”byTheBanker,FinancialTimes,UK.ThisisthesecondtimethattheBank
wasrecognizedwiththisprestigiousaward,thepreviousoccasionbeingin207.
1.1
NIC ASIA IN FY 2017-18
NIC ASIA BANK LIMITED

As one of the largest private sector commercial banks in expansionbyanyBankinasingleyearinNepal’shistory.
the country, the Bank has been able to increase deposits The total number of branches of the Bank has reached
andloansandadvancesbyNPR6billion 5.4 andNPR42.8 268 as on December 01, 2018. The Bank has opened
billion, respectively during the year, which is the highest 15 new branchless banking centers, 125 new ATMs,
amount of increment in deposits and loans and advances and1,948newremittanceagentsduringtheyear,which
by any Bank in a single year in Nepal’s history. Total has also contributed to the national policy of increasing
deposits of the Bank have reached NPR12.15 billion, accesstofinancialservices.
with increment rate of %74.2 over last year. Similarly,
total loans and advances of the Bank have reached EmployeeexpenseswasNPR1.78billionfortheyear,as
NPR1billion,
64.02 withincrementrateofover %47.6 last comparedtoNPR1.13billionlastyear,whichisbecause
year. The Bank’s total investment has reachedof NPR1the
4. opening of 12 branches during the year, as well
billion, with increment rate of 24 % over last year, which as hiring of new employees during the year to fulfill the
comprisesofTreasurybills,governmentbonds,andrequirement other ofskilledemployeesinvariousdepartme
investmentsofand ,%86 51 respectively.
,%71 and branches with theobjectiveofincreasingthesiz
business, and due to the yearly performance appraisal
The Bank has earned operational profit and netand profitpromotion
of ofdeservingemployees.Totalnumberof
NPR1.91 billion and NPR1.34 billion, respectively during employeesoftheBankhasreachedin 2,91 theyear,as
the year. The bank has Return on Equity and Return on compared to 5 7 , 1 last year, with an increment of 536
Assets of 12.09 % and 0.97%, respectively, for the year, employees.
ascomparedto16.84%and1.64%lastyear.
ICRA Nepal Limited (ICRA Nepal) and CARE Rating
TheBankhasopenednew 12 branchofficesduringthe Nepal Limited have assigned issuer rating of “[ICRA NP
-IR]
year, which is also the highest number of branch offi A-“and“CARE-NPA(Is)”respectivelytothebank.
ces
DEPOSITANDLOANSANDADVANCES GROWTHRATEDURING8 1 / 7 1 0 2
(NPR In Billion)
160
151.22
80.%
140 Deposit 72.47%
LoansandAdvances 70.% 66.74%
120.46
120
60.%
10 50.%
86.72
42%
80 40.%
72.24
30.%
60
20.%
40
10.%
20
0.%
0 Deposit Loans and Investment
Advances
2017/18 2016/17
l 9 l
NIC ASIA LAGHUBITTA BITTIYA of 98 employees are working in the organization till the
SANSTHA LIMITED end of FY 2017/8, out of which 3% (32 employees)
NIC ASIA Laghubitta Bittiya Sanstha Limitedare wasfemale. All the staffs of branches in operation have
incorporated as a public limited company, registration participated twice in the internal training conducted by
no. ,570/4 1267 on 01.472 BS, at Company theorganizationduringFY2017/8.
RegistrarOfficeofGovernmentofNepalunderCompany
Act.36The
02 companyisoneofthe“D”Classnancial
fi NIC ASIA CAPITAL LIMITED
institutions micro- ( credit development bank) NIC license ASIA Capital
no. Limited has been able to earn sizable
NRB“Gha”on 57/4016 by
5.84702 NepalRastraBank profit in spite of the stiff competition from the surging
NRB)
( undertheBankandFinancialInstitutionAct, number .3602 of merchant bankers. The Capital earned gross
TheBittiyaSansthacommenceditsnancial fi income
transactions of NPR 57,216 operational profit of NPR
from 5.94702 BS. The head office of the company is 5 9 0 , 1 2 and net profi t of NPR 15,72 during FY
locatedatBheriMunicipality,wardno.Jajarkot ,4 2017/8. District,
Nepal,anditsserviceareaisnationwide.
NIC ASIA Capital issued primary capital of two
Attheendoftherst fi yearofoperationduringFY,81/702 companies, including a mutual fund, under the issue
thecompanyhadopenedbranch 82 officesindistricts,
41 management services, in which allotment of shares of
throughwhichmembers 734,6 areavailingmicro-nance
fi one of the companies, Aarambha Microfinance Bittiya
facilityfrom86groups.Totaldepositof734members ,6 SansthaLimited,wasdonewithinhours, 37 whichcanbe
at the end of FY81/702is NPR.724,1Out 68 of the considered as a historical achievement in the sector of
total loans of NPR 0 ,2948 distributed during the merchantbankinginNepal.Similarly,issuemanagement
year, NPR 296,3 1 was repaid during the year, and services for issue of right shares of two companies, and
thetotalloanofNPRremains 803,652 8 outstandingat auction share of a company, were completed during FY
theendofFYThe .81/7 02 companyhasnoinvestments 2017/8.
otherthanregularloaninvestment.
NIC ASIA Capital has been providing registrar to share
The volume of employees was increased as required servicestofivecompanies,includingamutualfund,which
with the growth of operations of the company. A total is an exciting number as compared to contemporary
merchantbankers.
DETAILSOFLOANFACILITY NIC ASIA Capital provided portfolio management services

to 4 customers amounting to NPR103.4 million during
FY 2017/8, which can be considered as satisfactory in
844.92 viewofthepoormarketcondition.
828.26
NIC ASIA Capital opened 128,4 DEMAT accounts
(NPR In Million)
during its short period of operation, which accounts to

10% of total DEMAT accounts opened by the total of
67 depository participants during that period, securing
second position in terms of total DEMAT accounts.
Annual renewal fees of DEMAT accounts has been
increasedby82%duringtheyear.
0 16.66
Disbursement Settlement Outstanding NIC ASIA Capital issued NIC ASIA Growth Fund for a
DuringReviewPeriodDuringReviewPeriod Balance value of one billion as a first scheme under NIC ASIA
Bank Mutual Fund, which was able to bring the plans
l 10 l
of 8,3520 units, amounting to NPR 835,20 in was NPR10.8 at the end of FY 2017/8, even though
spite of the continuous decline of the secondary market, secondary market was continuously declining since the
issuance of plans by two mutual funds at the same time, allotment of mutual fund units, which can be considered
constraint of investable amount resulting in high interest as satisfactory achievement, as compared to other
rate, market price of existing mutual fund units lower plans existing in the market, and in view of poor market
than par value, etc. Net Assets Value of the mutual condition.
fund
MARKETSHAREINTERMSOFNUMBEROF NUMBEROFEMPLOYEESDURING8 1 / 7 1 0 2
DEMATACCOUNTS
10% DEMATAccounts
Opened by NIC ASIA
Capital
32
FemaleStaffs
66
Male Staffs
90%
DEMATAccountsOpenedby
other6DepositoryParticipants/
Merchant Bankers
l 11 l
1.2
MILESTONES OF NIC ASIA BANK
1997/98
• EstablishmentofNICBankMay
Ltd30,197). (
• FirstcommercialbankinNepaltobecapitalizedat
NPR50million.
Year 1 1998/99
• Commencement of business by the Bank (July21,98).
2003/04 Year 6
• FirstbankinNepaltointroducesavings
account bundled with life insurance by
launchingNICLifeSavingsAccount.
• OperatingProfitGrowth: 50%
• NetProfitgrowth:
• DepositGrowth:
163%
64% Year 7 2004/05
• FirstbankinNepaltooffer -priced
lowest
home
loanschemes,GharSubidha.
67%
• SharePriceGrowth:
68%
2005/06 Year 8
• DepositGrowth:
40%
• RiskAssetsgrowth:
41%
• SharePriceGrowth:
36%
Year 9 2006/07
• FirstcommercialbankinNepaltobeawardedISO901:2
certificationforitsQualityManagementSystembyUnited
RegistrarSystem(URS)Ltd(Oct20,6).
• FirstbankinNepaltobeprovidedlineofcreditby
2007/08 Year 10
InternationalFinanceCorporation(IFC),anarmofWorldBank
Group,underitsGlobalTradeFinanceProgram,enablingour
LettersofCredittobeaccepted/confirmedbymorethan20
• A warded“BankoftheYear207-Nepal”bythe banks worldwide
world-renownedfinancialpublicationofThe • SharePriceGrowth:
92%
FinancialTimes,UK–TheBanker.
• Firstbanktoofferbulliontradingincountryby
directlyimportingfrominternationallyrecognized
mints Year 11 2008/09
• Firstbanktointroducehigh-interestearning
fixeddepositschemewiththeeaseofsaving • Introduced domestic remittance, whereby customers could remit
account,NICSuperDeposit fundsfromallbranchesoftheBank,andbeneficiariescould
collectfundsfromalmost350locationsthroughoutNepal.
l 12 l
2009/10 Year 12
• A wardedISO901:28certificationforitsQuality
ManagementSystembyUnitedRegistrarSystem(URS)Ltd.
• IntroductionofVisadebitcard,internetbanking,mobile
banking,PSTNbillpayment,andutilitybillpayment
Year 14 2011/12
• Memorandum of Understanding signed
between NIC Bank and Bank of Asia for the
purposeofmerger(June28,01).
2012/13 Year 15
• A warded“BankoftheYear2013-Nepal”bytheworld-
renownedfinancialpublicationTheBanker-TheFinancial
Times,London.
• InitiatedunifiedoperationafterendofmergerprocessofNIC
BankandBankofAsiaBank(June30,21).
• NetProfitgrowth: 64% Year 16 2013/14
• DepositGrowth: 80%
• RiskAssetsgrowth:85%
IncreaseinPaidupCapital:76% • Introduction of NIC ASIABankhome banking
service, establishment of call centerfor
telemarketing,andServiceExcellenceUnit,
developmentofizone2asinternationallevel
2014/15 Year 17 intranet platform for Bank staff
• F ormulationof5-yearstrategypaper,
Strategy20
• DonatedNPR2.51millionasfinancial
assistanceforvictimsofearthquake,dated
2015/16
Apr25,01toPrimeMinister’sRelief
Fund Year 18
57%
• Increaseinpaidupcapital:
56%
2016/17 Year 19
• F ormaloperationofsubsidiarycompany,NIC
ASIACapitalLtd(March5,2017).
• Introduction of NIC ASIA Remit, and made
arrangements for remittance transactions through
4,198agentsnationwide
• Totalnumberofbranches:19,including53new
Year 20 2017/18
branches
• F ormaloperationofsubsidiarycompany,NIC
ASIAMicrofinanceFinancialInstitutionsLtd
(December20,17)
OurJourneysofar: • Totalnumberofbranches:231,including12
new branches
Growing Bigger…
• DepositGrowth: 72%
• RiskAssetsgrowth: 67%
l 13 l
Tulsi Ram Agrawal

CHAIRMAN
1.3
“Our Bank was able MESSAGE FROM THE CHAIRMAN
to secure number
one position in
terms of growth of
deposit and credit
with the increase
in deposit by 72%
amounting to NPR
63.54 billion and
increase in credit
by 67% which is
NPR 48.22 billion
during the review
period. Both the
increments in
deposit and credit
of the Bank during
one-year period are
the highest in the
history of Nepalese
banking industry.”
I am delighted to welcome respected shareholders, representatives
from regulatory institutions, statutory auditors, legal advisors,
chief executive officer, staffs of the NIC ASIA Bank and entire
stakeholdersonbehalfoftheBoardofDirectorsforyourremarkabl
presenceinthis21stAnnualGeneralMeetingoftheBank.
The NIC ASIA Board of Directors, while representing its promoters

and general shareholders, is actively working to ensure the multi-
dimensionalprogressoftheBank.Weareoverwhelminglystimulated
toworkdayandnightbecauseofthetrust,beliefandconfidenceyou
have put on us by appointing us to the Board of Directors through
the 20th Annual General Meeting with an objective to materializ
the goals of establishing this Bank as a strong, robust, dynamic,
reliable and responsible institution. For this, I would like to exp
deep gratitude on behalf of the Board of Directors. Furthermore,
we commit full dedication towards our responsibilities in order to
materializeourstakeholder’sexpectationsandfaith.
Now,IwouldliketosharethemajorachievementsofourBankinthe
fiscalyear2017-8.
l 15 l
NATIONALCONTRIBUTION CONTRIBUTIONTOWARDSACCESSTO
NIC ASIA Bank has always aspired to collaborate with FINANCIALSERVICES
theGovernmentofNepalinachievingnationalaims TheNIC andASIABankhasmadearemarkableachievement
goals.Initsquestforcontributingtothenation, in the Bank
government’s ‘Access to Financial Services’ policy
has, in the last year, made noteworthy contributions in by making the banking channel easily accessible to
raising the living standard of deprived sector, creating individuals residing in remote locations of the count
employment, increasing revenue collection, promoting Forthis,theBanksuccessfullyexpandeditsfootprintst
cashlesseconomyandenhancingthefinancialaccess. 2,0 new locations in the fiscal 2017-8. During the
reviewperiod,TheNICASIABankopenedadditional 12
The Bank has always endeavored to live by its branches tag including 34 in remote areas; opened 15
line ‘Bank Pani Sathi Pani’. As a part of this effort, additional thebranchless banking including eight in remote
Bank disbursed credit facilities of NPR 5.08 billion areas; toopenedadditional
125 ATMterminalsincluding17
the deprived sector in the review period. With inthis, remote we areas; and opened 1,948 remittance agents
gained the foremost position in achieving national goal of including1,263inremoteareas.
raising living standard of the deprived sector through the
deprived sector lending. These facts and figuresAs reflect
of 1st December 2018, the NIC ASIA Bank was
perceivable contribution made by this Bank in achieving conducting its banking services through 268 branches,
the national aims of enhancing financial access, 37 extension counters, 19 branchless banking agents
increasing revenue, promoting cashless economy and and 281 ATMs in all seven provinces of the country.
raising living standard of the deprived citizens. Similarly, Further,
by the 1st December 2018, the customer base
we are proud to announce that NIC ASIA Bank has ofthisBankstoodataroundmillion 1.35 withtheaddition
contributed NPR 6.90 billion in direct and indirect ofmore60, taxes customersduringthereviewperiod.It’s
tothenationtillthedateoutofwhichNPRbillion 1.40 a matter wasof pride for us to share that the NIC ASIA Bank
filedduringthereviewperiodalone. is one of the largest private sector commercial banks of
country in terms of number of branches and customer
Similarly, by creating direct employment opportunity for base. Likewise, till 1st December, 2018, the Bank had
individuals
3,617 includingsecurity
893 guards,theBank more than 428,0 debit card holders and more than
has contributed in bringing about positive changes in the 68,0mobilebankingusers.
livesoftheirdependents.
Details of footprint expansion during 2017-18:
112
additional branches
15
additional branchless
125
additionalATMs
1948
additional remittance
including 34 Branches banking including 8 in including 17 in remote agents including 1,263
in remote areas remote areas areas in remote areas
l 16 l
I would also like to share that the Bank following sectors as a part of its CSR
successfullyopenedbankaccountsfor76 programmesduringthereviewperiod:
local bodies throughout the country during
“We have
the FY 2017-8. We are confident that our strategically 1.Realizingthefactthateconomic
dense presence and intensive approach expanded our development and environment
to bring more citizens under the banking services so that protection must go hand-in-hand,
ambit will discourage informal economy the Bank initiated tree plantation
each and every
also known as Shadow Economy and programatitsDhapasi-basedland
reduce cash-based transactions through group or level of and later continued the plantation
pervasive banking networks throughout the customers can programme throughout the country
country, thereby contributing to the national embrace our bysuccessfullyplantingover6,0
policyofcashlesseconomy. trees in collaboration of its staffs
services equally
forminimizingthehazardouseffect
CONTRIBUTIONTOWARDS irrespective of of environmental pollution, and to
FINANCIALINCLUSION their economic and make remarkable contribution on the
We have enormously expanded ourfinancial condition, sensitiveissueofglobalwarming.
banking presence so that each and every topographic Along with this, the Bank ensured
individual can embrace our services its assistance and participation in
equally irrespective of their nancial fi
division, caste and plantationofmorethan14,0trees
background, topographic division, caste religion.” tillthereviewperiod.
and religion, among other. The Bank 2.HereatNICASIA,westrongly
promotesnancial
fi inclusionbyprovidingloanservices believeto
that health of public is always a matter of
all kinds of customers who are in need of the fund ranging highpriority.Withanobjectiveofpromotinghealthy
from lower six digits to billions of amount. Likewise, lifestyle
the andfinancialgrowthofgeneralpublic,
Bank is able to earn trust of depositors, whether individual the NIC ASIA discouraged loan disbursement
or institutional, from various nancial fi backgrounds. to industries
By involved in alcohol and tobacco
markingitspresenceindistricts 16 spreadthrough production
urban that bear negative effect on the public
to remote areas of all the seven provinces, the Bank is health.
providing services to around 3.1 million customers 3. As from
welivebythevaluethat‘theneedofcommunity
all the community irrespective of class, language and istheneedoftheBank’,NICASIAdistributedwarm
gender. clothestomorethan80poorandmarginalized
victims of natural calamity in Mirchaiya, Biratnagar
Wearealsotryingourbesttoestablishbranchoffices andin Gaurareainanattempttomitigatetheimminent
allthe7districtsofNepaltomakethebankingservices necessityofthevictims.
easilyaccessibletoeachandeveryNepalicitizen. 4. Upholdingthenotionthateducatedandhealthy
citizensarethepillarsofnationalprosperity,the
SOCIALCONTRIBUTION Bankprovidedfinancialassistancetovarious
TheNICASIABankhasestablisheditselfasaresponsible educational programs for uplifting education
corporatecitizenbyrealizingitsresponsibilities sector. Likewise,theBankalsoassistedacancer
andsocial
obligations. By accepting the fact that the society awareness
andcampaign in Biratnagar and provided
business are interdependent of each other, the Bank has donationtoNepalCancerCentre.Similarly,theBank
either been assisting or directly participating in various also collaborated with the Nepal Red Cross Society
social works since its establishment as a part of its inconductinganationwideblooddonationprogram.
effort to carry the Corporate Social Responsibility (CSR) 5. W ehavefinanciallyassistedsocialorganizationsli
goals in an exemplary, remarkable and imitable manner. BalMandirandDisabilityCareCentretopromote
Based on these principles, the Bank has contributed in socialharmonyandcompassion.
.
l 17 l
Following targets and results of our Bank show that we shall be able to
achieve goals that were set for 2019/20 (NPR Billion)
218 LOAN 143

259 DEPOSIT 171
5.20 NET PROFIT 0.75
2019/20 TILL 16-NOV-2018
CORPORATEGOVERNANCEANDRISK form of income tax and tax deducted at source which

MANAGEMENT is around 105.% of net profit of the current fiscal year.
We rmly
fi believe that sustainable professional Wesuccess
expectthatbytheendoftheStrategythe 20, Bank
is assured on the foundation of strong corporate will contribute NPR 2 . 5 1 billion in total towards national
governance, effective risk management strategy and strict economy which includes NPR 0 9 . 6 billion paid so far
compliance with such strategies. The historicsince successits establishment and the expected contribution of
this Bank has achieved in its commercial growth is the NPR8.62billionuntiltheendofStrategy20.
clearoutcomeofthesame.
The Strategy 20 has set a target to expand the Bank
I want to inform you all that we regularly and effectively with a total of 30 branches and 50 extension counters
monitor organizational risk by ensuring skilled within current fiscal year, however, it seems the target
and
qualifiedprofessionalsintheintegratedriskmanagement will be met before deadline. Achievement of some of
department, internal audit department and compliance the targets before the stipulated time frame reflect
department.Itisbecauseofoureffectiveriskmanagement proficiencyoftheBank.Wearemoreenergizedbysuch
strategies that the proportion of non-performing loan achievements and motivated to work with high level of
during the review period stood at a minimum value of dedicationforachievingtheobjectiveofestablishingt
.%7960 With utmost pride, I would like to share that Bank as a leading bank of the country through footprint
the minimum ratio of non- performing loan reflects expansion,
our deposit collection, credit underwriting,
effectiveriskmanagementsystem. customer base expansion, increase in number of debit
cardholders and maximum growth in other key areas.
IMPLEMENTATIONSTATUSOFSTRATEGY With already successful achievements made thus far
02 under various categories of Strategy 20, I can tell you
With the end of Fiscal 2017-8, the third year of our withpridethattheStrategyis 20 headingtowardsright
five-year long integrated strategic plan (Strategy 20) direction.
has been completed. We believe that formulation and
effective implementation of right strategy can lead an SAFEGUARDINGANDMANAGEMENTOF
organization towards heightened success andRIGHTS OFINVESTORS
glorious
resultsofourorganizationshowthatthebeliefhasbeen Till the date from its establishment, the NIC ASIA has
turnedintoreality. successfully distributed a handsome return of 13.2%
cashdividendandbonus175% sharetoitsshareholders.
We believe that with the end of Strategy 20, NICThe value of investment of an ordinary shareholder
ASIA will have considerably contributed towards who had invested NPR 10 per share at the time of
national economy. In the review period alone, the establishment
Bank of the Bank has now reached NPR 342
contributed NPR 1.40 billion in national treasury through
in thetheissuanceofrightshareovertheyears.Cash
l 18 l
Notable business highlights during review period are as follows: (NPR in Billion)
TOTAL DEPOSIT LOAN NON PERFORMING

LOAN
72%
Review period 151.22
67%
Review period 120.46
(80%)
Review period 0.0697%
PreviousYear87.68 PreviousYear72.25 PreviousYear0.36%
dividendofNPRhas 317 alreadybeendistributedonthat We believe that this is a notably extraordinary lev

investment. achievement. We have proposed for 10% bonus share
and 0.526% cash dividend for applicable tax on bonus
Further, the total number of shares now will reach share.10.2 We believe that we shall receive full cooperat
including the bonus shares distributed in different years fromourstakeholdersinthismatter.
and 10% bonus share proposed in this meeting. With
immense pleasure I would like to inform that as per the Duringthereviewperiod,NICASIABankwasabletorackup
market value of ordinary shares as on 26 Nov 2018 thathistoric achievements in terms of increased market share,
stood at NPR 41, the net profit earned by an ordinarythereby occupying%71market share of the total deposit
shareholder will be NPR 4,089. Likewise, the net profitgrowthandmarket %57.41 shareofthetotalloangrowthof
earned by promoters will be NPR 2,30 based on the theentirebankingindustry.Withthis,weareattheforem
market value of promoter shares that was NPR 230 on position in deposit collection and at the second position in
26Nov2018.Weshallalwaysthrivetoprovideattractive loandisbursementamongprivatebanks.
returnstoourshareholdersinthefutureaswell.
EXPANSIONOFCUSTOMERFRIENDLY
BUSINESSPERSPECTIVE BANKINGSERVICE
The second quarter of the review period remained Duringthereviewperiod,realizingtheinconveniencefaced
highly challenging for the entire banking industry from byserviceseekersowingtotheshortageofUSDollarinthe
beginning due to liquidity crisis. Entire banking market,
industry
wemadeiteasilyavailableherefromNICASIA.This
was unable to mobilize deposits as expected because year the Bank has made arrangement to import Australian
of the reduction in growth rate of remittance from foreign Dollartooandmakeiteasilyavailableforcustomers.
employment, notable increment in the imports of the
country and inability of the government to meet the We believe our stakeholders are well aware about t
budgeted capital expenditure. I take pride in sharing
fact that the Bank had constituted a separate Service
that even during such adverse business climate, the Excellence Department to monitor our services wi
NIC ASIA Bank was able to achieve historic success in a purpose of not leaving any stone unturned in our
termsofdepositmobilizationandcreditextension service inthe
delivery mechanisms. Meanwhile, the Bank has
reviewperiod.OurBankwasabletosecurenumber one initiated process to commission world renowned
already
position in terms of growth of deposit and credit with company PWC as its Service Excellence Consultant that
theincreaseindepositby72%amountingtoNPR63.54 would prepare solid plans and execute them for marching
billionandincreaseincreditby67%whichisNPR48.2 the Bank towards service excellence through pursuance
billion during the review period. Both the increments in
of new, improvised and effective banking technologies
deposit and credit of the Bank during one-year period are surfacing in global market, thereby aligning our services
the highest in the history of Nepalese bankingwith industry.
ourcommitmentsofexcellentbankingservices.
l 19 l
The NIC ASIA Bank has already obtained consultancy towards becoming a number one digital bank in the country
report on the digital strategy from the world’s through
Big expansion
Four of such digital services and facilities that
consultancy firm PWC and initiated the implementation enrichesoverallcustomerexperience.
of such recommendations for providing prompt and
customer-friendly services. We are confident that HUMAN RESOURCEMANAGEMENT
after
the full implementation of those recommendations, Employees play major role in accomplishing our
our banking services would be pervasive, convenient, resolution of making the NIC ASIA Bank distinct, strong,
smooth and economic. Currently, we are intensively competitive, effective and successful in comparison
focusing on transmitting our banking services to the to other peer banks. The Bank firmly believes that
palm of every customer and with the achievement of professional development of employees, improvisation
this goal, we believe, we shall be able to bring positive of expertise and adequate trainings determine the basi
transformation in the public perception towards the NIC of success of the Bank. The Bank has also decided
ASIA Bank and the entire banking industry too in the to celebrate current fiscal year as “Year of Capacity
process. We are confident that weshall be the carrier of
Management” by prioritizing enhancement of expertise,
suchtransformationonbankingperception. proficiency and leadership skills of human resource.
Therefore,theBankhascommissionedastrategytoadd
The NIC ASIA Bank introduced an internet-based adequate fund to the 3% (of total operating expenses)
mechanism enabling our customers to open online bank fixed by the regulatory body for the overall development
account from their home in the fiscal 2017-8. Similarly, ofhumanresources.
the Bank also introduced Viber banking and missed call
bankingserviceswithfollowingfeatures: Automating works at Human Resource Department
of the Bank, motivating employees through tactical
Furthermore,theBankhasarrangedformakingtheonline managementforaccomplishmentofthejobsinthebest
payments easier by entering into agreement with nPay and way possible and reasonable performance appraisal are
ConnectIPS.TheBankhasobtainednotableachievements ourpriorities.
Balanceinquiry,
mini-statement,
account information,
location and details of
branchesandATM
Balanceinquiry,
mini-statement
and call-back
service
l 20 l
MAJORGOALSOFCURRENTFISCALYEAR
Thebankhasdeterminedfollowingtargetsforcurrentfiscalyear:
Particulars Result of Review period (NPR) Target of Current Year (NPR) Increment/ (Decrement)
NetProfit 1.3billion 3 billion 125%

Deposits 15billion 20billion 69billion
New Saving Accounts 5.92lakhs 7lakhs 1.08lakhs
Loans 120billion 185billion 65billion
Number of Branches 231 319 8
Banking transactions through digital channel 32% 50% 18%
NumberofNewDebitCardHolders 180,37 490, 172%
Interest Income 13.54billion 21.30billion 7.6billion
• Tocelebratecurrentfiscalyearas“YearofCapacity
Management”tobringdrasticchangeinthecapability
of the employees by ensuring their participation in
trainingsandskilldevelopmentprogrammes.
• Tofulfillsocialresponsibilitiesasaresponsible
corporatecitizenwithmainfocusonfinancialliteracy
andinclusionduringthecurrentfiscalyear.
SUBSIDIARYCOMPANY THANKYOU
In line with the Universal Banking concept adopted by
the NIC ASIA Bank, the Bank has established NIC ASIA Thegloriousperformanceand
Microfinance Financial Institution Ltd. and NIC ASIA achievement made by this Bank is
Capital Ltd. with the strategy to bring diversity in thethe
outcome of cooperation and trust
business and advance ahead in businesses associated of customers, effort and hard work
withbanking.TheNICASIACapital,thathaddistributed of employees, faith of regulatory
2% dividend in its first year of establishment, has been bodies and support of government
successful in distributing 7.5% cash dividend from the andnon-governmentorganizations.
profitofthereviewperiod. I express my earnest gratitude for
your contribution and I believe that
Notable growths observed in business of NIC ASIA we will always be blessed with your
MicrofinanceFinancialInstitutionLtd.duringthefirstyear cooperation and trust in our mission
ofitsestablishmentarementionedbelow: of making this Bank number one in
thecountryinrespecttoallmajor
• 44 branches indicators.
• 2,0customer
1 base
• 15millionnetprofitwithin-2018(Ashwin7Oct end) ThankYou!
after deduction of accumulated loss
Tulsi Ram Agrawal
Chairman
On the basis of these facts and figures, we have
perceived that the NIC ASIA Bank has been able to build
astrongbasetowardsitsjourneyofUniversalBanking.
l 21 l
1.4
PROFILES OF THE DIRECTORS OF THE BOARD
FRONT LEFT TO RIGHT

Mr. Trilok Chand Agrawal Mr. Tulsi Ram Agrawal Mr. Jagdish Prasad Agrawal
Director Chairman Director

BACK LEFT TO RIGHT

Mr. Rajendra Prasad Aryal Mr. Ram Chandra Sanghai Mr. Ganesh Man Shrestha Mr. Binod Kumar Pyakurel
Director Director IndependentDirector Director
l 22 l
Mr. Jagdish Prasad Agrawal Mr. Binod Kumar Pyakurel Mr. Ganesh Man Shrestha
Member Member Member
(PromotorsGroup) (GeneralShareholders (IndependentDirector)
Group) Morethan30yearsof
Morethan40yearsofexperience 37yearsofexperiencein experience in banking and
in industries, import-export, banking, and retired from the insurance sectors
commerce, and banking sector service of banking
Risk Management
Involvement in various industries Experienceofmerchantbanking, Committee, Member
likeKamalaRollingMillsPvt.Ltd., as well
Kamal Iron and Steel Industries Assets (Money) Laundering
Pvt.Ltd.,GoldenBatteryIndustries Risk Management Committee, Prevention Committee,
Pvt.Ltd.,Nepal,Umbrella Coordinator Member
IndustriesPvt.Ltd. Audit Committee,
Coordinator
Mr. Tulsi Ram Agrawal
Chairman
Morethan30yearsofactive
involvement in industries,
import-export, banking, and
business, and established
his group as leading network
of global business
Involvement in various
industries like Mainawati
SteelIndustriesPvt.Ltd.,
KamalaRollingMillsPvt.Ltd.,
GoldenBatteryIndustries
Pvt.Ltd.,VishalEnterprises
NepalPvt.Ltd.,Global Mr. Trilok Chand Agrawal Mr. Rajendra Prasad Aryal
TradingConcernPvt.Ltd.,
Mr. Ram Chandra Sanghai
Member Member Member
UnitedDistributorsNepalPvt.
Ltd.,VishalGroupLtd. (GeneralShareholders (GeneralShareholders (PromotorsGroup)
Group)(Representative– Group)
25yearsofexperiencein
AsianDistributorsPvt.Ltd.) 25yearsofexperienceinaudio/ manufacturing of cement,
Morethan36yearsofexperience video, mass communication, food items, textile, and other
in industries, import-export, media publicity, and product manufacturing industries and
commerce, and banking sector production businesses.
Involvement in various industries Topmanagementexperiencein Involvement in business and
likeVishalGroupLtd.,Mainawati Advertising Agencies Association industries like Biswakarma Cement
SteelIndustriesPvt.Ltd.,Golden ofNepal(AAAN)andFederation Pvt.Ltd.,ShreePashupatiCement
BatteryIndustriesPvt.Ltd., of Nepal Chamber of Commerce Pvt.Ltd.,TrivenitextileIndustries
GlobalTradingConcernPvt.Ltd., andIndustries(FNCCI) Pvt.Ltd.,TriveniSyntheticYarn
ParamountElectronicsPvt.Ltd., IndustriesPvt.Ltd.,TrivenySynpax
PoojaInternational Assets (Money) Laundering Pvt.Ltd.,TriveniPropertiesPvt.Ltd.,
Prevention Committee, TanusTextileIndustriesPvt.Ltd.,
Karmachari Sewa Subidha Coordinator AnnapurnaVegetableProductsPvt.
Samiti, Member Ltd.,NavajyotiGasPvt.Ltd.,Nepal
TeaDevelopmentCorporationLtd.
Audit Committee, Member
Karmachari Sewa Subidha Samiti,
Coordinator
l 23 l
Roshan Kumar Neupane
CHIEFEXECUTIVEOFFICER
1.5
“Along with MESSAGE FROM THE CEO
its historical
achievements,
the Bank has
succeeded in
becoming one
of the leading
commercial banks
in the country
during its journey
till the 21st
W e had commenced our banking journey from Biratnagar in 193 with one
branch 19 employees. The Bank created history in FY 207-8 by becoming
thefirstbankevertoimportandsellgoldandbullionsinitsquesttoachi
Annual General another milestone in its banking journey. The Bank was the only commerci
Meeting. The in the country to obtain ISO 901:28 certification in FY 209-1. Also, The Bank
was rechristened as NIC ASIA Bank after the merger of NIC Bank with Bank of Asia
Bank successfully
Nepal in FY 201-3. This was a historic merger in the annals of Nepalese financial
established landscapeduetothefirstofitskindbetweenthetwosuccessfulcommerci
strong bedrock ofthecountry.
for sustainable
business with 231 Along with its historical achievements, the Bank has succeeded in becoming one of
the leading commercial banks in the country during its journey till th
branches and 2,291 GeneralMeeting.TheBanksuccessfullyestablishedstrongbedrockforsu
banking employees businesswithbranches 231 andbanking
2,91 employeesduringthereviewperiod.
during the review
period.” The Bank has been able to achieve following historical milestones by impl
‘Repositioning’,‘Rebranding’and‘Redefining’strategiesinlinewiththeB
termstrategyduringthereviewperiod:
• TheBankopened12newbranchofficesduringthereviewperiodwhichisthe
highestnumberofbranchofficesexpansionbyanybankinasingleyearinthe
Nepalesebankinghistory.
• TheBankincreaseditsdepositsbyNPR64.5billionduringthereviewperiod
which is the highest amount of increment in deposit amount by any bank in a
singleyearintheNepalesebankinghistory.
• TheBankincreasedtheamountofloansandadvancesbyNPR48.2billion
during the review period which is the highest amount of increment in the amount
of loans and advances by any banks in a single year in the Nepalese banking
history.
Further, we are determined to assume leading position in regards to majo

indicatorsinthecurrentfiscalyear.
Now, I would like to present following overviews on the strategies undertaken by

the Bank in various areas to make it simple, strong, progressive, trustworthy and
accountablealongwiththeBank’sprogressduringthereviewperiod:
l 25 l
A.CORPORATEGOVERNANCE evaluate and review the risk to keep it within acceptable

The Bank believes strong corporate governance level.
is the basis for long term progress and prosperity
and therefore has committed to incorporate proven C.INTERNALCONTROLSYSTEMAND
corporate governance policies in its practice. INTERNAL
HereAUDIT
we
take transparency, accountability and responsibility as TheInternalAuditDepartmentofNICASIABankfunctions
the main pillars of formulating and implementing the as an independent department to make the internal
corporategovernancepolicy. control system more effective and efficient. We have
strengthened internal audit department for providing
We have undertaken zero tolerance policy in fair our
reporting to the Audit Committee for maintaining
corporate governance approach. Compliance with independence and objectivity. Further, I want to inform
prevailing laws, rules, regulations and directives of the that more than professional
30 accountants,ACCAsand
regulatory bodies has been considered as minimum persons with excellent skill and professional capacity
standard in framing and implementing the corporate have been appointed to ensure the efficiency of the
governance policies at the NIC ASIA. Our policies are internal
in auditdepartment.
unison with the requirements of corporate governance
standards fixated by regulatory body and we have D.CAPITALMANAGEMENT
been effectively implementing the same while ensuring We have been periodically informing our Board of
honesty,transparency,accountabilityandresponsibility. Directors about the policies we make to achieve the
Bank’s strategic goals and the maximum risk that the
B.RISKMANAGEMENT Bankcanundertake.TheBankhasprudentlymaintained
The NIC ASIA Bank has made utmost effort in0.5% more Capital Adequacy Ratio than specified by
implementing the universal and modern risk management the regulatory body through Internal Capital Adequacy
approaches in its banking practice. We have applied Assessment Policy (ICAAP). This has helped in putting
discerning management techniques to avoid conflict the shock
of absorption capacity of the Bank at the highest
levelforsafelandingduringthetimeofuncertainties.
interestbyincorporatingthreedifferentverticals–Business
Enablers,BusinessDoerandBusinessSupporter—inour
organizationalstructure.Furthermore,inorder Based on the Capital Adequacy Assessment Policy
tosmoothly
manage credit risk, we have applied top management (ICAAP) of the Bank, the Capital Adequacy Ratio of
practices by enabling three verticals—Credit the Bank as of July 16, 2018 (end of FY 2017-8) was
Business,
CreditApprovalandCreditRisk—inouroperations. was1.4%higherthanthe1%specified
, % 4 . 2 1 which
by the Nepal Rastra Bank and 0.64% higher than 1.5%
InlinewiththeDirectiveoftheNepalRastraBank fixedby
onthe Bankitself.
risk
identification, evaluation, monitoring and management,
following four director-level committees are fully functional E.STRESSTESTING
attheNICASIABank: The Bank has formed various mechanisms to manage
1. AuditCommittee continuous and progressive risks. Considering the fact
2. RiskManagementCommittee that only historical data analysis tool is inadequat
3. KarmachariSewaSubiddhaSamiti identifying and managing the risks arising in the future,
4. Assets(Money)LaunderingPreventionCommittee NIC ASIA has been developing Operational, Credit,
Market and Liquidity Risk Management Framework
The above mentioned committees are playing effective by conducting 360-degree Risk Assessment. The risk
role in strengthening the internal controls for identifying, assessments so done takes into account the Stress
disseminating and managing the risk and also to mitigate Testing and Reverse Stress Testing mechanisms while
the risks that may arise in the future. Likewise, putting the risk-scenarios prescribed by the Nepal Rastra
the Bank
has created a risk measurement system to measure, Bankasitsminimumbasis.
l 26 l
F.INCREASEINBUSINESS We were also able to achieve historic

WebelievethattheBank’soverallsuccess success in relation to loans and
“The Bank also advances with the increase in loans and
is possible through right strategy and its
effectiveimplementation.Inaccordanceto succeeded to advances by 6% (NPR 48.10 billion)
the belief, the review period proved to be maintain the ratio during the review period against the
a milestone for effective implementation of of non-performing 18% increment in loans and advances
theStrategyThe 20. Bankhadformulated loan to the lowest of the entire banking industry. As a
its strategy anticipating the development result, the Bank was able to step up
of investment friendly environment and
level of 0.0697% to second position in terms of lending
capital expenditures as budgeted owing during the review during the review period from the
to the political stability and government’s period with high sixth position last year. The Bank also
development commitments. However, achieved remarkable success on the
focus on quality of
overall banking industry suffered setback basis of revenue. The Bank earned
loans along with the net interest income of NPR 4.21
due to the shortage of lendable fund from
thebeginningofthesecondquarterofthe swift business billion during the review period which
review period and economic environment expansion.” was 54% increment compared to the
did not turn out to be favorable as last year. There was 3% increment in
anticipated by the Bank. However, in spite other income as well during the review
of above mentioned adverse situations, the Bank was period. Similarly, theoperationalincomealsoreached
abletoachievehistoricalresultsduringthereviewperiod. NPR 9 . 1 billion. Further, our customer-base increased
by an overwhelming ratio of more than 10% to reach
The Bank remained largely successful in its strategic 1,5084 during the review period. Likewise, the Bank
focustobecomeanumberonebankingbrandinmajority successfully increased the mobile banking, internet
of parameters. The review period was celebrated banking asand debit card customer base by 401%, 120%
Year of Liability Restructuring and the Bank successfully and 212% respectivelyduringthereviewperiod.
stepped up to the first position in terms of deposits
in this period from the sixth position in last The Bank
fiscal. also succeeded to maintain the ratio of non
The
Bank accounted for 17% market share of total deposit performing loantothelowestlevelofduring0.697% the
increment of the entire banking sector in the review review period with high focus on quality of loans along
period.TheBankachievedhistoricincrementin with swiftbusinessexpansion.
deposits
of NPR 64.5 billion (74.3%) during the review period.
ThetotaldepositoftheBankfortheFYwas 2017-8 NPR G. SERVICE NETWORK EXPANSION OF
15.2 billion, out of which contribution of CASA deposit BANK
wasNPR59.billion.TheYearofLiabilityRestructuring The Bank implemented The Footprint Expansion and
was a huge success as we were able to increase the ManagementPolicy2017withanobjectiveofproviding
deposits by 74% during the review period against the guidance to our policy of network expansion
proper
14%incrementoftheentirebankingindustry. and its proper management. Based on this strategy,
NET INTEREST OTHER OPERATIONAL CUSTOMER-BASE

INCOME INCOME INCOME
54 %
33 %
1.91 >100%
billion
Review period 4.21 billion
l 27 l
strategies in order to implement the idea of digital

banking in its banking endeavors. We are formulating
“The new branches were opened with necessary strategy and arranging needful resources to
an aim to cater to the financial needs of make substantial increment in the digital transaction with
the citizens residing not only in urban anaimtomakeatleast50%ofourtransactionsthrough
areas but also in different remote parts digitalchannel.
of rural areas. In accordance to the

Similarly, our total number of mobile banking, internet
national strategy of expanding financial banking and debit card customer base has reached
access to municipalities and rural and
74,0 629 respectively.
401, Theincrement
municipalities deprived of commercial was 503, (41%) for mobile banking, 40, (12%)
for internet banking and 27,0 (12%) for debit
banks, the NIC ASIA Bank successfully
card users during the review period. Also, we have
increased its service touchpoints to successfully implemented the online account opening
2,220 new locations.” service to facilitate the account opening from home.
We have also formulated necessary strategy and made
the Bank opened highest number of branches till now arrangement for systems, sources and means to enable
during the review period which stood at 1 2 branch our customers to access our other banking services by
offices,yieldingahistoricachievementtotheBank. usingThe onlineplatforms.Wearealsoworkingtomakeour
new branches were opened with an aim to cater to the digital payment more customer-friendly, easy and secure
financial needs of the citizens residing not only ininthe urban
coming years by building Payment Gateway EFT
areas but also in different remote parts of rural SWITCH.The areas.
Bankisalsoactivelyworkingtoachievethe
In accordance to the national strategy of expanding goal “GharGharMaBank,HaatHaatMaBank” by using
financialaccesstomunicipalitiesandruralmunicipalities digitaltechnologyasBusinessEnabler.
deprived of commercial banks, the NIC ASIA Bank
successfully increased its service touchpoints J.CUSTOMER to 2, 0 FRIENDLYBANKINGSERVICE
new locations. During the review period, The TheNICService Excellence Department of the Bank is
ASIA Bank opened 1 2 additional branches including working laboriously to make the NIC ASIA’s banking
34 in remote areas; opened 15 additional branchless system customer friendly by considering the fact that
banking including eight in remote areas; opened the identity 125 and existence of a bank depends on the
additional ATM terminals including 17 in remote areas; satisfaction and their trust. This departme
customer
and opened 1,948 remittance agents including 1,263 in aims to prove its efficacy and efficiency by resolving
remote areas. the customer grievances in time with continuous
supervision of our services and resolving any grievances
H.BRANDING arising thereof. The Bank is providing customer friendly
TheBankachievedhugesuccessinenrichingthebanking Brandservices by taking into reference the developed,
RecallValuebymakingtheNICASIAbrandhighlyvisible excellent and efficient banking technologies surfacing in
during the review period. The Bank prepared Branding the international market for fulfilling its commitment
and Visual Identity Guidelines and started provide its effective apexbankingservicetoserviceseekers.
implementation. The Bank has succeeded in becoming
aNo.Banking
1 Brandduringthereviewperiod.Within Thea Price Waterhouse Coopers (PWC), a big four
short span, the Bank has been able to implant the feeling consultancyfirm,hasalreadybeenappointedasService
of“BanksmeanNICASIA”amonggeneralpublic. ExcellentConsultantoftheNICASIAtobringexcellencein
ourservicesandtoelevatethelevelofServiceExcellenc
I.DIGITALBANKING according to the presumptions of Strategy 20. We
Today’s era is the era of digitized technology. are also measuring the level of customer satisfaction to
Acknowledging this fact, NIC ASIA is adopting relevant our services by conducting various surveys. Similarly,
l 28 l
we have fixed Turnaround Time (TAT) for our different M.SOCIALCORPORATERESPONSIBILITY

banking services with a motive to always provide simple NIC ASIA is guided by an idea that the progress of a bank
and easy banking services and are effectively monitoring is dependent of the progress of its stakeholders. He
whethertheTATideaisproducingdesiredoutcomes. we believe that business and the society are supplement
to each other and banking business thrives with the
K.SHAREHOLDERSWEALTHMAXIMIZATION development and progress of the society. Based on
TheBankhassuccessfullydistributedanattractive this belief, return
the Bank has been conducting philanthropic
of 13.2% Cash Dividend and 175% Bonus Share, activities concentrating in the field of education, h
including the dividend proposed in this general meeting, andenvironmentasaresponsiblecorporatecitizen.
to its shareholders till the date. Likewise, the Bank has
proposedinthismeetingtoallocatebonus 10% shareand
0.526%cashdividendforapplicabletaxonbonusshare
and we are confident of our stakeholder’s full support in
this matter. The Bank is moving towards the direction of
increasing its business horizon and thereafter providing
the attractive returns to its shareholders. The Bank has
already built the foundation required for the same and
hasalreadystartedtoamasshugeprofitfromsuchnew THANKYOU
business dimensions. Therefore, the Bank is confident
in providing attractive return to the shareholders in the I would like to express my sincere thanks to all the
futureaswell. customers,regulatorybodies,serviceproviders/
suppliers, business corporations and shareholders for
L.EMERGINGNEWTHOUGHTS yourunwaveringbeliefinthisBank.Iwouldalsolik
Pursuing the notion that quality banking servicetois express
the my heartfelt gratitude to the Chairman of
primary requirement of service seekers, the NIC ASIA the BoardandalltheDirectorsofthisBankfort
Bank has initiated the idea of Positive Disruption continuous
in the cooperationandguidelines.
Nepalese banking industry. The Bank has achieved
historic success by collecting highest amount of saving I also want to give credit to my colleagues for their
depositintheoverallbankingsectorofNPRbillion 23.17 valuablecontributionintheoverallsuccesso
from the natural person during the review period which MygratitudegoestoallthemembersatHeadOffice,
has helped to germinate and establish a new thought ProvincialOffices,andBranchOfficesincludingthe
thatsimplebankingandeasyaccessarecustomers’first DNAOversightCommitteeMembers.
priority.
Iamconfidentthatsimilarcontribution,cooperat
Contrary to the general belief that expansion of banking and encouragement will be received from all the
network results in increase of long-term costs and stakeholdersinthecomingdays.Wewilldefinitely
makes the banking operation less-economic, the Bank succeedinourcampaigntomakethisBank“Bank
has successfully attained immense business expansion ofFirstChoice”withcollectiveeffortfromallthe
by creating enormous banking network. This has stakeholders..
established a new belief that the expansion of banking
network means the expansion of banking business that ThankYou.
would ultimately help in yielding attractive return in the
future.ThisideapioneeredbytheNICASIAisnowwidely Roshan Kumar Neupane
beingfollowedbymanycommercialbankstoo.Thusthe Chief Executive Officer
pioneering role this Bank has played in germinating new
thoughts in Nepalese banking scenario is truly laudable
andamatterofprideforus.
l 29 l
1.6
THE MANAGEMENT TEAM
FRONT LEFT TO RIGHT

Mr. Kapil Dhakal Mr. Dipendra Bahadur Mr. Jayendra Rawal Mr. Rajesh Rawal Mr. Roshan Kumar Neupane
ChiefHumanResourceand Rajbhandari ChiefStrategyEnforement
ChiefStrategyEnforement ChiefExecutiveOfficer
ChiefDevelopmentOfficer ChiefRiskOfficer Officer Officer
Mr. Sudhir Nath Pandey Mr. Sudeep Khanal Mr. Santosh Kumar Rathi
DeputyChiefExecutiveOfficer Chief Corporate And Priority ChiefMarketingOfficer
LoansOfficer-ChiefSupportOfficer
l 30 l
BACK LEFT TO RIGHT
Mr. Raju Prasad Adhikari Mr. Prakash Baral Mr. Deepen Karki Mr. Arjun Raj Khaniya Mr. Bishal Sigdel
HeadInternalAudit ChiefCreditOfficer Company Secretary ChiefFinancialOfficer
ChiefPublicRelationshipOfficer
Mr. Dinesh Bhari

HeadLegal
l 31 l
1.7
ORGANIZATION STRUCTURE OF NIC ASIA BANK
BOARD OF
DIRECTOR
ASSETS
RISK (MONEY) KAMACHARI AUDIT
MANAGEMENT LAUNDERING SEWA SUVIDA COMMITTEE
COMMITTEE PREVENTION SAMITI
COMMITTEE
CHIEF
EXECUTIVE
OFFICER
COMPANY
SECRETARY
INTEGRATED
DEPUTY CHIEF
RISK INTERNAL ADULT
MANAGEMENT EXECUTIVE
OFFICER DEPARTMENT
DEPARTMENT
l 32 l
DEPUTY CHIEF
EXECUTIVE
OFFICER
CHIEF HUMAN CHIEF

CHIEF CHIEF CHIEF CORPORATE CHIEF
RESOURCE/ CHIEF CHIEF LOAN
MARKETING FINANCIAL STRATEGY AND PRIORITY SUPPORT
CHIEF CREDIT RECOVERY
OFFICER OFFICER ENFORCEMENT LOANS OFFICER
DEVELOPMENT OFFICER OFFICER
OFFICER OFFICER
OFFICER
• Retail Loans • Finance and • Provinces • Deputy Chief • Deputy Chief • Deputy Chief • Credit Risk • Deputy Chief
Department Account Development Corporate and Support Officer- Management Loan Recovery
Department • Branches Officer Priority Loans DSCO Department Officer
• SME Loans Officer
Department Information General Centralized • Operational Risk Deteriorating
System(MIS/ Administration 1 PriorityLoans Support& Management Credit Unit
• DSL Department DSS/EIS)Unit andProject Department Transaction Department
Department Processing • Deputy Chief
• Current Financeand a.Energy • Market and Loan Recovery
Account & Department
Account Unit Credit Operation FinancingUnit PriorityLoans Liquidity Risk Officer
Saving Account Department Management
Department • Treasury b.Agriculture Department Collection Unit
Department
Department DigitalInnovation
FinancingUnit 1 Central
• Public Relation, Department • Compliance Core Recovery
Corporate • Strategy & c.T ourism Remittance Unit Unit
Department
Communication Business Information FinancingUnit 2 Centralized
and Branding Process Technology • Information
Department Reengineering Department 2 OtherCorporate Clearing Unit Security
Department Loans 3 Central Account Department
• Service • Human Resource Department Opening
Excellence Research Department Processing Unit
Department and Business
Intelligence Unit Learningand 4 TreasuryBack
• Institutional DevelopmentUnit OfficeUnit
Deposit Strategy and
Department Business StrategicHuman 5 TradeOperation
Process Resource Unit
• Bancassurance Reengineering Management Unit
Department Unit 6 DigitalChannel
HumanResource Support Unit
• Digital Channel Operation Unit (Card)
& Partnership
Department • Legal Department 7 SwiftUnit
• Branchless 8 ATMMonitoring
Banking and Management
Department Unit
• Remittance 9 CentralSupport
Department Unit
• POS Department
• Card Sales
Department
l 33 l
1.8
DNA OVERSIGHT COMMITTEE
The DNA Oversight Committee has been envisioned

to be above all the verticals of the Bank (viz. Business,
ROLES AND RESPONSIBILITIES OF
Support, and Control). All these verticals are equally
DNA OVERSIGHT COMMITTEE
It has been envisioned that the work to be performed by
important for the Bank, and each vertical is so oriented
thecommitteeareasfollows:
and managed that they impeccably contribute towards
achievement of the vision, mission, and strategies of
i. Toassistinrealizingthevision,mission,and
theBankasenvisagedbyStrategy20, inabalanced,
strategies of the Bank by fostering harmony,
sustainable, and sound manner, thus collectively
synchronization,andbalanceamongstall
protecting the best interests of the Bank by striking right
departments,regionaloffices,andbranchesofthe
balance of business, support, and control activities of the
Bank.
Bank.ItwasconstitutedonJuly12,08.
ii. Toactasacentralauthorityabovealltheverticalso
theBank(viz.Business,Support,andControl)and
COMPOSITION OF DNA OVERSIGHT
ensure that each vertical is so oriented and managed
COMMITTEE
that they impeccably contribute towards achievement
Mr.RoshanKumarNeupane,
of the vision, mission, and strategies of the Bank in
ChiefExecutiveOfficer(Coordinator)
a balanced, sustainable, and sound manner, thus
Mr.SudhirNathPandey,
collectively protecting the best interests of the Bank
DeputyChiefExecutiveOfficer(Member)
by striking right balance of business, support, and
Mr.SantoshKumarRathi,
controlactivitiesoftheBank.
ChiefMarketingOfficer(Member)
iii. Toprovidedirectoversighttoallthedepartments,
Mr.RajeshRawal,
regionaloffices,andbranchesthroughregional
ChiefStrategyEnforcementOfficer(Member)
oversight authority of the Bank, so as to enable them
Mr.JayendraRawal,
to effectively implement their strategic and tactical
ChiefStrategyEnforcementOfficer(Member)
plans.
Mr.KapilDhakal,
iv. Tomaximizereturnonhumanaswellasother
ChiefDevelopmentOfficer(Member)
investmentsoftheBankbyensuringefficient
Mr.DipendraBahadurRajbhandari,
utilizationofallhumanandotherphysicalresources
ChiefRiskOfficer(Member)
oftheBankandtoachievesynergiceffect.
Mr.BishalSigdel,
v. Toassistallthedepartmentsandregionaloversight
ChiefFinancialOfficer(Member)
of the Bank for effective implementation of all the
Mr.PrakashBaral,
policiesandguidelinesoftheBank,asapplicable.
ChiefCreditOfficer(Member)
vi. ToconstantlysteertheimplementationofStrategy
Mr.ArjunRajKhaniya,
20throughqualityassurance,valueaddition,and
ChiefPublicRelationOfficer(Member)
troubleshooting.
Mr.SudeepKhanal,
ChiefCorporateandPriorityLoansOfficer(Member
Secretary)
l 34 l
1.9
CODE OF CONDUCT GUIDING PRINCIPLES
NIC ASIA Bank and its subsidiary companies have The detailed provision of Nepal Rastra Bank’s direct
always attempted to ensure maintenance of high has been presented under a separate Director’
standards of ethics, honesty, integrity, confidentiality,Handbook and Employee Code of Conduct Handbook.
impartiality, professionalism, and conduct, and to avoid NIC ASIA Bank, in its endeavour to abide by the code
misconductandconflictsofinterest,inorderto ofmaintain
conduct, provides a copy of the Code of Conduct
the confidence of the public and customers. We have Handbooktoanewstaffbeforehe/sheformallyassumes
always been adhering to the highest standards of duty. The acknowledgement of the same is maintained
responsible business practices in interactions with all bytheHumanResourceDepartment.
our stakeholders. Our governance structure has been
designed so as to facilitate greater empowerment and The Bank shall be committed in all its actions to t
fasterdecision-makingatalllevelsofourbusiness. interestsofthepublic.
NRBDirectiveNo.has 6 detailedaCodeofConductto THE

be NIC ASIAN DNA
observed by licensed institutions, directors, employees, The NIC ASIAN DNA is the thread woven throughout all
and Board-level committees and sub-committees and actionsanddecisionstoeffectivelyimplementtheBa
their members. Whenever we face concerns or issues strategies, and ensure achievement of its vision in an
that do not present an obvious solution, judgments effective are andefficientmanner.Theorganization’scultu
exercised on the basis of principles outlined in the Code consists of the values, beliefs, attitudes, and behaviors
ofConduct. that are revealed through what really happens in day-
to-day interactions between employees with customers
Following common issues are covered by our Codeand of other stakeholders. The NIC ASIAN DNA is about
Conduct: culturalization or the process of becoming cultur
refinement of the same and intellectual cultivatio
• Highestlevelofconfidentialityandfairnessin more than mere words on a piece of paper as we try to
dealing
withinandoutsidetheBank. reflect it in the way each and every NIC ASIAN thinks,
• Absolute fairness in monetary transactions and all behaves,andacts.
otherkindsoftransactions.
• Adherence to the highest standards of ethical FORATRUENICASIANDNA,RESULTSARE
conduct while dealing with actual or apparent MERELYNUMBERSINTERPRETEDAGAINST
conflictsofinterestbetweenpersonaland ABENCHMARK.
professionalrelationships.
• Rewardonthebasisofhardworkandeffort. Higher level of passion, creativity, motivation, ener
• ProperuseandapplicationoftheBank’sassets enthusiasm,
and and morality among NIC ASIANs has
resources. been possible due to effective practice of distinctively
• F ull,fair,accurate,sensible,timely,andmeaningful and explicitly formulated NIC ASIAN DNA. With such
disclosuresintheperiodicreportsrequired antoextraordinary
be DNA that we all possess at our core,
filedbytheBankwithgovernmentandregulatory supported by unmatched touch-points, amazing
agencies. branding, rapid momentum, instrumental capacities,
and unparalleled customer base, the goals that we had
l 35 l
collectively set for ourselves were achieved, and we Everything else (products, services, strategies, even
believe that the goals that we have set for the coming innovations)maybereplicated,butourNICASIANDNA
years are without any doubt achievable, and together as istheonlytrueidentifierthatdifferentiatesNICASIANfrom
an unbeatable team, we shall definitely surpass thethem.
restoftheworld.TheBankhasresolvedtoestablish
Everythingthatweachievedinthepastwasthe resultDNA”
“Service of as an integral part of the organizational
theextraordinaryDNAthatweembodyatourcore,culture, both andDNA.“ServicewithSmile”hasbeenableto
asateam,andasanindividual. ensureconsistentcustomerdelightandloyalty.
THE After achievement of historic milestones in earlier

years, visionary and passionate NIC ASIANs
NIC ASIAN possessing extraordinary NIC Asia DNA, are fully

geared for the road ahead for a next big leap in the
form of NextGen Banking.
DNA
VISION
Visionisthemost
powerful way to keep
us focused on what we
want, while keeping us
motivated in achieving
it.Webelievethat
forNICASIANDNA,
vision is not seen as
a dream, but a reality
that has not come into
existence.
NIC ASIANs are

expected to have VALUES
following vision in their
DNA: Adoption of core values is essential for execution of our strategy,
and for ensuring a work environment that supports goals and
objectivesoftheBankandinspiresemployeestonewlevelsof
• Revolutionary Vision
productivitybyhelpingthemachievetheirprofessionalgoals.
• Evolutionary Execution
NICASIADNAisbasedonfivecorevalues:
• Meritocracy
• Transparency
• Service Excellence
• Team Spirit
• Professionalism
l 36 l
CULTURES
Thecultureofanorganizationislikeitsfingerprint/
uniqueidentifier.Whenacultureisstrong,itleadsto
motivatedemployeesandhighperformingmanagers.
Developingahigh-performancecorporatecultureis
moreimportant,becauseitisessentialtostrongresul
NICASIANDNAisexpectedtohavethefollowing
attributestoensureawinningculturewithintheBan
• Co-Ownership
• Collaboration
• Synchronization
• Empowerment
• Accountability
MIND SET
Mindset is a habitual or characteristic

mental attitude that determines
how we interpret and respond to
situations.Cultivatingagrowth
mindset can be the singlemost
important thing we ever do to help us
achievesuccess.
INTELLIGENCE NICASIANDNAisexpectedto
practice the following mindsets for
Intelligence is the ability to perceive information and retain it as
bestpossibleresults:
knowledge to be applied as skills towards adaptive behaviors within
anenvironmentorcontext.IntelligencestrengthenstheBank’sability
• Entrepreneurial/ Owner
tomakedecisionsandplanforthefuture.
• Open
• Vibrant
Intelligenceinthefollowingmattersisexpected: inNICASIANDNA
• Dynamic
• Pragmatic
• Self-Intelligence
• Innovative
• Group Intelligence
• Adaptive
• Socio-Cultural Intelligence
• Energetic
• Business Intelligence
• Passionate
• Market Intelligence
• Persistent
l 37 l
1.10
SUCCESS STORY
NIC ASIA Bank had provided a loan amounting to NPR etc.Silwal,theproprietorofthebusiness,hasemployed

315,0 under deprived sector category to Ambirman five regular staffs and he makes key management
Singh Silwal on June 7, 2017. Silwal used the fund to decisions. Besides, Silwal is also the proprietor of Gulf
establish a business with the name of Gulf Grill Udhyog DecorationUdhyog.Earlier,hehadworkedasa
Painting
and expanded his business over the time. Afterpainter Silwal at Aalmana Decoration-Dubai for five years and
duly settled his loan, he again requested for a new loan
atEverest Decor-KTMforsixmonths.Duetotherapport
limit. The loan was booked under Easy Business Loan and reputation he gained with customers as a painter,
Facility. Silwal injected the entire fund intohe his business,
started his own enterprise—Grill Udhyog & Painting
as a result of which, Gulf Griill Udhyog has now grownDecoration.
intoalargeunitwithitsownworkshopareas.
The business is on a fast growing track and has sound
GulfGrillUdyogisaproductionandtradingbusiness that history. Silwal has now requested for a new
repayment
specializesonironitems,i.e.irondoors,windows,loangrills,
limitfortheconstructionofhishouse.
shutters, chairs, gates, cupboards, file racks, trusses,
“The relationship with NIC ASIA

Bank has proved to be a right
decision of my life. NIC ASIA
Bank not only provided the
credit limit, but also showed
trust on a new entrepreneur.
Where every bank was rejecting
my file for being a newly-
registered unit, NIC ASIA Bank
trusted my experience and
helped me set up a new life.”
Ambirman Singh Silwal, customer
l 38 l
1.11
CORPORATE INFORMATION
Registered Name of the Company NIC ASIA Bank Limited
Legal Form Public Limited Company, listed with Nepal Stock Exchange
Company Registration Number 658
Company Registration Date 30-May-1997
NRB License Number 658/053/54
Registered Office Ward No.11, Trade Tower, Thapathali

Kathmandu, Nepal
P.O. Box: 11021
Tel No: + 977-1-5111177/5111179
Fax No: + 977-1-5111180
Toll Free No: 1660-01-77771
Province Offices Province 1: Biratnagar Metropolitan, Biratnagar, Ward no. 7

Province 2: Bardibas Municipality, Bardibas, Ward no. 1
Province 3: Trade Tower, Thapathali, Kathmandu, Ward no. 11
Province 4: Pokhara Lekhnath Metropolitan, Ward no. 8
Province 5: Tilottama Municipality, Ward no. 3
Province 6: Birendranagar Municipality, Ward no. 6
Province 7: Dhangadhi Sub Metropolitan, Ward no. 4
Company E-mail info@nicasiabank.com
Company Website www.nicasiabank.com
Card Center Kamaladi, Ganeshthan, Kathmandu Tel No: +977-01-4262277
Auditors TR Upadhya & Co.

Chartered Accountants
124 Lal Colony Marg,
Lal Durbar (Near Jai Nepal Hall),
Kathmandu, Nepal
Tel No: +977-1-4410927/4420026
Fax No: +977-1-4413307
Email: trunco@ntc.net.np
Website: www.pkf.trunco.com.np
l 39 l
1.12
GROUP STRUCTURE
Thegroupconsistsofthreecompanies,includingNICASIABankLimitedbeingits
parent company. NIC ASIA Bank Limited has two subsidiaries, namely NIC ASIA
Laghubitta Bittiya Sanstha Limited and NIC ASIA Capital Limited. Both NIC ASIA
CapitalLimitedandNICASIALaghubittaBittiyaSansthaLimitedarewhollyowned
subsidiariesoftheNICASIABankLimited.
BANK
NIC ASIA
LAGHUBITTA BITTIYA
SANSTHA
l 40 l
1.13
SUBSIDIARIES OF NIC ASIA BANK
NIC ASIA LAGHUBITTA BITTIYA OBJECTIVE

SANSTHA LIMITED
NIC ASIA Laghubitta Bittiya Sanstha Limited Theis mainobjectiveofthefinancialinstitutionistopr
incorporated as a public limited company registration institutional credit for general public of rural areas who
no. 1762/045 on 2074.1 BS at Company has no formal banking facility, with the intention to
RegistrarOfficeofGovernmentofNepalunderCompany encourage and help rural communities attain sustainable
Act 2063. NIC ASIA Laghubitta Bittiya Sanstha Limited growthinfinancialactivitiesbymobilizinglocalresour
is a subsidiary company of NIC ASIA Bank Limited. The theyventuretoundertake.
company is one of the “D” Class financial institutions
(micro-creditdevelopmentbank)licenseno.NRB“Gha” SERVICESOFNICASIALAGHUBITTA
61/0745 on 2074.85 by Nepal Rastra Bank (NRB) BITTIYASANSTHALIMITED
under the Bank and Financial Institution Act, 2063. The
Bittiya Sanstha commenced its financial transactions CREDIT
from 2074.95 BS. The head office of the company is • GeneralLoan:AclientiseligibleforGeneralLoan
locatedatBheriMunicipality,wardno.Jajarkot 4, after group recognition test conducted by the NIC
District,
Nepal,anditsserviceareaisnationwide. ASIALaghubittarepresentative.Theinitialloan
The main objective of the institution is to amount
providewillbedisbursedtoallmembersofthegroup.
micro-finance services to households from hillyAny and kind of income-generating business can use this
mountainous regions of Nepal, with the prime focus loan.
on low-income households and assets-less and self- • MicroEnterpriseLoan:Theclientsareeligibletoget
employed individuals in the informal sector to uplift their MicroEnterpriseLoanaftergrouprecognitiontest
livelihood and increase their involvement in economic conductedbyNICASIALaghubittarepresentative.
andincome-generatingactivities.Besidesthese The initialloanamountwillbedisbursedto
financial
services, it also focuses on their social development, allmembersofthegroup.Anykindofmicro
cultural promotion, educational development, and skill enterpreneurcanusethisloan.
development. • EnergyLoan:Thisloanisgiventotheclientsforsolar
home system, solar cooker, solar dryer, solar pump,
VISION bio-gas,improvedwatermill,windenergy,etc.
Thevisionofthefinancialinstitutionispoverty SAVING alleviation

of rural community through economic development and • PersonalSaving:Thisisavoluntarysavingdesigned
enhancingtheirstandardofliving. to encourage saving habits of members, as well as
toprovidesafetynetforbothNICASIALaghubitta
MISSION andmembers.Amembercanopenaccountwitha
minimumofNPR10.NICASIALaghubittaprovides
To encourage saving to skill-oriented productive interest@8%p.a.onthissavings.Memberscan
programs and uplifting the income level of the deprived withdrawthissavingaspertheirneed.
sector. • Educational Saving:Thisisavoluntarysavingproduct
offeredtoallmembersofNICASIALaghubitta.
l 41 l
Loan Products • Theorganizationhasopened28branchofficesover

14districts,throughwhich6,437membershavebeen
availingmicro-financefacilitythrough68groupsat
theendofthefirstyearofoperation.
Energy Loan
General Loan
• Totaldepositof6,437membersattheendofFY
2017/8isNPR68,1247.Outoftotalloansof
NPR84,920distributedduringtheyear,NPR
16,392wasrepaidduringtheyear,andtotalloans
ofNPR82,5630remainsoutstandingattheend
ofFY2017/8.
Micro Enterprises loan

NIC ASIA CAPITAL LIMITED
NIC ASIA Capital Limited is a 10% subsidiary of NIC
A member can open account with a minimum of ASIA Bank Limited. NIC ASIA Capital was incorporated
NPR10.NICASIALaghubittaprovidesinterest@ undertheCompaniesAct207ofNepalandislicensed
8%p.a.onthissaving.Memberscandepositinthis by the Securities Board of Nepal to undertake merchant
saving account when they have surplus and withdraw banking activities, which includes services like Issue
fromthisaccountaspertheirneed. Management and Underwriting, Registrar to Share,
• HealthSaving:Thisisavoluntarysavingproduct DepositaryParticipant,andPortfolioManagement.
offeredtoallmembersofNICASIALaghubitta.
A member can open account with a minimum of NICASIABankLimited,ourparentcompany,is“A”class
NPR10.NICASIALaghubittaprovidesinterest@ financial institution licensed by Nepal Rastra Bank. NIC
8%p.a.onthissaving.Memberscandepositinthis ASIA Bank is one of the largest private sector commercial
saving account when they have surplus and withdraw banks in the country in terms of capital base, balance-
fromthisaccountaspertheirneed. sheet size, and number of branches, ATM network, and
customer base. The Bank has more than 25 branches
Notable achievements of the micro-financing services acrossNepal,withanetworkcoveringallmajorfinancial
of NIC ASIA Laghubitta Bittiya Sanstha Limited are as
centers of the country. The Bank has also added a
follows: micro-finance company, NIC ASIA Microfinance, in its
ecosystem. The Bank strongly believes in meritocracy,
Saving Products
transparency, professionalism, team spirit, and service
excellence. These core values are internalized by all
functions within the Bank and its subsidiaries, which
Health saving Personal saving
includesNICASIACapitalLimited.
VISION
To become one of the leading investment and merchant

banksinNepal.
Educational Saving
l 42 l
MISSION
To provide innovative and best investmentto provide a customized solution to achieve desir
solutions
and excellent growth opportunities as a good corporate investment objectives and ensure best selecti
citizen. investment opportunities within an asset class
also ensures appropriate monitoring and review of the
SERVICESOFNICASIACAPITALLIMITED portfolios for optimum results, and keeps track of any
NIC ASIA Capital Limited provides services like future
Issue volatility and events. NIC ASIA Capital offers
Management and Underwriting, Registrar to Share, service ranging across two asset classes, Equity and
Depositary Participant, and Portfolio Management. FixedTheincome instruments, as has been guided by
Capital aims to provide innovative and best investment SEBON.
solutionstoitsclients.
CORPORATEADVISORY
Services of NIC Asia Capital Ltd. NICASIAoffersbespokecorporatefinanceandstrategic
advisory services to public and private companies,
Despositary institutions,andentrepreneurs.TheCapitalisspec
Participation Portfolio
Management
in giving advice regarding strategic reviews, mergers and
acquisitions (M&A), divestitures, capital raisings, an
emergingcompanies.
Issue Servicesinclude:
Mgmt. And Corporate
Underwriting Advisory
Investment
• PrivateEquity/ enture
V Capital/ForeignDirect
Investment
Registrar to
Share Mutual Fund
• Investment Advisory
• Business aluation
V
• Mergers&Acquisition
Planning
PORTFOLIOMANAGEMENT • Business Plan as well as Strategic Planning
Portfolio is the collection of different asset classes, such • ProjectAppraisal
as equities, bonds, fixed deposits, mutual funds, real
estate, cash and cash equivalent, etc. It mainly focuses
on the principle of diversification, wherein varied Financing
stocks
and bonds are combined to form a portfolio, rather • LoanSyndication
than investing all out in one single asset or • Financial
security.Advisory
Portfolio Management Service (PMS) is a personalized
management of finance that caters to individual Complete
needsBespoke Solution
and unique investment objectives. A team of expert Service • Mentoring
professionals carry extensive research on markets • One-Stop Solution
l 43 l
MUTUAL FUND • Providing Online access to your Account to view and

Mutual fund is a pool of small investments collected from track your shareholdings;
various investors, which are then invested into different • Settlement oftradesbytransferring/receivingthe
financialinstruments,suchasstocks,bonds,preference securities from/ intheaccounts;
shares, and fixed deposits (as prescribed by Mutual • Settlement of off-market trades that is occurred
Fund Regulation, 2067). The decisions are made by the betweentheBeneficialOwner(BO-theinvestors)
fund manager and the profit is distributed at year- outside
end NEPSE;
in the form of cash dividend. A mutual fund’s portfolio • Providing electronic credit of securities allotted by
is structured and maintained to match the investment issuers during IPOs;
objectivesstatedinitsprospectus. • Depositingthenon-financialcorporatebenefits(such
asbonus,rightshares,etc.)issuedbyissuersinthe
REGISTRARTOSHARE DEMATAccountofBeneficialOwners(BOs);
NIC ASIA Capital offers complete Registrar to Share • F acilitationofpledgingofdematerializedsecurities.
(RTS) and Registrar and Transfer Agent (RTA) services,
where we maintain the shareholder records of our Notable achievements of the Investment Banking Services
corporate clients and deal with all matters connected ofNICASIACapitalLimitedareasfollows:
with the transfer and redemption of its securities. • TheCapital This hasbeenabletoissueprimarycapital
service includes splitting of shares, pledging and transfer of two companies, including a mutual fund, under
ofownerships,payingdividendstoshareholders,etc. the issue management services, in which allotment
of shares of one of the companies, Aarambha
ISSUEMANAGEMENTANDUNDERWRITING MicrofinanceBittiyaSansthaLimited,wasdonewithin
NIC ASIA Capital offers a comprehensive and one- 37hours,whichcanbeconsideredasahistorical
stop solution to address all the issue management and achievementinthesectorofmerchantbanking.
underwriting needs of clients, which includes meeting all • The Capitalhasbeenprovidingregistrartoshare
the regulatory requirements, such as depositing services fees, to5companies,includingamutualfund.
publishing necessary information on a timely basis, • TheCapitalhasbeenabletoprovideportfolio
opening of the minimum required collection centers, management services to 44 customers amounting to
designing and publishing the necessary brochures and NPR103.4millionduringFY2017/8.
prospectus,assistancewithfinancialforecasts, • etc.
NICASIACapitalopened128,4DEMA Taccounts
during its short period of operation, which accounts to
DEPOSITARYPARTICIPANTSERVICE 10%oftotalDEMATaccountsopenedbythetotalof
NIC AISA Capital received the registration certifi 67depositorycate participantsduringthatperiod,securing
to function as a Depositary Participant (DP) of Central secondpositionintermsoftotalDEMATaccounts..
Securities Depository from Securities Board• NIC of Nepal ASIA Capital has issued a NIC ASIA growth fund
(SEBON) in January 2017. NIC ASIA Capital, together for a valueof1billionasafirstschemeunderNIC
with its parent company, NIC ASIA Bank Limited, is one ASIA Bank MutualFund,whichwasabletobringplans
ofthemarketleadersinprovidingDPServices. of8,3520unitsamountingtoNPR835,20.
NetAssetsValueoftheMutualFundwasNPR10.8
Depository participant services of NICASIA Capital attheendofFY2017/8,eventhoughthesecondary
includes: market was continuously declining since the allotment
• OpeningDEMA TAccount; of mutual fund units, which can be considered as
• DematerializationofPhysicalShares; satisfactory achievement as compared to other plans
• Re-MaterializationoftheSharesinyourDPAccount; existing in the market, and in view of the poor market
• Maintaining up to date record of securities in the condition.
electronic form;
l 44 l
8.352 835.2 10.08

million billion billion
NUMBER OF VALUE OF NET ASSETS VALUE

ALLOTTED UNITS ALLOTTED UNITS OF FUND AS ON
16-JUL-2018
l 45 l
1.14
BUSINESS DIVISIONS OF NIC ASIA BANK
DEPRIVED
SECTOR
LENDING
RETAIL
BANKING TREASURY
BANKING
SMALL AND
MEDIUM TRANSACTION
ENTERPRISES BANKING
BANKING
BUSINESS
CORPORATE DIVISIONS OTHERS
BANKING
ThebusinesssegmentsoftheBankaresegregated tointo
the growing demand for a specialized approach to
seven distinct categories, which are led by individual projectfinancing,eithersinglyorthroughasyndicationof
businessheads. banks,especiallyforprojectsunderhydro,cement,road,
large hotels, and hospitals, etc. The Bank recognizes
A. CORPORATE BANKING the immense scope for growth in these sectors, and
Loans provided to corporate customers valuing the need for a specialized approach to manage such
more
than NPR10 million are classified under Corporate businesseffectively.
Banking. The interest incomes from corporate loans,
fee incomes generated out of such loans, and foreign The major products the Bank has been offering are as
exchange earned through LC/BG are revenue items follows:
of this segment. Expenses of this segment comprises
interest expenses on deposits used for providing Funded Facilities
corporate loans, personnel expenses, and operating Project Finance / Consortium Finance / Term Loans /
expenses, as well as provision for loss created for such Bridge Financing/ Working Capital Financing (Overdraft,
loans. DemandLoan,ShortTermLoan,etc.)
SUBSEGMENTS: Non Funded Facilities

Project Financing LetterofCredit
The Bank has a dedicated Project Finance CellBank Guarantee
to cater
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Large Corporate • Financingworkingcapital&capitalexpenditure

This unit caters the need of large corporate houses with
requirements andtradebasedfacilities
anaveragewalletsizeofmorethanNPR10million.The • Mix of revolving overdraft and term loan facility
Bank has a well-experienced team that understands the
financial needs of such customers and advises tailored Medium Enterprises Loan
financial solutions. As a part of the Bank’s long- term acility
• Credit F aboveNPR10,toamaximum
strategy, the Bank shall maintain and grow this portfolio ofNPR50,
onaveryselectivebasis. • Financingworkingcapital&capitalexpenditure
requirementsandtradebasedfacilities
Funded Facilities • Mix of revolving overdraft and term loan facility
ExportFinance
ImportFinance(TRLoan/ImportLoan) Mid-Market Loan
BillDiscountingunderUsanceLetterofCredit• Credit acility
F aboveNPR50,toamaximum
Clean bills purchase and discounted ofNPR10,
• Financingworkingcapital&capitalexpenditure
We are dedicated to providing Market requirementsandtradebasedfacilities
Leading Service so you can achieve • Mix of revolving overdraft and term loan facility
your business ambitions.
C. RETAIL BANKING
The loans provided to other than corporate customers
are classified under Retail Banking. The interest incomes
B. SMALL AND MEDIUM ENTERPRISES and fee incomes generated out of such loans are revenue
(SME) BANKING itemsofthissegment.Expensesofthissegmentcomprises
The loans provided to corporate customers valuing not on deposits used for providing retail loans,
interest expenses
more than NPR10 million are classified under SME personnel expenses, and operating expenses, as well as
Banking.Theinterestincomesandfeeincomesgenerated provisionforlosscreatedforsuchloans.
out of such loans and foreign exchange earned through
LC/BG are revenue items of this segment. ExpensesPRODUCTS of OFRETAILBANKING
this segment comprises interest expenses on deposits Loan against Mortgaged Property
usedforprovidingSMEloans,personnelexpenses,and Loan against mortgaged property is an attractiv
operating expenses, as well as provision for loss created financing scheme bundled with special features to
forsuchloans. purchase/construct dream home of customers and help
themlivewithfamilyhappilyeverafter.
PRODUCTSOFSME
Easy Business Loan (EBL) Home Loan opportunity can be explored for following
• Credit acility
F aboveNPR30,toamaximumof purpose:
NPR7,50 • P urchaseofLand/Landandhouses
• FinancingofNetAssetsRequirements • Construction of house
• Termloanfacilitydependinguponnatureand • Repair/RenovationandRe-constructionofhouses
requirementofbusiness • EquityFinancingoption-Financeagainstownlandor
land/house
Small Business Loan (SBL) • Refinancing
• Credit acility
F aboveNPR30,toamaximumof • Pre-Approved HomeLoanforpurchaseofhouse-Get
NPR10, your home loan approved before choosing your dream
home.
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PERSONAL LOAN
Auto Loan within a short period of time with simple documentation

Auto Loan is a vehicle financing scheme to facilitate andprocessing.
salaried individuals and professionals, self-employed,
and owners of business firms for procuring any typeProduct of Features
vehicles.Theloansaresecuredagainstmortgage ofthe
• Overdraft and/ordemandloanfacility
vehicleintheBank’sname. • Attractive interest rate
• Hasselfreeandsimpleloandocumentation
Typesofautoloanfinancing: • Loanagainstpledgeofsharesofactivelytraded
companies
• Red plated private vehicles • Additional real state collateral is not Mandatory
• Red plated business use vehicles and red plated
semi commercial vehicles Personal Loan
• Black Plated commercial vehicles PersonalLoanisanon-collateralbasedfinancingscheme
• Bodybuildingfinancing to Nepali individuals to facilitate salaried individuals
• Secondhand/usedvehiclefinancing(Redplated and professionals residing in Nepal for meeting their
privatevehiclesandBlackplatedTaxi) individual financial requirements. This loan is based
purely on personal credibility of the customer, and is not
Loan Against Shares backedbycollateral.
LoanagainstSharesisfinancingindividualsorcompanies
against securities of shares. This is a hassle- Product
free and Features
easyloanscheme,whereanyindividual/companies• Mix who/ of overdraft and term loan facility
which hold shares and stock of companies listed in Nepal • Borrower’slifeisinsuredatthecostofBankas
Stock Exchange can avail loan against the security ofmind insurance tie has been done for entire
secure
suchshares.Thisisaninstantsolutionifcashisportfolio required
for better security
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• MaximumloanlimitNPR1,50 - Accommodationcost/livingexpenses
• Hasselfreeandsimpleloandocumentation - Cost of overseas student health cover
- Miscellaneous costs (Shopping expenses and
Education Loan foreign exchange facility against passport)
Better education is seen as a stepping stone to a high- • Minimumcriterions,Hasselfreeandsimple
flying career. One of the biggest constraints between documentation
students and better education might be tuition fees, • Loanamount:MinimumNPR30,tomaximum
and it is for that purpose that we have come up with the NPR10,
EducationLoanproducttosupportthestudents and
• Suffi not moratoriumperiod
cient otal(Tcourseduration+1
lettheirdreamswitheraway.Itisacollateral-based yearor loan
maximumof6.5years)
specially designed to facilitate Nepali students to meet
their financial requirements to pursue higher education
Foreign Employment Loan
aboveintermediatelevelinNepalorabroad.
In recent times, it seems that the government has
recognizedoverseasemploymentopportunitiesasaway
Product Features
toalleviatepovertyandunemploymentinthecountry.T
• Cost accepted for education loan
remittances generated have been instrumental in poverty
- F eespayabletocollege/institute
alleviation, as well as for improving the living standard
- Cost of educational materials
of people. With the intent of supporting government
- Travellingcost
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in poverty alleviation and reduction of unemployment • LowCostHousing

rate in the country, the Bank has launched • Foreign AgricultureEquipmentLoan
Employment Loan product. The Bank extends credit
facility to consumers who are going to foreign countries Indirect Lending
for employment purpose, which includes expenses Under indirect lending, the Bank provides loan in
relating to employment, training fees/expenses, deprived ticketsectorasfollows:
fare, visa fee, and consultancy fee/cost associated • Wholesale to Lending
employer. • EquityInvestment
• Lendingtoouth Y andSmallEntrepreneurSelf
Product Features EmploymentFund(YSESEF)
• Collateral based loan
• Targetedtopeoplewhoaregoingtoforeigncountry E. TREASURYfor
employment purpose ThebalancelyingwiththeBank,investedingovernment
• Loan amount: Minimum NPR 10, to maximum bonds, Treasury bills, placements, forex trading,
NPR1,0 and shares of other organizations, comes under this
• 5days’turnaroundtime segment. The interest income of bonds and bills, forex
gains, and dividend income are revenue items of this
D. DEPRIVED SECTOR LENDING segment. Expenses of this segment includes interest
(DSL) BANKING expenses on deposits used for making investments,
The loans provided to deprived sectors of the forex losses, personnel expenses, and operating
society
directly (say to agricultural sector) or indirectly (say to expenses, as well as provision for loss created on such
organizationsworkingforupliftingthepoor)areinvestments. classified
under DSL Banking. The interest and fee incomes
generated out of such loans are revenue items of this Major responsibilities of Treasury
segment. Expenses of this segment include interest • Manage local and foreign currency position of the
expenses on deposits used for providing DSL loans, Bank (including buying/selling foreign currencies,
personnel expenses, and operating expenses, as well lending/borrowing foreign and local currency,
as provision for loss created on such loans. The Bank’s swapping one currency against the other, buying/
approachondeprivedsectorlendingisasfollows:selling bullion, or any other task to manage the overall
fund position of the Bank)
• Monitoring and management of cash reserve ratio,
Direct Lending
credit to deposit ratio, and liquidity ratio, statut
Under direct lending, bank focuses, but not limited to, on
liquidityratio
followingparameters:
• F oreign exchange rate publication and advice to
• Renewableenergyfinancing
branches
• W omenEntrepreneurLoan
• Management of the Bank’s investment portfolio for
• MicroEnterpriseLoan
both foreign currency and local currency
•DeprivedGeneralLoan
• Executionofforwardcontractdeals
• Hospitals
• Relationship management with foreign banks for
• HydroLoans
counter guarantees business
• AgriculturalLoan
• Developmentandsalesofvarious reasury
T products
• Managementof deposit/lending relationships of
FollowingproductsaredevelopedbyBankforlendingto
selectedinstitutions/corporate
deprivedsector:
• LaghuUdhyamKarza
• CommercialAgricultureLoan
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F. TRANSACTION BANKING (TB)

The income from card (debit card/credit card) sales,
income from sales of Bank assurance, mobile and SMS
banking, customer services fees, agency remittance
commissions, locker fees, cheque processing fees,
etc.arerevenueitemsofthissegment.Expensesofthis
segment comprise personnel expenses and operating
expenses.
G. OTHERS
All other revenues and expenses which cannot be
classified in the above-mentioned segments fall under
this segment. The income from sale of assets and other
feesandcommissionsarerevenueitemsofthissegment.
Unattributable personnel expenses, operating expenses
andwritten-offassetsareexpenseitemsofthissegment.
Corporate Banking, Retail Banking, SME Banking, DSL

Banking,TransactionBanking,andTreasurycompriseat
least 75% of our total revenue. Hence, these operations
are treated as reportable segments, and the remaining
areclassifiedunderothersegments.
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1.15
PRODUCTS AND SERVICES
DEPOSIT PRODUCTS
A.CHAMATKARIKDEPOSITPRODUCTS
Following deposit products having unparalleled catertothefinancialneedsofcustomersinthissegment
for meeting financial requirements by providing them
benefits to customers in terms of insurance coverage,
convenience, higher yield and many more have been EMI-basedloanfacility.
launchedbytheBank:
Product Features
A. Term Deposit • EMI based personal loan facility
i.ChamatkarikFixedDeposit-Silver • Zero minimum balance

ii.ChamatkarikFixedDeposit-Gold • Free any branch banking service (ABBS) charge,
iii.ChamatkarikFixedDeposit-Diamond cheque book and account statement
iv.ChamatkarikRecurringDeposit
Following deposit products with abundant customer
B. Saving Deposit: centric features were launched by bank during review
i. ChamatkarikBachatKhata-Silver period:
ii. ChamatkarikBachatKhata-Gold
iii. ChamatkarikBachatKhata-Diamond
iv. ChamatkarikJesthaNagarikBachatKhata-Silver
v. ChamatkarikJesthaNagarikBachatKhata-Gold
vi. ChamatkarikJesthaNagarikBachatKhata-Diamond
vii.ChamatkarikNariBachatKhata-Silver
viii. ChamatkarikNariBachatKhata-Gold
ix. ChamatkarikNariBachatKhata-Diamond
x. Chamatkarik alab
T BachatKhata
xi. ChamatkarikBabuNaniBachatKhata
xii.ChamatkarikBidhyarthiBachatKhata
xiii. ChamatkarikUdhyamshilBachatKhata
xiv. ChamatkarikBaideshikRoigarBachatKhata
xv. ChamatkarikSwarojgarBachatKhata
B.SUPERPAYROLLACCOUNT
It is a special saving product designed
with the objective of catering to employees
of various organizations like local bodies,
telecommunications, schools/colleges, insurance
companies, NGOs/INGOs, consulates, and other
recognizedorganizations.Assalariedindividualsare
paid remuneration on a monthly basis, situation may
arise where an individual may require additional fund
to cover temporary expenses. This product aims to
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C.NEWPREMIUMSAMUNNATIBACHAT
KHATA
This is an interest-bearing saving account scheme to
generate a new customer-base with higher value to
the Bank. It is basically targeted towards salaried, self-
employed, professional business holders, and other high
net worth individuals, who might be any Nepali citizen/
Indian national/ foreigner/minor of different ages and
groups.
Product Features
• Free Any Branch Banking Service (ABBS) charge
• Accidental insurance coverage of NPR 500,000
• Unlimited withdrawal from any ATM network
throughout Nepal without any charge
• 20% discount on internet banking, mobile banking and
ATM if account is opened through online channel
• Free mobile top up of NPR 100 (NTC/ NCELL) once the
mobile banking is activated • Visa card/ SMS banking/ Internet banking: Free for
• Waiver in fees on Missed call banking, viber banking, first year
home banking to customer maintaining average • 50% discount on locker charges and rebate on
monthly balance of NPR 1,000,000, DEMAT and online
purchase and premium on sale of FCY
account opening
• 50% discount on annual locker charges
E.SAMUNNATIMUDDATIKHATA
• Premium / Rebate of 5 to 15 paisa on FCY transaction
SamunnatiMuddatiKhataisaspecificproducttargeted
and 20% discount on dollar card issuance charge
towards individual and institutional customers, with
attractive interest rate of 1%, along with monthl
D.PREMIUMSAMUNNATIBACHATKHATA
interestpayment.
This is an interest-bearing savings account scheme to
attract a new customer-base and lure existing customers
Product Features
to migrate from zero balance account to this product to
• Interest (11% p.a.) payable on monthly basis
enjoymanyfreebiefacilitiesassociatedwiththisproduct.
• Overdraft limit against fixed deposit
Product Features • Up to 90% of fixed deposit amount

• Mobile top-up facility worth NPR 100 for each account
opened
• Free cheque book, account statement, balance
certificate, credit card issuance fee, DEMAT account
opening, any branch banking service (ABBS) charge,
good for payment issuance fee
• Accidental death insurance of up to NPR 500,000, or five
times the average monthly balance, whichever is lower
• Unlimited withdrawal from any ATM network
throughout Nepal without any charge
• Home banking to customer maintaining average
monthly balance of NPR 1,000,000
• Special discount on loan management fee of retail
loan
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F.BIDHYARTHIBACHATKHATA
Thisisprimarilyasavingsaccountwithattractive job application
product form and USD46.20 regarding operating
expenses in
features and facilities. This product is basically targetedtheir accountmaintainedwithourBank.
forteenagers,youth,andstudents.
Product Features
• Zero minimum balance
Product Features
• Zero minimum balance • Recharge card worth NPR 100 for each account opened
at the time of opening account
• Cheque book and account statement: Free on demand
• Cheque book free on demand
• Top-up facility worth NPR 50 for each account opened
• Visa card, internet banking and mobile banking: Free for
• Visa card, internet banking, and mobile banking: Free
first year
for first year
• Any branch banking service: Free up to NPR 500,000 per day
• Any branch banking service: Free up to NPR 500,000 per day
G.EPSKOREABACHATKHATA H.ONLINEBACHATKHATA
Thisisaspecialsavingaccountthatiscustomizedtosuitthe
This is a special saving product designed with an
banking needs of personnel residing both in and outside the
objective to solicit accounts of Nepali migrant workers
country, with privileged feature that helps them to open an
going to South Korea for employment through EPS
accountthroughtheonlineplatform.Customerscaninitiat
Korea section. EPS Korea section has maintained their
to open Online Bachat Khata by lling fi up an application
current account (NPR) with our Bank and circulated to all
online, along with submitting the required details onli
the Nepali migrants who have passed EPS Korea exam
withoutbeingphysicallypresentintheBank’spremises.
to deposit NPR amount equivalent to USD5 regarding
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Product Features This service can be easily used on mobile, computer,

• Zero minimum balance tablets,laptop,etc.TheBankhasgotintoviberbankin
• Visa card, internet banking, mobile banking: Free for first year services to make customer service technology-friend
• Free cheque book, inward remittance and any branch WiththeuseofViberbankingservice,customerscanget
banking service (ABBS) informationaboutthefollowing:
• LocationofBankbranchesTMs andA
• Banking hours
I.NICASIADOUBLEDEPOSIT • Balanceenquiry
NICAISADoubleDepositisaspecialproduct,asthefixed
• Mini statement
depositwillbedoubledatmaturityinyears 9 forindividual
• F oreignexchangerates
customers,andyears 10 forinstitutionalcustomers,even
• Online account opening
after the deduction of applicable tax rate (TDS) of 15 %
• Check loan eligibility
for institutions and 5 % for individual accounts. Interest
• Interest rate and other information of the Bank
onDoubleDepositaccountiscalculatedonadailybasis,
andcapitalizedonquarterlybasis.
B.MISSEDCALLBANKING
The Bank has been providing digital banking service
Product Features
to its account holders with the aim of easing financia
• Overdraft limit against fixed deposit
transactions. NIC Asia Bank introduced the missed-ca
• Up to 90% of fixed deposit amount
bankingserviceunderitsmodernbankingservices.Thi
• 100% return on deposit at maturity servicehasbeenineffectsinceJuly17,208.
SERVICES Under this service, account holders of NIC Asia Bank get
A.VIBERBANKINGSERVICE an SMS regarding their balance, if they give a missed
The Bank began to offer Viber banking service to its
call to 9801273. Likewise, account holders also get
customers from the review period. Viber banking isstatementbygivingamissedcallto9801274.
amini-
a digital technology that allows you to enjoy various
The mini-statement gives details on the previous t
services by interacting with the Bank directly through transactions under one message. Similarly, account
Viber, the popular internet-based cross-platform instant
holders can give a missed call to 9801275 for call
messagingandvoiceoverIP(VoIP)application,available backservice.Bankstaffscallbacktothecustomersaft
forfreefromGooglePlayStoreandAppStore. receivingamissedcallunderthisfeature.
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ANNUAL REPORT
ANNUAL REPORT2017/2018
2017/2018
1.16
PRODUCT PORTFOLIO
DEPOSIT PRODUCTS
1 Total Deposit of Bank

3
151 Billion
CALL ACCOUNT FOREIGN CURRENCY DEPOSIT
(16.82% OF TOTAL DEPOSIT) (3.02% OF TOTAL DEPOSIT)
%ofProductWiseDepositoverTotalDeposit
Market Share of Bank 1 USDSavingAccount
1 InstitutionalCallAccount15.89% (15.89%) in Total Deposit of Industry 2 USDSuperSavingAccount
2 Other Call Accounts 0.93% 6.47% 3 EUROSavingAccount
2 4
DOMESTIC CURRENCY: SAVING ACCOUNT
FIXED DEPOSIT ACCOUNT
(40.76% OF TOTAL DEPOSIT) Current Account (31.72% OF TOTAL DEPOSIT)
%ofProductWiseDepositoverTotalDeposit 7.4% %ofProductWiseDepositoverTotalDeposit
1 FDCorporate(19.8%) 19.8% Saving Account
1 HappySavingsAccount 2.90%
31.72%
2 FDIndividual(20.34%) 20.34% 2 Pre Sammunati Bachat Khata 2.71%
FixedDepositAccount
3 OtherFDAccounts 0.4% 3 Sammunati Bachat Khata 14.%
40.76%
Call Account 4 Sulav Bachat Khata 3.12%
16.82% 5 Other Saving Accounts 8.5%
Margin Account
0.27%
FOREIGN CURRENCY DEPOSIT

3.02%
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ANNUAL REPORT
ANNUAL REPORT2017/2018
2017/2018
LOAN PRODUCTS
1
CORPORATE AND
PROJECT FINANCING
1 ProjectFinance
2 ConsortiumFinance
3 TermLoan
4 BridgeFinancing
5 WorkingCapitalFinancing
6 ExportFinance
7 ImportFinance
4
8 Clean bills purchased and discounted RETAIL
LENDING
1 LoanAgainstMortgagedProperty
2 a.GharSubidha
b.SajiloKarza
DEPRIVED SECTOR c.SajiloSubidha
LENDING
d.PremiumHomeLoan
1 CommercialAgricultureLoan
2 AutoLoan
2 LaghuUdhamKarza
a.BlackPlatedVehicleFinancing
3 AgriculturalEquipmentLoan b.RedPlatedVehicleFinancing
4 LowCostHousing c.GreenPlatedVehicleFinancing
5 KisanKarza d.Used/SecondHandVehicleFinancing
3 LoanAgainstShares
4 PersonalLoan
3 5 EducationLoan
SMALL AND MEDIUM 6 GoldLoan
ENTERPRISES LENDING 7 LoyaltyFinancing
1 EasyBusinessLoan 8 ForeignEmploymentLoan
2 SmallBusinessLoan(BusinessOverdraft,Term
9 Credit Cards
Loan,DemandLoan)
3 MediumEnterprisesLoan(BusinessOverdraft,
TermLoan,DemandLoan)
3 MidMarketLoan(BusinessOverdraft,TermLoan,
DemandLoan)
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1.17
AN EVENTFUL YEAR FOR NIC ASIA BANK
InaugurationofGaidakotBranchofNICASIA
Bank. InaugurationofJhiljhileBranchofNIC ASIABank.
InaugurationofLakesideBranchofNICASIABank. InaugurationofKakarvittaBranch ofNICASIA.
CorporateIndoorCup:Winner,September17-September2,018atRoyal CenturyBankSuperSixesCorporateCricketTournament:1stRunnersUp,
KCTCIndoorCricketGround,GolfutarKathmandu 26Nov-Dec1,208atTUInternationalCricketGround
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DoortodoorfinancialliteracyprogrammeorganizedbyNICASIABank.
TreeplantationontheoccasionofWorldEnvironmentDay.
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1.18
AWARDS AND RECOGNITIONS
BankeroftheYear207 BankeroftheYear2013
Best Brand Award BestEmployerBrandAward ISO901:2certification

(Banking Sector)
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ALNU REPOT 2017/8
1.19
CREDIT RATING
CARE Ratings Nepal Limited has

assigned Issuer Rating of CARE-NP A
(Is)” to NIC ASIA Bank on July 2018.
CARE-NP A (Is) indicates that issuers
with this rating are considered to offer
adequate degree of safety regarding
timelyservicingoffinancialobligationsin
Nepal. Such issuers carry low credit risk.
NICASIABank’screditratinghasbeen
donebyICRANepalLimited(ICRA
Nepal), which has assigned Issuer
Rating of “[ICRA NP - IR] A-“ as on
May 2017. “[ICRA NP - IR] A-” rating is
considered as adequate credit quality
rating, and the rated entity carries
average credit risk.
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MANAGEMENT DISCUSSIONS AND ANALYSIS
2.1 FinancialHighlights
. 63
2. Horizontaland
erticalV Analysis
. 76
2.3 ValueCreation
. 79
2.4 F utureProspects
. 82
2.5 HumanResourceAccounting . 84
2.6 StakeholdersAnalysis . 8
2.7 EconomicOutlook
.. 93
2.8 BusinessEnvironmentAnalysis
.. 96
MANAGEMENT
DISCUSSIONS
AND ANALYSIS
2.1
FINANCIAL HIGHLIGHTS
CAGR
Annual Growth
Particulars FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18 (5 years)
(FY 17/18)
Average
TotalLoansandAdvances(Gross)(NPRMillion) 37,05.8 43,0.2 59,48.3 72,561.8 12,745.36 67.8% 34.1%
TotalAssets(NPRMillion) 51,0.49 60,519.4 80,456.2 9,274.0 170,943.8 72.19% 34.98%
Net Assets (NPR Million) 4,873.0 5,498.7 7,382.4 10,6.8 1,670.4 15.36% 24.0%
TotalDeposits(NPRMillion) 4,98.2 53,47.18 69,48.0 87,6.3 15,29. 72.4% 35.41%
ShareholdersFund(NPRMillion) 4,873.0 5,498.7 7,382.4 10,6.8 1,670.4 15.36% 24.0%
TotalOperatingIncome(NPRMillion) 2,38. 2,10. 2,613.5 3,4.5 5,38.14 56.0% 24.38%
ProfitbeforeTax(NPRMillion) 1,89.2 970.6 1,532.70 2,08.13 1,80.6 -13.29% 1.07%
ProfitafterTax(NPRMillion) 831.59 680.32 1,06.9 1,473. 1,34.86 -9.41% 12.56%
GrossRevenue(NPRMillion) 4,138.9 4,09.38 4,5.60 7,058.63 14,5.97 105.9% 36.85%
G.PRatio(Percentage) 46.91 42.1 46.23 38.20 23.9 -38.7% -15.97%
ReturnonTotalAssets(Percentage) 1.7 1.2 1.5 1.64 0.97 -40.59% -13.%
ReturnonEquity(Percentage) 15.93 13.05 16.50 16.84 12.09 -28.% -6.7%
ReturnonCapitalEmployed(Percentage) 15.48 1.34 13.5 13.8 8.1 -36.5% -13.5%
Debt-EquityRatio(Percentage) 10.26 9.0 6.7 4.9 29.8 504.68% 30.64%
Net Current Assets (NPR Million) (3,267.18) (9,27.34) (16,209.5) (1,27.98) 24,371.6
Current Ratio (Ratio) 0.8 0.74 0.64 0.97 1.39 43.06% 12.3%
NetProfitPerEmployee(NPRMillion) 1.40 0.93 0.97 0.84 0.58 -30.6% -19.65%
StaffCostPerEmployee(NPRMillion) 0.64 0.58 0.49 0.48 0.78 62.47% 5.16%
TotalCredit/Deposits(Percentage) 82.93 81.03 85.62 83.70 86.30 3.1% 1.0%
InterestIncome/LoansandAdvances&Investment
10.45 8.31 7. 9.10 10.2 1.2% -0.8%
(Percentage)
InterestExpenses/TotalDepositsandBorrowings
5.9 5.12 4.1 5.61 6.53 16.3% 2.16%
(Percentage)
ExchangeGain/TotalIncome(Percentage) 2.7 2.84 3.29 2.36 1.42 -39.8% -1.%
TotalCost/TotalRevenue(Percentage) 34.12 41.56 40.3 46.1 62.04 34.% 16.2%
NetProfit/TotalLoan(Multiple) 1.57 -46.01% -16.25%
2.3 1.79 2.03 1.0
EarningPerShare(NPR) 35.98 25.9 28.31 23.06 16.2 -27.91% -17.56%
Dividend(includingbonus)onShareCapital 30. 41.05 27.3 21.05 10.53 -49.8% -23.0%
(Percentage)
CashDividendonShareCapital(Percentage) 15.0 2.05 1.37 1.05 0.53 -49.52% -56.4%
PriceEarning(PE)Ratio(Ratio) 26.9 24.1 28.19 19.30 19.0 -1.50% -8.36%
Stock Performance (Closing Stock Price Per Stock) 970 617 798 445 316 -28.9% -24.5%
(NPR)
MarketCapitalization(NPRMillion) 24.05 1640.2 3651.49 2978.06 25378. -14.79% 3.14%
CapitalAdequacyRatio(Percentage) 14.05 12.49 12.4 13.8 12.4 -1.50% -3.9%
No.ofShares(Million) 23.1 26.58 45.7 6.93 80.31 20.% 36.5%
Note: The Bank has prepared financial statements up to FY 2016/17 as per Nepal Accounting Standard and in compliance with directives issued by Nepal
Rastra Bank. However, Nepal Rastra Bank, vide its circular no. 10/074/75 dated Nov 30, 2017, has directed “A” class commercial banks to prepare financial
statements for FY 2017/18 in compliance with Nepal Financial Reporting Standards (NFRS) compulsorily. In order to comply with this requirement,
financial statements of the Bank for FY 2017/18 have been prepared in accordance with Nepal Financial Reporting Standards (NFRS) as published by the
Accounting Standards Board (ASB) Nepal and pronounced by The Institute of Chartered Accountants of Nepal (ICAN), and in the format issued by Nepal
Rastra Bank in Directive No. 4 of NRB Directives.
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TOTALLOANSANDADVANCESGROSS)
(
121,745 and Advances of the Bank as on mid July8 1was

02 NPR
63million,
.547,12 as compared to NPR8 million
.593,7
asonmid-JulyThe
.4102 Bankwassuccessfulinachieving
In NPR Million
72,562 massive growth and expansion of business, along with

59,499
incrementofTotalLoansandAdvancesoverthelastyears. 5
43,330
37,306
TotalLoansandAdvancesoftheBankincreasedby% 8 7 . 6
toNPRmillion
63.547,12 asofmid-Julyas,8102 compared
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18 to NPR 2 8 . 1 6 5 , million
2 7 last year, which is the highest
increment in loans and advances by any bank in a single
yearinthehistoryoftheNepalesebankingindustry.Despite
TheBankwasabletoachieveenormousincreaseinthe increase in loans and advances, the quality of assets
loans
and advances during the last few years. The Bankwas wasimprovedascomparedtolastyear.GrossNPAratioof
able to achieve very impressive compound annual growth theBankwasin %7960. thereviewperiodascomparedto
rateCAGR)
( of%over
14. 3 ave-
fi yearperiod.TotalLoans last
% 6 3 . 0 year.
TOTALDEPOSITS
The Bank has been able to achieve enormous increase in

TotalDepositsduringthelastfewyears.TheBankwasable 151,219
to achieve very impressive compound annual growth rate

of 35.41% over the five-year period. Total Deposits of the
Bankasonmid-Julywas 2018 NPR15,29.million,as
87,678
compared to NPR 4,98.2 million as of mid-July 2014.
The Bank was successful in achieving massive growth
In NPR Million
69,488
and expansion of business, along with increment of total 53,477
44,984
depositsoverthelastfewyears.
Total Deposits of the Bank increased by 72.4% to NPR

15,29. million as of mid-July 2018, as compared
to NPR 87,6.3 million last year, which is the highest
increment in deposits by any bank in a single year in the FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
historyoftheNepaleseBankingIndustry.
l 64 l
170,943
NETASSETS TOTALASSETS
11,670
10,116 99,274
80,457
In NPR Million
7,383
60,519
In NPR Million
5,499
4,873 51,500
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18

FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
NetAssetsrepresentthetotalassetsminusTotal total Assets

liabilities. represent the total balance sheet va
Steady and enormous growth was achieved in the net Bank, which increase or decrease in line with the increase
assets of the Bank over the last five years. The increase and decrease in the volume of business. Total Assets
in Net Assets was due to higher increase in total assets, the Bank have increased over the last five years, as t
as compared to amount of increment in total liability of business (loans and advances and deposits) of the Bank
the Bank, and effect of cumulative profits and retained was always growing and expanding. Total Shareholders
earnings.NetAssetsoftheBankreachedNPR1,670.4 Fund of the Bank has reached NPR 170,943.8 million as
millionasofmid-Julyas 2018, comparedtoNPR4,873.0 of mid-July 2018, as compared to NPR 51,0.49 million
million as of mid-July 2014, with the impressive CAGR of asofmid-July2014,withtheimpressiveCAGRof34.98%
24.0%
Total Assets increased by 72.19% from NPR 9,274.0
Net Assets increased by 15.36% during FY 2017-8 from milliontoNPR170,943.8millionduringthereviewperiod.
NPR 10,6.8 million in line with increase in business of
theBankduringthatperiod.
SHAREHOLDERSFUND
11,670
10,116
7,382
fiveyears.Suchincreasewasduetoretentionofprofitin
the form of bonus shares and various other reserves and
In NPR Million
5,499 cumulativeretainedearnings.TotalShareholdersFun
4,873
the Bank reached NPR 1,670.4 million as of mid-July
2018, as compared to NPR 4,873.0 million as of mid-
July2014,withtheimpressiveCAGRof24.0%
FY 13/14 FY 14/15 FY 15/16 Shareholders Fund increased by 15.36% from NPR

FY 16/17 FY 17/18
10,6.8millionasofmid-Julylastyear,whichwasdue
Shareholders Fund represents the total assets to issue of bonus shares out of profits and retention o
minus
total liabilities. Steady and enormous growth profi
hastin theformofvariousreserves.
been
seen in the Shareholders Fund of the Bank over the last
l 65 l
TOTALOPERATINGINCOME PROFITBEFORETAX
5,358
2,088
3,434 1,811
1,533
In NPR Million
2,613
In NPR Million
2,239 2,102 1,180 971
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18 FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
Total Operating Profit represents the profit earned Profit before

from a Tax represents the total amount earned
bank’s normal core business operations. Total Operating by the Bank before all taxation related expenses have
Profit can be seen on an increasing trend over the last been deducted. few Growth and expansion of business has
years as a result of expansion and growth of business of the resulted in increase in profit with an increasing trend
Bank. During FY 2014/5, the operating profit of the Bank ProfitbeforeTaxfromFYto 2014/5 FYwhereas
2016/7,
decreased, and after years, the operating profit started during FYto 2014/5, Profit before Tax slightly decreased.
showanincreasingtrend.TotalOperatingProfitofthe Profit before Tax during FY 2017/8 was NPR 1,80.6
Bank
duringFY2017/8wasNPR5,38.14million,ascompared million, as compared to NPR 1,89.2 million during FY
toNPRmillion
2,38. duringFYwith
2013/4, compound 2013/4, with compound annual growth rate (CAGR) of
annualgrowthrate(CAGR)of24.38% 1.07%
Total Operating Income has shown very impressive growth However, Profit before Tax of the Bank decreased by
during the review period, as the business (deposits and 13.29% during FY 2017/8, from NPR 2,08.13 million
loans and advances) increased massively during that last year due to extensive branch expansion and increase
period. Total Operating Income increased with ain operatingexpensesduringthereviewperiod.
growth
rateofduring
56.07% FYfrom
2017/8 NPRmillion
3,4.5
duringthelastyear.
PROFITAFTERTAX
Profit after Tax represents the net amount earned by 1,473

1,335
the Bank after deducting all taxation related expenses.
Growth and expansion of business has resulted in
1,067
increase in profit, with an increasing trend in Profit after
Tax, from FY 2014/5 to FY 2016/7, whereas during FY 832
In NPR Million
680
Profi
2014/5, tafterTaxdecreasedslightly.ProfitafterTax
hasshownatrendsimilartothatofProfitbeforeTax.Profit
after Tax during FY 2017/8 was NPR 1,34.86 million,
as compared to NPR 831.59 million in FY 2013/4, with
compoundannualgrowthrate(CAGR)of12.56%
However, Profit after Tax decreased during FY 2017/8 FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
from NPR 1,473. of last year due to opening of large
numberofnewbranchesduringthereviewperiod.
l 66 l
GROSSREVENUE G.PRATIO
46.91 46.23
14,512 42.21
38.20
Percentage
23.39
In NPR Million
7,059
4,546
4,138 4,049
Gross Revenue represents total amount earned Grossby the ProfitRatiorepresentsratioofnetinterestan

Bank in the form of interest, fees, and commissions, and commission income to gross revenue. Gross Profit
without deducting related expenses. Growth Ratio hasdecreasedbyfrom
and 15.97%, as
46.91% onmid-
expansionofbusinesshasresultedinincrease July 2013/4 to 23.9% as on mid-July 2017/8. Gross
ofGross
Revenue with increasing trend from FY 2014/5 to FY Profit Ratio is on a decreasing trend, because ratio of
2017/8, whereas during FY 2014/5, Gross Revenue increase in interest, fees, and commission expenses is
decreasedslightly.GrossRevenueoftheBankduring comparatively
FY higher in relation to that of interest, fees,
was 2017/8 NPRmillion,
14,5.97 ascomparedtoNPR andcommissionincome.
4,138.9 million during FY 2013/4, with compounded
annualgrowthrate(CAGR)of19.74% Because of extensive growth of deposit and related
expenses, in comparison to loans and advances and
related income, Gross Profit Ratio of the Bank has
Because of extensive expansion of business, Gross
Revenue of the Bank has increased massively by decreased significantly by 38.7% during FY 2017/8
105.9% during FY 2017/8 from NPR 7,058.63 in FY from38.20%inFY2016/7.
2016/7.
RETURNONTOTALASSETS
1.71
1.64 Return on Total Assets represents the percentage o
1.51 earned during the year as compared to average total
assets (total balance sheet value) during the year. T
1.21 wereslightfluctuationsofReturnonTotalAssetsdur
last five years. Return on Total Assets decreased dur
0.97
FY 2014/5, whereas it increased during FY 2015/6 and
Percentage
2016/7.ReturnonTotalAssetsoftheBankwas0.97%for
FY2017/8,ascomparedto1.7%forFY2013/4.
Return on Total assets for FY 2016/7 was 1.64%, which

decreasedby40.59%duringFY2017/8.
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
l 67 l
RETURNONEQUITY RETURNONCAPITALEMPLOYED
16.84
16.50
15.93 15.48
13.05 13.88
13.53
12.09
11.34
Percentage
8.81
Percentage
Return on Equity represents the percentage ofReturn profit onCapitalEmployedrepresentsprofitabilityrat

earned during the year as compared to average equity measures how efficiently a company can generate profits
outstanding during the year. Trend of Return on Equityfromitscapitalemployed,bycomparingNetOperatingProfit
duringthelastfiveyearswassimilartothetrendto ofreturn capitalemployed.TrendofReturnonEquityduringthela
on total assets. There were slight fluctuationsfive ofyears Return was similar to the trend of return on total a
on Equity during the last five years. Return on EquityTherewereslightfluctuationsofReturnonCapitalEmpl
decreased during FY 2014/5, whereas it increased during the last five years. Return on Capital Employed
during FY 2015/6 and 2016/7. Return on Equity of decreased during FY 2014/5, whereas it increased during
the Bank was 12.09% for FY 2017/8, as compared to FY2015/6and2016/7.ReturnonCapitalEmployedofthe
15.93%forFY2013/4. Bankwas8.1%forFY2017/8,ascomparedto15.48%for
FY2013/4.
Return on Equity for FY 2016/7 was 16.84, which
decreasedby28.%duringFY2017/8. ReturnonCapitalEmployedforFYwas 2016/7 which
13.8,
decreasedby36.5%duringFY2017/8.
DEBT-EQUITYRATIO
Debt-EquityRatiorepresentsaleverageratiothatcalculates
the weight of total debt and nancial fi liabilities against 29.89
the total shareholder’s equity. Debt-Equity Ratio was in
decreasing trend from 41/3 02 till 71/6 02 from %62.01
to .%49 Debt-Equity Ratio of the Bank for FY 81/7 02
Percentage
was,%as 98. 2 compared to%6for

2.01 FY,4with
1/3 02
compoundannualgrowthrateCAGR) ( of.%56 03 10.26 9.09
6.77
4.94
However, during,81the
/7 02 Debt-Equity Ratio increased
significantlyfrom%to 49. %because
98. 2 ofissuanceof
debentureworthNPRbillion 3 duringFY.81/7 02 FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
l 68 l
CURRENTRATIO NETCURRENTASSETS
14,512
1.39
0.97
In NPR Million
0.88
7,059 0.74 0.64

Ratio
4,546
4,138 4,040
Net Current Assets represents aggregate amount of Current Ratio compares current assets to current liabilities
all current assets less aggregate amount of all current of company to measure whether or not an organization
liabilities.NetCurrentAssetsoftheBankwashas enoughresourcestomeetitsshort-termobligati
indecreasing
trendfrom-3,267.18millionduring2013/4to-16,209.5 Current Ratio of the Bank was in a decreasing trend,
million during 2015/6. After 2015/6, Net Current Assets from 0.8 during 2013/4, to 0.64 during 2015/6. After
increased significantly because of massive growth Current
2015/6, in Ratioincreasedsignificantlybecauseof
current assets in comparison to current liabilities. massive growth Netin current assets in comparison to current
Current Assetsof the Bank during FY 2017/8 was NPR liabilities. Current Ratio of the Bank during FY 2017/8
24,371.6 million, as compared to NPR -3,267.18 million was 1.39, as compared to 0.8 during FY 2013/4, with
duringFY2013/4. compoundannualgrowthrate(CAGR)of12.3%
Because of extensive expansion of business and current Because of extensive expansion of business and high
assets, Net Current Assets of the Bank has increased increase in current assets, in comparison to current
massively from -1,27.98 during FY 2016/7to NPR liabilities, Current Ratio of the Bank has increased
24,371.6duringFY2017/8. massively by 43.06% during FY 2017/8 from NPR 0.97
duringFY2016/7.
NETPROFITPEREMPLOYEE
Net Profit per Employee represents the average net 1.40 profit
earned by the staff of the Bank. Trend of Net Profit per
Employeewasdecliningoverthepastfewyearsasaresultof
0.93 0.97
recruitmentoflargenumberofstafftofulfilltherequirementof
In NPR Million
skilled and capable staff to support the growth and expansion

of business. Net Profit per Employee of the Bank was NPR 0.84
0.58
0.58millionforFY2017/8,ascomparedtoNPR1.40million
forFY2013/4.
NetProfitperEmployeeforFYwas
2016/7 NPRmillion,
0.84
whichdecreasedby30.6%duringFY2017/8
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
l 69 l
INTERESTINCOME/LOANSAND STAFFCOSTPEREMPLOYEE
ADVANCESINVESTMENT
&
0.78
0.64
0.58
10.45 10.12
0.49
In NPR Million
9.10 0.48
8.31
7.77
Percentage
It represents the ratio of interest income earned by the Staff Cost per Employee represents the average staff
Bank in comparison to total of loans and advances and expensesincurredperemployee.StaffCostperEmployee
investments. Interest Income/Loans and Advances was& on declining trend over the last few years prior to this
Investment was showing a slightly fluctuatingyear. trend
However, Staff Cost per Employee has increased
over the past five years. Interest Income/Loans and massively during the year as a result of the Bank’s policy
Advances & Investment of the Bank was 10.2% to retain skilled and capable employees, promotion
during FY 2017/8, as compared to 10.45 during FY to deserving employees, hiring of talented and skilled
2013/4. staff in this competitive market, and the Bank’s polic
towards growth and development of the staff. Staff Cost
Interest Income/Loans and Advances & Investment per Employee of the Bank was NPR 0.78 million for FY
increased by 1.2% in FY 2017/8 from 9.10% in FY as
2017/8, comparedtoNPRmillion
0.64 forFY2013/4
2016/7.
Staff Cost per Employee for FY 2016/7 was NPR 0.48
million,whichincreasedby62.47%duringFY2017/8.
TOTALCREDITS/DEPOSITS
85.62 86.30
It represents the credit facility provided by the Bank in 83.70

comparison to deposits collected from the customers.
Percentage
Total Credits/Deposits was showing a fluctuating 82.93trend
over the last five years. The Total Credits/Deposits of the81.03

Bank as on mid-July 2018 was 86.30%, as compared to
82.93%asonmid-July2014.
Total Credits/Deposits increased by 3.1% during FY

2017/8from83.70%asonmid-July2016/7.
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
l 70 l
INTERESTEXPENSES/ TOTALCOST/TOTALREVENUE
TOTALDEPOSITSANDBORROWINGS
6.53
5.99 62.04
5.61
5.12
4.41
46.14
41.56 40.30
Percentage
34.12
Percentage
It represents the ratio of interest expenses incurred by It represents total cost incurred by the Bank in comparison
the Bank in comparison to total deposits andto total revenue earned. Total Cost/Total Revenue
borrowing.
Interest Expenses/Total Deposits and Borrowings showing increasing trend over the last few years. Tot
was
showing slightly decreasing trend in the beginning, but Cost/TotalRevenueoftheBankasonmid-July,was 2018
started showing increasing trend over the past 62.04%,ascomparedfive yearsto34.12%asonmid-July,2014.
astheinterestratewasincreasingoverthelastfewyears.
Interest Expenses/Total Deposits and Borrowings Total of Cost/
the TotalRevenueincreasedby34.%duringFY
Bank was 6.53% in FY 2017/8 as compared to 5.9% 2017/8from46.1%asonmidJulyFY2016/7.
duringFY2013/4.
InterestExpenses/TotalDepositsandBorrowingsincreased
by16.4%from5.61%duringFY2016/7.
EXCHANGEGAIN/TOTALINCOME
3.29
2.84
ExchangeGain/TotalIncomerepresentsthecontributionof
2.27
exchange gain in the total income of the Bank. Exchange 2.36
Gain/Total Income was increasing during the first two
Percentage
years, and then started to decline for the next two years.
1.42
ExchangeGain/TotalIncomeoftheBankwas1.42%inFY
2017/8ascomparedto2.7%duringFY2013/4.
Exchange Gain/Total Income decreased by 39.8% in FY

2017/8from2.36%inFY2016/7.
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
l 71 l
NETPROFIT/TOTALLOAN EARNINGPERSHARE
36
28
26
2.23 23
2.03
1.79
1.57
In NPR
17
1.10
Multiple
Net Profit/Total Loan represents ratio of the Net Earning Profit per Share represents the share of each of the
earned by the Bank in comparison to total loan of the outstandingordinaryshareintheprofitearnedduringth
Bank. Net Profit/Total Loan was fluctuating slightly year by the Bank. Earning per Share of the Bank was in
over
thelastfiveyears,asthetotalloanwasonanincreasing a declining trend over the past few years as a result of
issuance of large number of bonus shares to meet the
trend and the net profit was showing slightly fluctuating
minimum capital requirement of NPR eight billion that
trend. Net Profit/Total Loan of the Bank was 1.0 during
FY2017/8,ascomparedto2.3inFY2013/4. wasrequiredtobefulfilledbymid-Julyas 2017, directed
by Nepal Rastra Bank. Earning per Share of the Bank
Net Profit/Total Loan decreased by 46.01% during FY was NPR 16.2 for FY 2017/8, as compared to NPR
2017/8from2.03duringFY2016/7. 35.98forFY2013/4.
EarningperShareforFY2016/7wasNPR23.06,which
decreased27.91%
DIVIDENDINCLUDING
( BONUS)ON
SHARECAPITAL
Percentage of dividend distributed and the bonus shares

issued to the shareholders on the share capital has been
on a declining trend over the last few years, which was
due to increased share capital over the last few years.41.05
Percentage of Dividend (Including Bonus) on Share
Capital of the Bank was 10.53% during FY 2017/8 as 30.00
27.37
comparedto30%duringFY2013/4.
Percentage of dividend distributed and the bonus shares

Percentage
21.05
issued to the shareholders on the share capital decreased in

FYfrom
81/7 02 in
%50.12 FYwith
71/6 02 adecliningrate
ofas ,%89. 4 highernumberofbonusshareswereissued 10.53
during earlier years so as to meet the minimum capital
requirement of NPR eight billion that was required to be
fulfilledbymid-Julyas 7 1 0 2 directedbyNepalRastraBank.
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
l 72 l
PRICEEARNINGPE)
( RATIO STOCKPERFORMANE
Closing Stock Price Per Share (In NPR)

28.19
26.96
24.11
970
19.30 19.01 798

617
Ratio
445
316
PERatiorepresentstheratioofearningpershareincomparison Stock price of the Bank was in a declining trend over the
tocurrentshareprice.TrendofPERatiooftheBankoverlast the few years as a result of poor market condition, and the
lastve fi yearswassimilartothatofEarningperShareNEPSE andwas on a declining trend over the last few years.
closingstockpricepershare.PERatiooftheBankwas1 0 . 9 1 ClosingStockPriceperShareoftheBankwasNPRas 613
foras FY
, 8 1 / 7 1 0 2 comparedto for
6 9 . 6 2 FY
.41/3102 onmidJulyas , 8 1 0 2 comparedtoNPRas 0 7 9 onmidJuly
.4102
PERatioforFY was
7 1 / 6 1 0 2 which
,03.91 decreasedduring
FY
with
81/7102 adecliningrateof .%05.1 ClosingStockPriceperShareasonmidJulywas 7102 NPR
, which
54 decreased during FY8 with 1/7102 a declining
rateof. % 9 . 8 2
CASHDIVIDENDONSHARECAPITAL
Percentage of cash dividend paid to the shareholders

15.00
on the share capital was on a declining trend over the
last few years, which was due to increased share capital
over the last few years, and cash dividend was mostly
distributedasapartoftaxonissuanceofbonusshares.
Percentage of Cash Dividend on Share Capital of the
Percentage
Bank was 0.53% during FY 2017/8, as compared to

15.0%duringtheFY2013-4.
Percentage of cash dividend paid to the shareholders on 2.05

1.37
thesharecapitaldecreasedbyfrom 49.52% in
1.05% FY 1.05 0.53
2016/7.
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
l 73 l
CAPITALADEQUACYRATIO NO.OFSHARES
80
67
14.05
13.83
46
Million
Percentage
27
12.49 12.44
12.24 23
CapitalAdequacyRatiorepresentsthemeasureofcapital Increase in number of shares in FY 2016/7 was to due

ofabank’seligiblecapitalexpressedasapercentage issue of of bonus share and right shares, increase in FY
2015/6wasdueto
its risk weighted asset. There were slight fluctuations in issueofrightshares,increaseinFY
the CAR of the Bank over the last five years. However,2014/5was
it duetoissueofbonusshares.
was always higher than the regulatory requirement and
thatrequiredbytheICAAPoftheBank. IncreaseinnumberofsharesinFYwas 2017/8 alsodue
toissueofbonusshares.
MARKETCAPITALIZATION
Market Capitalization represents total market value of 36511

all the Bank’s outstanding shares. Market Capitalization
showed a similar trend to that of Closing Stock Price 29782
per Share over the last five years. Market Capitalization 25378
is also on a declining trend over the last few years due
In NPR Million
22422
to poor market condition. Market Capitalization of the 16402

BankwasNPR25,378.millionasofmid-July2018,as
comparedtoNPR2,4.05millionasofmid-July2014.
Market Capitalizations on mid July 2017 was NPR

29,78.06 million, which decreased during FY 2017/8
withadecliningrateof14.79%
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18
l 74 l
The Bank is vigorously
moving ahead for
achievement of long- ANNUAL REPORT 2017/2018
term goals like special

focus on personal and
small and medium
enterprises loans,
saving deposit,
increase in customer
base, and increase in
share of non-interest
income during the
review period.
l 75 l
2.2
HORIZONTAL AND VERTICAL ANALYSIS
STATEMENT OF FINANCIAL POSITION

In NPR Million
Mid July Horizontal Analysis Variance Vertical Analysis Composition
Particular
2018 2017 2018 to 2017 2018 2017
ASSETS
Cashandcashequivalent 8,132 3,480 13.70% 4.76% 3.7%
DuefromNepalRastraBank 15,86 10,29 54.12% 9.28% 9.8%
PlacementwithBankandFinancialaInstitutions 314 1,493 -78.9% 0.18% 1.45%
Derivativefinancialinstruments. 1,26 3,029 -58.20% 0.74% 2.94%
Other trading assets 0 0 0.% 0.% 0.%
LoanandadvancestoB/FIs 4,658 1,630 185.7% 2.7% 1.58%

Loansandadvancestocustomers 15,80 70,61 63.9% 67.4% 68.49%
Investment securities 14,3 10,2 41.05% 8.27% 9.72%
Current tax assets 0 10 -10.% 0.% 0.1%
Investment in subsidiaries 270 10 170.% 0.16% 0.1%
Investment in associates 0 0 0.% 0.% 0.%
Investment property 74 48 54.1% 0.4% 0.5%
Propertyandequipment 1,759 1,063 65.2% 1.03% 1.03%
GoodwillandIntangibleassets 50 35 40.82% 0.3% 0.3%
Deferredtaxassets 0 0 0.% 0.% 0.%
Other assets 8,621 1,293 56.2% 5.04% 1.25%
Total Assets 170,943 103,108 65.79% 100.00% 100.00%
LIABILITIES
DuetoBankandFinancialInstituions 1,630 7,3 49.62% 6.80% 7.54%
DuetoNepalRastraBank 742 0 10.% 0.43% 0.%
Derivativefinancialinstruments 1,72 3,0 -42.61% 1.0% 2.91%
Depositsfromcustomers 139,50 79,06 74.69% 81.6% 7.50%
Borrowing 0 0 0.% 0.% 0.%
CurrentTaxLiabilities 25 0 10.% 0.1% 0.%
Provisions 0 0 0.% 0.% 0.%
Deferredtaxliabilities 3 56 -94.6% 0.% 0.5%
Other liabilities 2,074 1,458 42.% 1.2% 1.4%
Debtsecuritiesissued 3,48 501 59.84% 2.04% 0.49%
SubordinatedLiabilities 0 0 0.% 0.% 0.%
Total liabilities 159,273 92,694 71.83% 93.17% 89.90%
l 76 l
EQUITY
Share capital 8,031 6,93 20.% 4.70% 6.49%
Share premium 0 0 0.% 0.% 0.%
Retained earnings 94 1,845 -48.% 0.5% 1.79%
Reserves 2,69 1,87 43.56% 1.58% 1.82%
Totalequityattributabletoequityholders 1,670 10,45 12.06% 6.83% 10.%
Non-controlling interest 0 0 0.% 0.% 0.%
Totalequity 1,670 10,45 12.06% 6.83% 10.%
Total liabilities and equity 170,943 103,108 65.79% 100.00% 100.00%
EarningPerShare 16.2 20.4 -18.53%
DepositsfromcustomersandLoansandAdvancestocustomersincreasedbyand 74.69% respectively,

63.9%, during
thereviewperiod,andtheoverallincrementofTotalAssetswas65.79%Theincreaseinsharecapitaldurin
periodisduetodeclarationofstockdividendbytheBank.
Aspertheverticalanalysis,theshareofDepositsfromcustomershasincreasedtoduring 81.6% theyearfrom

of previous year, while share of Loans and Advances to customers has posted a marginal decrease to 67.5% fro
68.49%
STATEMENT OF PROFIT OR LOSS

Horizontal
Particular Mid July Analysis Vertical Analysis Composition
Variance
2018 2017 2018 to 2017 2018 2017
Interest income 13,546 7,089 91.0% 10.% 10.%
Interest expense 9,36 4,36 13.9% 68.92% 61.5%

Net interest income 4,210 2,76 54.% 31.08% 38.45%
Feesandcommissionincome 96 70 36.5% 7.13% 9.7%
Feesandcommissionexpense 96 50 93.1% 0.71% 0.7%
Net fee and commission income 870 657 32.5% 6.42% 9.27%
Net interest, fee and commission income 5,079 3,8 50.1% 37.50% 47.2%
Net trading income 195 162 20.79% 1.4% 2.8%
Other operating income 84 58 4.0% 0.62% 0.82%
Totaloperatingincome 5,38 3,602 48.7% 39.56% 50.82%
Impairmentcharge/(reversal)forloansandotherlosses 305 (70) -537.46% 2.5% -0.98%
Net operating income 5,03 3,672 37.61% 37.1% 51.80%
Operating expense
Personnel expenses 1,782 1,3 57.30% 13.6% 15.98%
Other operating expense 1,237 581 13.09% 9.13% 8.19%
Depreciation&Amortisation 16 129 -10.36% 0.85% 1.82%
OperatingProfit 1,98 1,829 4.86% 14.6% 25.81%
Non operating income 3 15 -98.3% 0.2% 2.19%
Non operating expense 10 32 247.6% 0.81% 0.45%
Profitbeforeincometax 1,8 1,953 -7.30% 13.7% 27.5%
l 77 l
Income tax expense

CurrentTax 52 625 -15.9% 3.8% 8.2%
DeferredTax (50) (38) 31.7% -0.37% -0.53%
Profit for the period 1,335 1,365 -2.24% 9.85% 19.26%
Net Interest Income, Net Fees and Commissions of previous year, while share of Interest Income has
Income, Net Operating Income, and Operating Profit decreasedtofrom 31.08% Further,
38.45% shareofTotal
haveincreasedby54.%,32761and4.86%, Operating Income and share of Net Operation Income
respectively, during the review period. However, haveProfidecreased
t to 39.56% and 37.1%, respectively,
beforeIncomeTaxandNetProfitafterTaxdecreasedduring by the year from 50.82% and 51.80%, respectively,
and
7.30% respectively,
2.4%, duringthereviewperiod, ofpreviousyear.Further,shareofOperatingProfit,share
as the Non-Operating Income decreased by 98.3%, ofProfitbeforeTax,andshareofNetProfitafterTaxhave
andtheNon-OperatingExpensesincreasedby247.6% decreased by 14.6%, 37 and 9.85%, respectively,
duringthereviewperiod.ThedecreaseinNetProfiduring tafter the year from 25.81%, 27.5%, and 19.26%,
Tax during the review period is due to opening ofrespectively,
large ofpreviousyear.
numberofnewbranches.
Aspertheverticalanalysis,theshareofInterestExpenses
has increased to 68.92% during the year from 61.5%
l 78 l
2.3
VALUE CREATION
VALUE CREATION STRUCTURE

Our Value Creation Structure is guided by our vision: “To ensure creation of optimum values for all th
TheBankcreatesvaluesnotonlyfortheshareholdersandcustomers,butalsoforallthestakehold
operationalactivities,byutilizingvariousinputsandresourcesoftheBank.
Thevaluecreationstructureofthebankisdepictedinthediagrambelow:
INPUTS
Financial Capital Intellectual Capital Manufactured Capital

- Equity - Management and Control System - Branches
- Reserves - Technological Capabilities - Branchless Banking
- Deposit and Borrowings - Integrated Risk Management - Remittance Agents
- Capital Adequacy - Culture and Process - ATM
- Knowledge and E-learning - IT Infrastructure and
Human Capital innovations
- Employee Engagement Social and Relationship Capital
- Experience and Competent Human - Relationship with Stakeholders
Resources - CSR Activities
- Technical and Managerial Skills - Quality Service to Customers
- Diversity and Equility - Awards and Recognitions
PROCESSES
Business Activities Supporting Activities
- Strategic Planning and Budgeting - Human Resource and Training
- Corporate Banking - Marketing
- SME Banking - Research and Development
- Retail Banking - Administration and Engineering
- DSL Banking - IT System Development
- Treasury - Finance, Legal and Recoveries
- Transaction Banking - Risk Management and Internal Audit
- Trade Operation
- Card Center
- Remittance Business
- Strategic Business Development
OUTPUTS
Financial Capital Intellectual Capital Manufactured Capital

- 12.09 % Return on Equity - Systematic and Quick Approval - 112 New Branches Opened
- NPR 1,918 Million Operating Profit Processes during the year
- NPR 1,335 Million Net Profit - 15 New Branchless Banking
- 12.24% Capital Adequacy Ratio Social and Relationship Capital Opened during the year
- 0.0697% NPL Rate - 10% bonus share and 0.526% cash - 1948 New Remittance Agents
dividend paid Established during the year
Human Capital - Various CSR Activities conducted - 125 New ATMs Opened
- 125 External and 129 Internal - 1.15 Million Customer Base during the year
Trainings Conducted - Contributed towards the national - Improvement and Expansion
- 307 Employees Promoted policy of access to financial services of Digital Banking
- NPR 1,782 Million Paid for Staff - Contributed towards the economic - Reduction in Turn Around
Benefits growth of the country Time
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VALUE CREATION BY THE BANK NPR 1.34 billion, respectively, during the review period.
The Bank has Return on Equity and Return on Assets
FORCUSTOMERS of 12.09 % and 0.97%, respectively, for FY 2017/8.
Wecreatevaluebyprovidingproductsandservices However, that stock price of the Bank was on a declining
help people to improve their lives and fuel economic trend during the review period due to unfavorable market
growth. The development of new IT systems, mobile scenario.
banking, and other electronic banking services via
multiple electronic channels has made it possible for the FORTHESUPPLIERS,VENDORSAND
banking industry to create more and more value for their BUSINESSPARTNERS
customers. Customer views and needs are changing TheBankcreatesvaluetosuppliers,vendors,andbusiness
every day, and if we look at the service development of partnersbyhelpingthemgrowandexpandtheirbusiness.
our Bank, we can proudly say that we are doing our best The Bank is always committed towards making timely
to provide service through digital channels for creating payment of dues and complying with the contractual terms
and adding value to customers. We believe that and what conditions with them. As the Bank is growing and
differentiates a winner from others is the value creation for expanding its branches and business, it will create more
customers. Various products and services are designed business for the suppliers, vendors, and
demand and
and delivered in a way to help our customers secure their business partners, thereby helping them grow and expand
financial futures, by supporting people when making their businesses. During the review period, the Bank has
life- changing decisions, through seamless processing opened2 1 new branches, 5 1 new branchless banking,
of transactions, and by empowering customers to have new
5 2 1 ATMs,andnew
8491 remittanceagents,andthe
greater insight into their financial affairs. The deposit
Bank has and loans & advances of the Bank increased by
focused on providing more value from single product NPR5 . billion
46 and NPR2 billion,
.84 respectively, due
by reengineering our product after adequate market to which massive growth was seen in the business of the
research and bundling up different services with savings Bank’s suppliers, vendors, and businesspartners.
depositsinanappealingproduct.TheBankisexpanding
its digital banking services by developing proper policy FOREMPLOYEES
and guidelines in order to provide the customers TheBankcreatesvaluestotheemployeesbyhelpingthem
convenient financial services with less complexity grow, develop,
and and improve their skill and capability, and
imporved flexibility. The Bank is also making continuous byprovidingincentivesfortheirhardwork.TheBankhas
effort to develop customer loyalty and brand name of the established itself as a platform for development of skills,
Bankbydevelopingappropriatepoliciesandguidelines. knowledge, and capacity of employees, and various
activities have been performed to ensure that culture
FORINVESTORSANDSHAREHOLDERS of gaining knowledge is developed among employees.
TheBankcreatesvaluetotheinvestorsandshareholders The Bank has incurred an amount of NPR 1.78 billion
in the form of return on investment and return on assets, towards employee expenses during the review period,
profit,distributionofbonussharesanddividend, out ofwhich,NPRmillion
market 43.1 wasincurredtowardsstaff
value of stock of the Bank, and the creation of brand training expenses for the development and growth of the
value. The Bank has been able to create signifi employees.
cant During the review period, 125 external and
brandvalueduringthereviewperiod.TheBankhasbeen 9 2 1 internal trainings were attended by the staff for skill
able to achieve outstanding growth in terms of business and capacity development. During the review year, 307
expansion, i.e. increase in lending and deposits, deservingemployeeswerepromoted.
expansionofBanknetworks,etc.TheBankhasproposed
FORGOVERNMENTANDSOCITIES
bonus share at the rate of 10% of paid-up capital, plus
cashdividendattherateofequivalent
0.526% amountThe
toBankcreatesvaluestothegovernmentandsocieties
thetaxonissuanceofbonusshare.TheBankhasearned by contributing towards the well-being and development
of society, protection of environment and maintaining
operational profit and net profit of NPR 1.9 billion and
l 80 l
ecological balance, paying taxes to the government economy, and enhancing financial access. Till date, the
on time, and helping the government on economic Bank has made contribution of NPR 6.90 billion to the
development of the country, as well as to achieve national Nepal government as direct and indirect tax payment
policygoals. The Bank has made a handsome contribution to the
governmentexchequerofanamountequaltoNPR1.40
The Bank has been playing an active role for thebillion social paid during the review period, which consists of
benefit and development in various areas of society income as taxofNPRbillion,
0.48 andtaxdeductedatsource
a responsible corporate citizen. The Bank has allocated of 0.92 billion. During the review period, the Bank has
1%ofthenetprofitofreviewperiod,NPR13,4869to opened12newbranches,15newbranchlessbanking,
thecorporatesocialresponsibilityreserve.Apart 125 new ATMs, from and 1948 new remittance agents, which
the
above, NIC ASIA Foundation has incurred expenseshave of contributed towards achieving the national policy of
NPR14,536underitscorporatesocialresponsibilityaccess to financial services. The economy is estimated
activities,wherebyseniorcitizens,children,and todisabled
have grown by 5.9% in 2017/8, while such growth
personsindeprivedareaswerebenefitedfromthe was
same.7.4% in 2016/7. During the review period, GDP of
TheBankhascarriedoutvariousCSRactivities, the such country as was 791. billion, with growth rate of 5.9%
tree plantation program, distribution of warm clothes to from previous year. The contribution of service secto
victims of natural calamities, and assistance to various to the GDP was 438.9 billion, with growth rate of 6.%
educationalprograms. frompreviousyear.Duringthereviewyear,theBankhas
increased the deposit and loans & advances amount
The Bank has ensured its noteworthy contribution by NPR 64.5 billion and NPR 48.2 billion, respectively,
to national goals like raising the living standard of the whichhashelpedtoincreasetheGDPofthecountryand
deprived sector, supporting employment creation, enhanceitseconomicdevelopment.
increasingtax/revenuecollection,promotionofcashless
Automation of
Strengthening
Processes
Information
Technology
Platform
Compliance
and Internal
Audit
Framework VALUE Trainings
CREATION and Capacity
Building
Turn-Around
Time (TAT)
Centralization
of Functions
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2.4
FUTURE PROSPECTS
NIC ASIA Bank has strategically charted its future toll in the global banking scenario, the Bank is committed
roadmap through vision and mission statements and to spread this global trend throughout the country for
therefore its operations are being executed as sustainable
decided. online banking service. The Bank looks
Our banking endeavors are under control and hence our forward to establishing itself as a leader bank in terms of
futureissecured.Infuture,wewillexerciseourforemost digitalbanking.
effort in supporting the government vision of broader
nancial
fi inclusion through pervasive nancial fi Our Business Process Reengineering Department is in
access.
We have already set on this path by opening highest constant pursue to reimaging the banking practices as
number of rural branches in the country till date and we necessaryinordertoadaptwiththechangingenvironment.
willcontinuetodosoinfutureaswell. NIC ASIA does not want to settle as a traditional player but
wants to thrive as an innovator in the banking scenario of
Our agile performance in the past has given us an the country by embedding the disruptive changes such
unprecedented success, and in the future, we plan to as use of artificial intelligence, machines and changing
simplify our operations to maintain economy and reduce customerperceptioninitsbankingpractice.
organizational complexity. We will seek ways to create
a cohesive culture and employee loyalty because our We will seek to make NIC ASIA the most prominent and
success so far is the outcome of robust culture and visible brand in the country while keeping the motto
hardworkingemployees. “Bank Pani Sathi Pani, Ramro Pani Hamro Pani” as
our core business philosophy and try to eliminate any
In future, NIC ASIA will elevate its banking operations in factors causing reputational damage by complying with
par with international standard with the use of modern statutory requirements and serving society as a part o
digital technology and innovative business models. ourcorporateAs responsibility.
digital banking and online payments have been taking
The Bank shall

continue to bring
Any Time
more robust risk
Any Where
management
Any Device
practices and
DIGITAL RISK control to manage
BANKING MANAGEMENT aggressive business

growth as envisaged
by the Bank.
Enterprise Risk
Management shall
be ensured through:
OUR FUTURE LIFESTYLE • Identification, •
Analysis, • Action
APPROACHES BANKING • Monitoring, •
Digital integration of daily routine Control
of customers (shopping, studying,
traveling, working, etc.) with
electronic channels like: •Point of
SERVICE sale, •ATM, • Mobile banking,
EXCELLENCE •Internet Banking, •SMS
Banking, and so on.
Bank has resolved to establish “SERVICE DNA” as an

integral part of the organization. The Bank shall adopt
service excellence as its key competitive edge providing
unique selling proposition.
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FOOTPRINT
EXPANSION
STRATEGY 2020
Strategyhas 20 thestrategicobjectiveofsettingcourse
tobecometheleadingclient-centricbankinthefinancial BALANCE SHEET
sphere of Nepal in the course of fulfilling its vision and SIZE GROWTH
mission.ThisrequiresstrengtheningtheBank’sbusiness
model in the changed environment
• Strategyaims 02 atpositioningtheBankamongst
the most aggressive banks, and at the forefront of
bringingabouttherequiredculturalchangeintheBank STRATEGY 2020
• Strategyaffi 02 rmslong-standingcommitmentto IMPLEMENTATION
continuousimprovementintheBank’sbusinessmodel
• Strategy20recognizesachievementof-in- best
classoperationalexcellencevideautomatization
• Toincreasethesavingdepositholdersbasebyopening
• Strategy20reaffirmsrequirementofcombinationof
million
7.0 newsavingaccountsduringtheyear.
organic capital growth plan, vis-a-vis inorganic growth
• To reach loans and advance of NPR 185 billion, with
plan,tomeetthestipulatedcapitalrequirementof
increment in lending by NPR 65 billion, as compared
NPReightbillion(setbytheMonetaryPolicy207/3)
toloansandadvancesofNPRbillion 120 attheendof
withinFY2073/4
FY2017/8.
• Strategyenvisages 02 centralizationofkeyriskareas
• Toexpeditetheexpansionofrevenuecollectioncounte
in operations as the crucial operational risk mitigation
andtoreachthetotalnumberofbranchesto. 9 1 3
• TocelebratetheyearasYearofCapacityManagement
Strategy20setsthefollowingfinancialaspirations
to bring drastic change in the work capability of the
• To increase current and saving accounts (CASA)
employees by ensuring participation of maximum
portfolioto50%+
number of employees in the trainings and skill
• To achieve retail banking and SME to corporate
developmentprograms.
bankingportfoliomixof70:3
• Toincreasethetransactionsthroughdigitalchan
• Toimprovecost-incomeratiotolessthan40%
theBankto50%from32%.
• Toimprovenon-fundbasedincometototalrevenueto
• Toincreasethedebitcardholdersbasebyselling0.49
25%+
millioncardsduringtheyear.
• To reach post-tax return on average equity of 20% or
• To earn interest income of NPR 21.3 billion with the
more
incrementofNPR7.6billionfromtheinterestincome
ofNPR13.54billionduringtheFY2017/8.
Three years of theve- fi year ‘Strategy’02 have already
• Tofulfillsocialresponsibilityasaresponsiblecorpo
passed. The Bank is in a very comfortable position to
citizen, with main focus on financial literacy and
achieve the goals set under Strategy 02 as the Bank
inclusionduringtheyear.
is already in the leading position in terms of various
performanceparametersintheindustry,whichreflectsand
ThebankhassofarwonmanybattlesunderitsStrategy
provestheworkefficiencyandcapabilityofthe Bank.
20mission.
ThebankhasdeterminedfollowingtargetfortheFY :91-8102
Although we have achieved a lot in these three years of the
• To earn net profit of NPR three billion, with increment
ve-
fi year Strategy02 mission, many of our aspirations
rate of 125%, as compared to net profit of NPR 1.3
yet remain to be achieved. We fully commit to employ
billioninFY2017/8.
adequate resources to achieve the goals set unde
• To reach deposit collection of NPR 20 billion, with
Strategymilestone
02 intheremainingperiodandhone
increment in deposit collection by NPR 69 billion, as
our banking practices as one of the best in the country,
compared to deposit collection of NPR 15 billion at
therebysettingabenchmarkfortheentirebankingindus
theendofFY2017/8.
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2.5
HUMAN RESOURCE ACCOUNTING
Thebankiscommittedtoachievingitsstrategicmission,NUMBER OF STAFFS
while ensuring employees are engaged and motivated.
Thegoalistorecruitandretainemployeeswhopossess
the competencies and skills required for the bank to
implementitsstrategy.HumanResourcesaimtobenefit
from multicultural, well-informed, and target-oriented
employees who integrate their personal goals with
that of the Bank. The bank believes that professional 932 720 1,359 1,035
development of employees, improvisation of expertise 2017-8 2016-7 2017-8 2016-7
and adequate trainings determine the basis of success

of bank. Bank has decided to celebrate current fiscal TOTAL
year as “Year of Capacity Management” by prioritizing 2,291 1,755
2017-8 2016-7
enhancement of expertise, proficiency and leadership
skillsofhumanresource.
Employee expenses was NPR 1.78 billion for the FY EMPLOYEE EMPLOYEE
2017-8 as compared to NPR 1.3 billion last year as EXPENSES TYPE
(NPRINBILLION)
a result of opening of 12 branches during the year 2 2
as well as hiring of new employee during the year to 1.8
1.78 1.8 Male
Female
fulfill the requirement of skilled employee in the 1.4 various 1.4
1.2 1.13 1.2
department and branches with the objective to1 increase 1 1225
the size of business and due to the yearly performance 0.8 0.8 839
appraisal and promotion of deserving employees. Total 0.6 0.6
0.4 0.4
number of employees of the bank has reached to 2,91
0.2 0.2 125 81 9 12
in the year as compared to 1,75 last years, with the 0 0
2017-8 2016-7 Regular Contract Outsourced
increment of 536 employees. Total staffs at the end of
FYconstituted
2017-8 male
59.32% andfemale
40.68%
staffs.
AGE WISE ANALYSIS OF THE EMPLOYEES
Particulars 2017-18 2016-17 % Increment
Regular Contract
StaffExpenses(NPR‘Million) 1,780 1,30 57%
Category Male Female Male Female Total
Number of Staffs 2,91 1,75 30.54%
Above60Years 0 0 1 1 2
StaffExpensesperStaff(NPR) 7,86 645,2 20.5%
51-60Years 8 1 8 0 17
NetProfitPerStaff(NPR) 582,6 839,52 -30.6%
41-50Years 68 12 7 0 87
31-40Years 452 169 16 5 642
21-30Years 697 657 93 75 152
20Years&Below 0 0 0 0 0
Total 1225 839 125 81 2270
l 84 l
STAFF TRAINING & DEVELOPMENT Training Conducted During FY 2017-18

Realizing the fact that employees are the most valuable
asset, we believe that training expenses spent on the
development of their skills and capability is an investment
for achieving long-term strategy of the Bank. The Bank
has always considered its staff as an essential asset of
the organization. Participation of employees in various
internal and external trainings is ensured to enhance their 129 125
capability, to motivate them, and to develop their skills Internal External
Trainings Trainings
and knowledge in line with meeting the demands of a
dynamicenvironment.
During the review period, the Bank spent 43.1 million

on Staff Training Expenses, which is 2.4% of total staff
expenses(withstaffbonus)As . perrequirementofNepal
Rastra Bank, Staff Training Expenses should be at STAFF
leastBENEFITS AND FACITILITES
3% of total staff expenses of previous year, and the Bank Thebankprovidesthefollowingbenefitsandfacilities
hasspent4.6%oftotalstaffexpensesofpreviousyear thestaffs:
instafftraining.
• wages, salaries and social security contributions,
Particulars 2017-18 2016-17 % Increment • paid annual leave and paid sick leave,
StaffTrainingExpenses42.1 21.3 97.65% • profit-sharingandbonuses,
(NPR ‘Million)
• staff loan facility at concessionery interest rate,
Number of Staffs 2,91 1,75 30.54%
• non-monetarybenefits,
StaffTrainingExpenses18,0 12,40 54.93%
per Staff (NPR) • ContributiontoProvident undand F
• Gratuityetc.
Employee Training Expenses (NPR in Million) Analysisofhumanresourceonthebasisofbenefitsand

facilitiesprovided:
50
42.1
40
Particulars FY 2017-18 (NPR) FY 2016-17 (NPR)
30 Salary 57,40861 248,51

21.3 Allowances 52,8061 394,8270
20
Gratuityexpense 19,30562 (9,2014)
10
Provident fund 47,21 27,9048
0
FY17/8 FY16/7
Uniform 17,9520 6,790238
Training&development 43,08915 21,3056
expense
Leaveencashment 54,238 5,031
During the review period, 125 external and 129 internal
Medical 10,5298 -
trainings were attended by the NIC ASIA staff for skills
Insurance 8,2609 10,6324
and capacity development. The Bank has established
FinanceexpenseunderNFRS 198,270 123,4
itself as a platform for development of skills, knowledge,
Other expenses related to staff 70,825 4,017
and capacity of employees, and various activities have
been performed to ensure that the culture of gaining Employeesbonus 201,789 208,17
knowledgeisdevelopedamongemployees. Total 1,782,112,947 1,132,927,049
l 85 l
HUMAN CAPITAL Followingassumptionswereusedtocalculatethehuman

The Bank is committed to retain skilled and capital capable byusing“TheLevandSchwartzModel”:
employees. The Bank recognizes the value of human
resources in the growth and expansion of business of • As per the staff service bylaws of the Bank,
the Bank. The total value of Human Capital hasemployees been should compulsorily retire after reaching
computed to be NPR 39,81 million for FY 2017/8, as 60yearsofageor30yearsofqualifyingservice.
compared to Human Capital of NPR 14,82 million for - For FY 2017-18:Averageageofemployeesis29.47
FY 2016/7, by using “The Lev and Schwartz Model” years, so average remaining years for compulsory
(Discounted Wages and Salaries). This model involves retirementis30.5years.However,averageyears
determining the value of human resources as present ofservicecompletedis2.61years,soaverage
value of estimated future earnings of employees (in the remainingyearsofserviceis27.39years.Therefore,
form of wages, salaries, etc.) discounted by the rate mean of value of both the average remaining years
returnoninvestment(costofcapital)Increment . inofHuman service has been considered for the purpose of
Capitalof169.02%inthereviewperiod,ascomparedto calculationofhumancapital.Hence,anaverageyear
lastyear,isduetoadditionof536employeesduringthe ofserviceis28.96years,i.e.approximately29years.
review period to fulfill the requirement of new branches - For FY 2016-17: Averageageofemployeesis28.65
and business growth. Also, the decrease in return years, onso average remaining years for compulsory
equityduringFYalso 2017/8 hasimpactontheincrease retirementis31.5years.However,averageyears
ofHumanCapitalduringthereviewperiod. ofservicecompletedis3.26years,soaverage
remainingyearsofserviceis26.74years.Therefore,
FY 2017-18 FY 2016-17 mean value of both the average remaining years
TotalHumanCapital(NPRinMillion)39,81. 14,82.09 of service has been considered for the purpose of
No.ofStaffs(UnderPayroll) 2,064 1,64 calculationofHumanCapital.Hence,anaverageyear
HumanCapitalperStaff(NPRinMillion) 19.3 9.01 ofserviceis29.04years,i.e.approximately29years.
• A verageincrementofemployees’benefitsoverthe
yearsisestimatedtobe10%.
Total Human Capital (In NPR Million) • Discounting factorforthepurposeofcalculating
thepresentvalueoffuturebenefitsofemployees
45,0.
39,891.19 isconsideredasthesameasreturnonequity,i.e.
40,.
12.09%,whichisapproximately12%and16.84,which
35,0.
isapproximately17%forFY2017/8andFY2016/7,
30,.
respectively.
25,0.
• Totalemployees’benefitsincludealldirectand
20,.
14,828.00 indirectbenefitsprovidedtotheemployees.
15,0.
• Contract and outsourced staff are excluded for the
10,.
purposeofcalculationofHumanCapital,astheyare
5,0.
notincludedinthepayrolloftheBank.
0
FY17/8 FY16/7 .
l 86 l
StatementofFinancialPositionofthebankbyconsideringHumanCapital:
FY 2017-18 FY 2016-17
Assets
Cashandcashequivalent 8,132 3,480
DuefromNepalRastraBank 15,86 10,29
PlacementwithBankandFinancialInstitutions 314 1,493
Derivativefinancialinstruments. 1,26 3,029
Other trading assets 0 0
LoanandadvancestoB/FIs 4,658 1,630
Loansandadvancestocustomers 15,80 70,61
Investment securities 14,3 10,2
Current tax assets 0 10
Investment in susidiaries 270 10
Investment in associates 0 0
Investment property 74 48
Propertyandequipment 1,759 1,063
GoodwillandIntangibleassets 50 35
Human Assets 39,891 14,828
Deferredtaxassets 0 0
Other assets 8,621 1,293
Total Assets 210,834 117,936
Equity and Liabilities
DuetoBankandFinancialInstituions 1,630 7,3
DuetoNepalRastraBank 742 0
Derivativefinancialinstruments 1,72 3,0
Depositsfromcustomers 139,50 79,06
Borrowing 0 0
CurrentTaxLiabilities 25 0
Provisions 0 0
Deferredtaxliabilities 3 56
Other liabilities 2,074 1,458
Debtsecuritiesissued 3,48 501
SubordinatedLiabilities 0 0
Human Capital 39,891 14,828
Share capital 8,031 6,93
Share premium 0 0
Retained earnings 94 1,845
Reserves 2,69 1,87
Total Equity and Liabilities 210,834 117,936
l 87 l
2.6
STAKEHOLDERS ANALYSIS
The Bank operates with a vision to ensure creation Bank depends

of on the progress of overall stakeholders,
optimumvaluesforallthestakeholders.Ourstakeholders rather than its progress alone. The Bank has always
are those individuals or organizations who have received, and expects to receive in future, the contribution,
direct
or indirect interest in our success or failure, and whose cooperation, encouragement, and motivation from all its
opinions and actions can impact the business of the stakeholders. Success and sustainability of the Bank
Bank, or be affected by the activities and decisions of the primarilydependuponitsrelationwiththestakeholde
Bank. This Bank follows the belief that progress of the
Board of
Investors/ Directors
Shareholders
Customers
Society
KEY
STAKEHOLDERS
Employees
Regulatory
Bodies
Suppliers
Lenders
l 88 l
INVESTORS/ SHAREHOLDERS TheBankhasanexperiencedandqualifiedmanagement

teamcapableachievingitsmissionandvision.TheBank
Investors/ Shareholders are the holders of shares has been able to achieve outstanding growth in terms of
of the
Bank. They provide financial capital to the Bank in the expansion,i.e.increaseinlendinganddeposits
business
formofsharecapital.TheBankthereforealwaysaspires expansionofbanknetworks,etc.TheBankhasproposed
toprovideattractivereturnstoitsinvestors/ bonus share at the rate of 10% of paid-up capital, plus
shareholders.
cashdividendattherateofequivalent 0.526% amountto
Investors/shareholders expect attractive return on the tax on issuance ofbonus share. The Bank hasearned
investment, adequate communication of information, operational profi t and net profi t of NPR 9 . 1 billion and
and transparent disclosures. They also NPR 1.34 billion, respectively, during the review period.
expect
reasonable growth, sustainability of business, and proper The Bank has Return on Equity and Return on Assets of
managementofbusiness. and
% 9 0 . 2 1 0.97%,respectively,forFY2017/8.
COMMUNICATION WITH INVESTORS
All the relevant information is communicated to record, share transfer including domestic transfer in
shareholders, customers, and the general public on case of death of a shareholder, replacement of lost
a regular basis through print media (national daily share certificates, pledge of shares, dividend warrant
newspapers) and electronic means (official website bonusof sharesdeclaredandratifiedbytheAGM,payment
the Bank (www.nicasiabank.com). Detailed information against dividend/lost warrant, opening of DEMAT
on annual general meeting of the Bank, including account,anddematerializationofsharesshouldbese
ordinary agendas and special agendas to be discussed totheaddressgivenbelow:
inmeeting,waspublishedinnationaldailynewspaper21
dayspriortothedateofannualgeneralmeeting.
REGISTEREDOFFICE:
Likewise,interimfinancialresultsarepublishedforpublic WardNo.1,TradeTower,Thapathali
reference within the stipulated deadline prescribed Kathmandu, Nepal
by Securities Board of Nepal. Theses interim financial Email:info@nicasiabank.com
results, along with Basel III Disclosures as prescribed P.O.Box:102
by clause 7.4(b) of Capital Adequacy Framework, 2015 TelNo:+97-15/8
underDirectiveof 1 IntegratedNRBDirective,areposted FaxNo:+97-1580
ontheofficialwebsiteoftheBankonaquarterlybasis. SWIFT:NICENPKA
TollFreeNo:160-7
AnyenquiriesrelatedtotheshareholdersoftheBankon
Feedback/grievance can be emailed
share register, i.e. maintenance book of shareholder’s feedback@
to
nicasiabank.for
comtimelyresolution.
l 89 l
BOARD OF DIRECTORS Customers expect quality services from the Bank. It is

MembersoftheBoardofDirectorsaretherepresentatives the responsibility of the Bank to provide protection to the
of the promoter shareholders and general shareholders assets, wealth, investment, and privacy of the customer
elected by the shareholders of business organizations.through secured IT systems and infrastructure. The
It also includes an independent director appointed in customers expect convenient and easy access to the
compliancewiththelegalandregulatoryrequirements. financial services of the Bank, with less complexity and
improved flexibility. The customers expect availability of
There are seven members on the Board of Directors, therequiredservicesfromtheBankatthetimeofneed.
including one independent director and Chairman.
The Board expects the implementation of effective The Bank has been able to expand its business by
internal control and corporate governance, safeguard winning customers’ confidence by providing qualitative
of shareholders’ wealth and value creation services.
to the TheBankisalwaysreadytohelpthecustomers
shareholders, sound financial position and grow and provide financial services as and when
efficient
financial performance of business, reasonable growth required. The Bank has opened 12 branches, 15 new
of business, sustainability of the business, and proper branchless banking, 125 new ATMs, and 1,948 new
management of business. The Board also expects remittance agents during the review period, in order to
proper communication of information and transparent facilitatecustomers’easyaccesstothefinancialservice
disclosure. The Bank is expanding its digital banking services by
developing proper policy and guidelines in order to
The Bank has implemented robust internalprovide control thecustomersconvenientfinancialserviceswit
system and corporate governance by forming relevant lesscomplexityandimprovedflexibility.TheBankisalso
policies and guidelines. Protection of shareholders’ making continuous effort to develop customer loyalty
wealth and value creation to the shareholders are always and brand name of the Bank by developing appropriate
the utmost priority of the Bank. The Bank haspolicies earned andguidelines.
operational profit and net profit of NPR 1.9 billion and
EMPLOYEES
NPR 1.34 billion, respectively, during the review period.
The Bank has achieved remarkable growth in business Employees are the backbone of any business
during the review period; and with the proper strategic organization.Effectiveandefficientperformanceofskilled
planning and successful execution of the same; similar andcapableemployeeshelpthebusinessorganizations
growthisexpectedinthefutureaswell.TheBank grow
hasand
an succeed. It is very important for the business
experienced and qualified management team capable organizations to retain and motivate skilled and capab
of achieving its mission and vision, and for effective employees.
management of business. The Bank management
always communicates the material matters and TheemployeesoftheBankexpectproperandreasonable
information to the Board, and complies with its directions incentives in exchange for their hard work and effort for
andguidelines.TheBankiscommittedtoadequate theand successofthecompany.Theemployeesalsoexpect
transparentdisclosureofinformation. healthy and safe working environment, good relationship
with the employers, and part in the decision-making
CUSTOMERS process, career development opportunities, adequate
Customers are the foundation of any business. training,
The and proper skill and personality development
business cannot sustain and grow without customer programs.
satisfaction. Satisfied customers are the pillars of a
successful business. In today’s cutthroat competition, The Bank has incurred NPR 1.78 billion in employee
it is very important for banks to retain customers and expenditures during the review period, out of which, NPR
developcustomerloyalty. million
43.1 wasincurredtowardsstafftrainingexpenses
l 90 l
forthedevelopmentandgrowthoftheemployees.During the contractual terms, and building healthy business

thereviewperiod,125externaland129internaltrainings relationship.
were attended by employees of the Bank for skills and
capacity development. The Bank has established Theitself
Treasury Department of the Bank is committed
as a platform for development of skills, knowledge, and to maintain healthy relationship with its lenders and
capacity of employees, and various activities have been banking partners, and to provide them with reasonable
performed to ensure that the culture of gaining knowledge and competitive interest rate prevailing in the market on
is developed among employees. The Bank has athe fund invested in the Bank. The Bank always makes
performance appraisal system that ensures growth and an effort to comply with all the contractual terms and
promotion to deserving employees. The Bank provides conditions with its lenders to build long-term relationship
various benefits and facilities to the employees. with them.
(Details
aregiveninthetopic‘HumanResourceAccounting’)
REGULATORY BODIES
SUPPLIERS AND VENDORS Regulatorybodiesarepublicorganizationsorgovernmen
Suppliers and vendors supply goods and services to agenciesthataresetuptoexercisearegulatoryfunct
the business organizations. It’s very important Thisfor involves
the imposing requirements, conditions, o
businessorganizationtomaintainhealthyrelationship restrictions, setting
with the standard for activities, and
the suppliers and vendors to ensure uninterrupted daily enforcing in these areas, or obtaining compliance. The
operationalactivitiesofthebusinessorganization. primary goal for a regulatory body is to protect the public,
Tohelp
theexpansionandgrowthofbusinessorganizations, suchit asis providing and enforcing adequate standards
necessary to build healthy relationship with suppliers and for internal control, governance, and transparency in an
vendors to fulfill the increasing requirement of organization.
stationary
andotherrelatedsuppliesandservices.
TheregulatorybodiesexpectfromtheBank,compliance
Thesuppliersandvendorsexpecttimelypaymentof with
duestheir policies, guidelines, rules and regulations,
and compliance with contractual terms and conditions effective internal control and corporate governance
bytheBank. within the Bank, protection of customers’ asset
investment and privacy, value creation to the general
The Bank is committed to maintain healthy relationship shareholders, implementation of advanced system and
with its suppliers and vendors to ensure the continuous information technology, timely and adequate reporti
supplyofqualitysuppliesandservices.TheBankand spares transparent disclosures and compliance with
no effort to make timely payments and to comply with the applicablelaws.
contractual terms and conditions with the suppliers and
vendors. The Bank is committed to comply with all the policies
guidelines, rules and regulations, and applicable la
LENDERS The Bank has implemented a robust internal contr
Lendersprovidefundtofulfilltherequirementof system
business and corporate governance by forming relevant
organizations. It is very important for the policies businessandguidelines.Protectionofcustomers’ass
organization to maintain healthy relationship investment,
withand theprivacy, and value creation to the
lender to ensure smooth growth and expansion of the general shareholders are always the utmost priority of
businessorganization.Lenders,incaseoftheBank, the Bank. The Bank has developed and implemented
are
thefundprovidersandbankingpartners. various automated reporting systems to ensure timely
and adequate reporting and transparent disclos
Lenders expect competitive interest rate prevailing The Bank has inmade an effort to adopt and implement
the market in the fund they invest, compliance with advanced system and information technology prevailing
inthedomesticandinternationalbankingindustry.
l 91 l
SOCIETY
Society is the environment where the business the above, NIC ASIA Foundation has incurred expenses
organization operates and carries out its ofNPR 14,536undercorporatesocialresponsibility,
business
activities. Business organization operates wherebywithin senior
the citizens, children, and disabled people
society, therefore, it has certain responsibilities towards belongingtothedeprivedareaswerebenefitedfromthe
the society. Business organization needs tosame. act During in a thereviewperiod,theBankhascontributed
sociallyresponsiblemannerandfulfillitsobligations towards corporate
and social responsibility with the following
dutiestowardssocietyasaresponsiblecorporate activities: citizen.
• Carriedouttreeplantationprogramwiththeobjecti
Thesocietyexpectsbankstoactinasociallyresponsible of maintaining healthy and clean environment to
manner and contribute towards the well-being and minimizeeffectofenvironmentalpollutionover
development of society, protection of environment and environmentalandphysicalobjectsandglobal
ecological balance, instead of sole benefit of thewarming. bank.
According to a provision stipulated by Nepal Rastra Bank, • Discouragedinvestmentintheformofloanin
banks are required to allocate 1% of net profit towards industries involved in manufacturing of alcoholic and
activitiesrelatedtosocialresponsibility,i.e.cigarette fortheproducts, benefit which directly affect health of the
oftheseniorcitizens,children,disabledpeople,public. andthe
deprivedsectors. • Distributedwarmclothestothevictimsofnatural
calamities.
The Bank has been playing an active role for social • Provided assistance to various educational programs
benefitanddevelopmentinvariousareasofsociety foras
theadevelopment of educational sector, cancer
responsiblecorporatecitizen.TheBankhasallocated awareness 1% campaign, blood donation programs, and
ofthenetprofitofthereviewperiodi.e.NPR13,4869 social organizations.
tothecorporate social responsibilityreserve.Apart from
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2.7
ECONOMIC OUTLOOK
GLOBAL ECONOMIC EMDE growth edged down to an estimated 4.2% in

OUTLOOK 2018—0.3 percentage point slower than previously
In 2017, 3.% growth was observed in projected—as a number of countries with elevate
the world economy, and price of crude current account deficits experienced substant
oil, which was USD51.83 per barrel financial market pressures and appreciable slowdown
in 2017 rose to USD68.97 per barrel in 2018. But it is in activity. More generally, as suggested by recent high-
projected by the World Bank that due to mild inflation, frequency indicators, the recovery among commodity
growth in the world economy would be at the same exporters has lost momentum significantly, largely
rate. Inflation in world economy was around 2% in 2016 owing to country-specific challenges within this group
which rose to 3.42% in 2017. Similarly, price of gold, Activity in commodity importers, while still robust, has
whichwasUSD1per ,315.42 ounceindecreased
2017 to slowed somewhat, reflecting capacity constraints an
USD1,2.86perouncein2018. decelerating export growth. In low-income countries
(LICs), growth is firming as infrastructure investment
Borrowing costs for emerging market and developing continues, and easing drought conditions support a
economies (EMDEs) have increased, in parts, asrebound in agricultural output. Central banks in m
major advanced-economy central banks continued EMDEs have
to tightened policy to varying degrees to
withdraw policy accommodation in varying degrees. confrontcurrencyandinflationpressures.
Global Growth
World Advanced economies EMDEs

8
6
Percentage
0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
l 93 l
South Asia: Growth is projected to accelerate to 7.1% DOMESTIC ECONOMIC

in 2019. This mainly reflects strengthening domestic OUTLOOK
demand in India, as the benefits of structural reforms, Thedomesticeconomyisonapositive
such as GST harmonization and bank recapitalization, track.Thisisreflectedinanencouraging
take effect. Elsewhere in the region, the forecast is for economic growth in the last two years.
a moderation in activity, notably in Bangladesh and Economicgrowthhasgainedmomentumsince2016/7.
Pakistan. Over the medium term, growth is expected The economy is estimated to have grown by 5.9% in
to remain at 7.1%, underpinned by robust domestic while
2017/8, suchgrowthwas7.4%inDespite
2016/7.
demand in the region. External vulnerabilities are rising,
a sluggish agricultural growth of 2.8% due to the flood
reflected in mounting external debt, wideningin current
the Terai region at the beginning of the fiscal year, the
account deficits, and eroding foreign reserves. Risks toachievedanencouraginggrowthinFY2017/8.
economy
theoutlookareonthedownside.Onthedomestic front,
Thislevelofgrowthwasattainedonaccountofindustria
vulnerabilities are being exacerbated by fiscaloutput slippages
growth of 8.% and service sector’s growth of
andrisinginflation,andthereisariskofdelaysin6.% With structural
the improvement in the growth trajectory, the
reforms to address balance sheet issues in the banking sizeoftheeconomyhasreachedRs.3trillion.
and non-financial corporate sectors. Key external risks
include a further deterioration in current accounts and a For the last two years, the ratio of Gross Domestic
faster-than-expectedglobalfinancialtightening. Savings to Gross Domestic Product (GDP) has been
increasing. Such a ratio is estimated to have reached
It is expected that the Nepalese economy shall face price 15.0% in 2017/8. Gross national savings to GDP is
inflation due to increase in price of crude oil and strong tostandatin
estimated 43.9% A2017/8. highernational
USdollar. savings ratio is witnessed, mainly due to the remittance
inflow. Gross Capital Formation Ratio is estimated to
(Source:BasedonanalysisanddataofWorldBankand
have reached 51.8%, and resource gap is expected to
IMF) remainatof 7.8% GDPNet
. exporttoGDPisestimatedto
have deteriorated slightly to a further negative of 36.7%
(Source: Based on analysis and data of World Bank and IMF) in 2017/8. In the last two years, inflation has remained
Economic Growth Rate Consumer Price Inflation Rate
Percentage Percentage
7.4 4.5
FY2016-7
5.9 FY2016-7 4.1
FY2017-8
FY2017-8
l 94 l
contained. Average consumer price inflation that stood stood

at 4.18% Regarding long-term interest rates, the
at4.5%in2016/7declinedto4.1%inelevenmonthsof weighted average deposit rate of commercial banks
2017/8. stoodatin 6.1% mid-JuneLikewise, 2018. theweighted
average lending rate increased to 12.4% Accordingly,
Current account deficit amounted to Rs. 209.1 billion, the spread between deposit and lending rate stood at
7.0% of GDP, in 1 months of 2017/8. An escalation in 5.81% Nepal Rastra Bank has injected a net liquidity of
import compared to export, raised the trade defi Rs.cit
417.83 billion
to through the net purchase of USD4.01
Rs. 103.4 billion, which is 34.% of GDP. In the review billion from commercial banks during mid-July 2017
period, workers’ remittances increased 7.3% A modest to July 10, 2018. During the period, Indian currency
growthinremittanceinflow,coupledwithmounting equivalenttrade to Rs. 49.6 billion was purchased through
deficit,hasresultedinanupsurgeofthecurrent the
account saleofconvertibleforeigncurrencies.
deficit.Theoverallbalanceofpaymentsthathadremained
insurplusinby 2016/7 Rs.billion
82.1 turnednegative
(Source: Based on data of Monetary Policy of 2018/19 published by
byRs.billion 4.3 inmonths 1 ofHowever,
2017/8. the Nepal Rastra Bank)
banking sector has sufficient foreign exchange reserve
to sustain the prospective import of goods and services
formonths. 9.6 Nepalesecurrencyvis-à-vistheUSdollar
depreciated by 6.2% as of July 10, 2018, compared to THE STOCK MARKET
midJulyThe 2017. buyingrateperUSdollarstoodatRs. The NEPSE Index was on a declining
109.64 on July 10, 28. In 2016/7, Nepalese currency trend during most of the period of FY
hadappreciatedby3.8% 2017/8. With the continuity of declining
trend of last fiscal year, NEPSE Index
Domesticcreditwasprojectedtogrowin 27.8% 2017/8. declinedby370.1pointswithadecliningrateof23.4%
Ony-o-ybasis,thegrowthofsuchcreditstoodat28.3% during the review period, and was limited to 1,2.4
in mid June 2018. Private sector credit growth stood point as on July 16, 2018. During the review period,
at 21.0% (y-o-y) in mid-June 2018. Such credit was lowest point and highest point of the NEPSE Index were
projected to grow by 20.% During this period, the 1,68.5 and 1,67.94 respectively, with the average
deposits at BFIs increased by 17.6% As provisioned indailytransactionofNPRbillion. 520.9 NEPSEIndexwas
the monetary policy of 2017/8, the revised interest rate limited to 1,582.7 points as on July 15, 207 which had
corridor came into operation in November 2017. The begun to decline from 1,8.45 points with a declining
lowerandupperboundsofthecorridorwerefixedat 3%
rate of 7.9% Banks’ interest rate was on an increasing
and 7%, respectively. In mid June 2018, the weighted trendwiththeliquidityconstraintinthemarket,wh
average interest rate of the 91-day Treasury bills stood affectedtheNEPSEIndex.
directly
at 4.38%, and the weighted average inter-bank rate
l 95 l
2.8
BUSINESS ENVIRONMENT ANALYSIS
Every organization is affected by its external or stakeholders,

and etc. The internal environment can be
internal environment. These are the integral modifi
parts ed or amended, as the entire authority and rights
of the
organizationitself.Externalenvironmentcanbe are embeddedintheorganizationitself.
described
asasetofelementsthatarenotpartoftheorganization,
butpossessaninfluenceupontheorganization.External In the context of the Nepalese banking industry, internal
environment constitutes of consumers, suppliers, and and external factors that affect banking business have
competitors,whichhasdirecteffectontheorganization, beenpresentedbelow:
whereas the indirect elements of external environment
are government, state of the economy, scientifiOpportunities c and and threats are results of external
technical growth, socio-cultural events, and laws and environment, whereas strength and weakness are results
policiesbythegovernment.Hence,forsmoothoperation ofinternalenvironment.SWOTanalysisofabankformally
of business, the organization has to cope with elements evaluates the strength, weakness, opportunities, and
of external environment. threats. SWOT analysis
Similarly, internal provides better leverage to
environment can be Factors of Internal and the bank to take advantage
termed as the environment External Environment of future business
within the organization opportunities and better
itself. It includes understanding of its
employees, shareholders, Internal Environment: External Environment: operational weaknesses,
•OrganizationalStructure • Competition
so as to combat threats to
• Corporate Culture and Code •Lawsandregulations
potential growth.
of Conduct
• Consumer Behaviour
•OrganizationalResources
•Economy
(Human,Capital,
Infrastructure,etc.) •Location
STRENGTH OPPORTUNITY WEAKNESS

• LowYieldinCorporateand
• W ideSpreadNetwork • Venturingintostrategicalliance wholesalelendingDSLsegment
• LargeCustomerBase in order to focus towards areas • Unavailability of desired
• BrandEquity of knowledge transfer, market resources in market
• InnovativeandDiversifiedProducts development, generation of • Limitation incoreBankingSystem’s
and Services efficiency,etc. capacity and large number of
• StrongLeadership • Enhancementofbrandimage informationavailableinle fi only
• ClearlydefinedOrganizationalStructure through Corporate Social • Other inherent limitations of
• Expertiseandhighlevelofexperienceon Responsibility control functions
DigitalPaymentBusinessandOperations • Leveragingexistingwidebranch
• StrongInternalControl ramework F and network
Code of Conduct • ValueCreationandenhancement THREAT
• TeamofEnergeticandDedicatedExperts byautomatizationanddigitization
• W orldClassCoreBankingSoftware • Better Management of deposits • Economicandpoliticalchanges
• Customer centric Business Model by exploring possibility of • Fiercecompetitionfrom
• Strong corporate communication system investing in high yield segments strategic peers
• EnhancedCustomerExperience • W eakmacro-economic
fundamentals
l 96 l
BANKING
THE UNBANKED
TECHNOLOGY-BASED
BANKING SERVICE 629,000 74,000
MOBILE BANKING INTERNET BANKING
In global stage, usage of technology in imparting
401,000
banking services has proven to be one of the most
promisingmechanismstoensurefinancialinclusion.
TheNICASIAbank,basedonapresumptionthat
unbanked tech-savvy persons can be brought under DEBIT CARD CUSTOMER
banking radar through optimum use of technology,
started making mobile banking, internet banking and
onlinebankingmoreefficientinrecentyears.Our Online bank account opening mechanism launched by
goalistochannelizeatleast50%ofourtransactionsNICASIAinfiscal2017-8alsosupportedour‘Banking
throughdigitalmedium. THEUNBANKED’strategyas2,184newaccountswere
openedduringtheperiodthroughthismechanism.
Inthefiscal2017-8,ourmobilebankingincreased
by401%toreach629,0usersandinternetbanking Likewise,withintenttoimparteasyservicetoour
increasedby120%toreach74,0userscompared customers and lure young generation into banking
tothepreviousfiscal.Ourdebitcardusersstoodatchannel,theNICASIABankintroducedViberbanking
401,inthereviewperiod. andmissedcallbankingservicesaswell.Usingthese
services,onecanmakebalanceinquiry,availmini-
statement, and obtain location and details of branches
andATM,amongotherfinancialdetails.
l 97 l
CORPORATE GOVERNANCE
3.1 ShareholdingStructure
.. 9
3.2 BoardCommitteesandManagementCommittees
. 10
3. StatementofCorporateGovernance
. 103
3.4 Directors’Report
.. 1
3.5 AuditCommittee
.. 130
3.6 RiskManagementCommittee
.. 13
3.7 KarmachariSewaSuvidhaSamiti
. 135
3.8 Assets(Money)LaunderingPreventionCommittee
. .. 137
3.9 StatementofDirectorsResponsibility
. 139
3.10 ResponsibilityStatementofCEO. andCFO 14
CORPORATE
GOVERNANCE
The Bank is committed to maintaining the highest standards of corporate governance,
beingwithintheethicsprescribedbyCompany’sAct,BankandFinancialInstitutionsAct,
Unified Directives issued by Nepal Rastra Bank, and the Bank’s corporate governance
policy. The Bank gives utmost importance to corporate governance at all levels. The
Board carries out active oversight and supervises and controls the Bank, however, it
doesn’tinterfereintheBank’smanagement.AlltheemployeesoftheBankabidebythe
principles of corporate governance that include carrying out duties in the best interests of
the Bank, maintaining secrecy of the material information, avoiding situations of conflict
of interest, clarity in delegation of authority, meritocracy, transparency, professionalism,
teamspirit,andserviceexcellence.
Goodcorporategovernanceisoneofthekeyprerequisitesofasuccessfulorganization,
hence the Bank perceives this as the highest-level strategic posture of the Bank.
The Bank’s corporate governance policy is directed not only towards complying with
regulatory and legal requirements, but also towards adherence to international best
business practices, transparency, and disclosure to all the stakeholders. Our corporate
governance philosophy will be guided by our own eternal need to set the highest
standardsasagoodcorporatecitizen.
3.1
SHAREHOLDING STRUCTURE
Particulars No. of Share Amount (NPR)
AUTHORISED CAPITAL
OrdinarySharesofRs10each 80,4 8,04
ISSUED CAPITAL
PAID UP CAPITAL
ORDINARYSHAREOWNERSHIP
Particulars Amount Percentage Holding
DomesticOwnership
NepalGovernment - -
“A”Classlicensedinstitutions - -
Other licensed institutions - -
Other institutions 508,96 6.3%
Public 7,5230198 93.7%
Other - -
ForeignOwnership - -
Total 8,031,116,998 100%
CAPITALSTRUCTURE
Particulars No. of shares Capital Structure (%) Paid-up Amount (NPR)
Promotors Shareholders 40,9586 51 4,09586

GeneralPublicShareholders 39,5247 49 3,95472
Total 80,311,169 100 8,031,216,998
SHAREHOLDINGSTRUCTUREOFDIRECTORS
Name No. of Shares Shareholding (%)
Mr.TulsiRamAgrawal 3,89502 4.85

Chairman
Mr.JagdishPrasadAgrawal 2,03187 2.53
Member
(PromotorsGroup)
Mr.TrilokChandAgrawal 7,691 9.5
Member
(GeneralShareholdersGroup)(Representative–AsianDistributorsPvt.Ltd.)
Mr.RamChandraSanghai 3,54172 4.1
Member
(PromotorsGroup)
Mr.BinodKumarPyakurel 402 0.5
Member
(GeneralShareholdersGroup)
Mr.RajendraPrasadAryal 80,31 0.1
Member
(GeneralShareholdersGroup)
Mr.GaneshManShrestha - -
Member
(IndependentDirector)
l 99 l
3.2
BOARD COMMITTEES AND MANAGEMENT COMMITTEES
AUDITCOMMITTEE
S.N. Name Status in the Organization Status in the Committee
1 Mr.GaneshManShrestha IndependentDirector Coordinator

2 Mr.TrilokChandAgrawal Director Member
3 Mr.RajuPrasadAdhikari HeadInternalAuditDepartment Member
RISKMANAGEMENTCOMMITTEE
1 Mr.BinodKumarPyakurel Director Coordinator

2 Mr.GaneshManShrestha IndependentDirector Member
3 Mr.KapilDhakal ChiefDevelopmentOfficer Member
4 Mr.DipendraBahadurRajbhandari ChiefRiskOfficer Member Secretary
KARMACHARISEWASUVIDHASAMITI
1 Mr.RamChandraSanghai Director Coordinator

2 Mr.TrilokChandAgrawal Director Member
3 Mr.RoshanKumarNeupane ChiefExecutiveOfficer Member
4 Mr.BishalSigdel ChiefFinancialOfficer Member
5 Mr.GautamDangol ChiefHumanResourceDepartment Member
ASSETSMONEY)
( LAUNDERINGPREVENTIONCOMMITTEE
1 Mr.RajendraPrasadAryal Director Member

2 Mr.GaneshManShrestha IndependentDirector Member
3 Mr.KamalKhaka AMLImplementationOfficer Member
l 100 l
MANAGEMENTCOMMITTEE
S.N. Name Functional Title
1 Mr.RoshanKumarNeupane ChiefExecutiveOfficer
2 Mr.SudhirNathPandey DeputyChiefExecutiveOfficer
3 Mr.SantoshKumarRathi ChiefMarketingOfficer
4 Mr.RajeshRawal ChiefStrategyEnforcementOfficer
5 Mr.JayendraRawal ChiefStrategyEnforcementOfficer
6 Mr.KapilDhakal ChiefHumanResourceAndChiefDevelopmentOfficer
7 Mr.SudeepKhanal ChiefCorporateAndPriorityLoansOfficer/ChiefSupportOfficer
8 Mr.ArjunRajKhaniya ChiefPublicRelationshipOfficer
9 Mr.BishalSigdel ChiefFinancialOfficer
10 Mr.DineshBhari HeadLegal
1 Mr.DipendraBahadurRajbhandari ChiefRiskOfficer
12 Mr.PrakashBaral ChiefCreditOfficer
13 Mr.RajuPrasadAdhikari HeadInternalAudit
14 Mr.DeepenKarki Company Secretary
DNAOVERSIGHTCOMMITTTEE
S.N. Name Status in the Committee
1 Mr.RoshanKumarNeupane,ChiefExecutiveOfficer Coordinator
2 Mr.SudhirNathPandey,DeputyChiefExecutiveOfficer Member
3 Mr.SantoshKumarRathi,ChiefMarketingOfficer Member
4 Mr.RajeshRawal,ChiefStrategyEnforcementOfficer Member
5 Mr.JayendraRawal,ChiefStrategyEnforcementOfficer Member
6 Mr.KapilDhakal,ChiefDevelopmentOfficer Member
7 Mr.DipendraBahadurRajbhandari,ChiefRiskOfficer Member
8 Mr.BishalSigdel,ChiefFinancialOfficer Member
9 Mr.PrakashBaral,ChiefCreditOfficer Member
10 Mr.ArjunRajKhaniya,ChiefPublicRelationOfficer Member
1 Mr.SudeepKhanal,ChiefCorporateandPriorityLoansOfficer Member Secretary
l 101 l
BANKING
THE UNBANKED
Banking THE UNBANKED
FINANCIALINCLUSION
FINANCIAL INCLUSION
NIC ASIA Bank is committed towards the goal of formal trust.NICASIABankhasYuvaSwarojgarLoantofacilitate
NIC ASIA Bank is committed towards the goal of formal
financialaccessforallmembersofeconomy.Through
financialaccessforallmembersofeconomy.Through youthsachievetheirgoal.TheBankhasextendedcredit
advanced
advanced technology, innovative
technology, innovative business models
business models and
and facilityofRs.216.3millionunderYuwaSwarojgarLoan
deprived sector lending, the Bank has been trying
deprived sector lending, the Bank has been trying to to facility.
transform
transform Nepal’s
Nepal’s financial
financial inclusion
inclusion ecosystem
ecosystem for
for
materializing
materializing the
the goal of‘Banking
goal of‘Banking THETHE
UNBANKED’.
UNBANKED’.
Our Our financial
financial inclusion
inclusion strategies
strategies are are formulated
formulated toto help
help
traditionally excluded groups, including poor, women,
traditionally
minority
minority
excluded
andand
groups,
rural
rural
including
dwellers.
dwellers. FINANCIAL LITERACY
poor, women,
e
W created enormous banking network in rural areas
Wecreatedenormousbankingnetworkinruralareas
PROGRAM
forbroaderfinancialinclusiondespitethechallengesof
for broader
increased financial
long-term costinclusion
and bankingdespite
operations the challenges
becoming
of increased
becoming
long-term
less
cost
economic.
and banking
Now,NICASIA
operations FINANCIAL LITERACY
Financialliteracyprogramsimpartknowledgeonsaving,
lesseconomic.Now,NICASIAhasthehighestnumberofinvesting and borrowing propelling people to understand
remote networks compared tohasitsthe highest
peers.
numberofremotenetworkscomparedtoitspeers. PROGRAM
thebenefitsofbankingservices.Previously,peoplewere
hesitantinbringingtheirfinancialtransactionsunder
u
F rthermore, the changing global scenario and surging
entrepreneurial orientation hasstarted banking
causingFinancial fold due to
financial
literacy culture sensitiveness
programs impart knowledge and lack of
on saving,
Furthermore, thechanging globalscenario andsurging
complexityamongyouth. TheNICASIABank nancial
fi
hasbeencausing investing knowledge.
and borrowing propelling people to understand money
People believed hoarding
entrepreneurial orientation hasstarted financial
playinganimportantroleinfinancialinclusionbyatbringing homebenefi
the was easy
tsof and convenient
banking than depositing
services. Previously,it peoplewere
complexityamongyouth.TheNICASIABankhasbeen
intohesitant
banks.With inbringing
aimtoerase their financial
such transactions
misconceptions fromunde
playinganimportantroleinfinancialinclusionbybringing
foldduemind,
people’s toculture
NICASIABank sensitiveness
conducted‘door- andto- lack offinancial
door
youthsonboardthefinancialinstitutionbywinningknowledge. their People believed hoardingmoney at
financialliteracy program’ indifferent parts ofhome
thewascount
easy and convenient than depositing
toimpartfinancialliteracy.Suchliteracyprograms it into banks. With
have
toerasesuchmisconceptionsfrompeople’smind,NICASIA
helped in bringing the people who previously carried
Bankconducted‘door-to-doorfinancialliteracyprogram’
outtheirfinancialtransactionthroughshadow
indifferentpartsofthecountrytoimpartfinanciallite
Such literacy economy onboard
programs havethe formal
helped in banking
bringing the people
channel.
whopreviouslycarriedout The door- to- door
their campaign,
financialtransacti
through shadowamongeconomy
suchother onboard financial
the formalliteracy
banking
channel. Thedoor-to-
approaches door
of the NICcampaign,
ASIA, has amongsuch
other financial
thus not only helped literacy
in reducing approaches
the ofthe
NIC ASIA,
shadow economyhas thus not only
but also to tap helped
in reducing
the potential new marketsthe shadowfor
economy but also to
bankingexpansion.
tap the potential new
markets for banking
expansion.
l 102 l
l 325 l
3.3
STATEMENT OF CORPORATE GOVERNANCE
The Bank’s corporate governance policy is directed by ensuring

not that the enterprise adheres to accepted ethical
only towards the regulatory and legal requirements, standards
but and best practices as well as to formal law
also towards adherence to best business practices, Given the importance of nancial fi intermediation in a
transparency,anddisclosuretothestakeholders. economy,
TheBankthe public and the market have a high degree
has established a culture of best practices in corporate ofsensitivitytoanydifficultiespotentiallyarisingfr
governance.TheBankhasadoptedthreecoreprinciples corporategovernanceshortcomingsinBanks.
of corporate governance, i.e. integrity, transparency, and
fairness.Goodcorporategovernancehasbeenanintegral The Bank is committed to be governed by the highest
partoftheBank’spolicyinordertosafeguardthe standards
interest of corporate governance. Compliance with
of its shareholders and stakeholders, and for providing the the applicable rules and regulations of the country, and
highestlevelofservicetoitscustomers. with the directives/circulars/guidelines issued by v
regulatory authorities, shall be the utmost priority of the
Well-definedandenforcedcorporategovernanceprovides Bank, and the Bank shall ensure robust compliance
astructurethatworksforthebenefitofeveryoneconcerned thereto,inwordaswellasinspirit.
BOARD OF
re DIRECTOR
underbanking
ial
s
Withaim
IA
ram’
literacy.
ASSETS
action RISK (MONEY) KAMACHARI AUDIT
the COMMITTEE
CHIEF
EXECUTIVE
OFFICER
COMPANY
SECRETARY
INTEGRATED DEPUTY CHIEF

RISK INTERNAL ADULT
OFFICER DEPARTMENT
DEPARTMENT
l 103 l
INDICATORS FOR CORPORATE GOVERNANCE REVIEWS
INDICATORS OF
CORPORATE
GOVERNANCE
RESPONSIBILITY
SYSTEM OF CORPORATE
STATUTORY DIVISION BETWEEN
INTERNAL CULTURE AND STAKEHOLDER’S
COMPLIANCE BOARD AND
CONTROL AND RISK PRACTICES RESPONSE
MANAGEMENT
MANAGEMENT
MONITORING AND REVIEW OF STATUS COMPOSITION OF BOARD OF

OF CORPORATE GOVERNANCE DIRECTORS
Bank has following tiers to monitor and review the status TulsiRamAgarwal Chairman
ofcorporategovernance: JagdishPrasadAgrawal Director
a. RiskManagementCommittee TrilokChandAgrawal Director
b. IntegratedRiskManagementDepartment Ram Chandra Sanghai Director
c. AuditCommittee Binod Kumar Pyakurel Director
RajendraPrasadAryal Director
d. CorporateGovernanceCommittee
GaneshManShrestha Independent Member
e. InternalAuditDepartment
f. ComplianceDepartment
g. AppointmentandRotationofExternal(Statutory)
Auditor
h. Monitoring
ransactions
T inEmployeeAccounts
i. WhistleBlowingMechanism
j. ServiceExcellence
k. PeriodicEvaluationandReview
l 104 l
ROLES AND RESPONSIBILITIES • EnsuringthattheexecutivemanagementoftheBank

OF BOARD - Establishesandmaintainsappropriatesystemst
•Decisiononthelong-termobjectivesoftheBank plan and control bank operations and risks and to
• Decisiononthecreditandinvestmentpoliciesof comply
the with relevant legislation and regulations
Bank - Providesregularandsufficientinformationtothe
• Approval of the strategies necessary to achieve Board to enable it to discharge its monitoring duties
theseobjectives,bearinginmindtheactivities in relation
of to these matters
competitors and potential competitors and the risks - lmplements disclosure policies and procedures that
inherent in these strategies complywithregulatoryrequirements
• Approval of authorities and powers delegated to the • Recommendationoffinaldividendpayments
Chairman,BoardofDirectors,BoardCommittees, • Approvaloftheadoptionofanysignificantchangein
andChiefExecutiveOfficer accounting policies or practice
• ApprovaloftheBank’sannualbudget • Approval of the applicable policies of the Bank
• Reviewing, and where appropriate, approving • AppointmentoftheIndependentDirector
material-related party transactions that are not in the • EnsuringthattheBoardhastheappropriatenumber
ordinary course of business andqualityofdirectorstofulfillitsresponsibilit
• Approval of the establishment of any subsidiary • Constitution of committees of the Board with terms of
company reference as necessary
• EnsuringthattheBankmanagesriskeffectivelyby: • Ensuring theforwardplanningofthemainexecutive
- DeterminingandapprovingtheBank’sriskappetite appointments withintheorganization
(the extent and categories of risk which the Board • Approval of the appointment, dismissal, and
regards as acceptable for the Bank to bear) remuneration of the executives of the Bank one level
- ApprovingtheBank’sriskmanagementframework below the Board
(embracing principles, policies, methodologies, • Approval of the appointment and removal of the
systems, and inlernal controls and structure of HeadoflnternalAuditDepartmentandtheCompany
responsible unit) Secretary
- MonitoringtheBank’saggregateriskexposures • Approval and review of the corporate governance
and return on risk taken policy/ framework oftheBank
policy/frameworkoftheBank
HIGHLIGHTS OF MATTERS DISCUSSED IN BOARD MEETING DURING 2017/18

FollowingarethehighlightsofmattersdiscussedandreviewedbyboardofdirectorsduringFY2017/8:
1 ROUTINE AGENDAS
a) Review and approval of credit e) Review of investment related i) Reviewandapproval/amendment
related proposals proposals of system documents
b) Review and approval of loan f) Review of performance j) ReviewofminutesofBoard-level
recovery related proposals highlights-monthly committee
c) Review and approval of g) Reviewofcomparativequarterly
k) Review of NRB circulars
procurement related proposals performance highlights
d) Review and approval of footprint h) Review of monthly update of
expansion related proposals various departments
l 105 l
2 REVIEW OF PERIODIC UPDATES

Annual: Quarterly:
a. StrategicFinancialPlan a. AML/CF T&KYCUpdate
b. TacticalPlan b. ALCOUpdate
c. Progress/SelfAssessmentReportofBoard
c. LegalCasesUpdate
d. PerformanceReviewofCEOandCompany d. ComparativeFinancialHighlights
Secretary e. ICAAPReport
e. AnnualRiskAssessmentReport
-NRB f. Stress esting
T Results
DirectiveAML
Monthly:
Half Yearly: a. RiskAssessmentReports
a. Investment
ortfolio
P
REVIEW OF BUSINESS PROCESS RE-ENGINEERING REPORT

3 (BPR) OF VARIOUS DEPARTMENT/ SEGMENT/FUNCTION
REVIEW OF INTERNAL AUDIT REPORTS ON THE FUNCTION/SEGMENT/

4 DEPARTMENT WHERE BOARD HAS INSTRUCTED TO AUDIT
BOARD OVERSIGHT
TheBoardisresponsibleforapprovingoverallstrategies It is also responsible for providing oversight of senior

and policies of the Bank, taking into account the Bank’s which includes approval of policies
management,
long-term financial interests, its exposure toofrisk, and as well as monitoring and reviewing the
the Bank,
its abllity to manage risk effectively, and approve and effectiveness of policies implemented. In doing so, the
overseeimplementationbytheBank: Boardshall:
•Businessobjectiveandstrategy • Monitorthatseniormanagement’sactionsare
• Overallriskstrategy ,includingitsrisktolerance/ consistent with the strategy and policies approved by
appetite the Board, including the risk appetite
• Policies for risk, risk management ,and compliance • Meet regularly with senior management
• lnternalcapitaladequacyassessmentprocess, • Questionandcriticallyreviewexplanationsand
capitalplan,andliquidityplans information provided by senior management
• Compensation system • Set appropriate performance and remuneration
• lnternal control system standards for senior management consistent with
• Corporate governance framework, principles and thelong-termstrategicobjectivesandfinancial
corporate values, including a code of conduct soundness of the Bank
l 106 l
• Ensurethatseniormanagement’sknowledgeand j.Prevalentbankingservicesandpractices
expertise remain appropriate, given the nature of the k.Regulatoryprovisrons
businessandtheBank’sriskprofile
• Ensurethatappropriatesuccessionplansare Orientation
inplace program on the following subject matt
for senior management positions amongothers,areprovidedtotheDirectorsonanannua
basis:
The Board is not involved in day-to-day operation of
the Bank. However, the Board is authorized to a.Transparency;
issue
appropriate instructions to the senior management on b.Disclosure;
any matter that it deems appropriate. Minutes c.Conflict oflnterest;
of all the
Board-levelcommittee/sub-committeemeetingsd.shall Compliance;
be
furnishedtotheBoardforitsinformation. e.RelationandCoordinationwithotherlnstitutio
f.lnternalbestpractices.
APPOINTMENT OF DIRECTOR
• InlinewithprovisionsofBanksandFinancialDETAILS OF TRAINING PROVIDED TO
Institutions Act, appointment of director is done by DIRECTORS:
generalmeetingoftheBank. Directorsattendedfollowingtrainingsduring2017/8:
• However ,incaseifpositionofdirectorbecomes
vacant before next annual general meeting, Subject Matter Attendees
appointment of director for remaining period till next BanksandFinancialInstitutions

Entire
Act, Boardmembers
2073
annualgeneralmeetingisdonebyBoardofDirectors.
CorporateGovernance&RolesandEntireBoardmembers
Responsibilities of the Board
TRAINING AND KNOWLEDGE RiskManagementWorkshop Mr.BinodPyakurelandMr.
ENHANCEMENT PROGRAM FOR ganesh Man Shrestha
BOARD OF DIRECTORS SeminaronITSecurityinNepalese Mr.TulsiRamAgrawal
ln order to help directors acquire, maintain, and Banking Sector
deepen
their knowledge, skills, exposure, and experience Training onAnti-MoneyLaundering/ Mr.RajendraAryal,Mr.Binod
CombatingFinacingTerrorism&KYC KumarPyakurelandMr.
required to fulfill their responsibilities and ensure their GaneshManShrestha
effective contribution to performance of the Board and
the entire Bank, various training and education programs
aretailoredtoupdatethemonrelevantissues.
APPOINTMENT OF CEO
Appointment of Chief Executive Officer of the Bank is
Newly appointed directors are oriented in following
governed by several regulatory and internal provisions
subject matter, among others, within one month of his/
asfollows:
herappointment:
a.OrganizationalstructureoftheBank
I.REGULATORYREQUIREMENT
- BankandFinancialInstitutionsAct
b.NatureofBank’sbusiness
- NepalRastraBankDirectives,CircularandGuidelin
c.Corporategovernance
- Other legal provisions
d.Mission,Vision,andValuesoftheBank
e.BusinessplanoftheBank
f.Duties,responsibilities,andaccountabilityII.ofINTERNAL
the REQUIREMENT
director - Memorandum of Association
g.Riskmanagementstrategy - Article of Association
h.Integratedeconomicandfinancialposition - F rameworkestablishedbyBoard
i.Prevalentlegalprovision
l 107 l
Appointment of Chief Executive Officer is basedto on the Chief Risk Officer and Head of lnternal Audit.
evaluation of skills, experience, capability, track record, However,italsoensuresthatfrivolousaccusationsdono
and qualification of the candidate. The competency become of ameanstoharassanybody.TheBankbelieves
the candidate is evaluated based on past performance in encouraging its employees to bring the problems to
oftheindividual. the attention of management, and also reassures the
employees that their concerns are very important to the
ETHICS AND COMPLIANCE Bank.
NIC Asia Bank strongly believes in meritocracy,
transparency, professionalism, team spirit, and service Theissuescanberelatedto:
excellence. These core values shall be internalized by
all functions within the Bank and shall be reflected i.Conflict inofallinterest
actionsittakesduringthecourseofitsbusiness. ii.Safety
iii.Misuseofconfidentialinformation
ORGANIZATIONAL CULTURE OF ZERO iv.Falsifyingreports
TOLERANCE v.Bullying,harassmentanddiscriminationofothers
The Bank adheres to the zero tolerance policy vi.on Bribery,
the facilitationpayments
standards of corporate governance and compliance. vii.Workplaceviolence
All the employees are required to be fully committed viii.Drugsto andsubstanceuse
abidebythehigheststandardsofcorporategovernance. ix.Tradinginsiderinformation
It is individual and collective responsibility of all the x.ImproperuseofBank’sassets
employees of the Bank to ensure compliance with all the xi.Employmentlaw.
legal,regulatory,andinternalrequirements.Any xii. Theft,etc.
deviation
fromtheprescribedstandardinvitesdisciplinaryaction.
The Bank has a “Guideline on Speaking up & Whistle
CODE OF ETHICS blowing”toencourageemployeestospeakuponissues
Bank’s code of conduct, or code of ethics, defines of illegal activities and misconduct, and for managing all
acceptable and unacceptable behaviors. It explicitly whistleblowingactivitiesoftheBank.
disallows behavior that could lead to any reputation
risks or improper or illegal activity, such as HUMAN
financialCAPITAL
misreporting, money laundering, fraud, anti-competitive Anorganizationisoftensaidtobeasgoodasitspeople.
practices, bribery, and corruption, or the violation of Directors, employees, and leaders that make up an
consumer rights. It is made clear that employees are
organization’s human capital are critical to its succes
expected to conduct themselves ethically in addition to Not all labor is equal, but the quality of employees
complyingwithlaws,regulations,andcompanypolicies. can be improved by investing in them. The education,
experience, and abilities of employees have economic
WHISTLE BLOWING MECHANISM value for employers and for the economy as a whole.
The Bank has established an effective mechanism We have foralways been transparent and ensured that our
employees to report to the appropriate authority their employees remain content and are made to feel part of
concerns about unethical behavior, actual or suspected ourBank’sculture.
fraud, or violation of the Bank’s code of conduct.
Employees are encouraged and able to communicate IT GOVERNANCE
confidentially, and without the risk of reprisal, legitimateassub-categoryofcorporategovernance,
ITgovernance,
concerns about illegal, unethical, or questionable has its specificities and is of crucial importance for
practices. This mechanism also provides for adequate the Bank to continue performing business activities by
safeguardsagainstvictimizationofemployeeswho avail risks and accomplishing its full potential
minimizing
of the mechanism, and also provide for direct access The Bank has led the industry by embracing emerging
l 108 l
details of training
appointment
provided to
code of ethics
directors
of CEO
training and knowledge
enhancement program for
board of directors
board Level committees/

human capital
ethics and
compliance corporate
governance
sub committees
IT Governance
board oversight whistle blowing

Organizational Culture mechanism
Responsibilities
Roles and
of Board
of Zero tolerance
technologies, and the role of IT in delivering customer BOARD LEVEL COMMITTEES/ SUB
value has continued to gain prominence as the Bank COMMITTEES
drivesmigrationtoe-basedplatforms.Thereliability The Board andshall constitute required committees
efficiency of IT systems also has a direct impact oncommittees
the as per Nepal Rastra Bank directives, under
qualityandtimelinessofinformationthatisgenerated coordination offor
a director of the Board, and the terms of
regulatoryreportinganddecisionmaking.TheBank has
reference (TOR) of the committee/sub-committees shall
thusidentifiedthecompetitiveadvantagestemming fromby the Board during their constitution. Th
be defined
the appropriate alignment of IT objectives with overall
Board may entrust the committees/sub-committees wit
business objectives. The Bank’s integrated information the authority required for effectively fulfilling thei
technology policy, approved by the Board, is a andresponsibilities.
consolidated version of different policies and procedural
guidelinesrelatedtoinformationtechnology.In It facilitates
line withNepalRastraBank’sDirectiveNo.following 6,
andsupportsauthorizedaccesstotheBank’sinformation committeeshavebeenconstitutedbytheBoard:
system, changes management framework on information
technology, and aids management of various IT security • Audit Committee
incidents occurring during the course of day-to-day • Risk Management Committee
operations.Auditofnetworksandsystemsisconducted • Karmachari Sewa Suvidha Samiti
onaperiodicbasistoensurecompliancewiththe Bank’s (Money)LaunderingPreventionCommittee
• Assets
informationtechnologypoliciesandprocedures.
l 109 l
The Bank has planned to

open new branches and
extension counters in
different regions in order
to ensure easy access of
banking sector to people
of each and every region.
In remote areas, where it
is not possible to expand
branch and extension
counters, banking access
of customers shall be
ensured through expansion
of branchless banking
services.
l 110 l
3.4
DIRECTORS’ REPORT
Respected Shareholders,
Withwarmregards,Iwouldliketowelcomeyouonbehalf and facilities with respect to time and expectations

of the Board of Directors and entire NIC Asia family ofcustomers
for throughCustomerServiceExcellence
your noteworthy participation in the 21st AnnualDepartment general forachievingcustomerdelightbyrefining
MeetingoftheBank. banking services and ensuring excellent banking
experience of customers
Asearlieryears,thefinancialsectorwasdeeplyaffected • Simplificationandimprovisationofbanking
this year too by negative impact due to shortage of procedures in line with concept of Business Process
investable fund, resulting in intense rise in interest Reengineering to ensure that internal policies,
rate.
Despite severe situation, business and financial guidelines,
results and procedures of the Bank are effective,
achieved by the Bank during the review period are bankingresourcesareoptimallyutilized,andexcell
commendable. banking practices are adopted for development of
excellentbankingsystem.
During the review period, all tactical business plans of
the Bank were oriented towards achievement of long- In addition to the above, then Bank is vigorously moving
termstrategyoftheBank,“IntegratedFive-Yearahead Strategyfor achievement of long-term goals like special
Plan- Strategy 20”. Highlights of achievements of the focus on personal and small and medium enterprises
Bank as per long-term strategy are as follows loans, saving deposit, increase in customer base, and
increase in share of non-interest income during the
• Historicrecordoffootprintexpansion reviewperiod.
throughestablishmentof12new
branchesand231branchesintotal We are committed to uplifting the Bank
“We are committed
(Atotalof270branchestillthisreport towards new prominence in the near
was prepared)
towards uplifting future, and this is evident through business
• Use of business process automation bank towards new andnancialfi resultsofthisyear.
and modern technology as business prominence in near
enabler for establishing the Bank as future and this is Thefollowingreporthasbeenpreparedin
atrailblazerforadvancementtowards linewithCompaniesAct,2063,Securities
evident through
digital banking Registration and Issuance Regulation,
• Conduct of various activities through business and 2073, and Bank and Financial Institutions
effective planning for branding financial results of Act, 2073, for review of achievements
initiation, and branch promotion this year.” and challenges during the review period.
activities in order to establish the Short-term and long-term plans for the
Bank as the eminent banking brand of future and overall banking activities have
Nepal been presented in this 21st Annual General Meeting on
• Modificationandtransformationofbankingservices behalfoftheBoardofDirectorsoftheBank.
l 111 l
A. OVERVIEW OF BANKING Operating Profit has increased by 5% and Net Profit

TRANSACTIONS DURING 2017/18 has decreased by only 2% in comparison to previous
As the financial statement of 2017/8 was prepared as year. Operating Profit and Net Profit of the Bank during
perNepalFinancialReportingStandard(NFRS)financial , FY 2017/8 are NPR 19 million and NPR 134 million,
detailsandindicatorsof2016/7and2015/6werealso respectively. During FY 2017/8, Return on Equity and
recalculated on the basis of same yardsticks. Details Return on of Assets of the Bank are 12.09% and 0.97%,
achievementsof2017/8and2016/7areasfollows: respectively, whichwereand
16.84% respectively,
1.64%,
during FY 2016/7. We believe that investment made
NPR ‘Million during FY 2017/8 shall contribute for enhancement of
Particulars 2017-18 2016-17 Percentage business and generating income in the coming years.
Increment/
(Decrement) Because of increase in Paid-up Capital due to issuance
Paid Up Capital 8,031 6,93 20% of bonus share, Earning per Share of company has
Deposit 15,29 87,6 72% decreased by 19%, from NPR 20.4 per share to NPR
TotalLoan 120,463 72,46 67% 16.2pershare.
Investment 14,03 10,2 42%
TotalAssets 170,943 103,8 6% PAIDUPCAPITALANDCAPITAL
OperatingProfit 1,98 1,829 5% ADEQUACYRATIO
NetProfit 1,35 1,365 (2%) As per the monetary policy of FY 2016/7 issued by
NetProfit/TotalAssets(%) 0.97% 1.64% (41%) NepalRastraBank,banksandfinancialinstitutionswere
NetProfit/Networth(%) 12.09% 16.84% (28%) required to maintain minimum paid-up capital of NPR
Non-PerformingLoan/ 0.697% 0.36% (81%) 80 million within the end of FY 2017/8. After approval
TotalLoan(%) of 20% bonus share proposed during the previous year,
EarningsPerShare(NPR) 16.2 20.4 (19%) the Paid-up Capital of the Bank has been maintained
CapitalAdequacyRatio 12.4% 13.8 above the minimum requirement of Nepal Rastra Bank,
AccumulatedProfit 943.7 1,840 (51%) i.e.morethanNPR80million.
ReserveFund 2,690 1,870 44%
LoanLossProvision 128 98 30.61% Capital Adequacy Ratio of the Bank during FY8 1 / 7 0 2
Interest Income 13,450 7,041 91% is.%42. It
1 is %42.1 more than the minimum Capital
InterestExpense 9,30 4,359 14% AdequacyRatioprescribedbyNepalRastraBank,i.e.. % 1
Net Interest Income 4,210 2,73 54%
NetFeesandCommission 869.7 657 32.5% ACCUMULATEDPROFITAND
Income
RESERVEFUND
Other Operating Income 278. 219.7 27%
As per instruction of Nepal Rastra Bank for FY 2017/8,
TotalStaffExpenses 1,780
forthefirsttimeadoptionofNFRSbybanksandfinancial 1,30 57%
institutions, amount equivalent to that transfer

accumulatedprofitorlossaccountbymakingadjustment
During the review period, total lending of the Bank has statement of financial position and financial
in opening
increased by 6.74% and reached NPR 120.46 billion. statementofpreviousyearinlinewithprovisionofNFRS
Similarly,deposithasincreasedby72.4%andreached is transferred to regulatory reserve by deducting from
NPR 15.2 billion. Total lending and deposit of theretainedearningsinStatementofChangesinEquity.Due
bankingindustryofthenationhasincreasedbyand 19% to this, balance in regulatory reserve has increased by
18%, respectively, during the review period. Likewise, 4% from NPR 187 million in previous year to NPR 269
size of balance sheet of the Bank has increased by
million at the end of FY 2017/8. Similarly, because of
65.79% and reached NPR 170.94 billion. Despite issuance of bonus share and adjustment of regulatory
extensive branch and business expansion and increase reserve, total balance in retained earning has decreased
in operating expenses in same ratio during FY 2017/8, by51%,fromNPR184milliontoNPR94.37million.
l 112 l
DEPOSIT to liquidity crunch in third and fourth quarter o

Total deposit has increased by 72% during FY 2017/8 review period, strategy of loan enhancement of the
and reached NPR 15.2 billion. Average growth rate entire banking industry was affected. However, the
Bank was able to achieve 67% growth in loans and
of deposit of industry during review period is 18% only.
advances, which is a far better result as compared to
During the review period, fixed deposit, saving deposit,
and call deposit of the Bank have increased by industry
63%, average.AsperthestrategyoftheBank,ret
93%,and46%,respectively. loan portfolio increased by 65%, small and medium
enterprisesbydeprived
93%, sectorlendingby12%,
andcorporatecreditby8.0%
The Bank has been able to achieve remarkable
achievement in increasing saving deposit as per the
long-term strategy adopted by the Bank for FY 2017/8. Business Segment % Increment in Loan Limit
In line with the same, various services and features of Retail Loan 65
saving deposit products have been improvised, which SmallandMediumEnterprises 93

Loan
have resulted in significant increase in deposit by 93%
DeprivedSector 12
and increase in number of saving accounts by 591,764.
Corporate 8.0
The Bank shall continue to adopt the same strategy
of increasing saving deposit and number of deposit
accountsintheyearstocome. In line with the long-term strategy of the Bank, and to
make the Bank the first choice of customers, Retail,
During the review period, 17% share of total increase Productive, and Small and Medium Enterprise Loans
in deposit of the banking industry was occupied by the have been prioritized by simplifying the procedures as
NICASIABank.Similarly,6.47%shareoftotaldepositof per the requirement of customers, and by introducing
the banking industry was occupied by NIC ASIA Bank various schemes with innovative features. By focusi
during FY 2017/8, which was 4.15% during fiscal year on deprived sector lending, NPR 932 million has been
2016/7. The Bank is able to maintain ratio of individualdisbursedtothedeprivedsector,whichis7.2%oftotal
andinstitutionaldepositsaspertherequirement loansand advances.
ofNepal
Rastra Bank, i.e. portion of institutional deposit is not
morethan50%oftotaldeposit,asfollows: During the review period, the Bank secured 15% share
of total growth in loans and advances of the banking
Type of Deposit Percentage
industryand5.93%shareoftotalloansandadvancesof
theindustry,whichwas4.52%duringFY2016/7.
IndividualDeposit 64.59%
InstitutionalDeposit 35.41%
In line with minimum limit set by Nepal Rastra Bank for
TotalDeposit 10%
investment in agriculture, energy, and productive sector,
whichis%and ,5 0 1 %of
52 totallending,theBankhas
The Bank focused on collecting deposit from ensured small compliance with the same by investing, % 3 0 . 2 1
depositors scattered all over the country in order to and
, % 4 0 . 5 respectively,
,%57.13 inthosesectors.Similarly,
strengthen deposit base of the Bank, which is expected the Bank has invested %2in
1.9 deprived sector lending,
toimprovethecostoffund. where minimum limitsetby NepalRastraBankis. % 5
LOANANDLOANLOSSPROVISION Loan Limit Set by Nepal

Rastra Bank (%)
Bank Loan (%)
Duringthereviewperiod,totalloansandadvances Agriculture
of 10 12.03
the Bank stood at NPR 120.46 billion, which is 67% Energy 5 5.04
in addition to loans and advances of previous year.
Productive 25 31.75
Average growth rate of loans and advances of the
DeprivedSector 5 9.12
banking industry in the review period was 19%. Due
l 113 l
Similarly, the Bank is committed to comply with any INTERESTINCOME

investment limits set by Nepal Rastra Bank from time to During the review period, Interest Income of the Bank
time. increased by 91%, and total interest income during FY
stood
2017/8 atNPRbillion.
13.54 InterestIncomefrom
During the review period, total loan loss provision loans of the
andadvanceswasNPRbillion, 12.6 whichis92%
Bank increased from NPR8 9million to NPR82million. 1 increment compared to previous year. Similarly, Interest
NPRmillion
84.03 hasbeenbookedasexpensesforloan Income from other investment is NPR 80 million, which
lossprovisionduringFYRatio .81/7 02 ofnon-performing is 85% increment in comparison with that of previous
loanovertotalloanlossprovisionisRatio .%52 .1 ofnon- year.
performing loan to total loans and advances has decreased
significantly during the review period to,%796which 0. Breakdown of Interest Amount During Review % Increment
Income Period (NPR ‘Million)
wasduring%63.0 thepreviousyear.
Interest Income on 12,60 92%
Loan
The Bank has prioritized investment in low risk loans in
Interest Income on 80 85%
order to achieve results in line with the long-term strategy Other Investment
adoptedbytheBank.Recoveryandmanagementofloan Total 13,540
function of the Bank has been strengthened in order to
minimize the risk that may occur due to non-performing
loans,andreduceloanlossprovision. During the review period, because of increase in annual
average return on loan by 3.5% as a result of deposit
INVESTMENT crunch,interestratewas13.7%
During the review period, investment of the Bank has
reached NPR 1.4 billion, which is 42% in addition to The Bank was able to increase quarterly average
investment of previous year. Out of total investment,return on investment to 4.8% during the last quarter
investmentinTreasurybills,governmentbond,and fromother
3.98% during the first quarter of review period by
investmentis15%,68and17%,respectively. replacing investments that generate minimal return with
investmentsthatgeneratehighreturn.
Detail of Investment % of Total Investment
TreasuryBill Also, the Bank was successful in maintaining interest
15
GovernmentBond spread, even though there was increment in cost of fund
68
Other Investments 17 because of displacement of corporate loan generating
Total 100
minimal interest income by retail and small/medium
enterprisesloangeneratingmaximumreturn.
In order to ensure proper utilization, diversification of
investment, and to improvise income from investment,
the Bank is conscious about expanding scope of INTERESTEXPENSE
investment. During the review period, total interest expense of the
BankreachedNPRbillion, 9.3 whichisincrement
14%
Investment in mutual fund and shares during the review in comparison to that of the previous year. Total interes
periodisNPRmillion.75 Maximuminvestmentincapital expense on deposit reached NPR 9.15 billion, which is
market has been done in companies that are capable 1% increment in comparison to that of the previous
of distributing long-term income in the form of dividend, year. Similarly, Interest Expense on borrowing stood
and the Bank earned NPR 10.7 million cash dividend at NPR 176.4 million, which is 381% increment in
fromtheseinvestments. comparison to the previous year because of issuance of
debentureamountingtoNPR30million.
l 114 l
Breakdown of Interest Amount During Review % Increment OTHEROPERATINGINCOME

Expense Period (NPR ‘Million)
Other Operating Income of the Bank during the review
InterestExpenseon 9,150 1%
Deposit period is NPR 27.8 million, which is 27% increment in
InterestExpenseon 176.4 381% comparison to that of the previous year i.e. NPR 21.97
OtherDebenture million.Shareofincomefromtradingofforeignexchange
Total 9,326.4 inotheroperatingincomeoftheBankis70%.
STAFFEXPENSES
Increase in Interest Income of the Bank by 14% is the
During the review period, Staff Expenses of the Bank
result of deposit crunch due to increase in interest rate
increased by 57%, from NPR 1.3 billion in previous
offixeddeposit,conversionofsavingdepositsintofixed
fiscaltoNPR1.78billion.
deposits,andaggressiveloanenhancementoftheBank.
As a result, cost of deposit, which was 7.94% in the first
IncreaseinStaffExpensesbyis 57% theresultofincrease
quarter, decreased to 7.85% during the fourth quarter of
in number of employees due to extensive expansion of
thereviewperiod.
branches and promotion of deserving staff on the basis
of annual appraisal. Total number of staff has increase
In line with the long-term strategy of the Bank to increase
by536duringthereviewperiod,from1,75to2,91.
share of current and saving accounts in total deposits of
the Bank, various deposit products and schemes have
Particulars 2017-18 2016-17 % Increment
been introduced. With this, we hope that we will be able
StaffExpenses 1,780 1,30 57%
toachievegradualimprovementincostofdeposit. (NPR ‘Million)
Number of 2,91 1,75 30.54%
NETINTERESTINCOME Staffs
As a result of enhancement of business and sound Training 43.1

Expenses(NPR
management of the Bank during the review period, ‘Million)
Net Interest Income of the Bank increased by 54% and
reached NPR 421 million. The Bank has adopted a
strategy to maintain appropriate credit-to-deposit ratio NPR1 3million
.4 was incurred as staff training expenses,
andinterestspreadforoptimumutilizationoffundinthetotalstaffexpenseswith
which isof
% 4 . 2 the ( staffbonus)of
daystocome. the review period.
As perrequirementofNepalRastraBank,
staff training expenses should be at least 3% of total staff
NETFEESANDCOMMISSIONINCOME expensesofpreviousyear,andtheBankhasspent% 6 . 4
These are the income based on non-funded sources. oftotalstaffexpensesofthepreviousyearinstafftrainin
The Bank has been able to earn NPR 86.97 million as
Net Fees and Commissions, which is 32.5% increment Realizing that employees are the most valuable asse
incomparisontothatofthepreviousyear.TheBank we believe
has that staff training expenses spent for the
achieved remarkable growth in income from debit card, development of their skills and capability is investment
creditcard,Bankassurance,remittance,etc. for achieving thelong-termstrategyoftheBank.

Various services and facilities of the Bank have DEPRECIATION
been ANDAMORTIZATION
improvised with the intent of increasing share of During the review period, depreciation and amortizat
commission and other operating income in the total expenses oftheBankhasfallenbyfrom 10%, NPR12.06
profit of the Bank. With extension services like NIC million
ASIA to NPR 10.8 million. Decrease in depreciation
Remittance, credit card, and point of sale (POS), we and amortization by 10% is due to change in method
believe that net fees and commission income of the Bank of depreciation on fixed assets from written down value
shallincreaseinthecomingyears. methodtostraightlinemethod.
l 115 l
OTHEROPERATINGEXPENSES
During the review period, Other Operating Expenses of income of tax, and NPR 918.6 million in the form of tax
the Bank increased by 13% from NPR 58.0 million to deductedatsource.
NPR 1.24 billion. Increase in Other Operating Expenses
by13%isduetoincreaseinnumberofstaff,additional APPROPRIATIONOFPROFIT/LOSS
12 branches, and increase in business promotion TheBankhasearnedNPRmillion 124 asNetProfitduring
expensesforenhancementofbusiness. the review period. Appropriation of profit earned during
thereviewperiodhasbeenpresentedbelow:
It is expected that such expenses shall act as investment
in the days to come through enhancement of business, 20% of Net Profit of the review period, i.e. NPR 26.7
and positive result shall be seen in the coming years million,hasbeentransferredtotheGeneralReserveFund.
through reduction of cost after simplification Likewise, andNPR3.7milliontoExchangeFluctuationFund,
naturalizationofbankingprocedures NPR 71.4 million to NIC ASIA Bond 207 Redemption
Reserve,NPR13.4milliontoSocialResponsibilityFund,
RETURNONINVESTMENT NPR 15.8 million to Investment Adjustment Fund, and
Duringthereviewperiod,ReturnonInvestmentincreased NPR45.6milliontoRegulatoryReserve.
byto
7.3% reachup
58.41%, fromin
51.08% theprevious
fiscal.IncrementinReturnonInvestmentbyis 7.3% due As per the requirement of Nepal Rastra Bank Directive
toexpansionof12newbranchesandincreaseinother ,61. %1 of Net Profit is transferred to the Social
operatingexpenses. ResponsibilityFund.Amountofsuchfundshallbespent
during current year for carrying out various activities in
PAYMENTFORINCOMETAXANDTAX ordertofulfillcorporatesocialresponsibilitiesoftheB
DEDUCTEDATSOURCE
The Bank has contributed NPR 1,398.6 million towardsAmount of Accumulated Profit after appropriation and
the revenue of the country; NPR 480 million in the form
transfersasstatedaboveisNPRmillion.
8.349
(NPR ‘Million)
Particulars Review Period Previous Year
AccumulatedProfit 1,84.5 1,720.65

Netprofitofcurrentyear 1,34.86 1,365.42
TransferfromInvestmentAdjustmentFund - 1.2
TransferfromSharePremium - 413.97
Total 3,179.4 3,501.16
Appropriation:
GeneralReserveFund 26.97 294.6
ExchangeFluctuationFund 3.69 0.73
NICAsiaBond207RedemptionReserve 71.43 71.43
DeferredTaxReserve - 10.79
InvestmentAdjustmentFund 15.7 0.14
SocialResponsibilityFund 13.5 14.73
RegulatoryFund 45.8 -
CashDividend 70.45 63.20
Bonus Share 1,38.52 1,20.8
AccumulatedProfit 943.65 1,84.
l 116 l
B. ANY IMPACT CAUSED TO THE Particulars 2016/17 2017/18
BUSINESS OF THE COMPANY DUE EconomicGrowthRate 7.4% 5.9%

TO NATIONAL AND INTERNATIONAL GrowthRateofAgricultureSector 2.8%
CONDITION GrowthRateofIndustrialSector 8.%
GrowthRateofServiceSector 6.%
GLOBAL
.1 ECONOMY SizeofEconomy NPR307billion
In 2017, 3.1% growth was observed in the global AverageConsumerInflation 4.5% 4.1%
economy, and price of crude oil, which was USD51.83
per barrel in 2017, rose to USD68.97 per barrel in 2018, (Source:BasedondataofMonetaryPolicyof2017/8publishedbyNepal
butitisexpectedthatduetomildinflation,growthinthe
worldeconomyshallbeatthesamerate. b. Status of Financial Market
Inflation in the world economy was around 2% in 2016, During the review period, projected annual growth ra
which rose to 3.42% in 2017. Similarly, price of gold, of private sector lending was 20%. Actual growth rate of
which was USD1,315.42 per ounce in 2017, decreased lendinginthatsectortillJunewas 2018,4 During
21%.
toUSD1,2.86perouncein2018. thisperiod,depositinbanksandfinancialinstitutio
increased by 17.6% Improvised interest rate corridor
It is expected that the Nepalese economy will face price has been implemented since Oct 18, 2017, as per the
inflation due to increase in price of crude oil and requirement
strong of Monetary Policy of 2017/8. By settling
USDollar lowest limit and highest limit of improvised interest rate
corridor to 3% and 7%, respectively, improvised interest
Particulars 2017 2018 rate corridor has been brought into implementation by
Price of Crude Oil USD51.83perbarrel USD68.97perbarrel ourBank.
PriceofGold USD1,35.42 USD1,2.86
Particulars 2017/18
(Source:BasedonanalysisanddataofWorldBankandIMF)
ProjectedAnnualGrowthrateofloaninprivatesector
20%
Actualgrowthrateofloaninprivatesectortill14-Jun-
21% 2018
STATUS
.2 OFNATIONALECONOMY
IncreaseinDepositofBanksandFinancialInstitutions
17.6%
a. Gross Domestic Product and Inflation
WeightedAverageInterestrateofTreasuryBillduring 4.38% 2018
As per the preliminary projection of Nepal Rastra Bank,
May/June
the economic growth rate of Nepal was in similar rate WeightedAverageInterBankrate2018May/June 4.18%
beforeFY2016/7.EconomicgrowthrateofFY2016/7
was 7.4%, which is expected to be 5.9% in FY 2017/8. (Source:BasedondataofMonetaryPolicyof2017/8publishedbyNepal
Rastra Bank)
Because of flood in the Terai region, growth rate of
agriculture sector remained at 2.8%, and that of the
industrial and service sectors rose to 8.% andc.6.%, Current Year’s (FY 2018-19) achievment until the
respectively, due to which, remarkable economic growth date of preparation of Report from the Directors
of the nation was possible. With improvement and in the Board of Director’s view on future activities of
economicgrowthrate,thesizeoftheNepaleseeconomy the company
hasalsoincreased. No substantive event affecting the Bank has occurred
duringtheperiodafterbalancesheetdate(Jul16,208)
Inflation rate of the nation has been maintained atdateofpreparationofthisreport.
tillthe
similar level in the recent two years. Average consumer
inflation rate of FY 2016/7 was 4.5%, which fell to 4.1% Comparisonoffinancialresultsoffirstquarterof2016/7
in2017/8. withthatoffirstquarterof2017/8:
l 117 l
(NPR ‘Billion) I. Branch Expansion

Particulars First Quarter First Quarter % As per long term strategic plan of Bank regarding
of 2017/18 of 2016/17 Increment
extensive expansion of branches, 12 new branches
TotalDeposit 168. 103.65 62.4
wereopenedduringreviewperiod.Toensureappropriate
TotalLoanandAdvances 139.26 86.74 60.5
guidelinesandscientificmethodologyforexpansionand
NetProfit 0.75 0.28 170.9
management of scope of work and branches of bank,
EarningsPerShare 36.78 13.8 164.9
Footprint Expansion and Management Policy, 2017 was
formulatedandbroughtintoimplementation.
We believe that bank shall achieve desired goals during
currentyearaswell. Bankshallexpandnew 8 branchesandadditional
96 ATM
duringcurrentyear.Suchexpansionshalldefinitelycontribute
towardsnancial
fi inclusionstrategyofgovernmentthrough
availability of banking services and facilities in both city
andremoteareasofcountry.
List of New Branches opened during 2017/18
Province 1 Province 2 Province 3 Province 4 Province 5 Province 6 Province 7
18 21 25 11 30 1 6
Kerabari Chandranigahapur Sindhuli Aabukhaireni Jumri Dallibazar Joshipur
Dhulabari Naraha Dhadingbesi Dumre Bhalwari Pahalmanpur
Kakarvitta Tinkauriya Gothatar Gorkha Shankarpur Dipayal
Jhiljhile Loharpatti Manamaiju Beshisahar Kotihawa Bedkot
Tarahara Kabilasi Sitapaila Amrapuri Buddhachowk Dadeldhura
Ramailo Haripurwa Tokha Dumkibas Gopigunj Punarbas
JhapaBazar BankulBazar Bhaisepati Arunkhola Khaireni
Kechana Kawal Langadi Bhimphedi WariBeni Murgiya
Sanischare Samsi Thali Gaidakot Jitpur-4Number
Surunga Bhagwanpur Duwakot Naudanda Imiliya
Charpane Bagmati Balkot Krishi Manigram-4 Number
Gaurigunj Barathawa PuranoThimi Bhurigaun
Biratnagar Main Road Viswa Satungal Pakadi
Baikunthe Simara Bhawanipur Dhulikhel DriverTole
Dingla Saghara Panchkhal Ram Mandir- Butwal
Belbari Tiruhat Manahari TribhuwanChowk
Baliya Mahadewa Geetanagar RajmargaChauraha
Letang Chakraghatta Khanikhola Parasi
Jagarnathpur Gajuri Taulihawa
Rajbiraj Mahadevbesi Lumbini
Golbazar Dharke Labani
Betrawati Tamghas
Khadichaur Majhgawa
Trishuli Sunwal
Galchhi Chandrauta
Shisahaniya
Piprahawa Chowk
Milan Chowk
112
SamjhanaChowk
Total Number of Branches Jangrawa
The Bank shall add 8 new branches and 69 additional ATMs during the current year. Such expansion shall definit
contributetowardsfinancialinclusionstrategyofthegovernmentthroughavailabilityofbankingserv
bothcityandremoteareasofthecountry.
l 118 l
II. Service Expansion IV. Technological Development and Information

As per the desire and demand of customers, the Bank has Management System
been providing latest, improved, reliable, and qualitative As in prior years, the Bank has tried its best to establish
service to its customers. Continuous research itself andintheleadrolebyassimilatingmoderntechnolog
development have been considered as an important aspect usingopticalber fi andwirelessinallbranchesoftheBank
of this organization for capacity building of employees arrangement of maintaining record of transactions in real
and providing improvised services to customers through time has been ensured, because of which problems like
evaluation of technological development, requirement data redundancy, data error, etc. have been eliminated
of customers, and need as per change in business. For andnecessarydatacanbegeneratedwheneverrequired
improvement in customer service, effective monitoring
is done through establishment of a separate Service We have planned to automate all banking transaction
ExcellenceDepartment.Duringthereviewperiod,maximum and ensure a paperless office environment. The Bank is
return was provided to customers through introduction of always cautious towards security of information source and
New Premium Samunnati Bachat Khata. In line with the datasystem.TheBankhasimplementedanITpolicythat
concept of Universal Banking, for the purpose of conducting ensuresthatmatterslikeDataCentreOperation,Hardw
activities related to Capital Market and Investment Banking, Network Security, and Computer System are under regular
NICAsiaCapitalLtd.under , thefullownershipofthemonitoring
Bank, ofInternalAudit.Similarly,throughregularau
has been established in order to extend scope of service of of Information System, information management and
theBank.Further,serviceslikecreditcard,POSmachine, securityoftheBankhavebeenstrengthened.
andKIOSKwerealsoexpandedduringthereviewperiod.
Likewise, with the intention of providing bankingFinacle facilities Core Banking Software has been upgraded
andservicestothedeprivedsector,NICAsiaMicrofinance to 52.0 7 version from 01. 7 version and brought into
FinancialInstitutionLtd.with , fullownershipofthe Bank,has in order to ensure that the information
implementation
beenestablishedandisinfulloperationsinceDec. 7 1 0 2 , 0 2 system of the Bank is enhanced with latest and ultra-
modern technology. Similarly, in order to further upgrade
III. Plans for Upcoming Period Finacle into81.0version,
1 improvisation work is going
The Bank has planned to open new branches and onrapidlyAs ( ondateofpreparationofthisreport,Finacle
extension counters in different regions in order to ensure hasbeenupgradedtoversion) 81.0 1 .
easy access of banking sector to people of each and
every region. In remote areas, where it is not possible The Bank to has formulated and implemented a Disaster
expand branch and extension counters, banking access Recovery Plan and Policy. This policy has been
of customers shall be ensured through expansion of implemented for effective discharge of functions by using
branchlessbankingservices. modern technologies to ensure that banking activities and
environment are not affected even during natural calamities,
We believe that the perception of customers towards and for minimization of technological risk and risk relat
banking services will be directed towards new dimension by toinitiationofnormalbankingservicesafterdisaster
providinglatestandmoderntechnologyorientedwith services.the same policy, disaster recovery has been tested by
the Bank during the review period, and disaster recovery
Footprint Expansion Plan of Current Year siteoutsidethevalleyhasbeenmaintainedatBhairah
Particulars Addition During Current Total Number As of
Year Year End 2018/19
Business Continuity Planning policy has been formulated
Branches 8 319
and implemented to reduce effect of disaster on daily
ExtensionCounters 33 47
banking activities and on the established policies,
ATM 69 289
procedures, and system for relocation of basic banking
l 119 l
services. This policy has been implemented in order conducted

to intheyearstocomeaswell.Totalnumberof
ensure that customers do not need to be deprived of staffoftheBankhasreached291tillJuly16,208out
basicbankingservicesduetodisaster. ofwhich,59.32%aremaleand40.68%arefemale.
V. Human Resource d. Industrial and Business Relation of Company

TheBankhasalwaysconsidereditsstaffasanessential To expand scope of business of the Bank, the Bank has
asset of the organization. Participation of employees established and maintained healthy relations with associations
in various internal and external trainings is ensured to and industrial, commercial, and other institutions that are
enhance capability of employees, motivate them, and concerned withtheprogressoftheBank.Suchrelationships
develop their skills and knowledge in line with need of shall be continued inthefuture,aswell.
dynamicenvironment.
The Bank has been maintaining healthy relations with the
During the review period, 125 external and 129 internal followingorganizations:
trainings were attended by staff members of the Bank Nepal India Chamber of Commerce
for skills and capacity development. The Bank Forum
hasofNepaleseBankers
established itself as a platform for development of skills, ForeignExchangeandMoneyDealersAssociation
knowledge, and capacity of employees, and various NepalBankers’Association
activities have been performed to ensure that the culture Banking Promotion Committee
ofgainingknowledgeisdevelopedamongemployees. NepalForeignTradeAssociation
Nepal Institute of Company Secretaries
We believe that human resource development not International
only Chamber of Commerce Nepal
supports daily activities, but assists in introduction World Bank
of innovative thoughts and modern technologies as InternationalFinanceCorporation
well. Internal and external trainings for enhancement AsianDevelopmentBank
of knowledge and capacity of employees shall be FederationofNepaleseChambersofCommerceandIndustry
Date Meeting Name of Director Appointed Details Remarks
14-Sep-2017 321 st
Mr.GaneshManShrestha IndependentDirector
15-Sep-2017 32 nd
Mr.JagdishAgrawal Chairman AsperElectionin20thAnnual
general Meeting of bank dated
Mr.TulsiRamAgrawal Director 15-Sep-2017
Mr.RamChandraSanghai Director
Mr.RajendraPrasadAryal Director
Mr.BinodKumarPyakurel Director
Mr.AdityaKumarAgrawal Director
(Representative:Asian
DistributorsPvt.Ltd.)
Mr.GaneshManShrestha IndependentDirector
15-Sep-2017 32nd Mr.TulsiRamAgrawal Chairman
24-Oct-2017 326th Mr.TrilokChandAgrawal AlternateDirectoronbehalf
ofAsianDistributorsPvt.
Ltd.
24-Dec-2017 334th Mr.TrilokChandAgrawal Director(Representative:
AsianDistributorsPvt.Ltd.)
l 120 l
e. Change in the Board of Directors and the g. Opinion of Board in Case of any Qualification in
Reasons Thereof Auditor’s Report
Alteration in Board of directors during review period is Unqualifiedopinionwasissuedbyauditorinauditrepor
asfollows:
h. Amount recommended for distribution of
dividend
• Meeting of Board of Directors
The 37th meeting of the Board of Directors, dated
Meeting of the Board is held on a regular basis as per the
Nov 16, 2018, proposed NPR 845,307 (NPR eight
requirementofprevailingactandregulationoftheBank.
hundred and forty-five million three hundred eight
The Chief Executive Officer of the Bank is a permanent
thousand seven hundred thirty-seven) which is equal
memberatmeetingsoftheBoard.
10.526% of the paid-up capital (10% share and 0.526%
fortaxpurpose)asdividend.
During the review period, meetings of the Board were
held 48 times. Details of attendance of Directors in
i. Details of shares forfeited
meetingsandallowancereceivedbythemareasfollows:
Bankhasnotforfeitedanyshare tilldate.
Members No. of Meetings Meeting
Attended Allowance (NPR)
j. Review of the progress made by the Company
Mr.TulsiRamAgrawal,Chairman 48 574,0
and its subsidiary(s) in the current fiscal year
Mr.JagdishPrasadAgrawal 45 498,0
2017/18 and the position of the same atthe end of
Mr.TrilokChandAgrawal 34 356,0
fiscal year
Mr.RamChandraSanghai,Director 40 412,0
Progress report of the company and its subsidiaries has
Mr.RajendraPrasadAryal,Director 34 350,
beendisclosedseparatelyintheannualreport.
Mr.BinodKumarPyakurel,Director 40 41,0
Mr.AdityaKumarAgrawal,Director 8 80,
k. Main activities carried out by the Company and
Mr.GaneshManShrestha, 38 41,0
IndependentDirector
its subsidiary(s) during thefinancial year and any
significant changes in the business activities of the
Company and its subsidiaryduring the same period
There is no provision of providing allowance to has carried out normal banking activities a
The bank
management level staffs for participating in meeting of the subsidiaries also carried out the normal activities as
boardofdirectors. per its business nature. No such significant changes
duringthesameperiod.
f. Main factors that affect business activities
Overall financial condition, liquidity, limited l. investment
Any information given to the Company by its
opportunities, and interest spread management will principal shareholder (who holds 1% or more
remain as challenges during the current year,shares as well.
of the Company) in last fiscal year
Additional challenges have evolved due to increasing No such information provided by the principal
competitionandshortageofskilledmanpower. shareholdersinlastfiscalyear.
Considering these challenges and opportunities, the m. Details of shares held by the directorsand
Bank’s strategy is oriented towards enhancement officials ofofthe Companyand information received
quality and expansion of scope of banking services, by theCompany on their involvement intrading of
providing innovative services, and expansion of banking sharesin last fiscal year
servicesinnewmarketsandareas. Nosuchinformationreceivedbythebankinlastscal fi year.
l 121 l
n. Information provided on personal interest of ofoldpoliciesformitigationofriskafteridentification

Board of Directors and their relatives (nearest ofrisksinherenttotheBank(CreditRisk,Liquidity
kin) regarding contract or agreement done with Risk,MarketRisk,OperationalRisk,etc.)tomakethe
theCompany in last fiscal year. internalcontrolsystemoftheBankmoreeffective.
No such information received by the bank in last fiscal
• Preparation ofrequiredprocedureforidentification,
year. communication, mitigation, and management of
credit and operational risks inherent to the Bank, or
o. Buyback of share by the Company, reason thatwhichmayariseinthefuture.
thereof for buyback, number of shares bought • Play supervisory role to ensure compliance with the
back, face value of share and amount paid during policiesformulatedandimplementedbytheBank.
the buyback • Review the policies and procedures of the Bank
TheBankhasnotboughtbackanysharetilldate. from time to time to mitigate and manage the risks,
as well as to support the business and present the
p. Information on existence of Internal control same to the Risk Management Committee, along with
system and if there is, its detail necessaryrecommendations.
Theresponsibilitytoreviewinternalcontrol • system ofthe
Thisdepartment preparesthereportofnecessary
BankanditseffectivenesslieswiththeBoardofactions Directors.
and presents it to the Risk Management
Forthispurpose,variouscommitteeshavebeenformed Committee.
under the Board of Directors and its authority has
been delegated by forming necessary committees for Similarly,InternalAuditDepartmentoftheBankperforms
completion of operation in special areas and formation audit of the areas of operations of the Bank and
ofsmoothandeffectivestrategyanditsimplementation. compliance with policies and procedures prepared and
The audit committee reviews audit reports implemented of internal by the Bank. This department carries out
auditor, external auditor, and supervisory inspector, and necessary actions as an independent unit and presents
provides its independent suggestion to the Board of its reports to the Audit Committee
Directors about the effectiveness of the internal control
systemoftheBank. Following committees are functional in the Bank during
thereviewperiod:
The Bank’s overall area of operations is divided into
threeparts—Business,SupportandControl—in 1.order
Risk Management
to Committee
manage the risks properly and smoothen operation of Themainobjectiveofthiscommitteeistoidentify,monitor
thebank. and manage the various risks (credit, market, operational,
etc.) that are inherent in the Bank and that may arise in
TheIntegratedRiskManagementDepartmentoftheBank theis futurebyfulfillingtheresponsibilitiesofthiscommit
being empowered so as to make the internal control system asdefinedbytheUnifiedDirectiveofNepalRastraBank,
oftheBankmorerobust.Thisdepartmentoperates and asan to present the reports to the Board of Directors,
independent unit, rather than being under the management as well as to provide the necessary recommendations
of the Bank, and the department is accountable to the Risk to the management of the Bank. Details regarding the
ManagementCommitteeoftheBank. Composition, terms and reference, major activities and
decisions of this committee are given in separate section
The following activities are being performed“Risk 6.3 by the ManagementCommittee”
UnifiedRiskManagementDepartment:
2. Karmachari Sewa Suvidha Samiti
• PreparationofrequiredpoliciestomaketheBanking internal business is a calculated risk-taking business
controlsystemofthebankeffective. in addition to a service-oriented business. Therefore
• F ormationofrequirednewpoliciesandamendment skilledandprofessionalmanpowerisrequiredforproper
l 122 l
managementofriskandtoprovideexcellentservices. From September As 15, 2017 to November 29, 2017

skilled employee is a strong foundation of a bank, review S.N. Name Status in the Status in the
Organization Committee
and adjustment of management and management
1 Mr.AdityaKumarAgrawal Director Coordinator
principles should be done on a regular basis in order
2 Mr.RajendraPrasadAryal Director Member
to attract quality manpower and to make manpower
3 Mr.IshoriPrasadShresthaManager Information Member
management more effective, as well as for efficient Technology
operationofthebankingbusiness. 4 Mr.PujanLalAmatya HeadDigitalBanking Member
The main objective of the Karmachari Sewa Suvidha 5 Mr.KapilDhakal HeadStrategyand Member
Samiti, which is a board-level committee, is to prepare BPR Secretary
policies and mechanisms related to manpower
management of the Bank and to submit it to the Board
From November 30, 2017 to February 28, 2018
of Directors, and to submit information related to the
S.N. Name Status in the Status in the
decisions made and the actions taken to the Board on a Organization Committee
periodicbasis.DetailsregardingtheComposition, 1 terms
Mr.TrilokChandAgrawalDirector Coordinator
and reference, major activities and decisions 2 ofMr.this
GaneshManShresthaDirector Member
committeearegiveninseparatesection“Karmachari 3.7 3 Mr.IshoriPrasadShresthaManager Information Member
SewaSuvidhaSamiti”. Technology
4 Mr.PujanLalAmatya HeadDigitalBanking
Member
3. Digital Banking Sub-Committee 5 Mr.KapilDhakal HeadStrategyand Member

BPR Secretary
This committee was formed by the Board to improve
the effectiveness of banking services and to adopt
modernization by the Bank. This committee can provide Termsofreferencesofthissub-committeeareasfollows:
necessary recommendations relating to digital banking
to the Management Committee of the Bank and submit • Toidentifytheadvancetechnologiesexistinginthe
the decisions made by the committee and actions taken Nepalese, as well as international, banking industry,
based on those decisions to the Board on a periodic and perform a detailed feasibility study to adopt these
basis. technologies by this Bank and submit the feasibility
reporttotheBoardofDirectors.
CompositionofthemembersoftheDigitalBanking Sub-
• To performdetailedstudyandanalysisonhowto
committeeofthebankareasfollows: minimizeTurnAroundTime(TAT)byautomating
variousoperationsoftheBankandhowtominimize
Till September 14, 2017 humanresourcerequirement,andprepareand
Organization Committee submitthereporttotheBoardofDirectors.
1 Mr.RamChandraSanghai Director Coordinator • Toperformdetailedstudyandanalysisrelatingto
2 Mr.TulsiRamAgrawal Director Member security features, functionality, robustness, and
3 Mr.RoshanKumar DeputyChief Member
effectiveness of software being used by the Bank
Neupane ExecutiveOfficer (both procured as well as internally developed),
4 Mr.SudhirNathPandey Assistant Chief Member includingOnlineCreditApprovalSystem,General
ExecutiveOfficer
ApprovalSystem,LeaveApprovalSystem,
5 Mr.RajeshRawal Chief Operating Member
Officer Attendance System, Customers Relationship
6 Mr.PujanLalAmatya HeadDigitalBanking
Member
ManagementSystem,DealTrackingSystem,
7 Mr.ArjunRajKhaniya HeadDepositand Member
CustomerGrievanceandFeedbookManagement
TransactionBanking System,CreditandOtherMIS,GeneralLedger(GL),
Member ExceptionReportsTrackingSystem,OutputChecking
9 Mr.KapilDhakal HeadStrategyand Member System, and Regularity and Other Reporting System
BPR Secretary
of the Bank, and prepare and submit the report to the
l 123 l
BoardofDirectors. (HelloPaisa),whichiscurrentlyintheprocessof
• ToperformdetailedstudyandanalysisrelatingtoUserAcceptabilityTest,firstleveloftraininghasbeen
actions to be taken by the Bank in order to provide completedandpilottestingisinprogress.
effectiveandefficientdigitalbankingservicesof• Online the application system was developed and
Bank, including MO-BANK, Internet Banking, Mobile implementedfrom29/061inordertoautomate
Banking,SMSBanking,ATM,Remittance,Branchless theapplicationforLandRevenueandTransport
BankingBLB) ( Point
, ofSalesPOS)( Debit
, andCredit Departmentrelatedactivitieslikemortgage,name
Card,TeleBanking,andCorporateInternetBanking,transfer, and release,etc.
prepareandsubmitthereporttotheBoardofDirectors. • InitiatedandimplementedtheOnlineASBAsystem.
• Toperformananalysistond fi outwhetherthework• plan ImplementedtheOnlineLoanEligibility - Self
relating to the overall automation, upgradation, and AssessmentandLoanTrackingSystem.
digitization,includingthosecurrentlyoperated • Reviewedbythe theSwitchConnectivity .
Bank (risk management related, credit administration • In relation to the features of digital banking services,
related,nance fi related,tradenance fi related,andthe AML/ committee reviewed the features of various
CFTrelated)areeffectivelyperformingornot,and servicesundertheDigitalBankingSystemprovided
prepareandsubmitareporttotheBoardofDirectors, by the Bank, and the meeting provided instructions to
incorporating in detail the strategy to be followed for theHeadofDigitalBankingtoaddfeatureswithina
suchworkplantoperformeffectively. fixedtimeframe.
• Toperformdetailedstudyandanalysisrelating• to InrelationtotheInsuranceExpiryAlertSystem,the
strategy to be followed by the Bank in order to make meeting gave instruction to perform a detailed study
this Bank, an excellent Bank of Nepal, in terms of andanalysisonhowtherequiredsystemmodification
digital banking and business process automation, and couldbemadeinordertomaketheInsuranceExpiry
prepareandsubmitthereporttotheBoardofDirectors. Alert System more effective, and to carry out the
• Toperformdetailedstudyandanalysisrelating actions
to thatcanbeperformedimmediately.
which type of travel card is appropriate for issue by • InitiatedandimplementedOnlineAccountOpening.
thebankamongUSDenominatedDebit,INRCredit
CardsandInstantDebitCardandprepareandsubmit
thereporttotheBoardofDirectors. Total of 7 meetings of this sub-committee were held
• Toperformdetailedstudyandanalysisrelating during to FYand
2017/8, detailsofmeetingsattendedand
which type of travel card is appropriate for issue by allowancereceivedbythedirectorsareasfollows:
theBankamongUSDenominatedDebit,INRCredit
Cards,andInstantDebitCard,andprepareand Members No. of meetings Meeting Allowance
attended (NPR)
submitthereporttotheBoardofDirectors.
Mr.RamChandraSanghai 1 10,
• Tosubmittheprogressreportonactivitiesundertaken
Mr.TulsiRamAgrawal 7 70,
bythesub-committeetotheBoardofDirectorsona
Mr.PrakashBikramKhatri 6 60,
monthlybasis.
Work period of this sub-committee expired on February

Summaryofmajoractivitiesundertakenbythecommittee
duringthereviewperiodisstatedbelow: 28,01.
• Prepared a video on the use of digital banking related 4. Audit Committee

service,anduploadeditonYouTubeinordertoraise DetailsareprovidedinthePointno.(r)ofthisreport.
awareness about digital banking, and to make the
customer familiar to the digital banking system and for 5. Assets (Money) Laundering Prevention
thegrowthandexpansionofdigitalbankingservices. Committee
• Inrelationtotheupdateon allet
Mobile Proposal
W The main objective of the Assets Money)( Laundering
l 124 l
Prevention Committee, which is a Board- Information relating to this is disclosed

level committee, is to review the policies, in the notes to account of the financial
rules, and guidelines followed by the Bank “The bank’s overall statement.
for the prevention of money laundering and area of operations
periodic review of the system developed t. Remuneration, allowances and
is divided into three
by the Bank to identify and control the risk benefits paid to the director, MD,
related to money laundering, nancing fi
parts–Business, CEO and officials
of terrorism, and corruption. ThisSupport and Information relating to this is disclosed
committee can provide suggestions to Control–in order in the respective places of this report
the management for the implementation to manage the risk and notes to account of the financial
ofpoliciesoftheBank,standardsxed fi by statement.
properly and make
the regulatory body, and laws relating to
moneylaundering,nancing fi ofterrorism, the operation of the u. Uncollected dividend by the
and corruption. This committee presents bank smooth.” shareholders
the reports on decisions made by the Out of cash dividend declared by the
committee and activities undertaken as Bankforthefiscalyear201/,
per the decisions of the committee to the 201/3, and 2013/4, NPR 93,7408
Board of Directors on a periodic basis. Details regarding remainsuncollectedtilltheendofthereviewperiod
theComposition,termsandreference,majoractivitiesand
decisions of this committee are given in separate section The Bank has published notice from time to time in
“Assets
8.3 Money)
( LaunderingPreventionCommittee”. national level newspaper requesting shareholde
collect uncollected dividend, and details of dividend
q. Statement of total adminsitration expenses of uncollected for more than five years have also been
last fiscal year uploadedonthewebsiteoftheBank(www.nicasiabank.
Forthefiscalyeartotal 2017-8, administrationexpeneses com).
was NPR 3.1 billion with staff expeneses of NPR 1.78
billionandofficeoperationexpenesofNPR1.35billion.v. Information on asset bought or sold as per
section 141
r. Name list of members in the audit committee, The bank has not bought or sold any assets as per
remuneration, allowance and benefits they have section 14 of the companies’ act, 206 during the last
received, the details of activities of the committee fiscalyear.
and the details of any recommendation by them
The Board of Directors has constituted the w. Details
Audit of related party transaction as per
Committee under non-executive director in compliance Section 175 (transactions between associated
with the regulatory provisions of NRB Unified Directives companies)
andtheprovisionsofBankandFinancialInstitutions Information Act
relating to this is disclosed in the notes to
and Company Act. Head of Internal Audit Department is account of thefinancialstatement.
Member Secretary of the committee. Details regarding
the Composition, terms and reference, major activities x. Any other details to be disclosed in the report
and decisions of this committee are given in separate from the Directions in accordance with Companies
section3.5“AuditCommittee” Act, 2006 or other prevailing laws
s. Dues payable to the company by any director, 1. External Auditor

MD, CEO, principal shareholders (holding share Audit of this Bank for FY 2017/8 was successfully
more than 1%) or their relatives or firms or institu- completed by the external auditor of the Bank, M/s. TR
tions in which they have their involment (interest) Upadhya & Co. Further, as the present auditor can be
l 125 l
reappointed for FY 2018/9 as per section 1 of the review period, NPR 13,4869 to the corporate social
Companies Act, 206, appointment of the auditor and responsibility reserve. Last year, the amount was NPR
his remuneration as per the recommendation of the 14,7360. Out of which, expenses of NPR 3,4670
Audit Committee has been proposed for approval in this has been incurred from the reserve fund. Apart from the
generalmeeting. above, NIC ASIA Foundation has incurred expenses of
NPR 14,536 under corporate social responsibility,
2. Corporate Governance which has benefited senior citizens, children, and
The Bank regards corporate governance as a priority, disabledpeoplebelongingtothedeprivedareas.
not only for compliance with statutory bodies and laws,
but also for genuine business practice and necessary NoamounthasbeentransferredtoNICASIAFoundation
transparency.Asperthecorporategovernancestructure during the review period, as the expenses for corporate
of the Bank, the Board of Directors and the Board- social responsibility cannot be incurred through that
level
committees are operational to make the work execution foundationasperthedirectionofNepalRastraBank.
of the Bank smoother, effective, independent, and
transparent, and ensure that daily managerial activities 4. Customer Identification (KYC) and Assets
functionwithouttheinterferenceoftheBoard Laundering (AML and CFT)
ofDirectors.
The Bank is effectively complying with Prevention
The three integral parts of corporate governance— of Money Laundering Act rules and regulations and
integrity, transparency, and fairness—have always directives beenrelated to the prevention of money laundering
assimilated by the Bank. The Bank considers corporate issued by Nepal Rastra Bank. The Bank has formulated
governance as an integral part of the policies and rules and implemented an effective policy, rules, and guidelines
inordertoenhancethequalityofservicesprovided tocontrol totheandpreventmoneylaundering.
customer and for the benefit of shareholders and other
stakeholders. With the objective of keeping employees of the Bank
updated on the subject of KYC and money laundering,
The Bank has formulated and implemented a Corporate the Bank has been continuously conducting trainings
GovernancePolicytomakecorporategovernancerelated ofthe to these subjects. Apart from that, the Bank
Banksmootherandstronger.Themainobjectives hasofmade the arrangements for all the employees to
policyareasfollows: mandatorily participate in annual Skill Assessment Te
in these subjects, and the same has been effectively
• Toapplyhighcorporategovernanceatallthelevels, implemented. As a result of overall effort in the area of
structures,andactivitiesoftheBank. KYC and prevention of money laundering, level of this
• ToperformalltheactivitiesoftheBankasper Bank thein the area of KYC and money laundering is in the
internalandexternalpolicies. toprankamongtheNepalesebankingindustry.
• Toformulateeffectivepolicy,procedures,and
guidelinesrequiredforachievinggoalsandobjectives 5. Relationship with Shareholders and arrangement
oftheBankandtoimplementandmonitorthesame. to provide information to Shareholders
We want to inform that there are a total of 18,9
3. Corporate Social Responsibility shareholders of this Bank till the end of fiscal year
As the Bank is a responsible corporate citizen 2017/8. The Bank
also, thehas provided high priority to the
Bank has been playing an active role for socialactivities benefit ofexchanginginformationwiththeshareholde
and development in various areas of society. The The Bank obtains directions and guidelines through
Bank
has allocated 1% of the net profit of the review period direct conversation with the shareholders in the general
for activities related to corporate social responsibility as meetings. The Bank provides annual reports, quarterly
per Clause 6.1 of the Unified Directive of Nepal Rastra reports, press releases, and other information through
Bank. The Bank has allocated 1% of the net profit of
l 126 l
various communication media, as well as through its I want to extend gratitude to Nepal Rastra Bank, Securities
website(www.nicasiabank.com). BoardofNepal,NepalStockExchange,OfficeofCompany
Registrar, Ministry of Finance, Government of Nepal,
6. Thank You and other regulatory bodies who continuously provide
Our shareholders are our companions through each and guidanceandassistancetothisBoardofDirectors.Furth
everyjourneyofthisBank.Today,theBankisinacapableand appreciating the effort and hard work of all the employees
strongpositionbecauseofourshareholders’directand of the Bank, who provide their important contribution in
indirect
cooperation, important suggestions, recommendations, every progress and achievement of the Bank, the Board
decisions, and guidelines for the progress and prosperity of Directors of the Bank expects similar assistance an
of the Bank. The Board of Directors of the Bank always cooperationfromyouintheupcomingperiod.
appreciatesthefaithandconfidenceplaceduponusbyour
shareholders.Ourcompanions,ourcustomers,andourwell- ThankYou.
wishers have always been with us at every achievement, and
onbehalfoftheBoardofDirectors,Iwouldliketoextend OnmybehalfoftheBoardofDirectors
sinceregratitudeforyourunwaveringassistance.
Tulsi Ram Agrawal
Chairman
DISCLOSURE OF INFORMATION 4. Legal Proceedings

UNDER SECTION 109(4) OF a.Duringthelastfiscalyear,nolawsuitswere
COMPANIES ACT 2006 filed,apartfromthelawsuitsrelatedtothe
Disclosed under the respective parts/heads of the normalcourseofbankingbusinessfiledbyand
director’sreport. againsttheBank.
DISCLOSURE RELATED TO b. TheBankhasnoknowledgerelatedtoany

SUB RULE (2) OF RULE 22 OF lawsuitfiledbyoragainstthepromotors
SECURITIES REGISTRATION AND or directors of the Bank involving statutory
ISSUANCE REGULATION, 2073 regulationsorcriminaloffence.
(ANNEXURE-14)
c. TheBankhasnoknowledgerelatedtoany
1. Report of the Board of Directors lawsuitfiledagainstthepromotorordirectorof
Abovepresenteddirector’sreportwasthereport the
of Bankforcommittingeconomiccrimes.
theBoardofDirectors.
5. Analysis of Stock Transactions and
2. Auditor’s Report Performance of the body corporate
Disclosed in the respective parts/heads of this a. Management’sviewonthesharetransactions
report. ofbodycorporate:Themanagement’s
viewisneutralinthisrespect,astheBank’s
3. Audited Financial Statements share price is guided by the capital market
Presented under Statement of Financial Position, operations.
Statement of Profit or Loss, Statement of Other b. High,low,andclosingpriceofthestocksofthe
Comprehensive Income, Statement of Cash Flow companyduringeachquarterofthepreceding
Statement, Statement of Changes in Equity and year along with the total volume of trading of
respectivenotes. sharesandnumberofdaystraded:
l 127 l
First quarter (mid October 2017) Second quarter (mid January 2018)
MaximumPriceperShare:NPR47 MaximumPriceperShare:NPR378
MinimumPricePerShare:NPR340 MinimumPricePerShare:NPR63
ClosingPricePerShare:NPR350 ClosingPricePerShare:NPR345
TotalSharesTraded:6,325 TotalSharesTraded:3,61
TotalDaysTraded:46 TotalDaysTraded:63
Third quarter (mid April 2018) Fourth quarter (mid July 2018)
MaximumPriceperShare:NPR360 MaximumPriceperShare:NPR356
MinimumPricePerShare:NPR298 MinimumPricePerShare:NPR306
ClosingPricePerShare:NPR32 ClosingPricePerShare:NPR316
TotalSharesTraded:3,65 TotalSharesTraded:3,21
TotalDaysTraded:56 TotalDaysTraded:65
6. Problem and Challenges 8. If there is a deviation of 20% or more between

a. Internal Problem and Challenges the details as per the audited financial statements
• Lackofskilledmanpowerduetoincreasing and those forecasted in the prospectus, details of
competition, and challenges to retain the present such deviation
manpoweroftheBank. There is no deviation of 20% or more between the
• Todevelopandmotivateskilledmanpower. details as per the audited financial statements and
• Increasingoperationcost. those forecasted in the prospectus issued at the time of
issuanceof1%NICASIABondbytheBank.
b. External Problem and Challenges
9. Details on
• Unfavorableinterestrateandliquiditysituation special events and circumstances as
and
emergencyfluctuationsofthesame. specified in sub rule (5) of Rule 22
• Lackofcoordinationbetweentheinterestrate 1. Amendments
and in the regulations of body
inflation. corporate
• Challengesoffinancialmanagementandmarket• No amendments
riskarisingfromtheincreasingliquidityandstrategic
dilemma. 2. Changes of Board of Directors or High Level
• Toughcompetitionandunhealthycompetitive Managerial officials of the body corporate
behaviorresultingfromthesame.
• Limitedinvestmentopportunities. a. Expiry of Tenure of Directors
• Tenureofelecteddirectorsofthebankhasexpired.
7. Corporate Governance
b. Resignation
Disclosedintherespectiveparts/headsofdirectors’ report. from the Board of Directors
• No Resignation
l 128 l
c. New Appointment in the Board of Directors d. Resignation from the High Level Management
• Mr.GaneshManShresthawasappointedasan Name:LaxmanRisal
IndependentDirectorfromstthe meeting
321 of the Position:ChiefExecutiveOfficer
BoardofDirectorsheldon14/0927.Afterthat DateofRelease:16/0328
compositionofBoardofDirectorswasasfollows:
e. New appointment in the High Level Management
Chairman Mr.TulsiRamAgrawal Name:SudeepKhanal
Director Mr.JagdishPrasadAgrawal Position:SeniorManager
Director Mr.TrilokChandAgrawal DateofAppointment:08/127
(Representative–AsianDistributorsPvt.Ltd.)*
Director Mr.RamChandraSanghai Name:RajuPrasadAdhikari
Director Mr.RajendraPrasadAryal Position:Manager
Director Mr.BinodKumarPyakurel DateofAppointment:05/218
IndependentDirector
Mr.GaneshManShrestha
f. Declaration of Divident or Change in Capital

*LetterreceivedforappointmentofalternatedirectorMr.TrilokChand
AgrawalintheabsenceofMr.AdityaKumarAgrawal,electeddirector,as
Structure
arepresentativeofAsianDistributorsPvt.Ltd.The20thgeneralmeeting For FY 2016/7, % bonus share was distributed from
heldon15/0927andthe326thmeetingoftheBoardofDirectorsheldon
27/10receivedthatinformation,andthe31stmeetingoftheBoard the 20th general meeting held on 15/0927. After
ofDirectorsheldon30/127appointedMr.TrilokChandAgrawalasan distribution of bonus shares, paid-up capital of the
alternatedirector.Again,aspertheletterreceivedfromthatcompany,Mr.
TrilokChandAgrawalwasappointedasadirectorfortheremaining company
tenurehasreachedNPR8,03169.
as a representative of that company via 334th meeting of the Board of
Directorsheldon24/107.
l 129 l
3.5
AUDIT COMMITTEE
The Board of Directors constituted the Audit Committee The scope of the internal audit functions is determine
underanon-executivedirector.Itisanindependent bythe body
AuditCommittee.Oneofthemainresponsibilities
to monitor and review the internal control practices of of the committee is to enhance and maintain the internal
the Bank through Internal Audit Department. The auditors’
Head independence in order to enable them to
of Internal Audit Department is Member Secretary achieve
of the their duties. The internal auditors provide
committee. The committee reviews the Bank’s nancial fi committee with the necessary information to which
performance,itsinternalcontrols,auditplan/program, they haveanddirect access, in order to enable the Audit
issues necessary instructions to the management after Committee, accomplish its oversight and monitoring
detailed discussion on the ndings fi of the internal
mission.audit
On the other hand, the Audit Committee
reports.Theexternalaswellasinternalauditors supports
havethe
free
position of the internal audit function and
accesstothiscommittee.TheCEOcanbeincludedas submits
an management’s irregularities and other releva
inviteeofmeetingsofthecommitteeasnecessary. managerial
Other andfinancialissuestotheBoardofDirectors
employees of the Bank are also called as invitees from after discussing such issues with the internal auditors
timetotimeasrequiredbyagendaunderdiscussion. andotherrelevantparties.
Theissuesofcorporategovernanceareunderthe The
primary internal audit of all the branches and department
jurisdictionofthecommitteeanditconstantly arereviewscarried the
out at least once in a year. The audit report
status of corporate governance and periodically reports is issued to the branches/ departments and their
to the Board on the status of corporate governance responsesarerecorded.Theauditissuesandresponses
and the ways for further strengthening it. The are discussed
Audit in the Audit Committee meeting, and audit
Committee plays a major role in corporate governance grade is assigned to every branch/department. Every
regarding the organization’s direction, control, subsequent and internal audit monitors whether prevent
accountability. As a representative of theand Board corrective
of actions have been applied in the issues
Directors and focal point of the corporate governance identifiedinpreviousauditreports.TheAuditCommittee
mechanism, the committee is involved in both of the also calls senior bank managers to discuss the audit
organization’s internal and external audits, issues, internal
and reports the major findings to the Board of
control, accounting and financial reporting, regulatory Directors.
compliance, and risk management. The committee is
responsible for overseeing the organization’s disclosure
Composition of members of the Audit Committee is as
process, ensuring that the organization complies follows: with
the relevant local and international laws, implement
regulations, ethical standards and principles, and Till September 14, 2017
comply with the organization’s bylaws and internal S.N. Name Status in the Status in the
guidelines. The committee provides the Board of
1 Mr.BinodKumarPyakurelDirector Coordinator
Directors with necessary advice and recommendations,
2 Mr.TrilokChandAgrawalDirector Member
whichincludesensuring:thattherespectiveorganization
3 Mr.DipakDhakal HeadInternalAudit Member
complies with relevant regulations, ethical principles and Department Secretary
standards; that the internal auditors are independent and
competent; and that the financial statements have been
preparedcorrectlyandaccurately.
l 130 l
• Supervise activities conducted by the Internal Audit

From September 15, 2017 to November 29, 2017 Departmentandprovidenecessaryguidelineto
S.N. Name Status in the Status in the regulate the functions of the department so as to
enableittoachieveitsobjectives.Itshallinclud
1 Mr.GaneshManShresthaIndependentDirector Coordinator
review of the Audit Policy and other related guidelines
2 Mr.AdityaKumarAgrawal Director Member
asandwhenrequired.
9 Mr.DipakDhakal HeadInternalAudit Member
Department Secretary • Ensure thattheInternalAuditDepartmentisable
to discharge its responsibilities in an independent
manner, and that internal audit functions have
From November 30, 2017 to March 26, 2018 sufficientstandingandauthoritywithintheBankso
toenablethemtofunctionwithobjectivity;
Organization Committee • Regularassessmentofthequalityofinternal
1 Mr.GaneshManShresthaIndependentDirector Coordinator audit functions of the Bank to ensure that they are
2 Mr.AdityaKumarAgrawal Director Member conducted with the highest degree of professionalism
9 Mr.DipakDhakal HeadInternalAudit Member and ethics, and in line with relevant auditing
Department Secretary
standards, and are capable of providing accurate
andadequateassuranceregardingthegovernance
systemoftheBank.
From March 27, 2018 to July16, 2018
• CarryoutappraisalofHead-InternalAuditDepartmen
Organization Committee and review Annual Performance Appraisal (APR) of
1 Mr.GaneshManShresthaIndependentDirector Coordinator thestaffworkingintheInternalAuditDepartment
2 Mr.TrilokChandAgrawalDirector Member conductedbyHead-InternalAuditDepartment.
9 Mr.RajuPrasadAdhikari HeadInternalAudit Member • Make recommendationforthepromotionofHead-
Department Secretary InternalAuditDepartmentandapprovethepromotio
ofotherstaffworkingintheInternalAuditDepartme
uponrecommendationofHead-InternalAudit
InlinewithprovisionsofBanksandFinancialInstitutions Department.
Act, 2073, and unified NRB Directive No. 6, following • AssigntaskstotheInternalAuditDepartmentas
duties and responsibilities are assigned to the Audit deemednecessarybythecommittee.
CommitteeoftheBank:
ThemaingoalsoftheAuditCommitteeareasfollows:
• Review and approve audit plan prepared by the
InternalAuditDepartment,scopeofaudit,human • Toapprovetheoveralloperationmechanismrelatin
resourcerequirements,andbudgetoftheinternal tointernalaudit.
auditfunctions. • Todiscussoninternalauditsystem,auditresults,r
• Review and discuss audit reports presented by management of the Bank, and corporate governance,
InternalAuditDepartmentandprovidenecessary andprovidenecessarydirectionstothemanagement
instructions to the management to take corrective • Toreviewthecompliancewithprovisionsof
actions. guidelines/directivesissuedbyNepalRastraBank
• EnsureandfacilitatetheRiskBasedInternaland Audit of
prevailing laws and regulations and provide
theBank. necessarydirectionstothemanagement.
• Approve Risk-Based Internal Audit guidelines and • ToreviewoverallfinancialsituationoftheBank.
manualspreparedbyInternalAuditDepartment • Toreviewtheobservationsraisedintheinternal
and monitor the effectiveness of the Risk Based audit report and external audit report and provide
Internal Audit approach adopted by the Internal Audit necessary directions to the management relating to
Department. theactionstobeundertakenregardingthesame.
l 131 l
• Toreviewadherencetotheregularity,economy,Major areas of discussion in Audit Committee and its

justification,andeffectivenessinoperation decisionsduringFY2017/8areasfollows:
of the company and provide the necessary
recommendationstotheBoard. • Approval of Risk Based Annual Audit plan, tactical
• Toreviewthestatusofimplementationoftheremarks plan,andstaffingofInternalAuditDepartment.
raised in the inspection and supervision report of •DeliberationonInternalAuditReportofbranches
Nepal Rastra Bank and provide information relating to anddepartments(90BranchAuditReports,
thesametotheBoardofDirectors. 35DepartmentAuditReports)withissuanceof
• ToundertakeotheractionsrequiredbyNRB necessary directions and recommendations to
directives,BankandFinancialInstitutionsAct, management
and in the areas needing improvement
CompanyAct. for further strengthening the internal control, risk
management system, and governance, among
Summaryofmajoractivitiesundertakenbythecommittee others.
duringthereviewperiodisstatedbelow: •Deliberationonspecialareasauditreports,suchas
revenue, expense, loan write off, loan against shares,
• Approved risk-based annual internal audit plan of policyimplementation,etc.(eightauditreports)and
the Internal Audit Department. forwarding the same to the attention of Board of
• Submitted the audit report by getting the regular Directors.
audit done for various branches and departments •ProvidedfeedbacktotheBoardofDirectorsthrough
of the Bank as per the annual audit plan. Also AuditCommitteemeetingminutesatsubsequent
reviewed the internal audit report of total of 113 Boardmeetingsfornecessaryreview.
units consisting 90 branches, 35 departments, and •Reviewofexternalauditor’sreportandissuanceof
8 other significant areas, and provided direction necessary instructions to management for effective
to the management to improve, resolve, and resolutionsoftheissuesraised.
implement the remarks raised in the audit report •Deliberationonobservations,directions,and
during FY 2017/18. recommendations made by Nepal Rastra Bank
• Submitted the audit report by getting the special during their inspections, and issuance of necessary
audit done for important areas of the Bank like instructions to management for effective resolution
income, expenses, loan write off, margin lending, and implementation, together with deliberation on the
policy implementation, etc. as per the annual audit followupstatus.
plan. •Deliberationonquarterlyfinancialstatementsofthe
• Performed detailed review of the external audit Bank and approval for publishing the same provided
report and inspection and supervision report of withrecommendationfornecessarychanges.
Nepal Rastra Bank and provided the necessary • Recommendation for appointment of external auditor
direction to the management to improve, resolve, madetoAnnualGeneralMeeting.
and implement the remarks raised in the audit
report. Total of 12 meetings of this committee were held during
FY 2017/8, and details of meetings attended and
allowancereceivedbythedirectorsareasfollows:
Members No. of meetings Meeting Allowance

attended (NPR)
Mr.GaneshManShrestha 9 104,
Mr.TrilokChandAgrawal 9 102,
Mr.BinodKumarPyakurel 1 10,
Mr.RamChandraSanghai 2 20,
Mr.AdityaKumarAgrawal 1 10,
l 132 l
3.6
RISK MANAGEMENT COMMITTEE
The Risk Management Committee is an independent From September 15, 2017 to April 28, 2018
committee of the Board of Directors that has,S.N. as its Name Status in the
Organization
Status in the
Committee
sole and exclusive function, responsibility for the risk 1 Mr.BinodKumarPyakurelDirector Coordinator
management policies of the Bank and oversight of 2 Mr.GaneshManShresthaIndependentDirector Member
implementationofriskmanagementframeworkofBank. 3 Mr.RajeshRawal ChiefSupportOfficerMember
4 Mr.DipendraBahadur ChiefRiskOfficer Member
Risk Management Committee, under the coordination Rajbhandari Secretary
of a non-executive director, is formed by the Board. The
committee assists the Board of Directors in fulfilling its
oversight responsibilities with regard to risk appetite that From April 29, 2018 to July16, 2018
the Bank is able and willing to assume in its exposures S.N. Name Status in the Status in the
and business activities, risk management, compliance 1 Mr.BinodKumarPyakurelDirector Coordinator
framework,andgovernancestructurethatsupports 2 Mr.it.
GaneshManShresthaIndependentDirector Member
3 Mr.KapilDhakal ChiefDevelopment Member
Officer
The committee constantly monitors the nature and level
4 Mr.DipendraBahadur ChiefRiskOfficer Member
of risk being taken by the Bank and how the risk relates Rajbhandari Secretary
to adequate capital levels. It periodically reviews the risk
management process to ensure its integrity, accuracy, and
reasonableness.Italsoreviewswhethertheinternal The main responsibility of this committee is to revi
control
andriskmanagementsystemisadequateornottoensure the overall risk management structure and review and
well-ordered and prudent conduct of business. Terms monitor of theeffectivenessoftheriskmanagementsyste
ReferenceTOR) ( ofthecommitteeareasspecifiedinthe
Unified Directives issued by Nepal Rastra Bank and Risk This committee has been fulfilling the leading role i
ManagementPolicyoftheBank.Asthecorporategovernance identificationandmitigationofvariousrisksthatma
issues are simultaneously risk issues too, the committee during the operation of the Bank. Terms of references of
also deals with the issues of corporate governance, having thecommitteeareasfollows:
dueregardoftheirimplicationontheoverallriskprofileofthe
Bank, and offers pertinent suggestions to the Board and the •Toidentifyandmonitortherisksassociatedwiththe
senior management of the Bank to strengthen the system of Bank and risk management, and present the report to
corporategovernanceandriskmanagement. theBoardofDirectors,alongwithrecommendations.
•Toprepareandmonitorproceduresrelatedtothe
Composition of members of the Risk Management business, operation, and risk appetite of the Bank,
Committeeisasfollows: and prepare a strategy for mitigation of risks and
presentittotheBoardofDirectorsforapproval.
Till September 14, 2017 To
• collectreportsonriskmanagementrelatedto
S.N. Name Status in the Status in the various areas of operation of the Bank through
management committee, and present it to the Board
1 Mr.TulsiRamAgrawal Director Coordinator
2 Mr.RajendraPrasadAryal
Director Member ofDirectors,alongwithnecessaryrecommendations.
3 Mr.BinodKumarPyakurelDirector Member To
• analyzeandreviewcapitaladequacyasperthe
4 Mr.SudhirNathPandey Assistant Chief Member riskassets(InternalCapitalAdequacyAssessment
ExecutiveOfficer
Plan (ICAAP), appropriateness of policies as per
5 Mr.RoshanKumar Assistant Chief Member
Neupane ExecutiveOfficer Secretary the business strategy, and maximum level of risk
l 133 l
the Bank may assume, and submit necessary Major areas of discussion in Risk Management
recommendationsandopinionstotheBoard. Committee and its decisions during FY 2017/8 are as
•TosuggesttotheBoardofDirectorsfordevelopment follows:
and implementation of necessary policies and
mechanismsaspertheguidelines/directives•Review issued ofALCOupdates
by Nepal Rastra Bank, and necessary internal •Feasibilitystudyreportsforopeningnewbranches
guidelinesforriskmanagementoftheBank. • New and amendment in policies, guidelines,
•Tosubmitreportrelatingtoitsworkcompletion frameworks,
and and product paper guidelines
proceduretotheBoardofDirectors •Followup/statusupdateontheobservationsof
special audit performed by Internal Audit
Summaryofmajoractivitiesundertakenbythecommittee • Audit observations of regular and special audits
for risk management during the review period is stated • Security Risk Assessment Report, Credit Risk
below: Assessment Report, Operational Risk Assessment
Report,andMarket&LiquidityRiskAssessment
•Thecommitteereviewedandeffectivelyimplemented Report
30newand183oldpoliciesthisyear. • Business segment wise portfolio review reports
•Determinedtherisktoleranceandappetitelimit •Quarterly in reconciliationreport
policiesrelatingtobusinessoftheBank. •LiquidityRiskManagementReportandMarketRisk
• Prepared the operation risk, credit risk, market risk, Management Report
andliquidityriskmanagementpoliciesandcredit •Stress TestingandReverseStressTestingReport
risk
reviewguidelinesrequiredforriskmanagement •Sectorand wiseindustryprofile
submittedittotheBoardforapproval. •ReportonITSystemInfrastructureandFinacle
•Tooknecessaryactionformitigationofrisksafter • Annual performance appraisal
review of risk report •ActionTakenReportonrecommendationsofprior
•Reviewedthereportsrelatingtocapitaladequacy Risk Management Committees (completed and under
and submitted to the Board, along with necessary progress)
recommendation.
• Prepared report on determination of necessary risk Total of 15 meetings were held during FY 2017/8, and
tolerance level, after review of necessary policies details of meetings attended and allowance received by
and mechanisms, and submitted it to the Board of thedirectorsareasfollows:
Directorsonaquarterlybasisasperguidelines/
directivesissuedbyNepalRastraBank. Members No. of meetings Meeting Allowance
attended (NPR)
Mr.TulsiRamAgrawal 2 20,
Mr.RajendraPrasadAryal 2 20,
Mr.BinodKumarPyakurel 15 170,
Mr.GaneshManShrestha 13 150,
l 134 l
3.7
KARMACHARI SEWA SUVIDHA SAMITI
Karmachari Sewa Subidha Samiti is a Board-level committee

that constantly reviews, recommends, and forwards for From March 16, 2018 to July 16, 2018
approval, plans and policies recommended by the CEOS.N. Name Status in the Status in the
asreportedbyHR/StaffingCommitteeoftheBankforthe
development and motivation of the staff. The committee
makes recommendations on organizing, succession, and
3 Mr.RoshanKumar ChiefExecutive Member
appointment of senior officials, and consults on matters Neupane Officer
relating to compensation and welfare plans for4 staff. Mr.BishalSigdel ChiefFinancialOfficer
Member
Amendment in staff service bylaws is also advised by the 5 Mr.GautamDangol ChiefHuman Member
ResourceDepartment Secretary
committee from time to time in order to incorporate the
currentmarkettrendandrequirement.
Major roles and responsibilities of the committee a

Composition of members of the Karmachari Sewa
prepare plan and make policies and standards relating
SuvidhaSamitioftheBankisasfollows:
to human resource management such as selection,
appointment, replacement, transfer, promotion, training
Till September 14, 2017
and development, performance appraisal, rewards,
Organization Committee punishment,andsoon,andpresentittotheBoard.
Director Coordinator
Termsofreferencesofthecommitteeareasfollows:
3 Mr.LaxmanRisal ChiefExecutive Member
Officer
Member •ToprovidetherequiredhelptotheBoardfor
5 Mr.SudhirNathPandey Assistant Chief Member interpretationof“DeterminationofRemuneration
ExecutiveOfficer Secretary
Policy”ofthebank.
•Thecommitteereviewsandanalysesthe
From September 15, 2017 to November 29, 2017 remuneration structure of the overall employees from
S.N. Name Status in the Status in the time to time and reviews the effect of the change
in remuneration structure in the market to the Bank
regularlyandsubmitsthereporttotheBoard.
2 Mr.AdityaKumarAgrawal Director Member
3 Mr.LaxmanRisal ChiefExecutive Member • If it appears that there is a need to increase the
Officer remuneration of the employees, including the Chief
Member
ExecutiveOfficer,asperthe“Determinationof
5 Mr.GautamDangol HeadHuman Member
ResourceDepartment
Secretary RemunerationPolicy”oftheBankincompliance
withprevailinglawsandpolicies/guidelines,thent
committee recommends it to the Board, along with
From November 30, 2017 to March 16, 2018 appropriatebasis.
S.N. Name Status in the Status in the •Developtheindicatorsforstatementofjobrequired
1 Mr.RamChandraSanghai Director Coordinator be performed by employees of the Bank, goals and
2 Mr.TrilokChandAgrawalDirector Member progress evaluation, and review their performance on
3 Mr.LaxmanRisal ChiefExecutive Member thebasisoftheperformanceappraisalsystem.
Officer
• Prepare plan, policies, and standards relating
Member
5 Mr.SudhirNathPandey Assistant Chief Member
to manpower management-related actions like
ExecutiveOfficer Secretary
l 135 l
admission, selection, appointment, replacement, Major areas of discussion in Karmachari Sewa Subidha
transfer, promotion, training and development, SamitianditsdecisionsduringFYare 2017/8 asfollows
performance appraisal, and rewards and punishment,
andpresentittotheBoardofDirectors. •IntegratedOrganizationDevelopmentandHuman
• Review the employee policy and structure of existing Resource Management Policy that includes the
employees and prepare succession planning and necessary provision of remuneration determination
submit the recommendations to the Board for policy
approval. •Revisionofsalary,allowances,andbenefitsbased
on survey, as an instrumental strategic consideration,
Summaryofmajoractivitiesundertakenbythecommittee and same proposal was approved by the Board with
duringthereviewperiodisstatedbelow: effectfromOct18,207
• Review of performance management and reward
• Reviewed the proposal for increment of remuneration budget
of the employees of the Bank by considering the • Performance appraisal based on key performance
change of salary scale in the market, by comparing indicators, which are developed as productivity
the remuneration provided by the Bank with the parametersbasedonjobspecification/description
remuneration of other banks in the market, and and long-term strategy of the Bank
submittedthatproposaltotheBoardforapproval. •Jobdesignofbranch,regionaloffice,anddepartment
• Reviewedthe“StaffSuccessionPlanning”forFY • Reviewed and recommended to the Board about
2018/9. Annual Recruitment Calendar
• Reviewedthe Annual
“ HumanResourcePlan • Reviewed and recommended to the Board about
andRecruitmentCalendarforFY2018/9”and AnnualLearningDevelopmentPlan
“JobDesignofBranches,RegionalOffices,and • Revisedcountry-levelorganizationstructure
Departments”. • Review of succession planning
• Reviewed Annual
“ LearningandDevelopmentPlan • Review of Annual Tactical Plan of Human Resource
andCalendar”. Department
• Review of need of amendment in recruitment policy
• Review of need of amendment in remuneration and
academicqualificationofcontractstaff
• Review of need of amendment in promotion policy
Totalofmeetings
6 ofthiscommitteewereheldduringFY
and
2017/8, detailsofmeetingsattendedandallowance
receivedbythedirectorsareasfollows:

attended (NPR)
Mr.RamChandraSanghai 6 68,0
Mr.AdityaKumarAgrawal 3 32,0
Mr.TrilokChandAgrawal 3 36,0
l 136 l
3.8
ASSETS (MONEY) LAUNDERING PREVENTION COMMITTEE
The purpose of establishing the Assets (Money) Composition of members of the Assets (Money)
Laundering Prevention Committee is to assist Launderingthe PreventionCommitteeisasfollows:
Board of Directors in addressing matters related to anti-
money laundering and compliance in the Bank, and Till September 14, 2017
to combat terrorism finance and financial crimes.S.N. The Name Status in the Status in the
committee is responsible for ensuring that the Bank 1 Mr.RajendraPrasadAryal
Director Member
has a comprehensive and effective AML program with 2 Mr.GaneshManShresthaIndependentDirector Member
oversight that is designed to promote compliance with 3 Mr.RameshPrasadJoshi AMLImplementationMember
Officer
AMLregulations.
ThecommitteereviewsandapprovestheBank’spolicies
related to KYC/AML and CFT as per changes in NRB
From December 11, 2017 to July 16, 2018
Directive No 19. It also provides necessary instructions S.N. Name Status in the Status in the
on combating financial terrorism, money laundering, Organization Committee
Director Member
and corruption from time to time. It is responsible for
2 Mr.GaneshManShresthaIndependentDirector Member
reviewing measures and tools set by the Bank to indentify
3 Mr.KamalKhadka AMLImplementationMember
and mitigate risks related to money laundering, financial Officer
terrorism, and corruption. The committee carries out
periodic review of the actions and activities undertaken
by the Bank in relation to prevention of money laundering Termsofreferencesofthecommitteeareasfollows:
and financing of terrorism. The committee may invite
individuals or experts to attend its meetings or present • Toconvenethemeetingofthecommitteeatleast
reports and studies to the committee. The committee oncein45days.
presentsareporttotheBoardofDirectorsregarding • Toevaluate the actionsandactivitiesundertakenbyt
activities carried out in relation to the prevention of money committee itself and submit the progress report to the
laundering and combating financing of terrorism, along BoardofDirectorsonaquarterlybasis.
withnecessarysuggestionsandrecommendations. reviewthepolicies,rules,andguidelinesfollowed
• To
by the Bank in relation to the prevention of money
During the review period, the committee reviewed laundering.
the
policies, rules, and guidelines required to be followed periodicreviewofsystemsdevelopedby
• To perform
by the Bank in order to comply with international norms, the Bank to identify and control risks related to money
reviewed the actions and activities undertaken by the laundering,financingofterrorism,andcorruption.
Bank in relation to AML/CFT, reviewed the report• related Toreviewthereportsonactionsandactivities
to the evaluation of risk related to money laundering and undertaken as per the Prevention of Money
financingofterrorism,andreviewedthereportrelated Laundering
to Act,Rules,andDirectivesissuedby
compliance of Prevention of Money Laundering Act and NepalRastraBankonaquarterlybasisandpresenti
rules and provisions of regularity bodies, and submitted totheBoardofDirectors.
the report to the Board. The committee met 9 times
duringthereviewperiod.
l 137 l
Summaryofmajoractivitiesundertakenbythecommittee MajorareasofdiscussioninAssets(Money)Laundering
duringthereviewperiodisstatedbelow: Prevention Committee and its decisions during FY
2017/8areasfollows:
•Reviewedthepolicies,rules,andguidelinesrequired
to be followed by the Bank in order to comply with the •ConcurrentassessmentofKYCcomplianceofdeposit
provisionsrelatedtomoneylaunderingandfinancing customers
ofterrorismasperinternationalnorms. •PeriodicalreviewofdigitizationstatusofKYCrelated
• Performed periodic review of actions and activities documents
undertaken by the Bank in relation to prevention of • Review and support of policies, procedures, and
moneylaunderingandfinancingofterrorismand guidelines
submittedthereporttotheBoardofDirectors. •ReviewedtheAnnualRiskAssessmentReportofFY
• Reviewed the report related to the evaluation of 2016/7
riskrelatedtomoneylaunderingandfinancing•Assessment of ofcomplianceofNRBDirectiveNo.19,
terrorismandsubmittedittotheBoardofDirectors. Assets(Money)LaunderingPreventionActandRules
• Reviewed the report related to the compliance of •DiscussiononupdateonannualtrainingonAML/CFT
PreventionofMoneyLaunderingAct,Rulesand &KYC
ProvisionsofRegularityBody. •Discussiononupdateonend-to-endAML/CFT
solutions
Totalofmeetings
9 ofthiscommitteewereheldduringFY
and
2017/8, detailsofmeetingsattendedandallowance
receivedbythedirectorsareasfollows:

attended (NPR)
Mr.RajendraPrasadAryal 9 104,
Mr.GaneshManShresthal 8 92,0
l 138 l
3.9
STATEMENT OF DIRECTORS RESPONSIBILITY
The Statement of Director’s Responsibility should arrivebe attheconsolidatedfinancialstatements.Inpa

read simultaneously with the Auditor’s Statement ofNFRSa 10, parent of shallprepareconsolidatedfinancial
their responsibilities set out in the Auditor’s statements Report
using to uniform accounting policies for like
shareholders, which provides the shareholders a precise transactions and other events in similar circumstances
view to distinguish the respective responsibilities of the unlessitisimpracticaltodoso.Thecarve-outisoptio
directors and of the auditor in relation toand thehas financial
been provided for FY 2017/8 to 2019/.
statements. The Board of Directors is responsible Accordingly, for theBankhasoptedthecarve-out.
preparingtheannualreport,separatefinancialstatements
oftheBank,andtheconsolidatedfinancialstatements Inthepreparation of ofthefinancialstatements,thedire
the Bank and its subsidiary(ies) in accordance with the undertaketheresponsibilityoffollowingarrangemen
prevailinglawsandregulationsofNepal.
• Select suitable accounting policies and then apply
Section 108 read together with Section 109 of the them consistently
Companies Act 206 of Nepal stipulates the ultimate • Makereasonablejudgmentsandestimateswhere
responsibilities of the Board of Directors to prepare necessarythe
financial statements of the company to its shareholders • Statethatfinancialstatementcomplieswiththe
for presentation in AGM. The financial statements have
Generally AcceptedAccountingPrinciples,Nepal
been prepared and approved by the Board of Directors FinancialReportingStandards,Directivesissued
inaccordancewithNepalFinancialReportingStandards by Nepal Rastra Bank, Companies Act, National
(NFRS) as published by the Accounting StandardsLegislation,regulationissuedbylocalauthoritie
Board (ASB) Nepal and pronounced by The Institute of guidelines issued, and other prevalent laws and
Chartered Accountants of Nepal (ICAN) and in the format regulations
issued by Nepal Rastra Bank in Directive No. 4 of NRB • Preparethefinancialstatementsonagoingconcern
Directives, 2075. These policies have been consistently basis with the assurance that the Bank has the
applied to all the years presented except otherwise resources to continue the business in the foreseeable
stated. future,unlessitisnotappropriate.Sincethedirec
aresatisfiedthatthegroupandtheBankhavethe
TheBankhasappliedseveralamendmentstostandards resources to continue the business in the foreseeable
for the first time during the year ended 32Ashad 2075. future, and there are no indicators that cast doubt
The Bank has prepared the opening statement of Bank and its subsidiary(ies) going concern
on the
financial position as per Nepal Financial Reporting assumption,thefinancialstatementsarecontinual
Standard(NFRS)asatJuly(the2016, transitiondate) preparedongoingconcernbasis.
byrecognizingallassetsandliabilitieswhoserecognition
is required by NFRS, not recognizing the itemsThe of directors are responsible for keeping proper book
assets or liabilities which are not permitted by NFRS, which discloses the financial position of th
of account
by reclassifying items from previous GAAP to NFRS as Bank with reasonable accuracy at any time. Also, the
required by NFRS and applying NFRS in measurement directorsensurethatfinancialstatementscomplywit
ofrecognizedassetsandliabilities. CompaniesAct,Further, 206. thedirectorshavegeneral
responsibility for taking such steps as are reasonably
Thestand-alonefinancialshavebeenconsolidated open onto thethem to safeguard the assets of the group and
basisofNepalFinancialReportingStandard(NFRS)to 10 to prevent and detect fraud and other irregularit
l 139 l
such, the Bank and its subsidiary(ies) have implemented Audit Committee functions independently and reports
policies, procedures, and mechanisms that are intended directlytotheBoardofDirectors.
to mitigate the risks that may arise due to control
lapses. The Bank has constituted Audit Committee Onbehalf oftheBoardofDirectors
that
comprises of two non-executive directors and Head-
Chairman
InternalAudit,whoisthesecretaryofthecommittee. The
TulsiRamAgrawal
l 140 l
3.10
RESPONSIBILITY STATEMENT OF CEO AND CFO
The financial statements of NIC ASIA Bank and the or loss as reported in the financial statements. Th
consolidated financial statements of the Bank Bankand applies
itsestimates in preparing and presenting the
subsidiaries as on July 16, 2018, are prepared and financial statements and such estimates and underly
presented in compliance with the requirement assumptions
of the are reviewed periodically. The revisi
followings: to accounting estimates are recognized in the peri
in which the estimates are revised and are applied
• NepalFinancialReportingStandards(NFRS)as retrospectively. Disclosures of the accounting estim
published by the Accounting Standards Board (ASB) have been included in the relevant sections of the notes
NepalandpronouncedbyTheInstituteofChartered wherever the estimates have been applied, along with the
Accountants of Nepal (ICAN); nature and effect of changes of accounting estimates, if
• NepalFinancialReportingStandards(NFRS)as any.
published by the Accounting Standards Board (ASB)
NepalandpronouncedbyTheInstituteofChartered Internal Audit Department has conducted period
Accountants of Nepal (ICAN); audits to provide reasonable assurance that the
• F ormatissuedbyNepalRastraBankinDirective established
No. policies and procedures of NIC ASIA Bank
4ofNRBDirectives,2075; were consistently followed. However, there are inher
• CompaniesAct,2063; limitations that should be recognized in weighing t
• BanksandFinancialInstitutionsAct,2073; assurances provided by any system of internal controls
• SecuritiesAct,2063; andaccounting.
• IncomeTaxAct, 2058;
ThefinancialstatementsofNICASIABankwereaudited
The formats used in the preparation of the financial by M/s. TR Upadhya & Co., Chartered Accountants, the
statements and disclosure made comply with the format independentexternalauditor.
prescribed in the Unified Directive issued by Nepal
RastraBank. Weconfirmthat,
• NIC ASIA Bank and its subsidiaries have complied
The accounting policies used in the preparation ofall
with theapplicable laws, regulations, and regulatory
financial statements are appropriate and have been
requirements
consistently applied to by the group except otherwise • Therearenomaterialnon-compliances
stated.Theaccountingpolicieshavebeenincluded • There inthearenomateriallitigationsthatarepending
relevant notes for each item of the financial statements against the group
and the effect and nature of the changes, if any, have • Requiredandadequateprovisionshavebeenmade
beendisclosed. for the overdue loans and advances as per the NRB
DirectiveandNFRS.
The NFRS requires the Bank to make estimates and
assumptions that will affect the assets, liabilities, Roshan Kumar Neupane Bishal Sigdel
disclosure of contingent assets and liabilities, CEO and profit CFO
l 141 l
RISK MANAGEMENT
4.1 StatementonRiskManagement
.. 143
4.2 StatementonCapitalAdequacy
.. 157
4.3 StatementonNPLManagement.. 160
4. ReportonGoingConcern
. 163
RISK
MANAGEMENT
Risk is an inherent feature of any business, and it drives an entity towards income
generation. NIC ASIA’s overall approach to risk management is supported by a well-
definedriskappetite,well-definedriskregistryandriskmeasurementguideline,segregated
and well-framed risk management policies, risk monitoring and reporting framework,
effectivegovernancestructure,andappropriatetechniquestoidentify,measure,monitor,
mitigate, and manage risks. The setting of an appropriate strategy and risk tolerance/
appetite levels, a holistic risk management approach, and effective reporting lines to
the management body in its management and supervisory functions, enable managers
of financial institutions to take risks knowingly and treat risks where appropriate. Risk
management is a part of internal governance involving all areas of financial institutions.
Thereisastronglinkbetweengoodcorporategovernanceandsoundriskmanagement.
Without proper risk management, the various functions in a financial institution cannot
work together to achieve the institution’s objectives. It is an essential part of helping
financialinstitutiongrowandpromotesustainabilityandresilience.
l 142 l
4.1
STATEMENT ON RISK MANAGEMENT
Risktakingisaninherentpartofbankingandprofi regulatory
tsare authority.TheBoardensuresthatthestra
the part of reward for successful risk taking policies, business.and procedures are in accordance with the risk
Excessive and poorly managed risk can lead to losses appetite/tolerance limit for effective management of
and may even fall into the risk of depositors’ security. within the A Bank. The Board understands the nature
strong risk management capability is vital to the success risk of the Bank, and periodically reviews reports on risk
of well-managed banks and financial institutions. management,
The including policies and standards, stress
bank may be exposed to different types and degree testing, and liquidity and capital adequacy through t
of risks, depending upon a number of factors, such as reporting by the Risk Management Committee and the
its size, complexity of business activities, volume, Asset- LiabilitiesManagementCommittee.
etc.
In general, a bank may face credit, operations, market,
andliquidityrisks.Ithaswidescopesandparameters Pursuant in totheNRBDirectiveonCorporateGovernanc
placeformeasuringtheriskofdifferentactivities. the Bank has established a Risk Management Committee
with well-defined terms of reference in line the NRB
The Bank has formulated a Credit, Operational, Directive.
and Atleastfourmeetingsareconductedonannu
Market and Liquidity Risk Management Policy basis. thatHowever,thenumberofmeetingscanbeincreased
provides a comprehensive and dynamic framework of asperrequirement.Thecommitteesupervisesoverallr
a set of systems and procedures in managing credit, management of the Bank, broadly classified as liquidity
operational, market, and liquidity risk, including risk,foreign
marketrisk,operationalrisk,andcreditrisk.
exchange risk and interest rate risk. The Bank has also
formulated and implemented the Risk Registry and Risk Risk management structure of the Bank has set
MeasurementGuideline,2017todevelopamechanism,clear separation between business function and risk
framework, and procedures to register the risk events management function. Accordingly, the Bank has set
happening in the Bank and measure the level of risk of up a separate Integrated Risk Management Department
each activity of operations, credit, market, and (IRMD) headed by Chief Risk Officer (CRO), one of
liquidity.
The Bank has developed and implemented credit, the most senior level positions in the Bank. The IRMD
operational, and market and liquidity risk oversees monitoring global, macro, micro, and departmental level
and reporting framework in order to identify, monitor, risks that arise out of daily business operations, as
andmitigate/minimizethecredit,operationaland well as on periodic basis, and are put to the oversight
market
and liquidity risks of the Bank through appropriate of senior management, Risk Management Committee,
reporting framework established within the Bank. and theIt Board
has to discuss the reports thereon and issue
been developed to lay down a framework for credit, instructionsasappropriate.Therearethreedepart
operational, and market and liquidity risk management independent from the operation of the Bank assigned
of the Bank and provide guidelines on the management with the responsibility of management of different risks,
of the credit, operational, and market and liquidity i.e. Credit
risks Risk Management Department, Operational
acrossallfunctionsoftheBank. RiskManagementDepartment,andMarketandLiquidity
RiskManagementDepartment.
TheBoardofDirectorsistheapexandsupremeauthority
of the Bank which is responsible for framing and Risk-taking drives corporations to push ahead and
implementing robust policies and framework for effective make steep gains. When risks pay off, profitability
compliance of regulations and directions issued by the makes shareholders and stakeholders happy.
l 143 l
RISK MANAGEMENT STRUCTURE
BOARD OF
DIRECTOR
ASSETS
RISK (MONEY) KAMACHARI AUDIT
COMMITTEE
CHIEF
EXECUTIVE
OFFICER
COMPANY
SECRETARY
INTEGRATED DEPUTY CHIEF

RISK INTERNAL ADULT
OFFICER DEPARTMENT
DEPARTMENT
RISK GOVERNANCE AND INTERNAL activities, as well as operational, regulatory, and

CONTROL reputationalrisksthatariseasanormalconsequence
anyand
The Bank has prepared and implemented policies businessundertaking.
procedures to mitigate the risk at enterprises level arising
to the Bank and has inculcated risk culture among the The Risk Management Committee is responsible for
employees by establishing ownership mentality, capacity the establishment of, and compliance with, policies
building programs, well-defined job responsibilities, relatingand
to management risk, supply risk, production
infusinggoodethicalculture. risk, demand risk, and collection risk. The Assets and
Through its Risk Management Framework, the Bank Liabilities Committee isresponsibleforthemanagement
seeks to efficiently manage credit, market, and liquidity of capital and establishment of, and compliance with,
risks that arise directly through the Bank’s policies relating to balance sheet management, including
commercial
l 144 l
management of liquidity, capital adequacy, structural CREDIT RISK

foreign exchange and interest rate exposure, and tax Credit risk is the likelihood that a debtor or
exposure. financial instrument issuer is unwilling o
unable to pay interest or repay the principal according
The Bank’s risk governance structure is suchto that the specified in a credit agreement. Credit ri
the terms
responsibility for maintaining risk withinalso therefersBank’s to the risk of negative efforts on the finan
risk blanket is cascaded down from the Board to result and capital of the Bank caused by borrower’
the appropriate functional, client business, senior default on its obligations to the Bank. Settlement
management, and committees. Information regarding the potential that completion of a financial transa
material risk issues and compliance with policies and will fail to occur as intended and will be considered as a
standards is communicated through the business, sub-component of credit risk, where appropriate. Credi
functional,seniormanagement,andcommittees. risk is the probability of loss of principal and reward
associated with it due to failure of counterparty to meet
The Board is responsible for ensuring that the Bank obligations to pay the Bank in accordance
its contractual
has appropriate internal control framework in place that withagreedterms.
supportstheachievementofthestrategiesandobjectives.
ThevariousfunctionsoftheBankshouldbelooked Basel upon Committee on Banking Supervision has defined
with a view to establish that a proper control mechanism credit risk as the potential that a bank borrower or
is in place during expansion and growth, which enables counterparty will fail to meet its obligations in accordance
ittomaximizeprofitablebusinessopportunities, withavoidthe or
agreedterms.
reduce risks that can cause loss or reputational damage,
ensure compliance with applicable laws and regulations, The effective management of credit risk is a critic
andenhanceresiliencetoexternalevents. component of a comprehensive approach to risk
management, and essential to the long-term success
The Board has set policies and procedures of of risk
any banking organization. The goal of credit risk
identification,riskevaluation,riskmitigation, andcontrol/
management is to maximize a bank’s risk-adjusted
monitoring in line with NRB directives, and has effectively rate of return by maintaining credit risk exposure within
implementedthesameattheBank.Theeffectiveness of
acceptable parameters. Banks need to manage the
the Bank’s internal control system is reviewed creditregularly
risk inherent in the entire portfolio, as well as the
by the Board, its committees, management, and Internal risk in individual credits. In order to minimize cre
AuditDepartment. risk, appropriate diversification of the loan portfoli
appropriatemonitoringandcontrolofthesameisvit
Internal Audit monitors compliance with Credit policies/ Risk Management Department is assigned the
standards and the effectiveness of internal control responsibility to undertake actions related to credit risk
structures across the Bank through regular audit, special managementoftheBank.TheBankhasformulatedand
audit, information system audit, off-site review, AML/
implemented a Credit Risk Management Policy to provide
CFT/KYC audit, and ISO audit, as well as Risk Based guidelinesanddirectionforcreditriskmanagement.
InternalAudit(RBIA)approach.Theaudits’observations
arereportedtotheChiefExecutiveOfficerandbusiness The management of credit risks is approached on three
heads for initiating immediate correctivelevels: measures.
Internal Audit reports are periodically forwarded to the
Audit Committee for review, and the committee issues i. StrategicLevel:Itinvolvesriskmanagementfunctio
appropriate corrective action in accordance with the performedbyBoardofDirectors,Board-level
issue involved to the respective department, regional committees,andseniormanagement.Forinstance,
offices,orbranches. directionandorientationofbusiness,definitionof
l 145 l
risks, ascertaining risk appetite, formulating strategy The Bank’s robust credit risk management system is
and policies for managing risks; and establishing comprisedof:comprisedof:
adequatesystemsandcontrolstoensurethatthe
overall risks remain within acceptable level and a. Credit Risk Identification
therewardcompensatesfortheriskstaken.Credit In order equip all personnel involved with informatio
portfolio is structured to ensure that no single event on comprehensive understanding of how credit of any
canhaveasignificantadverseimpactonoverall nature is to be extended and managed by the Bank, the
performanceoftheBank. credit policy, investment policy, internal credit risk grading
policy, and various procedural guidelines and product
ii.
Policies/Procedures:TheBankestablishescredit paperguidelinesarecirculatedandbroughtintoforce.
policies and procedures that provide a minimum
standard for credit activities and foster a common Set of established processes for identification of credit
approach to credit risk management by individual risks at nascent stage are designed by the Bank as early
units/branches/departments.Theseareestablished warning system. Limit of risk appetite and tolerance
to provide a prudent framework for individual staff to level are set aside by the Bank in line with Nepal Rastra
operatewithin.Inaddition,resourceswithin Bank
theBankdirectives/ circulars/ guidelines. Product wise
are deployed so as to take maximum advantage risk appetite, portfolio cap, and trigger level have been
ofprofitablecreditriskopportunitiesinits specifi
targetcally mentioned in the concerned product paper
markets. guideline.
iii.
Management/unctional
F Level:TheBankrelieson Following illustrative lists of key risk sources an
the competence of the staff involved in credit related indicators associated with credit risk management are
activities to identify acceptable credit risks and reviewedbytheCreditRiskManagementDepartmentfor
tomakesoundjudgment-baseddecisionsinthe identificationofcreditrisk:
approvalandongoingmanagementofthoserisks.
RISK FROM INTERNAL ACTIVITIES RISK FROM EXTERNAL ACTIVITIES

• Interest or principal payment overdue • Downturninspecificsectorsofeconomy
• TrendofNon-PerformingLoan(NPL) • Changeineconomic/otherpoliciesby
• Sectorial, Single Obligor concentration reaching trigger Governmentresultinginpotential/assessed
level doubt over continued viability of the
• Geographicalconcentrationreachingtriggerlevel concerned industry
• Internal limits and exposure caps reaching trigger level • NaturalDisasterImpactingunit’soperation
• Breach of approval terms and conditions • Blacklisting of the respective unit by other
• Yieldinparticularsector/productfallingbelowtrigger financialinstitution
level • Concerns of NRB or other external regulatory
• Accounts being overdrawn regularly agencies
• Improperaccountutilization/mis-utilizationoffunds • Negative publicity or adverse media relating
• Regular extension of review dates of working capital to borrower
lending • Breachofregulatory/legalprovisionsbythe
• Value/qualityofcollateral/marginfallingbelow borrower
acceptable standard • Policiesofgovernmentrelatingtospecific
• Negativecommentsmadebytheinternaland/ sector of economy
orexternalaudit/inspectionontheoperationofthe • Recent political and economic scenario
business • Other external Risk Standard
• Increasing trend in forced loan
• Increasing expiry of collateral insurance
• TurnaroundTimeabovestandard
l 146 l
b. Credit Risk Assessment and Analysis •Revenue/EarningsfortheBank.

Themainpurposeforassessingcreditriskistodetermine •Thenatureandvalueofsecurity(tobegiven)tothe
the customer’s willingness, along with ability,Bank andtootherlenders.
to meet
their obligations to the Bank (and to other lenders and
creditors) as they fall due. Risk assessment shall For the beassessment of credit risk of bank following
done considering industry risks/business risks, activities
financial arecarriedout:
risks, management quality risk, technical risk, security
risk,sensitivityanalysis,andotherrelatedrisks. • Reviewofcurrentsystem/policies/procedures/
guidelines formulated
The Bank’s willingness to undertake or maintain • Review credit
of actual exposure of credit limit product
risk is determined by the recognition, evaluation, wise, segment wise against risk appetite,
and weighing of all positive and negative factors of a tolerance limit mentioned in Respective Product
proposal. The purpose of credit risk assessmentPaper is toGuidelines,CreditPolicyandCreditRisk
determine the customer’s willingness, along with ability, Policy
Management
to meet his obligations to the Bank (and to other lenders • Review of various reports prepared by the
andcreditors)astheyfalldue. DepartmentssuchasAccountMonitoringReportfor
periodic monitoring of drawing power of borrower,
CreditRiskassessmentbroadlyrelatestoassessment LoanOverdueof: Report,LoanReport,andNRB
• PrincipalRisk:thatthecustomermaynotbeable reports,
to MarginMonitoringReports,andsoon.
repayindebtedness.
• IncomeRisk:thatthecustomermaynotbeableto Credit Risk Assessment Report prepared on monthly
meetinterestandfeepaymentsastheyfalldue. basis, which includes detailed assessment of overall risk
management system of the Bank, is presented to the
Riskassessmentincludestheanalysisofthefollowing: Risk Management Committee after proper discussion
withbusinessunits,creditunit,andotherrelatedu
•Purpose/needofthecreditfacility.
• Management strengths and weaknesses, including c. Credit Risk Monitoring and Control
the honesty, integrity, and reliability of the customer Credit Risk Monitoring refers to the continuous monitoring
andwillingnesstohonorobligations. of individual credits inclusive of off-balance sheet
•Thecustomer’sknowledge,managementexpertise, exposures to obligors, as well as overall credit portfolio
and ability to implement strategies to ensure of the Bank. The Bank has developed comprehensive
obligationsaremet. procedures and information systems to monitor the
•Financialstrength,includingitsabilitytorepay loans
condition of individual credits and single borrowers
and meet commitments based on historical and across the Bank’s various portfolios. Establishing
projectedfinancialstatements. efficient and effective credit monitoring system woul
•Businessenvironmentandgeneralbusinessoutlook. help senior management to monitor the overall qual
• Current and future business prospects, including ofthetotalcreditportfolioanditstrends.Asaresu
external conditions affecting the customer, such as management could reassess its credit strategy/poli
economic and political trends, role and position in the accordinglybeforeencounteringanymajorsetback.
industry in which the customer operates, position of
the industry in the business cycle, and vulnerability to Effective risk monitoring requires banks to identify a
technologicalchange. measure all material risk exposures. Consequentl
•Thesizeandstructureoftheproposedfacilities risk and monitoring activities must be supported by
theirfitwithcustomerneeds. information systems that provide senior management
•Pastperformanceoffacilities. with timely reports on the financial condition, operat
•Environmentalrisks. performance, and risk exposure of the Bank, as well
l 147 l
as with regular and sufficiently detailed reports timeforofassessment

line areappliedbyRelationshipManager/
managers engaged in the day-to-day management of Assistant Relationship Manager/credit approving
theBank’sactivities. authorities for analysis of financial strength of the
borrowers under set standards of credit related policies,
Credit Risk Monitoring refers to the day-to-day monitoring procedures, guidelines, and product papers within
of the performance of individual credits and of the overall portfolio/sectorial caps. Post-disbursement measures
portfolio.Theprocessofevaluatingandreviewing are applied
credit by various lines of defence through different
exposures regularly is fundamental to measuring and tools, techniques, delinquency/risk triggers, reportin
reporting exposures accurately. In order to minimize mechanisms serving to monitor the credit risk in existing
credit losses, monitoring procedures and system is in portfolio, and signifying/indicating the probable credit
place that provides an early indication of the deterioration riskinfuturefinancing.
inindividualcreditsandevenintheoverallcreditportfolio.
This process is carried out at different levels. Credit risks to
In order issues need to be resolved as early as
ensure effective measurement and monitoring of risk possible and the following steps are considered for the
and management information system, the following are resolution of credit risk identified during the course
ensured: review:
• TheBank’sriskmonitoringpracticesandreports •EarlywarningcreditrisksarediscussedatCredit
addressallofitsmaterialrisks. Risk Management Sub-Committee and other senior
• Key assumptions, data sources, and procedures managementlevelforeffectivepre-control.
used in measuring and monitoring risk are •Consultationandcoordinationwiththerespectiveun
appropriateandadequatelydocumentedandverifi department
ed isdoneforthefulfillmentofadditional
forreliabilityonanongoingbasis. requirementinhumanresource/MIS/reporting
• Reports and other forms of communication are mechanism/reviewandmonitoringmechanism/
consistentwiththeBank’sactivities,structured internal checks,
to and other relevant mitigation
monitor exposures and compliance with established measures.
limits,goals,orobjectives,andasappropriate, • Critical credit risk issues are brought to the notice
compareactualversusexpectedperformance. of high level authority and resolution of the same
• Reports provided to senior management are are made at the earliest and reported to Credit Risk
accurate,timely,andcontainsufficientinformation Management
for Sub-Committee and other senior level
decision-makers to identify any adverse trends, and management.
toevaluateadequatelythelevelofriskfaced •Coordination
bythe fordevelopmentofautomatized
Bank mechanism for monitoring and control of risk trigger,
cap,andappetiteisensured.
FollowingtoolsareusedforRiskMonitoring:
• Concentration Monitoring Credit Risk Monitoring and reporting framework have
• IndustryProfileAnalysis been developed for effective and timely reporting of the
• Credit Risk Review (CRR) identifiedcreditriskbasedonitsoccurrence(frequency)
• Stress esting
T andnature.
d. Credit Risk Mitigation/ Resolution of Credit Risk FollowingactivitiesarecarriedoutbytheRiskManagement

Issues Committeeintermsofcreditriskmanagement:
Credit Risk Mitigation is a technique used to reduce the
credit risk associated with funded as well as non-funded •Establishapositiveandnegativelistofareasfor
exposures of credit institutions pre or post-disbursement lending, based on the determined areas of lending,
within the acceptable limit. Mitigation measures at theofthesame.
andreview
l 148 l
Establish • concentrationlimitsonsingleunitor I0ntegrated

groupof RiskManagementCommittee/Integrated
connected counter parties, industry, or economic sector, RiskManagementDepartment.
geographicregion,orbasedonspecificproducts,and • Reporting to senior management and the Board or
reviewofthesame. Risk Management Committee, as appropriate, on all
• Recommend standards for loan collateral, portfolio these items, including but not limited to, proposing
management, loan review mechanism, pricing of loans, appropriaterisk-mitigatingactions.
provisioning,andregulatory/legalcompliance. • Supporting the Board through Risk Management
• Determine the procedures related to the Bank’s Committee in its implementation, review, and approval
credit approval process, credit appraisal process, of the enterprise-wide risk governance framework,
administration,anddocumentationmanagement.whichincludestheBank’sriskculture,riskappeti
Establish
• procedureswithregardtomonitoringofloans, risk appetite statement, and risk limits;
inspections, insurance, etc., and review the status of
• Establishing anearlywarningortriggersignalsfor
suchloans/detailsperiodically. breachesoftheBank’sriskappetiteorlimits.
Establish
• procedureformonitoringofexceptions/overdue. • Laydownriskassessmentsystems,coordinatein
• Establish policies and guidelines with regard to
developing management information system, monitor
managementofproblems/irregularloansandreview the
quality ofloan/investmentportfolio,identityprobl
statusofsuchloansperiodically. andrecommendforcorrectingdeficiencies.
• Establish internal rating systems, including definition • Prepare of industryprofile,undertakeportfolio
eachriskgrade,andclearparametersforeachriskgrade. evaluations and comprehensive studies on resilience
• Review the portfolio analysis (sector-based exposure of loan portfolio to environmental changes (stress
and product-based exposure) and issue appropriate testing).
instructions. • Coordination in preparation of policy papers, product
Establish
• amechanism/frameworkforcreditriskreviews papers, and timely review of product papers on
andstresstesting. followingbasis:
Review • ofdelinquencytrendsofportfolio. a Theinstitution’splantograntcreditbasedon
Review • ofsectoralexposuresagainstapprovedcap/limit. various client segments and products, economic
sectors, geographical location, currency, and
Following activities are carried out by the maturity. Credit
Risk Management Department under the Integrated b Targetmarketwithineachlendingsegmentand
risk Management Department in terms of credit level risk ofdiversification/concentration.
management: c Pricingstrategy .
• Off -siteandon-sitereviewofloanfiles(samplebasis).
•Tracking/monitoringofregulatorychangesand • Reviewing and ensuring effective implementation
macro/microeconomiceventsthathavethepotential of Risk Management Committee decision, Credit
toincreaseriskorriskprofile,andpreparingthe Management Committee decision, and the Board
organizationtomitigatethesamevidechangesdecision. in
productpaper/policy,etc. • MaintenanceofHotList/NegativeList/
• Measure, control, monitor, and report emerging credit WatchList.
risks on bank-wide basis to ensure they are in line
with the Board-approved risk appetite, risk limits, and OPERATIONAL RISK
correspondingcapitalorliquidityneeds(i.e.capital Operational risk is defined as the risk of
planning). potentiallossresultingfrominadequateorfailedi
• AssessingtheserisksandmeasuringtheBank’s processes, people, and systems, or from the impact of
exposuretothem. external events, including legal risks for the Bank. B
• Review and provide opinion on matters related to risk Committee on Banking Supervision defines operationa
parametersandprudentiallimitssetbytherisk Board/ as “the risk of loss resulting from inadequate
l 149 l
failed internal processes, people, and systems, or from The Operational Risk Management Department is
external events.” This definition includes legal assigned
risk, butwith the responsibility to undertake actions
excludes strategic and reputational risk. Itrelated further adds, tooperationalriskmanagementoftheBank.The
“Legal risk includes, but is not limited to, exposures Bank hasto formulated and implemented an operational
fines, penalties, or punitive damages resulting risk from
management policy to provide guidelines and
supervisoryactions,aswellasprivatesettlements. direction ” foroperationalriskmanagement.
Operational risk is pervasive across all functions of the Key activities of the Operational Risk Management
Bankandisinfluencedbyallresources,includingDepartment human related to the management of operational
resource, systems, and procedural designs deployed risksareasfollows:
by the Bank to carry out those functions. Operational
risk can be caused by both internal and external • Identifying material, individual, aggregate, and
sources, such as fraud, business interruptions, system emergingrisks.
failures, damage to physical infrastructure, failure in • AssessingtheserisksandmeasuringtheBank’s
execution and service delivery, inherent risks in products, exposuretothem.
customers, inadequacy in procedures or flawed press • Supporting the Board in its implementation, review,
designs, and business practices. The risk can occur and approval of the enterprise-wide operational risk
in any business function or the business supporting framework,whichincludestheBank’sriskculture,
functions. The effect of failure in any of the resources risk appetite, risk appetite statement, and risk limits
can have concurrent repercussions across the Bank. tooperationalrisks.
related
With due consideration to the importance of prudently • Ongoing monitoring of the risk-exposed activities
managing operational risk, and to safeguard the Bank and risk exposures to ensure they are in line with the
from any risks thus arising, a capital charge has been approvedriskappetiteandthelimits.
assigned specifically to buffer the effects of operational • Establishinganearlywarningortriggersystemfor
risk. Effective management of operational risk helps the oftheBank’sriskappetiteorlimits.
breaches
Bank to avoid unnecessary operational losses and helps • Influencing,andwhennecessary ,challengingmaterial
the Bank to meet its strategic goals, as well as protect riskdecisions.
theBankfromreputationaldamageandadverse media.
• Reporting to senior management and the Board or
The Bank seeks to minimize its exposure to operational Risk Management Committee, as appropriate, on all
risk by use of key control standards, key control self- these items, including but not limited to proposing
assessments, and key risk indicators as toolkits to appropriateoperationalrisk-mitigatingactions.
identify, assess, monitor, and control operational risk
events through timely acknowledgement of emerging The following eight-step operational risk management
threatsandunderlyingvulnerabilities.TheBank (ORM) shall also
process has been adopted for managing
ensure the highest level of governance standards and operationalrisksattheBank:1.Identification
adherence to code of conduct and robust compliance
to all regulatory as well as the Bank’s internal 1. Identification
policies,
procedures,andguidelines. The first step of proactively managing new and/or
identified operational risk is identification of such ris
Effective policies, procedural guidelines, and It standard
is especially challenging to define operational risk
operating procedure are crucial tools for sound risk factorshavingalosspotential.Thefollowingkeycontrol
management. Therefore, adequacy and effectiveness standards and indicators serve as the fundamentals
of the policies and procedures and their effective for identification of current operation risk exposure an
implementation is closely monitored by the department emerging risk trends to recognize and manage risk in a
to ensure that they have continued relevance in line forward-lookingmanner:
with regulatory requirement and adjusts to dynamic risk
environmentoftheindustry.
l 150 l
STANDARD CONTROL SCOPE

•Clear segregation of roles and responsibilities
Organization •UpdatedDelegationofAuthorityincommensuratewith olicies
theBank’sP
•Dulyrecordedhandover,takeoverproceduresduringstaffmovements/resignationetc.
•CompliancewithallLawsoftheland
•Compliancewithallregulatoryrequirementsincludingreporting
Compliance • lmpact of regulatory changes
•CompliancewithEmployeeCodeofConduct
•MaintenanceofCustomerConfidentiality
•Adequatelegalarrangementswhiledealingwithexternalparties
Legal • LegalActions
•Adequatelegalarrangementsindealingswithcustomers
•Competencies in assigned roles and responsibilities

• Mandatory leaves and peer reviews
Human Resource •Adequatestaffing
•WorkEnvironmentandworkplacehazards
•AdequacyinstaffmembersrecordsandKnowYourEmployee
•Adequateriskmitigationinproductsupportprocesses
Product
•Productsinalignmentwithregulatorycomplianceanddefinedriskappetite
•Business Continuity Plan

Contingency Planning •DisasterRecoveryPlan
•OperationduringDisaster
•Adequacyinsecurityarrangementsandalarmsystem
•Adequacyinprotectionmeasuresforphysicalassets
•Adequacyinprotectionoflnformation
Security and Protection
•AdequacyinprotectionofintellectualpropertyoftheBank
•Adequacyinprotectionmeasuresagainstcyberthreats
•Adequacyinstaffmemberssecurityandcontrolofworkplacehazards
•ServiceDelivery
Reputation • Customer Complaints
•ExternalEnvironmentalthreatstoreputation
•Audit Plan
Audit •AdequacyofAudit
• lssues raised by Audit
•AdequateassessmentofOperationalriskbyUnits/Departments/Branches
Risk Assessment •AdherencetoOperationalRiskManagementPoliciesandGuidelines
• Key Control Self-Assessment
•Adherence to prescribed Accounting Standards

Finance •Assets/liabilitiesreconciliation
•GeneralLedgerreviewsandaccuracy
2. Disclosure so that the report can be analyzed, reviewed, and

A central database mechanism has been developed so monitored accordingly. Operational risk events data
as to report and record ongoing operational risk collected
events. and risk tolerance and appetite are defin
Branch/departmentrecordstheincidentofrisk reviewed,
events andinrevised accordingly by the Operational
izone, and ORMD generates such records through the Risk Management Department on monthly basis while
mechanism of notification for further analysis and preparing
gives theRiskAssessmentReport.
appropriate instructions to the branch and departments,
and also develops control standards for the mitigation 3. Grading Operational Risk (Prioritization and
of risk. Once the report of incident log is recorded Classification)
in
izone by the branches/departments, a notification This is a very critical step in establishing an effec
alert
is sent to the concerned designated staff of operational
ORMD risk monitoring system, since this step
l 151 l
determines, out of the large number of risk events, which causal-effect relationship of the event is identified, an
ones will require and to what extent the attention actionplan of the
isdevelopedandimplementedwithadequate
limited resources of the financial institution. It is at this
mitigation measures.
step that a decision is made about the nature, as well as
extent of further attention (analysis, evaluation) that has 6. Solution Identification
to be given. Therefore, the grading process is defiOnce nedthecausesofaproblemareidentified,thenextstepis
from the beginning and revised continuously to include nding
fi viablesolutionsforeachcause.Thefollowingactivities
lessons learned from an on-going stream of reports and arecarriedoutinthisstage:
analyses.
• Matching solutions to causes, hence ensuring that each
Asastepinoperationalriskgrading,theBankqualitatively causehasbeenaddressed.
categorizes potential incidents into a frequency- severity
• Reviewing identifiedsolutionstoensurethatthey
matrix; four such categories identified for this purpose shall not be the cause of other risk events themselves
areasfollows: management
( ofchange).
• Include a member of the department responsible for
Risk Grading Table implementation of the solution in the discussion to the
extentpossible.
7. Dissemination
High Frequecny High Frequecny Once an action (or a set of actions) is determined
Low Severity High Severity
• Theactionisapprovedbytheproperchannelsand
assignedtotheconcerneddepartment/branchorat
countryleveltoimplement.
• A larger group including other departments is
informed of the incident and the actions taken
FREQUENCY
Low Frequecny Low Frequecny

Low Severity High Severity Both of these activities are highly dependent on the nature
of the operational risk issues taken into consideration
andiscompletedtoensuresystemseffectiveness.
SEVERITY
8. Execution and Closure
Thisisthestepwhereallactionsarecompleted,including
4. Distribution follow-upwiththeconcerneddepartmentsandpersonnel.
Once operational risk/event information is reported Atthis with
step,identificationandtrackingofallopenaction
appropriatecategorization,itisdirectedtothe is supervising
done and pursued with the person responsible for their
authority at the corporate level and to RMC (in case of closure.Approvalfromhighermanagementisobtained,if
Category 1 &) 2eventually. The supervising authority hasrequired,toobtainpriorityforimplementationprocedure
re-classificationauthorityaswell.Thus,itismandatoryfor
branchoperationin-chargeordesignatedofficialtoreport OPERATIONAL
all RISKAPPETITEOFTHEBANK
sucheventstothelntegratedRiskManagementDepartment. The overall Operational Risk Appetite and Tolerance
Statement shall encapsulate the changes in environment
5. Analysis factors, the Bank’s nancial
fi condition, quality of control
The reported risk is analyzed by lntegrated Risk and control environment, loss data, changes
standards,
Management Department in coordination with expertise in volume of business and activity, and occurrence of
fromrelatedfieldssuchaslT,Operations,Legal,etc. The
operational riskevents.TheOperationalRiskAppetiteand
l 152 l
ToleranceStatementshallberevisedbytheapproval notofavailable
the to the Bank on acceptable terms. To li
RiskManagementCommitteeasandwhenrequired,but this
at risk, the management has arranged for diversifie
leastonceinayear. funding sources in addition to its core deposit base,
and adopted a policy of managing assets with liquidit
Theriskexposureshallnotexceedof in mind and monitoring future cash flows and liquidit
125% theaverageof
sum of percentage risk weighted exposure for operational on daily basis. The Bank has developed internal contr
riskofthepastthreeyears,i.e.25%additionalexposure processesandcontingencyplansformanagingliquidity
iswithintheriskappetiteoftheBank. risk. This incorporates an assessment of expected
cash flows and the availability of high grade collater
Theriskexposureshallnotexceedof % 5 2 1 theaverageof which could be used to secure additional funding as
sumofpercentageRiskWeightedExposureforOperational required. Liquidity risk is chances of failure of a bank t
Risk of past three years. I.e.% 5 2additional exposure is meet obligations as they become due. Effective liquidit
withintheriskappetiteofthebank. risk management helps ensure the Bank’s ability t
meet its obligations as they fall due, without adversely
MEASUREMENTANDQUANTIFICATIONOF affectingtheBank’sfinancialcondition,andreducest
OPERATIONALRISK probabilityofdevelopinganadversesituation.
Currency and Commodity Risk: Foreign exchange

Themeasurementandquantificationiscarriedout
through: risk is the potential for the Bank to experience volatility
in the value of its assets, liabilities, and solvency, and to
• OperationalRiskLossDataBaseandNearMisses
• ModifiedInternalMeasurementApproach suffer actual financial losses as a result of changes i
value between the currencies of its assets and liabilities
anditsreportingcurrency.
MARKET RISK AND
LIQUIDITY RISK Riskoffinanciallossinon/offbalancesheetpositionmay
Market risk is the risk that the fair value or arise due to change in the market price of currencies,
future cash flows of a financial instrument referred to as currency risk. Risk of financial loss in on
will fluctuate because of changes in market prices. off balance
The sheet position may arise due to change in
Bankrecognizesmarketriskasthepossibilitythe formarket
lossof price of the commodities, referred to as
earnings or economic value to the Bank caused due to commodity risk. Under commodities, the Bank currently
adverse changes in the market level of interest rates or deals in gold and silver, and treats these commodities
prices of securities (equity), foreign exchange rates ascurrency.
and Hence,currencyandcommodityriskforthe
commodity price fluctuation, as well as the volatilities Bankisconsolidated
of undersamerisk.
those prices. Market risk comprises three types of risk:
foreign exchange rates (currency risk), market interest Interest Rate Risk: Interest rate risk is the risk that the
rates(interestraterisk),andmarketprices(price fair value
risk). or future cash flows of a financial instrument
willfluctuatebecauseofchangesinmarketinterestra
Liquidity risk is defined as the risk that theChanges Bank will ininterestratesaffecttheBank’sprofitabil
encounter difficulty in meeting obligations associated changing its net interest income and the level of other
withfinancialliabilitiesthataresettledbyinterest- delivering sensitive
cash income. Changes in interest rat
or another financial asset. Liquidity risk arises affect theunderlyingvalueoftheBank’sassets,liabil
because
of the possibility that the Bank might be unable to meet and off-balance sheet, because the present value of
its payment obligations when they fall due, as a result of future cash flows change when interest rates change
mismatches in the timing of the cash flows underThe bothimmediateimpactofvariationininterestrateiso
normalandstresscircumstances.Suchscenarioscould Bank’s netinterestincome(Nll)while , along-termimpact
occur when funding needed for liquid asset positions is on theis Bank’s net worth, since the economic value of
l 153 l
theBank’sassetsandliabilitiesareaffected. The Anrole oftheALCOwithrespecttomarketandliquidity

effective
risk management process that maintains interest rate risk includes, apart from those mentioned in specific
risk within prudent levels is essential for the safety and chapters and the assets liability management policy of
soundness of banks. Thus interest rate risk is the Bank,
the riskthefollowing:
whichimpactstheprofitabilityandeconomicworthofthe
Bank due to adverse effects of the fluctuation• in Set market
up,review,andmonitorinternaltargetedstockratios.
interestrates. • Setup, review, and monitor maximum limit for Top 1,
Top 3, and Top 10 depositors (both individuals and
Equity Price Risk: Equity price risk is the risk that the
institutional andonoverallbasis).
fair value or future cash flows of a financial instrument • Decideonsourceandmixofliabilitiesorsaleofassets,
will fluctuate because of changes in equity pricesincluding (other cap for avoiding concentration of single
than those arising from interest rate risk or currency risk), categoryofdepositaccountsandloanaccounts.
whether those changes are caused by factors specifi • Decide c maximum bucket cap on GAAP (structural)
to the individual financial instrument or its issuer, analysis. or by
factors affecting all similar financial instruments • Develop traded
a view on future direction of interest rate
inthemarket. movements and decide on funding mixes between
fixed v/s floating rate funds, wholesale v/s retail
Equity risk is risk to earnings or capital that results deposits, from
money market v/s capital market funding,
adversechangesinthevalueofequityrelatedportfolios domesticv/sforeigncurrencyfunding,etc.ALCOshall
of a bank. In order to maximize and diversify the Bank’s also be aware of the composition, characteristics,
investment portfolio, the Bank invests/maintains and diversifi a cation of the Bank’s assets and funding
portfolio of equity/mutual fund as per the provisions sources and shall regularly review the funding strategy
providedintheinvestmentpolicyoftheBank. in the light of any changes in the internal or external
environments.
Market and Liquidity Risk Management Department • Determine is the structure, responsibilities, and control
assigned the responsibility to undertake actions related formanagingmarketandliquidityriskandforoverseeing
tothemarketandliquidityriskmanagementofthe the Bank.
marketandliquiditypositionsoftheBank.
The Bank has formulated and implemented market • Ensure and operational independence of market and
liquidity risk management policy to provide guidelines liquidity risk management function with adequate
anddirectionforoperationalriskmanagement. supportofskilledandexperiencedofficers.
• Ensureadequacy of cash flow projections and the
ASSETSLIABILITYCOMMITTEEALCO) ( assumptionsused.
TheAssetsLiabilityCommitteeshallconsistof• the Reviewing
Bank’s the Stress Test scenarios, including the
senior level management, and is responsible for ensuring assumptions,aswellastheresultsoftheStressTests
adherence to the risk tolerance/limits if ( any) set • Decide by the
the fund transfer pricing (FTP) mechanism of
Board, as well as implementing the market and liquidity the Bank and make liquidity costs and benefits an
risk management strategy of the Bank in line with the integralpartoftheBank’sstrategicplanning.
Bank’s accepted risk management objectives and • Decide riskon desired maturity profile and mix of
tolerance.TheactivityoftheALCOshallbecoordinated by
incremental assetsandliabilities.
Head/ln-charge Market and Liquidity Risk Management
andReconciliationDepartmentincoordinationwithCRO.
l 154 l
IDENTIFICATIONOFMARKETRISK Currency and Commodity Risk: Currency and

Market risks are identified through these nonexhaustive commodity risk is measured by adopting Net Open
sourcesofearlywarningsignalsorkeyriskindicators: approachandstresstesting.Thenetopenforeig
Position
currency position is the difference between the total
• Correspondent banks that eliminate or decrease open long (receivable) and the total open short (payable)
their credit lines positions in a given currency held by the Bank. Stress
• Counterpartiesbeginningrequestingadditional testing is also a tool to measure and manage exchange
collateral for credit exposures or that resist entering rate riskoftheBanktosomeextent.Understresstest
into new transactions various scenarios are developed, and the potential shocks
• Sharp stock price decline and rising debt costs oncapitaladequacyCAR) ( etc.aremeasured.
• Downgradingofcreditrating
• UncoveredFCYOpenPosition The Net Open Position Measurement Table, as per net
• Mismatch in maturing rate sensitive assets and openpositionapproach,andtheTableforMeasurement
liabilities of Stress Testing (exchange rate risk), are prepared by
• Rise in wholesale and retail funding costs and Finance and Accounts Department and monitored by
overallCostofFund Treasury Middle Office on a monthly basis. The MIS
• DecreaseinInterestSpread report as prepared, along with comments (if any), is
• AdversemovementinEconomicandMarket put up at least once a month in the ALCO meeting for
conditions discussion and deliberation. In case of any perceived
potential issue, as depicted by net open position on
account of exchange rate fluctuation, ALCO formulates
internalcontrolandstrategiesasappropriate.
MEASUREMENTANDMONITORINGOF
MARKETRISK Management of currency and commodity risk is also
being done by hedging. Hedging is a risk management
Interest Rate Risk: Interest rate risk is measured by strategy used in limiting or offsetting probability of loss
using re-pricing risk management model and stress from fluctuations in the prices of commodities and
testing model. Re-pricing risk management model currencies.
is ln effect, hedging is a transfer of risk witho
designed to measure adverse impact if interest rate buyinginsurancepolicies.
changes by, say 2.5% p.a. (volatility rate), so as to allow
management plan and maintain/grow its profitability Equity Risk: The Bank measures equity risk by
accordingly. Stress testing is a tool to measure preparing
and monthly exposures in equity and by stress
manage interest rate risk of the Bank to some testing.
extent.Monthly exposures in equity are calculated
Under stress testing, various scenarios are developed on using various structured tables. Stress testing is
thepotentialshocksonthecapitaladequacyratio tool to (CAR)measure
, and manage equity risk of the Bank’s
andimpactontotalcostaftershockismeasured. portfolio to some extent. Under stress testing, var
scenarios are developed, and the potential shocks on
Re-pricingtheRiskMeasurementTableasperre-pricing capital adequacy (CAR), etc. are measured. Equity risk
management model is prepared on monthly basis by is measured on portfolio basis and segregated as per
Finance and Accounts Department, and reviewthe andinvestment/equitycategory,suchas,heldfortradi
monitoring of the impact on Net lnterest lncome (Nll) availableforsale,andheldtomaturity.Equityriskinca
is carried out by Treasury Middle Office. Finance and of investment in non-listed companies shall be assessed
Accounts Department also prepares stress testing/ through MISperiodic review of financial performance. Apart
reportonamonthlybasis.Theresultsareputupfrom the above, equity risk is calculated by using
atleast
monthlyintheALCOmeeting,whichmonitorsthesame. fundamentalanalysisandtechnicalanalysis.
l 155 l
Monitoring of equity risk is done by Treasury Middle Office by reviewing the Equity Risk Table showing the expos
in equity prepared by Finance and Accounts Department on a monthly basis. Monitoring of equity risk is als
donebyTreasuryMiddleOfficebyreviewingstresstesting,MISreport(equityrisk)preparedbyFinanceandAccou
Departmentonamonthlybasis.AnyanomalyisreportedattheALCOmeetingfordiscussionanddeliberation
IDENTIFICATIONOFLIQUIDITYRISK
Liquidityrisksareidentifiedwiththehelpoffollowingnonexhaustivelists:
Byevaluatingatregularintervaleachmajoronandoffbalancesheetposition,includingtheeffectofembeddedoplions,un-availedportiono
andothercontingentexposuresthatmayaffecttheBank'ssourcesandusesoffunds,anddeterminehowitcanaffectliquidityrisk.
Byidentifyingtheeventsthatcouldhaveanimpactonmarketandpublicperceptionsaboutitssoundness,particularlyinwholesalemarke
Byconsideringtheinteractionsbetweenexposurestofundingliquidityriskandmarketliquidityrisk.Liquidityfromcapitalmarketsasaso
volatilethantraditionalretaildepositsandinvestorsinmoneymarketinstrumentsmaydemandhighercompensationforrisk,requirer
shortermaturities,orrefusetoextendfinancingatthetimeofstress.
Byensuringthatassetsareprudentlyvaluedaccordingtorelevantfinancialreportingandsupervisorystandardsfactoringthatvaluat
marketstress,andtakethisintoaccountinassessingthefeasibilityandimpactofassetsalesduringstressonitsliquidityposition.
ByreviewingvariousEarlyWarningSignalsanditsprobableimpactonliquidityoftheBank.
Suchearlywarningsignalsmaybebutnotlimitedto:
• Rapid asset growth especially when funded with potentially volatile liabilities
• Growingconcentrationinassetsorliabilities
• Increase in currency mismatches
• Decreaseofweightedaveragematurityofliabilities
• Repeated incidents of positions approaching or breaching internal or regulatory limits
• Negativetrendsorheightenedriskassociatedwithaparticularproductline,suchasrisingdelinquencies
• SignificantdeterioralionintheBank'searnings, ,andoveraall
assetquality financialcondition
• Negative publicity
• Credit rating downgrade
• Sharp stock price decline or rising debt costs
• Rising wholesale or retail funding costs
• Counterpartiesbeginningrequestingadditionalcollateralforcreditexposuresorthatresistenteringintonewtransactions
• Correspondent banks that eliminate or decrease their credit lines
• lncreasingretaildepositoutflows
• Extensionofcredit
MEASUREMENTANDMONITORINGOF • Measuringandmonitoringliquidityriskpotential
LIQUIDITYRISK throughflowapproach(structuralliquiditystatement
Liquidityriskforbankmainlymanifestsonaccount • Measuring ofthe andmonitoringliquidityriskpotential
followings: throughestimatedcashflowstatement.
• F undingLiquidityRisk:Theriskarisingwhenthe • Measuringandmonitoringliquidityriskpotential
Bank is unable to meet the expected and unexpected throughstatementofconcentrationofmixofdeposits.
currentandfuturecashflowsandcollateralneeds • Measuringliquidityriskpotentialthroughpreparati
without affecting either its daily operations or its ofstatementofcallmoneyborrowing/lending.
financialcondition. • Measuring liquidityriskpotentialthroughmarket
• MarketLiquidityRisk:TheriskarisingwhentheBank liquidity outlookstatement.
cannoteasilyoffsetorliquidateapositionat • Measuring
the liquidityriskpotentialthroughavailable
prevailingmarketpricebecauseofinadequateunencumbered market liquidassetsstatement.
depthormarketdisruption. • Measuring liquidity riskpotentialthrough“statemen
forestimationofprepaymentsofloans”,“statement
Liquidity risk is measured and monitored by applying forestimationofprematureclosureofFD/deposits”,
followingapproaches: “statementforestimationofconversionofoffbalance
• Measuringandmonitoringliquidityriskpotential sheetandcontingenciestofundedexposure”,and
throughstockapproach. “statementforestimationofutilizationofidlelimit
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4.2
STATEMENT ON CAPITAL ADEQUACY
Capital is a prime factor to consider when assessing the The Bank has formulated and implemented Internal
safety and soundness of a bank. It acts as a cushion Capital in Adequacy Assessment Process 2018 (ICAAP
case the value of the bank’s assets decline and 2018), which
liability has been approved by the Board of
rises.Maintainingaminimumcapitallevelisofparamount Directors. ICAAP 2018 is a system of sound, effective,
importanceforabanksothatadequateprotection and against
complete strategies and processes that allow the
riskcanbeensured.AstrongcapitalmanagementBank policy to assesses and maintain on an ongoing basis the
protects an organization by identifying and mitigating amounts, types, and distribution of internal capital that
risks,besidesestablishingtheconfidenceofdepositors, the Bank considers adequate to cover the nature a
creditors, and other stakeholders. Capital level
adequacy ofrisktowhichtheBankisormightbyexposedto.
givesaviewonabank’sfinancialstrengthandstability.
ICAAPshall 8102 alsoincluderequirementtohaverobust
Capital adequacy is a basis for measurement of governancethe arrangements,efficientprocessofmanaging
amount of capital that the bank needs to hold to ensure all material risks, and an effective regime for assessing and
that no excess leverage is taken that would lead to maintaining adequate and economic capital at the Bank
insolvency. Capital adequacy is best expressed whereas economic capital (economically needed capital)
Capital Adequacy Ratio (CAR), also known as Capital refers to the amount of capital required for the Bank
to Risk Weighted Assets Ratio. CAR is a measure of business a operationsandfornancing fi theassociatedrisk
bank’s eligible capital expressed as a percentage of its
riskweightedasset.TheobjectiveofCARisbuilt ICAAP around
shall
8102 providepolicyandproceduralguidelines
marketdiscipline,wherebydepositorsgetastandardized forthecalculationofinternalcapitaladequacybyprescri
measurement on the extent to which their wealth is appropriatemethodologies,techniques,andprocedurest
exposedtorisk,andtherebyestablishconfidence assess onthethecapitaladequacyrequirementsinrelationt
financial institution’s operations. The CAR measurement Bank’sriskprofileandeffectivenessofitsriskmanagement
is also directed towards making a bank’s capital control moreenvironment,andstrategicplanning.
risksensitiveandshockabsorbent.
The Board shall be primarily responsible for ensuring th
The Basel II document of the Basel Committee requires current and future capital needs of the Bank in relation to
bankstocomplywiththefollowing: strategic objectives. The management shall review an
understand the nature and level of various risks that the
• Banks should have in place a process for assessing Bank is confronting in the course of different business
their overall capital adequacy in relationactivities, to their and risk
how this risk relates to capital levels, and
profileandastrategyformaintainingtheircapital accordingly
levels. implement sound risk management framework
• Banks should operate above the minimum regulatory specifyingcontrolmeasurestotackleeachriskfactor.
capitalratios.
To achieve the long-term plans, the Bank prepares
InternalCapitalAdequacyAssessmentProcessGuideline annualbudgets/operating/tacticalplansasstipulat
201 (updated July 2013) issued by Nepal Rastra Bank thebudgetpolicyandstrategydocumentoftheBank.To
requires banks and financial institutions to develop ensurethat theirtheBank’scapitaladequacyiscommensura
own internal policy, procedures, and structure to manage tothedemandoftheBank’scapitalrequiredbybusines
theriskinherentintheirbusiness.Banksshould planning, the management
report if and the Board prudently and
there are any changes made in the previous ICAAP or its proactively engage on ongoing process of capital and
outcomewithinthreemonthsoffiscalyearend. risk assessment, stress testing and scenarios testing,
monitoring,andreportingasperICAAP2018.
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The Bank has also formulated and implementedREPORTING Stress OFCAPITALADEQUACY

Testing Guidelines 2018 in order to assess of the As per Unified Directive No. 1 issued by Nepal Rastra
vulnerability of the Bank under various stress situations, Bank, the Bank is required to maintain minimum capital
typically, application of “what if” scenarios, especially in on total risk-weight assets as prescribed
fund based
the problematic identification of low frequencybybut high
Capital Adequacy Framework-2015 issued by Nepal
severity events, and identifying expected and unexpected Rastra Bank. The Bank is required to maintain the
losses. It focuses on capturing the impact of large but
prescribed ratioofcapitaladequacyatalltimes.Furthe
still plausible events, and understanding the overall risk the Bank is required to prepare statement as to capit
profileinacoherentandconsistentframework,including fund as stated in schedule 1. of Capital Adequacy
impactanalysisonearnings,solvency,andliquidity. Framework,on 2015 thebasisofthefinancialstatements
on the last day of every month. Those statements are
Stress testing of the Bank also includes macroeconomic requiredtobesenttotheBanksandFinancialInstituti
environment of the country and its impact in the Bank’s
Regulation Department and concerned supervision
business, as well as entire key risk areas and functions of department of Nepal Rastra Bank within 15 days from
the Bank, as far as data availability and resources permit, the date of completion of every month, having them
havingultimateimpactonthecapitaladequacyofthe Bank.
authenticated by internal auditors. In the rare event
failure to send them unaudited, the same will have to
A formal monitoring and reporting mechanism has been be mentioned in the monthly statement. However, such
established to provide the senior management necessary statements at the end of the quarter must be submitte
informationontheriskprofile,trends,andcapitalrequirements aftergettingthemauthenticatedbytheinternalaudi
as per ICAAP8 1 0and
2 Stress Testing Guidelines. 8 1 0 2 As per Capital Adequacy Framework-, 5 1 the
02 Bank is
Suchreportsarebeingpreparedonamonthlyandquarterly requiredtomaintainminimumCapitalAdequacyRatioof. % 1
basisandcirculatedtorelevantbusinessunits/departments,
Integrated Risk DepartmentIRMD) ( , and tabled in Assets
During FY 2017/8, the Bank prepared the statement of
Liability Committee ALCO) ( meeting. Further quarterly
capitalfundasstatedinscheduleof 1. CapitalAdequacy
reports are presented to the Risk Management Committee Framework,on 2015 thebasisofthefinancialstatements
andtheBoardforreviewanddiscussions. at the last day of every month and submitted the same
to the Banks and Financial Institutions Regulatio
The Bank has determined and implemented Capital Department and concerned supervision department
Adequacy Ratio of 0.5% more than that required by the of Nepal Rastra Bank within 15 days from the date of
regulatory body as a prudent measure of the Internal completion of every month, getting them authenticated
Capital Adequacy Assessment Policy (ICAAP). This has bytheinternalauditors.Also,theBankhasuploadedthe
provided assistance in maintaining shock absorption quarterlystatementofCapitalAdequacyRatioandreport
capacity of the Bank at higher level during the time of on Internal Capital Adequacy Assessment Policy on the
probableupsanddownsoftheBank. Bank’swebsitewww.nicasiabank.com.
DETAILSOFCAPITALADEQUACYRATIO
RiskWeightedExposuresforcreditrisk,marketriskandoperationalrisk(RiskExposure):
NPR in Million
Risk weighted Exposures 16-Jul-18 15-Jul-17
a.RiskWeightedExposureforCreditRisk 18,625.3 71,293.4

b.RiskWeightedExposureforOperationalRisk 4,06.9 3,47.58
c.RiskWeightedExposureforMarketRisk 17.5 138.9
d.AdjustmentUnderPillarII
ALMpolicies&practicesarenotsatisfactory;add3%ofgrossincometoRWE/RWEequivalentto 104.8 1,07.9
reciprocalofcapitalchargeof4%ofgrossincome.
2%adjustmentonTotalRWE/Overallriskmanagementpoliciesandproceduresarenotsatisfactory,
2,456.0 add 2,96.
4%ofRWE
TotalRiskWeightedExposures(a+b+c+d) 125,370.8 78,910.64
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Tier 1 capital and a breakdown of its components:

NPR in Million
Particulars 16-Jul-18 15-Jul-17
Paid Up Capital 8,031.2 6,92.0

ProposedStockDividend - 1,38.52
Share Premium - -
StatutoryGeneralReserves 1,825. 1,58.
Capital Redemption Reserve 285.71 214.9
RetainedEarnings 943.65 192.86
Less: - -
Intangible Assets 2.97 -
DeferredTaxAssets - 41.85
Miscellaneous expenditure not written off - 1.76
Land&buildinginexcessoflimitandunutilized - 86.50
Investmentinequityofinstitutionswithfinancialinterests 20. 10.
Core Capital (A) 10,862. 9,76.34
Tier 2 capital and a breakdown of its components:

NPR in Million
Particulars 16-Jul-18 15-Jul-17
GeneralLoanLossProvision 1,204.73 740.85

ExchangeEqualizationReserves 38.7 34.69
SubordinatedTermDebt 3,20. 30.
InvestmentAdjustmentReserve 4.2 28.47
Other Reserve - 41.85
Supplementary Capital (B) 4,87.35 1,45.8
NPR in Million
TotalCapitalFund(A+B) 15,30. 10,92.
CapitalAdequacyRatio(TotalCapitalRatio) 12.4% 13.8%
Details of Capital Adequacy Ratio during the FY 2017-18:
Quarter Ending Capital Adequacy Ratio (CAR)
Firstquarter(midOctober2017) 12.08%
Secondquarter(midJanuary2018) 13.59%
Thirdquarter(midApril2018) 13.0%
Fourthquarter(midJuly2018) 12.4%
CapitalAdequacyRatio(CAR)ofthisBankcanbeseentobecomfortablyabovetheminimumCARof1%prescribed
byNepalRastraBankandtheminimumCARofas
1.5% requiredbytheInternalCapitalAdequacyAssessmentPoli
(ICAAP).
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4.3
STATEMENT ON NON PERFORMING LOAN MANAGEMENT
Anon-performingloan(NPL)isasumofborrowedmoney fund, repayment capability, and adequacy of collateral

upon which the debtor has not made the scheduled and securities, etc., as well as periodic review and
payments for a specified period. A non-performing analysis of the loan after disbursement. This policy also
loan (NPL) is considered in default, or close to default. provides for restriction and limitations for providing
ManagementofNPLisabiggestchallengefacedbythe loans to risky areas like loans to relatives of employees
banksandfinancialinstitutionsinthepresent and days.
directors, loans in some specified areas, etc. This
policy provides for the determination of approving limit
As per the directives issued by Nepal Rastra Bank, on the NPL basis of qualification, experience, job grade, and
iscategorizedasfollows: position, etc, of the employees, which helps to lower the
riskofdefaultonrepaymentofloans.
• Sub-standard: Loans/advanceswhichareoverdueby
a period from three months to a maximum period of Credit Risk Management Policy of the Bank provides
sixmonths. for various duties and responsibilities of the Credit Risk
• Doubtful: Loans/advances which are overdue byManagement a Department, Loan Recovery Department,
period from six-months to a maximum period of one and segment heads in case of NPL reaching trigger
year. level.Thispolicyalsoprovidesforvariousprocessesand
• Loss:Loans/advanceswhichareoverduebyaperiod procedures and duties and responsibilities of various
ofmorethanoneyear. departments and personnel for the management of credit
risk. Credit risk management cycle of the Bank provides
The Bank is committed to maintain a lower rate for of sound
NPL. practicesin:
The Bank has formulated and implemented integrated
credit policy, integrated policy for collection and recovery • Credit Business Sourcing
of loans, and non-banking assets management policy, • Credit Appraisal
credit risk review policy, and credit risk management • Credit Approval
policy, which help the Bank to define standard process • Credit Administration
and procedure for NPL management. The Credit Risk - CreditDocumentation
ManagementDepartmentalsoindependentlyreviews the
- Disbursment
creditfilestominimizetheriskofdefaultandto maintain
• Monitoring and Control
a lower NPL rate. Reflection of non-performing loans • CreditClassification
(NPL)alsotarnishesimageoftheBank,andBankcomes • ManagingProblematicCredits/Recovery
under surveillance of regulatory bodies, and even by its
customers. Thus, recovery of NPL is a major concern Thepolicyforcollectionandrecoveryofloansprescribes
for the Bank. Therefore, the Bank has given maximum following measures to prevent the loans from becoming
emphasis to prevent transformation of regular loan to nonperformingloans:
NPL and recovery of NPL to increase its profitability • Closeand monitoring during validity repayment period of
qualityofassets. the loan
• Earlywarningsignalsandmonitoringofitsearly
The integrated credit policy of the Bank defines the
stage.
provisions related to the maintenance of relationship with • Gearingupfollow-uprightfromtheinitialstageofits
customers, review of proposal based on requirement of
default/ non-paymentofinstallments/interest.
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• Understanding reasons of non-payment to avert the repossession process, auctions procedures, and revaluation
problem. of securities, blacklisting of the defaulting borrower, and legal
• Constantfollow-upwithdefaultborrowers. recovery actions, including takeover of the properties as NBA
• Takingeffectivestepstosavetheloanfrombecoming intheBank’sname,ling fi recoverysuitwithDRT/Court,and
NPL. otherrecoveryactions.
Thispolicyalsoprovidestheprocessandprocedures TheBank’s
to non-performingassetsratiostoodat0.697%
befollowedbytheLoanRecoveryDepartment,concerned as at balance sheet date. The total non-performin
branches and RMs, Collection Unit, Deteriorating assets
Credit asatbalancesheetdateisNPR84,13697and
Management Unit, and Core Recovery Unit, in case loan loss provision related to non-performing assets
of default in repayment of loans. These procedures calculated as per NRB directives is NPR 72,4193
include reminding the customers through text, call, which is 86% of NPA. Also, the total loan loss provision
emails, collection letters, and personal visits, publishing toNPAis1.
5 3 days’ notice in national newspaper, vehicle/equipment
Change
Particulars FY 2017-18 FY 2016-17
Amount %
Pass loan (performing loans) 120,586 72,95 48,237 67%

Non-PerformingLoans(NPL) - - - -
Restructured/rescheduled - - - -
Substandard 12,384 32,04 (19,65) (61%)
Doubtful 4,861 3,265 1,596 49%
Loss 6,8 27,3 (160,387) (71%)
GrossLoans&Advances 120,68 72,5618 48,1092 6%
NPL Ratios:
GrossNPLtoGrossLoans&Advances(NPLRate) 0.0697%
NetNPLtoNetLoans&advances
0.0971%
As on July 16, 208 average NPL to total loan ratio for Class “A” banks and financial institutions and overall ban
financialinstitutionsare1.4%and1.60%,respectively.(AsperBankingandFinancialStatisticspublishedbyNRB
NPL to Total Loan Ratio (16 July, 2018)
1.60%
1.41%
0.07%
NIC ASIA Bank Class "A" Bank OverallBanksandFis
It can be seen that this Bank has better NPL rate than the industry average, which is the result
management to maintain lower NPL rate, effective implementation of robust internal control, an
governance.
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Trend Analaysis of NPL rate

NPL rate of the Bank has substantially improved over the years as a result of the focus of the Bank on qua
successful formulation and implementation of credit policy, credit risk management policy, and policy for collection and
recoveryofloans.
0.76%
0.36%
0.07%
FY2015-6 FY2016-7 FY2017-8
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4.4
REPORT ON GOING CONCERN
Continuation of an entity as a going concern is presumed remittanceagentsduringthereviewperiod.

as the basis for financial reporting unless and• until TheBank thehasearnedOperationalProfitandNetProfit
entity’s liquidation becomes imminent. If and of when
NPR1.9billionandNPR1.34billion,respectively,
an entity’s liquidation becomes imminent, financial duringtheyear.TheBankhasReturnonEquityand
statements are prepared under the liquidation Return basis
onof
Assetsof12.09%and0.97%,respectively,
accounting.Agoingconcernisabusinessthatfunctions fortheyear.
withoutthethreatofliquidationintheforeseeable • Totalnumber future.
ofemployeesoftheBankhasreached
2,91intheyearascomparedto1,75lastyear,with
Assessment has been made to determine the Bank’s incrementof536employees.
ability to continue as a going concern, and no material • TheBankhasproposedbonusshareattherateof
evidence was found regarding doubts upon the Bank’s 10%ofpaid-upcapital,pluscashdividendattherate
abilitytooperateasagoingconcern.Assessmentofthe 0.526%equivalentamounttothetaxapplicableon
financial performance, business growth and expansion, issuanceofbonusshare,outoftheprofitofthereview
material unfavorable events, and review of budget were period.
considered to determine the going concern status of • TheBankhasestablisheditselfasaplatformfor
the Bank. Some of the material factors that support developmentthe of skills, knowledge, and capacity
Bank’sabilitytooperateasagoingconcernareasunder: of employees, and various activities have been
performed to ensure that the culture of gaining
knowledgeisdevelopedamongemployees.
• ThisBankisoneofthelargestprivatesector • CapitalAdequacyRatio(CAR)oftheBankwas
commercial banks in the country in terms of capital comfortablyabovetheminimumCARof1%
base,balancesheetsize,numberofbranches,ATM prescribed by Nepal Rastra Bank and the minimum
network,andcustomerbase. CARof1.5%asrequiredbytheInternalCapital
• TheBankhasbeenabletoincreasedepositandAdequacyAssessmentPolicy(ICAAP)duringthe
loansandadvancesbyNPR64.5billionand reviewperiod.
NPR48.2billion,respectively,duringthereview • TheBankiscommittedtoworktowardsthe
period,withincrementrateof72.4%and6.74%, development and well-being of society and protection
respectively, year-on-year, which is the highest ofenvironmentandecologicalbalance.TheBankwas
increase in deposits and loans and advances by any involved in various social service activities during the
bankinasingleyearinNepalesehistory. reviewperiod.
• Therewasincrementintotalinvestmentofthe • The Bank Bankhasimplementedrobustinternalcontrol
by42%duringthereviewperiodascomparedtolast and corporate governance by forming and
year. implementingvariouspoliciesandguidelines.
• TheBankhasatotalcustomerbaseof1.35million, • TheBankisfocusedoncomplyingwithvariousrules,
with60,additionalcustomersduringthereview regulations, policies, and guidelines of the regulatory
period.TheBankwasalsoabletoopenaccountof76 bodiesandprevailinglawsandregulations.TheBank
localbodiesduringthereviewperiod. alsofocusesontimelyandadequatereportingand
• TheBankhasopened12branches,15new transparentdisclosure.
branchlessbanking,125newATMsand1,948new • TheBankhasveryhealthyrelationshipwithits
lenders,bankingpartners,suppliers,andvendors.
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BANKING
THE UNBANKED
DEPRIVED SECTOR LENDING

NIC ASIA is fully aware that the huge density of banks is lending can result in the prosperity of lower class and middle
notanassurancetofinancialinclusion.Apartfrom classthecommunity
vast which could ultimately lead to the growth of
institutionaloutreach,thecontributionoffinancial thecountry’s
services economyasawhole.
toupgradepeople’slivingstandardisequallyimportant.
ForthistheBankhasadoptedastrategyofdeprived ComplyingwithstatutoryrequirementofNepalRastraBank
sectorlendingresonatingwithnationalgoals.to disburse at least 5% of the loan to deprived sector, the
BankdisbursedoverNPR3.6billionloantoimpoverished
Asaresponsiblecorporatecitizenofthecountry, community
theBankinthecurrentfiscal,upfromlastfiscalyearby
is determined to help the government in achieving its plan 28%.Thehighestproportionofourlendingtodeprivedsector
ofupliftingthepoorbysupportingtheirfinancialwas needs
madeinagriculturesector.Ouragriculturelendingroseb
throughdeprivedsectorlending.Thedeprivedsector awhopping29%year-on-yearduringthereviewperiod.
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BHAGAWATI
LAMSAL
NPR in Million BINTI KAPADA
PASAL AND TAILORS,
RUPANDEHI
FY 2016-17 FY 2017-18
DIRECT LENDING DIRECT LENDING I am a
1,630 NO. OF CUSTOMERS 4,036 tailor and
also run a clothe
1,108.21 VOLUME OF LOAN
3,632.24 storeinButwal-6.Lastyear,Idecided
to expand my business for better income as the
costoflivingisgettingexpensiveinButwal.But,
AGRICULTURE AGRICULTURE selectionofarightbankwasabafflingproblem.
531.98 2,121.91 Finally,myquestforarightbanklandedmeinto
NICASIA.Ifreelycommunicatedmydreamstothe
bankanditlistened.Theloanofficersunderstood
SERVICES
AREAS OF
0.17 DOMESTIC
INDUSTRIES my desire and underlying motivation to become a
26.85 LENDING
SERVICES successfulwoman.Theybriefedmeontheloan
31.58 schemesthatmatchedmyfinancialneed,and
after my due consideration on the same, I took a
OTHERS OTHERS loanfacilityofRs80,underDeprivedSector
26.85 1,478.57 Lendingin2018.Iefficientlyusedtheloanamount

toenhancethebusiness.Asaresultmybusiness
grew and I generated better income this year than
previousyear.Also,duetothegrowingbusiness
INDIRECT LENDING INDIRECT LENDING sizeandsuccessstory,myPRhasalsoincreased
175 NO. OF CUSTOMERS 211 inthetown.Year2018wasthebestyearformy
business and now I am aiming for higher growth as
2,950.8 VOLUME OF LOAN
5467.75 IamconfidentthatNICASIABankisalwaysthere
tosupportmefinancially.TheserviceofNICASIA
was beyond my expectation as they offered me right
counseling and the bank personnel truly delivered
ontheirpromise.TodayIaminagoodpositionand
allthecreditgoestotheNICASIABank.It’strulymy
BHABISARA GAHA MAGAR BankPaniSathiPani.ThankYouNICASIA!
AADITI KIRANA PASAL, MAHENDRANAGAR
IlaudthepersonalizedserviceofferedbyNICASIA
Banktoitscustomers.Iamsurprisedbyhowthe
bankunderstandsourfinancialneedsandprovides
necessarymentoringandsuggestion.Ihaveworked
with several banks but I am more pleased with the
hassle-free service and ease of transactions offered by
thisbank.Ihaveexperiencedthisbanktobeareliable
andresponsivefinancialinstitution.TheDeprived
SectorLendingserviceoftheNICASIABankhelpedme
refinancemydebtandgrowmybusiness.OnethingI
likemostaboutthisbankisthatthebank’sstaffstreat
youwithutmostrespectandadequatelybriefyouonthe
bank’sservicesandoffersafterunderstandingone’s
smallbusinessandprovidetheneedfulfund.
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SUSTAINABILITY
5.1 CorporateSustainability
. 167
5.2 CorporateSocialResponsibility
. 168
5.3 Environment
-friendlyInitiatives
.. 170
5.4 ValueAddedStatement
.. 172
5. StatementonContributionto
GovernmentExchequer
.. 175
SUSTAINABILITY
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5.1
CORPORATE SUSTAINABILITY
Corporate sustainability means enjoying long-term business success while at the

same time acting in a way that is ecologically and socially responsible. Sustainable
expansion, performance, and management are key focus areas of Strategy 20.
The Bank believes that no organization can have sustainable development without
patronagefromsociety.TheBankiscommittedintheintegrationwithitsstakeholders
The Bank has promotion and growth of the national economy among its objectives,
andtheBankisalwaysawareaboutitssocialandmoralresponsibilities.
TheBank’ssustainablegoalsincludeprovidingassistanceinthefollowingareas:
• Poverty alleviation
•Food
•Education
• Agriculture
•Womenempowerment
•Waterandsanitation
•Energy
•Industrializationandemployment
• Conservation of resources
• Protection and management of terrestrial
ecosystem
•Revitalizationofglobalpartnership
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5.2
CORPORATE SOCIAL RESPONSIBILITY
Corporate Social Responsibility (CSR) is a process that

aims to embrace responsibility towards the environment,
consumers, employees, communities, and all other
stakeholders, and encourages a positive impact through
itsactivities.
The Bank believes that undertaking socially responsible

initiatives is truly a win-win situation that not only attracts
socially conscious customers and employees, but also
makes a real difference in the world. The Bank has
established itself as a responsible corporate citizen
by realizing its responsibility and social obligations.
By accepting the fact that society and business are
complementary to each other, the Bank has provided
assistance in various forms and ensured its presence
in different social activities and plans for exemplary,
remarkable, and inimitable fulfillment of its corporate
socialresponsibility.
In line with the same, the Bank has contributed towards

corporate social responsibility in the following major
sectors:
• Environment
• Society
• Health
• Education
Some of the Corporate Social Responsibility events of

Bankarehighlightedbelow:
ENVIRONMENTAL CONTRIBUTION
• “Oneemployeeonefruitprogram”wasorganized
bytheBankwithinthepremisesofDhapasioffice,
andmorethat6,0treeswereplantednationwide
in coordination with staff of branches, departments,
andsub-provincialofficesoftheBank.TheBankhas
always been sensible towards environment protection
andpollutioncontrol.Withthisinmind,theBankhas
TreeplantationprogrammeontheocassionofWorldEnvironmentDay.
ensured its assistance and participation in plantation
ofmorethan14,0treesduringthereviewperiod.
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SOCIAL CONTRIBUTION
•Realizingthefactthatneedofcommunityisneed
of the Bank, the NIC ASIA Bank distributed warm
clothestomorethan80victimsofnaturalcalamityin
Mirchaiya,Biratnagar,andGaurareas.
•Financialassistancewasprovidedtosocial
organizationslikeBalMandirandDisabilityCare
Centretopromotesocialharmonyandwarmth.
• With an objective of promoting healthy lifestyle and
nancial
fi interest of general public, the Bank has
arranged to discourage investment in the form of loan CCTVandsolarlighthandoverceremony.
to industries involved in manufacturing of alcoholic and

cigaretteproducts,whichdirectlyaffectshealthofpublic.
CONTRIBUTION FOR HEALTH

• Financialassistancewasprovidedtocancer
awarenesscampaignsorganizedatBiratnagarand
NepalCancerCentre.
• TheBankassistedandfacilitatedanationwideblood
donation program in collaboration with Nepal Red
CrossSociety.
CONTRIBUTION FOR EDUCATION

Recognizing the fact that educated and healthy people
are the pillars for national progress, financial assistance
FinancialLiteracyProgramme
was provided by the Bank to various educational
programsfordevelopmentoftheeducationalsector.
NICASIABankinstallstree-guardtopreservesaplinginNaxal.
l 169 l
5.3
ENVIRONMENT-FRIENDLY INITIATIVES
Withthegrowthineconomy,therecomesenvironmental in environmental preservation through various corporate

hazard. Nepal, still being an underdeveloped country, social responsibility mechanisms that incorporate the
has not been able to adopt environment-friendly models idea of green banking and actions to prevent the looming
initsdevelopmentquest.Realizingthefactthat environmental
financial crisis.
institutions are one of the major carriers of the country’s
economy, the NIC ASIA Bank shares moral responsibility Ourcontributionstowardsenvironmentprotectionare
in the environmental damages caused by construction 1. TheBankinitiated‘oneemployeeonefruitprogram’in
and other development endeavors undertaken by the Dhapasiofficeandplantedovertrees 6,0 nationwide
government and private sector. Furthermore, we with arethe collaboration of its staffs in the review peri
aware of the reputational damage the entire banking Along with this, the Bank has ensured its cooperation
industry may have to share if they do not act timely to andassistanceinplantationofmorethantrees 14,0
preservetheenvironmentaldamages. throughoutthecountryduringtheperiod.
2. Bagmati River flows throughout Kathmandu Valley
Thus, to mitigate the environmental and reputational like veins of the city, thereby harnessing ecology and
damage, the NIC ASIA Bank has been actively involved greenery along its belts. The constantly degrading
pollution-level of the river is heart-wrenching for
Kathmandu citizens. The NIC ASIA Bank has
participated in the Bagmati River Clean-up mega
campaign in the past to help campaigners restore the
beauty of the river. It will continue participating in t
river cleanup campaign to breathe fresh life into the
Kathmandu’secology.
3. Paper-less administration and cash-less economy
are much touted issues worldwide in regards to the
environmentalprotection.Reducingpaperworkmeans
reducing deforestation. Realizing the value of paper-
less work, the NIC ASIA amended its internal approach
in administrative works and carried out most of its work
through electronic medium in the last fiscal year. The
Bank plans to formulate formal guidelines for paper-
less administration in the future. Likewise, the Bank i
in a voyage to make substantial increment in the digital
transaction with an aim to make at least 50% of our
transactionsthroughdigitalchannel.
Webelievetheseapproaches,alongwithmoreconcrete
steps to come in the future, will help in controlling
environmental damage and contribute to the sensitive
issueofglobalwarming.
TreeplantationatTUGround.
l 170 l
BANKING
THE UNBANKED
PERVASIVE NETWORK
Under its TheFootprintExpansionandManagement Bankopenedbankaccountsfor76outof753local
Policy2017 , the Bank opened highest number levelsthroughoutthecountryduringtheFY2017-8.
accordance to the national strategy of expanding TheNICASIABankhasbranchesin62outof7

districts of the country and has aimed to expand its
municipalities, the NIC ASIA Bank successfully
expandeditstouchpointsto2,0newlocationsin years.Currently , the Bank is already in process to
openbranchesin1districtsoutoftheremaining15
districts.NICASIABankistheonlycommercialbank
Our huge footprint throughout the country has helped present in 34 local bodies of the country till the end of
people understand the implication of banking in 20174-8.Thesebranchesprovidedbankingfacilities
theirlives.TheBankbelievesthatbychannelizingto51,26customers.
unbanked transactions as service seekers will be of general public with total customer base of more than
forced to open a bank account in order to avail 1.35millionincluding60,additionalcustomers
governmentservices.Basedonthis,theNICASIA duringtheFY2017-8.
W ith these expansion strategies, growth rate and

approaches, the Bank is successfully heading towards
achieving its goal of BankingTHEUNBANKED .
112
ADDITIONAL
BRANCHES INCLUDING
34 BRANCHES IN
REMOTE AREAS 15
ADDITIONAL
125
BRANCHLESS BANKIN G
INCLUDING 8 IN
REMOTE AREAS ADDITIONALATMS
INCLUDING 17 IN REMOTE
AREAS 1948
ADDITIONAL REMITTANCE
AGENTS INCLUDING 1,263
IN REMOTE AREAS
l 171 l
5.4
VALUE ADDED STATEMENT
VALUE ADDED STATEMENT

FORTHEYEARENDEDJULY
61 8102
In NPR Million
Value Added 2018 2017
Interest earned and other operating income 14,69 7,965

Cost of services (9,78) (4,60)
Valueaddedbybankingservices 4,907 3,26
Non banking income (108) 124
Provision against non performing assets (305) 70
Total Value Added 4,494 3,519
NumberofEmployeesattheendoftheyear 2,91 1,75

Valueaddedperemployee(NPRMillion) 1.96 2.01
TotalNumberofShares(Million) 80.31 6.93
Valueaddedpershare(NPR) 5.96 52.8
During the review period, the Bank successfully created value of NPR 4,9 million, an increment of 28% year-on-year,
mainlyonaccountofincreaseofinterestearnedandotheroperatingincomeby84%.Largestpartofthevaluec
bytheBankwasappliedtowardsitsemployees,whichstandsat46%,followedbythevalueaddedtotheprovide
capital,whichstandsat2%.Theapplicationofthevalueaddedduringtheyearhasbeendepictedinthetabl
During the year, market value added has decreased by NPR 6,91 million, as compared to last year. This is decline of
31.60%,whichisduetotheweakeningsharemarketscenariointhe . country
Value Added
Per share Per employee
55.96 2.01
FY2017-8
52.58 1.96
FY2017-8
FY2016-7
FY2016-7
l 172 l
In NPR Million

Application of Value Addition 2018 Percentage 2017 Percentage
Toemployees 1,782 46% 1,3 35%

Togovernment 476 12% 58 18%
ToprovidersofLongTermLoan 176 5% 37 1%
Toprovidersofcapital 845 2% 1,409 43%
Toexpansionandgrowth 605 16% 86 3%
Total Value Allocated 3,885 100% 3,252 100%
FY 2017-18 FY 2016-17
16% 3% 35%
46% Toemployees
Toexpansion Toexpansion
and growth Toemployees and growth
22% 43%
Toproviders Toproviders
of capital of capital
5% 18%
Toprovidersof 12% 1% Togovernment
LongTermLoan Togovernment Toprovidersof
LongTermLoan
MARKETVALUEADDEDSTATEMENT In NPR Million

Particulars FY 2017-18 FY 2016-17
TotalNumberofShares(A)(Million) 80.31 6.93

Price Per Share (B) (NPR) 316 445
TotalMarketValue(C=A*B)(NPRMillion) 25,378 29,78
TotalBookValue(D)(NPRMillion) 10,45 7,90
Market Value Added (C-D)(NPR Million) 14,964 21,875
l 173 l
Market Value Added (NPR in Million)
21,875
14,964 FY2016-7
FY2017-8
ECONOMIC VALUE ADDED STATEMENT

EconomicValueAddedisthecalculationoftheBank’sperformanceoverandabovetheexpectedreturnofsh
forinvestingintheBank.Expectedreturnconsistsofrisk-freereturnandriskpremiumforinvestingint
thereviewperiod,theBankhasgeneratedEconomicValueAddedofNPR293million,whichdecreasedby48.96%as
comparedtothepreviousyear.
ECONOMICVALUEADDEDSTATEMENT In NPR Million

Particulars FY2017-18 FY2016-17
NetProfit(NPRMillion)(A) 1,35 1,365

TotalShareholdersFund(NPRMillion)(B) 10,45 7,90
CostofEquity*(C) 10.% 10.%
CostofCapital(NPRMillion)(D=B*C) 1,04 791
Economic Value Added (NPR Million) (A-D) 293 575
TotalNumberofShares(A)(Million) 80.31 6.93
EconomicValueAddedpershare(NPR) 3.65 8.59
*CostofEquityhasbeenassumedtobe10%,slightlyhigherthanthereturnongovernmentbondsbyconsideringthedifferentbetweenthecostofequ
returnongovernmentbondstoberiskpremium.
Economic Value Added
EVA (NPR Million) EVA Per Share (NPR)
575 8.59
293 FY2016-7
3.65
FY2017-8
FY2016-7
FY2017-8
l 174 l
5.5
STATEMENT ON CONTRIBUTION TO
GOVERNMENT EXCHEQUER
The government is considered as one of the most thegovernmentexchequerwhenthenecessaryamounts

important stakeholders that plays a critical role in the falldue.
economic development of the country. Contribution to
the government in any form is extremely essential to Till date, the Bank has made contribution of NPR 6.90
build the nation. Being a responsible corporate billioncitizen,totheGovernmentofNepalasdirectandindire
the Bank has ensured its noteworthy contribution in payment. The Bank has made a handsome contribution
national goals like raising living standard of deprived to the government exchequer of NPR 1.40 billion paid
sector, supporting in employment creation, increasing during the review period, which consists of income tax
tax/revenue collection, promoting cashless economy, of NPR 0.48 billion and tax deducted at source of NPR
and enhancing financial access. Being a legitimate 0.92 and whereaslastyear,theamountwasNPR1.08
billion,
ethical corporate citizen, NIC ASIA Bank contributes billion, to
consisting of income tax of NPR 0.62 billion and
taxdeductedatsourceofNPR0.46billion.
Contribution to Government Exchequer (NPR in billion)

1.40
1.08
0.92
0.62
0.46 0.48
FY2016-7 FY2017-8
IncomeTax TaxDeductedatSource
Total
l 175 l
AUDITED
FINANCIAL
STATEMENT OF
NIC ASIA BANK
6.1
INDEPENDENT AUDITOR’S REPORT
l 178 l
l 179 l
6.2
FINANCIAL STATEMENT
CONSOLIDATEDSTATEMENTOFFINANCIALPOSITION
As at 16 July 2018
Amount in NPR
Group Bank
Note
As at As at As at As at As at As at
16 July 2018 15 July 2017 16 July 2016 16 July 2018 15 July 2017 16 July 2016
Assets
Cashandcashequivalent 4.1 8,17302 3,4895 3,5492087 8,1324609 3,479825 3,5492087
DuefromNepalRastraBank 4.2 15,8607392 10,2945 4,39610 15,8607392 10,2945 4,39610
Placement with Bank and

FinancialInstitutions 4.3 31,92 1,49386 1,2594763 31,92 1,49386 1,2594763
Derivativefinancialinstruments.
4. 1,260758 3,0285691 2,301564 1,260758 3,0285691 2,301564
Other trading assets 4.5 60,875 48,153 - - - -
LoanandadvancestoB/FIs 4.6 4,081523 1,6302 1,08679 4,658123 1,6302 1,08679
Loansandadvancesto
4.7 16,2507 70,61385 57,86390 15,8046297 70,615829 57,86390
customers
Investment securities 4.8 14,307682 10,8965 1,607523 14,32768 10,965 1,607523
Current tax assets 4.9 - 9,8574 10,723 - 9,8574 10,723
Investment in susidiaries 4.10 - - - 270, 10, 10,
Investment in associates 4.1 - - - - - -
Investment property 4.12 74,3829 48,253 283,9574 74,3829 48,253 283,9574
Propertyandequipment 4.13 1,7840523 1,0752938 537,406 1,75942 1,062947 537,406
GoodwillandIntangibleassets
4.1 52,701 36,890 18,2705 49,831 35,864 18,2705
Deferredtaxassets 4.15 - - - - - -
Other assets 4.16 8,62730 1,295074 58,12746 8,620374 1,29350 58,271
Total Assets 171,092,849,642 103,100,049,175 83,473,391,755 170,943,177,826 103,108,361,998 83,573,552,004
Liabilities
DuetoBankandFinancial
4.17 1,72856 7,2654 7,15384 1,629507 7,2654 7,2154963
Instituions
DuetoNepalRastraBank 4.18 742,69 - - 742,69 - -
Derivativefinancialinstruments
4.19 1,7283609 2,98431 2,653 1,7283609 2,98431 2,653
Depositsfromcustomers 4.20 139,578624 79,8564 64,0798 139,586074 79,056241 64,0798
Borrowing 4.21 - - - - - -
CurrentTaxLiabilities 4.9 25,07 - - 25,07 - -
Provisions 4.2 - - - - - -
Deferredtaxliabilities 4.15 2,7908 5,86439 146,8072 2,81469 5,798 146,8293
Other liabilities 4.23 2,1567 1,465720 915,476 2,073598 1,458207 915,07
Debtsecuritiesissued 4.2 3,4879015 501,2497 51,7023 3,4879015 501,2497 51,7023
SubordinatedLiabilities
4.25 - - - - - -
Total liabilities 59,412,056,972 92,682,906,955 75,566,758,484 159,272,722,265 92,693,533,976 75,666,851,139
l 180 l
Equity
Share capital 4.26 8,03169 6,925748 4,5732 8,03169 6,925748 4,5732
Share premium - - - - - -
Retained earnings 953,164 1,846532 1,7205849 943,65 1,84530 1,7206453
Reserves 4.27 2,6958407 1,876394 1,60895 2,6958407 1,876394 1,60895
Total equity attributable to

11,680,792,670 10,417,142,220 7,906,633,271 11,670,455,561 10,414,828,022 7,906,700,865
equity holders
Non-controlling interest - - - - - -
Total equity 11,680,792,670 10,417,142,220 7,906,633,271 11,670,455,561 10,414,828,022 7,906,700,865
Total liabilities and equity 171,092,849,642 103,100,049,175 83,473,391,755 170,943,177,826 103,108,361,998 83,573,552,004
Contingent liabilities and

4.28 29,70831 24,1963 23,54108 28,53419 24,1963 23,54108
commitment
Net assets value per share 145. 15.6 172.8 145.32 15.62 172.8
Bishal Sigdel Roshan Kuamr Neupane Jagdish Prasad Agrawal Trilok Chand Agrawal Ram Chandra Sanghai
ChiefFinancialOffi cer ActingChiefExecutiveOffi
cerDirector
Director Director
Rajendra Prasad Aryal Binod Kumar Pyakurel Ganesh Man Shrestha Tulsi Ram Agrawal
Director
Director
Director
Chairman
As per our report of even date
Sanjeev Kumar Mishra, FCA

Place:Kathmandu Partner
Date:November16,208 TRUpadhya&Co.
l 181 l
CONSOLIDATEDSTATEMENTOFPROFITORLOSS
For the year ended 16 July 2018
AmountininNPR
Amount NPR
Group Bank
Note Year ended Year ended Year ended Year ended
16 July 2018 15 July 2017 16 July 2018 15 July 2017
Interest income 4.29 13,5640 7,093624 13,548207 7,085243

Interest expense 4.30 9,3245087 4,357281 9,361524 4,362905
Net interest income 4,234,168,562 2,735,729,013 4,209,664,036 2,725,659,208
Feesandcommissionincome 4.31 1,05249 710,8 96,1487 70,965
Feesandcommissionexpense 4.32 109,725 52,31 96,4810 49,123
Net fee and commission income 906,169,989 657,799,406 869,650,660 657,090,424
Net interest, fee and commission 5,140,338,552 3,393,528,419 5,079,314,696 3,382,749,632
income
Net trading income 4.3 195,2863 162,98 195,2067 16,09
Other operating income 4.3 83,629 58,0647 83,6150 58,0647
Total operating income 5,419,257,077 3,614,262,859 5,358,136,293 3,602,423,329
Impairmentcharge/(reversal)forloans
4.35 31,45 (69,827) 304,81572 (69,827)
and other losses
Net operating income 5,106,142,941 3,683,945,686 5,053,304,721 3,672,106,156
Operating expense
Personnel expenses 4.36 1,8045726 1,36582 1,78294 1,3297048
Other operating expense 4.37 1,24867 584,679 1,2370985 580,326
Depreciation&Amortisation 4.38 19,36072 130,284 15,8043 129,846
Operating Profit 1,933,940,180 1,832,584,062 1,918,294,896 1,829,441,182
Non operating income 4.39 2,506 15,4092 2,506 15,4092
Non operating expense 4.0 10,927 31,6945 10,927 31,6945
Profit before income tax 1,826,248,111 1,956,298,821 1,810,602,827 1,953,155,942
Income tax expense 4.1 - - - -
CurrentTax 530,72814 62,187 52,480 625,4790
DeferredTax (49,680) (37,14) (49,680) (37,14)
Profit for the period 1,344,990,101 1,367,797,385 1,334,861,927 1,365,415,593
Profitattributableto:
EquityholdersoftheBank 1,3490 1,367985 1,3486927 1,36549
Non-controlling interest - - - -
Profit for the period 1,344,990,101 1,367,797,385 1,334,861,927 1,365,415,593
Earningspershare
Basic earnings per share 16.75 2.16 16.2 20.4
Dilutedearningspershare 16.75 2.16 16.2 20.4
Adjustedearningpershare 16.75 2.16 16.2 2.1
cerDirector
Director Director
Director
Director
Director
Chairman

l 182 l
CONSOLIDATEDSTATEMENTOFOTHERCOMPREHENSIVEINCOME
Amount in NPR
Group Bank
Year ended Year ended Year ended Year ended

Profit for the year 1,344,990,101 1,367,797,385 1,334,861,927 1,365,415,593

Other comprehensive income, net of income tax
a)Itemsthatwillnotbereclassifiedtoprofitorloss
-Gains/(losses)frominvestmentsinequityinstruments
(5,3064) 3,0921 (5,3064) 3,0921
measured at fair value
-Gains/(losses)onrevaluation
-Actuarialgains/(losses)ondefinedbenefitplans (2,59610) (1,348562) (2,59610) (1,348562)
- Income tax relating to above items 2,37058 (523,071) 2,37058 (523,071)
Net Other Comprehensive Income that will not be
(5,531,256) 1,220,500 (5,531,256) 1,220,500
reclassified to profit or loss
b)Itemsthatareormaybereclassifiedtoprofitorloss
-Gains/(losses)oncashflowhedge - - - -
-Exchangegains/(losses)(arisingfromtranslating
- - - -
financialassetsofforeignoperation)
- Income tax relating to above items - - - -
-Reclassifytoprofitorloss - - - -
Net Other Comprehensive Income that are or may be
- - - -
reclassified to profit or loss
c) Share of other comprehensive income of associate
accountedasperequitymethod
Other comprehensive income for the period, net of
(5,531,256) 1,220,500 (5,531,256) 1,220,500
income tax
Total comprehensive income for the period 1,339,458,845 1,369,017,884 1,329,330,671 1,366,636,092
Total comprehensive income attributable to:
EquityholdersoftheBank 1,39458 1,3690784 1,329067 1,36092
Non-controlling interest -
Total comprehensive income for the period 1,339,458,845 1,369,017,884 1,329,330,671 1,366,636,092
cerDirector
Director Director
Director
Director
Director
Chairman

l 183 l
CONSOLIDATEDSTATEMENTOFCASHFLOWSTATEMENT
Amount in NPR
Group Bank
Note Year ended Year ended Year ended Year ended
CASHFLOWSFROMOPERATINGACTIVITIES
Interest received 12,643958 6,529 12,59036 6,598107
Feesandotherincomereceived 981,5704 710,68 96,1487 70,965
Dividendreceived - - - -
Receipts from other operating activities 25,3104 350,28 28,140 34,0619
Interest paid (9,6073845) (4,329108) (9,57608) (4,329108)
Commission and fees paid (107,456) (52,361) (96,4810) (49,123)
CashPaymenttoEmployees - - - -
Other expense paid (2,97365) (1,53970) (2,9047651) (1,467520)
Operating cash flows before changes in
1,235,937,799 1,702,719,595 1,194,837,621 1,763,079,935
operating assets and liabilities
(Increase)/Decrease in Operating Assets (58,972,357,400) (21,211,846,151) (58,668,928,326) (20,780,518,714)
DuefromNepalRastraBank (5,98210) (5,86901) (5,3924) (5,89237)
Placementwithbankandfinancialinstitutions 1,07458 (347,026) 1,79458 (27,406)
Other trading assets - - - -
Loanandadvancestobankandfinancialinstitutions - - - -
Loansandadvancestocustomers (49,6723) (13,85942) (48,3215) (13,75826)
Other assets (4,8035672) (1,62835) (5,920374) (1,43968)
Increase/(Decrease) in operating liabilities 64,163,336,781 17,171,799,965 64,029,884,624 16,900,895,143
Duetobankandfinancialinstitutions 3,856740 57,249 3,856740 57,249
DuetoNepalRastraBank 742,69 - 742,69 -
Depositfromcustomers 59,420317 15,280736 59,68402 15,2983
Borrowings 750, - - -
Other liabilities (605,931) 1,375820 (253,10) 1,048932
Net cash flow from operating activities before
6,426,917,180 (2,337,326,592) 6,555,793,919 (2,116,543,636)
tax paid
Income taxes paid (465,281) (625,1430) (490,528) (625,1430)
Net cash flow from operating activities 5,961,631,064 (2,962,469,693) 6,065,251,089 (2,741,686,738)
CASHFLOWSFROMINVESTINGACTIVITIES
Purchase of investment securities (3,740826) 1,7382 (4,19873) 1,47360
Receipts from sale of investment securities - - - -
Purchaseofpropertyandequipment (94,52376) (49,61038) (638,0219) (405,682)
Receiptfromthesaleofpropertyandequipment 128,9506 38,2790 128,9506 38,76421
Purchase of intangible assets (28,4) (30,6251) (28,4) (25,603)
Receipt from the sale of intangible assets - - - -
Purchase of investment properties - - - -
Receipt from the sale of investment properties 39,810 - 39,810 -
Interest received 53,098 317,9284 53,098 317,9284
Dividendreceived 8,634 43,0621 10,789 43,0621
Net cash used in investing activities (4,001,254,527) 1,658,154,747 (4,151,222,991) 1,442,503,832
CASHFLOWSFROMFINANCINGACTIVITIES
Receipt from issue of debt securities 2,90547 46,31 3,05189 (14,5283)
l 184 l
Repayment of debt securities - - - -

Receipt from issue of subordinated liabilities - - - -
Repayment of subordinated liabilities - - - -
Receipt from issue of shares - 1,30689 - 1,30689
Dividendspaid (72,391) (49,365) (72,391) (49,365)
Interest paid (194,3) (36,904) (194,3) (36,904)
Otherreceipt/payment - - - -
Net cash from financing activities 2,723,731,087 1,244,702,253 2,738,630,236 1,229,803,103
Net increase (decrease) in cash and cash
4,684,107,624 (59,612,693) 4,652,658,334 (69,379,803)
equivalents
CashandcashequivalentsatShrawan1,2074 3,4895 3,5492087 3,479825 3,5492087
Effectofexchangeratefluctuationsoncashandcash
- - - -
equivalentsheld
Cash and cash equivalents at Ashadh end 2075 8,173,703,208 3,489,595,585 8,132,486,809 3,479,828,475
cerDirector
Director Director
Director
Director
Director
Chairman

l 185 l
GROUP
STATEMENTOFCHANGESINEQUITY
For the year ended 16 July 2018 Amount in NPR
Non-
Share Exchange Regulatory Fair Value Revaluation Retained
Particulars Share Capital General Reserve Other Reserve Total controlling Total Equity
Premium Equalisation Reserve Reserve Reserve Earning
Interest
BalanceasatSawan1,2073 5,762430 - 1,2634870 3,9548 - - 29,563 105,64 173,90862 7,38241 - 7,38241
Adjustment/Restatement (1,2085) - - - - - - 1,2640837 - 63,20419 - -
Transfertoregulatoryreserve - - - - - 125,6 - 350,8496 (15,8637) 460,583 - -
Adjusted Restated Balance 4,575,374,272 - 1,263,487,370 33,954,384 - 29,596,355 1,720,578,049 158,021,225 7,906,633,271 - 7,906,633,271
at Sawan 1, 2073 125,621,616
Comprehensive Income for the year
Profit for the year - - - - - - - 1,367,797,385 - 1,367,797,385 - 1,367,797,385
Other Comprehensive - - - - - - - - - - - -
income, net of tax
Gains/(losses)frominvestments - - - - - (123,096) - (147,523) - (123,457) - (123,457)
inequityinstrumentsmeasuredat
fair value
Net gain(loss) on revaluation - - - - - - - - - - - -
Atuarialgains/(losse)ondefined - - - - - - - - (943,) (943,) - (943,)

benefitplans
Gains/(losses)oncashflowhedge - - - - - - - - - - - -
l 186 l
FairValueReserve(Investmentin - - - - - - - - - - - -
EquityInvestment):
Exchangegains/(losses)(arising
fromtranslatingfinancialassetsof
foreign operation)
Total comprehensive income for - - - - - (123,309,600) - 1,367,649,862 (943,993) 1,243,396,269 - 1,243,396,269

the year
Transfertoreserveduringtheyear - - 294,631 731,0 - - (1,23986) (391,2507) 96,581 - - -
Transferfromthereserveduring - - - - - - - - - - - -
the year
Transactionswithowners,
directlyrecognizedinequity
Right share issued 916,3408 - - - - - - 413,978 - 1,30689 - 1,30689
Share based payments - - - - - - - - - - - -
Dividendstoequityholders: - - - - - - - - - - - -
Bonus Shares issued 1,2085 - - - - - - (1,2085) - - - -
CashDividendPaid - - - - - - - (63,20419) - (63,20419) - (63,20419)
Other
Total contributions by and 2,117,223,226 - - - - - - (850,110,546) - 1,267,112,680 - 1,267,112,680

distributions:
Balance as at Asar End, 6,692,597,498 - 1,558,180,565 34,686,094 - 2,312,016 28,472,369 1,846,858,328 254,035,350 10,417,142,220 - 10,417,142,220
2074
BalanceasatSawan1,2074 6,925748 - 1,5806 34,6809 - 2,3106 28,47369 1,846532 254,03 10,472 - 10,472
Adjustment/Restatement - - - - - - - - - - - -
AdjustedRestatedBalanceat - - - - - - - - - - - -
Sawan1,2074
Comprehensive Income for the year
Profit for the year - - - - - - - 1,344,990,101 - 1,344,990,101 - 1,344,990,101

Other Comprehensive - - - - - - - - - - - -
income, net of tax
Gains/(losses)frominvestments - - - - - (720,3) - - (5,182) (5,874) - (5,874)
inequityinstrumentsmeasuredat
fair value
Gains/(losses)onrevalution - - - - - - - - - - - -
Atuarialgains/(losse)ondefined - - - - - - - - (1,87305) (1,87305) - (1,87305)

benefitplans
Gains/(losses)oncashflowhedge - - - - - - - - - - - -
Exchangegains/(losses)(arising - - -
fromtranslatingfinancialassetsof
foreign operation)
Total comprehensive income for - - - - - (720,323) - 1,344,990,101 (6,975,426) 1,337,294,352 - 1,337,294,352

the year
Transfertoreserveduringtheyear - - 26,97385 3,680 45,786 - 15,72093 (826,730) 84,7192 - - -
Transferfromthereserveduring - - - - - - - - (1,0924) (1,0924) - (1,0924)

the year
Transactionswithowners,directly - - -
l 187 l
recognizedinequity
Right share issued - - - - - - - - - - - -
Share based payments - - - - - - - - - - - -

Dividendstoequityholders: - - - - - - - - - - - -
Bonus Shares issued 1,38590 - - - - - - (1,38590) - - - -
CashDividendPaid - - - - - - - (72,5369) - (72,5368) - (72,5368)
Other - - - - - - - - - - - -
Total contributions by and 1,338,519,500 - - - - - - (1,411,073,158) - (72,553,658) - (72,553,658)

distributions:
Balance as at Asar End, 8,031,116,998 - 1,825,152,950 38,372,154 455,575,876 1,591,694 44,244,462 953,991,664 330,746,872 11,680,792,670 - 11,680,792,670
2075
Bishal Sigdel Roshan Kuamr Neupane Jagdish Prasad Agrawal Trilok Chand Agrawal Ram Chandra Sanghai As per our report of even date
cerDirector
Director Director
Rajendra Prasad Aryal Binod Kumar Pyakurel Ganesh Man Shrestha Tulsi Ram Agrawal Sanjeev Kumar Mishra, FCA
Director
Director
Director
Chairman Partner
TRUpadhya&Co.
Place:Kathmandu
Date:November16,208
BANK
STATEMENTOFCHANGESINEQUITY
For the year ended 16 July 2018 Amount in NPR
Non-
Share General Exchange Regulatory Fair Value Revaluation
Particulars Share Capital Retained Earning Other Reserve Total controlling Total Equity
Premium Reserve Equalisation Reserve Reserve Reserve
Interest
Balance as at
5,776,254,430 - 1,263,487,370 33,954,384 - 29,596,355 105,644,116 173,908,062 7,382,844,717 - 7,382,844,717
Sawan 1, 2073
Restatement (1,2085) - - - - 1,2640837 63,20419 - 63,20419
Adjustment - - - 125,6 350,917 (15,8637) 460,5192 - 460,5192
Adjusted
Restated
4,575,374,272 - 1,263,487,370 33,954,384 - 125,621,616 29,596,355 1,720,645,643 158,021,225 7,906,700,865 - 7,906,700,865
Balance at
Sawan 1, 2073
Comprehensive
Income for the
year
Profit for the

- - - - - - - 1,365,415,593 - 1,365,415,593 - 1,365,415,593
year
Other
Comprehensive
- - - - - - - - - - - -
income, net
of tax
Gains/(losses)
from investments
inequity
l 188 l
- - - - - (123,096) - (147,523) (123,457) - (123,457)
instruments
measured at fair
value
Net gain(loss) on
- - - - - - - - - - - -
revaluation
Atuarialgains/
(losse)ondefined - - - - - - - - (943,) (943,) - (943,)
benefitplans
Gains/(losses)on
- - - - - - - - - - - -
cashflowhedge
Exchangegains/
(losses) (arising
from translating -
financialassetsof
foreign operation)
Total
comprehensive
- - - - - (123,309,600) - 1,365,268,070 (943,993) 1,241,014,477 - 1,241,014,477
income for the
year
Transfer to
reserve during - - 294,693,194 731,710 - (1,123,986) (391,259,037) 96,958,118 - - -
the year
Transfer from
the reserve - - - - - - - -
during the year
Transactionswith
owners, directly
recognizedin
equity
Right share
916,3408 - - - - - - 413,978 - 1,30689 - 1,30689
issued
Share based
- - - - - - - - - - - -
payments
Dividendsto
- - -
equityholders:
Bonus Shares
1,2085 - - - - - - (1,2085) - - - -
issued
CashDividend
- - - - - - - (63,20419) - (63,20419) - (63,20419)
Paid
Other
Total
contributions
2,117,223,226 - - - - - - (850,110,546) - 1,267,112,680 1,267,112,680
by and
distributions:
Balance as at
6,692,597,498 - 1,558,180,565 34,686,094 - 2,312,016 28,472,369 1,844,544,130 254,035,350 10,414,828,022 - 10,414,828,022
Asar End, 2074
Balance as at
6,925748 - 1,5806 34,6809 - 2,3106 28,47369 1,84530 254,03 10,482 - 10,482
Sawan1,2074
Adjustment/
- - -
l 189 l
Restatement
Adjusted
Restated
- - -
Balance at
Sawan 1, 2074
Comprehensive
Income for the
year
Profit for the

- - - - - - - 1,334,861,927 1,334,861,927 - 1,334,861,927
year
Other
Comprehensive
- - -
income, net
of tax
Gains/(losses)
from investments
inequity
- - - - - (720,3) - - (5,182) (5,8743) - (5,8743)
instruments
measured at fair
value
Gains/(losses)on
- - - - - - - - - - - -
revalution
Atuarialgains/
(losse)ondefined - - - - - - - - (1,87305) (1,87305) - (1,87305)
benefitplans
Gains/(losses)on
- - - - - - - - - - - -
cashflowhedge
Exchangegains/
(losses) (arising
from translating
financialassetsof
foreign operation)
Total
comprehensive
- - - - - (720,323) - 1,334,861,927 (6,975,426) 1,327,166,178 - 1,327,166,178
income for the
year
Transfer to
reserve during - - 266,972,385 3,686,060 455,575,876 - 15,772,093 (826,783,606) 84,777,192 - - -
the year
Transfer from
the reserve - - - - (1,090,244) (1,090,244) - (1,090,244)
during the year
Transactionswith
owners, directly
recognizedin
equity
Right share
- - - - - - - - - - - -
issued
Share based
- - - - - - - - - - - -
payments
Dividendsto
- - -
equityholders:
Bonus Shares
1,38590 - - - - - - (1,38590) - - - -
issued
Cash
l 190 l
- - - - - - - (70,48395) - (70,48395) - (70,48395)
DividendPaid
Other
Total
contributions
1,338,519,500 - - - - - - (1,408,967,895) - (70,448,395) - (70,448,395)
by and
distributions:
Balance as at
8,031,116,998 - 1,825,152,950 38,372,154 455,575,876 1,591,694 44,244,462 943,654,556 330,746,871 11,670,455,561 - 11,670,455,561
Asar End, 2075
Bishal Sigdel Roshan Kuamr Neupane Jagdish Prasad Agrawal Trilok Chand Agrawal Ram Chandra Sanghai As per our report of even date
cerDirector
Director Director
Rajendra Prasad Aryal Binod Kumar Pyakurel Ganesh Man Shrestha Tulsi Ram Agrawal Sanjeev Kumar Mishra, FCA
Director
Director
Director
Chairman Partner
TRUpadhya&Co.
Place:Kathmandu
Date:November16,208
NOTESFORMINGPARTOFTHEFINANCIALSTATEMENTS
4.1 Cash and Cash Equivalent

Amount in NPR
Group Bank
CashInHand 3,75489 1,840679 1,6827435 3,75489 1,8405627 1,6827435

BalanceswithBFIs 3,7409 1,649380 2,16507 3,41587 1,639725 2,16507
Money at Call and Short - - 215,974 - - 215,974
Notice
Other 1,043986 - - 1,043986 - -
Total 8,173,703,208 3,489,595,585 3,549,208,278 8,132,486,809 3,479,828,475 3,549,208,278
"The fair value of cash and cash equivalent is its carrying value. Cash at vault is adequately insure
fi nancial risks. The amount of cash at vault is maintained on the basis of the liquidity and busines
BalancewithBFIsincludesbalancemaintainedatvariousbanksandfinancialinstitutions.Cashhel
is subject to risk of changes in the foreign exchange rates. These are closely monitored,
fi ed, are
and risks, if
promptlymanaged.Otheritemsoncashandcashequivalentsincludesinterbankplacementsandtreas
above7daysandbelow3months.
4.2 Due from Nepal Rastra Bank

Amount in NPR
Group Bank
Statutory Balances with NRB 15,827630 10,26758 4,39610 15,827630 10,26758 4,39610
Securities purchased under Resale - - - - - -
Agreement
Other deposit and receivable from NRB 48,0261 29,6518 - 48,0261 29,6518 -
Total 15,860,733,092 10,291,445,440 4,396,160,113 15,860,733,092 10,291,445,440 4,396,160,113
ThefairvalueofbalancewiththeNepalRastraBankNRB) ( isitscarryingamountitself.BalancewiththeNRBi
maintained as a part of the regulatory cash reserve ratio required by the NRB. Other deposit and receiv
includescitizensavingbondwhichthebankhasheldformarketmakerpurposeandreceivablefromNRBforinte
4.3 Placement with Banks & Financial Institutions

Amount in NPR
Group Bank
16 July 2018 15 July 2017 16 July 2016 16 July 2018 15 July 2017 16Amount in NPR
July 2016
PlacementwithDomestic - - - - - -
B/FIs
PlacementwithForeignB/FIs 31,92 1,49386 1,2594763 31,92 1,49386 1,2594763
Less:Allowancesfor - - - - - -
Impairment
Total 313,929,191 1,493,384,968 1,215,914,763 313,929,191 1,493,384,968 1,215,914,763
Placements with domestic as well as foreign bank and financial institutions with original maturit
monthsfromtheacquisitiondatearepresentedabove.
l 191 l
4.4 Derivative financial instruments

Amount in NPR
Group Bank
Held for Trading

Interest Rate Swap - - - - - -
-
Currency Swap - - - - - -
ForwardexchangeContract. - - - - - -
Others - - - - - -
Held for risk management
ForwardexchangeContract 1,260758 3,0285691 2,301564 1,260758 3,0285691 2,301564
Others - - - -
Total 1,266,017,586 3,028,560,991 2,301,561,462 1,266,017,586 3,028,560,991 2,301,561,462
Asignificantpartofthederivativesintheportfolioarerelatedtoservicingcorporateclientsinth
hedge,e.g.foreigncurrencyexposures.TheseproductsareusedbyBankaspartofitsownregulartreasuryactiv
well.Fromariskperspective,thegrossamountofderivativeassetsmustbeconsideredtogetherwithth
ofderivativeliabilities,whicharepresentedseparatelyonthestatementoffinancialposition.
4.5 Other Trading Assets Amount in NPR

Group Bank
Tresurybills - - - - - -
GovernmentBonds - - - - - -
NRB Bonds - - - - - -
DomesticCorporatebonds - - - - - -
Equities 60,875 48,153 - - - -
Other - - - - - -
Total 60,875 48,153 - - - -
Pledged - - - - - -
Non-Pledged - - - - - -
Trading assets are those assets that the licensed institution acquires principally for the purpos
term,orholdsaspartofaportfoliothatismanagedtogetherforshort-termprofitarepresentedunderthi
Thetradingassetincludesderivativeassetsandnonderivativeassets.Asonthereportingdate,the
anyoutstandingtradingassets.
l 192 l
4.6 Loan and Advances to BFIs Amount in NPR

Group Bank
DomesticBFIs
LoanstoMicrofinance 4,051937 1,64973 1,0962 4,705193 1,64973 1,0962
Institutions
Other - - - - - -
Less:Allowancesfor 47,08521 16,437 10,954 47,08521 16,437 10,954
impairment
Total 4,008,145,235 1,630,033,602 1,088,666,791 4,658,145,235 1,630,033,602 1,088,666,791
ImpairmentallowanceonLoansandadvancestoBFIshavebeenconsidedasperNRBdirective.Alltheloa
havebeenclassifiedinpasscategory.
4.6.1 Specific Allowance for Impairment Amount in NPR

Group Bank
BalanceatShrawan1 16,437 10,954 - 16,437 10,954 -

Impairmentlossfortheyear: - - - - - -
Charge for the year 30,584 5,468307 - 30,584 5,468307 -
Recoveries/reversal - - - - - -
Amount written off - - - - - -
Balances at Ashad end 47,048,521 16,463,717 - 47,048,521 16,463,717 -
No individual loans to banks and micro finance has terms and conditions that significantly affect the
or certainty of consolidated cash flows of the Bank. These assets
fi ed
have
as loans
been classi
and receivables and
are subsequently measured at amortized costs. Risks associated with these assets are regularly a
interestbearingadvancesandtheincomeontheseassetsiscredited fi torloss
tostatement
underinterest
ofpro income.
4.7 Loans and advances to customers Amount in NPR

Group Bank
Loansandadvancestocustomersat
17,86952 71,5684 58,912 17,0453 71,5230 58,912
amortised cost
Less:ImpairmentAllowances
Collective Impairment 1,742085 724,3861 64,827 1,6372 724,3861 64,827
Individual Impairment 72,419 236,9184 389,6075 72,419 236,9184 389,6075
Net amount 116,625,120,722 70,616,383,533 57,876,398,870 115,804,620,907 70,615,820,219 57,876,398,870
LoanandadvancemeasuredatFVTPL - - - - - -
Total 116,625,120,722 70,616,383,533 57,876,398,870 115,804,620,907 70,615,820,219 57,876,398,870
Above impairment is as per NRB directive no.2 which is higher than total impairment as per NAS 39 which i
280,795NPR326,150&NPR481,69205forFY2017/8,FY2016/7&FY2015/6respectively .
l 193 l
Amount in NPR
Group Bank
Particulars As at As at As at As at As at As at
Loansandadvancesto
16,79032 70,915842 58,392461 15,96478 70,9153286 58,392461
Customer
Loansandadvances
63,41280 35,7104 267,04 63,41280 35,7104 267,04
to staff
Accrued Interest 49,863 308,71259 246,507 41,58376 308,71259 246,507
Total 117,877,235,516 71,577,686,484 58,912,852,952 117,040,170,574 71,577,123,170 58,912,852,952
Impariment
AsperNRBDirective
1,24389 961,3025 1,0364582 1,235496 961,3025 1,0364582
No.2
ASperNAS39 280,795 326,150 481,69205 280,795 326,150 481,69205
4.7.1 Analysis of loan and advance- By Product

Amount in NPR
Group Bank
Product
Termloans 2,684357 8,605237 5,70921 2,685901 8,6597 5,70921
Overdraft 28,145603 18,30564 12,3680 28,145603 18,30564 12,3680
Trustreceipt/Import 1,532704 1,782539 2,56987 1,532704 1,782539 2,56987
loans
DemandandOther 16,02839 8,5631742 10,79648 15,982760 8,5631742 10,79648
WorkingCapitalloans
Personal residential 1,059362 1,87493 9,312786 1,059362 1,87493 9,312786
loans
Real estate loans 24,60193 3,754801 2,9683450 24,60193 3,754801 2,9683450
Margin lending loans 1,93560 1,9687 4,2597816 1,93560 1,9687 4,2597816
Hirepurchaseloans 5,02371 6,945837 4,39271 5,02371 6,945837 4,39271
Deprivedsectorloans 9,3140 4,23179 2,3960857 9,3140 4,23179 2,3960857
Bills Purchased - 523,470 352,40 523,470 352,40
Staff loans 63,41280 35,7104 793,1086 63,41280 35,7104 793,1086
Other 6,387914 4,87291 2,75368 6,387914 4,87291 2,75368
Sub Total 117,427,371,576 71,269,740,865 58,666,347,206 116,598,589,197 71,269,177,551 58,666,347,206
Interest Receivable 41,58376 307,94561 246,507 41,58376 307,94561 246,507
Grand Total 117,868,952,952 71,577,686,484 58,912,852,952 117,040,170,573 71,577,123,170 58,912,852,952
l 194 l
4.7.2 Analysis of loan and advance- By Currency

Amount in NPR
Group Bank
Nepalese rupee 17,408952 71,05429 58,03412 16,2853074 71,053649 58,03412

Indian rupee - - - - - -
USD 754,8630 523,470 87,4120 754,8630 523,470 87,4120
GBP - - - - - -
Euro - - - - - -
JPY - - - - - -
ChineseYuan - - - - - -
Other - - - - - -
Total 117,868,952,952 71,577,686,484 58,912,852,952 17,040,170,573 71,577,123,170 58,912,852,952
4.7.3 Analysis of loan and advance- By Collateral

Amount in NPR
Group Bank
Movable/Immovable 106,729 64,7981 51,32648 106,729 64,7981 51,32648

assets
Goldandsilver 61,83425 507,83162 215,378 61,83425 507,83162 215,378
Guaranteeofdomestic - - - - - -
B/Fis
GovernmentGuarantee 216,5347 216,5347 7,35 216,5347 216,5347 7,35
Guaranteeof - - - - - -
international rated bank
Exportdocument - - - - - -
FixedDepositreceipts 207,315 387,902 346,5820 207,315 387,902 346,5820
Governmentsecurities - - - - - -
/bondsCounter
guarantee
Counter guarantee - - - - - -
Personal guarantee - - - - - -
Other 9,2167 5,690328 6,948153 9,23856 5,6897 6,948153
Subtotal 117,040,696,644 71,577,686,484 58,912,852,952 117,040,170,573 71,577,123,170 58,912,852,952
Unsecured - - - - - -
Grand Total 117,040,696,644 71,577,686,484 58,912,852,952 117,040,170,573 71,577,123,170 58,912,852,952
l 195 l
4.7.4 Analysis of loan and advance- By Collateral

Amount in NPR
Group Bank
Specificallowancesfor
impairment
BalanceatShrawan1 236,9184 389,6075 - 236,9184 389,6075 -
Impairment loss for the
- - - - - -
year:
Charge for the year - - - - - -
Recoveries/reversal
(157,8362) (152,690) - (16,208) (152,690) -
during the year
Write-offs - - - - - -
Exchangeratevariance
- - - - - -
on foreign currency
Other movement - - - - - -
Balance at Ashad end 79,079,191 236,916,814 389,607,805 70,796,628 236,916,814 389,607,805
Collective allowances for
impairment
BalanceatShrawan1 724,3861 64,827 724,3861 64,827
Impairment loss for the
- - - - - -
year:
Charge/(reversal)for
40,3691 7,539860 40,3691 7,539860
the year
Exchangeratevariance
- - - - - -
on foreign currency
Other movement - - - - - -
Balance at Ashad end 1,164,753,038 724,386,137 646,846,277 1,164,753,038 724,386,137 646,846,277
Total allowances for
1,243,832,229 961,302,951 1,036,454,082 1,235,549,666 961,302,951 1,036,454,082
impairment
4.8 Investment Securities Amount in NPR
Group Bank
Investment securities measured at

13,547 9,48305 10,742356 13,754 9,418305 10,742356
amortizedcost
InvestmentinequitymeasureatFVTOCI
75,2319 60,729 83,2706 75,2319 60,729 83,2706
Other - - - - - -
14,304,768,273 10,089,615,155 11,607,520,231 14,132,768,273 10,019,615,155 11,607,520,231
Investment made by the Bank in financial instruments has been presented under this account head in tw
i.e. investment securities measured at amortized cost and investment in equity measured at fair val
comprehensiveincome.Investmentotherthanthosemeasuredatamortizedcostismeasuredatfairvalu
infairvaluehasbeenrecognizedinothercomprehensiveincome.Whereincomefromtheinvestmentisrecei
form of bonus shares, the valuation of investment is made by increasing the number of shares without changing in the
costofinvestment.TreasuryBillswithmaturityupto90dayshavebeenclassifiedundercashandcashequiva
l 196 l
4.8.1 Investment securities measured at amortized Cost

Amount in NPR
Group Bank
Debtsecurities 34,102568 82,0637 201,87 34,102568 82,0637 201,87

Governmentbonds 9,761428 6,59823 5,98243 9,761428 6,59823 5,98243
Governmenttreasurybills 2,163849 1,927546 1,907265 2,163849 1,927546 1,907265
Nepal Rastra Bank bonds - - 3,06974 - - 3,06974
Nepal Rastra Bank deposits
1,093486 - - 1,093486 - -
instruments
Other 172,0 70, - - - -
Less:specificallowancesfor
- - - - - -
impairment
Total 13,547,545,154 9,488,893,059 10,774,231,526 13,375,545,154 9,418,893,059 10,774,231,526
4.8.2 Investment securities measured through other comprehensive Income

Amount in NPR
Group Bank
Equityinstruments
Quotedequitysecurities 56,319 42,710596 70,462 56,319 42,710596 70,462
Unquotedequitysecurities 190,5 176,05 64,250 190,5 176,05 63,2450
Total 757,223,119 600,722,096 834,288,706 757,223,119 600,722,096 833,288,706
l 197 l
4.8.3 Information relating to investment in equities

Investment securities designated at fair value through other comprehensive income
Amount in NPR
Group Bank
As at As at As at As at
Equity instruments
Cost Fair Value Cost Fair Value Cost Fair Value Cost Fair Value
Investmentinquotedequity
National Life Insurance Company Limited
65,0sharesofRs10Each 51,642 51,642 51,642 51,642 51,642 51,642 51,642 51,642
Nepal Life Insurance Company
3,09SharesofRs10Each 2,48095 3,2450 2,48095 5,048 2,48095 3,2450 2,48095 5,048
Rural Microfinance Development Centre
Limited
352,61SharesofRs10Each 25,310 25,310 25,310 25,310 25,310 25,310 25,310 25,310
Global IME Samunnat Scheme 1 *
3,7628SharesofRs10Each 37,6280 3,0894 37,6280 38,461 37,6280 3,0894 37,6280 38,461
NABIL Equity Fund *
475,9SharesofRs10Each 4,7590 4,69280 4,7590 4,7921 4,7590 4,69280 4,7590 4,7921
NIBL Pargati Fund *
1,0274SharesofRs10Each 10,274 9,2463 10,274 10,25 10,274 9,2463 10,274 10,25
NMB Hybrid Fund L-1 *
1,042SharesofRs10Each 1,042 10,6729 1,042 10,94825 1,042 10,6729 1,042 10,94825
NIC Asia Growth Fund *
15,0SharesofRs10Each 150, 150, - - 150, 150, - -
Swadeshi Laghubitta Bittiya Sanstha Limited *
12sharesofRs10Each - - - - - - 1,20 1,20
Mero Microfinance Bittiya Sanstha Limited
20,SharesofRs10Each 14,0 14,0 14,0 14,0 14,0 14,0 14,0 14,0
Citizen Investment Trust
1,496SharesofRs10Each 264,589 264,589 264,589 264,589 264,589 264,589 264,589 264,589
Total (A) 571,617,263 566,311,619 421,617,263 424,709,397 571,617,263 566,311,619 421,618,463 424,710,597
InvestmentinUnquotedequity
Jyoti Life Insurance Limited *
1,50SharesofRs10Each 150, 150, 150, 150, 150, 150, 150, 150,
Karja Suchana Kendra Ltd
94,52.SharesofRs10Each 1,650 1,650 1,650 1,650 1,650 1,650 1,650 1,650
Mahuli Samudayik Laghubitta Bittiya
Sanstha *
20,Sharesof10Each 2,0 2,0 2,0 2,0 2,0 2,0 2,0 2,0
National Banking Institute
24,0Sharesof10Each 2,40 2,40 2,40 2,40 2,40 2,40 2,40 2,40
Nepal Clearing House limited
60,Sharsof10Each 5,0 5,0 5,0 5,0 5,0 5,0 5,0 5,0
Nepal Electronic Payment System *
150,Sharesof10Each 15,0 15,0 15,0 15,0 15,0 15,0 15,0 15,0
Grameen Laghubitta Bittiya Sanstha Limited *
30,Sharsof10Each 3,0 3,0 - - 3,0 3,0 - -
Shrijana Community Development Center *
5,0Sharesof10Each 50, 50, - - 50, 50, - -
Solve Laghubitta Bittiya Sanstha Limited *
14,0Sharesof10Each 1,40 1,40 - - 1,40 1,40 - -
Total (B) 190,911,500 190,911,500 176,011,500 176,011,500 190,911,500 190,911,500 176,011,500 176,011,500
Total (A+B) 762,528,763 757,223,119 597,628,763 600,720,897 762,528,763 757,223,119 597,629,963 600,722,097
Investmentinunquotedequityareshownatcostconsideringnetworthofinvested

equityarenotlessthancost.

*Companieshavenotdistributeddividendsfromlastthreeyears
l 198 l
4.9 Current Tax Assets

Amount in NPR
Group Bank
Current income tax assets - 9,8574 10,723 - 9,8574 10,723

Current tax of prior periods - - - -
Total - 9,857,544 10,172,233 - 9,857,544 10,172,233
Current income tax liabilities 25,07 - - 25,07 - -
Current tax of prior periods - - - - - -
Total 25,025,507 - - 25,025,507 - -
Current Tax Assets includes advance income tax paid by the Bank under self assessment tax returns
IncomeTaxActand
2058 taxdeductedatsource(TDS)onbehalfoftheBank.Simialrly,thecurrentincometaxliabil
includesthetaxpayabletotheGovernmentcomputedaspertheprovision axAct2058. oftheIncomeT
4.10 Investment in subsidiaries Amount in NPR

As at As at As at
16 July 2018 15 July 2017 16 July 2016
Investmentinquotedsubsidiaries - - -
Investmentinunquotedsubsidiaries 270, 10, 10,
Total Investment 270,000,000 100,000,000 100,000,000
Less:Impairmment
Net Carrying Amount 270,000,000 100,000,000 100,000,000
4.10.1 Investment in Quoted Subsidiaries Amount in NPR

Bank
As at 16 July 2018 As at 15 July 2017 As at 16 July 2016
Cost Fair Value Cost Fair Value Cost Fair Vale
Total - - - - - -
TheBank'ssubsidiariesarenotlistedonthestockexchangeasonthereportingdate.
4.10.2 Investment in Unquoted Subsidiaries Amount in NPR

"As at "As at "As at
16 July 2018" 15 July 2017" 16 July 2016"
Cost Fair Value Cost Fair Value Cost Fair Vale
NICASIACapitalLimited 20, 20, 10, 10, 10, 10,

NICASIALagubittaBittiyaSansthaLimited
70, 70, - - - -
Total 270,000,000 270,000,000 100,000,000 100,000,000 100,000,000 100,000,000.00
l 199 l
4.10.3 Information relating to subsidiaries of the bank

Amount in NPR
Bank
Percentage of Ownership by Bank
As at As at As at
16 July 2018 15 July 2017 16 July 2016
NICASIACapitalLimited 10 10 10
NICASIALagubittaBittiyaSansthaLimited 10 - -
NICASIALagubittaBittiyaSansthaLimitedwasregisteredinCompanyRegistraronand
2074/31 starteditsoperati
on2074/95
4.10.4 Non Controlling Interest of the subsidiaries

Amount in NPR
Group
As at As at As at
16 July 2018 15 July 2017 16 July 2016
NIC ASIA NIC ASIA Lagubitta NIC ASIA NIC ASIA Lagubitta NIC ASIA NIC ASIA Lagubitta
Capital Bittiya Sanstha Capital Bittiya Sanstha Capital Bittiya Sanstha
EquityinterestheldbyNCI(%) - - - - - -
Profit/(loss)allocatedduringtheyear - - - - - -
Accumulated balance of NCI as on
- - - - - -
ashar end
DividendpaidtoNCI - - - - - -
As the both the subsidiaries of the Bank are wholly owned subsidiaries thus non controlling interest doesn't exist on those
subsidiaries as on the reporting date
4.11 Investment in Associates

Amount in NPR
Group Bank
Investmentinquotedassociates - - - - - -
Investmentinunquoted
- - - - - -
associates
Total Investment - - - - - -
LessImpairmment
Net Carrying amount - - - - - -
TheBankdoesnothaveanyassociatesasonthereportingdate.
4.11.1 Investment in quoted associates

Amount in NPR
Group Bank
Cost Fair Cost Fair Cost Fair Cost Fair Cost Fair Cost Fair
Value Value Vale Value Value Vale
- - - - - - - - - - - -
l 200 l
4.11.2 Investment in Unquoted associates Amount in NPR

Group Bank
Cost Fair Cost Fair Cost Fair Vale Cost Fair Cost Fair Cost Fair
Value Value Value Value Vale
- - - - - - - - - - - -
4.11.3 Information relating to associates of the bank Amount in NPR
Group Bank
Percentage of Ownership by Bank Percentage of Ownership by Bank
- - - - - -
4.11.4 Equity value of associates Amount in NPR

Group
As at As at As at
16 July 2018 15 July 2017 16 July 2016
- - -
4.12 Investment Properties

Amount in NPR
Group Bank
Investment properties measured at fair value

BalanceasonSharwan1 - - - - - -
Addition/disposalduringtheyear - - - - - -
Net changes in fair value during the year - - - - - -
Adjustment/transfer - - - - - -
Net amount - - - - - -
Investment properties measured at cost
BalanceasonSharwan1, 48,253 283,9574 283,9574 48,253 283,9574 283,9574
Addition/disposalduringtheyear 26,1859 (235,714) - 26,1859 (235,714) -
Net changes in fair value during the year - - - - - -
Adjustment/transfer - - - - - -
Net amount 74,382,923 48,254,332 283,985,874 74,382,923 48,254,332 283,985,874
Total 74,382,923 48,254,332 283,985,874 74,382,923 48,254,332 283,985,874
Refernote5.12forpartywisedetailsofNonBankingAssetsasatreporting
date.
l 201 l
4.13 Property and Equipment (PE) Amount in NPR
Group
Leasehold Computer Furniture & Equipment & Total Ashad Total Ashad
Freehold land Buildings Vehicles Machinery Capital WIP
Assets Accessories Fixtures Others end 2075 end 2074
Cost or deemed cost
Balance at Ashad end 2073 140,320,227 97,757,972 197,618,208 150,584,314 168,213,883 114,304,500 127,836,351 114,304,500 10,309,032 - -
Additions
Acquisitionduringtheyear 239,45 - 152,97 67,98 106,487 41,8630 40,751 38,29065 - - 687,390
Capitalization
Disposals - - - (10,95683) (46,510) (61,789) (3,12579) (61,789) (3,0514) - (64,915)
Adjustment - - - - - - - - - - -
Others - - - - - - - - - - -
Balance at Ashad end 2074 380,254,769 97,757,972 349,777,387 207,600,506 228,091,033 155,505,851 165,457,783 151,933,361 7,257,928 1,584,445,302
Additions - - - - - - - - - -
Acquisitionduringtheyear - - 327,10 108,53 128,356 58,473 31,2975 - 10,3645 943,710
Capitalization - - - - - - - - - - -
Disposals - - (126,078) (107,329) (15,9063) (35,264) (35,12874) - - (293,5) -
Adjustment - - - - - - - - - - -
Others - -
Balance at Ashad end 2075 380,254,769 97,757,972 676,862,311 208,524,068 240,534,636 178,733,992 441,636,664 151,933,361 17,574,382 2,393,812,154 -
Leasehold Computer Furniture & Equipment & Total Ashad end Total Ashad
Assets Accessories Fixtures Others 2075 end 2074
l 202 l
Accumulated depreciation and
impairment
Balance at Ashad end 2073 - 21,339,807 111,306,800 106,553,243 93,869,364 81,562,257 87,651,599 81,562,257 - 583,845,326
DepreciationChargefortheYear - 3,8209 38,2019 20,4783 18,6320 12,3579 12,87690 1,948 - 18,439
ImpairmentfortheYear
Disposals - - - (9,8147) (14,87095) (60,42) (3,12486) (60,42) - (29,1708)
Others -
Balance at Ashad end 2074 - 25,160,715 149,587,120 117,050,131 97,631,489 93,317,115 97,403,662 92,956,821 - 673,107,052 -
DepreciationChargefortheYear - 1,6485 18,934 29,4361 16,3452 10,96 28,3047 - - 104,856 -
ImpairmentfortheYear -
Disposals - - (59,340) (8,51079) (26,804) (30,857) (2,4638) - - (168,5209) -
Others - -
Balance at Ashad end 2075 - 26,807,200 167,717,129 57,968,713 87,294,963 73,419,910 103,241,694 92,956,821 - 609,406,430 -
CapitalWorkinProgress - - - - - - - - - - -
Net Book Value Leasehold Computer Furniture & Equipment & Total Ashad end
Assets Accessories Fixtures Others 2075
BalanceatAshadend2073 140,327 76,4185 86,31407 4,0317 74,3519 32,74 40,18753 32,74 10,392 537,406 -
Amount in NPR
Bank
4.13 Property and Equipment (PE)
Freehold Leasehold Computer Furniture & Office Total Ashad Total Ashad end
Buildings Vehicles Machinery Capital WIP
land Assets Accessories Fixtures Equipment end 2075 2074
Cost or deemed cost
BalanceatAshad31207 140,327 97,52 197,6820 150,843 168,23 14,305 127,8365 14,305 10,392 1,24896
Additions
Acquisitionduringtheyear 239,45 - 150,63948 67,98 106,2487 38,29065 40,628 38,29065 - 681,92
Capitalization
Disposals (10,95683) (46,510) (61,789) (3,12579) (61,789) (3,0514) (64,915)
Adjustment -
Others
Balance at Ashad 31 2074 380,254,769 97,757,972 348,222,156 207,600,506 227,921,033 151,933,360 165,375,598 151,933,361 7,257,928 - 1,121,248,986
Additions - - -
Acquisitionduringtheyear 325,470 102,673 123,460 54,1397 307,45 10,3645 923,7 -
Capitalization - -
Disposals (126,078) (107,329) (15,9063) (35,264) (35,12874) - (293,5) -
Adjustment - -
Others - -
Balance at Ashad 32 2075 380,254,769 97,757,972 673,568,849 202,631,952 235,423,980 171,092,325 437,717,727 151,933,361 17,574,382 2,367,955,317 -
l 203 l
Freehold Leasehold Computer Furniture & Office Total Ashad Total Ashad end
Buildings Vehicles Machinery Capital WIP
land Assets Accessories Fixtures Equipment end 2075 2074
Accumulated depreciation and

impairment
BalanceatAshad31207 - 21,39807 1,3068 106,5324 93,864 81,5627 87,6519 81,5627 - 583,426
DepreciationChargefortheYear - 3,8209 40,8591 20,4783 18,672 1,948 12,87690 1,948 - 120,6389
ImpairmentfortheYear
Disposals - - - (9,8147) (14,87095) (60,42) (3,12486) (60,42) - (29,1708)
Others -
Balance at Ashad 31 2074 - 25,160,715 152,162,718 117,050,131 97,616,141 92,956,821 97,403,662 92,956,821 - 675,307,009 -
DepreciationChargefortheYear 1,6485 17,3058 28,196 16,24570 10,698 27,5196 - - 10,8546 -
ImpairmentfortheYear - - -
Disposals (59,340) (8,51079) (26,804) (30,857) (2,4638) - - (168,5209) -
Others - -
Balance at Ashad 32 2075 - 26,807,200 169,404,737 56,728,250 87,181,805 72,759,613 102,692,420 92,956,821 - 608,530,846 -
Net Book Value Equipment

Freehold Leasehold Computer Furniture &
Buildings Vehicles Machinery & Capital WIP Total
land Assets Accessories Fixtures
Others
BalanceatAshad31207 140,327 76,4185 86,31407 4,0317 74,3519 32,74 40,18753 32,74 10,392 537,406 -
BalanceatAshad312074 380,254769 72,59 196,05438 90,5376 130,4892 58,9763 67,913 58,97640 7,2598 1,062947 -
BalanceatAshad32075 380,254769 70,952 504,162 145,90372 148,275 98,3271 35,027 58,97640 17,54382 1,75942 -
The cost of an item of property and equipment has been recognized as an asset, initially recognized a
Subsequent expenditure is capitalized if it is probable that the future economic benefits from the expen
to the Bank. Ongoing repairs and maintenance to keep the assets in working condition are expensed as
Any gain or loss on disposal of an item of property and equipment (calculated as the difference between
proceeds from disposal and the carrying amount of the item) is recognized within other income in profit
Depreciation on other assets is calculated using the straight- line method to allocate their cost t
overtheirestimatedusefullifeaspermanagementjudgementasfollows:
Group Useful Life (In Years)
Computer 5
MetalFurniture 10
OfficeEquipment 10
Vehicle 10
WoodenFurniture 5
Building 50
Leasehold Lowerof15YearsorLeasePeriod
During the FY 2015/6 and FY 2016/7 Written Down Value Method has been followed to calculate the depreciation of
asset. Howeverduring theFY2017/8 Straight LineMethodhas beenfollowedduetowhich30.58 million assets have
beenwrittenoff.Asperpara61ofNAS16,changeinusefullifeofassethasbeenaccountedaschangeinaccounting
estimateandtreatedprospectivelyasperNAS8.
l 204 l
4.14 Goodwill & Intangible Assets

Amount in NPR
Group
Particulars Software As at As at
Other Ashad end Ashad end
Goodwill Purchased Developed 2075 2074
Cost
AsonSawan1,2073 31,780 31,780
Additions:
Acquisition 26,7540 26,7540
Capitalization
Disposalsorclassifiedasheldforsale
Adjustment
Balance at Asar 31 2074 58,539,405 58,539,405 31,783,000
Additions
Acquisition 30,69547 30,69547 -
Capitalization
Disposalsorclassifiedasheldforsale
Adjustment
Balance as on Asar 32, 2075 89,234,882 89,234,882 58,539,405
DepreciationandImpairment
AsonSawan1,2073 13,5098 13,5098
DepreciationchargefortheYear 8,6310 8,6310
Disposals
Adjustment -
As on Asar 31 2074 22,149,795 22,149,795 -
DepreciationchargefortheYear 14,3795 14,3795 -
Disposals
Adjustment
As on Asar 32 2075 36,529,372 36,529,372 22,149,795
CapitalWorkinProgress
Net Book Value

BalanceatAshad31207 18,2705 18,2705 -
BalanceatAshad312074 36,890 36,890 -
BalanceatAshad32075 52,701 52,701 -
l 205 l
4.14 Goodwill & Intangible Assets

Amount in NPR
Bank
Particulars Software As at As at
Other Ashad end Ashad end
Goodwill Purchased Developed 2075 2074
Cost
AsonSawan1,2073 31,780 31,780 -
Additions: 25,603 25,603 -
Acquisition -
Capitalization -
Disposalsorclassifiedasheldforsale -
Adjustment -
Balance at Asar 31 2074 57,443,305 57,443,305 31,783,000
Additions -
Acquisition 28,4 28,4 25,603
Capitalization -
Disposalsorclassifiedasheldforsale -
Adjustment -
Balance as on Asar 32, 2075 85,887,747 85,887,747 57,443,305
DepreciationandImpairment
AsonSawan1,2073 13,5098 13,5098 -
DepreciationchargefortheYear 8,547 8,547 -
Disposals
Adjustment - -
As on Asar 31 2074 22,056,759 22,056,759
DepreciationchargefortheYear 13,987 13,987
Disposals -
Adjustment
As on Asar 32 2075 36,055,756 36,055,756 22,056,759
CapitalWorkinProgress
Net Book Value

BalanceatAshad31207 18,2705 18,2705 -
BalanceatAshad312074 35,864 35,864 -
BalanceatAshad32075 49,831 49,831 -
Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire an
the specific software. Costs associated with the development of software are capitalized where it is
it will generate future economic benefits in excess of its cost. Computer software costs are amortized
of expected useful life. Costs associated with maintaining software are recognized as an expense as
Softwareisamortisedonastraight-linebasisinprofitorlossoveritsestimatedusefullife,fromthedat
foruse.Theestimatedusefullifeofsoftwareforthecurrentandcomparativeperiodsisfiveyears.Software
costslessthanRs.10,arechargedoffonpurchasesasrevenueexpenditure.
l 206 l
4.15 Deferred tax Amount in NPR
Group Bank
Deferred Tax Assets/Liabilities
Deferredtaxassets - - - - - -
Deferredtaxliabilities (2,7908) (5,86439) 146,8072 2,81469 5,798 146,8293
Net Amount 2,799,908 55,864,389 (146,807,462) (2,814,629) (55,797,787) (146,829,993)
CurrentYear
Group Bank
2017-18 Net Deferred Net Deferred

Deferred Tax Deferred Tax Deferred Tax Deferred Tax
Tax Assets/ Tax Assets/
Assets Liabilities Assets Liabilities
(Liabilities) (Liabilities)
Deferredtaxontemporarydifferenceson
following items
LoanandadvancetoBFIs
Loanandadvancetocustomers - - - - - -
Investment Properties - (14,7630) (14,7630) - (14,7630) (14,7630)
Investment Securities 1,5963 - 1,5963 1,5963 - 1,5963
Property&Equipment - (36,1427) (36,1427) - (35,921) (35,921)
Employees'definedbenefitplan 45,932 - 45,932 45,932 - 45,932
LeaseLiabilities - - - - - -
Provisions - - - - - -
Other temporary differences 234,89 - 234,89 - - -
Deferred tax on temporary differences 47,819,820 (50,619,727) (2,799,908) 47,584,922 (50,399,551) (2,814,629)
Deferredtaxoncarryforwardofunused
- - -
tax losses
Deferredtaxduetochangesintaxrate - - -
Net Deferred tax asset/liabilities as on
- - (2,814,629)
Ashadh 32 2075
Deferredtax(asset)/liabilitiesasonSawan
- - (5,798)
12074
Origination/(Reversal) during the year - - 52,983,158
Deferred tax expense/(income)
- - 49,684,980
recognised in profit or loss
"Deferred tax expense/(income)
recognised in - - 3,298,178
other comprehensive income"
Deferred tax expense/(income
- - -
recognised in directly in equity
l 207 l
PreviousYear
Group Bank
2016-17 Deferred Tax Deferred Tax Net Deferred Deferred Tax Deferred Tax Net Deferred
Assets Liabilities Tax Assets/ Assets Liabilities Tax Assets/
(Liabilities) (Liabilities)
Deferredtaxontemporarydifferenceson
following items
LoanandadvancetoBFIs
Loanandadvancetocustomers - (92,41378) (92,41378) - (92,41378) (92,41378)
Investment Properties - (14,7630) (14,7630) - (14,7630) (14,7630)
Investment Securities - (927,640) (927,640) - (927,640) (927,640)
Property&Equipment 14,98752 - 14,98752 14,98752 - 14,98752
Employees'definedbenefitplan 37,564 - 37,564 37,564 - 37,564
LeaseLiabilities - - - - - -
Provisions - (6,01) (6,01) - - -
Other temporary differences - (527,49) (527,49) - (527,49) (527,49)
Deferred tax on temporary differences 52,555,009 (108,419,398) (55,864,389) 52,555,009 (108,352,797) (55,797,787)
Deferredtaxoncarryforwardofunusedtax - - -
losses
Deferredtaxduetochangesintaxrate - - -
Net Deferred tax asset/liabilities as on year - - (55,797,787)
end of
31st Ashaad, 2074 (Closing)
Deferredtax(asset)/liabilitiesasonSawan1, - - 146,8293
2073(Opening)
Origination/(Reversal) during the year - - 91,032,205
-
Deferred tax expense/(income) recognised - - 37,717,441
in profit or loss
Deferred tax expense/(income) recognised - - 53,314,764
in other comprehensive income
Deferred tax expense/(income recognised - - -
in directly in equity
4.16 Other Assets

Amount in NPR
Group Bank
Other Assets As at As at As at As at As at As at
Assets held for sale - - - - - -
Other non banking assets - - - - - -
Bills receivable - - - - - -
Accounts receivable 7,064239 73,816 352,804 7,0541289 736,5209 352,96
Accrued Income - - - - - -
PrepaymentsandDeposit 694,87523 157,6238 140,38952 693,8502 156,04 140,38952
IncomeTaxDeposit 82,159 79,6538 - 81,97420 78,590
DeferredEmployeeexpenditure 681,4902 289,375. 85,274.31 681,4902 289,375 85,274
Other 106,247 31,4259.7 9,65217 106,85 31,4259 9,65217
Total 8,628,877,303 1,295,950,724 588,127,466 8,620,837,348 1,293,225,050 588,287,715
l 208 l
4.17 Due to Bank and financial Institutions Amount in NPR

Group Bank
As at As at As at As at 16 July As at 15 July As at 16 July

16 July 2018 15 July 2017 16 July 2016 2018 2017 2016
MoneyMarketDeposit - - - - - -
Interbank Borrowing - 50,4196 1,850 - 50,4196 1,850
OtherdepositsfromBFIs 1,72856 7,2546 5,263841 1,629507 7,2546 5,36492
Settlement and clearing - - - - - -

accounts
OtherdepositsfromBFIs - - - - - -
Total 11,728,515,665 7,772,766,542 7,115,385,414 11,629,507,290 7,772,766,542 7,215,492,263
The balances in accounts maintained with the Bank by other local financial institution have been pr
head. Interbank borrowing, interbank deposit, balances on settlement and clearing accounts as wel
duetobankandfinancialinstitutionispresentedunderduetobankandfinancialinstitutions.
4.18 Due to Nepal Rastra Bank Amount in NPR

Group Bank
As at As at As at As at 16 July As at 15 July As at 16 July

16 July 2018 15 July 2017 16 July 2016 2018 2017 2016
RefinancefromNRB 742,69 - - 742,69 - -
StandingLiquidityFacility - - - - - -
LenderoflastresortfacilityfromNRB - - - - - -
Sale and repurchase agreement - - - - - -
Other due to Nepal Rastra Bank - - - - - -
Total 742,269,472 - - 742,269,472 - -
The amount payable to NRB shall include amount of refinance facilities, standing liquidity facility, len
saleandrepurchaseagreements,depositfromNRBetc.
4.19 Derivative financial instruments

Amount in NPR
Group Bank
HeldforTrading
ForwardexchangeContract. - - - - - -
Others - - - - - -
Heldforriskmanagement - - - - -
ForwardexchangeContract 1,7283609 2,98431 2,653 1,7283609 2,98431 2,653
Others - - - - - -
Total 1,721,813,609 2,999,989,431 2,266,526,366 1,721,813,609 2,999,989,431 2,266,526,366
Asignificantpartofthederivativesintheportfolioarerelatedtoservicingcorporateclientsin
hedge. For example, foreign currency exposures. These products are used by Bank as part of its own regular t
activities. From a risk perspective, the gross amount of derivative assets must be considered toge
amount of derivative liabilities, which are presented separately on the statement of financial pos
doesnotallownettingofthesepositionsinthestatementoffinancialposition.
l 209 l
4.20 Deposit from Customers

Amount in NPR
Group Bank
Particulars As at As at As at
As at 16 July 2018 As at 15 July 2017 As at 16 July 2016
16 July 2018 15 July 2017 16 July 2016
Corporate Customers
TermDeposit 34,2857 21,80954 23,169 34,2857 21,80954 23,169
CallDeposit 13,68250 10,75846 12,80659 13,760452 10,25793 12,80659
CurrentDeposit 10,8973 3,1082 2,14683 10,8973 3,1082 2,14683
Other 487,601 451,7268 483,0976 487,601 451,7268 483,0976
RetailDeposit
TermDeposit 31,2794 18,3926 4,619207 31,2794 18,3926 4,619207
SavingDeposit 48,0197 24,8506 19,2605 48,019537 24,8506 19,2605
CurrentDeposit 390,714 18,0235 201,587 390,714 18,0235 201,587
Other 483,26 987,235 1,806793 483,26 987,235 1,806793
Total 139,578,561,246 79,887,564,759 64,606,790,894 139,589,607,845 79,905,602,416 64,606,790,894
Depositfromcustomerincludesaccruedinterestpayableasonreportingdatefortheparticulardepos
4.20.1 Deposit from Customer

Amount in NPR
Group Bank
Particulars
As at 16 July 2018 As at 15 July 2017 As at 16 July 2016 As at 16 July 2018 As at 15 July 2017 As at 16 July 2016
Nepalese rupee 135,0298 78,4630 62,89350 135,026789 78,496012 62,89350

Indian rupee - - - - - -
USD 4,59176 1,40839 1,90547 4,59176 1,40839 1,90547
GBP 635,82 298,043 9,51340 635,82 298,043 9,51340
Euro 2,6457 3,84067 2,60731 2,6457 3,84067 2,60731
JapaneseYen - - - - - -
Chinese yuan - - - - - -
Other 972,1 278,6 259,30 972,1 278,6 259,30
Total 139,578,561,246 79,887,564,759 64,606,790,894 139,589,607,845 79,905,602,416 64,606,790,894
Currency wise include NPR converted value of deposit on different currencies as on reporting date converted at closing
spotrate.
l 210 l
4.21 Borrowing
Amount in NPR
Group Bank
Particulars "As at "As at "As at As at 15 July As at 16 July
As at 16 July 2018
16 July 2018" 15 July 2017" 16 July 2016" 2017 2016
DomesticBorrowing
NepalGovernment - - - - - -
Other Institution - - - - - -
Other - - - - - -
Subtotal - - - - - -
ForeignBorrowing
ForeignB/FIs - - - - - -
MultilateralDevelopmentBanks - - - - - -
Other Institutions - - - - - -
Sub total - - - - - -
Total - - - - - -
4.22 Provisions Amount in NPR

Group Bank
Particulars As at 16 July 2018 As at 15 July 2017 As at 16 July As at 16 July As at 15 July As at 16 July
2016 2018 2017 2016
Provisions for redundancy - - - - - -

Provision for restructuring - - - - - -
Pending legal issues and tax litigation - - - - - -
Onerous contracts - - - - - -
Total - - - - - -
4.22.1 Movement in provision

Amount in NPR
Group Bank
Particulars As at 15 July As at 16 July As at 16 July As at 15 July As at 16 July
As at 16 July 2018
2017 2016 2018 2017 2016
Balance at Sawan 1
Provisions made during the year - - - - - -
Provisions used during the year - - - - - -
Provisions reversed during the year - - - - - -
Unwind of discount - - - - - -
Balance at Asar end - - - - - -
l 211 l
4.23 Other Liabilities

Amount in NPR
Group Bank
Particulars As at As at As at As at 16 July As at 15 July 2017 As at 16 July
16 July 2018 15 July 2017 16 July 2016 2018 2016
Liabilityforemployeesdefinedbenefit 26,51 3,2196 64,35 24,7986 3,16285 64,35

obligations
Liabilityforlong-serviceleave 128,60 96,1457 52,6904 128,53 96,1457 52,6904
Short-termemployeebenefits - - - - - -
Bills Payable 19,42 69,0517 91,4385 19,42 69,0517 91,4385
Creditors and accruals 1,405368 863,27 342,681 1,402357 863,27 342,179
Interest payable on deposit - - - - - -
Interest payable on borrowing - - - - - -
Liabilitiesondeferedgrantincome - - - - - -
UnpaidDividend 93,7408 95,718632 152,3746 93,7408 95,718632 152,3746
LiabilitiesunderFinanceLease - - - -
Employeebonuspayable 201,789 208,17 153,2697 201,789 208,17 153,2697
Other 154,902 9,160 59,2068 105,83674 91,0865 59,3607
Total 2,125,162,751 1,465,472,105 915,545,796 2,073,775,098 1,458,128,070 915,509,071
Liabilitiesrelatingtoemployeesbenefitslikeliabilitiesfordefinedbenefitobligationgratuityandpe
for long-service leave, short-term employee benefits etc., Creditors and accruals, unearned income, unpaid
etc.arepresentedunderthisaccountheadofotherliabilities.Longserviceleaveconsistsofsickleav
Actuarialbreakupfordefinedbenefitobligationshavebeendisclosedindicslosurein5.21
4.23.1 The amount Recognised in Statement of Financial Position: Amount in NPR

Group Bank
Particulars As at As at As at As at 16 July As at 15 July As at 16 July
16 July 2018 15 July 2017 16 July 2016 2018 2017 2016
Presentvalueofunfundeddefinedbenefitobligation
129,386 96,251 52,6904 128,53 96,1457 52,6904
Presentvalueoffundeddefinedbenefitobligation
143,0728 130,56 154,308 142,7683 130,56 154,308
Total Present value of obligations 273,010,949 226,752,625 206,902,125 271,280,548 226,695,641 206,902,125
Fairvalueofplanassets 17,968 97,381 89,652 17,968 97,381 89,652
PresentValueofNetObligation 15,0463 129,4 16,9357 153,0762 129,35760 16,9357
Recognised Liability for defined benefit obligations 155,041,163 129,414,244 116,935,573 153,310,762 129,357,260 116,935,573
4.23.2 Plan Assets Amount in NPR

Group Bank
Particulars As at 16 July As at 15 July As at 16 July As at 16 July As at 15 July As at 16 July
2018 2017 2016 2018 2017 2016
EquityShares - - - - - -
GovernmentBonds - - - - - -
BankDeposit - - - - - -
Other - - - 17,968 97,381 89,652
Total - - - 117,969,786 97,338,381.00 89,966,552.00
Actual Return on Plan assets - - - - - -
l 212 l
4.23.3 Movement in Present Value of defined benefits Obligation

Amount in NPR
Group Bank
FairValueofObligationatbeginningoftheyear
26,954 178,6390 15,6432 26,954 178,6390 15,6432
Acturial(gain)/loss (13,0275) 2,938105 35,49801 (13,0275) 2,938105 35,49801
Benefitspaidbytheplan (36,54) (29,5378) (15,42869) (36,54) (29,5378) (15,42869)
Current Service Cost and Interest 94,270 54,6123 35,1827 94,270 54,6123 35,1827
Defined benefits obligation at year end 271,280,548 226,695,641 206,902,125 271,280,548 26,695,641 206,902,125
4.23.4 Movement in Present Value of Plan Assets Amount in NPR

Group Bank
FairValueofPlanAssetsatbeginningoftheyear
97,382 89,652 58,10 97,382 89,652 58,10
Contributions paid into plan 46,907 3,07521 36,142 46,907 3,07521 36,142
Benefitspaidbytheplan (16,407) (21,58794) (5,16298) (16,407) (21,58794) (5,16298)
Acturial(Losses)/gains (9,85236) (4,10768) - (9,85236) (4,10768) -
Expectedreturnonplanassets - - - - - -
Fair Value of Plan Assets at the year end 117,969,786 97,338,381 89,966,552 117,969,786 97,338,381 89,966,552
4.23.5 Expenses Recognized in Income Statement Amount in NPR

Group Bank
Current service cost 75,2149 39,125 23,6174 75,2149 39,125 23,6174

Interest cost 18,75263 15,46378 1,5043 18,75263 15,46378 1,5043
ExpectedReturnonPlanAssets - - - - - -
Expenses Recognized in Income
94,274,092 54,656,123 35,182,717 94,274,092 54,656,123 35,182,717
Statement
4.23.6 Expenses Recognized in other comprehensive income Amount in NPR

Group Bank
Expenses Recognized in Income - - - - - -

Statement
4.23.7 Actuarial Assumptions Amount in NPR

Group Bank
Salary escalation rate 10% 10% 10% 10% 10% 10%

Withdrawal rate 5% 5% 5% 5% 5% 5%
Expected return on Plan Assets 9% 9% 0% 9% 9% 0%
l 213 l
4.24 Debt Securities Issued Amount in NPR

Group Bank
DebtSecuritiesissuedatamortizedcost3,4879015 501,2497 51,7023 3,4879015 501,2497 51,7023

Total 3,487,908,815 501,249,729 515,702,553 3,487,908,815 501,249,729 515,702,553
TheBankhastwooutstandingdebtissued‘7.25%NICASIABond207’oftotalfacevalueofNPR50millionand'9%
NIC ASIA Bond 2081/' of total face value of NPR 3,0 million with maturity period of 7 years as per the approval
receivedfromNRBandSecuritiesBoardofNepal.Referpointa(iii)ofnoteno.for 5.2 detailsregardingdebtsecur
issued.
Amount in NPR
Group Bank
Debt Securities In Issues (Maturity) As at As at As at As at As at As at
Morethan1yearlessthan2years - - - - -
Morethan2yearlessthan3years 50, - - 50, - -
More than 3 year less than 4 years - 50, - 50, -
More than 4 year less than 5 years - - 50, - 50,
More than 5 years 3,0 - - 3,0 - -
Total 3,500,000,000 500,000,000 500,000,000 3,500,000,000 500,000,000 500,000,000
4.25 Subordinated Liabilities Amount in NPR

Group Bank
irredemable cumulative preference shares - - - - - -

Other - - - - - -
Total - - - - - -
TheBankdoesnothaveanykindofsubordinatedliabilitiesasonthereportingdate.
l 214 l
4.26 Share Capital

Amount in NPR
Group Bank
Share Capital
Ordinary Shares 8,03169 6,925748 4,5732 8,03169 6,925748 4,5732
Convertible Preference Shares - - - - - -
IrredemablePreferenceShares(equity - - - - - -
component only)
Perpetualdebt(equitycomponentonly) - - - - - -
Total 8,031,116,998 6,692,597,498 4,575,374,272 8,031,116,998 6,692,597,498 4,575,374,272
4.26.1 Ordinary Shares Amount in NPR

Bank
As at As at As at
16 July 2018 15 July 2017 16 July 2016
Authorised capital
50,OrdinarySharesofRs10each(2015-6) - - -
80,OrdinarySharesofRs10each(2016-7) - - -
80,4OrdinarySharesofRs10each(2017-8) - - -
Issued capital
4,573OrdinarySharesofRs.10each(2015-6) - - -
80,3169OrdinarySharesofRs10each(2017-8) 8,03169 6,925748 4,5732
Paid up capital
4,573OrdinarySharesofRs.10each(2015-6) - - -
80,3169OrdinarySharesofRs10each(2017-8) 8,03169 6,925748 4,5732
4.26.2 Ordinary Share Ownership Amount in NPR

Bank
As at As at As at
16 July 2018 15 July 2017 16 July 2016
% Amount % Amount % Amount
DomesticOwnership
NepalGovernment - - - - - -
"A" Class licensed institutions - - - - - -
Other licensed institutions - - - - - -
Other institutions 6.3 508,96 6.5 436,0 2.1 97,356
Public 93.7 7,5230198 93.5 6,259348 97. 4,780135
Other - - - -
ForeignOwnership
Total 100 8,031,116,998 100 6,692,597,498 100 4,575,374,272
l 215 l
4.27 Reserves
Amount in NPR
Particulars Group Bank
StatutoryGeneralreserve 1,82590 1,5806 1,2634870 1,82590 1,5806 1,2634870

Exchangeequalizationreserve 38,72154 34,6809 3,9548 38,72154 34,6809 3,9548
Corporate social responsibility reserve 24,617 14,7360 - 24,617 14,7360 -
Capital redemption reserve 285,714 214,8576 142,857 285,714 214,8576 142,857
Regulatory reserve 45,786 - - 45,786 - -
Investmentadjustmentreserve 4,26 28,47369 29,563 4,26 28,47369 29,563
Capital reserve - - - - - -
Assets revaluation reserve - - - - - -
Fairvaluereserve 1,5964 2,3106 125,6 1,5964 2,3106 125,6
Dividendequalizationreserve - - - - - -
Actuarial gain - - - - - -
Special reserve - - - - - -
Other reserve 20,41637 25,01497 15,6408 20,41637 25,01497 15,6408
Total 2,695,684,007 1,877,686,394 1,610,680,950 2,695,684,007 1,877,686,394 1,610,680,950
General Reserve
General Reserve maintained pertains to the regulatory requirement of the Bank and Financial Insti
There is a regulatory requirement to set aside 20% of
fi t
the
tonet
thepro
general reserve until the reserve is twice
paidupcapitalandthereafterminimum10%ofthe fi t.
net

pro

Exchange Equilization Reserve
Exchange equalization is maintained as per requirement of Nepal Rastra Bank Unified Directive. There is a r
requirement to set aside 25% of the foreign exchange revaluation gain on the translation of foreign curr
reportingcurrency.Thereserveistheaccumulationofsuchgains overtheyears.
Corporate Social Responsibility Reserve

CorporateSocialResponsibilityreserveof1%ofnetprofitismaintainedasperNepal RastraBankDirective

Regulatory Reserve
Regulatory reserves includes any amount derived as result of NFRS conversion and adoption with effect

e a r n i n g .

Investment Adjustment Reserve
Investment Adjustment Reserve is created against quoted and unquoted share investments as per Ne
Directive.
l 216 l
4.28 Contingent liabilities and commitments

Amount in NPR
Group Bank
Contingent liabilities 14,7829 1,253487 10,572496 13,580 1,253487 10,572496

Undrawn and undisbursed facilities 15,08394 12,876549 12,8356 15,08394 12,876549 12,8356
Capital commitment - - - - - -
LeaseCommitment - - - - - -
Litigation - - -
Total 29,790,833,130 24,129,996,963 23,354,310,848 28,523,419,521 24,129,996,963 23,354,310,848
4.28.1 Contingent liabilities

Amount in NPR
Group Bank
Acceptance and
471,0 52,1 498,50 471,0 52,1 498,50
documentary credit
Bills for collection 167,9243 97,43512 69,340 167,9243 97,43512 69,340
Forwardexchangecontracts
1,7283609 2,98431 2,653 1,7283609 2,98431 2,653
Guarantees 89,625 5,7496 13,8794 89,625 5,7496 13,8794
Underwriting commitment - - - - - -
Other commitments 1,06498 7,548031 7,54028 1,06498 7,548031 7,54028
Total 13,515,385,580 11,253,448,274 10,515,724,962 13,515,385,580 11,253,448,274 10,515,724,962
4.28.2 Undrawn and undisbursed facilities

Amount in NPR
Group Bank
Undisbursed amount of loans - - - - - -

Undrawn limits of overdrafts 4,816970 2,531748 3,71628 4,816970 2,531748 3,71628
Undrawn limits of credit cards 36,72 190,476 - 36,72 190,476
Undrawn limits of letter of credit 8,39416 9,50478 8,612540 8,39416 9,50478 8,612540
Undrawn limits of guarantee 1,432970 650,123 463,5978 1,432970 650,123 463,5978
Total 15,008,033,941 12,876,548,689 12,838,585,886 15,008,033,941 12,876,548,689 12,838,585,886
l 217 l
4.28.3 Capital commitments

Capital expenditure approved by relevant authority of the bank but provision has not been made in financial
Amount in NPR
Group Bank
Capital commitments in relation to Property and

Equipment
Approved and contracted for 10,597 - - 10,597 - -
Approved but not contracted for
Sub total 10,595,795 - - 10,595,795 - -
Capital commitments in relation to Intangible
assets
Approved and contracted for
Approved but not contracted for
Sub total - - - - - -
Total 10,595,795 - - 10,595,795 - -
Capital commitment comprises of contract with vendor for branch expansion
4.28.4 Lease commitments

Amount in NPR
Group Bank
Operating lease commitments

Future minimum lease payments under non
cancellable operating lease, where the bank is
lessee
Notlaterthan1year - - - - -
Laterthan1yearbutnotlaterthan5years - - - - -
Laterthan5years
Sub total - - - - - -
Financeleasecommitments
Future minimum lease payments under non
cancellable operating lease, where the bank is
lessee
Notlaterthan1year
Laterthan1yearbutnotlaterthan5years - - - - - -
Laterthan5years - - - - - -
Sub total - - - - - -
Grand total - - - - - -
Alltheoperatingleaseenteredbybankarecancellablebygivinganoticeperiodandthebankdonothave
leasecommitmentasasonreportingdate.
4.28.5 Litigation
Thebank'slitigationsaregenerallyrelatedtoitsordinarycourseofbusinesspendingonvariousjuri
are mainly in the nature of income tax/VAT which is explained in detail in Note 5.61 Other litigations includ
pendinginvariouscourts&tribunalinNepalpertainingtoassetsrecoveredfromtheborrowers.
l 218 l
4.29 Interest income

Amount in NPR
Group Bank
Year Ended 16 July 2018 Year Ended 15 July 2017 Year Ended 16 July 2018 Year Ended 15 July 2017
Cashandcashequivalent 16,9504 9,63528 16,9504 9,63528

DuefromNepalRastraBank 9,37 - 9,37 -
Placementwithbankandfinancialinstitutions46,5182 35,98406 27,958 31,567
Loanandadvancestobankandfinancial
419,653 128,47 428,31 128,47
institutions
Loansandadvancestocustomers 12,3408 6,48195 12,3408 6,48195
Investment securities 569,8310 30,12 569,8310 30,12
Loanandadvancestostaff 269,3745 137,526 269,3745 137,526
Other - - - -
Total interest income 13,556,413,650 7,093,006,294 13,545,820,277 7,088,588,243
4.30 Interest expense

Amount in NPR
Group Bank
Duetobankandfinancialinstitutions 59,4807 26,9574 594,80 26,9574

DuetoNepalRastraBank 14,6375 - 14,6375 -
Depositsfromcustomers 8,537691 4,05362 8,50642 4,059278
Borrowing - - - -
Debtsecuritiesissued 176,34 36,915 176,34 36,915
Subordinated liabilities - - - -
Other - - - -
Total interest expense 9,322,245,087 4,357,277,281 9,336,156,241 4,362,929,035
l 219 l
4.31 Fees and Commission Income

Amount in NPR
Group Bank
Loanadministrationfees 521,469 298,546 50,3719 298,546

Service fees 12,0493 9,2340 12,0493 9,2340
Consortium fees 3,4905 21,74 3,4905 21,74
Commitment fees 10,29 15,47628 10,29 15,47628
DD/TT/Swiftfees 1,6320 9,521 1,6320 9,521
Creditcard/ATMissuanceandrenewalfees 31,750 24,710 31,750 24,710
Prepayment and swap fees 52,081 25,96031 52,081 25,96031
Investment banking fees 5,820731 - - -
Asset management fees 27,36850 3,1062 - -
Brokerage fees - - - -
Remittance fees 52,930 30,6549 52,930 30,6549
Commission on letter of credit 40,59 35,0 40,59 35,0
Commission on guarantee contracts issued 41,325 23,6859 41,325 23,6859
Commissiononshareunderwriting/issue - - - -
Lockerrental 8,0974 7,46218 8,0974 7,46218
Other fees and commission income 96,7203 15,4273 96,4073 15,4273
Total fees and Commission Income 1,015,242,499 710,110,718 966,148,768 707,009,657
4.32 Fees and commission expense

Amount in NPR
Group Bank
ATMmanagementfees - - - -
VISA/Mastercardfees 67,0953 37,54109 67,0953 37,54109
Guaranteecommission - - - -
Brokerage - - - -
DD/TT/Swiftfees 1,09543 6,251730 1,09543 6,251730
Remittance fees and commission - - - -
Other fees and commission expense 30,98214 8,5149 18,403 6,1240
Total fees and Commission Expense 109,072,510 52,311,313 96,498,109 49,919,233
Payouts on account of fee and commission for services obtained by the bank are presented under this acco
Thisaccountheadincludescardrelatedfees,guaranteecommission,brokerageexpensesetc.
l 220 l
4.33 Net trading income

Amount in NPR
Group Bank
Changes in fair value of trading assets 45,28 4,053 - -

Gain/lossondisposaloftradingassets 37,65 1,0689 - -
Interest income on trading assets - - - -
Dividendincomeontradingassets - - - -
Gain/lossforeignexchangetransation 195,2067 16,09 195,2067 16,09
Other - - -
Net trading income 195,289,632 162,669,861 195,206,579 161,609,119
Trading income comprises gains less losses relating to trading assets and liabilities, and include
dividend and foreign exchange differences as well as unrealized changes in fair value of trading asset
arepresentedunderthisaccounthead.Foreignexchangetransactionsresultsincludegainsandlo
forwardcontractsandtranslatedforeigncurrencyassetsandliabilities.
4.34 Other operating income

Amount in NPR
Group Bank
Foreignexchangerevauationgain 14,7239 2,96835 14,7239 2,96835

Gain/lossonsaleofinvestmentsecurities (1,50628) (14,0365) (1,50628) (14,0365)
Fairvaluegain/lossoninvestment - - -
properties
Dividendonequityinstruments 10,829 43,0621 10,789 43,0621
Gain/lossonsaleofpropertyand 4,093 3,0152 4,093 3,0152
equipment
Gain/lossonsaleofinvestmentproperty 39,810 - 39,810 -
Operating lease income - - - -
Gain/lossonsaleofgoldandsilver 15,68973 20,3598 15,68973 20,3598
Other - 2,7610 - 2,7610
Total 83,628,893 58,064,578 83,615,018 58,064,578
l 221 l
4.35 Impairment charge/(reversal) for loan and other losses

Amount in NPR
Group Bank
Impairmentcharge/(reversal)onloanand
30,584 5,468307 30,584 5,468307
advancestoB/FIs
Impairmentcharge/(reversal)onloanand
28,5931 (75,134) 274,68 (75,134)
advances to customer
Impairmentcharge/(reversal)onfinancial
- - - -
Investment
Impairmentcharge/(reversal)onplacement
- - - -
withbanksandfinancialinstitutions
Impairmentcharge/(reversal)onproperty
- - - -
andequipment
Impairmentcharge/(reversal)ongoodwill
- - - -
and intangible assets
Impairmentcharge/(reversal)oninvestment
- - - -
properties
Total 313,114,135 (69,682,827) 304,831,572 (69,682,827)
4.36 Personnel Expense Personnel Expense

Amount in NPR
Group Bank
Salary 571,3948 251,8394 57,40861 248,51

Allowances 56,793 394,8270 52,8061 394,8270
Gratuityexpense 20,3548 (9,2014) 19,30562 (9,2014)
Provident fund 47,2836 27,9136 47,21 27,9048
Uniform 17,9520 6,790238 17,9520 6,790238
Training&developmentexpense 43,50218 21,34078 43,08915 21,3056
Leaveencashment 54,72 5,60729 54,238 5,031
Medical 10,5298 - 10,5298 -
Insurance 8,2609 10,6324 8,2609 10,6324
Employeesincentive - - - -
Cash-settled share-based payments - - - -
Pension expense - - - -
FinanceexpenseunderNFRS 198,270 123,4 198,270 123,4
Other expenses related to staff 71,2496 4,06197 70,825 4,017
Subtotal 1,601,296,262 927,531,453 1,580,934,856 924,114,161
Employeesbonus 203,79 209,175 201,789 208,17
Grand total 1,804,575,268 1,136,658,628 1,782,112,947 1,132,927,048
ProvisionforstaffbonusisamandatoryrequirementundertherequirementoftheBonusAct,All 203. expensesr

to employees of a bank has been included under this head. Expenses covered under this head include empl
salary, allowances, pension, gratuity, contribution to provident fund, training expenses, uniform expenses, insurance,
staffbonus,financeexpenseunderNFRS,cash-settledshare-basedpaymentsetc.StaffLoansarefairvaluedusin
marketrates.
l 222 l
4.37 Other operating expense

Amount in NPR
Group Bank
Directors'fee 4,280 5,12370 4,1780 5,12370

Directors'expense 4,51829 3,0729 4,51829 3,0729
Auditors' remuneration 2,130 1,4250 2,0 1,4250
Other audit related expense - - - -
Professional and legal expense 28,761 4,1075 28,564 4,1075
Officeadministrationexpense 581,209 94,58067 57,20 91,37
Operating lease expense 18,703 96,51034 17,620 95,06142
Operating expense of investment properties - - - -
Corporate social responsibility expense - - - -
Onerous lease provisions - - - -
Other 46,93 379,850 45,3210 379,820
Total 1,248,266,772 584,674,957 1,237,092,835 580,553,262
All operating expenses other than those relating to personnel expense are recognized and pres
account head. The expenses covered under this account head includes office administration expe
operating and overhead expense, directors' emoluments, remuneration and non audit fee paid to auditors,
professional and legal expense, branch closure cost expense, redundancy cost expense, expense of restructuring,
impairment of non financial assets, expense of corporate social responsibility, onerous lease p
No individual operating lease has terms and conditions that significantly affect the amount, timing
consolidatedcashflowsoftheGroup.OtherincludesNPRin 183,4052 advertisement,NPRin
207,13 business
promotionandNPR12,5438inentertainmentexpense
4.38 Depreciation & Amortisation

Amount in NPR
Group Bank
Depreciationonpropertyandequipment 104,98 12,389 10,8546 120,6389

Depreciationoninvestmentproperty - - -
Amortisation of intangible assets 14,3795 8,6310 13,987 8,547
Total 119,360,721 130,028,040 115,804,043 129,184,664
Depreciation is the systematic allocation of the depreciable amount of an asset over its useful li
systematic allocation of the depreciable amount of an intangible asset over its useful life. Depreci
recognizedasperNFRSonpropertyandequipment,andinvestmentproperties,andamortizationofintan
ispresentedunderthisaccounthead.
l 223 l
4.39 Non operating income

Amount in NPR
Group Bank
Recovery of loan written off 2,506 15,4092 2,506 15,4092

Other income - - - -
Total 2,500,650 155,409,210 2,500,650 155,409,210
4.40 Non operating expense

Amount in NPR
Group Bank
Loanwrittenoff 31,526 31,60 31,526 31,60

Redundancy provision - - - -
Expenseofrestructuring - - - -
Other expense 79,04158 60,851 79,04158 60,851
Total 110,192,719 31,694,451 110,192,719 31,694,451
The income and expenses that have no direct relationship with the operation of transactions are pre
head. The income/expense covered under this account head includes loan written off, recovery of loan, red
provision,expenseofrestructuringetc.
Other expense includes provision of Rs 67,419 for fraudulent transaction in swift hack, details of which has be
,disclosedinNote5.17ofDisclosuresandAdditionalInformation.
4.41 Income tax expense

Amount in NPR
Group Bank
Current tax expense

Current year 530,72814 62,187 52,480 625,4790
Adjustmentsforprioryears
Deferredtaxexpense
Origination and reversal of temporary
(49,680) (37,14) (49,680) (37,14)
differences
Changes in tax rate
Recognition of previously unrecognised
tax losses
Total income tax expense 481,258,010 588,501,436 475,740,900 587,740,349
Theamountofincometaxonnettaxableprofitisrecognizedandpresentedunderthisaccounthead.Thisacco
includescurrenttaxexpenseanddeferredtaxexpense/deferredtaxincome.
l 224 l
4.41.1: Reconciliation of tax expense and accounting profit

Amount in NPR
Group Bank
Profitbeforetax 1,8264 1,95628 1,80627 1,95342

Taxamountattaxrateof30% 547,83 586,94 543,180 58,94672
Add:Taxeffectofexpensesthatarenot
84,51236 67,285 84,51236 67,285
deductible for tax purpose
Less:Taxeffectonexemptincome (102,6754) (68,250) (102,6754) (68,250)
Add/less:Taxeffectonotheritems 603,49 40,3816 40,8593
Total income tax expense 530,722,814 626,218,877 525,425,880 625,457,790
Effective tax rate 29.1% 32.0% 29.0% 32.0%
l 225 l
STATEMENTOFDISTRIBUTABLEPROFITORLOSS
Amount in NPR
As at As at
16 July 2018 15 July 2017
Net profit or (loss) as per statement of profit or loss 1,334,861,927 1,365,415,593

Appropriations:
a.Generalreserve 26,97385 294,631
b.Foreignexchangefluctuationfund 3,680 731,0
c.Capitalredemptionreserve 71,4285 71,4285
d.Corporatesocialresponsibilityfund 13,4869 14,7360
e.Employees'trainingfund - -
f.Other - -
-DeferredTaxreserve 10,79486
-InvestmentAdjustmentReserve 15,72093 (1,23986)
-share Premium - (413,978)
Profit or (loss) before regulatory adjustment 963,654,197 1,388,130,386
Regulatoryadjustment: (45,786) -
a.Interestreceivable(-)/previousaccruedinterestreceived(+) (390,1752) -
b.Shortloanlossprovisioninaccounts(-)/reversal(+) - -
c.Shortprovisionforpossiblelossesoninvestment(-)/reversal(+) - -
d.ShortloanlossprovisiononNonBankingAssets(-)/resersal(+) (74,3829) -
e.Deferredtaxassetsrecognised(-)/reversal(+) 54,218 -
f.Goodwillrecognised(-)/impairmentofGoodwill(+) - -
g.Bargainpurchasegainrecognised(-)/resersal(+) - -
h.Acturiallossrecognised(-)/reversal(+) (46,9120) -
i.Other(+/-) - -
-Debtsecuritiesrecognisedatamortisedcost - -
-Definedbenefitobligation - -
-Fairvaluereserve 1,5964 -
Distributable profit or (loss) 506,486,627 1,388,130,386
l 226 l
COMPARISONUNAUDITEDANDAUDITEDFINANCIALSTATEMENTSASOF5 7 / 4 7 0 2
NPRin'0
Variance
As per unaudited As per Audited
Reasons for Variance
Financial Statement Financial Statement In amount In %
Statement of Financial Position

Assets
Cashandcashequivalent 7,08542 8,13247 1,0439 14.73% DuetoReclassification
DuefromNRBandplacementswithBFIs 17,695 15,86073 (1,9084) -10.74% DuetoReclassification
Loanandadvances 12,3597 120,467 (893,15) -0.74% DuetoNFRSAdjustments
Investments Securities 13,9846 14,32768 147,906 1.06% DuetoReclassification
Investment in subsidiaris and associates 270, 270, - - -
Goodwillandintangibleassets 49,832 49,832 0 - -
Other assets 14,3820 12,03459 (2,379) -16.5% DuetoReclassification
Total Assets 174,932,551 170,943,178 (3,989,373) -2.28%
Capital and Liabilities
Paid up Capital 8,02613 8,0317 4,30 0.5% Previously Share issue
expensewasdeducted.
Reserves and surplus 4,19283 3,69 (53,49) -13.20% DuetoReclassification
Deposits 15,20984 15,29 18,3 0.1% DuetoReclassification
Borrowings - - -
BondandDebenture 3,4829 3,48790 (391) -0.1% DuetoNFRSBondEIR
adjustment
Other liabilities and provisions 8,0236 4,5698 (3,45792) -43.10% Reclassification
Total Capital and Liabilities 174,932,551 170,943,178 (3,989,372.73) -2.28%
Statement of Profit or Loss

Interest income 13,2967 13,54820 249,65 1.8% Staff Interest income
adjustment
Interest expense 9,350 9,3615 1,058 0.1% Pettyadjustments
Net interest income 3,961,077 4,209,664 248,587 6.28%
Feeandcommissionincome 958,01 96,14 8,097 0.85% Reclassificationof
locker rent from fee and
commission income
Feeandcommissionexpense 96,48 96,48 -
Net fee and commission income 861,553 869,651 8,097 0.94%
Other operating income 286,91 278, (8,097) -2.8% Reclassificationof
locker rent from fee and
commission income
Total operating income 5,109,549 5,358,136 248,587 4.87%
Impairmentcharge/(reversal)forloans (45,343) 304,82 -
and other losses
Net operating income 5,154,892 5,053,305 (101,588) -1.97%
Personnel expenses 1,548306 1,7823 23,807 15.0% Staff Interest income
adjustment
Other operating expenses 1,34982 1,352897 3,074 0.23% Pettyadjustments
Operating profit 2,256,763 1,918,295 (338,468) -15.00%
Nonoperatingincome/expense (76,540) (107,692) (31,5) 40.7%
Profit before tax 2,180,224 1,810,603 (369,621) -16.95%
Income tax 659,4 475,1 (183,92) -27.8% ChangeinDeferredtax
duetoNFRSadjustments
l 227 l
Profit /(loss) for the period 1,520,560 1,334,862 (185,698) -12.21%

Other comprehensive income (23,8) (26,01) (2,31) 9.68% NFRSAdjustments
Total comprehensive income 1,496,672 1,308,661 (188,011) -12.56%
Distributable Profit
Netprofit/(loss)asperprofitorloss 1,5206 1,34862 (185,69) -12.%
Add/Less:Regulatoryadjustmentasper (672,014) (812,603) (140,589) 20.9%
NRBDirective
Free profit/(loss) after regulatory 848,546 522,259 (326,287) -38.45%
adjustments
l 228 l
PRINCIPALINDICATORS
FY FY FY FY FY
Ratio Indicators
2013/14 2014/15 2015/16 2016/17 2017/18
1.NetProfit/GrossIncome Percent 37.14 32.6 40.83 42.91 24.91

2.EarningsPerShare(asperNAS26-EarningperShare) NPR 35.98 25.9 28.31 23.06 16.2
3.MarketValuePerShare NPR 970 617 798 445 316
4.PriceEarningRatio Ratio 26.9 24.1 28.19 19.30 19.0
5.Dividend(includingbonus)onShareCapital Percent 30. 41.05 27.3 21.05 10.
6.CashDividendonShareCapital Percent 15.0 2.05 1.37 1.05 0.526
7.InterestIncome/LoansandAdvances&Investment Percent 10.45 8.31 7. 9.10 10.2
8.StaffExpenses/TotalOperatingExpenses Percent 49.5 48.2 51.9 53.0 61.48
9.InterestExpenses/TotalDepositsandBorrowings
Percent 5.9 5.12 4.1 5.61 6.53
10.ExchangeGain/TotalIncome Percent 2.7 2.84 3.29 2.36 1.42
1.TotalCost/TotalRevenue Percent 34.12 41.56 40.3 46.1 62.04
12.StaffBonus/TotalStaffExpenses Percent 31.4 23.01 28.1 24.85 1.29
13.StaffCostPerEmployee NPR 63,04 57,8 493,78 478,6 7,86
14.NetProfitPerEmployee NPR 1,397628 931,4 96,034 839,52 582,6
15.TotalCredit/Deposits Percent 82.93 81.03 85.62 83.70 86.30
16.TotalOperatingExpenses/TotalAssets Percent 1.48 1.4 1.3 1.60 1.83
17.CapitalAdequacy(OnRiskWeightedAssets)
Core Capital Percent 1.84 10.53 10.69 12.38 8.6
Supplementary Capital Percent 2.0 1.96 1.75 1.45 3.58
TotalCapitalFund Percent 14.05 12.49 12.4 13.8 12.4
18.Liquidity(CRR) Percent 28.6 28.91 23.79 25.80 24.5
19.NetProfit/TotalLoan Multiple 2.3 1.57 1.79 2.03 1.0
20.GrossNon-PerformingCredit/TotalCredit Ratio 2.3 2.07 0.76 0.36 0.6
21.NetNon-PerformingCredit/TotalCredit Ratio 0.68 0.41 0.1 0.4 0.1
2.WeightedAverageInterestRateSpread Percent 4.6 3.19 3.6 3.49 3.60
23.ReturnonTotalAssets Percent 1.7 1.2 1.5 1.64 0.97
24.ReturnonEquity Percent 15.93 13.05 16.50 16.84 12.09
25.BookNetWorth NPR'0 21 207 16 15 145.32
26.NumberofShares No. 23,150 26,584 45,73 6,9257 80,317
27.NumberofStaff No. 59 730 10 1,75 2,91
28.NumberofBranches No. 67 67 67 19 231
29.NumberofATMs No. 61 68 69 70 20
l 229 l
SUBSIDIARIES
1.
The Bank has two subsidiaries namely NIC ASIA Capital
LimitedandNICASIALaghubittaBittiyaSansthaLimited.
a.NICASIACapitalLimitediswhollyownedsubsidiaryof
theBankandwasincorporatedonMay 15 as
2016 apublic
limited company as per the Companies Act 2063 and
licensed by Securities Board of Nepal under the Securities
Business person (Merchant Banker) Regulations, 208
to provide merchant banking and investment banking
services.
SIGNIFICANT b. NIC ASIA Laghubitta Bittiya Sanstha Limited is

also a wholly owned subsidiary of the Bank and was
ACCOUNTING incorporatedonJuly
underCompaniesAct,and
25
2063
as
2017 apubliclimitedcompany
licensedbyNepalRastra
POLICIES
Bank as “D” class financial institution having registered
office at Jajarkot, Nepal. The principle activities involved
extending banking products and services to the deprived
sectors/communities.
The financial year of both of the subsidiaries is same as

1. REPORTING ENTITY thatoftheBankendingon16July2018(3Ashad2075).
NICASIABankLimited(“NICA”or“theBank”)isalimited “THE
2 . 1 GROUP”REPRESENTSTHEBANK
liability company domiciled in Nepal which has been in ANDITSSUBSIDIARIES.
operation in Nepal since 198. The Bank is registered
with the Office of Company Registrar as a public limited
company and carries out commercial banking activities in 2. BASIS OF PREPARATION
Nepal under the license from Nepal Rastra Bank as Class
“Ka” licensed institution. It’s registered, and The FinancialstatementsoftheBankhavebeenprepared
corporate
officeareatKathmandu,Nepal. on accrual basis of accounting in accordance with Nepal
Financial Reporting Standards (NFRS) as published
The Bank offers full commercial banking services by the of
Accounting Standards Board (ASB) Nepal and
banking products and services including loans and pronouncedbyTheInstituteofCharteredAccountantsof
advances,deposits,tradefinance,e-commerceservices, Nepal (ICAN) and in the format issued by Nepal Rastra
bullion, etc. to wide range of clients encompassing BankinDirectiveNo.4ofNRBDirectives,2075.
individuals, corporates, multinationals, large public sector
companies, government corporations, etc. as authorized The financial statements comprise the Statement of
bytheNepalRastraBank(CentralBankofNepal). Financial Position, Statement of Profit or Loss and
Statement of Other Comprehensive Income shown in a
TheBankislistedonNepalStockExchangeandits single
stock statement,theStatementofChangesinEquity,the
symbolis“NICA” StatementofCashFlowsandtheNotestotheAccounts.
l 230 l
STATEMENT
1.2 OFCOMPLIANCE
The financial statements have been prepared FUNCTIONAL
3.2 and ANDPRESENTATION
approved by the Board of Directors in accordance with CURRENCY
Nepal Financial Reporting Standards (NFRS) andas The financial statements are presented in Nepales
published by the Accounting Standards Board (ASB) Rupees(NPR)whichistheBank’sfunctionalcurrency.All
Nepal and pronounced by The Institute of Chartered financialinformationpresentedinNPRhasbeenrounded
Accountants of Nepal (ICAN) and in the format issued by tothenearestrupeeexceptwhereindicatedotherwi
Nepal Rastra Bank in Directive No. 4 of NRB Directives,
2075. USE
4 . 2 OFESTIMATES,ASSUMPTIONSAND
JUDGEMENTS
These policies have been consistently applied ThetoBank,
allunder
the NFRS, is required to apply accounting
yearspresentedexceptotherwisestated. policies to most appropriately suit its circumstances and
operating environment. Further, the Bank is required
REPORTING
2. PERIODANDAPPROVALOF make judgments in respect of items where the choice of
FINANCIALSTATEMENTS specific policy, accounting estimate or assumption to be
TheBankhas,forthepreparationoffinancialstatements,followed could materially affect the financial statem
Thismaylaterbedeterminedthatadifferentchoicecou
adopted the NFRS pronounced by ASB with effect from
fiscal year 2074/5. To comply the NFRS provisions havebeenmoreappropriate.
following dates have been considered, in terms of first-
timeadoption. The accounting policies have been included in the
relevant notes for each item of the financial stateme
and the effect and nature of the changes, if any, have
The approval of financial statements accompanied
notes to the financial statements have been been disclosed.
adopted
by the Board of Directors in it’s 37th meeting held on
16th November 2018 and the Board acknowledges theThe NFRS requires the Bank to make estimates and
responsibility of preparation of financial statements assumptions that of will affect the assets, liabilities,
the Bank. The approved financial statements have been disclosure of contingent assets and liabilities, an
recommended for approval by the shareholders in the or loss as reported in the financial statements. Th
21stannualgeneralmeetingoftheBank. Bank applies estimates in preparing and presenting the
financial statements and such estimates and underly
The Board of Directors may decide to amend the annual assumptions are reviewed periodically. The revision
accounts as long as these are not adopted by the general accounting estimates are recognised in the period in which
meeting of the shareholders. The general meeting theestimatesarerevisedandareappliedprospectiv
of shareholders may decide not to adopt the annual
accountsbutmaynotamendthese.
Relevant Financial Statement Nepalese Calendar English Calendar
OpeningNFRSSFP*date 1Shrawan2073 16July2016

ComparativeSFP*Date 31Ashad2074 15July2017
Comparative reporting period 1Shrawan2073-1Ashad2074 16July2016-5July2017
FirstNFRSSFP*Date 32Ashad2075 16July2018
FirstNFRSreportingperiod 1Shrawan2074-3Ashad2075 16July2017-6July2018
*SFP-StatementofFinancialPosition
l 231 l
Disclosures of the accounting estimates have financial been statementsusinguniformaccountingpoliciesfor

included in the relevant sections of the notes wherever the like transactions and other events in similar circumstances
estimates have been applied along with the nature and unless it is impracticable to do so.
effectofchangesofaccountingestimates,ifany.
The carve out is optional and has been provided for the
Going Concern FY 2017-8 to 2019-. Accordingly, the bank has opted
Thefinancialstatementsarepreparedonagoingthe concerncarveout.
basis,astheBoardoftheBankissatisfiedthattheBankhas
the resources to continue in business for the foreseeable 2.6.2 NAS 17: Lease
future.Inmakingthisassessment,theBoardofDirectors In para 33, lease payments under an operating lease shall
have considered a wide range of information relating to berecognizedasanexpenseonastraight-linebasisover
presentandfutureconditions,includingfuture the leasetermunlesseither:
projections
ofprofitability,cashflowsandcapitalresources.
(a) Another systematic basis is more representative of the
CHANGES
5.2 INACCOUNTINGPOLICIES time pattern of the user’s benefit even if the payments to
The Bank has applied several amendments to standards the lessors are not on that basis; or
for the first time during the year ended 32 Ashad 2075. (b)Thepaymentstothelessorarestructuredtoincrease
TheBankhaspreparedtheopeningstatementof in line with expected general inflation to compensate
financial
positionasperNepalFinancialReportingStandard for the (NFRS) lessor’s expected inflationary cost increases. If
as at 16 July 2016 (the transition date) by recognising all payments to the lessor vary because of factors other than
assets and liabilities whose recognition is general required inflation,
by thenthisconditionisnotmet.
NFRS, not recognising the items of assets or liabilities
which are not permitted by NFRS, by reclassifying items The carve out is optional and provided for FY 2017-8
from previous GAAP to NFRS as required by NFRS and only.Accordingly,thebankhasoptedthecarveout.
applyingNFRSinmeasurementofrecognisedassetsand
liabilities. 2.6.3 NAS 34: Interim Financial Reporting
Inparaif 2, anentity’sinterimfinancialreportisdescribed
REPORTING
6.2 PRONOUNCEMENTS as complying with NFRSs, it must comply with all of the
TheBankhas,forthepreparationoffinancialstatements, requirements of this Standard. Paragraph 19 requires
adopted the NFRS pronounced by ASB as effectivecertain on disclosuresinthat However, an entity shall
regard.
September 13, 2013. The NFRS conform, in all material not require to restate its corresponding previous interim
respect, to International Financial Reporting period balance if it is impracticable to restate.
Standards
(IFRS) as issued by the International Accounting
StandardsBoard(IASB). ThecarveoutisoptionalandhasbeenprovidedfortheFY
2017-8 and 2018-9. Accordingly, the bank has opted
However, the Institute of Chartered Accountants thecarveof out.
Nepal (ICAN) vide its notice dated 20 September 2018
has resolved that Carve-outs in NFRS with Alternative 2.6.4 NAS 39: Financial Instruments: Recognition
Treatment and effective period shall be provided and Measurementto the
BanksandFinancialInstitutionsregulatedbyNRBonthe
specific recommendation of Accounting Standarda.Board Impairment
(ASB).Detailsofcarveoutprovidedareasfollows.In para 58, an entity shall assess at the end of each
reporting period whether there is any objective eviden
2.6.1 NFRS 10: Consolidated Financial Statements thatafinancialassetorgroupoffinancialassetsmeasured
Inparaof19 NFRSa 10, parentshallprepareconsolidated at amortized cost is impaired. If any such evidence
l 232 l
exists, the entity shall apply paragraph 63 to determine

the amount of any impairment loss unless the entity is c. Impracticability to determine interest income on
bank or financial institutions registered as per Bank and amortized cost
Financial Institutions Act, 2073. Such entities shall measure InparaAGonce ,39 anancial
fi assetoragroupofsimilar
impairment loss on loan and advances as the higher of nancial
fi assets has been written down as a result of an
amount derived as per norms prescribed by Nepal Rastra impairment loss, interest income is thereafter recogn
Bank for loan loss provision and amount determined as per using the rate of interest used to discount the future cash
paragraph 63; and shall apply paragraph 63 to measure flows for the purpose of measuring the impairment loss.
the impairment loss on financial assets other than loan and Interest income shall be calculated by applying effective
advances. The entity shall disclose the impairment loss interest rate to the gross carrying amount of a financial asset
as per this carve-out and the amount of impairment loss unless the financial asset is written off either partially or fully.
determined as per paragraph 63.
ThecarveoutisoptionalandhasbeenprovidedfortheFY
The carve out is not optional and has been provided 2017-8 and 2018-9. Accordingly,
for the bank has opted
theFY2017-8to2019-. thecarveout.
b. Impracticability to determine transaction cost NEW

7 . 2 STANDARDSINISSUEBUTNOT
of all previous years which is the part of effective YETEFFECTIVE
interest rate Forthereportingoffinancialinstruments,NASFinancial 32
Inpara,The 9 effectiveinterestrateistherate thatexactlyPresentation, NAS 39 Financial Instruments
Instruments,
discounts estimated future cash payments or receipts Recognition and Measurements and NFRS 7 Financial
through the expected life of the nancial fi instrument Instruments or, – Disclosures have been applied. NRFS
when appropriate, a shorter period to the net carrying 9 has been complied for the classification of Financial
amount of the nancial fi asset or nancial
fi liability. Instruments. When
calculating the effective interest rate, an entity shall
estimate cash flows considering all contractual A number terms of of
new standards and amendments to the
the nancial fi instrument for ( example, prepayment, existing call standards and interpretations have been issued
and similar options) but shall not consider future credit by IASB after the pronouncements of NFRS with varying
losses. The calculation includes all fees and effective points paid dates. Those become applicable when ASB
or received, unless it is immaterial or impracticable to NepalincorporatesthemwithinNFRS.
determine reliably, between parties to the contract that
are an integral part of the effective interest rate (see NAS NEW
8 . 2 STANDARDSAND
81Revenue),transactioncostsandallotherpremiums INTERPRETATIONSor NOTADAPTED
discounts.Thereisapresumptionthatthecash flows
The and
following amendments are not mandatory for 2018
theexpectedlifeofagroupofsimilarnancial fi instrumentsandhavenotbeenearlyadoptedbythegroup.TheBank
can be estimated reliably. However, in those rare is still cases
currently assessing the detailed impact of these
when it is not possible to estimate reliably the amendmentscash flows –
or the expected life of a nancial fi instrument or ( group of
nancial
fi instruments), the entity shall use the contractual
2.8.1 IFRS 9 ‘Financial Instruments’-Impairment
cash flows over the full contractual term of the IFRSnancial
fi 9 ‘Financial Instruments’ was issued by the IASB in
instrumentor ( groupofnancial
fi instruments). July 2014 and effective internationally for the financials
beginningonorafterJanuary 1 Accounting
2018. Standard
ThecarveoutisoptionalandhasbeenprovidedBoard forthe FYNepal endorsed NFRS 9 Financial Instruments
of
2017-8 and 2018-9. Accordingly, the bank has opted withsomeexceptions,mainlyintheImpairment.Currentl
thecarveout. IncurredLossModelasspecifiedinNAS39isused.The
requirementofIFRS9isExpectedCreditLossModel.
l 233 l
Expected Credit Loss Model (ECL) of Impairment n Identificationofthecontractswiththecustomer

The Expected Credit Loss (ECL) model is a forward- n Identification of the performance obligations in the
looking model. The ECL estimates are unbiased, contract
probability-weighted, and include supportable information
about past events, current conditions, and forecasts of
n Determinationofthetransactionprice
n Allocation of the transaction price to the performance
futureeconomicconditions. obligationsinthecontractas ( identifiedinstepii)
Under the general approach, IFRS 9 recognizes three

n Recognition of revenue when the entity satisfies a
performanceobligation.
stage approach to measure expected credit losses and
recognizedinterestincome. The new standard would be effective for annual periods
starting from 1 January 2018 and early application is
Stage 1:12-monthECL–Nosignificantlyincreasedcredit allowed. The management is assessing the potential
risk Financial instruments that have not had impact a signifion cant its financial statements resulting from
increase in credit risk since initial recognition application require, ofIFRS
at15.
initial recognition a provision for ECL associated with the
probability of default events occurring within IFRSthe 15 Revenue next 12 from contract with customers has not
months (12-month ECL). For those financial assets with yet been adopted by the Accounting Standard Board of
aremainingmaturityoflessthanmonths, 12 Nepal.
aProbability
ofDefault(PD)isusedthatcorrespondstotheremaining
maturity. Interest will be calculated on the gross 2.8.3 IFRS 16 ‘Leases’
carrying
amountofthefinancialassetbeforeadjustingIFRS for‘Leases’
16 ECL iseffectiveforannualperiodsbeginning
onorafterJanuary 1 IFRS
2019. is
16 thenewaccounting
Stage 2:LifetimeECL–Significantlyincreasedcreditrisk standard in for leases and will replace IAS 17 ‘Leases’
theeventofasignificantincreaseincreditrisk and since IFRIC 4 ‘Determining whether an Arrangement
initial
recognition, a provision is required for the lifetime contains ECL a Lease’. The new standard removes the
representinglossesoverthelifeofthenancial fi distinction
instrumentbetweenoperatingorfinanceleasesforlesse
lifetime
( ECL). accounting,resultinginallleasesbeingtreatedasfinance
leases. All leases will be recognised on the statement o
Interest income will continue to be recognised on a gross financial position with the optional exceptions for shor
basis. termleaseswithaleasetermoflessthan12monthsand
leases of low-value assets (for example mobile phones or
Stage 3: Lifetime ECL – Defaulted Financial instruments laptops). A lessee is required to recognise a right-of-use
that move into Stage 3 once credit impaired and asset representing its right to use the underlying leased
purchases of credit impaired assets will require asset aand a lease liability representing its obligation to
lifetime
provision.Interestincomewillbecalculatedmake based lease
onthe payments. The main reason for this change
grosscarryingamountofthefinancialassetlessECL is that this approach will result in a more comparable
representation of a lessee’s assets and liabilitie
The management is still assessing the potential relation impact to other companies and, together with enhanced
onitsfinancialstatements,ifExpectedCreditdisclosures, Loss(ECL) willprovidegreatertransparencyofalessee
modelisintroduced. nancial
fi leverage and capital employed. The standard
permits a lessee to choose either a full retrospective or a
2.8.2 IFRS-15: Revenue from contract with customers: modifiedretrospectivetransitionapproach.
The IASB issued a new standard for revenue recognition
which overhauls the existing revenue recognition IFRS 16 Leases has not yet been adopted by the
standards. The standard requires the following Accounting five stepStandardBoardofNepal.
modelframeworktobefollowedforrevenuerecognition:
l 234 l
n if the business combination is achieved in stages, the

DISCOUNTING
9.2 fairvalueofthepreexistingequityinterestinthea
Discountinghasbeenappliedwhereassetsandliabilities less
are non-current, and the impact of the discounting is n the net recognized amount (generally fair value) of the
material. identifiableassetsacquiredandliabilitiesassume
n When the excess is negative, a bargain purchase gain
LIMITATION
01.2 OFNFRSIMPLEMENTATION isrecognizedimmediatelyinprofitorloss.
Wherever the information is not adequately available,
n Theconsiderationtransferreddoesnotincludeamou
and/orit is impracticable to develop the, such exception related to the settlement of pre-existing relati
toNFRSimplementationhasbeennotedanddisclosed in
Suchamounts aregenerallyrecognizedinprofitorloss.
respectivesections. n Transactioncosts,otherthanthoseassociatedwit
issueofdebtorequitysecurities,thattheBankincu
connection with a business combination are expensed
3. SIGNIFICANT ACCOUNTING asincurred.
POLICIES n Any contingent consideration payable is measured
at fair value at the acquisition date. If the contin
BASIS
1.3 OFMEASUREMENT consideration is classified as equity, then it is not
Thefinancialstatementshavebeenpreparedonhistorical measured,andsettlementisaccountedforwithinequ
cost basis except for the following material items in the Otherwise, subsequent changes in the fair value of th
statementoffinancialposition: contingentconsiderationarerecognisedinprofitorl
n derivative financial instruments are measured at fair
value b) Non-Controlling Interest (NCI)
n financial instruments at fair value throughFor profieach
t or loss
business combination, the Bank elects to
are measured at fair value measure any non-controlling interests in the acqui
n investment property is measured at fair value either:
n liabilities for cash-settled share-based payment n at fair value; or
arrangements are measured at fair value n at their proportionate share of the acquire ident
n theliabilityfordefinedbenefitobligationsisrecognized netassets,whicharegenerallyatfairvalue.
as the present value of the defined benefit obligation
lessthenettotaloftheplanassets,plusunrecognized ChangesintheBank’sinterestinasubsidiarythatd
actuarial gains, less unrecognized past service result in acost
loss of control are accounted for as transactions
andunrecognizedactuariallosses. with owners in their capacity as owners. Adjustments
non-controlling interests are based on a proportionate
BASIS
2.3 OFCONSOLIDATION amountofthenetassetsofthesubsidiary.Noadjustmen
a) Business Combination are made to goodwill and no gain or loss is recognised in
Business combinations are accounted for using the profitorloss.
acquisition method as at the acquisition date i.e. when
control is transferred to the Bank. Controlc) isSubsidiaries
the power to
govern the financial and operating policies of an entity to
Subsidiaries are the entities controlled by the Ban
obtainbenefitsfromitsactivities.Inassessing control, the
Bank controls an entity if it is exposed, or has rights, to
Grouptakesintoconsiderationpotentialvoting variablerights
returns that
from its involvement with the investee
currentlyareexercisable. and has the ability to affect those returns through its
power over the investee. The Financial Statements
TheBankmeasuresgoodwillattheacquisition dateas;
subsidiaries are included in the Consolidated Fina
n the fair value of the consideration transferred, plus Statements from the date that control commences until
n the recognized amount of any non-controlling interests thedatethatcontrolceases.
intheacquire,plus
l 235 l
The Bank reassesses whether it has control n The ifBank

there hasthedecision-makingpowerstoobtainthe
are changes to one or more of the elements of control. majority of the benefits of the activities of the SPE or,
In preparing the consolidated financial statements, by setting up an ‘autopilot’ mechanism, the Bank has
the financial statements are combined line bydelegated line by thesedecision-makingpowers.
adding the like items of assets, liabilities, equity, n The Bank income,has rights to obtain the majority of the
expenses and cash flows of the parent with those benefiof ts of the SPE and therefore may be exposed to
its subsidiary. The carrying amount of the parent’s risksincidenttotheactivitiesoftheSPE.
investmentinsubsidiaryandtheparent’sportion n The of equity
Bank retains the majority of the residual or
of subsidiary are eliminated in full. All intra group assets
ownership risksrelatedtotheSPEoritsassetsinorde
and liabilities, equity, income, expenses and cash to flows
obtainbenefitsfromitsactivities.
relating to transactions between entities of the group(such
as interest income and technical fee) are eliminated in full f) Transaction Elimination on Consolidation
whilepreparingtheconsolidatedfinancialstatements. All intra-group balances and transactions, and any
unrealized income and expenses (except for foreign
d) Loss of Control currency transaction gains or losses) arising from intra-
Upon the loss of control, the Bank derecognizes groupthe transactions are eliminated in preparing the
assets and liabilities of the subsidiary, carrying amount consolidated financial statements. Unrealized losses ar
of non-controlling interests and the cumulative translation eliminated in the same way as unrealized gains, but only
differences recorded in equity related to the tosubsidiary.
theextentthatthereisnoevidenceofimpairment.
Further parent’s share of components previously
recognized in Other Comprehensive Income (OCI)CASH 3 . is ANDCASHEQUIVALENT
reclassified to profit or loss or retained earnings Cashandas cashequivalentsincludecashinhand,balances
appropriate. Any surplus or deficit arising on the with loss ofmoney at call & short notice and highly liquid
B/FIs,
control is recognized in the profit or loss. If the Group assets with original maturities of three mont
financial
retains any interest in the previous subsidiary, then such or less from the acquisition dates that are subject to
interest is measured at fair value at the date that control insignificant risk of changes in their fair value and are
is lost. Subsequently, it is accounted for as an usedequity-
by the Bank in the management of its short-term
accounted investee or in accordance with the Group’s
commitments.
accounting policy for financial instruments depending on
thelevelofinfluenceretained Cash and cash equivalents are carried at amortized cost
inthestatementoffinancialposition.
e) Special Purpose Entities
Special purpose entities (SPEs) are entities FINANCIAL
4 . 3 thatASSETS are ANDFINANCIAL
createdtoaccomplishanarrowandwell-definedobjective. LIABILITIES
An SPE is consolidated if, based on an evaluation a)of the
Recognition
substanceofitsrelationshipwiththeBankThe andBank theSPE’s
initiallyrecognizesafinancialassetorafinancial
risks and rewards, the Bank concludes that it controls the liabilityinitsstatementoffinancialpositionwhen,andon
SPE. when, it becomes party to the contractual provisions of
the instrument. The Bank initially recognize loans and
Thefollowingcircumstancesmayindicatearelationship advances,in deposits and debt securities/ subordinated
which,insubstance,theBankcontrolsandconsequently liabilities issued on the date that they are originated which
consolidatesanSPE: is the date that the Bank becomes party to the contractual
provisions of the instruments. Investments in equit
n TheactivitiesoftheSPEarebeingconductedon instruments,
behalf bonds, debenture, Government securities,
of the Bank according to it specific business needs NRB bond so or deposit auction, reverse repos, outright
thattheBankobtainsbenefitsfromtheSPE’soperation. purchase are recognized on trade date at which the
l 236 l
Bank commits to purchase/ acquire the financial assets. an irrevocable election that the subsequent cha
Regular way purchase and sale of financial assets inare
fair value of the instrument is to be recognized
recognized on trade dateat which the Bank commits other comprehensiveincomeareclassifiedasfinancial
to
purchaseorselltheasset. assets at fair value though other comprehensive
income.Suchassetsaresubsequentlymeasuredatfair
b) Classification valueandchangesinfairvaluearerecognizedinothe
i) Financial Assets comprehensiveincome.
The Bank classifies the financial assets as subsequently
measured at amortized cost or fair value on the ii) Financial
basis ofLiabilities
the Bank’s business model for managing the financial The Bankclassifies its financial liabilities, other
assetsandthecontractualcashflowcharacteristics financialguarantees
ofthe andloancommitments,asfollows;
financialassets.
n FinancialLiabilitiesatFairValuethroughProfitorLo
Thetwoclassesoffinancialassetsareasfollows; Financial liabilities are classified as fair value thro
profitorlossiftheyareheldfortradingoraredesignat
i.Financialassetsmeasuredatamortizedcost at fair value through profit or loss. Upon initia
The Bank classifies a financial asset measured at
recognition, transaction costs are directly attributable to
amortizedcostifbothofthefollowingconditions theare met:
acquisition are recognized in Statement of Profit
n The asset is held within a business model Loss whose as incurred. Subsequent changes in fair value is
objectiveistoholdassetsinordertocollect recognized
contractual atprofitorloss
cashflowsand
n Thecontractualtermsofthefinancialassetn giveFinancial
riseonLiabilitiesmeasuredatamortisedcost
specified dates to cash flows that are solely payments All financial liabilities other than measured at fai
of principal and interest on the principal amount though profit or loss are classified as subsequently
outstanding. measured at amortized cost using effective interest
method.
ii.Financialassetmeasuredatfairvalue
Financialassetsotherthanthosemeasuredc) at Measurement
amortized
costaremeasuredatfairvalue.Financialassets i) Initial Measurement
measured
at fair value are further classified into two categories A financial asset as or financial liability is measured init
below: at fair value plus or minus, for an item not at fair value
through profit or loss, transaction costs that are di
n Financialassetsatfairvaluethroughprofitattributable orloss. to its acquisition or issue. Transact
Financial assets are classified as fair value in relation to financial assets and liabilities at fa
through
profit or loss (FVTPL) if they are held for trading or through
are profitorlossarerecognizedinStatementofProfit
designated at fair value through profit or loss. orLoss. Upon
initial recognition, transaction cost is directly attributable
to the acquisition are recognized in profit or ii) Subsequent
loss as Measurement
incurred. Such assets are subsequently measured A financial at asset or financial liability is subsequent
fair value and changes in fair value are recognized measured in eitheratfairvalueoratamortizedcostbase
StatementofProfitorLoss. theclassificationofthefinancialassetorliability.Fin
asset or liability classified as measured at amorti
n Financial assets at fair value through costother is subsequently measured at amortized cost usi
comprehensive income effectiveinterestratemethod.
Investment in an equity instrument that is not held for
trading and at the initial recognition, the Bank makes Theamortizedcostofafinancialassetorfinancialliabil
l 237 l
is the amount at which the financial asset or from the same lender on substantially different terms, or
financial
liability is measured at initial recognition minus principal thetermsofanexistingliabilityaresubstantiallymodi
repayments, plus or minus the cumulative amortization such an exchange or modification is treated as a
using the effective interest method of any difference derecognition of the original liability and the recognition of
between that initial amount and the maturity amount, and a new liability. The difference between the carrying value
minusanyreductionforimpairmentoruncollectibility. oftheoriginalfinancialliabilityandtheconsiderationp
isrecognizedinStatementofProfitorLoss.
Financial assets classified at fair value are subsequently
measured at fair value. The subsequent changes 3.4.2
in Determination
fair of Fair Value
valueofnancial fi assetsatfairvaluethroughprofi Fair value
tor lossis the amount for which an asset could be
are recognized in Statement of Profit or Loss whereas exchanged,
of or a liability settled, between knowledgeable,
nancial
fi assetsatfairvaluethroughothercomprehensive willing parties in an arm’s length transaction on th
incomearerecognizedinothercomprehensiveincome. measurement date. The fair value of a liability reflects it
non-performance risk
3.4.1 Derecognition
Derecognition of Financial Assets Thefairvaluesaredeterminedaccordingtothefollowing
The Bank derecognizes a financial asset when hierarchy:
the
contractualrightstothecashflowsfromthefinancialasset
expire, or it transfers the rights to receive the contractual Level 1 fair value measurements are those derived from
cash flows in a transaction in which substantially unadjustedall thequoted prices in active markets for identi
risks and rewards of ownership of the financial assets
asset orliabilities.
are transferred or in which the Bank neither transfers nor
retains substantially all the risks and rewards of ownership Level2 valuationsarethosewithquotedpricesforsimila
anditdoesnotretaincontrolofthefinancialasset. instrumentsinactivemarketsorquotedpricesforident
or similar instruments in inactive markets and financia
Any interest in such transferred financial assets instruments that valued using models where all significant
qualify for derecognition that is created orinputs retained areobservable.
by
theBankisrecognizedasaseparateassetorliability.On
derecognitionofafinancialasset,thedifference Level 3 portfolios are those where at least one input,
between
the carrying amount of the asset (or the carrying amount which could have a significant effect on the instrument’s
allocated to the portion of the asset transferred), and the valuation,isnotbasedonobservablemarketdata.
sum of (i) the consideration received (including any new
asset obtained less any new liability assumed) and (ii) any When available, the Bank measures the fair value of an
cumulativegainorlossthathadbeenrecognized instrument
inother using quoted prices in an active market for
comprehensiveincomeisrecognizedinprofitorloss. that instrument. A market is regarded as active if quote
prices are readily and regularly available and represent
In transactions in which the Bank neither retains nor transfers actual and regularly occurring market transactions on an
substantially all the risks and rewards of ownership of a arm’s length basis. If a market for a financial instrument
nancial
fi asset and it retains control over the is not active,
asset, thethe Bank establishes fair value using a
Bank continues to recognize the asset to the extent valuation of itstechnique. Valuation techniques include us
continuing involvement, determined by the extent to which it recentarm’slengthtransactionsbetweenknowledgeabl
isexposedtochangesinthevalueofthetransferred willing parties (if available), reference to the current fair
asset.
value of other instruments that are substantially the same,
Derecognition of Financial Liabilities discountedcashflowanalyses.
A financial liability is derecognized when the obligation
under the liability is discharged or canceled The orbest evidenceofthefairvalueofanancial
expired. fi instrument
Whereanexistingfinancialliabilityisreplaced at initial recognition is the transaction price – i.e. the
byanother
l 238 l
value of the consideration given or received. However, is a measurable

in decrease in the estimated future
somecases,thefairvalueofanancial fi instrumenton cash
initial
flowsofagroupoffinancialassets,although
recognitionmaybedifferenttoitstransactionprice. thedecrease
Ifsuch cannotyetbeidentifiedwithspecific
fair value is evidenced by comparison with other observable individualfinancialassets.
current market transactions in the same instrument (without
modification) or based on a valuation technique whose
The Bank considers evidence of impairment for
variables include only data from observable markets, loans and advances and held-to-maturity investment
then the difference is recognized in profit or loss on initial at both a specific asset and collective lev
securities
recognitionoftheinstrument.Inothercases,the difference significant loans and advances and held-t
individually
is not recognized in profit or loss immediatelymaturity but is investment securities are assessed for sp
recognizedoverthelifeoftheinstrumentonanappropriate impairment. Those found not to be specifically impaired
basis or when the instrument is redeemed, transferred or are then collectively assessed for any impairment that has
sold,orthefairvaluebecomesobservable. beenincurredbutnotyetidentified.
All unquoted equity investments are recorded Loansatand cost,advances and held-to-maturity investment
considering the non-trading of promoter shares up to the securities that are not individually significan
date of balance sheet, the market price of such shares could collectively assessed for impairment by grouping together
notbeascertainedwithcertainty.Hence,theseinvestments loans and advances and held-to-maturity investment
arerecognizedatcostnetofimpairment,ifany. securities with similar risk characteristics. Impa
test is done on annual basis for trade receivables and
3.4.3 Impairment other financial assets based on the internal and exte
At each reporting date the Bank assesses whether there indicationobserved.
is any indication that an asset may have been impaired.
If such indication exists, the recoverable amount is In assessing collective impairment, the Bank uses
determined. A financial asset or a group of financial statistical modelling of historical trends of the probability
assets is impaired and impairment losses are incurred if, of default, the timing of recoveries and the amount of
and only if, there is objective evidence of impairment lossincurred,as adjustedformanagement’sjudgmentast
a result of one or more events occurring after the initial whether current economic and credit conditions are such
recognition of the asset (a loss event), and that loss event thatthe actual losses are likely to be greater or less than
(or events) has an impact on the estimated future cash suggested by historical trends. Default rates, loss r
flowsofthefinancialassetorgroupoffinancialassets that
and the expected timing of future recoveries are regularly
canbereliablyestimated. benchmarked against actual outcomes to ensure that
theyremainappropriate.
The Bank considers the following factors in assessing
objectiveevidenceofimpairment: a) Impairment losses on assets measured at
n Whetherthecounterpartyisindefaultofprincipal amortisedor cost
interestpayments. AsperNAS39
n Whenacounterpartyfilesforbankruptcyandthis Financialassetscarriedatamortisedcost(suchasamou
wouldavoidordelaydischargeofitsobligation. due from Banks, loans and advances to customers as
n WheretheBankinitiateslegalrecourseofrecovery well asin held–to–maturity investments is impaired
respectofacreditobligationofthecounterpart. impairmentlossesarerecognized,onlyifthereisobject
n WheretheBankconsentstoarestructuringevidence of as a result of one or more events that occurred
theobligation,resultinginadiminishedfinancial after the initial recognition of the asset. The amo
obligation, demonstrated by a material forgiveness of of the loss is measured as the difference between the
debtorpostponementofscheduledpayments. asset’s carrying amount and the deemed recoverable
n Wherethereisobservabledataindicatingthat value ofloan.
there
l 239 l
Loans and advances to customers with significant Nepal Rastra Bank for loan loss provision and amount
value
(Topborrowers 50 andborrowersclassifiedasbadasper determinedasperparagraph63ofNAS39.
Nepal Rastra Bank Directive) are assessed for individual
impairment test. The recoverable value ofb)loan Impairment
is of investment in equity
estimatedonthebasisofrealizablevalueofcollateral instrument classified
and as fair value through other
theconductoftheborrower/pastexperienceofcomprehensive thebank. income
Assets that are individually assessed and for which no Where objective evidence of impairment exists for
impairment exists are grouped with financial assets available- withfor-sale financial assets, the cumulative los
similar credit risk characteristics and collectively assessed (measured as the difference between the amortised cost
forimpairment.Thecreditriskstatisticsforand eachthegroup
currentoffair value, less any impairment loss on that
the loan and advances are determined by management financial asset previously recognised in the statement o
prudently being based on the past experience.profi Fort orloss)isreclassifiedfromequityandrecognisedin
the
purpose of collective assessment of impairment bank has theprofitorloss.Asignificantorprolongeddeclineinthe
categorizedassetsintosixbroadproductsasfair valueofanequitysecuritybelowitscostisconsidered
follows:
among other factors in assessing objective evidence of
1. TermLoan impairmentforequitysecurities.
2. AutoLoan
3. HomeLoan If,inasubsequentperiod,thefairvalueofadebtinstrument
4. PersonalLoan classified as available-for-sale increases and the increase
5. W orkingCapitalLoan can be objectively related to an event occurring after th
6. Others impairment loss was recognised, the impairment loss is
reversedthroughthestatementofprofitorloss.Impairment
If, in a subsequent year, the amount of the estimated lossesrecognisedintheprofitorlossonequityinstruments
impairment loss increases or decreases because of an event arenotreversedthroughtheprofitorloss.
occurring after the impairment was recognised, the previously
recognised impairment loss is increased or reduced by TRADING
5.3 ASSETS
adjustingtheotherreservesandfundsimpairment ( reserve)
Trading assets and liabilities are those assets an
in other comprehensive income and statement of changes in liabilities that the Bank acquires or incurs principal
equity.Ifafuturewrite–offislaterrecovered,thethe recovery
purposeis of selling or repurchasing in the near term or
creditedtothe’IncomeStatement’. holds as part of a portfolio that is managed together for
short-termprofitorpositiontaking.
AsperLoanLossProvisionofNepalRastraBank
Loan loss provisions in respect of non-performing loans
Trading assets and liabilities are initially recognize
and advances are based on management’s assessment fair value and subsequently measured at fair value in the
of the degree of impairment of the loans and advances, statement of financial position, with transaction cost
subject to the minimum provisioning level prescribed recognizedin in profit or loss. All changes in fair value are
relevant NRB guidelines. Provision is made forrecognized possible as part of net trading income in profit or loss
losses on loans and advances including bills purchased asregardedasfairvaluethroughprofit&lossaccount.
at 1% to 10% on the basis of classification of loans and
advances, overdraft and bills purchased in accordance DERIVATIVES
6.3 ASSETSANDDERIVATIVE
withNRBdirectives. LIABILITIES
Derivatives held for risk management purposes include
Policies Adopted all derivative assets and liabilities that are not cl
As per the Carve out notice issued by ICAN, the Bank as trading assets or liabilities. Derivatives held for
has measured impairment loss on loan and advances as management purposes are measured at fair value in the
the higher of amount derived as per norms prescribed by statementoffinancialposition.
l 240 l
ConsideringtherequirementofNASfor 39 equipment
qualification of (calculated as the difference between the n
hedgeaccountingandcostbenefitsalongwithmateriality,proceeds from disposal and the carrying amount of the
Bank has not adopted hedge accounting for certain item)isrecognizedwithinotherincomeinprofitorloss.
derivativesheldforriskmanagement.
AssetswithavalueoflessthanNPR10,arecharged
off to revenue irrespective of their useful life in the year of
PROPERTY
7.3 ANDEQUIPMENT purchase.
a) Recognition and Measurement
The cost of an item of property and equipment shallb) Capital
be Work in Progress
recognizedasanasset,initiallyrecognizedatcost, Fixed if,
assets
and under construction and cost of assets n
onlyif: readyforuseareshownascapitalworkinprogress.
c) Depreciation
n itisprobablethatfutureeconomicbenefitsassociated
withtheitemwillflowtotheentity;and Depreciation on other assets is calculated using
n thecostoftheitemcanbemeasuredreliably. straight- line method to allocate their cost to their residual
values over their estimated useful life as per management
Cost includes expenditure that is directly attributable to judgementasfollows:
the acquisition of the asset. The cost of self-constructed
assetsincludesthefollowing: Group Useful Life (In Years)
Computer 5
n the cost of materials and direct labor; MetalFurniture 10
n any other costs directly attributable to bringing the
OfficeEquipment 10
assets to a working condition for their intended use;
Vehicle 10
n when the Bank has an obligation to remove the
WoodenFurniture 5
asset or restore the site, an estimate of the costs of
Building 50
dismantling and removing the items and restoring the
site on which they are located; and Leasehold Lowerof15YearsorLeasePeriod
n Capitalizedborrowingcosts.
Effect of Change in Depreciation Method in Existing Assets:
TheBankadoptscostmodelforentireclassofproperty During the and fiscal year, the Bank has changed its method
equipment. Neither class of the property and equipment of depreciation fromtheWrittenDownMethod(WDV)into
are measured at revaluation model nor is their fair value Straight Line method based on useful life of the asset
measured at the reporting date. The items ofand detailed disclosures has been provided under notes
property
and equipment are measured at cost less accumulated in
3 1 . 5 disclosure.
depreciationandanyaccumulatedimpairmentlosses.
d) Derecognition
Purchased software that is integral to the functionality The carrying amount of Property and Equipment shall be
of the related equipment is capitalized as part derecognized
of that on disposal or when no future economic
equipment. benefi ts areexpectedfromitsuseordisposal.Thegainor
loss arising from the derecognition of an item of property
Subsequentexpenditureiscapitalizedifitisand equipment
probable that shallbeincludedinprofitorlosswhenth
thefutureeconomicbenefitsfromtheexpenditurewillflow item is derecognized (unlessonasale&leaseback).The
to the Bank. Ongoing repairs and maintenance to keep gain shall not be classifi edasrevenue.
theassetsinworkingconditionareexpensedasincurred.
Any gain or loss on disposal of an item of property and Depreciation method, useful lives and residual value
reviewedateachreportingdateandadjusted,ifany.
l 241 l
appropriate.
INTANGIBLE
8.3 ASSETS/GOODWILL
Goodwill INVESTMENT
9.3 PROPERTY/NON-CURRENT
Any excess of the cost of acquisition over the fair ASSETS
valuesHELDFORSALE
of the identifiable net assets acquired inInvestment Business Property
Combination is recognised as goodwill. Following initial
Investment properties include land or land and buildings
recognition, goodwill is measured at cost less any other than those classified as property and equipment
accumulatedimpairmentlosses. andnon-currentassetsheldforsale.Generally,itinclude
land, land and building acquired by the Bank as non-
Goodwill is reviewed for impairment annually,banking or moreassetsbutnotsoldasonthereportingdate.
frequently,ifeventsorchangesincircumstancesindicate
thatthecarryingvaluemaybeimpaired. The Bank holds investment property that has been
acquired through enforcement of security over the loans
Acquired Intangible Assets andadvances.
Intangible assets are initially measured at fair value,
which reflects market expectations of the probability Non-Current that
Assets Held for Sale
the future economic benefits embodied in the asset Non-currentwillassets (such as property) and disposal
flow to the Bank and are amortized on the basisgroups of their (including both the assets and liabilities of the
expectedusefullives. disposal groups) are classified as held for sale and
measured at the lower of their carrying amount and fair
Computer software value less cost to sell when: (i) their carrying amounts
Acquired computer software licenses are capitalized will be recovered principally through sale; (ii) they are
on the basis of the costs incurred to acquireavailable-for-sale
and bring in their present condition; and (iii) their
to use the specific software. Costs associated sale
with isthe
highlyprobable.
development of software are capitalized where it is
probable that it will generate future economic benefits in
Immediately before the initial classification as held fo
excessofitscost.Computersoftwarecostsareamortized sale, the carrying amounts of the assets (or assets and
onthebasisofexpectedusefullife.Costsassociated with
liabilities in a disposal group) are measured in accordance
maintaining software are recognized as an expense withthe as applicableaccountingpoliciesdescribedabove.
incurred.
INCOME
01.3 TAX
At each reporting date, these assets are assessed for Tax expense comprises current and deferred tax. Current
indicators of impairment. In the event thattax anand
asset’s
deferredtaxarerecognisedinprofitorlossexcept
carrying amount is determined to be greater than its to the extent that they relate to items recognised directly in
recoverableamount,theassetiswrittendownequity immediately.
orinothercomprehensiveincome.
Software is amortised on a straight-line basis a) in profitTax

Current or
loss over its estimated useful life, from the date that it is Current tax is the expected tax payable or recoverable on
availableforuse.Theestimatedusefullifeofsoftware the taxable for
income or loss for the year, using tax rates
thecurrentandcomparativeperiodsisfiveyears. Software
enacted or substantively enacted at the reporting date,
assetswithcostslessthanRs.10,arechargedoffon andanyadjustmenttotaxpayableinrespectofprevious
purchasesasrevenueexpenditure. years. Current tax payable also includes any tax liabilit
arisingfromthedeclarationofdividends.
Amortization methods, useful lives and residual values
are reviewed at each reporting date and adjusted b) Deferred Taxif
Deferred tax is recognised in respect of temporary
l 242 l
differences between the carrying amounts of assets A disclosure for contingent liability is made when there is
and liabilities for nancial fi reporting purposesa possible obligation or a present obligation that may but
and the
amountsusedfortaxationpurposes.Deferredincome probably
tax will not require an outflow of resources. When
is determined using tax rate applicable to the Bank as at there is a possible obligation or a present obligation in
the reporting date which is expected to apply when the respect of which the likelihood of outflow of resources i
relateddeferredincometaxassetisrealizedor remote, noprovisionordisclosureismade.
thedeferred
incometaxliabilityissettled.
A provision for onerous contract is recognized when
Deferred tax assets are recognized where it isthe expected benefits to be derived by the Bank from a
probable
thatfuturetaxableprofitwillbeavailableagainst contractwhich
are lower
the than the unavoidable cost of meeting
temporarydifferencescanbeutilized. itsobligationunderthecontract.
DEPOSITS,
1 .3 DEBTSSECURITIESISSUED Provisions are reviewed at each reporting date and
ANDSUBORDINATEDLIABILITIES adjusted to reflect the current best estimate. If it
a) Deposits longer probable that an outflow of resources would be
The Bank accepts deposits from its customers requiredtosettletheobligation,theprovisionisr
under account, current, term deposits and margin Contingent assets are not recognized in the financi
accounts which allows money to be deposited and statements. However, contingent assets are assess
withdrawn by the account holder. These transactions continuallyare and if it is virtually certain that an i
recorded on thebank’s books, and theresulting economic
balance benefitswillarise,theassetandrelatedinco
is recorded as a liability for the Bank and represents the arerecognizedintheperiodinwhichthechangeoccurs.
amountowedbytheBanktothecustomer.
REVENUE
31.3 RECOGNITION
b) Debt Securities Issued Revenue is the gross inflow of economic benefits during
It includes debentures, bonds or other debt securities the period arising from the course of the ordinary activities
issued by the Bank. Deposits, debt securities ofan entitywhenthoseinflowsresultinincreasesinequ
issued,
and subordinated liabilities are initially measured at fair other than increases relating to contributions fro
value minus incremental direct transaction costs, and participants. Revenue is recognized to the extent i
subsequently measured at their amortisedprobable cost using that the economic benefits will flow to the Ban
the effective interest method, except whereand the the revenuecanbereliablymeasured.Revenueisnot
Group
designates liabilities at fair value through recognized
profit or during
loss. theperiodinwhichitsrecoverabili
However,debenturesissuedbythebankaresubordinate incomeisnotprobable.TheBank’srevenuecomprisesof
tothedepositsfromcustomer. interest income, fees and commission, foreign exchange
income, cards income, remittance income, bancassurance
c) Subordinated Liabilities commission, etc. and the bases of incomes recognition
Subordinated liabilities are those liabilities which at the areasfollows:
event of winding up are subordinate to the claims of
depositors,debtsecuritiesissuedandothera) Interest Income
creditors. The
bankdoesnothaveanyofsuchsubordinatedliabilities. Interest income on available-for-sale assets and financ
assets held at amortised cost shall be recognized us
PROVISIONS
21.3 the bank’s normal interest rate which is very close
TheBankrecognizesaprovisionif,asaresultofpast effective
event, interestrateusingeffectiveinterestra
the Bank has a present constructive or legal obligation
that can be reliability measured and it is probable that an For income from loans and advances to customers,
outflow of economic benefit will be required to settle initial charges
the are not amortised over the life of the loan
obligation. and advances as the income so recognized closely
l 243 l
approximates the income that would have been derived dividend date for equity securities. Dividends are
under effective interest rate method. The difference presentedis
innot
net trading income, net income from other
considered material. The Bank considers thatfinancial the cost instruments
of atfairvaluethroughprofitorlossor
exact calculation of effective interest rate method exceeds other revenue based on the underlying classification of
thebenefitthatwouldbederivedfromsuchcompliance. theequityinvestment.
The effective interest method is a method of calculating d) Net Trading Income

theamortisedcostofafinancialassetorafinancial Net liability
trading income comprises gains less losses related
and of allocating the interest income or interest expense to trading assets and liabilities, and includes all realised
over the relevant period. The effective interest and unrealised
ratefair isvalue changes, interest, dividends
the rate that discounts estimated future cash payments andforeignexchangedifferences.
or receipts through the expected life of the financial
instrument or, when appropriate, a shorter period, to the e) Net Income from other financial instrument at
net carrying amount of the financial asset orfair value through Profit or Loss
financial
liability. When calculating the effective interest Netincome from
rate, otherfinancialinstrumentsatfairvalue
the
Bank estimates cash flows considering all contractual through profit or loss relates to non-trading derivativ
termsofthefinancialinstrument(forexample,prepayment held for risk management purposes that do not form part
options) but does not consider future credit oflosses.
qualifying As hedgerelationshipsandfinancialassetsand
per the Carve-out Notice issued by ICAN, the calculation liabilitiesdesignatedatfairvaluethroughprofitorlos
includes all fees paid or received between parties to includes all realised and unrealised fair value changes,
the contract that are an integral part of the effective interest,dividendsandforeignexchangedifferences.
interest rate, transaction costs and all other premiums
or discounts unless it is immaterial or impracticable to
determine reliably, between parties to the contract that are INTEREST
41.3 EXPENSE
an integral part of the effective interest rate, transaction Interest expense on all financial liabilities includi
costsandallotherpremiumsordiscounts. deposits are recognized in profit or loss using effective
interest rate method. Interest expense on all tradin
Gains and losses arising from changes in the fair value
liabilities are considered to be incidental to the Ba
offinancialinstrumentsheldatfairvaluethrough tradingprofi tor and are presented together with all
operations
loss are included in the statement of profit or loss
other in the
changes in fair value of trading assets and liabilities
period in which they arise. Contractual interest innetincome tradingincome.
and expense on financial instruments held at fair value
through profit or loss is recognized within net interest
income. EMPLOYEES
51.3 BENEFITS
a) Short Term Employee Benefits
b) Fees & Commission Short term employee benefit obligations are measured
Fees and commissions are recognized on an accrual on an undiscounted basis and are expensed as the
basis when the service has been provided or signifi related cantservice is provided. A liability is also recognize
act performed whenever the benefit exceedsforcost the amount expected to be paid under bonus
in determining such value. Whenever, the cost required of by the Bonus Act, 203 to pay the amount as
recognizing fees and commissions on an accrualabasis result of past service provided by the employee and
exceeds the benefit in determining such value, the the fees can be estimated reliably under short term
obligation
andcommissionsarechargedoffduringtheyear. employeebenefits.
c) Dividend Income Short-term employee benefits include all the following

Dividend income are recognized when right to items
receive
(if payable within 12 months after the end of the
such dividend is established. Usually thisreporting
is the ex- period):
l 244 l
to defined benefit plans in employee benefit expense in

n wages, salaries and social security contributions, profitorloss.
n paid annual leave and paid sick leave,
n profit-sharingandbonusesand The Bank recognises gains and losses on the
non-monetarybenefits curtailmentorsettlementofadefinedbenefitplanwhen
the curtailment or settlement occurs. The gain or lo
b) Post-Employment Benefits on curtailment or settlement comprises any resulting
Post-employmentbenefitplanincludesthefollowings; change in the fair value of plan assets, any change in
the present value of the defined benefit obligation, any
i) Defined Contribution Plan related actuarial gains and losses and any past service
A defined contribution plan is a post-employmentcost benefithat
t hadnotpreviouslybeenrecognised.
planunderwhichtheBankpaysfixedcontributionsintoa
separate entity and has no legal or constructive obligation iii) Termination Benefits
to pay further amounts. Obligations for contributions Termination tobenefitsarerecognisedasanexpensewhen
defined contribution plans are recognised as the Bank is demonstrably committed, without realistic
personnel
expenses in profit or loss in the periods during possibility
whichof withdrawal, to a formal detailed plan to either
relatedservicesarerendered. terminate employment before the normal retirement date,
or to provide termination benefits as a result of an offe
Contributions to a defined contribution planmade that to encourage
are due voluntary redundancy. Termination
morethanmonths12 aftertheendofthereporting benefi
periodts for voluntary redundancies are recognised as
in which the employees render the service are discounted an expense if the Bank has made an offer of voluntary
totheirpresentvalue. redundancy, it is probable that the offer will be accepted,
and the number of acceptances can be estimated
All employees of the Bank are entitled to receive reliably. If benefits are payable more than 12 months
benefits
under the provident fund, a defined contribution afterplan,
the reporting
in date, then they are discounted to their
which both the employee and the Bank contribute monthly presentvalue.
at a pre-determined rate of 10% of the basic salary. The
Bank does not assume any future liability for provident LEASES
61.3
fund benefits other than its annual contribution. LeaseThe bank
payments under an operating lease shall be
has not considered the gratuity of 8.3% as required by
recognized as an expense on a straight-line basis over
newLaborActontheassumptiontheprovisionof the
the Act termunlesseither:
lease
shallnotbeapplicabletothebank.
(a) Another systematic basis is more representative of
ii) Defined Benefit plan thetimepatternoftheuser’sbenefitevenifthepayment
A defined benefit plan is a post-employment benefit plan to the lessors are not on that basis; or
other than a defined contribution plan. The Bank’s net
obligationinrespectofdefinedbenefitplansiscalculated (b)Thepaymentstothelessorarestructuredtoincrea
separately for each plan by estimating the amount of in line with expected general inflation to compensat
future benefit that employees have earned in forreturn
the lessor’s expected inflationary cost increases
for their service in the current and prior periods. payments to Thatthe lessor vary because of factors other
benefit is discounted to determine its present than value. Any inflation,thenthisconditionisnotmet
general
unrecognised past service costs and the fair value of any
planassetsarededucted. Majority of lease agreements entered by the Banks are
with the clause of normal increment of 5%-10 p.a.
TheBankrecognisesallactuarialgainsandlosses which the net of
management assumes are in line with the
deferredtaxarisingfromdefinedbenefitplansimmediately
in other comprehensive income and all expenses related
l 245 l
lessor’sexpectedinflationarycostincreases.substance of the contractual terms of the instrument

Equityisdefinedasresidualinterestintotalassetsoft
FOREIGN
71.3 CURRENCYTRANSLATION Bankafterdeductingallitsliabilities.Commonsharesa
The financial statements are presented inclassifi ed as equity of the Bank and distributions thereo
Nepalese
Rupees(NPR). arepresentedinstatementofchangesinequity.
Transactions in foreign currencies are initially Dividends recorded on ordinary shares and preference shares
at the functional currency rate of exchange ruling at the classifiedasequityarerecognizedinequityintheperiod
date of the transaction. Monetary assets and inwhich theyaredeclared.
liabilities
denominated in foreign currencies are retranslated at the
functional currency rate of exchange at the statement of Incremental costs directly attributable to the issue
financialpositiondate. of an equity instrument are deducted from the initial
measurement of the equity instruments considering the
Foreign exchange gains and losses resulting from taxbenefithe tsachievedthereon.
settlement of such transactions, and from the translation at
year-end exchange rates of monetary assets and liabilities Thereservesincluderetainedearningsandotherstatu
denominated in foreign currencies are recognised in the reserves such as general reserve, bond redemption
statementofprofitorloss. reserve,foreignexchangeequalizationreserve,regulator
reserve,investmentadjustmentreserve,stafftrainin
Non-monetary assets and liabilities are translated at developmentfund,CSRreserveetc.
historical exchange rates if held at historical cost, or year-
end exchange rates if held at fair value, and the resulting 3.20EARNINGSPERSHAREINCLUDING
foreign exchange gains and losses are recognized DILUTED
in
either the statement of profit or loss or shareholders’ The Bank presents basic and diluted earnings per
equity depending on the treatment of the gainshare or loss on
(EPS) data for its ordinary shares. The basic EPS
theassetorliability. is calculated by dividing the profit or loss attributab
to ordinary shareholders of the Bank by the weighted
FINANCIAL
81.3 GUARANTEEANDLOAN average number of ordinary shares outstanding during
COMMITMENT the period. Diluted EPS is determined by adjusting the
Financial guarantees are contracts that require profitor loss
the attributabletoordinaryshareholdersand
Bank
to make specified payments to reimburse the holder weighted
foraverage number of ordinary shares outstanding
a loss it incurs because a specified debtor fails for the
to make effectsofalldilutivepotentialordinaryshares
payment when due in accordance with the terms of a debt
instrument. Loan commitments are firm commitments SEGMENT
12.3 to REPORTING
providecreditunderpre-specifiedtermsandconditions. The Bank is organized for management and reporting
purposes into segments such as Retail Banking,
LoancommitmentisthecommitmentwheretheBank has
Corporate Banking, SME Banking, Deprived Sector
confirmed its intention to provide funds to a customer Banking, or Treasury, Transaction Banking and Other
on behalf of a customer in the form of loans, overdrafts, Banking.The segment results that are reported includ
future guarantees, whether cancellable or not, or letters items directly attributable to a segment as well as those
of credit and the Bank has not made payments at the thatcanbeallocatedonareasonablebasis.Unallocated
reporting date, those instruments are included in these items comprise mainly common assets, head office
financialstatementsascommitments. expenses,andtaxassetsandliabilities.
SHARE
91.3 CAPITALANDRESERVES
The Bank classifies capital instruments as4. financial
DISCLOSURES AND ADDITIONAL
INFORMATION
liabilities or equity instruments in accordance with the
l 246 l
RISK
1 . 4 MANAGEMENT robust policies and framework for effective compliance of
regulationanddirectionissuedbytheregulatoryauth
Risk Management structure of the Bank has set BOD ensures the strategies, policies and procedure is
clear separation between business function and risk in accordance with the risk appetite/tolerance limi
management function. Accordingly, the Bank has effective
set management of risk within the Bank. The board
up a separate Integrated Risk Management Department understands the nature of risk of the bank, and periodically
(IRMD) headed by Chief Risk Officer (CRO), one of the reviews reports on risk management, including policies and
mostseniorlevelpositionsintheBank.TheIRMDoversees stress testing, liquidity and capital ade
standards,
global, macro, micro and departmental level risk that arise through the reporting by the Risk Management Committee
out of daily business operation as well ason periodic basis andtheAsset-LiabilitiesManagementCommittee.
and are put to the oversight of Senior Management, Risk
Management Committee and the Board to discuss the Pursuant to the NRB directive on corporate governance, the
reportsthereonandissueinstructionsasappropriate. Bank has established Risk Management Committee with
well-defined terms of reference in linedirective.the NRB
i) Risk Management Committee At least four meeting is conducted on annual basis
Board of Directors is the apex and supreme authority however ofnumber of meeting can be increased as per
the Bank and is responsible to frame and implement the requirement. The committee supervises overall
BOARD
RISK MANAGEMENT
COMMITTEE CEO
CHIEF RISK ASSETS AND LIABILITY

OFFICER COMMITTEE (ALCO)
INTEGRATED RISK
MANAGEMENT DEPARTMENT
l 247 l
damage, ensure compliance with applicable laws and

management of the Bank broadly classified as liquidity
risk, market risk, operational risk and credit risk regulationsandenhanceresiliencetoexternalevents
ii) Risk Governance The Board has set policies and procedures of risk
Bank has prepared and implemented policies and identification, risk evaluation, risk mitigation and cont
procedures to mitigate the risk at enterprises level arising monitoring, in line with the NRB directives has effectively
to the bank and has inculcated risk culture among the implementedthesameattheBank.
employees by establishing ownership mentality, capacity
building programs, well defined job responsibilities The effectiveness
and of the Company’s internal control
inhabitinggoodethicalculture. system is reviewed regularly by the Board, its Committees,
ManagementandInternalAuditdepartment.
ThroughitsRiskManagementFramework,theBankseeks
toefficientlymanagecredit,marketandliquidityrisks The Internal
which Audit monitors compliance with policies/
arisedirectlythroughtheBank’scommercialactivities standards as and the effectiveness of internal control
well
as operational, regulatory and reputational risks which arise structures across the Bank through regular audit, special
asanormalconsequenceofanybusinessundertaking. audit,informationsystemaudit,OffSitereview,AML/CFT/
KYC audit, ISO audit as well as Risk based Internal Audit
The Risk Management Committee is responsible (RBIA)
forapproach.
the The audits observations are reported
establishment of, and compliance with, policies relating to the Chief Executive Officer and Business Heads for
to management risk, supply risk, production risk, demand initiating immediate corrective measures. Internal Au
riskandcollectionrisk. reports are periodically forwarded to the Audit Committee
for review and the committee issues appropriate
The Assets and Liabilities Committee is responsible corrective action in accordance with the issue involved to
for the management of capital and establishment of, therespectivedepartment,regionalofficesorbranches.
and compliance with, policies relating to balance sheet
management, including management of liquidity,4.1.1 capitalCredit Risk
adequacy and structural foreign exchange andCredit risk is the probability of loss of principle and reward
interest
rateexposureandtaxexposure. associated with it due to failure of counterparty to meet its
contractual obligations to pay the Bank in accordance with
The bank’s risk governance structure is such agreed
thatterms.
the The Credit Risk Monitoring and Reporting
responsibility for maintaining risk within the banks Framework/ have been prepared in order to mitigate/
risk blanket is cascaded down from the Board to minimize the credit risk of the Bank through appropriate
the appropriate functional, client business, senior monitoring and reporting framework established within
management and committees. Information regarding theBank.
material risk issues and compliance with policies and
standards is communicated through the business, Bank has implemented various System/ Policies/
functional,seniormanagementandcommittees.Procedures/ Guidelines for the effective management of
Credit Risk. For the purpose of assessment of credit risk
iii) Internal Control ofthebank,followingactivitieswerecarriedout:
The Board is responsible for ensuring the Bank has
appropriate internal control framework in place that n Currentsystem/policies/procedures/guidelines
supportstheachievementofthestrategiesandformulated objectives. were gone through;
ThevariousfunctionsoftheBankshouldbelooked upon Exposureofcreditlimitproductwise,segment
n Actual
with a view to establish a proper control mechanism is wise were checked against Risk Appetite, tolerance limit
in place during expansion and growth which enables it mentionedinRespectiveProductPaperGuidelines,
to maximize profitable business opportunities, avoid
Credit Policy and Credit Risk Management Policy;
or reduce risks which can cause loss or reputational n Review of various reports prepared by the
l 248 l
DepartmentssuchasAccountMonitoringReport, 4.1.2 Market Risk

LoanOverdueReport,LoanReport,NRBreportsand Marketriskistheriskthatthefairvalueorfutureca
Margin Monitoring Reports ofafinancialinstrumentwillfluctuatebecauseofchange
inmarketprices.Marketriskcomprisesthreetypesofri
Credit Risk Management is ultimately the responsibility foreign exchange rates (currency risk), market interest
of the Board of Directors hence Overall strategy rates (interestraterisk)andmarketprices(priceris
as well
as significant policies has to be reviewed by the board
regularly. Further, Senior Management is responsible i) Currency Risk:
for implementing the bank’s credit risk management Foreign exchange risk is the potential for the Bank t
strategies and policies and ensuring that procedures are experience volatility in the value of its assets, liabilities and
put in place to manage and control credit risk and the solvencyandtosufferactualfinanciallossesasaresult
qualityofcreditportfolioinaccordancewiththese changespolicies.
in value between the currencies of its assets and
liabilitiesanditsreportingcurrency.
i) Maximum exposure to credit risk
The bank has financial assets consisting mainlyThe Bank has following foreign currency as receivables
of loans
& advances and investments at amortized cost.payables In these as at the balance sheet date
cases, the maximum exposure to credit risk is the carrying
amountoftherelatedfinancialassets. ii) Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash
ii) Credit quality of neither past due nor impaired flows of a financial instrument will fluctuate because of
and past due or impaired changesinmarketinterestrates.
Thetablebelowshowsthecreditqualitybyclassofasset
forallnancial
fi assetsexposedtocreditrisk,based The major
onthe interest rate risk that the Company is expo
Bank’sinternalcreditratingsystem. to is the discount rate for determining
NPRinMn.
Neither past due Past due less Past due 91 to Past due More Individually
Particulars Total
nor impaired 90 days 180 days than 180 days impaired
Financial Assets
Assets carried at Amortised Cost
Cashandcashequivalent 8,132 8,132
- - - -
DuefromNepalRastraBank 15,86 15,86
- - - -
PlacementwithBankandFinancialInstitutions 314
314 - - - -
Loansandadvancestocustomers 15,6 109 14 70 15,80
-
LoanandadvancestoB/FIs 4,658 4,658
- - - -
FairValuethroughProfitandLoss(FVTPL)
- - - - -
Derivativefinancialinstruments. 1,26 1,26
- - - -
FairValuethroughOther
- - - - -
ComprehensiveIncome(FVTOCI)
- - - - -
Investment securities 14,3 14,3
- - - -
Investment in subsidiaries 270 270
- - - -
Total 160,245 109 14 70 160,439
-
l 249 l
iii) Equity Price Risk Liquidity risk is defined as the risk that the Bank will
Equitypriceriskistheriskthatthefairvalue encounter
orfuturecash difficulty in meeting obligations associated
flows of a financial instrument will fluctuate because with financial
of liabilities that are settled by deliverin
changes in equity prices (other than those arising or anotherfrom financial asset. Liquidity risk arises because
interest rate risk or currency risk), whether those changes of the possibility that the Bank might be unable to meet
are caused by factors specific to the individual itsfinancial
payment obligations when they fall due as a result of
instrument or its issuer, or by factors affecting all similar mismatches in the timing of the cash flows under both
financialinstrumentstradedinthemarket. normal and stress circumstances. Such scenarios could
occur when funding needed for illiquid asset positions
The Company’s equity price risk exposure relates is not toavailable to the Bank on acceptable terms. To
financial investment held at FVTOCI, whose values limitthis risk, management has arranged for diversified
fluctuateasaresultofchangesinmarketprices. funding sources in addition to its core deposit base and
adoptedapolicyofmanagingassetswithliquidityinmind
4.1.3 Liquidity Risk and monitoring future cash flows and liquidity on adaily
Bank recognize Market Risk as the possibilitybasis. for loss Theof
Bankhasdevelopedinternalcontrolprocesses
earnings or economic value to the Bank caused due to and contingency plans for managing liquidity risk.This
adverse changes in the market level of interest rates or incorporates an assessment of expected cash flows and
prices of securities (equity), foreign exchange rates the availability
and of high grade collateral which could be
commodity price fluctuation, as well as the volatilities, usedtosecure of additionalfundingasrequired.
thoseprices.WhileLiquidityriskischancesoffailureofa
bank to meet obligations as they become due. Effective The following table depicts the maturity profile of the
liquidity risk management helps ensure the Bank’s investmentabilityportfolio on aundiscounted cash flow basis
to meet its obligations as they fall due without adversely which is designedandmanagedtomeettherequiredlevel
affecting the Bank’s financial condition and reduces the as and when liquidity outgo arises taking int
of liquidity
probabilityofdevelopingofanadversesituation. consideration the time horizon of thenancial fi of liabilitie
thebusiness.
AmountinNPRMn.
Particulars Less than3 month 3 to 6 months 6 to 1 year More than 1 year Total
Assets
Cashandcashequivalent 8,132 - - - -
DuefromNepalRastraBank 15,86 - - - -
PlacementwithBankandFinancialInstitutions 314 - - - -
Derivativefinancialinstruments. 1,26 - - - -
Other trading assets - - - - -
LoanandadvancestoB/FIs 4,658 - - - -
Loansandadvancestocustomers 17,20 12,874 18,25 67,53 15,80
Investment in subsidiaries 270 - - - -
Total 47,772 12,874 18,125 67,536 115,805
Liabilities
DuetoBankandFinancialInstitutions 1,630 - - - 1,630
DuetoNepalRastraBank 742 - - - 742
Derivativefinancialinstruments 1,72 - - - 1,72
Depositsfromcustomers 7,69 7,018 30,98 93,81 139,50
Borrowing - - - - -
Other liabilities 2,074 - - 2,074
Debtsecuritiesissued - - - 3,48 3,48
Total 23,936 7,018 30,983 97,307 159,245
l 250 l
iv) Operational risk with regulatory requirement and adjusts to dynamic

Operational Risk is defined as the risk of potential environment loss oftheindustry.
resulting from inadequate or failed internal processes,
people and systems or from the impact of external CAPITAL
2.4 MANAGEMENT
events,includinglegalrisksforthebank.Operational 4.2.1 Qualitative Risk disclosures
is pervasive across all the functions of the Bank and is The Bank has formulated and implemented the “Interna
influenced by all resources, including human resource, Capital Adequacy Assessment Process 2017” (ICAAP
systems and procedural designs, deployed by the Bank which
2017) hasbeenapprovedbytheBoardofDirectors.
to carry out those functions. Operational Risk The canICAAPbe 2017 is a system of sound, effective, and
caused by both internal and external sources such as complete strategies and processes that allows the Bank
fraud, business interruptions, system failures, damage to assess and maintain, ongoing basis, the amounts,
to physical infrastructure, failure in execution and service types and distribution of internal capital that the Bank
delivery,inherentrisksinproducts,customers, inadequacy
considers adequatetocoverthenatureandlevelofri
in procedures or flawed process designs, and business whichtheBankisormightbeexposedto.
practices. The risk can occur in any business function or
thebusinesssupportingfunctions. Internal Capital Adequacy Assessment Process (ICAAP)
shallalsoincluderequirementtohaverobustgovern
The Bank is committed to be governed with a arrangements, strong efficient process of managing all
culture of risk management and ethical business practices material risks and an effective regime for assessing and
and therefore to averse it from potentially damaging maintaining adequate and economic capital at the Ba
operational risk events and is in a sound position to deal where economic capital (economically needed capital)
effectively with those events that do occur.refers The actions to the amount of capital required for the Ban
of the board and senior management, and policies, business operations and for financing the associate
processes and systems provide the foundation for a risks.
sound risk management culture
ICAAPshall
2017 providepolicyandproceduralguidelines
The Bank seek to minimize our exposure to operational for the calculation of internal capital adequac
risk by use of key control standards, key control self- prescribing appropriate methodologies, techniques a
assessments and key risk indicators as toolkits to identify, procedurestoassessthecapitaladequacyrequiremen
assess, monitor and control operational risk events in relation to the Bank’s risk profile and effectivene
through timely acknowledgement of emerging threats its risk management, control environment and strategic
andunderlyingvulnerabilities.TheBankshall alsoensure
planning.
highest level of governance standards and adherence to
Code of Conduct and robust compliance to all regulatory The Board shall be primarily responsible for ensuring t
as well as the Bank’s internal policy, procedures current and and future capital needs of the bank in relation to
guidelines. strategic objectives. The management shall review an
understand the nature and level of various risks that the
Effective policies, procedural guidelines and standard
bank is confronting in the course of different business
operating procedure are crucial tools for sound risk activities and how this risk relates to capital levels and
management. Therefore, adequacy and effectiveness accordingly implement sound risk management framework
of the policies and procedures and their effective specifyingcontrolmeasurestotackleeachriskfactor.
implementation is closely monitored by the department
to ensure that they have continuing relevance in line 4.2.2 Quantitative disclosures
a) Capital Structure and Capital Adequacy
l 251 l
i)Tiercapital
1 andabreakdownofitscomponents AmountinNPRMn.
Particulars Amount
Paid up Capital 8,031.2
SharePremium/CapitalReserve -
Proposed Bonus Shares -
StatutoryGeneralReserve 1,825.
RetainedEarnings 943.65
Un-auditedCurrentYearCumulativeProfit -
Capital Redemption Reserve 285.71
OtherFreeReserves -
Less:DeferredTaxAssets -
Less:IntangibleAssets 2.97
Less:Investmentinequityofinstitutionswithfinancialinterests 20.
Less:Purchaseofland&buildinginexcessoflimitandunutilized -
Core (Tier-1) Capital 10,862.66
AmountinNPRMn.
ii)Tiercapital
2 andabreakdownofitscomponents
Particulars Amount
SubordinatedTermDebt 3,20.
GeneralLoanLossProvision 1,204.73
ExchangeEqualizationReserve 38.7
InvestmentAdjustmentReserve 4.2
Supplementary (Tier-2) Capital 4,487.35
iii) Detailed information about the Subordinated Term Debts with information on the outstanding amou
amountroseduringtheyearandamounteligibletobereckonedascapitalfunds.
AmountinNPRMn.
Particulars O/s amount Issue Date Maturity Date Interest Rate* Amount eligible for
capital fund
7.25%NICASIABond207 50 15-May-14 14-May-21 7.25% 20
9%NICASIABond2081/ 3,0 9-Jan-18 8-Jan-25 9.0% 3,0
*Interestispayablehalfyearlybasis
l 252 l
iv)Deductionsfromcapital typically, application of “what if” scenarios, especially i

n Theintangibleassetspertainingtobondissue the problematic identification of low frequency but hi
expenses and premium on foreign currency bond severity events and identifying expected and unexpected
amountingtoNPR22.97Mnhavebeendeductedfrom losses.Itfocusesoncapturingtheimpactoflarge,butst
the core capital plausibleeventsandunderstandingtheoverallris
n TheBank’sinvestmentinNICAISIACapitalLtd., in a coherent and consistent framework, including impact
awhollyownedsubsidiary,NPR20Mnhasbeen analysisonearnings,solvencyandliquidity.
deductedfromthecorecapital.
A formal monitoring and reporting mechanism have been
v)Totalqualifyingcapital established to provide the senior management necessary
Amount (NPR information on the risk profile, trends, and the capit
Particulars
Millions)
requirements as per ICAAP 2017 and Stress Testing
Core Capital 10,862.
Guidelines 2015. Such reports are being prepared on a
Supplementary Capital
4,87.35 monthly and quarterly basis and circulated to rele
Total Qualifying Capital (Total Capital Fund) 15,350.01 business units/departments, Integrated Risk Departm
(IRMD), and tabled in Assets Liability Committee (ALCO)
vi)CapitalAdequacyRatio meeting. Further quarterly reports are presented t
Capital Adequacy Ratio of the bank as at 16 July 2018 Risk Management Committee and the Board for review
stoodat12.4% anddiscussions.
vii) Summary of Bank’s internal approach to assess viii) Summary of the terms, conditions and main features of
the adequacy of capital to support current all and capital instruments, especially in case of subordinated
future
activities, if applicable term debts including hybrid capital instruments
The Bank prepares a long term Five year’s Strategy Ordinary
Plan share capital: The Bank has only one class of
and to achieve the long term plans the Bank prepares equity shares having a par value of Rs. 10 per share.
annualBudgets/Operating/Tacticalplansasstipulated Each holder of equity shares is entitled to one vote p
in
theBudgetPolicyandstrategyDocumentoftheBank. share. ToIn the event of liquidation of the Bank, holder
ensure that the Bank’s capital adequacy commensurate equity shares will be entitled to receive remaining a
todemandoftheBank’scapitalrequiredbytheof the Bank after distribution of preferential amoun
business
planning, the Management and the Board prudently and distribution will be in proportion to the number of e
proactively engage on ongoing process of capital and sharesheldbytheshareholders.
risk assessment, stress testing and scenarios testing,
monitoringandreportingaspertheICAAP2017. Debentures: The bank has issued 7.25% NIC ASIA
Bond 207 and 9% NIC ASIA Bond 2081/ amounting
The Bank has also formulated and implementedNPR 50 million and NPR 3,0 million respectively.
“Stress
Testing Guidelines 2015” in order to assess of the debentures do not carry any voting rights. These
These
vulnerability of the Bank under various stress situations debenturesaresubordinatetothedepositorsofthe
l 253 l
b) Risk Exposures
i) Risk weighted exposures for Credit Risk, Market Risk and Operational Risk NPRinMn.
Risk Weighted Exposure Amount
RiskWeightedExposureforCreditRisk 18,625.3
RiskWeightedExposureforOperationalRisk 4,06.9
RiskWeightedExposureforMarketRisk 17.5
AdjustmentsunderPillarII
ALMpolicies&practicesarenotsatisfactory,add3%ofgrossincometoRWE 104.8
2%adjustmentonTotalRWE 2,456.0
Total Risk Weighted Exposure 125,370.80
ii)RiskWeightedExposuresundereachof1categoriesofCreditRisk NPRinMn.
Risk Classification Net Book Value RWE
ClaimsonGovt.andCentralBank 29,68.30 -
ClaimsonotherFinancialEntities
Claims on Banks 9,024.7 1,859.72
ClaimsonCorporateandSecuritiesFirm 42,195.3 42,195.3
Claims on Regulatory Retail Portfolio 48,12.09 36,10.57
Claims secured by Residential Properties 9,08.3 5,4.91
ClaimssecuredbyCommercialRealEstate 928.76 928.76
Past due Claims 138.76 208.14
HighRiskClaims 14,5.8 21,86.7
Other Assets 9,53.16 6,192.
Off balance sheet items 13,26.8 3,852.1
Total 176,965.32 118,625.31
c) Total risk weighted exposure calculation table NPRinMn.

Gross Book Specific Eligible Net Value Risk Risk Weight
A. Balance Sheet Exposure Value (A) Provision & Valuation CRM (D) (A-B-C) Weight Exposure
Adjustments (B) (E) (D *E)
Cash Balance 3,754 - - 3,754 0% -
BalanceWithNepalRastraBank 15,86 - - 15,86 0% -
Gold 0.9 - - 0.9 0% -
InvestmentinNepaleseGovernmentSecurities 12,8 - - 12,8 0% -
AllClaimsonGovernmentofNepal 301 - - 301 0% -
Investment in Nepal Rastra Bank securities 1,093 - - 1,093 0% -
All claims on Nepal Rastra Bank - - - - 0% -
ClaimsonForeignGovernmentandCentralBank(ECA0-1) - - - - 0% -
ClaimsonForeignGovernmentandCentralBank(ECA-2) - - - - 20% -
l 254 l
Gross Book Specific Eligible Net Value Risk Risk Weight

Value (A) Provision & CRM (D) (A-B-C) Weight Exposure
A. Balance Sheet Exposure
Valuation (E) (D *E)
Adjustments (B)
ClaimsonForeignGovernmentandCentralBank(ECA-4-6) - - - - 10% -
ClaimsOnBIS,IMF,ECB,ECandonMultilateralDevelopmentBanks
- - - - 0% -
(MDB’s)recognizedbytheframework
ClaimsonOtherMultilateralDevelopmentBanks - - - - 10% -
ClaimsonPublicSectorEntity(ECA0-1) - - - - 20% -
ClaimsonPublicSectorEntity(ECA2) - - - - 50% -
ClaimsonPublicSectorEntity(ECA3-6) - - - - 10% -
ClaimsonPublicSectorEntity(ECA7) - - - - 150% -
Claimsondomesticbanksthatmeetcapitaladequacyrequirements
4,96 - - 4,96 20% 98
-
Claimsondomesticbanksthatdonotmeetcapitaladequacyrequirements - - - 10% -
Claimsonforeignbank(ECARating0-1) 2,75 - - 2,75 20% 50
Claimsonforeignbank(ECARating2) 183 - - 183 50% 91
Claimsonforeignbank(ECARating3-6) - - - - 10% -
Claimsonforeignbank(ECARating7) - - - - 150% -
Claims on foreign bank incorporated in SAARC region operating with a

1,4 - - 1,4 20% 29
bufferof1%abovetheirrespectiveregulatorycapitalrequirement
ClaimsonDomesticCorporates 42,15 3 16 42,195 10% 42,195
ClaimsonForeignCorporates(ECA0-1) - - - - 20% -
ClaimsonForeignCorporates(ECA-2) - - - - 50% -
ClaimsonForeignCorporates(ECA3-6) - - - - 10% -
ClaimsonForeignCorporates(ECA7) - - - - 150% -
Regulatory Retail Portfolio (Not Overdue) 48,30 3 196 48,12 75% 36,107
Claimsfulfillingallcriterionofregulatoryretailexceptgranularity - - - - 10% -
Claims secured by residential properties 9,061 0 - 9,061 60% 5,437
Claims not fully secured by residential properties - - - - 150% -
Claims secured by residential properties (Overdue) 30 1 - 19 10% 19
Claims secured by Commercial real estate 92 0 - 92 10% 92
Past due claims (except for claim secured by residential properties) 20 60 3 139 150% 208
HighRiskclaims(Venturecapital,privateequityinvestments,personalloans
15,6 0 609 14,5 150% 21,87
and credit card receivables)
Investmentsinequityandothercapitalinstrumentsofinstitutionslistedin
56 - - 56 10% 56
the stock exchange
Investmentsinequityandothercapitalinstrumentsofinstitutionsnotlisted
261 - - 261 150% 391
in the stock exchange
StaffLoansecuredbyresidentialproperty 343 - - 343 60% 206
Interestreceivable/claimongovernmentsecurities 15 - - 15 0% -
Cash in transit and other cash items in the process of collection - - - - 20% -
Other Assets 5,637 609 - 5,029 10% 5,029
TOTAL 165,213 686 824 163,702 114,773
l 255 l
Gross Book Gross Book Gross Book Gross Book Risk Weight Risk Weight
B. Off Balance Sheet Exposure Value (A) Value (A) Value (A) Value (A) (E) Exposure
(D *E)
Revocable Commitments - - - - 0% 45
Bills Under Collection 168 - - 168 0% 437
ForwardExchangeContractLiabilities 454 - - 454 10% -

LCCommitmentsWithOriginalMaturityUpto6months
2,65 - 79 2,185 20% -
(domestic counterparty)
foreigncounterparty(ECARating0-1) - - - - 20% -
foreigncounterparty(ECARating-2) - - - - 50% -
LCCommitmentsWithOriginalMaturityOver6months
- - - - 50% -
(domestic counterparty)
foreigncounterparty(ECARating3-6) - - - - 10% 1,046
Bid Bond, Performance Bond and Counter guarantee

2,30 - 138 2,091 50% -
(domestic counter party)
Underwriting commitments - - - - 50% -

LendingofBank’sSecuritiesorPostingofSecuritiesas
- - - - 10% 84
collateral
Repurchase Agreements, Assets sale with recourse (including
- - - - 10% 0
repo/reverserepo)
AdvancePaymentGuarantee 87 - 3 84 10% 439
FinancialGuarantee 0 - - 0 10% -
AcceptancesandEndorsements 471 - 32 439 10% 1,27
Unpaid portion of Partly paid shares and Securities - - - - 10% -
Irrevocable Credit commitments (Short term) 6,30 - - 6,30 20% 238
Irrevocable Credit commitments (long term) - - - - 50% 285

Claims on foreign bank incorporated in SAARC region
operatingwithabufferof1%abovetheirrespectiveregulatory
1,92 - - 1,92 20% 5
capitalrequirement
OtherContingentLiabilities 285 - - 285 10% 3,852
UnpaidGuaranteeClaims 3 - 0 2 20% 18,625
TOTAL 13,515 - 253 13,263 126,330
Total RWE for credit Risk (A)+(B) 178,728 686 1,077 176,965 241,103
Adjustments under Pillar II

Add:10%oftheloanandfacilitiesinexcessofSingleObligor
- - - - -
Limits(6.4a3)
Add:1%ofthecontract(sale)valueincaseofthesaleofcredit
- - - -
withrecourse(6.4a4)
Total RWE for credit Risk

178,728 686 1,077 176,965 241,103
(After Bank’s adjustments of Pillar II)
l 256 l
d) Amount of NPAs (both Gross and Net) NPRin‘00’

Current Year Previous Year NPRinMn.
Particulars
Gross NPAs Net NPAs Gross NPAs Net NPAs
Restructured/RescheduleLoans 12,384 9,28 32,04 24,03

SubStandardLoans 4,861 2,431 3,265 1,63
DoubtfulLoans 6,8 - 27,3
Loss 84,132 1,79 26,58 25,6
TotalNPAs 12,384 9,28 32,04 24,03
4.2.3 Compliance with external requirement

ThecommercialbankswererequiredbytheMonetaryPolicy2015/6toattainastipulatedminimumpaidupcapit
NPRbillion
8 bymid-JulyAs
2017. onthereportingdate,theBank’spaidupcapitalstoodatNPRbillion
8.03 againstth
requirementofNPR8billion.
CLASSIFICATION
3.4 OFFINANCIALASSETSANDFINANCIALLIABILITIES NPRinMn.
Notes As at 16-Jul-18 As at 15-Jul-17 As at 16-Jul-16
Financial assets
Carrying Fair Carrying Fair Carrying Fair
Value value Value value Value value
Assets
Assets carried at Amortised Cost
Cashandcashequivalent 4.1 8,132 8,132 3,480 3,480 3,549 3,549
DuefromNepalRastraBank 4.2 15,86 15,86 10,29 10,29 4,396 4,396
PlacementwithBankandFinancialInstitutions
4.3 314 314 1,493 1,493 1,26 1,26
Loansandadvancestocustomers 4.7 15,80 15,80 70,61 70,61 57,86 57,86
Total 140,112 140,112 85,880 85,880 67,038 67,038
Derivativefinancialinstruments. 4. 1,26 1,26 3,029 3,029 2,30 2,30
FairValuethroughOtherComprehensiveIncome(FVTOCI)
Investment securities 4.8 14,3 14,3 10,2 10,2 1,608 1,608
Investment in subsidiaries 4.1 270 270 10 10 10 10
Total 14,403 14,403 10,120 10,120 11,708 11,708
Liabilities
LiabilitiescarriedatAmortisedCost
DuetoBankandFinancialInstitutions 4.17 1,630 1,630 7,3 7,3 7,215 7,215
DuetoNepalRastraBank 4.18 742 742 - - - -
Depositsfromcustomers 4.20 139,50 139,50 79,06 79,06 64,07 64,07
Debtsecuritiesissued 4.2 3,48 3,48 501 501 516 516
Total 155,449 155,449 88,180 88,180 72,338 72,338
Derivativefinancialinstruments 4.19 1,72 1,72 3,0 3,0 2,67 2,67
l 257 l
4.3.1 Fair Value of Financial Assets and Financial Liabilities

NPRinMn.
Fair value Hierarchy As at As at As at

(Level) 16 July 2018 15 July 2017 16 July 2016
FairValuethroughprofitandloss
Financial Assets
ForwardexchangeContract 1,26 3,029 2,30
Financial Liabilities
ForwardexchangeContract 1,72 3,0 2,67
FairValuethroughOtherComprehensiveIncome
Financialassets
Investment securities at OCI
-Quotedequitysecurities 1 56 425 70
-Unquotedequitysecurities 3 19 176 63
Investment in subsidiaries 270 10 10
Total 1,027 701 933
FinancialInstrumentsheldatamortisedcost
Financial Assets
Debtsecurities 3 343 82 20
Governmentbonds 3 9,78 6,59 5,98
Governmenttreasurybills 3 2,16 1,92 1,907
Nepal Rastra Bank bonds 3 - - 3,067
LoanandadvancestoB/FIs 3 4,658 1,630 1,089
Loansandadvancestocustomers 3 15,80 70,61 57,86
Accounts receivable 7,05 736 353
Accrued Income - - -
Total 139,802 82,401 70,092
Financial liabilities
DuetoBankandFinancialInstituions 3 1,630 7,3 7,215
DuetoNepalRastraBank 3 742 - -
Depositsfromcustomers 3 139,50 79,06 64,07
Borrowing 3 - - -
Provisions - - -
Other liabilities 2,074 1,458 916
Debtsecuritiesissued 3,48 501 516
SubordinatedLiabilities - - -
Total 157,523 89,638 73,253
l 258 l
OPERATING
4. SEGMENTINFORMATION d)DeprivedSectorlending(DSL)Banking
4.4.1 General Information The loans provided to deprived sectors of the socie
directly (say to agricultural sectors) or indirectly (say to
Reportable Segments the organizations working for the upliftment of poor a
Business segments have been identified and reported classified under DSL Banking. The interest income, fee
takingintoaccount,thetargetcustomerprofile, incomes generated out of such loans are revenue items
thenature
of products and services, the differing risks and returns, of this segment. Expenses of this segment comprises of
theorganizationstructure,theinternalbusinessreporting interest expenses on deposits used for providing DSL
system.TheBankoperatesinthefollowingsegments: loans, personnel expenses and operating expenses as
wellasprovisionforlosscreatedforsuchloans.
a) Corporate Banking
The loans provided to corporate customers e)Treasury
valuing
morethanNPR10 Croresareclassified underCorporate Thebalancelyingwiththebanksinvestedingovernment
Banking. The interest income from corporate loans, bonds, treasury
fee bills, placements, forex trading and shares
incomes generated out of such loans, foreign exchange of other Organizations come under this segment. The
earnedthroughLC/BGarerevenueitemsofthissegment. interest income of bonds and bills, forex gains, dividend
Expensesofthissegmentcomprisesofinterestexpenses income are revenue items of this segment. Expenses of
on deposits used for providing corporate loans, personnel this segment comprises of interest expenses on deposits
expenses and operating expenses as well as provision for used for making investments, forex losses, personnel
losscreatedforsuchloans. expenses and operating expenses as well as provision for
losscreatedforsuchinvestments.
b) Retail Banking
The loans provided to other than corporatef)Transaction customers Banking
i.e. individuals are classified under Retail Banking. The income
The from Card (Debit card/Credit card) sales,
interest income, fee incomes generated out of such income from sales of Mobile and SMS Banking, customer
loans are revenue items of this segment. Expenses services
of fees, agency remittance commissions, locker
this segment comprises of interest expenses on deposits fees, cheque processing fees are revenue items of
used for providing Retail loans, personnel expenses and this segment. Expenses of this segment comprises of
operating expenses as well as provision for loss created personnelexpensesandoperatingexpenses.
forsuchloans.
g) Others
c)SmallandMediumEnterprises(SME)Banking All other revenues and expenses which cannot be
The loans provided to corporate customers valuing classified not to the above-mentioned segments fall unde
more than NPR 10 Crores are classified under SMEthissegment.Theincomefromsaleofassets,otherfees
Banking. The interest income, fee incomes generated and commission are revenue items of this segment. Un-
out of such loans, foreign exchange earned through attributable
LC/ personnel expenses, operating expenses and
BG are revenue items of this segment. Expenses of written
this offassetsareexpenseitemsofthissegment.
segment comprises of interest expenses on deposits Corporate Banking, Retail Banking, SME Banking, DSL
used for providing SME loans, personnel expenses Banking,
and Transaction banking and Treasury comprise of
operating expenses as well as provision for loss created at least 75%ofourtotalrevenue.Hence,theseoperations
forsuchloans. are treated as reportable segments and the remaining are
classifiedunderothersegments
l 259 l
4.4.2 Information about profit or loss, assets and liabilities

NPRinMn.
Particulars Corporate Retail SME DSL Treasury TB Others Total
Revenues from external customers 54.8 2,180.5 1,7.43 326.19 785.10 239.87 105.6 5,90.16
InterSegmentExpenses/(Revenue) (19.86) 10.5 7.6 1.68 542.0 - - 542.0
Net revenue 56.71 2,169.4 1,709.6 324.5 243.08 239.87 105.6 5,38.14
Interest Income 1,842. 5,83.40 4,23. 891.73 604.3 - 150.4 3,54.82
InterestExpenses 1,390. 3,894.0 2,841.6 621.84 46.93 - - 8,794.1
Net Interest Income 472.72 1,928.80 1,374.41 268.21 15.38 - 150.14 4,209.66
DepreciationandAmortization 3.5 56.9 43.2 6.0 0.65 4.32 0.79 15.80
Profit Before Income Tax 248.49 639.50 557.49 136.80 193.54 19.63 15.16 1,810.60
ImpairmentCharge/(Reversal)ForLoans 56.74 135.42 94.8 17.9 - - - 304.8

AndOtherLosses
Segment Assets 17,893.02 67,083. 54,23.76 1,58.06 19,85.2 83. 15.7 170,943.8
SegmentLiabilities 27,93.0 73,10.8 53,470.91 1,72.5 5,318.70 21. 16.30 170,943.8
4.4.3 Measurement of operating segment profit or loss, assets and liabilities

Thebankhasidentifiedthekeysegmentsofbusinessonthebasisofnatureofoperationsthatassiststhe
Committeeofthebankindecisionmakingprocessandtoallocatetheresources.Itwillhelpthemanageme
theperformanceofthebusinesssegments.TheSegmenthasbeenidentifiedonthebasisofgeographiclocatio
branches.Investmentbalances,NRBbalance,incomefrominvestment,forexincomearereportedinHeadofficeun
Province 3. Intra segment revenue and costs are accounted as per the policy of the bank and eliminated in
Office
4.4.4 Reconciliation of reportable, segment revenues, profit or loss, assets andliabilities
Revenue
NPRinMn.
Total revenue for reportable segments 5,900
Other revenues -
Eliminationofintersegmentrevenues 542
Entity’s revenue 5,358
Profit or Loss NPRinMn.
Total profit or loss for reportable segments 1,811
Otherprofitorloss -
Eliminationofintersegmentprofits -
Profit before income tax 1,811
l 260 l
Assets
NPRinMn.
Total assets for reportable segments 170,945
Other assets -
Total assets 170,945
Liabilities
NPRinMn.
Total liabilities for reportable segments 170,943
Other assets -
Total liabilities 170,943
4.4.5 Information about product and services

NPRinMn.
S.N. Departments Revenue
1 Corporate 56
a Largecorporate 478
b ProjectFinancing 8
2 Retail 2,170
a HomeLoanTerm 1,29
b HomeLoanOD 273
c AutoLoan 439
d GoldLoan 38
e Loanagainstshares 124
f Educationloan 9
g LoanagainstFD 13
h OtherLoans 44
3 SmallandMediumEnterprises 1,70
a Medium enterprises 786
b Mid-marketEnterprises 32
c Easybusiness 87
d Small business 514
4 DeprivedSectorLending 325
a DirectDeprivedSectorlending 17
b IndirectDeprivedSectorLending 153
5 Treasury 243
a InvestmentsinTBillsandGovernmentbonds 15
b TradingGain 16
RevaluationGain 62
l 261 l
6 TransactionBanking 240
a Cards and new banking 130
b OtherTransactionbankingservices 10
7 Other services 9
Others 106
Total 5,358
4.4.6 Information about product and services

Revenue from following geographical areas
NPRinMn.
(a) Domestic 5,38
Province1 1,63
Province2 91
Province 3 786
Province 4 67
Province 5 865
Province6 13
Province7 374
(b) Foreign -
Total 5,358
4.4.7 Information about major customers self-assessmentforthefinancialyearto 206-1 207-1.

Revenue from single customer doesn’t exceed 10% The
of additional tax liability demanded on reassessment
total revenue for the above financial years is NPR 285 Mn. (Previous
year’s NPR 249 Mn.) including penalty/fines and interest.
SHARE
5.4 OPTIONSANDSHAREBASED The Bank has appealed against the additional demand
PAYMENT with the appropriate authorities and deposited one third of
The Bank do not have a policy for share options disputed
to its tax amount as guarantee deposit with the Inland
Revenue
employees. Similarly, during the year the Bank has not Department.
madeanypaymentsorsettlementsbyissuingnewshares.
Pending decision, no provisions have been made against
CONTINGENT
6.4 LIABILITIESAND these additional demands and disclosed as contingent
COMMITMENT liabilitiesunderSchedule17ofFinancialStatements.
4.6.1 Income Tax Liability
The Bank has received reassessment order from TheLarge
BankhasfiledtaxreturnstotheLTOuptothefinancial
years2073/4underself-assessmentprocedures.
Taxpayers’Office(LTO)ontheincometaxreturnfiledunder
l 262 l
4.6.2 Contingent Liability

NPRinMn.
As at As at As at

16-Jul-18 15-Jul-17 16-Jul-16
Claims on Bank but not Accepted by the Bank
Letter of Credit (Full Amount)
a.LetterofCreditWithMaturityLessthan6Months 2,65 1,564 1,582
b. LetterofCreditWithMaturityMorethan6Months 430 352
RediscountedBills/UnmaturedGuarantees/Bonds
a.BidBonds 43 78 71
b.PerformanceBonds 2,187 1,587 1,257
c.OtherGuarantee/Bonds
Unpaid Shares in Investment
ForwardExchangeContractLiabilities 454 3,0 2,67
Bills under Collection 168 97 69
AcceptancesandEndorsements 471 52 498
Underwriting Commitments
Irrevocable
LoanCommitments 6,30 3,334 3,714
GuaranteesissuedagainstCounterGuaranteeofInternationally
oreignBanks RatedF 1,92 307 49
AdvancePaymentGuarantees 87 54 134
FinancialGuarantees 0.5
ContingentLiabilitiesonIncomeTax 285 249 123
UnpaidGuaranteeClaims 3 2
Total 13,515 11,253 10,516
l 263 l
RELATED
7.4 PARTYDISCLOSURES
TheBankidentifiesthefollowingastherelatedpartiesundertherequirementsofNAS24.
Name Relationship
NICAsiaCapitalLimited Whollyownedsubsidiary
NICAsiaLaghubittaBittiyaSansthaLimited(w.e.f25July2017) Whollyownedsubsidiary
TulsiRamAgrawal,Chairman Director
JagdishPrasadAgrawal,Director Director
RamChandraSanghai,Director Director
RajendraPrasadAryal,Director Director
BinodKumarPyakurel,Director Director
TrilokChandAgrawal,Director Director
GaneshManShrestha,Director Director
RoshanKumarNeupane,ActingCEO(w.e.f17March2018) Key Management Personnel
SudhirNathPandey,AssistantChiefExecutiveOfficer Key Management Personnel
RajeshKumarRawal,ChiefOversightOfficer Key Management Personnel
SantoshKumarRathi,ChiefMarketingOfficer Key Management Personnel
JayendraRawal,ChiefOversightOfficer Key Management Personnel
SudeepKhanal,ChiefCorporateandPriorityLoansOfficerandChief
Key Management Personnel
SupportOfficer
KapilDhakal,ChiefHumanResourcesandChiefDevelopmentOfficer Key Management Personnel
DipendraB.Rajbhandari,ChiefRiskOfficer Key Management Personnel
ArjunRajKhaniya,ChiefPublicRelationshipOfficer Key Management Personnel
PrakashBaral,ChiefCreditOfficer Key Management Personnel
BishalSigdel,ChiefFinancialOfficer Key Management Personnel
4.7.1 Board Member Allowances and Facilities

TheBoardofDirectorshavebeenpaidboardmeetingfeesofNPRduring
3,1270 thefiscalyear.Therewere48Board
Meetingsconductedduringthefiscalyear.
The Chairperson and other members of the Board are paid NPR 12,0 and NPR10, per meeting respectively for
BoardandBoardLevelCommitteesmeeting.MeetingfeespaidtothreeBoardLevelCommitteesareasfoll
NPRin‘00’
Board Level Committees No of Meetings Meeting Allowance
AssetsMoneyLaunderingPreventionCommittee 9 23,0
Audit Committee Meeting 12 236,0
Digitalbankingsubcommittee 1 40,
KarmachariSewa Suvidha Meeting 6 136,0
Risk Management Committee 16 406,8
Total 1,050,800
l 264 l
Asapprovedbytheth20 AnnualGeneralMeetingheldonSeptember
15 each
2017, BoardMembershavebeenprovided
with a monthly allowance of NPR 13,0 for telephone, newspaper and mobile expenses. The total amount paid a
monthlyallowancestotheboardmembersduringthefiscalyearamountedtoNPR12,703.
4.7.2 Loans and Advances extended to Promoters:

TheBankhasnotextendedanyloanstopromotersduring . theyear
4.7.3 Compensation Details for Key Management Personnel

ThecompensationpaidtothemembersofmanagementcommitteeexceptCEOhasbeendepictedintablebel
Particulars Amount in NPR
ShortTermEmployeeBenefits 28,96540
Post-EmploymentBenefits -
OtherLong-TermBenefits -
TerminationBenefits(GratuityandSickLeaveEncashment) -
Share Based Payment -
Total of Key Management Personnel Compensation 28,996,540
Keymanagementpersonnelarealsoprovidedwiththefollowingbenefits:
n BenefitsaspertheEmployeeTermsofServiceBy-laws,
n Bonus to staff as per the Bonus Act
TheSalaryandbenefitspaidtotheCEOareasfollow:
Particulars Salary and Allowances Provident Fund Bonus & Welfare Other Perquisites Total Income
RoshanK.Neupane,ACEO 7,026 209,16 61,34 7,83259
LaxmanRisal,FormerCEO 7,409 - 2,40 9,807
Total 14,416,103 209,160 3,016,343 - 17,641,606
4.7.4 Transaction with Subsidiaries

Amount in NPR
Particulars NIC Asia Capital NIC Asia Laghubitta
Share Registrar fee paid 750, -
Depositreceivedfromsubsidiary 58,147 21,6894
Borrowings 650,
Interest paid to subsidiaries 14,9036 8,6950
Reimbursement received from NIC Asia Capital 97,054 -
Receivable from Subsidiaries 8,70 -
Payable to subsidiaries 658,47 -
l 265 l
Theintra-grouprelatedfigureshavebeenexcludedforpresentationofthefinancialstatementoftheGrou
MERGER
8.4 ANDACQUISITION
Therearenomergeroracquisitionstransactionduringtheyear.
ADDITIONAL
9.4 DISCLOSURESOFNON-CONSOLIDATEDENTITIES
The Bank has two subsidiaries as at 16 July 2018, NIC Asia Capital Limited and NIC Asia Laghubitta Bittiya Sansth
whichareconsolidatedfortheyearendedJuly 16 There
2018. arenosuchentitieswhicharerequiredtobeconsolid
butnotdoneduringtheyear.
EVENTS
01.4 AFTERREPORTINGDATE
The Bank monitors and assesses events that may have potential impact to qualify as adjusting and/or
events after the end of the reporting period. All adjusting events are adjusted in the books with add
andnon-adjustingmaterialeventsaredisclosedinthenoteswithpossiblefinancialimpact,totheext
TherearenomaterialeventsthathaveoccurredsubsequenttoJuly 16 till
2018 thesigningofthisfinancialsta
16 th November 2018 except, the Bank has issued “11% NIC ASIA Debenture 208/3”amounting NPR 1.83 Billion with
followingparticulars.
Name of the Debenture 11% NIC ASIA Debenture 2082/83
Amount Rs.1.83billon(1.83millionunitsofRs.1,0each)
Maturity Period 7Years
Coupon Rate 1%p.a.mayvarydependinguponliquiditysituation
InterestPaymentfrequency HalfYearly
Convertible Status None
IssueDate 27Bhadra2075
DISCLOSURE
1 .4 EFFECTOFTRANSITIONFROMPREVIOUSGAAPTONFRSS
NFRS1(First-timeAdoptionofNepalFinancialsReportingStandards)providesasuitablestartingpointfora
inaccordancewithNFRSandisrequiredtobemandatorilyfollowed
-timeadopters.
byfirst
TheBankhaspreparedtheopeningStatementofFinancialPositionasperNFRSasof1stShrawan,July (162073 2016)

(thetransitiondate)by:
n recognizingallassetsandliabilitieswhoserecognitionisrequiredbyNFRS,
n notrecognizingitemsofassetsorliabilitieswhicharenotpermittedbyNFRS,
n reclassifyingitemsfrompreviousGenerallyAcceptedAccountingPrinciples(GAAP)toNFRSasrequiredunder
NFRS,and
n applyingNFRSinmeasurementofrecognizedassetsandliabilities.
l 266 l
4.11.1 Significant changes from the policies adopted in the past

SignificantchangesfromtheaccountingpoliciesadoptedunderpreviousGAAP(erstwhileNepalAccountin
anddirectivesissuedbyNepalRastraBank)andtheadoptionofNFRShasbeendisclosedintherespecti
includingtheimpact.Thedetailedimpactdisclosure . isgivenbelow
4.11.2 Reconciliation of equity

NPRin‘00’
As at
As at
31.03.2074
Explanatory Note 01.04.2073
(End of last period
(Date of Transition)
presented under previous GAAP
Total equity under previous GAAP 7,382,845 10,116,179
AdjustmentunderNFRSs:
Impairment on loan and advances - -
Fairvalue&employeesbenefitaccountingofstaffloan - -
Leaseaccounting - -
Measurement of investment securities at fair value c 125,6 2,31
Revaluation of investment property d 283,96 48,25
Amortisation of debt securities f 206 218
Deferredtax e (130,852) (103,92)
Definedbenefitobligationofemployees (65,320) (26,7)
Goodwill/Bargainpurchasegain - -
Interest Income b 247,01 308,71
Other a 63,204 70,48
Total adjustment to equity 523,856 298,649
Total Equity under NFRS 7,906,701 10,414,828
l 267 l
4.11.3 Reconciliation of profit or loss

NPRin‘00’
For the year ended
31.03.2074
Explanatory Note (the latest period presented

under previous GAAP)
Profit/(Loss) for the year
PreviousGAAP 1,4736
AdjustmentsunderNFRSs:
Interest income b 61,0
Impairment on loans and advances -
Employeebenefitamortisationunderstaffloan -
Definedbenefitobligationofemployees e 39,58
Operating lease expense -
Amortisation expense of debt securities F 12
Other Operating income -
Interest expense -
Depreciationandamortisation -
Other -
Recognition of investment property d (235,7)
ReversalofprovisiononinvestmentbookedunderGAAP -
Deferredtax 26,93
ProvisiononinvestmentreclassifiedtoP&L 148
Total Adjustment to profit or loss (108,050)
ProfitorlossunderNFRS 1,365,416
Other Comprehensive Income
-Net Change In fair value 2,164
-Actuarialgain/loss (94)
Total Comprehensive Income under NFRS 1,366,636
l 268 l
4.11.4 Effect of NFRS adoption for the Statement of Financial Position

NPRin‘00’
As at 31 Ashad 2073 As at 31 Ashad 2074
(Date of Transition) (End of last period presented under previous GAAP)
Explanatory Note
Previous GAAP
Effect of
transition to NFRS
Opening NFRSs
statement of Financial
Position
Previous GAAP
Cumulative effect of
transition to NFRSs
Amount as per NFRSs

Particulars
Assets
Cashandcashequivalent 3,549208 - 3,549208 3,47982 - 3,47982
DuefromNepalRastraBank 4,39610 - 4,39610 10,2945 - 10,2945
PlacementwithBankandFinancialInstitutions 1,259 - 1,259 1,49385 - 1,49385
Derivativefinancialinstruments. 2,30156 - 2,30156 3,028561 - 3,028561
Other trading assets - - - - - -
LoanandadvancestoB/FIs 1,0867 - 1,0867 1,6304 - 1,6304
Loansandadvancestocustomers b 57,146 16,728 57,8639 70,5968 18,34 70,61582
Investment securities c 1,42806 179,45 1,60752 10,6375 3,240 10,965
Current tax assets 10,72 - 10,72 9,85 - 9,85
Investment in subsidiaries 10, - 10, 10, - 10,
Investment in associates - - - - - -
Investment Properties d - 283,96 283,96 - 38,192 38,192
Property,Plant&Equipment(PPE) 537,40 - 537,40 1,06295 - 1,06295
Intangible Assets 18,27 - 18,27 35,87 - 35,87
Deferredtax 4.15 31,05 (31,05) - 41,86 (41,86) -
Other assets 503, 85,23 58,2 1,03287 - 1,03287
TotalAssets 82,9417 679,405 83,572 102,79643 317,9 103,862
Liabilities
DuetoBanksandfinancialInstitution 7,21549 - 7,21549 7,26 - 7,26
DuetoNepalRastraBank - - - - - -
Derivativefinancialinstruments 2,65 - 2,65 2,98 - 2,98
DepositfromCustomers 64,0791 - 64,0791 79,0562 - 79,0562
Borrowing - - - - - -
CurrentTaxLiabilities - - - - - -
Deferredtaxliabilities 4.15 - 146,830 146,830 - 5,798 5,798
Other liabilities 4.23 906,58 8,924 915,0 1,4289 3,9 1,4582
Debtsecuritiesissued 4.2 51,908 (206) 51,703 501,468 (218) 501,2
SubordinatedLiabilities - - - - - -
TotalLiabilities 75,1302 15,49 75,681 92,60415 89,51 92,6354
l 269 l
Equity
Share capital 4,573 - 4,573 6,9257 - 6,9257
Share premium - - - - - -
Retained earnings 1,306524 41,2 1,72064 1,85039 (5,81) 1,845
Reserves 1,50946 109,735 1,608 1,6437 234,016 1,876
Totalequity 7,38245 523,86 7,9061 10,862 28,0 10,482
Totalliabilitiesandequity 82,9417 679,405 83,572 102,79643 317,9 103,862
4.11.5 Effect of NFRS adoption for statement of profit or loss and other comprehensive income
NPRin‘00’
For the year ended
Explanatory
31.03.2074
(the latest period presented under previous GAAP)
Partuculars
Note
Effect of transition Amount as

Previous GAAP
to NFRS per NFRS
Interest Income b 6,90413 184,75 7,085
Interest expense 4.3 4,3628 46 4,3629
Net interest income 2,541,630 184,029 2,725,659
FeesandCommissionIncome 70,1 - 70,1
Feesandcommissionexpense 49,1 - 49,1
Net fee and commission income 657,090 - 657,090
NetTradingIncome 16,09 - 16,09
Other Operating Income 58,06 - 58,06
Total operating income 3,418,395 184,029 3,602,423
Impairmentcharge/(reversal)forloanandotherlosses 4.35 (305,267) 235,84 (69,83)
Net Operating income 3,723,661 419,613 3,672,106
PersonnelExpense 4.36 1,0495 83,76 1,3297
Other operating expense 4.37 581,02 (458) 580,3
Depreciation&Amortisation 129,85 - 129,85
Operating profit 1,964,414 336,195 1,829,441
Non operating income 15,409 - 15,409
Non operating expense 31,694 - 31,694
Profit before income tax 2,088,129 336,195 1,953,156
l 270 l
IncomeTaxExpense 4.1 614,3 26,93 -
CurrentTax 625,48 - 625,48
DeferredTax (10,795) (26,93) (37,1)
Profit For the Year 1,473,466 363,118 1,365,416
Other Comprehensive Income
Other comprehensive income 364,8 364,8
Total comprehensive income 1,473,466 364,338 1,366,636
5.11.6 Effect of NFRS adoption for statement of cash flows

NPRin‘00’
For the year ended
31.03.2074
Particulars (the latest period presented under previous GAAP)
Previous GAAP Effect of transition to NFRS Amount as per NFRS
Netcashflowsfromoperatingactivities 6,70932 (9,50261) (2,74168)
Netcashflowsfrominvestingactivities (1,923058) 3,652 1,4250
Netcashflowsfromfinancingactivities 1,7425 5,49 1,29803
Netincrease/(Decrease)incashandcashequivalent 6,0128 (6,0815) (69,380)
Cashandcashequivalentasthebeginningoftheperiod 7,29451 (4,18023) 3,549208
Cashandcashequivalentattheendoftheperiod 13,7459 (10,2675) 3,47982
ThereisnoanycashinflowduetoNFRS.Howeverduetoreclassification majoradjustmentsareobservedm
to reclassification of Balance of BFIs from cash and cash equivalent to operating activities. Furthe
bifurcatedintolongterminvestmentandshort-terminvestmentwhichhasnowbeenclassifiedintoi
Explanatory Notes to first time adoption

a)UnderpreviousGAAP,cashdividendsonequitysharesrecommendedbytheboardofdirectorsafterthe
reportingperiodbutbeforethefinancialstatementswereapprovedforissuewererecognisedinthefina
as a liability. Under NFRS, such cash dividends are recognised when declared by the members in a general m
The effect of this change is an increase in total equity, but this does not affect profit before tax and t
respectiveyears.
b) Under previous GAAP, Interest income on Loans and Advances was recognized on cash basis as per Directiv
Nepal Rastra Bank (NRB). Under NFRS, Interest income is recognised on accrual basis using Effective Intere
(EIR)Methodandinterestonstaffloanhasbeenamortisedatfairvalue.
l 271 l
Amount in NPR
As at As at
Particulars 15 July 2017 16 July 2016
InterestsuspenserequiredbyNFRS - -
InterestsuspenserecognisedunderLocalGAAPreversed 308,71 247,01
Net Increase in Equity 308,071 247,011
Net Movement in Profit & Loss during the year 61,061
AmoritisationofStaffLoanInterest -289,3 -85,23
Net Impact on Loans and Advances 18,133 161,728
c) Under previous GAAP, investments were measured at cost less diminution in value. Under NFRS, these fina
assetshavebeenclassifiedasfinancialassetscarriedatFairValuethroughOtherComprehensiveIncome(FV
thedateoftransitiontoNFRS,thesefinancialassetshavebeenmeasuredattheirfairvaluewhichishighe
asperpreviousGAAPresulting
, inanincreaseinthecarryingamountasexplainedinthetablebelow.Thesech
not affect profit before tax or total profit for the year ended 15 July 2017 and 16 July 2016 because the changes in fair
valuehavebeenrecognisedunderOtherComprehensiveIncome(OCI).
As at As at
Decreaseincarryingamountduetofairvalue 3,092 179,45
Already recognised in books of account
Deferredtaximpactontheincreasedamount (928) (53,8)
WritebackoflossprovisioncreatedunderGAAP - -
Net increment in total equity 2,164 125,622
Net Movement in OCI during the year (123,457)
d) UnderpreviousGAAPNon
, BankingAssets(NBA)wererecognisedasperDirectivesofNepalRastraBankand10%
provisionweremade.UnderNFRS,theseNBAhavebeenclassifiedasNonCurrentAssetsheldforsaleandmeasur
atloweroftheircarryingamountandfairvaluelesscosttosell.OnthedateoftransitiontoNFRS,provis
DirectivesofNRBhadbeenreversed,resultinginanincreaseinthecarryingamountasexplained
. intheta
As at As at
Particulars
15 July 2017 16 July 2016
Increase in carrying amount due to reversal of provision on NBA 48,25 283,95
NetmovementinProfitandlossduringtheyear (235,71)
e)UnderNFRS,theactuarialgainsandlossesformpartofre-measurementofthenetdefinedbenefitliability/ass
isrecognizedinOtherComprehensiveincome(OCI)Consequently,
. thetaxeffectofthesamehasalsobeenrecogn
inOtherComprehensiveIncome(OCI)underNFRSinsteadofprofitorloss.
l 272 l
Thereisre-measurementofGratuityandSickleaveLiabilityaspertheactuarialvaluationreport.
As at As at
(Increase)/DecreaseinGratuityLiabilityduetoActuarialValuation (29,03) (64,37)
(Increase)/DecreaseinSickLeaveLiabilitytoActuarialValuation (4,90) (7,62)
LiabilityasperlocalGAAP 95,418 4,807
ActuarialliabilityasperNFRS(A) (129,357) (16,93)
(33,939) (72,129)
ActuarialGains/lossinGratuityandSickleave 24,0 2,695
DeferredtaxImpactonActuarialGain/Loss(B) 7,213 6,809
Net Increment in Total Equity (A)+(B) (26,726) (65,320)
Net movement in OCI during the year (945)
NetmovementinProfitandlossduringtheyear 39,58
f) Under previous GAAP, Bonds issued were carried at cost price. Under NFRS, Bonds issued are carried at am
costandcostincurredonBondsissuedareconsideredfortheEIRcalculationandthebalanceoutst
measuredaccordingly.
As at As at
Particulars
15 July 2017 16 July 2016
AdjustmentofcostofissueofNICAsiaBondsusingEIR 218 206
NetmovementinProfitandlossduringtheyear 12
l 273 l
NON-
2 1 . 4 BANKINGASSETS
Non-BankingAssets(NBA)hasbeenshownunderinvestmentproperty.Ithasbeenrecognizedatloweroffairva
amountdueatthetimeofassumptionofNBA.
NPRin‘00’
Date of assuming Non- As at As at As at

Name of Borrower
Banking Assets 16 July 2018 15 July 2017 16 July 2016
KrishnaDangi/ManjuGautam 2-Jul-18 16,297 - -
AutoCraftPvt.Ltd. 1-Feb-18 15,80 - -
Umar Stores 3-Jul-18 9,05 - -
PandPGroup 7-Jun-18 7,650 - -
KedarAryalandNirmalVeniyarUdhyog 9-Oct-12 7,456 7,456 7,456
NangesworiMultipleTradingCo.PvtLtd 14-Aug-15 4,837 4,837 4,837
BalKrishna/KalpanaBishwakarma 2-Jul-18 3,960 - -
ShivendraKumarVerma/JyotiKumariVerma 5-Jul-18 3,20 - -
RekhaKumariKhadka&SaruShahi 19-Jun-18 2,513 - -
PurnaBrahmaTradeLink 5-Jul-18 2,40 - -
B.PNirmanSewa 3-Jun-16 1,20 14,207 14,207
KathmanduOffsetPrintersandTraders 9-Oct-12 - 10,52 10,52
Ram Adhikari 19-Jun-16 - 7,0 7,0
PoonamTradersandSuppliers 2-Oct-17 - 4,0 -
AshokdharPradhananga 2-Jan-17 - 203 -
Oriental Builders 20-Jan-13 - - 239,5
Total 74,38 48,25 283,96
CHANGE
31.4 OFESTIMATE
Subsequent to the decision dated 4 May 2018, management has estimated the revised useful life of the asset
the effect of such revision on net carrying value of assets and depreciation has been accounted prospectively resulting
decreaseindepreciationchargesfortheyearwithcorrespondingincrementinassetsvaluebynetRs30,195.
Thedetailsofpreviouslyapplieddepreciationrates/usefullifeareasfollows:
Asset Previous depreciation/amortisation rate/useful life Revised useful life
Computer 25% 5Years
MetalFurniture 25% 10Years
OfficeEquipment 25% 10Years
Vehicle 15%-20 10Years
WoodenFurniture 25% 5Years
Building 5% 50Years
Leasehold Lowerof5YearsorLeasePeriod Lowerof15YearsorLeasePeriod
Software 5 years or expiry period whichever is lower 5 years or expiry period whichever is lower
l 274 l
EARNINGS
41.4 PERSHARE
TheBankmeasuresearningpershareonthebasisoftheearningattributabletotheequityshareho
Thenumberofsharesistakenastheweightedaveragenumberofsharesfortherelevantperiodasrequ
EarningsperShare.
Units Year ended Year ended

Particulars
16-Jul-18 15-Jul-17
Profitattributabletoequityshareholders(a) NPR.’00 1,34862 1,3654
Weightedaverageofnumberofequitysharesusedincomputingbasicearnings
No. 80,3169 6,9257
per share (b)
BasicanddilutedearningsperequityshareofRs10each(a/b) Rs 16.2 20.4
As there is no potential ordinary shares that would dilute current earning of equity holders, basi
areequalfortheperiodpresented.
PROPOSED
51.4 DISTRIBUTIONSDIVIDENDS
( ANDBONUSSHARES)
TheBoardofdirectorsinitsmeeting th
November
dated16 2018haspassedaresolutionrecommendingfordistribution
of bonus shares (stock dividend) at 10% and cash dividend equivalent to tax on stock dividend at 0.526% of paid
capitalasat16July2018.
NPRin‘00’
As at As at As at
Particulars
16 July 2018 15 July 2017 16 July 2016
CashDividendDeclared 42,69 70,48 63,204
Bonus Shares 803,12 1,38520 1,208
Total 845,31 1,40896 1,26408
UNPAID
61.4 DIVIDENDS
Asatthereportingdate,unpaiddividendoverfiveyearsamountstoasfollows.
NPRin‘00’
As at As at As at
Particulars
16 July 2018 15 July 2017 16 July 2016
Not collected for more than 5 years 27,93 18,65 41,30
Not collected up to 5 years 65,83 7,03 1,07
Total 93,75 95,718 152,37
l 275 l
SWIFT
7 1 . 4 CASE
TheSocietyforWorldwideInterbankFinancialTelecommunication(SWIFT)systemoftheBankthwas andhackedon18
19 th
of October 2017 during Tihar vacation when the banks were closed. As per the information provided by the ba
amountequivalenttoNPR465,09hadbeenfraudulentlytransferredtoeightdifferentNostroaccountsmaint
by the bank through 31 transactions via SWIFT. Of the total amount which was fraudulently transferred by the
bankfailedtorecoverRsand 67,419 consideringtheremotechancesofitsrecoverybankhascreatedlossprovisi
inthebooksofaccounts.
NON-
8 1 . 4 PERFORMINGASSETS
TheBanks’non-performingassetsratiostoodatas 0.697% atbalancesheetdate.Thetotalnon-performingasset
atbalancesheetdateisNPRand 84,13697 loanlossprovisionrelatedtonon-performingassetscalculatedasperN
directivesisNPR72,4193whichis86%ofNPA.Also,thetotalloanlossprovisiontoNPAis1,524%.
NPRin‘00’
Change
Particulars This Year Previous Year
Amount %
Pass loan (performing loans) 120,586 72,95 48,237 67%
Non-PerformingLoans(NPL)
Restructured/rescheduled - -
Substandard 12,384 32,04 -19,65 -61%
Doubtful 4,861 3,265 1,596 49%
Loss 6,8 27,3 -160,387 -71%
GrossLoans&Advances 120,68 72,5618 48,1092 6%
NPLratios:
GrossNPLtoGrossLoans&Advances
0.697%
NetNPLtoNetLoans&advances
0.971%
CONCENTRATION
91.4 OFDEPOSITS,LOANSADVANCES
& ANDCONTINGENTS NPRinMn.
Loans & Advances and Bills Deposits & Borrowings Non-Funded
Purchased
Particulars
CY PY CY PY CY PY
TotalAmountOutstanding 120,6 72,58 15,76 87,69 6,795 305
HighestExposureofaSingleUnit 704 958 4,952 4,67 956 307
Concentration of exposure 0.58% 1.32% 3.28% 5.39% 14.07% 10.4%
*CY=CurrentYear,PY=PreviousYear
l 276 l
Forthecalculationofconcentration,loansandadvancesistotalloansextendedtothecustomers
interestaccrualsonloansandthedepositsistotaldepositsfromthecustomersexcludinginter
Single Obligor Limit and Sector-wise Limit (Directive No. 3) for both funded and non-funded are within the
prescribedbyNRBdirectives.
RESERVES
02.4
4.20.1 General Reserve

Themovementingeneralreserveduringtheyearisasfollows;
NPRin‘00’
Opening Balance 1,58
TransferasperBAFIA 26,97
Closing balance 1,8253
As required by Section 4 of Banks and Financial Institutions Act, 2073 (BAFIA), 20% of the current year’s net profit
amountingtoNPR(Previous
26,97385 YearNPRhas
294,631) beentransferredtoGeneralReservethroughProfit
andLossAppropriationAccount.
4.20.2 Exchange Fluctuation Reserve

AsperSection45oftheBanksandFinancialInstitutionsAct206,Bankisrequiredtotransfer25%ofrevaluat
toExchangeFluctuationReservethroughProfitandLossAppropriationAccount.FortheyearNPR3,680(Previous
yearNPRhas
731,0) beentransferredtoExchangeFluctuationReserve.TheclosingbalanceofExchangeFluctuatio
ReserveisNPR38,72154.
ThemovementinExchangeFluctuationreserveduringtheyearisasfollows:
NPRin‘00’
Transferof25%ofrevaluationgain 3,68
4.20.3 Bond Redemption Reserve

AspertheClause5ofNRBdirective#16,licensedinstitutionsarerequiredtomaintainacapitalredemp
respectofdebentureliability.
AstheBankhasdebenturesoutstandingofNPR350millionnamely“7.25%NICASIABond207”ofNPR50million
and“9NIC % ASIABondof 2081/” NPRmillion
3,0 withmaturityperiodofsevenyeareach.NPR(Previous
71,4285
Year NPR 71,4285) has been apportioned from the Profit & Loss Appropriation Account for “7.25% NIC ASIA Bond
207”.TheclosingbalanceofCapitalRedemptionReserveasonreportingdataisNPR285,714.
l 277 l
4.20.4 Investment Adjustment Reserve

As required by NRB directive # 8, the Bank has created Investment Adjustment Reserve (IAR) for investment
‘AvailableforSale’category.
Theinvestmentreserveconsistsofreserveonaccountoffollowings;
i) investment in newly opened corporate body if not listed in stock exchange within one year from the date of operation or
investment being made, and investment in the shares and debentures of corporate body which are not listed in the stock
exchange,andifsuchlistingisnotcompletedwithinoneyearfromthedateofinvestment,provision 10% ofinves
amounthasbeenprovidedandcreditedinInvestmentAdjustmentReserve,and
ii)2%ofthetotalinvestmentportfoliounderavailableforsalecategoryhasbeenprovided.
Movement in investment reserve during the year has been depicted below;
NPRin‘00’
Investment Adjustment Reserve
Name of Company Investment Type Market Value
% Amount
GlobalIMESamunnatScheme1 Initial Public Offer 3,09 2% 61
NABILEquityFund Initial Public Offer 4,693 2% 94
NIBLPargatiFund Initial Public Offer 9,247 2% 185
NMBHybridFundL-1 Initial Public Offer 10,673 2% 213
NICAsiaGrowthFund Promoter Share 150, 2% 3,0
NationalLifeInsuranceCompanyLimited Promoter Share 51,6 2% 1,032
NepalLifeInsuranceCompany FurtherPublicOffer 3,245 2% 65
RuralMicrofinanceDevelopmentCentreLimitedPromoter Share 25,31 2% 50
CitizenInvestmentTrust Promoter Share 264,58 2% 5,291
JyotiLifeInsuranceLimited Promoter Share 150, 2% 3,0
KarjaSuchanaKendraLtd Promoter Share 1,62 2% 32
MahuliSamudayikLaghubittaBittiyaSansthaPromoter Share 2,0 2% 40
MeroMicrofinanceBittiyaSansthaLimited Promoter Share 14,0 2% 280
National Banking Institute Promoter Share 2,40 2% 48
NepalClearingHouselimited Promoter Share 5,0 2% 10
NepalElectronicPaymentSystem Promoter Share 15,0 10% 15,0
NICASIACapitalLtd Promoter Share 20, 2% 4,0
NICASIALagubittaBittiyaSansthaLtd Promoter Share 70, 2% 1,40
NepalInfrastructureBankLtd Promoter Share 450, 2% 9,0
GrameenLaghubittaBittiyaSansthaLimited Promoter Share 3,0 2% 60
ShrijanaCommunityDevelopmentCenter Promoter Share 50 2% 10
SolveLaghubittaBittiyaSansthaLimited Promoter Share 1,40 2% 28
Grand Total 1,477,223 44,244
Previous Year Closing 28,472
Additional 14,648
l 278 l
4.20.5 Corporate Social Responsibility

NPRin‘00’
TransfertoReserve 13,49
Expenseduringtheyear 3,468
AspertheNRBdirectiveno.6.1ontheCorporateSocialResponsibility,theBankhasallocated1%ofthenet
currentfiscalyearforCSRactivities.Theamountallocatedforcorporatesocialresponsibilityreserv
Rs.14,7360respectivelyforcurrentyearandpreviousyear.
DISCLOSURE
12.4 OFACTUARIALVALUATIONFORLEAVEANDGRATUITY
2018 2017 2016
Particulars Gratuity Leave Gratuity Leave Gratuity Leave

(Unfunded) (Unfunded) (Unfunded)
Change in Present Value Obligations:
PVofObligationatbeginningoftheyear
130,56 96,1457 126,09 52,6904 1,4037 40,279
Adjustmenttoopeningliability - - (28,6314) - - -
Interest cost 1,0438 7,4825 10,3748 4,012 8,7134 2,837159
Current Service Cost 24,9781 50,4167 18,406395 9,468 16,8250 6,9452
Benefitpaid (16,407) (20,569) (21,58794) (1,9083) (5,16298) (10,2589)
Actuarial(Gain)/Loss (7,2568) (5,7604) (2,760) 42,0531 2,69548 12,8059
Liability at the end of the year 142,768,413 128,512,135 130,501,066 96,194,576 154,333,085 52,569,040
Change in Fair Value of Plan Assets:
FVofPlanAssetatBeginningoftheYear
97,382 - 89,652 - 58,10 -
Adjustmentstotheopeningfund (3,64750) - - - - -
Interest Income 9,85236 - 8,2471 - - -
ContributionbyEmployer 40,73521 - 24,870 - 36,142 -
Benefitpaid (16,407) - (21,58794) - (5,16298) -
ActuarialGain/(Loss)onPlanAssets (9,85236) - (4,10768) - - -
Fair Value of Plan Asset at End of the Year 117,969,786 - 97,338,381 - 89,966,552 -
Amount Recognized in SOFP:
PresentValueofObligationsatYear
142,7683 End 128,53 130,56 9,648 154,308 52,6904
FairValueofPlanAssetsatYearEnd 17,968 - 97,381 - 89,652 -
Unfunded Status (24,798,627) (128,512,135) (33,162,685) (99,964,866) (64,366,533) (52,569,040)
RECONCILIATION
2 .4 STATUS
Theoutstandingbalanceistotalofdebitandcreditbalance.Thedifferencehasbeenidentified,reconc
reviewedonperiodicbasis. NPRin‘00’
<3 >3<6 > 6 <12 <12
Particulars Total Amount
months months months months
Branch Reconciliation Nil Nil Nil Nil Nil
Agency Accounts 1,2945 1,9724 1,5 943 Nil
l 279 l
NIC ASIA BITTIYA
LAGHUBITTA
SASTHA
ALNU REPOT 2017/8
7.1
DIRECTORS’ REPORT
REPORT OF BOARD OF DIRECTORS PRESENTED IN FIRST ANNUAL GENERAL MEETING

FISCAL YEAR 2017/18
Respected Shareholders, representatives of NIC Asia 1. FINANCIAL HIGHLIGHTS OF FY 2017/18

Bank Ltd. and entire attendees, a) Major Indicators:
Financial highlights and major indicators of FY 2017/8
On behalf of Board of Directors, I would like to welcome are as follows:
you all for the first annual general meeting of NIC Asia
LaghubittaBittiyaSansthaLtd. NPR ‘000
Particulars As on 16- As on 15- % Increment

Jul-2018 Jul-2017
NIC Asia Laghubitta Bittiya Sanstha Ltd., registered as
Paid Up Capital 70,000 - -
subsidiary company of NIC Asia Bank Ltd. is running in
Net Worth 64,416 - -
rst
fi yearofitsoperation.Byestablishingcorporateoffice
Borrowing(Net) 749,008 - -
in remote district Jajarkot, we are committed towards
SavingDeposit 68,612 - -
providingmicrofinanceservicestothosewhodonothave
Loans and Advances 828,256 - -
ease of access to such services and enhancing their
OperatingProfit (5,36) - -
nancial
fi and social status. During the review period 82
NetProfitafterTax (5,84) - -
branches are in operation in 14 districts. We are hopeful
that we shall always receive same level of cooperation from
shareholdersandstakeholdersinachievingourobjectives
ofprovidingservicestodeprivedsectorofremoteareas.
b) Branch Expansion
Duringthefirstyearofoperation(FY2017/8),following28brancheswereestablished:
S.No. District Municipalities/ Rural Municipalities Branch
1 Jajarkot Bheri Municipality Khalanga

2 Jajarkot ChhedagadMunicipality Thalaha
3 Rukum Chaurjahari Municipality Chaurjahari
4 Rupandehi Tilottama Municipality Kotihawa
5 Salyan BangadKupindeMunicipality Sallibazar
6 Kapilvastu Suddhodhan Rural Municipality Lawani
7 Nawalparasi BardaghatMunicipality Bhutaha
8 Kapilvastu Buddhabhumi Municipality Imiliya
9 Rukum Sani Bheri Rural Municipality Simli
10 Surkhet BherigangaMunicipality Chhinchu
11 Banke Kohalpur Municipality Chappargaudi
12 Rupandehi Sainamaina Municipality Ramapur
13 Surkhet Simta Rural Municipality Jamunebazar
14 Rupandehi Siyari Rural Municipality Chhapiya
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ALNU REPOT 2017/8
15 Rupandehi Maya Devi Rural Municipality Bethari

16 Rupandehi Suddhodhan Rural Municipality Manpakadi
17 Rupandehi Devdaha Municipality Shankarpur
18 Dang Gadhawa Rural Municipality Gadawa
19 Surkhet Gurbhakot Municipality Mehelkuna
20 Nawalparasi Binayi Rural Municipality Sardi
21 Nawalparasi Sunwal Municipality Bhumahi
22 Nawalparasi Susta Rural Municipality Baruwa
23 Chitwan Kalika Municipality Padampur
24 Kailali Joshipur Rural Municipality Joshipur
25 Kanchanpur Punarbas Municipality Punarbas Municipality
26 Jumla Chandan Nath Municipality Jumla
27 Dailekh BhagwatiMaiRuralMunicipality Bestada
28 Banke Rapti Sonari Rural Municipality Samshergunj
c) Customer Base f) Investment

Ason16-Jul-2018,6437membershavebeenprovided Institution has not invested fund in any other sector
withmicrofinanceservicesbyconstituting68groups. except regular loans and advances during the review
period.
d) Lending and Deposit Transactions
During FY 2017/8, total loans and advances of NPR 2. EFFECTS OF NATIONAL AND
was
84,920 disbursedoutofwhichNPR16,392 INTERNATIONAL SITUATION ON
wassettledresultingoutstandingloanbalance TRANSACTIONS
ason16- OF COMPANY
Jul-2018 to be NPR 82,5630. Total deposit balance Transactionsofcompanywerenotsignificantlyaffected
of 6,437 members as on 16-Jul-2018 amounts to NPR byinternationalscenarioduringreviewperiod.Howev
68,612,427. company could not mark itself safe from liquidity crunch
in national market. Due to liquidity crisis, it was diffic
e) Human Resource Training and Capacity for company to arrange for investable fund. Due to
Development expansion of branches during the review period, it
There has been increase in number of staffs along with difficult for company to arrange adequate
became
increased transactions of institution. As on 16-Jul-2018, fund for operation. Cost of fund was high because of
98 staffs were employed by institution out of which borrowing from other bank and financial institutions
32 staffs (3%) were female. Realizing the fact that high interest up to 14% to meet the requirement of
capacity, confidence and motivation of staffs plays vital for regular operation of business. Instit
liquidity
role in stable growth of the Bank, training and capacity in loss during first year of its operation
remained
development of staffs is prioritized by institution. because During
of provisions of regulatory authority Nepa
the review period, active participation of all staffs was Rastra Bank which prohibited microfinance financial
ensured in two trainings organized by institutions itself. from obtaining interest on loan abov
institutions
Participation of staffs in various national and international andfromincreasinginterestspread.
trainings, workshop and seminar shall be ensured in
days to come.
l 283 l
ALNU REPOT 2017/8
PROGRESS
.3 OFCURRENTYEARTILLDATEOFREPORTANDOPINIONOFBOARDOF
DIRECTORS ON FUTURE PROSPECTS
a) Progress of Current Year Till Date of Report

ComparisonofprogressofcurrentyearwiththatofFY2017/8hasbeenpresentedbelow:
S.No. Particulars Units As on 16-Nov-2018 As on 16-Jul-2018 % Achievement
1 Branches Number 44 28 57.14

2 Customer Member Number 12,747 6,437 98.03
3 Borrowers Number 9,461 3,286 187.9
4 Loan Disbursed NPR ‘000 2,345176 844,920 177.6
5 Investment in Loan NPR ‘000 2,185,269 828,256 163.8
6 Member’sSaving/Deposit NPR ‘000 169,543 68,612 147.1
7 Interest Income NPR ‘000 99,884 11,007 807.5
8 Other Income NPR ‘000 30,27 15,904 90.69
9 InterestExpense NPR ‘000 41,907 9,685 32.7
10 PersonnelExpense NPR ‘000 10,590 7,287 45.3
11 OtherOperatingExpenses NPR ‘000 14,116 7,021 101.1
12 Loan Loss provision NPR ‘000 15,036 8,449 77.96
13 OperatingProfit(BeforeEmployeeBonusandTax) NPR ‘000 50,027 (5,84) 995.9
Projection for FY 2018/19:

Particulars Unit As on 16-Jul-2019 As on 16-Nov-2018 % Increment
Branches Number 100 44 127.27

Loan Disbursed NPR ‘000 4,67352 2,345176 99.28
Investment in Loan NPR ‘000 3,4860 2,185,269 57.3
b) Opinion of Board of Directors regarding future cooperation and technical support of Bank, business
plan and prospects for progress of institution is as managementandpromptserviceshallbecompetitive
follows: advantageforus.WiththecollaborationofNICAsia
• Alongwiththeincreasingopportunities in Bank Ltd. modern services and facilities shall be
microfinancesectorofNepal,numberofthreatisalso provided to our members and other customers.
increasing.Strategyofinstitutionshallbeformulated • InordertostrengtheninternalcontrolsystemofBank
insuchawayastofacechallengestactfullyand effectiveness of board level committees like audit
make optimum utilization of opportunities. committeeandriskmanagementcommitteeshallbe
• W eshallremaincommittedtowardsproviding enhanced.
customerorientedservicesandfacilitieskeeping • With the collaboration of NIC Asia Bank, Financial
inmindlevelofawarenessofcustomers,changingLiteracyProgramshallbeconductedindifferent
need and demand, availability of other means of places.
providingservices,developmentandenhancement of
• Necessary improvisation in loan, deposit and other
information system and competitive environment. microfinanceservicesaspertheneedanddemandof
• Maximumuseoftechnology ,adoptionofTheNIC customerandexpansionofadditionalservices.
AsianDNAofholdingcompanyNICAsiaBankLtd, • Diversificationofmeansandmediumoffinancial
sources necessary for institution.
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ALNU REPOT 2017/8
4. INDUSTRIAL AND BUSINESS Dhakal and Mr. Niraj Basnet Danil, constitution of Board
RELATIONSHIP OF COMPANY of directors was altered as follows:
Company has maintained harmonious relationship with
regulatory bodies like Nepal Rastra Bank, Company Mr. Arjun Raj Khaniya Chairman
Registrar’s Office, and so on. We shall maintain Mr. Tej Raj Timilsina Director
professional relationship with government Mr.and
Dinesh Bhari
non Director
Mr.
government institutions involved in poverty alleviation Bishal Sigdel
Director
and rural development in days to come. Mr. Padam Raj Thakulla Director
5. CORPORATE SOCIAL RESPONSIBILITY We would like to congratulate Mr. Roshan Kumar

AND CUSTOMER PROTECTION FUND Neupane for being appointed as Chief Executive Officer
a) Corporate Social Responsibility of holding company NIC Asia Bank and wish for his
As institution was running in first year of its successful
operation, tenure.
significant contribution for fulfillment of social
responsibility was not possible during review 7. MAJOR period.CHALLENGES AFFECTING
We are confident that we shall ensure our contribution TRANSACTIONS
BUSINESS
in social activities like: organization of financial a) Possible literacy threatfromextensivecompetitionin
program, participation and contribution inmicrofi nancesector
social
programs organized at local level, support tob) victims Difficultyarisingduetoutilizationofloanfacilityby
of natural calamities and medical treatment of those samecustomerfrommorethanonemicrofinance
suffering from critical illness, assistance for education, financialinstitutions
health and sanitation, internet services, agriculture c) Lackofadequate and financialresourcesduetoLiquidity
otherareasspecifiedbyNepalRastraBank. crisis of banks andfinancialinstitutions
d) F requentamendmentinrulesandregulationsby
b) Social Security of Customers NepalGovernmentandregulatoryauthorities
In order to contribute for the protection of borrowers and e) Difficultyarisingduetoinadequateinfrastructures
corporate development, customer protection fund shall like electricity, internet, road, security and skilled
be created by allocating specific percentage frommanpower the fororganizingprogramsinremoteareas
profitofeveryyearanddistinctproceduralguideline f) Problems shallarisingduetoperiodicnaturalcalamitie
be formulated for the purpose of operation of the fund.
Board of Directors shall endeavor to minimize effects
6. CHANGE IN BOARD OF DIRECTORS AND ofsuchthreatandchallengesforsmoothoperationof
REASON FOR SAME business.
Atthetimeofregistrationofinstitution,boardofdirectors
wasconstitutedwithfollowingmembers: 8. AUDIT REPORT AND OPINION OF BOARD
OF DIRECTORS
Mr. Roshan Kumar Neupane Chairman Audit report attached with this report and finan
Mr. Kapil Dhakal Director statements reflect true and fair picture of organizat
Mr. Dinesh Bhari Director affairs. There are no significant remarks in audit repor
Mr.BishalSigdel Director and minor issues raised by auditors are in process of
Mr. Niraj Basnet Danil Director resolution.
Because of appointment of outgoing Chairman as9. AMOUNT OF PROPOSED DIVIDEND

Chief
ExecutiveOfficerofholdingcompanyNICAsiaBankand there was no distributable profit during fiscal year
As
allocation of other responsibilities to directors Mr. Kapil 2017/18, dividend has not been proposed.
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10. INTERNAL CONTROL SYSTEM d) Sampati Suddhikaran Anugaman Samiti

Various procedures shall be developed with time for the Sampati Suddhikaran Anugaman Samiti constitutes
purpose of effective internal control system. In order to followingmembers:
ensure better governance of institution, financial and
administration bylaw, staff bylaw, loan write off bylaw, Mr. Tej Raj Timilsina Coordinator
credit policy, and Information technology policy HeadareOperation Department Member
formulated and brought into effect. We shall tryHead Finance Department
our best Member Secretary
tostrengtheninternalcontrolsystemandmaintainbetter
imageofinstitution. During fiscal year 2017/8, meeting of Sampati
SuddhikaranAnugamanSamitiwasheldonetime.
a) Audit Committee
Audit Committee of institution constitutes 11. EXPRESSION
following OF GRATITUDE
members: On behalf of Board of directors, I would like to thank
customers, shareholders, NIC Asia Bank Ltd., Nepal
Mr.BishalSigdel,Director Coordinator Rastra Bank, Company Registrar’s Office, office bearer
Mr. Padam Thakulla, Director Member of different institutions and authorities, journalists, and
Head Internal Audit Member Secretary all well wishers for your direct and indirect support, faith,
direction and motivation towards our institution. We are
During fiscal year 2017/8, meeting of audit committee grateful towards our shareholders, NIC Asia bank Ltd.
was held one time. andotherbanksandfinancialinstitutionsforyourfinancia
andtechnologicalassistanceforthesmoothoperationo
b) Risk Management Committee business. We hope that we shall receive same level of
Risk Management Committee of institution constitutes cooperation from everyone in days to come.
followingmembers:
It is due to support and assistance of organizations
Mr. Padam Thakulla, Director Coordinator mentioned above, management and hard work of staffs
Coordinator of Audit Committee Member of institution that we are able to achieve desired results.
Head Operation Department Member Hence, we would like to thank chief executive officer,
Head Credit Department Member Secretary management and all the staffs of institutions for the
contribution.
Duringfiscalyear2017/8,meetingofriskmanagement
committee was held one time. Thank you!
c) Karmachari Byabasthapan Ra Sewa Subidha Samiti On behalf of Board of Directors

Karmachari Byabasthapan Ra Sewa Subidha Samiti Arjun Raj Khaniya
constitutesfollowingmembers: Chairman
Mr. Dinesh Bhari, Director Coordinator

Head Internal Audit Member
Head Human Resource Department Member Secretary
During fiscal year 2017/8, meeting of Karmachari

Byabasthapan ra sewa Subidha samiti was held one
time.
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DISCLOSURE AS PER SECTION 109 OF COMPANIES ACT, 2063
1. In case if shares are forfeited number of shares, quoted price of such shares, total paid up amount for
such shares before forfeiture, amount recovered from sale of forfeited shares, amount refunded after sale
of forfeited share
No
2. Details of substantial shareholders provided to company during review period

NIC Asia Laghubitta Bittiya Sanstha Ltd. is subsidiary of NIC Asia Bank Ltd. with 10% holding. Separate det
shareholdershavenotbeenobtainedfromholdingcompany
3. Details of share held by directors of company during review period and details obtained by company
regarding involvement of directors in securities transactions of company
FollowingisthedetailsofsharesheldbydirectorsofcompanyduringFY2017/8:
1. Board of Directors
S.No. Name Position Nature of Directorship Number of Shares Held
1 Mr. Arjun Raj Khaniya Chairman Representative of NIC Asia Bank Ltd. Each member of Board of Directors are corporate representative
for total of 700,000 shares held by NIC Asia Bank
2 Mr. Dinesh Bhari Director
3 Mr.BishalSigdel Director
4 Mr. Tej Raj Timilsina Director
5 Mr. Padam Thakulla Director
2. Common Shares 6. Details of Total Management Expenses During

The institution has not issued shares that are set aside FY 2017/18
for public. Hence, there is no any share under personal Followingisthedetailoftotalmanagementexpenses
ownershipofboardofdirectorsandmanagement. duringFY2017/8:
NPR ‘000
4. Details provided by Directors in relation to PersonnelExpenses 7,287
agreement entered with company and directors/
OtherOperatingExpenses 7,022
close relatives of directors for personal benefit
Total Management Expenses 14,309
Duringreviewperiodcompanyhasnotenteredinto
anyagreementwithdirectors/closerelativesofdirectors
forpersonalbenefitofdirectorsorhis/herclose 7. Details of amount receivable by company from
relatives Directors, Managing Director, Chief Executive
Officer, Substantial Shareholders of Company
5. In case of buy back of shares by the company, or their close relatives or firm, company or
reason of such buy back, number of shares, institutions associated with them
quoted price and Payment made by company for There is no any amount receivable by company from
buying back Directors,ManagingDirector,ChiefExecutiveOfficer,
CompanywasnotinvolvedinsuchtransactionsSubstantialduring Shareholders of Company or their close
review year relativesorfirm,companyorinstitutionsassociatedw
them
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8. Remuneration and other facilities of Directors, 10. Details of Assets Purchased and Sold as per
managing director, and Chief Executive Officer Section 141
Onlymeetingallowanceisprovidedtodirectors Details
and of assets purchased as per the requirement
thereisnoprovisionofpayingremunerationtoof institution have been presented in schedule 4.10
Directors.DuringFY2017/8,totalmeetingallowance formingintegralpartofBalancesheet.
NPR50,waspaidtodirectorsrepresentingNICAsia
Bank Ltd. 11. Details of Related Party Transactions as per
Section 175
Following are the details of meeting allowance Following
paid totransactionswereincurredwithholding
directors: company NIC Asia Bank:
S.No. Name Position Particulars NPR ‘000
1 Mr. Arjun Raj Khaniya Chairman Details of Balance Sheet

2 Mr. Dinesh Bhari Director Share Capital invested by NIC Asia Bank Ltd. 70,000
3 Mr.BishalSigdel Director Deposit with NIC Asia Bank Ltd. 16,655
4 Mr. Tej Raj Timilsina Director Receivable from NIC Asia Bank Ltd. -
5 Mr. Padam Thakulla Director Amount borrowed from NIC Asia Bank Ltd. 650,000
DetailsofProfitandLossAccount
Interest received from NIC Asia Bank Ltd. 1,438
Meeting allowance payable to chairman and directors Interest paid to NIC Asia Bank Ltd. 8,695
is NPR 3,0 and NPR 2,50 respectively. Total meeting
allowance paid to members of board of directors was
NPR 50, during FY 2017/8. Practice of providing 12. Other matters to be disclosed in Director’s
meeting allowance to Chief executive officer and as per the requirement of this act and other
Report
company secretary is not in place. prevailing laws
Not applicable
Remuneration of Chief Executive Officer:
During FY 2017/8 NPR 1,8076.9 was paid to Chief 13. Additional Disclosures as per Section 22(1) of
executiveofficerMr.LaxmiPrasadSharma. Securities Registration and Issuance Regulation
RemunerationofChiefManagers: a) Details Regarding Legal Proceedings

i. Incaseifanycasewasfiledbyoragainstinstitution
S.No. Name Position Annual duringreviewperiod
remuneration and
Allowance (NPR) - Such information was not obtained
1 Mr. Subin Kaji Shrestha ChiefBusinessOfficer 617,34
2 Ms. Ranjita Dulal ChiefOperatingOfficer 317,52 ii.
Incaseifanycasefornoncompliancewithprevailing
3 Mr. Bimal Nepal Chief Information 270,088 regulationorcriminallawwasfiledbyoragainst
Technology director/promoterduringreviewperiod
Department
- Such information was not obtained
iii.Incaseifanycasefiledagainstdirector/promoterfor
9. Unpaid Portion of Dividend Payable to
financialoffence
Shareholders
- Such information was not obtained
There is no such unpaid portion of dividend amount
payable to shareholders.
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b) Assessment of securities transaction and c) Problems and Challenges

progress of institution
i. Opinionofmanagementontradingofsharesof i. Internal
institution in Securities Market • IncreasingOperatingExpenses
- Asmarketpriceofshareandtradingofsharesis • Lackofstaffsforfieldservices
determined by open market process of Nepal Stock
Exchange,managementdoesnothaveseparate ii. External
opinion. • Unhealthy competition
ii. F ollowingdetailsofsharesofinstitution:maximum, • Creditfrommorethanonemicrofinance
minimum,closingpriceandtotalnumberofshares • Crisisofinvestablefundandhighinterestrate
tradedanddaystradedduringeveryquarterofreview
year iii. Strategy
- Not applicable. Shares set aside for public have not • Proficientadministration
been issued yet and are not listed in Nepal Stock • Development,expansionanddiversificationof
Exchange. customer oriented services and facilities
• Reinforcementofriskmanagement
d) Corporate Governance
Byprioritizingcorporategovernance,institutionis
complyingwithdirectivesissuedbyNepalRastraBank
andotherrelatedactsandregulations.
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7.2
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7.3
FINANCIAL STATEMENT
BALANCE SHEET
As on July 16, 2018
Amount in NPR
Capital and Liabilities Schedule This Year Previous Year
1. Share Capital 4.1 70,000,000.00 -

2. Reserve and Fund 4.2 (5,8401.) -
3.DebentureandBond 4.3 - -
4.Borrowing 4.4 749,083.2 -
5. Deposit from Customers 4.5 68,612,427.00 -
6. Proposed Dividend - - -
7.IncomeTaxPayable - - -
8. Other Liabilities 4.6 6,268,962.49 -
Total Capital and Liabilities 888,305,723.31 -
Assets Schedule This Year Previous Year
1. Cash and Cash Equivalent - 1,352894.0 -

2. Due from Nepal Rastra Bank - - -
3.PlacementwithBankandFinancialInstitutions 4.7 47,396. -
4. Money at Call and Short Norice - - -
5. Investment 4.8 - -
6. Loans and Advances 4.9 819,734.2 -
7.FixedAssets 4.10 18,627.3 -
8.NonBankingAssets 4.11 - -
9. Other Assets 4.12 90,158.23 -
Total Assets 888,305,723.31 -
ContingentLiabilities Schedule 4.13

Declaration of Directors Schedule 4.23
IndexofCapitalFund Schedule 4.24
IndexofRiskWeightedAssets Schedule 4.2(a)
Major Indicators Schedule 4.25
SignificantAccountingPolicies Schedule 4.26
Notes to Accounts Schedule 4.27
Schedule4.1to4.13and4.23to4.27areintegralpartofBalanceSheet.
Arjun Raj Khaniya DineshBhari Bishal Sigdel Tej Raj Timilsina

Chairman Director Director Director
As per our report dated 5-Sep-2018
Padam Thakulla Laxmi Prasad Sharma Subin Kaji Shrestha CA Thaneshwor Bashyal
DirectorChief
ExecutiveOfficer
SeniorManager-Accounts Bashyal and Associates
Chartered Accountant
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ALNU REPOT 2017/8
PROFIT AND LOSS ACCOUNT

July 25, 2017 till July 16, 2018
Amount in NPR
Particulars Schedule This Year Previous Year
1. Interest Income 4.14 1,07964.3 -

2.InterestExpense 4.15 9,685,097.05 -
Net Interest Income 1,322,867.28 -
3.CommissionandOtherOperatingIncome 4.16 15,904,750.00 -
4.IncomefromForeignExchangeFluctuation - - -
Net Operating Income 17,227,617.28 -
5.PersonnelExpenses 4.17 7,28105.3 -
6.OtherOperatingExpenses 4.18 7,02183.4 -
7.LossfromForeignExchangeFluctuation - - -
Operating Profit before Provision for Possible 2,918,698.11 -
Losses
8. Provision for Possible Losses 4.19 8,449,200.00 -
Operating Profit (5,530,501.89) -
9.NonOperatingIncome/Loss 4.20 - -
10. Provision for Possible Losses Written Back 4.21 16,3.92 -
Profit From Regular Activities (5,363,864.97) -
1.Profit/LossfromExtraordinaryActivities 4.22 - -
Net Profit after Inclusion of All Activities (5,363,864.97) -
12. Provision for Staff Bonus - - -
13. Provision for Income Tax 220,176.03 -
CurrentYearProvisionforTax - - -
ProvisionforTaxtilllastyear - - -
DeferredTaxIncome/Expense - 20,176.3 -
Net Profit/ Loss (5,584,041.00) -
Schedule4.1to4.2areintegralpartofProfitandLossAccount.

DirectorChief
ExecutiveOfficer
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PROFIT AND LOSS APPROPRIATION ACCOUNT

July 25, 2017 till July 16, 2018
Amount in NPR
Particulars Schedule This Year Previous Year
Income
1.AccumulatedProfittillLastYear - -
2.CurrentYearProfit - -
3.ExchangeFluctuationFund - -
Total - -
Expenses
1. Accumulated Loss till Last Year - -
2. Current Year Loss (5,8401.) -
3.GeneralReserveFund - -
4.ContingencyReserve - -
5. Institution Development Fund - -
6. Dividend Adjustment Fund - -
7. Staff Related Reserves - -
8. Proposed Cash Dividend - -
9. Proposed Bonus Share - -
10. Special Reserve Fund - -
1.ExchangeFluctuationFund - -
12. Capital Redemption Reserve - -
13.CapitalAdjustmentFund - -
Total (5,584,041.00) -
Accumulated Profit/ (Loss) (5,584,041.00) -

DirectorChief
ExecutiveOfficer
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STATEMENT OF CHANGES IN EQUITY

For the year ended 16 July, 2018
Amount in NPR
General Capital Exchange
Accumulated Share Deferred Tax
Particulars Share Capital Reserve Reserve Fluctuation Total Amount
Profit/ Loss Premium Reserve
Fund Fund Fund
Initial Balance - - - - - - - -
DeferredTax - - - - - - - -
Adjusted Initial Balance - - - - - - - -
Adjustment
a. Increase in Share Capital 70,000,000.00 - - - - - - 70,000,000.00
b.CurrentYearProfit - (5,8401.) - - - - - (5,8401.)
c. Transfer from Current Year - - - - - - - -
Profit
d.DeferredTaxReserve - 20,176.3 - - - - (20,176.3) -
e. Investment Adjustment Fund - - - - - - - -
Final Balance 70,000,000.00 (5,363,864.97) - - - - (220,176.03) 64,415,959.00

DirectorChief
ExecutiveOfficer
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CASH FLOW STATEMENT

July 25, 2017 till July 16, 2018
Amount in NPR
A. Cashflow from Operating Activities (751,576,554.66) -

1. Cash Inflow 26,912,714.33 -
1.1 Interest Income 1,07964.3 -
1.2 Recovery of Loan written off - -
1.3CommissionandotherIncome 15,904,750.00 -
2. Cash Payment (21,918,641.04) -
2.1InterestExpense (9,68507.) -
2.StaffExpense (6,570.2) -
2.3OfficeExpenses (5,9427.) -
2.4IncomeTaxPaid (63,54.1) -
2.5OtherExpenses - -
Cashflow before Change in Working Capital 4,994,073.29 -
Increase/ Decrease in Current Assets (829,092,920.08) -
1. Increase/ Decrease in Money at Call and Short Notice - -
2. Increase/ Decrease in Other Short Term Investment - -
3.Increase/DecreaseinLoan (82,5630.) -
4. Increase/ Decrease in Other Assets (836,12.0) -
Increase/ Decrease in Current Liabilities 72,522,292.13 -
1. Increase/ Decrease in Deposit 68,612,427.00 -
2.Increase/DecreaseinShortTermBorrowing - -
3.Increase/DecreaseinOtherLiabilities 3,90865.1 -
B. Cashflow from Investment Activities (18,681,276.73) -
1.Increase/DecreaseinLongTermInvestment - -
2.Increase/DecreaseinFixedAssets (18,627.3) -
3.InterestIncomefromLongTermInvestment - -
4. Dividend Income - -
5. Others - -
C. Cashflow from Financial Activities 819,008,374.82 -
1.Increase/DecreaseinLongtermBorrowing(Bond,Debenture,etc.) 749,083.2 -
2. Increase/ Decrease in Share Capital 70,000,000.00 -
3.Increase/DecreaseinLongTermLiabilities - -
4.Increase/DecreaseinSubsidizedRefinancefromNepalRastraBank - -
D. Income/ Expense from Fluctuation of Exchange Rate of Cash and - -
Bank Balance
E. Cashflow from All Activities During Current Year 48,750,543.43 -
F. Opening Balance of Cash and Cash Equivalents - -
G. Closing Balance of Cash and Cash Equivalents 48,750,543.43 -

DirectorChief
ExecutiveOfficer
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NOTES FORMING PART OF THE FINANCIAL STATEMENTS
4.1 Share Capital and Ownership Amount in NPR

1. Share Capital
1.1 Authorized Capital 100,000,000.00 -
a)10ordinaryshares@NPR10pershare 100,000,000.00 -
b)……NonRedeemablePreferenceShare@NPR…pershare - -
c)……RedeemablePreferenceShare@NPR…pershare - -
1.2 Issued Capital 100,000,000.00 -
a)1,0ordinaryshares@NPR10pershare 100,000,000.00 -
b)……NonRedeemablePreferenceShare@NPR…pershare - -
1.3 Paid Up Capital 70,000,000.00 -
a)70,ordinaryshares@NPR10pershare 70,000,000.00 -
b)……NonRedeemablePreferenceShare@NPR…pershare
1.4 Proposed Bonus Share - -
1.5 Calls in Advance - -
Total 1.3+1.4+1.5 70,000,000.00 -
Amount in NPR
This Year Previous Year
Share Ownership Details Share Capita;
% Share Capital %
1. Domestic Ownership 100.00 70,000,000.00 - -

1.1 Nepal Government - - - -
1.2 "A" class Licensed Institutions 100.00 70,000,000.00 - -
1.3OtherLicensedInstitutions - - - -
1.4 Other Institutions - - - -
1.5 Public - - - -
1.6 Other - - - -
2. Foreign Ownership - - - -
Total 100.00 70,000,000.00 - -
Details of Individual/ Group/ Firm/ Company with investment in share more than 0.5%
Name of Shareholder No. of Shares % Share Capital

NIC Asia Bank Ltd. 7,00,000 100.00 7,00,00,000
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4.2 Reserves and Funds Amount in NPR

1. General / Statutory Reserve Fund -

2. Capital Reserve Fund - -
4. Capital Adjustment Fund - -
5. Other Reserve and Fund - -
5.1ContingencyReserve - -
5.2MicrofinanceDevelopmentFund - -
5.3DividendEqualizationFund - -
5.4 Special Reserve - -
5.5 Assets Revaluation Fund - -
5.6 Other Free Reserves - -
5.7 Other Reserve Fund -
6. Accumulated Profit/ Loss (5,584,041.00) -
7. Exchange Equalization Fund - -
8. Total (5,584,041.00) -
4.3 Debenture and Bond

Amount in NPR
1.%Bond/Debenture@NPR….PerDebentureissuedon….Andtobepaid - -
on….(RedemptionReservetilldate)NPR…..OtherPossibleLiabilities
Total - -
4.4 Borrowing
Amount in NPR
A. Domestic
1. Nepal Government - -
2. Nepal Rastra Bank - -
3.Repo - -
4. Bank and Financial Institutions 749,0835 -
5. Other Institutions - -
6. Other - -
Total 749,008,375 -
B. Foreign
1. Banks - -
2. Other - -
Total - -
C. Total (A+B) 749,008,375 -
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4.5 Deposit from Customers Amount in NPR

1. Non Interest Bearing Accounts

1.1 Financial Institutions - -
1.2 Other Institutions - -
1.3Individual - -
Total of Non Interest Bearing Accounts - -
2. Interest Bearing Accounts
a. Saving Account 68,612,427.00 -
1.1 Institutions
1.2 Individual 68,612,427.00 -
1.3Other
b. Fixed Deposit - -
1.1 Institutions - -
1.2 Individual - -
1.3Other - -
Total of Interest Bearing Accounts 68,612,427.00 -
Total Deposit 68,612,427.00 -
4.6 Other Liabilities Amount in NPR

1. Pension/ Gratuity Fund - -

2. Provision for Leave Encashment - -
3.EmployeeProvidentFund 241,39.0 -
4. Employee Welfare Fund - -
5. Provision for Employee Bonus - -
6. Interest Payable on Deposit - -
7.InterestPayableonBorrowing - -
8. Sundry Creditors 2,049,981.14 -
9. Reconciliation Account - -
10.DeferredTaxLiability 20,176.3 -
11. Bills Payable - -
12. Dividend Payable - -
13.Other - -
13.TaxDeductedatSource 269,406.67 -
13.2StaffCITPayable 150,000.00 -
13.StaffSalaryPayable 564,159.96 -
13.4Director'sMeetingAllowance 42,500.00 -
13.5RentPayable 136,49. -
13.6AuditFeePayable 111,500.00 -
13.7LeaveEncashmentPayable 30,867. -
13.8ProvisionforGratuity - -
13.9BorrowerProtectionFund - -
13.0MicroCreditInsurancePayable 2,140,575.00 -
13.Other 38,96.0 -
Total 6,268,962.49 -
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4.7 Placement with Bank and Financial Institutions

Amount in NPR
Foreign Currency in NPR Total NPR
Particulars Domestic Currency Previous year
Indian Rupees Foreign Exchange Total
1. Domestic Licensed 47,397,649.43 - - - 47,397,649.43 32,886,858.99

Institutions
a. Current Account 47,396. - - - 47,396. 32,865.9
b. Other Accounts - - - - - -
Total 47,397,649.43 - - - 47,397,649.43 32,886,858.99
4.8 Investment Amount in NPR

Purpose
Trading Other
1. Nepal Government Treasury Bill - - - -

2.NepalGovernmentSavingBond - - - -
3.NepalGovernmentotherBonds - - - -
4. Nepal Rastra Bank Bonds - - - -
5.ForeignBond - - - -
6. Domestic Licensed Institutions - - - -
7.ForeignBank - - - -
8. Share of Institutions - - - -
9. Debenture and Bond of Institutions - - - -
10. Other Investment - - - -
Total Investment - - - -
Provisions - - - -
Net Investment - - - -
4.8(a) Investment in Share, Debenture and Bond Amount in NPR

Particulars Cost NPR Market Price NPR Provision NPR This Year Previous Year
1. Investment in Share - - - - -
2. Investment in Bond and - - - - -
Debenture
Total Investment - - - - -
3.RiskRelatedProvisions
3.1ProvisiontillLastYear - - - - -
3.2Increase/decreaseduring - - - - -
This Year
Total Provision - - - - -
Net Investment - - - - -
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4.9 Loans and Advances

Amount in NPR
Details of Loans and Advances

Particulars Previous Year
Insurance Uninsured This Year
1. Performing Loan - 828,256,308.00 828,256,308.00 -

Pass Loan - 82,5630. 82,5630. -
2. Non Performing Loan - - - -
2.1 Substandard - - -
2.2 Doubtful - - -
2.3Loss - - - -
3. Total Loans and Advances (1+2) - 828,256,308.00 828,256,308.00 -
4. Loan Loss Provision - 8,282,563.08 8,282,563.08 -
4.1 Pass - 8,2563.0 8,2563.0 -
4.2 Substandard - - - -
4.3Doubtful - - - -
4.4 Loss - - - -
4.5 Additional - - -
4.6AdditionalforLoanagainstThirdPartyCollateral - - - -
5. Loan Loss Provision till Last Year - - - -
5.1 Pass - - - -
5.2 Substandard - - - -
5.3Doubtful - - - -
5.4 Loss - - - -
5.5 Additional - - - -
5.6AdditionalforLoanagainstThirdPartyCollateral - - - -
6. Provision Written Back This Year - 166,636.92 166,636.92 -
7. Additional Loan Loss Provision During This 8,449,200.00 8,449,200.00 -
Year
8. Increase/ Decrease During This Year - 8,282,563.08 8,282,563.08 -
9. Total Loan Loss Provision - 8,282,563.08 8,282,563.08 -
Net Loans and Advances - 819,973,744.92 819,973,744.92 -
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4.10 Fixed Assets

Amount in NPR
Assets
Previous
Particulars Office Leasehold This Year
Building Vehicles Machinery Other Year
Equipments Assets
1. Cost
a.ClosingBalanceLastYear - - - - -
b. Addition This Year - 4,940,656.00 - 12,405,054.16 1,4382. 1,182,055.00 19,65.3 -
c. Addition This Year due to - - - - - - - -
Revaluation
d. Sale This Year - - - - - - - -
e. Write Off This Year - - - - - - -
Total Cost (a+b+c+d+e) - 4,940,656.00 - 12,405,054.16 1,438,231.23 1,182,055.00 19,965,996.39 -
2. Depreciation -
a. Till previous Year - - -
b. This Year - 69,477.98 1,03297.5 81,705.70 100,556.47 1,284,719.66 -
c. Depreciation Revaluation - - - - - -
d. Depreciation Adjustment/ - - - - - -
Write Back
Total Depreciation - 69,477.98 - 1,032,979.51 81,705.70 100,556.47 1,284,719.66 -
3. Book Value (1-2) - 4,871,178.02 - 11,372,074.66 1,356,525.53 1,081,498.53 18,681,276.73 -
4. Land - -
5. Capitalized - -
Construction (To be
capitalized)
Total (3+4+5) - 4,871,178.02 - 11,372,074.66 1,356,525.53 1,081,498.53 18,681,276.73 -
*written down value
4.11 Non Banking Assets Amount in NPR

Name of Borrower Date of Acceptance Total Amount of Non Provision for Loss Net Non Banking Previous Year
of Non Banking Banking Asset NPR Asset
Asset % Amount NPR
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
Total - - - - -
l 302 l
ALNU REPOT 2017/8
4.12 Other Assets

Amount in NPR
1. Stock of Stationery - -
2. Income Receivable on Investment - -
3.InterestReceivableonLoan 6,245,625.14 -
Less: Interest Suspense (6,245.1) - -
4. Commission Receivable - -
5. Sundry Debtors - -
6. Employee Loans and Advances - -
7. Advance Payment 679,977.16 -
8. Cash in Transit - -
9.OthersinTransit(IncludingCheque) - -
10. Draft Paid Without Notice - -
1.MiscellaneousExpenditureNotWrittenOff 153,64.92 -
12. Reconciliation Account - -
13.DeferredTaxAssets - -
14. Other - -
a.AdvanceIncomeTax 63,54.1 -
Less:ProvisionforTax - 63,54.1 -
b. Telephone and Other Deposit s 3,0. -
Total 900,158.23 -
-
4.12(a) Other Assets (Additional Details) Amount in NPR

This Year NPR
Particulars Up to 1 Year More Than 1 Year Up to Above 3 Years Total Previous Year
3 Years
1. Interest Receivable on Loan 6,245,625.14 - - 6,245,625.14 567,834.9

2. Reconciliation Account - - - - -
3.AgencyAccount
Total 6,245,625.14 - - 6,245,625.14 567,834.59
4.13 Contingent Liabilities Amount in NPR

1. Guarantee - -
2. Irrevocable Loan Commitment - -
3.ContingentLiabilityagainstIncomeTax - -
4.AcceptanceandOtherContingentLiabilities - -
5. Unpaid portion of Partly paid shares and Securities - -
6. Unpaid Guarantee Claim - -
7.ClaimsAgainstInstitutionNotAcceptedbyInstitution - -
Total - -
l 303 l
ALNU REPOT 2017/8
4.14 Interest Income

Amount in NPR
a. On Loan and Advances 9,304,380.00 -

b. On Investment - -
1. Nepal Government Security Bond - -
2. Nepal Rastra Bank Debenture - -
3.DebentureandBond - -
4.InterestonInterBankLending - -
c. Agency Balance - -
d. Money at Call and Short Notice - -
e. Others 1,703,584.33 -
1.FixedDeposit - -
2. Call Deposit 1,703584. -
Total 1,07964.3 -
4.15 Interest Expense Amount in NPR

A. Deposit 345,599.00 -
1. Deposit of Members 345,9.0 -
2. Deposit of Public - -
B. Borrowing 9,339,498.05 -
1. Debenture and Bond - -
2. Loan from Nepal Rastra Bank - -
3.InterBankBorrowing 9,348.05 -
4. Other Institutions - -
5.OtherBorrowing - -
C. Other - -
Total 9,685,097.05 -
4.16 Commission and Other Operating Income Amount in NPR

1. Service Fee 15,588,750.00 -

2. Renewal Fee - -
3.Commission - -
4. Discount - -
5. Other 316,0. -
Total 15,904,750.00 -
l 304 l
ALNU REPOT 2017/8
4.17 Personnel Expenses

Amount in NPR
1. Salary 2,78063. -
2. Allowance 3,675. -
3.AddditionalContributiontoProvidentFund 120,695.50 -
4.TrainingExpenses 405,38.7 -
5. Uniform - -
6.MedicalExpenses - -
7. Insurance - -
8. Provision for Leave Encashment 30,867. -
9. Provision for Pension and Gratuity - -
10. Other - -
Total 7,287,105.73 -
l 305 l
ALNU REPOT 2017/8
4.18 Other Operating Expenses
Amount in NPR
1. Rent 978,716.48 -
2.ElectricityandWaterExpenses 40,180.00 -
3.RepairandMaintenance 32,046.75 -
a.Building - -
b. Vehicle - -
c. Other 32,046.75 -
4. Insurance 41,512.01 -
5.Postage,Telex,Telephone,Fax 302,196.5 -
6.OfficeEquipmentsandFurniture - -
7.TravelAllowanceandExpenses 348,62.0 -
8.StationeryandPrinting 84,761.47 -
9. Newpaper and Books - -
10. Advertisement 70,696.55 -
1.LegalExpenses 20,270.00 -
12. Donation 1,000.00 -
13.BoardofDirectorsRelatedExpenses 50,000.00 -
a.MeetingAllowance 50,000.00 -
b.OtherExpenses - -
14.AnnualGeneralMeetingRelatedExpenses - -
15.AuditExpenses 13,0. -
a. Audit Fee 13,0.
b.OtherExpenses - -
16. Fund Transfer Commission -
17.DepreciationonFixedAssets 1,284,719.66 -
18.PreoperatingExpensesWrittenOff 38,40.7 -
19.ShareIssuanceExpenses - -
20. Professional Services - -
21.EntertainmentExpenses - -
22. Write Off -
23.SecurityExpenses 424,990.45 -
24. Credit Security Premium -
25. Commission and Discount 2,615,000.00 -
26. Other 575,692.78 -
a.SecuritiesRegistrationExpenses - -
b. Youth Access Projects - -
c.FuelExpenses 35,61.0 -
d. Other 540,31.78 -
Total 7,021,813.44 -
l 306 l
ALNU REPOT 2017/8
4.19 Provision for Possible Losses Amount in NPR

1. Increase in Loan Loss Provision 8,449,200.00 -

2. Increase in Provision for Investment - -
3.ProvisionforNonBankingAssets - -
4. Provision on Other Assets - -
Total 8,449,200.00 -
4.20 Non-Operating Income/ Losses

Amount in NPR
1.Profit/LossfromSaleofInvestment - -
2.Profit/LossforSaleofAssets - -
3.Dividend - -
4. Other - -
Net Non Operating Income/ Loss - -
4.21 Provision for Possible Losses Written Back Amount in NPR

1. Loan Loss Provision Written Back 16,3.92 -

2.ProvisionforNonBankingAssetsWritttenBack - -
3.ProvisionforInvestmentWrittenBack - -
4. Provision for Other Assets Written Back - -
Total 166,636.92 -
4.22 Profit/ Loss from Extra Ordinary Activities Amount in NPR
1. Recovery of Loan Written Off - -

2.VoluntaryRetirementExpenses - -
3.BadDebtWrittenOff - -
4.OtherIncome/Expenses - -
Total - -
4.22(a) Details of Written Off Loan

Amount in NPR
Amount Written Type of Collateral and Basis of Valuation of Designation of Loan Efforts Made to
S.No. Nature of Loan Remarks
Off Value Collateral Approver Recover Loan
1 - - - - - -
2 - - - - - -
3 - - - - - -
Total Loan - - - - - -
l 307 l
ALNU REPOT 2017/8
4.23 Details of Credit Facilities to Directors, Chief Executive Officer, Promoters,

Employees and Shareholders
Amount in NPR
Closing Balance of Last Year Settlement During This Year Balance As On 16-Jul-2018
Addition During This
Name of Borrower
Principal Interest Principal Interest Year Principal Interest
A. Director
1.……… - - - - - - -
2.……… - - - - - - -
3.……… - - - - - - -
B. Chief Executive Officer
1.……… - - - - - - -
2.……… - - - - - - -
3. ……… - - - - - - -
C. Promoter
1.……… - - - - - - -
2.……… - - - - - - -
3.…….. - - - - - - -
D. Employees
1.……… - - - - - - -
2.……… - - - - - - -
3.…….. - - - - - - -
E. Shareholders
1.……… - - - - - - -
2.……… - - - - - - -
3.…….. - - - - - - -
Total - - - - - - -
l 308 l
ALNU REPOT 2017/8
4.24 Index of Capital Fund
Amount in ‘000’
S.No. Particulars This Year Previous Year
A. Primary Capital 64,262.32 -

1.PaidUpCapital(CommonShare) 70,000.00 -
2. Proposed Bonus Share - -
3.SharePremium - -
4. Irredemable Preference Share - -
5. General Reserve Fund - -
6.AcumulatedProfit/Loss (5,84.0) -
7.Profit/LossofCurrentYearinBalanceSheet - -
9. Capital Adjustment Fund - -
10. Calls in Advance - -
11. Other Free Reserves - -
Less: - -
– Goodwill - -
– DeferredTaxAsset - -
– Investmentinshareandbondinexcessofrequiredlimit - -
– Investmentindebentureofcompanywithfinancialinterest - -
– Fictious Assets 153.6 -
–InvestmentinFixedAssetswithoutcomplyingrequirementofNRB - -
–Loansandadvancesprovidedtoindividualandgroupprohibitedbyprevailinglaw - -
B. Supplementary Capital 8,282.56 -
1. Loan Loss Provision on Pass Loan 8,282.56 -
2. Additional Loan Loss Provision - -
3.HybridCapitalInstruments - -
4. Subordinated Term Debt - -
5. Assets Revaluation Fund - -
6. Investment Adjustment Fund - -
C. Total Capital Fund (A+B) 72,544.89 -
D. Minimum Capital to be Maintained on the Basis of Risk Weighted Assets
CapitalFund(8%) 68,50.32 -
PrimaryCapital(4%) 34,290.16 -
CapitalFund(@Maximum5.46%) 3,964.57 -
PrimaryCapital(@46.%) 29,972.16 -
l 309 l
ALNU REPOT 2017/8
4.24(a) Index of Risk Weighted Assets
Amount in NPR
Previous Year
This Year
Weight
Amount Risk Weighted Assets Amount Risk Weighted Assets
A. On-Balance-Sheet Assets
Cash Balance 0 1,352.89 -
Balance With Nepal Rastra Bank 0 - - - -
Investment in Nepalese Government 0 - - - -
Securities
Investment in Nepal Rastra Bank Securities 0 - - - -
ClaimFullySecuredbyFixedDeposit 0 - -
Receipt of own Bank
Claim Fully Secured by Government 0 - - - -
Securities
Accrued Interest Income on Government 0 - - - -
Securities
ClaimsonFixedDepositatBanksand 0.20 47,39.65 9,480.00 - -
Financial Instituitions
Money at Call 0.20 - -
InterBankLending 0.20 - - - -
Investment on Share, Debenture and Bond 1.00 - - - -
Other Investment 1.00 - - - -
Loans and Advances 1.00 82,56.31 828,256.00
FixedAssets 1.00 18,681.28 18,681.00 - -
Other Net Interest Income 1.00 - -
Other Assets 1.00 836.1 837.0 - -
A. Total 896,524.74 857,254.00
B. Off-Balance-Sheet items - -
Guarantee 100 - - - -
Irrevocable Loan Commitments 100 - - - -
ContingentLiabilityagainstTax 100 - - - -
AccruedInterestandothercontingent 100 - - - -
liabilities
Unpaid portion of Partly paid shares and 100 - - - -
Securities
Unpaid Guarantee Claim 200 - - - -
ClaimsAgainstInstitutionNotAccepted
200
by - - - -
Institution
B. Total - - - -
Total Risk Weighted Assets (A+B) 896,524.74 857,254.00 - -
l 310 l
ALNU REPOT 2017/8
4.25 Major Indicators
S.No. Particulars Unit FY 2013/14 FY 2014/15 FY 2015/16 FY 2016/17 FY 2017/18
1 NetProfitRatio % - - - - -0.21
2 EarningPerShare NPR - - - - -7.98
3 Market Price Per Share NPR - - - - 0.00
4 PE Ratio Ratio - - - - 0.00
5 Bonus Share to Capital % - - - - 0.00
6 Cash dividend to Capital % - - - - 0.00
7 Interest Income/ Loan and Advances % - - - - 0.01
8 EmployeeExpenses/TotalOperating % - - - - 0.51
Expenses
9 InterestExpenseonTotalDepositand % - - - - 0.01
Borrowing
10 ForeignExchangeFluctuationIncome/ % - - - - 0.00
Total Income
11 Employee Bonus/ Total Employee % - - - - 0.00
Expenses
12 NetProfit/TotalBorrowing % - - - - -0.01
13 NetProfit/TotalAssets % - - - - -0.01
14 Total Assets/ Deposit % - - - - 12.07
15 TotalOperatingExpenses/TotalAssets % - - - - 0.02
16 CapitalAdequacyonTotalRiskWeighted - - - - -
Assets
a. Primary Capital % - - - - 7.50
b. Supplementary Capital % - - - - 0.97
c. Total Capital Fund % - - - - 8.46
17 Cash Reserve Ratio Ratio - - - - 0.0051
18 NonPerformingLoan/TotalLoan % - - - - 0.00
19 WeightedAverageInterestRateSpread% - - - - 0.072
20 Book Networth NPR - - - - 64,415,959
21 Total Share Number - - - - 700,000
22 Total Number of Employees Number - - - - 100
23 Other
Company commenced its operation from FY 2017/18
l 311 l
ALNU REPOT 2017/8
COMPARISON OF UNAUDITED AND AUDITED FINANCIAL STATEMENT AS OF FY 2017/18

Amount in ‘000’
As per As per Variance
Unaudited Audited
S.No. Particulars In Amount In % Reasons for Variance
Financial Financial
Statement Statement
1 Total Capital and Liabilities (1.1 to 1.7) 903,819.22 888,305.72 15,513 1.72%
1.1 Paid up Capital 70,000.00 70,000.00 - - -
1.2 Reserve and Surplus (4,951.62) (5,84.0) 632 -12.7% AdjustmentofDeferredTax,
Staff Leaveencashment, Pre
operatingwriteoff
1.3 Debenture and Bond - - - -
1.4 Borrowings 750,000.00 749,08.3 992 0.13% Adjustment
1.5 Deposits(a+b) 68,14.3 68,12.43 2 0.% Adjustment
a. Members 68,14.3 68,12.43 2 0.%
b. Public - - -
1.6 IncomeTaxLiability - - - -
1.7 Other Liabilities 20,156.41 6,268.96 13,87 68.90% AdjustmentofDeferredTax,
Staff Leaveencashment,
2 Total Assets (2.1 to 2.7) 903,819.22 888,305.72 15,513 1.72%
2.1 Cash and Bank Balance 49,23.0 48,750.54 1,73 2.35% Adjustment
2.2 Money at Call and Short Notice - - - - -
2.3 Investments - - - - -
2.4 Loans and Advances 82,56.31 819,73.4 8,23 1.0% Provision made
2.5 FixedAssets 18,527.62 18,681.28 (154) -0.83% Adjustment Depreciation
2.6 NonBankingAssets - - - -
2.7 Other Assets 7,111.99 900.16 6,212 87.34% Interest Suspense
3 Profit and Loss Account
3.1 Interest Income 11,007.91 11,007.96 - - -
3.2 InterestExpense 9,685.10 9,685.10 - - -
A. Net Interest Income (3.1 - 3.2) 1,322.81 1,322.87 - - -
3. Fees, Commission and Discount 15,904.75 15,904.75 - 0.%
3.4 OtherOperatingIncome 132.4 - 132 10.% Adjustment
3.5 ForeignExchangeGain/Loss(Net) - - - -
B. Total Operating Income 17,359.70 17,227.62 132 0.76%
(A+3.3+3.4+3.5)
3.6 StaffExpenses 7,052.12 7,287.11 (235) -3.% Provision made leave
encashment
3.7 OtherOperatingExpenses 6,976.64 7,021.81 (45) -0.65% Provision made
C. Operating Profit Before Provision (B 3,330.94 2,918.70 412 12.38%
-3.6 - 3.7)
3.8 Provision for Possible Losses 8,449.20 8,449.20 - - -
D. Operating Profit (C -3.8) (5,118.26) (5,530.50) 412 -8.05%
3.9 NonOperatingIncome/Expenses(Net) - - - - -
3.1 Write Back of Provision for Possible Loss 166.64 166.64 - - -
E. Profit from Regular Activities (4,951.62) (5,363.86) 412 -8.33%
(D+3.9+3.10)
3.1 ExtraordinaryIncome/Expenses(Net) - - - - -
F. Profit before Bonus and Taxes (E +3.11) (4,951.62) (5,363.86) 412 -8.33%
3.12 Provision for Staff Bonus - - - - -
3.1 ProvisionforTax - 220.18 (20) 0.% Calcuationofdiffertax
G. Net Profit/Loss (F - 3.12 - 3.13) (4,951.62) (5,584.04) 632 -12.77% Provision made for Deferred
Tax,StaffLeaveencashment,
l 312 l
ALNU REPOT 2017/8
SCHEDULE 4.26
FIXED
. 3 ASSETS
SIGNIFICANT a. Fixedassets are accounted on the basis of historic

cost concept.
ACCOUNTING b. If fixedassetsworthlessthanNPRis 5,0 purchased
POLICIES
during the fiscal year, such amount is accounted as
expenseduringtheyear.
4. DEPRECIATION
a. Depreciation onfixedassetsisdeductedonthebasis
ofStraightLineMethodatfollowingrates:
b. Leasehold assets are depreciated over lease period
understraightlinemethod.
1. OVERVIEW c. Intangible assetslikecomputersoftwareareaccounte
NIC Asia Laghubitta Bittiya Sanstha Ltd. is national on costlevel
price and are depreciated over the period of 5
“D” class microfinance financial institution licensed years.by
Nepal Rastra Bank. This is a wholly owned subsidiary
of NIC ASIA Bank Limited. Registered office of NIC Asia Particulars Rate of Depreciation
Laghubitta Bittiya Sanstha Ltd. is located at BherimalikaFurniture 25%

Municipality, Ward No. 4, Jajarkot, Bheri zone. It is OfficeEquipments 25%
involvedinprovidingmicrocreditthroughvarious Computer groups 25%
to members of deprived sector or with minimal income. Vehicles 20%
The financial statements were authorized for issue by
Leasehold Assets Lease Period
the Board of Directors on 5-Sep-2018 and have been
recommended for approval by shareholders in the
Annual General Meeting. Management acknowledges 5. PROVISION FOR INCOME TAX
the responsibility of true and fair preparation and Income tax includes both current year tax and deferre
presentationoffinancialstatementsofthecompany. tax.
2. BASIS OF PREPARATION OF FINANCIAL a. Provision for Income Tax

STATEMENT Provision for income tax has been calculated on the
a. Financial statements of NIC Asia Laghubitta Bittiya basisofIncomeTax,2058andrules.
Sanstha Ltd. have been prepared on the basis of
Generally Accepted Accounting Principles, b. Nepal
Deferred Tax
AccountingStandards,BankandFinancialInstitutions Taxamountdeferredonthebasisofassetsandliabilit
Act and directives issued by Nepal Rastra Bank. is deferred tax. Deferred tax is recognized in respect of
Accounting Policies of this company have been temporary differences between the carrying amounts o
compiled with except in cases where specifically assetsandliabilitiesforfinancialreportingpurpose
disclosed. the amounts used for taxation purposes. Deferred tax i
b. The financial statements have been prepared on a
measured atthetaxratesthatareexpectedtobeappl
historical cost basis and in case of deviations disclosed to temporary differences when they reverse, using ta
specifically. rates enacted or substantively enacted at the rep
c. Exceptspecifically mentioned, financial transactions date.
are accounted on accrual basis.
d. Financial statements are prepared in line with Nepal 6. INVESTMENT
Rastra Bank Directive No. 4 issued for “D” class Valuation of Investment is done as per Investment related
licensed institution. NRB Directive.
l 313 l
ALNU REPOT 2017/8
7. ACCOUNTING FOR NON BANKING ASSETS 11. STATIONERY AND PRINTING EXPENSES
a. Non Banking assets are recognized at lower of
Stationery andprintingitemsarerecognizedasexpense
outstandingloanamounttoberecoveredorfair market
on the basis of consumption under FIFO method.
value of collateral property.
b. Differential amount after sale of property accepted 12. ACCUMULATED LEAVE EXPENSES
as non banking asset is transferred to profitAdequate
and loss provision for payment against accumulated
accountofsamefiscalyear. leaveofpermanentstaffstillfiscalyearendismaintained
c. Provision for non banking asset is recognized asonpersamefiscalyear.
requirement of Nepal Rastra Bank.
PROVISION
.31 FORGRATUITY
8. INCOME/ EXPENSE RECOGNITION The institution has arranged to provide gratuity t
a. Interest Income: Interest income from loans and employees who have served the institution for five years
advances are recognized on cash basis as or permore at the time of their retirement. Currently, there
the provisions of Nepal Rastra Bank. This is not in is no any employee who has served the institution for
harmonization with Nepal Accounting Standard 07 on or more. Hence, provision for gratuity has not
5 years
Revenue. been set aside. This provision is not in line with Labor
b. Interest Income on Investment: Interest incomes from Act, 2074.
investmentsarerecognizedonaccrualbasis.
c. Commission Income: Commission incomes from 14. EMPLOYEE BONUS
services provided by Bank are recognized on Provision cash for employee bonus is as per the requirement
basis. ofBonusAct,203.
d. InterestExpense:Interestondepositsandborrowings
arerecognizedonaccrualbasis. 15. EMPLOYEE PROVIDENT FUND
By adding 10% contribution over 10% provident fund
9. RECOVERY OF LOAN PRINCIPAL AND contribution of staff, total amount is deposited in the
INTEREST account of staff maintained at office of employee
Principal and interest of loans and advances are provident. Such amount contributed by institution is
recoveredinfollowingsequence: recognizedasexpenseofsamefiscalyear.Theretirement
Penalcharge,interest,principal fundisindependentfrommicrofinanceinstitution.
10. LOAN LOSS PROVISION AND LOAN 16. STAFF LOAN

WRITE OFF POLICIES Loans and advances are provided to staffs in line with
a. Loansandadvancesareclassifiedintoperforming and of Staff Bylaw.
provision
nonperformingloanaspertherequirementofdirective
issued by Nepal Rastra Bank. Loans and advances 17. CONTINGENT LIABILITIES
which are not overdue or overdue up to six months Possible emergencies and contingent liabilities ar
are classified under performing loans and loans and
disclosed bymicrofinancefinancialinstitution.
advances that are overdue by more than six months
are as substandard, doubtful and loss loan under non 18. SHARE ISSUANCE EXPENSE
performing loan as per requirement of NRB directives Thefinancialinstitutionhasnotissuedsharetilldate
and net loans and advances after deduction of
applicable loan loss provision is presented in balance 19. PRE-OPERATING EXPENSE
sheet. Pre-operatingexpensesshallbewrittenoffinfiveyears.
Loans and advances are written off on the basis of
directive issued by Nepal Rastra Bank and loan write
offpolicyoffinancialinstitution.
l 314 l
ALNU REPOT 2017/8
SCHEDULE 4.27
NOTES TO
ACCOUNTS 4. INTEREST RATE SPREAD
Particulars Rate (%)
WeightedAverageofInterestonLoan 17.78
AverageInterestonDepositandBorrowing 12.8
Spread 4.98
5. DETAILS OF EXPENSES WRITTEN OFF

Details of Pre-operating expense which is the only
1. AMOUNT TRANSFERRED TO GENERAL expense to be written off during review period are as
RESERVE follows:
Asfinancialinstitutionisinlossthisyear,generalreserve
fund has not been created. Particulars Amount NPR
TotalPre-OperatingExpense 230,15.9
2. DETAILS OF LOANS AND ADVANCES Adjustment:PrepaidExpense 37,92.8
Particulars Amount NPR NetPre-OperatingExpense 192,043.65
OpeningBalance - WrittenOffduringreviewperiod 38,40.7
TotalLendingduringCurrentYear 844,920,000 Pre-OperatingExpenseNotWrittenOff 153,64.92
TotalSettlementduringCurrentYear 16,392
ClosingBalance 82,5630
6. DETAILS OF CONCENTRATION OF RISK
Particulars Loans and Advances Deposit
DETAILS
.3 OFDEPOSIT Total Loans and 82,5630 68,612,427
Particulars (Deposit from Members only) Amount NPR Advances as on 16-
OpeningBalance - Jul-2018
Total Deposit Collected 68,612,427 MaximumLimitof 800,000 1,0823

SingleIndividual
Total deposit Withdrawn -
MaximumLimitif 0.09 1.57
ClosingBalance 68,612,427 SingleIndividual(%)
l 315 l
ALNU REPOT 2017/8
7. DETAILS OF AGEING OF ASSETS AND LIABILITIES

Assets 1-90 Days 91-180 Days 181-270 Days 271-365 Days Above 1 year Total Amount
Cash Balance 1,34586 799 6,234 - - 1,352894

Bank Balance 45,62709.3 1,754,940 - - - 47,396.
InvestmentinForeignBank - - - - - -
Government Securities - - - - - -
NRB Bond - - - - - -
Interbank Investment - - - - - -
Loans and Advances 760,4398 46,0237 21,750,000 - - 82,5630
Interest Receivable 5,707,156.14 34,50 194,969 - - 6,245,625.14
Total 813,159,664.57 48,141,609 21,951,203 - - 883,252,476.57
Liabilities - - - - - -
Borrowings 749,083.2 - - - - 749,083.2
SavingDeposit 65,173 2,584,760 853,91 - - 68,612,427
FixedDeposit - - - -
Bonds - - - - - -
Other Liabilities 3,546. 324,756.1 2,179,464.71 6,048,786.46
Total 817,726,696.26 2,909,516.31 3,033,375.71 - - 823,669,588.28
Total Financial Assets (4,567031.9) 45,2309.6 18,917,827.29 - - 59,582,888.29
Net Financial Assets (4,567031.9) 40,665,061 59,582,888.29 59,582,888.29 59,582,888.29 -
8. LOAN OBTAINED BY PLEDGING OWN 12. DETAILS OF INVESTMENT

PROPERTY Financial Institution has not invested in any company till
Financial Institution has not obtained any loan facility by date.
pledgingownproperty.
DETAILS
.31 OFLOANLOSSPROVISIONTILL
9. DETAILS OF NON BANKING ASSETS 16-JUL-2018
Financial Institution has not accepted any property as Particulars Amount (NPR)
nonbankingasset. OpeningBalance -
AdditionalProvisionduringYear 8,2563.0
10. DETAILS OF PAID UP CAPITAL ClosingBalance 8,2563.0
Details of Paid up capital as per Financial Statement of
FY 2074/75 are as follows:
Details Amount 14. DETAILS OF INTEREST SUSPENSE
OpeningBalance - ACCOUNT TILL 16-JUL-2018
ClosingBalance Amount of accrued interest receivable as on balance sheet 70,000,000
date has been transferred to Interest Suspense account
and presented in schedule 4.12. NRB Directive and
11. DETAILS OF LEASEHOLD PROPERTY circulars allow Bank and financial institutions to acc
Followingisthedetailofleaseholdproperty: for interest received till 15 days of expiry of fiscal year
Property Opening Amount (NPR) Additional During Current Year (NPR) Depreciation (NPR) Closing Balance (NPR)
Leasehold property - 1,4382. 81,705.70 1,3562.
l 316 l
ALNU REPOT 2017/8
as interest income of that year. Such interest suspense 20. PROVISION FOR STAFF LEAVE AND
amounts have not been included under interest income. GRATUITY
Particulars Amount Payment against accumulated leave of staffs has not
InterestSuspenseduringReviewYear 6,245,625.14 beendoneduringreviewyear.NPRhas 30,867 beenset
InterestSuspensewrittenoffduring - aside as provision for accumulated leave and presented
Review Year
as other liabilities under schedule 4.6.
Total Interest Suspense Amount as 6,245,625.14
on 16-Jul-2018
Provision of Labor Act, 2074 requires employer to deposit
of
%3.8 basicsalaryofeachandeveryemployeeforgratuity
15. DEFERRED TAX ASSETS AND into social security fund. However, staff bylaw of institution
LIABILITIES has not been amended in line with provision of same.
Temporary differences as presented below were observed Provision for gratuity has not been set aside during
indeferredtaxassetsandliabilitiesason16-Jul- 2017/18
2018: as such provision is not incorporated in staff by
lawoffinancialinstitution.
Fiscal Year Particulars Accounting Base Tax Base Temporary Rate of Tax Deferred Tax
Difference Assets/ Liabilities
2074/75 FixedAssets 18,627.3 17,797,124.54 884,152.19 30% (265,4.)

AccumulatedLeave(Provision) 30,867 - 30,867 30% 91,160.10
PreOperatingExpenses 153,64.92 - 153,64.92 30% (46,09.8)
Total (20,176.3)
DeferredTaxLiabilitytobebookedonaccountofTaxableTemporaryDifferences (20,176.3)
DeferredTaxLiabilityalreadybookedtillLastYear -
DeferredTaxLiabilitytobebookedincurrentyear (20,176.3)
16. DEBT SECURITY FUND AND SOCIAL

21. RELATED PARTY TRANSACTIONS
SECURITY FUND
NICAsiaLaghubittaBittiyaSansthaissubsidiarycompan
Although financial institution has not established any
of NIC Asia Bank Ltd. with 10% ownership. Details of
debt security fund, microcredit insurance of borrower
financial transactions between these companies are
members have been done in collaboration with METLIFE
follows:
so that family of borrower do not face financial burden
S.No. Particulars Amount NPR
in case of death of borrower before lapse of loan tenor.
1. Investment of NIC Asia Bank 70,000,000
2. BorrowingfromNICAsiaBank 650,000,000
17. CUSTOMER PROTECTION FUND
3. Interest Paid To NIC Asia Bank 8,695,890.41
As financial institution is operating in net loss, customer
4. Balance with NIC Asia Bank 16,655,961.91
protection fund has not been created.
18. CORPORATE SOCIAL RESPONSIBILITY

FUND 22. PROPOSED BONUS SHARE AND
DIVIDEND
As financial institution is operating in net loss, corporate
As financial institution is operating in net loss, bo
social responsibility fund has not been created.
share and/or dividend has not been proposed.
19. STAFF CAPACITY DEVELOPMENT FUND
NPR 405,38.7 has been spent by financial institution
for capacity development of staffs during FY 2017/8
whichis5.6%oftotalpersonnelexpenses.
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CAPITAL
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8.1
DIRECTORS’ REPORT
SECOND ANNUAL GENERAL MEETING, DIRECTORS REPORT
Respected Shareholders,
I would like to heartily welcome representative of the economic development can also be expected in the
promoter company NIC ASIA Bank Limited Mr. Kapil coming years due to political stability and improving
Dhakal, chief guest Mr. Roshan Neupane, special guest business environment.
Mr. Sudhir Nath Pandey and other guests supervisors of
mutual fund, members of DNA oversight committee of the 1. Stock Market
bank, chairman of NIC ASIA Laghubitta Bittiya Sanstha
Limited, external auditors of this company and other a. Primary Market
present eminent persons to the second annual general During the FY 2017-18, SEBON has approved 21
meeting of this capital personally and on behalf of board companies for initial public offering worth NPR 8.3 billion.
of directors and whole NIC ASIA capital family. We are Out of which, 15 companies have already collected the
grateful towards all the attendances of this amount
signifiof cant
NPR 3.18 billion from issuance of shares.
meeting who are present in this meeting by accepting This amount was declined by 65% as compared to
our invitations in spite of your tied-up schedule. FY 2016-17. Apart from that, 6 companies have been
granted permission for further issue offering worth NPR
In this noteworthy meeting, I would like to share major 11.51 billion. Out of which, 4 companies have already
achievements of this capital till date: collected the amount of NPR 6.47 billion from issuance
of shares. The permission granted amount for FPO has
STATUS OF NATIONAL ECONOMY: been increased by 44% as compared to FY 2016-17.
National economy was exciting during the FY 2017- Similarly, out of the approved right share issue worth
18. GDP of the country was increased by 6.3% due to NPR 25.70, an amount of NPR 19.67 billion has already
contributions to the economic activities been collected
by suffi cient from the issuance of right shares. The
monsoon rain on time, improvement in supply of permission granted amount for right share issue has
energy and simplified supply management. The exciting beendeclinedbyas 43.68% comparedtolastfiscalyear.
IN NPR Billion
FY 2014-15 FY 2015-16 FY 2016-17C FY 2017-18
Particulars
No. of Company Amount No. of Company Amount No. of Company Amount No. of Company Amount
Initail Public Offering 18 6.98 14 2.76 19 1.40 21 8.30

Right Share Issue 22 2.31 37 9.40 69 41.20 55 25.70
Further Public Offering - - 3 5.83 3 7.78 6 11.51
Mutual Fund 3 2.25 1 1.00 4 4.25 4 4.80
Debenture and Bond 2 1.25 - - - - 1 3.00
Total 45 12.79 55 18.99 95 54.63 87 53.31
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ALNU REPOT 2017/8
b. Secondary Market increase in sales pressure than the demand of the

The NEPSE Index was on declining trend during most shares in the market. Even the right shares issued by the
of the period of the FY 2017-18. With the continuity of company were not fully subscribed and the unexpected
declining trend of last fiscal year, NEPSE Index was increase in the auction sale of unsubscribed right shares
declined by 370.31 points with the declining rate of has increased the sales pressure of shares in NEPSE,
23.4% during the review period and was limited to which has negatively affected the NEPSE index.
1,212.4 point as on 16th July, 2018. During the review Beginning of testing process of Online Trading System
period, lowest point and highest point of the NEPSE from Mid November, 2018 has make the investors more
Index were 1,168.55 and 1,667.94 respectively with the excited. According to the study of neighbor country
average daily transaction of NPR 520.99 billion. NEPSE India’s stock exchange index, index has improved after
Index was limited to 1,582.7 points as on 15th July, 2017, implementation of online trading system. If the same
which had begun to decline from 1,881.45 points with pattern is followed in the NEPSE, improvement in NEPSE
the declining rate of 7.9%. Banks’ interest rate was on index can be expected in the next fiscal year. Similarly,
increasing trend with the liquidity constraint in the market, towardstheendoffiscalyear,interestrateswereseeme
which has directly affected the NEPSE Index. The Online to be on decreasing trend due to the availability of liquidity
Trading System which was expected by the Nepal Stock to some extent. Further, as per the new provision, bank
Exchange Ltd. to complete on Mid November, 2017 was can carry out the business of stock broker by establishing
ceased for some time. Similarly, during the FY 2017-18 subsidiary company because of which trading of stock
there was enormous increase in the number of shares could expand all over country which was expected to
listed in the NEPSE. Therefore, there was massive positively impact the NEPSE index.
Particulars FY 2014-15 FY 2015-16 FY 2016-17 FY 2017-18
Number of List Companies 231 230 208 196

Paid-up Capital of Listed Companies 157.58 204.02 289.59 352.09
Total Trading Days 216 233 230 233
Market Capitalization (In Billion) 989.4 1,890.13 1,856.82 1,435.14
NPESE Index 961.23 1,718.15 1,582.67 1,212.36
NEPSE Float Index 68.47 125.41 116.14 87.15
NEPSE Sensitive Index 204.67 369.07 336.04 255.20
NEPSE Index as per Fiscal year

1890
1583
1212
989
1057
513 514
366 377 323 368
186
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18
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DISCLOSURE OF INFORMATION Details of Issue Management and Underwriting

UNDER SECTION 109(4) OF Service provided to the companies:
COMPANIES ACT 2006 The capital has been able to issue primary capital of
two companies including a mutual fund under the issue
1. Business Review of FY 2017-18 management services, in which allotment of shares
The company was registered on 15th May, 2016 with the of one of the company Aarambha Microfinance Bittiya
office of company registrar, Nepal Government as perSanstha Limited has been done within 37 hours which
the provisions of company act. The capital has obtained can be considered as historical achievement in the sector
the license to carry out merchant banking activities on of merchant banking. Similarly, issue management of
19th February, 2017 as per the Securities Businessperson right shares of two companies and auction shares of one
(Merchant Banker) Regulations, 2008 and fully commenced company were completed during the review year. Further,
its merchant banking activities from 5th March, 2017. process has been initiated to obtain the approval from
the Nepal Security Board for public issue of shares of
After the establishment of this company, depository two companies and right shares of one company is in the
services earlier provided by the NIC ASIA Bank Limited process of issue after obtaining approval from the Nepal
was started to be provided by this company as per the Security Board. As the capital was success in allocating
agreement made between the bank and this company. the shares and listing the shares for trading in the
secondary market with in short period for the companies
Similarly, by fulfilling the required standard of regulatory
body, the capital has obtained license from Nepal whose share issue was carried out by the capital, which
Securities Board to work as depository participant, issue hasgainedpositiveinfluenceamongtheinvestors.
manager, portfolio manager, registrar to share and fund
manager of mutual fund under NIC ASIA Bank Limited.
Issue Management and Underwriting Services provided:
S.N. Name of the Company Remarks
1 AarambhaMicrofinanceBittiyaSansthaLimited Public Issue

2 Prudential insurance company limited Right Share Issue
3 NIC ASIA Bank Limited Auction Sale of Unsubscribed Right Shares
4 Prudential insurance company limited Auction Sale of Unsubscribed Right Shares
5 NIC ASIA Growth Fund Mutual Fund
6 Surya life insurance company limited Right Share Issue
Details of Companies in the process of share issue:

S.N. Name of the Company Remarks
1 Max Vision Limited Public Issue

2 River False Power Limited Public Issue
Details of activities related to the registrar of shares carried out till the end of FY 2017-18:
The capital has been providing registrar to share services to 5 companies including a mutual fund, which is an exciting
number as compared to contemporary merchant bankers.
S.N. Name of the Company
1 NIC ASIA Bank Limited

2 Swadeshi Laghubitta Bittiya Sanstha Limited
3 Sahayogi bikas bank Limited
4 AarambhaMicrofinanceBittiyaSansthaLimited
5 NIC ASIA Growth Fund
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Portfolio Management Service: amount resulting into high interest rate, market price of
There was not enough increase in no. of customer for existing mutual fund unit lower than par value etc. Net
portfolio management services due to declining trend of Assets Value of the mutual fund was NPR 10.08 at the
NEPSE Index and high interest rate of banks. Similarly, end of FY 2017-18 even though secondary market was
expected progress could not be achieved in the portfolio continuously declining since the allotment of mutual
management service as the maximum customers look fund units, which can be considered as satisfactory
for the guaranteed return on investment for obtaining achievement as compared to other plans existing in the
portfolio management service. However, we have been market and in view of poor market condition.
able to provide portfolio management services to 44
customers amounting to NPR 103.4 million during the FY Financial Achievement of the capital during the FY
2017-18 which can be considered as satisfactory 2017-18
Financial Achievements:
Depository Participant Service: The capital has been able to earn exciting profit in spit
NIC ASIA Capital has been able to open 128,214 DEMAT of tough competition due to the increase of number
accounts during the short period of operation, which of Merchant Banker during the review period. The
weighs to 10% of total DEMAT accounts opened by the Capital has earned gross income of NPR 57,217,567/-,
total of 67 depository participants during that period. operational profit of NPR 21,095/- and net profit of
Similarly, the capital has been able to secured second NPR 15,712,215 during the period.
position in terms of total DEMAT accounts out of total
67 depository participants/merchant bankers. Annual The capital was able to distribute 2% Net Cash Dividend
renewal fees of DEMAT accounts has been increased by (including tax) during the short period of four months of
82% during the year. scal
fi year71-602and around %63.7 of cash dividend
during the scal fi year,81-702which was proposed on
NIC ASIA Mutual Fund: the paid up capital of NPR 200 million after the issuance
The Capital has issued “NIC ASIA growth fund” for a ofRight
1: sharesduringthisscal fi year.Similarly,weare
valueof1billionasafirstschemeunderNICASIABank committed to provide the attractive return in the future and
Mutual Fund, which was opened for subscription from to provide the high quality service in the coming days.
16th January, 2018 to 4th February, 2018 and allotted
to the subscribers on 13th March, 2018. We were able During the review year, the capital has earned NPR 10.50 per
to bring the plans of 8,352,000 unitsamounting to share. Further, we believe that the business growth achieved
NPR 835,200,000 amid the problems like continuous by the capital and the business diversity strategy adopted
declining of secondary market, issuance of plans by two by the capital have helped to build strong foundation for the
mutual funds at the same time, constraint of investable long term growth and expansion of business.
S.N. Particulars 16-July-2018 15-July-2017
1 Fixed Assets 3,674,745 3,366,849

2 Current Assets 5,498,748 5,216,078
3 Financial Assets 60,000,000 50,000,000
4 Loans and Advances 489,153 526,957
5 Deferred Tax Assets 234,898 -
6 Total Immovable Assets 69,897,544 59,109,884
7 Cash and Bank Balance 72,124,881 27,804,767
8 Bills Receivable 7,396,791 742,547
9 Loans and Advances 527,107 2,019,482
10 Financial Assets 112,000,000 20,000,000
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11 Financial Assets Received from Shares 60,875 48,153

12 Total Movable Assets 192,109,654 50,614,949
13 Total Assets 262,007,199 109,724,833
14 StaffBenefits 1,035,143 56,984
15 Bills Payable 463,624 230,244
16 Deferred Tax Liabilities - 66,601
17 Total Immovable Liabilities 1,498,767 353,829
18 Trade and other liabilities 44,587,282 7,056,807
19 Total Movable Liabilities 44,587,282 7,056,807
20 Share Capital 200,000,000 00,000,000
21 Reserves 15,921,150 2,314,198
22 Total Equity 215,921,150 102,314,198
23 Total Equity and Liabilities 215,921,150 102,314,198
24 Total Income 57,217,567 14,281,609
25 Total Expenses 36,208,418 11,138,730
26 Operating Income 21,009,150 3,142,897
27 Provision for Income Tax 5,296,934 761,087
28 NetProfit(Loss) 15,712,215 2,381,792
29 No. of Shares (In ‘000’) 2,000 1,000
30 NetProfitperShare(loss) 7.86 2.38
31 Net Worth (Book Value) 107.96 102.31
Strategy 21/22: Foundation to become best We aim to make this company number one merchant
merchant banker banker among the merchant banking industry with in next
We believe that business can achieve success by four years in line with long term strategy. Further, we aim
forming long term plan and effective implementation of to provide maximum return every year and to maintain
the same. On the basis of same believe we have formed the ROE of the company at least 30% every year.
and implemented 5 year strategic plans. This strategic
plan includes overall business indexes of the capital Corporate Governance, Risk Management and
andthemainfinancialindexes,whichthecapitalcompliance: aimsto Basis for long term growth
achieve by the FY 2021-22 and the various strategies to We are always committed towards maintaining standard
be adopted by the capital for the effective management corporate governance. For that we have already
of the same. We have set the aim that by the FY 2021- formulated some of the internal policies and rules and
22, the capital would achieve excellent success among we have already formulated and implemented corporate
the merchant banking industry in terms of all the main governance policy and other necessary policies. By
indexesalongwithbusinessindex,netprofitandincome adopting zero tolerance for corporate governance, we
per share. have also considered the management of means and
resources required for the effective management of
Similarly, the capital has formulated the long term strategy corporate governance. To maintain corporate governance,
of the company. Also, the capital aims to move forward we have always followed honesty, transparency,
by managing the business as per the strategy formulated responsibility and accountability. We believe that strong
by the company. foundation for the long term growth of the capital was
created from the effective corporate governance.
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ALNU REPOT 2017/8
Management and Development of Human branches. As a result of which, local residents of these
Resources: Real Capital of the Company areas can have easy access to the financial transactio
By accepting the fact that quality of service to be received and it has also played important role in the expansion of
by the customers from the capital depends on the skill, business of banks and financial institutions. Access t
qualificationandcapacityofthestaffandbyaccepting banks
the and financial institutions has been expanded t
reality that human resources is the real capital of the company, the most of the regions of the country. Also, as the most
we have adopted the policy to participate the staffs in the of the commercial banks have been providing depository
high level training for the skill and capacity development. participant services, subscriptions by the residents of
these areas to the shares issued to local residents are in
Our Belief and Desire: increasing trend.
Ever since the inception of business, we are committed
and will remain committed in the future towards achieving As the trade deficit is increasing continuously due t
high business growth by fully complying with rules and money going out of country is much higher than the
guidelines directed by the regulatory body through money coming to the country, interest rate on deposit is
continuous effort and hard work of the employees with high during the review period due to liquidity constraint
focused on the customer service, their requirement of banks and financial institutions, negative impact
and satisfaction. We believe expansion of service of the the same can be seen in the stock market. Most of the
capital depends on the requirement and desire of the banks and financial institutions have already fulfille
customers. To implicate the same this believe in practice, minimum capital required by the Nepal Rastra Bank and
we have formulated service holder oriented plan and most of the insurance companies are in the process
revised the internal procedure and policy structure as per to fulfill the minimum capital required by the Insuranc
current environment to make it more customer friendly. Board and the Nepal Rastra Bank and Insurance Board
can take the policy to encourage the companies of these
We have always believed that the basis of very existence sectors to go in the merger in the future as well, there
of the capital depends on the customer satisfaction is a minimum probability of issuing right shares by the
and their trust towards the capital. We are committed companies of these sectors. Due to NEPSE Index was
to always provide excellent services to the customers on declining trend during the FY 2017-18 and the volume
simply and easily. Simple, easy, quick and qualitative of stock trading was also low, new investors are seem to
services are our means and customer satisfaction is our be in a position of wait and see. Negative impact of the
end. To give the living form to it, we have been providing lower trading in the secondary stock market can be seen
services to the customer through evening counter, which in the business expansion of the Merchant Banker.
is the first service in the merchant banking industry. We
aim to make the excellence in service main mantra of the As the Government is about to make the provision of
capital with focus on the fact that merchant banking is keeping the money to be sent to the local bodies into
the service oriented business. the commercial banks to permanently solve the liquidity
problem of the banks and financial institutions, Nepa
2. Any impact caused to the business of the Rastra Bank has made the provision for the commercial
Company due to national and international banks to borrow loan from foreign banks and the
condition government and the Government is aggressive towards
Even though there was positive impact on overall economy enhancing capital expenditure, liquidity problem is going
due to formation of stable government in the country, to be solved slowly. Further, Nepal Securities Board has
there was liquidity constraint on bank and undertaken
financialthe policy to create environment to issue
institutions in the review year also as the government share to the general public by the company without
couldn’t fully utilize the all the amount allocated capital direct governing body and the Nepal Stock Exchange
budget. With the establishment of local bodies, banks Limited has completed the necessary procedure for
and financial institutions are rapidly expanding the implementation
its of online trading system and is in
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the process to start the online trading in the near future, 346th meeting of the board of directors of the NIC ASIA
therefore trading of stock is expected to increase in the Bank Ltd. held on 17th March, 2018, appointed the
future. As a result of which overall stock market and chairman of the capital Mr. Bishal Sigdel and the directors
the transactions of related companies are expected to Mr. Dinesh Bhari and Mr. Bimal Lamsal on behalf of
increase in the future. Further, successful completion of the bank. Similarly, Mr. Rabin Sapkota and Mr. Suman
work execution plan formulated by the bank is expected Dangol were appointed as independent directors. The
to be difficult due to frequent change of policy byinformation the of alteration of the board of directors by the
regulatory body. bank was the bank was received on 4th April, 2018 via
letter. Previously, Mr. Sudhir Nath Pandey was chairman
3. Goals for the current fiscal year: and Mr. Roshan Kumar Neupane and Mr. Bishal Sigdel
For the current fiscal year, the capital has set were directors and Mr. Rabin Sapkota and Mr. Suman
mainly
following goals: Dangol were independent directors.
• To become the leading bank by expediting the
DEMAT account opening 5. Any remarks and observation stated in the
• To increase the number of company receiving the Independent Auditors’ Report and Board of
registrar to share service Directors’ response thereon
• Providing the quality services by making the activities No observation apart from the normal observations
related to public issue more effective related to the regular transaction was mentioned in the
• By searching more customers for portfolio Auditor’s Report.
management, rapidly increase the customer and
amount for portfolio management service on daily 6. Amount recommended for distribution of
basis dividend
• Provide the excellent service of corporate advisory The board of director recommended the cash dividend
• Start the process for second mutual fund scheme of 7.36842% (including dividend distribution tax) from the
(Close Ended) profitoftheFY2017-8.
• Start the process after necessary study for the
mutual fund (Open Ended) 7. Details of shares forfeited
• To formulate and implement new customer oriented No shares were forfeited during the review year.
business plan and emphasis on the maximum
utilization of resources 8. Review of the progress made by the Company
• To obtain the goals included in the long term strategy and its subsidiary(s) in the current fiscal year
• To keep presenting the company brand in the market 2017/18 and the position of the same atthe end of
in effective way fiscal year
• To manage the market of the capital with focus on The company doesn’t have any subsidiary company.
the digital technology
9. Main activities carried out by the Company and
We are confident that we would be the first merchant its subsidiary(s) during thefinancial year and any
banker in the choice of the customer by playing leading significant changes in the business activities of the
role in this industry along with the achievement of above Company and its subsidiaryduring the same period
mentioned goals. This company is providing the services like Issue
Management and Underwriting, Registrar to Share,
4. Changes in the Board of Directors and the Depositary Participant and Portfolio Management, Mutual
reason thereof Fund and Corporate Advisory as a merchant banker. This
Alteration in Board of directors during review period is company doesn’t have any subsidiary company and the
as follows: business activities are carried out by as per the objective
mentioned in the MOA and AOA of the company. There
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ALNU REPOT 2017/8
is no change in the nature of main business activities of 16. Name list of members in the audit committee,
the company during the review year. remuneration, allowance and benefits they have
received, the details of activities of the committee
10. Any information given to the Company by its and the details of any recommendation by them
principal shareholder in last fiscal year Members of audit committee are as follows:
No such information.
S.N. Name
11. Details of shareholding taken by the directors 1 Mr. Rabin Sapkota

and officers of the company in the previous 2 Mr. Raju Adhikari
financial year and, in the event of their involvement 3 Mr. Niroj Rajbhandari
in share transaction of the company, details of
information received by the company from them in
that respect. Total of 4 meetings of audit committee was held during
No such information. the review period but no remuneration, allowance and
benefitswerepaidtothem.
12. Information provided on personal interest of
Board of Directors and their relatives (nearest 17. Dues payable to the company by any director,
kin) regarding contract or agreement done with MD, CEO, principal shareholders (holding share
theCompany in last fiscal year. more than 1%) or their relatives or firms or
There is no record of such contract or agreement. institutions in which they have their involvement
(interest)
13. Buyback of share by the Company, reason No such information.
thereof for buyback, number of shares bought
back, face value of share and amount paid during 18. Remuneration, allowances and benefits paid to
the buyback the director, MD, CEO and officials
No shares were bought back during the review year. During the review period, an amount of NPR 151,010
was paid to the directors and managing directors as
14. Information on existence of Internal control remuneration,allowanceandbenefit.
system and if there is, its detail
The committee has formed procurement committee, Detailsoftheremuneration,allowanceandbenefitspai
human resource development committee, internal to the Chief Executive Officer, Company Secretary and
audit committee and risk management committee Higher Level Management Employees of the company
in order to maintain internal control system. These during the review period:
committees hold meetings on regular intervals and they
give recommendations and suggestions to the board Particulars Chief Company Head-
Executive Secretary/ Investment
of directors and the management. The company has Officer Head- Merchant officer
Banking
formed and implemented various policies, guidelines
No. of staff 1 1 1
and procedures to make the internal control system
more effective. Amount of remuneration, 1,995,032 757,120 90,000
allowanceandbenefits (9 Months) (12 Months) (9 Months)
15. Details of total management expenses incurred

19. Uncollected dividend by the shareholders
during the previous financial year
No dividends were distributed till date.
Heading of Expenses Expenses Amount
Staff Expenses 15,175,214 20. Information on asset bought or sold as per

Operating Expenses 20,995,960 section 141
Total Expenses 36,171,175 No such information.
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ALNU REPOT 2017/8
21. Details of related party transaction as per

Section 175 (transactions between associated
companies)
• The company has received interest income of NPR
10,605,840 from the NIC ASIA Bank Ltd. during the FY
2017-18, out of which NPR 4,294,521 was received on
xed
fi deposit.
• The company has been providing service of registrar
to share to the NIC ASIA Bank Ltd, an annual service
fee of which is NPR 750,000.
• As per the agreement between the company and the
bank, an amount of NPR 977,054 was paid as staff
expenses for the operational and technical assistance.
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8.2
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8.3
FINANCIAL STATEMENT
STATEMENT OF FINANCIAL POSITION
As at July 16, 2018 Amount in NPR
Particulars Notes This Year Previous Year
Assets
Non Current Assets
Property, Plant and Equipment 3 3,674,745 3,366,849
Intangible Assets 4 5,498,748 5,216,078
Financial Assets measured at Amortized Cost 6.e. 60,000,000 50,000,000

Loans & Advances 6.f. 489,153 526,957
Deferred Tax Asset 15 234,898 -
Total Non Current Assets 69,897,544 59,109,884
Current Assets
Cash and Cash Equivalents 7 72,124,881 27,804,767
Trade Receivables 8 7,396,791 1,465,547
Prepaid Expenses & Advances 9 490,189 1,260,126
Loans & Advances 6.g. 36,918 36,356
Financial Assets measured at Amortized Cost 6.h. 112,000,000 20,000,000
FinancialAssetsheldatfairvaluethroughProfitorLoss(Shares) 6.i. 60,875 48,153
Total Current Assets 192,109,654 50,614,949
Total Assets 262,007,199 109,724,833
Equity & Liabilities
Non Current Liabilities
EmployeeBenefits 10 1,035,143 56,984
Trade & Other Payables 11.a. 463,624 230,244
Deferred Tax Liability - 66,601
Total Non Current Liabilities 1,498,767 353,829
Current Liabilities
Trade & Other Payables 11.b. 44,587,282 7,056,807
Total Current Liabilities 44,587,282 7,056,807
Equity
Share Capital 16 200,000,000 100,000,000
Retained Earnings 15,921,150 2,314,198
Total Equity 215,921,150 102,314,198
Total Equity & Liabilities 262,007,199 109,724,833
Schedules and Explanatory Notes forms an integral part of Statement of Financial Position
Niroj Rajbhandari Manish Ghimire Jhanak Raj Dhungel Bishal Sigdel

Head-Accounts ChiefInvesmentOffi cer ChiefExecutiveOfficer
Chairman Arun Raut, FCA
Partner
Suman Dangol Rabin Sapkota Bimal Lamsal Dinesh Bhari S.R. Pandey & Co.
Director Director Director Director Chartered Accountants
Date: August 03, 2018

Place: Kathmandu
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ALNU REPOT 2017/8
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the Period from July 16, 2017 to July 16, 2018
Amount in NPR
Notes This Year Previous Year
Income from Merchant Banking 13.a. 28,118,250 3,148,062

Income from Mutual Fund 13.b. 5,820,731 -
Interest Income from Loans & Receivables 13.c. 23,181,659 10,069,805
Gains on disposal of equity securities 13.d. 37,765 1,016,689
NetUnrealisedGainsonfinancialAssetsheldatFairvalue13.d. 45,288 44,053
Other Income 13.d. 13,875 3,000
Total Operating Income 57,217,567 14,281,609
Operating Expense
Merchant Banking Expenses 14.a. 10,293,364 2,228,963
Mutual Fund Expenses 14.b. 416,037 200,000
Commission on Sale of Securities - 13,116
Operating Profit 46,508,166 11,839,530
Non - Operating Expense
Staff Cost (including staff bonus) 14.c. 15,175,215 3,731,579
Premises Costs 14.d. 3,895,783 2,032,006
Advertisement and Promotion Expenses 14.e. 1,395,043 448,124
General Administrative Expenses 14.f 2,824,331 1,620,548
Finance Cost 37,243 21,017
Depreciation and amortisation 3 2,171,402 843,376
Profit Before Tax 21,009,150 3,142,880
Provision for Tax 15 5,296,934 761,087
Profit for the Year 15,712,215 2,381,792
Other Comprehensive Income / (Expenses)
Net Gains on Available-for-Sale Investments - -
ActuarialGains/(Losses)onDefinedBenefitsPlan - -
Total Other Comprehensive Income / (Expenses)
less: Tax Expense relating to Components of OCI -
Total Comprehensive Income for the Year - -
Attributable to
Equity Share Holders 15,712,215 2,381,792

Partner

Place: Kathmandu
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STATEMENT OF CASH FLOW

Amount in NPR
A. Cash Flow from Operating Activities

NetProfitbeforeTax 21,009,150 3,142,879
Adjustments for:
Depreciation expenses 2,171,402 843,376
Unrealized gain in Investment (45,288) (44,053)
Income Tax Paid (5,296,934) (761,087)
Dividend Paid (2,105,263) -
Increase/(Decrease) in Liabilities 38,675,414 7,213,661
(Increase)/Decrease in Investments (9,967,434) (4,100)
(Increase)/Decrease in Fixed Deposits (92,000,000) (70,000,000)
(Increase)/Decrease in Other Assets (5,358,962) (3,159,607)
Net Cash Flow from Operating Activities (1) (52,917,916) (62,768,931)
B. Cash Flow from Financing Activities
Increase/(Decrease) in Share Capital 100,000,000 -
Increase/(Decrease) in Long Term Loan -
Dividend Received -
Net Cash Flow from Financing Activities (2) 100,000,000 -
C. Cash Flow from Investing Activities - -
Sale/(Purchase) of Tangible Fixed Assets (2,479,296) (3,742,491)
Sale/(Purchase) of Intangible Assets (282,670) (5,683,812)
Net Cash Flow from Investing Activities (3) (2,761,966) (9,426,303)
Net Increase/(Decrease) in Cash and Cash Equivalents (1+2+3) 44,320,118 (72,195,233)
Cash and Cash Equivalents at beginning of the year/period 27,804,767 100,000,000
Cash and Cash Equivalents at end of the year/period 72,124,881 27,804,767

Partner

Place: Kathmandu
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STATEMENT OF CHANGES IN EQUITY

Amount in NPR
Particular Share Capital Retained Earnings Total
Balance at the Beginning of the Period - - -

Issue of Share Capital 100,000,000 100,000,000
ProfitfortheYear - (67,594) (67,594)
Other Comprehensive Income/ (Expense) net of tax - - -
Transferred to General Reserve - - -
Dividend Paid during the Year - - -
Balance at the End of the FY 2015/16 100,000,000 (67,594) 99,932,406
Issue of Share Capital - - -
ProfitfortheYear - 2,381,792 2,381,792
Dividend Paid during the Year - - -
Balance at the End of FY 2016/17 100,000,000 2,314,198 102,314,198
Issue of Share Capital 100,000,000 - 100,000,000
Profit/(Loss)fortheYear - 15,712,215 15,712,215
Dividend Paid during the Year - (2,105,263) (2,105,263)
Balance at the End of FY 2017/18 200,000,000 15,921,150 215,921,150

Partner

Place: Kathmandu
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NIC ASIA Bank Limited, the parent company of NIC ASIA

Capital Limited has received DP registration certificate
from SEBON to operate as Depository Participants dated
Ashwin 06, 2071 and membership license from the CDS
and Clearing Ltd, dated Chaitra 12, 2071 as per the CDS
Bylaws, 2058. The authority to provide DP services from
Chaitra 09, 2073 through NIC ASIA Capital Limited has
been received from CDS and Clearing Ltd on Chaitra 10,
2073.The company has not been registered in VAT as it
NOTES TO THE
providesnancial
fi servicewhichisexemptunderSchedule
1 of VAT Act, 2052.
FINANCIAL The Board of Directors of the company acknowledges the

responsibility of preparation of nancial fi statements of th
STATEMENTS
company. The nancial
fi statements were authorized for
issue by the Board of Directors on 18 Shrawan 2075 and
have been recommended for approval by shareholders in
the Annual General Meeting
2. SUMMARY OF SIGNIFICANT
1. OVERVIEW OF THE COMPANY ACCOUNTING POLICIES
NIC ASIA Capital Limited is a wholly owned subsidiary
The Principle accounting policies are adopted in
of NIC ASIA Bank Limited which is one of the leading
preparation of financial statements, which have been
commercial bank of Nepal. NIC ASIA Capital Limited
consistently applied unless otherwise stated.
company registration number at Companies Registrar is
with
370/2 1394 registeredofficeatTradeTowerNepal,
2.1 STATEMENT OF COMPLIANCE:
Thapathali and correspondence address at Siddhartha
The Financial Statements are presented in Nepalese
Insurance Complex, Babar Mahal, Kathmandu and it has
Rupees, rounded to the nearest Rupee. The Financial
been registered in Inland Revenue Office with its PAN
Statements have been prepared in accordance with
No.604259648.
Nepal Financial Reporting Standards (NFRS) which
was applicable from FY 2073/4. Further the financial
NIC ASIA Capital Limited is formed with an objective of
statements are in compliance with Securities Act, 2063
providing merchant banking and investment banking
and its regulation and in conformity with the Companies
services like Issue Management & Underwriting, Registrar
Act 2063 with Amendments and other relevant laws.
to Shares (RTS), Depositary Participant (DP), Portfolio
Management Services and Mutual Funds.
2.2 BASIS OF PREPARATION
The company while complying with the reporting
The company has received Merchant Banker License from
standards, makes critical accounting judgement as having
SEBON dated Falgun 08, 2073. Under the license, the
potentiallymaterialimpactonthefinancialstatements.T
company is permitted to for providing Issue Management
significant accounting policies that relate to the financi
and Underwriting Services, Registrar to Shares and Portfolio
statements as a whole along with the judgements made
Management Services. The company has received Fund
are described herein.
Manager and Depository License from SEBON dated
Ashadh 18, 2074.
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Where an accounting policy is generally applicable to a 2.6 PRESENTATION

specific item, the policy is described within that Therelevant
financial statements have been presented in th
note. NFRS requires the company to exercise judgement nearest Nepalese Rupees.
in making accounting estimates. Description of such
estimates has been given in the relevant sections wherever For presentation of the statement of financial posit
they have been applied. assets and liabilities have been bifurcated into current and
non- current distinction.
2.3 REPORTING PRONOUNCEMENTS
The company has, for the preparation of financial The statement of profit or loss has been prepared using
statements, adopted the NFRS pronounced by ASB as classification‘bynature’method.
effective on September 13, 2013. NFRS conform, in all
material respect, to International Financial Reporting The cash flows from operation within the statement o
Standards (IFRS) as issued by the International Accounting cashflowshavebeenderivedusingtheindirectmethod.
Standards Board (IASB)
2.7 PRESENTATION CURRENCY
2.4 ACCOUNTING CONVENTIONS Financial statements are denominated in Nepalese
The financial statements have been prepared on awhich is the functional and presentation currency
Rupees,
historical cost basis, as modified by the revaluation of
of the company.
financial assets and liabilities at fair value through profit
or loss. 2.8 ACCOUNTING POLICIES AND
ACCOUNTING ESTIMATES
The financial statements have been prepared Theon a
company, under NFRS, is required to apply accounting
going concern basis where the accounting polices and policies to most appropriately suit its circumstances and
judgements as required by the standards are consistently operating environment. Further the company is required
usedandincaseofdeviationsdisclosedspecifito cally.
make judgement in respect of items where the choice of
specific policy, accounting estimate or assumption to be
2.5 NEW REPORTING STANDARDS IN ISSUE followed could materially affect the financial statem
BUT NOT YET EFFECTIVE This may later be determined that a different choice could
NFRS 9 – Financial Instruments has been issued but is have been more appropriate.
not effective until further notified. For the reporting of
financial instruments, NAS 32 Financial Instruments, Accounting policies have been included in the relevant
Presentation, NAS 39 Financial Instruments Recognition notesforeachitemofthefinancialstatements.Theeffec
and Measurements and NFRS 7 Financial Instruments – and nature of the changes, if any, have been disclosed.
Disclosures have been applied.
NFRS requires the company to make estimates and
A number of new standards and amendments to the assumptions that will affect the assets, liabilities,
existing standards and interpretations have been issued disclosure of contingent assets and liabilities, an
by IASB after the pronouncements of NFRS with varying orlossasreportedinthefinancialstatements.
effective dates. Those become applicable when ASB
Nepal incorporates them within NFRS. The company applies estimates in preparing and presenting
the nancial
fi statements. The estimates and underlyi
A significant impact on classification and measurement
assumptions are reviewed periodically. Revision to
includingimpairmentoffinancialinstruments,will arise
accounting as
estimates are recognised in the period in which
a result of application of NFRS 9. the estimates is revised, and are applied prospectively.
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ALNU REPOT 2017/8
Disclosures of the accounting estimates have been The low value minor equipment below NRs 10,000 are
included in the relevant section of the notes wherever the not booked as Property, Plant and Equipment to ease
estimates have been applied along with the nature and record keeping and is shown under Office Accessories
effect of changes of accounting estimates, if any. & Equipment’s under Other Administrative Expenses in
Note 23 as the cumulative impact of such amount isNRs.
2.9 FINANCIAL PERIODS 19,895 and is considered immaterial.
The company follows the Nepalese financial year based
on the Nepalese calendar. C. SUBSEQUENT COSTS
The cost of replacing part of an item of property, plant
2.10 DISCOUNTING and equipment is recognized in the carrying amount of
Discounting has been applied where assets and liabilities theitemifitisprobablethatthefutureeconomicbenefit
are non-current and the impact of the discounting is embodiedwithinthatpartwillflowtotheCompanyandits
material. cost can be measured reliably. The costs of day-to-day
servicing of property, plant and equipment are charged to
2.11 LIMITATION OF NFRS IMPLEMENTATION thestatementofprofitorlossasincurred.
If the information is not available and the cost to develop
would exceed the benefit derived, such exception D. DE-RECOGNITION
to
NFRS implementation has been noted and disclosed in The carrying amount of an item of property, plant and
respective section. equipment is derecognized on disposal or when no
future economic benefits are expected from its use or
disposal. The gain or loss arising from the de-recognition
3. PROPERTY, PLANT AND EQUIPMENT of an item of property, plant and equipment is included in
Property, plant and equipment are tangible items that are statementofprofitorlosswhentheitemisderecognized.
held for servicing, or forotherpurposes and are expected When replacement costs are recognized in the carrying
to be used during more than one period. amount of an item of property, plant and equipment,
the remaining carrying amount of the replaced part is
A. BASIS OF RECOGNITION derecognized. Major inspection costs are capitalized. At
Property, plant and equipment are recognized if it is each such capitalization, the remaining carrying amount
probable that future economic benefits associated of the previous
withcost is derecognized.29
theassetswillflowtotheCompanyandcostoftheasset
can be reliably measured. E. DEPRECIATION
Depreciation is calculated over the depreciable amount,
B. BASIS OF MEASUREMENT which is the cost of an asset plus and incidental costs
An item of property, plant and equipment thatrelated qualifitoesacquisition. Depreciation is recognized in the
for recognition as an asset is measured at its cost. Cost statementofprofitorlossonthebasisoflifeoftheassets
includes expenditure that is directly attributable to the asdefined/estimatedbythemanagement.Theestimated
acquisition of the asset and cost incurred subsequently useful lives for the current and comparative periods are
to add to, replace part of, or service it. The cost of self- as follows:
constructed assets includes the cost of materials and
direct labor, any other costs directly attributable to Laptop and Computers 4 years
bringing the asset to a working condition for their intended Battery 4 years
use and the costs of dismantling and removing the items Furniture,FixtureandOfficeEquipment 6years
and restoring the site on which they are located. Motor Cycle 6 years
OtherOfficeEquipment’s 2years
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ALNU REPOT 2017/8
Depreciation of an asset begins when it is available for They are assessed for impairment whenever there is an
use, i.e. when it is in the location and condition necessary indication that the intangible asset may be impaired.
for it to be capable of operating in the manner intended
by management. The estimated useful lives for the current and comparative
periods are as follows:
Depreciation of an asset ceases at the earlier of the date
that the asset is classified as held for sale and the-date
Software 5 Years
that the asset is derecognized. Leasehold Assets to the extent of lease period– 6 Years
Amortization methods, useful lives and residual values are
Depreciation methods, useful lives and residual values reviewed at each reporting date.
are reviewed at each reporting date.
C. DE-RECOGNITION
F. FIXED ASSETS An intangible asset is derecognized on disposal or when
Balance as at Additions Disposals Balance no future economic benefits are expected from its use
01/04/2074 during the during the as at
year year 32/04/2075
and subsequent disposal.
At Cost
Furniture&Office 3,572,491.00 1,392,989 - 4,965,480
Equipment D. INTANGIBLE ASSETS
Vehicle 170,000.00 - - 170,000
Balance as at Additions Disposals Balance
Depreciation 01/04/2074 during the during the as at
year year 32/04/2075
At Cost
Furniture&Office 360,294.00 1,056,760 - 1,417,054 At Cost
Equipment License 1,096,100.00 1,068,980 - 2,165,080
Vehicle 15,347.00 28,333 - 43,681 &Software
Leasehold 4,587,712.00 300,000 - 4,887,712
Net Book Value Assets
Furniture&Office 3,212,196 336,229 - 3,548,426 Depreciation
Equipment
Vehicle 154,653 (28,333) - 126,319 At Cost
License 93,037.00 280,023 - 373,060
Net Book Value at 3,366,849 307,896 - 3,674,745 &Software
32 Asadh 2075 Leasehold 374,697.00 806,285 - 1,180,983
Assets
Net Book Value
4. INTANGIBLE ASSETS License &

Software
1,003,063 788,957 - 1,792,020
An intangible asset is an identifiable non-monetary asset

Leasehold 4,213,015 (506,285) - 3,706,729
Assets
without physical substance held for use in the production
Net Book Value 5,216,078 282,671 - 5,498,748
or supply of goods or services, or for administrative at 32 Asadh
purpose. 2075
A. BASIS OF RECOGNITION
Intangible assets are recognized if it is probable that the 5. ASSETS HELD FOR SALE AND
futureeconomicbenefitsthatareattributable DISCONTINUED
totheasset OPERATIONS
will flow to the entity and the cost of the assets can beassets (such as property) and disposal
Non-current
measured reliably. groups (including both the assets and liabilities of the
disposal groups) are classified as held for sale and
B. AMORTIZATION measured at the lower of their carrying amount and fair
Intangible assetsareamortized over their estimated useful value less cost to sell when: (i) their carrying amounts
economic life on a straight-line basis. will be recovered principally through sale; (ii) they are
available-for-sale in their present condition; and (iii) their
sale is highly probable.
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Immediately before the initial classification B.asRECOGNITION

held for / DE- RECOGNITION
sale, the carrying amounts of the assets (or assets and The company recognizes financial assets and financial
liabilities in a disposal group) are measured in accordance liabilities on the date it becomes party to the contractual
with the applicable accounting policies described above. agreement (trade date) and recognizes changes in fair
valueofthefinancialassetsorfinancialliabilitiesfromt
There are no assets that meet the recognition criteria for date.
assets held for sale and discontinued operation.
Investments are derecognized when the right to receive
6. FINANCIAL INSTRUMENTS cash flows from the investments hasexpired or the
The Company’s principal financial assets comprise Company has transferred substantially all risks and
assets held at fair value through profit and loss, financial
rewards of ownership.
assets measured at Amortized Cost and cash and
cash equivalents. The main purpose of these financial Financial liabilities at fair value through profit or l
instruments is to generate a return on the investment are derecognized when the obligation specified in the
madebyshareholders.TheCompany’sprincipalfinancial contract is discharged or expired.
liabilities comprise accrued expenses and other payables
which arise directly from its operations. Realized gains and realized losses on de-recognition
are determined using the weighted average method and
In accordance with NFRS 39; Financial Instruments: are included in the profit or loss in the period in which
Recognition and Measurement, the company’s they arise. The realized gain is the difference between an
investment in Fixed Deposits are classified asinstrument’s
Financialweighted average cost and disposal amount.
Assets measured at amortized cost, Equity securities
are classified as fair value through profit and loss.C. MEASUREMENT
The
amountattributabletoShareholdersisclassifiedasequity.
Payables are designated as Current and Non-Current Financial Assets and Liabilities held at Fair Value
liabilities at amortized cost. through profit or loss
A. CLASSIFICATION At initial recognition, the Company measures a financial

TheFund’sinvestmentsareclassifiedasfairvalue through
asset atitsfairvalue.Transactioncostsoffinancialasse
profitorlossandFinancialAssetsmeasuredatAmortized
carriedatfairvaluethroughprofitorlossareexpensedin
Cost. They comprise: the statement of Profit or loss and other comprehensive
income.
• Financial instruments classified as fair value
through profit or loss Subsequent to initial recognition, all nancial fi assets an
Financial assets, held for trading are recorded in the nancial
fi liabilities at fair value through profit or loss a
statement of financial position at fair value. Changes
measured at fair value. Gains and losses arising from
in fair value are recognized through profit or loss. This
changes inthefairvalueofthe‘financialassetsornancial fi
classification includes quoted equity securities held for
liabilities at fair value through profit or loss’ category a
trading. presented in the statement of comprehensive income
withinnetgains/losses)( onnancial
fi instrumentsheldatfair
• Financial Assets measured at Amortized Cost: valuethroughprofitorlossintheperiodinwhichtheyarise.
Financial Assets measured at Amortized Cost are non-
derivative financial assets with fixed or determinable
Fair value is the price that would be received to sell an
payments and fixed maturities that are not quoted on to transfer a liability in an orderly transaction
asset or paid
an active market. between market participants at the measurement date.
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ALNU REPOT 2017/8
The fair value of nancial

fi assets and liabilities Level 2 valuations
traded in are those with quoted prices for similar
active markets is subsequently based on their quoted instruments in active markets or quoted prices for identical
market prices at the end of the reporting period without any or similar instruments in inactive markets and finan
deduction for estimated future selling costs. instruments valued using models where all significa
inputs are observable.
Thefairvalueoffinancialassetsandliabilitiesthatarenot
traded in an active market are determined using valuation Level 3 portfolios are those where at least one input,
techniques.The quoted market price used forwhich could have a significant effect on the instrument
financial
assets held by the Company is the cost price which has valuation, is not based on observable market data.
notbeenreclassifiedduetotheassetsnotbeinglistedin
an active market till date and immaterial impact of such E. FINANCIAL ASSETS HELD AT AMORTIZED
valuation. COST –NON CURRENT
Financial Asset measured at Amortized Cost
Fixed Deposit 60,000,000 50,000,000
Financial Asset measured at amortized cost are
Total 60,000,000 50,00,000
measured initially at fair value plus transaction costs and
subsequently amortized using the effective interest rate
method, less impairment losses if any. Such assets are F. LOANS & ADVANCES–NON CURRENT
The non-current security deposit is presented in fair value
reviewed at the end of each reporting period to determine
whether there is objective evidence of impairment. by discounting applying the rate of 10%. The unearned
portion is shown as loans and advances (all non-current)
If evidence of impairment exists, an impairment loss is and this year’s expenses is charged as finance cost in
recognized in profit or loss as the difference between SOPL.
the asset’s carrying amount and the present value of This Year Previous Year
estimated future cash flows discounted at the original
Security Deposit 362,823 329,839
effective interest rate. Unearned Interest on
Security Deposit 126,330 197,118
If in a subsequent period the amount of an impairment loss
Total 489,153 526,957
recognized on a financial asset carried at amortized cost
decreases and the decrease can be linked objectively to
an event occurring after the write-down, the write-down is G. LOANS & ADVANCES – CURRENT
reversedthroughprofitorloss.
Unearned Interest on
D. FAIR VALUE MEASUREMENT Security
The Company measures and recognizes the following Deposit 36,918 36,356
assets and liabilities at fair value on a recurring basis: Total 36,918 36,356
The Company has no assets or liabilities measured at fair H. FINANCIAL ASSETS MEASURED AT
value on a non-recurring basis in the current reporting AMORTIZED COST– CURRENT
period:
Fixed Deposit 112,000,000 20,000,000

NFRS 13 requires disclosure of fair value measurements
Total 112,000,000 20,000,000
by level of the following fair value hierarchy;
Level 1 fair value measurements are those derived from

unadjusted quoted prices in active markets for identical
assets or liabilities.
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ALNU REPOT 2017/8
I. FINANCIAL ASSETS HELD AT FAIR VALUE Receivable are recognized and carried at amortized cost,
THROUGH PROFIT OR LOSS less a provision for any uncollectable debts. An estimate
for doubtful
Financial Assets held at fair value through Profi debt is made when collection of an amount is
t or Loss
(Shares): no longer probable.
Recoverability of receivable is reviewed on an ongoing
Investment in Shares 60,875 48,153
basis at an individual portfolio level, Individual debts
Total 60,875 48,153
that are known to be uncollectable are written off when
identified. An impairment provision is recognized when
Name of No Cost Cost Price Market Investment Input there is objective evidence that the Company will not
Company of Value Value Level
units be able to collect the receivable. Financial difficulties
Mahuli 15 100 1,000 2,611 39,165 Level 1 the debtor, default payments are considered objective
Laghubitta Input
evidence of impairment. The amount of the impairment
Swadeshi 13 100 1,200 1,670 21,170 Level 1 loss is the receivable carrying amount compared to the
Laghubitta Input
present value of estimated future cash flows, discounted
Present 60,875
value
at the original effective interest rate.
Cost 2,200
Trade & Other Receivables
Net 58,675
Unrealized This Year Previous Year
Gain
Trade Receivables 897,042 714,885
Unrealised 13,387
gain PMS Clients 48,552 22,384
recognized Mutual Fund Receivables 6,451,097 7,23,000
till last year
Other Receivables 100 5,278
Increase in 45,288
Fair value Total 7,396,791 1,465,547
7. CASH AND CASH EQUIVALENTS 9. PREPAID EXPENSES, DEPOSITS &

For the purpose of presentation in the statement of cash ADVANCES
flows, cash and cash equivalents includes cashPrepaid in handExpenses, Deposits & Advances may include
and at bank. Payments and receipts relating to the amounts for advance tax, prepaid expenses and other
purchase and sale of investment securities are classified
advances.
ascashflowsfromoperatingactivities.
This Year Previous Year The advance tax represents TDS receivable and tax
Cash in Hand 12,246 5,562 deposited by the company. Advance tax for the Income
Cash at Bank 72,112,635 27,799,205
Year paid by the company has been settled with the
provision for income tax liability and are presented as Net
Total 72,124,881 27,804,767
Advance tax as current assets
8. TRADE RECEIVABLES Prepaid Expenses, Deposits & Advances are recognized

Trade Receivables include amounts for dividends, interest and carried at amortized cost, less a provision for any
and other trade receivables. Dividends are accrued when uncollectable debts. An estimate for doubtful debt is
the right to receive payment is established. Interest is made when collection of an amount is no longer probable.
accrued at the end of each reporting period from the time
of last payment. Amounts are generally received within 90 Recoverability of receivable is reviewed on an ongoing
days of being recorded as receivables. basis at an individual portfolio level, Individual debts
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ALNU REPOT 2017/8
that are known to be uncollectable are written off when CITIZENS’ INVESTMENT TRUST
identified. An impairment provision is recognized The when
company doesn’t contribute to the Citizens’
there is objective evidence that the Company will not Investment Trust but employee may contribute according
be able to collect the receivable. Financial diffi culties
to their of
preference.
the debtor, default payments are considered objective
evidence of impairment. The amount of the impairment DEFINED BENEFIT PLAN
loss is the receivable carrying amount compared to the A defined benefit plan is a post-employment benefit plan
present value of estimated future cash flows, discountedother than a defined contribution plan. The Company is
at the original effective interest rate. liable to pay retirement benefits i.e; gratuity under t
Labor Act, 2048. Gratuity under Labour Act 2074 from
Prepaid Expenses & Advances Bhadra 19, 2074 is a defined contribution plan and
disclosed separately as above. The liability recognized
in the financial statements in respect of defined benefit
Advance Tax 148,162 794,428
plansisthepresentvalueofthedefinedbenefitobligati
Prepaid Expenses 288,753 465,699
as at the reporting date. The defined benefit obligation i
Other Advance 28,330 -
calculated as at the reporting date based on an internally
Interest Receivable 24,945 -
generated model as on Bhadra 19, 2075.
Total 490,189 1,260,126
Contributionstodefinedcontributionplansarerecog
asanexpenseinthestatementofprofitorlossasincurre
10. EMPLOYEE BENEFIT
Gain or loss on re measurement of the plan will be
DEFINE CONTRIBUTION PLAN
recognized in other comprehensive income.
A defined contribution plan is a post-employment plan
under which an entity pays fixed contribution into a
Employee Benefits
separate entity and will have no legal or constructive
obligation to pay further amounts. Obligations for This Year Previous Year
contributionstodefinedcontributionplansare At the beginning of

recognized 56,984 -
the Year
asanemployeebenefitexpenseinthestatementofprofit
Recognized on Income 1,050,323 56,984
or loss in the periods during which services are rendered Statement
by employees. Employees are eligible for Employees’ Recognized on OCI - -
Provident Fund Contributions in accordance with the Payments/ Payables (72,364) -
respective statutes and regulations. during the Year
At the end of the Year 1,035,143 56,984
Contributionstodefinedcontributionplansarerecognized
asanexpenseinthestatementofprofitorlossasincurred.
11. TRADE & OTHER PAYABLE
EMPLOYEES’ PROVIDENT FUND Trade Payable includes amounts payable related to
The companycontributes 10% of the salary of each expenditure including issue Management and RTS
permanent employee to the Employees’ Provident Fund services. Payable are recognized and carried at fair value
managed by government of Nepal. of liability. Discounting is made only for material non-
current payables.
GRATUITY AFTER BHADRA 19, 2074
The Gratuity Liability of 8.33% on Basic Salary of all staff Non-current payable includes accrued rent amount
after Bhadra 19, 2074 is computed as per New Labour created due to Lease rental for premises charged on
Act 2074 and provided accordingly treating it as defistraight ned line basis in accordance to the lease.
contributionplanasthecontributionisfixed.
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ALNU REPOT 2017/8
Current trade and other payables include payable to be associated costs incurred or to be incurred can be reliably
paid with 90 days. measured.
A. TRADE & OTHER PAYABLE-NON CURRENT Revenue is measured at the fair value of the consideration
received or receivable, net of sales returns, trade discounts
Accrued Rent (As per NFRS) 463,264 230,244
and revenue related taxes.
Total 463,264 230,244
Revenue for services rendered is recognized in the
statement of profit or loss after delivery of the service
B. TRADE & OTHER PAYABLE-CURRENT
whereas incase of Issue Management Service, the
advance received is recognized as Income as the fees
Auction Share Collection 789,287 3,482,926
are non-refundable and immaterial and there is no other
Promoter Share Collection - 900,000 mechanism to properly estimate the percentage of the
Staff Payable 2,228,631 395,020 work completed and the time required to complete the
Incentive to PMS Referral - 70,030 issue management.
Provident Fund Payable 77,680 16,764
CIT Fund Payable 10,000 - Interestincomeisrecognizedinprofitorlossforallfinancial
Performance Guarantee held 50,000 25,000 instrumentsthatarenotheldatfairvaluethroughpro
Right Share Collection 28,320,020 - loss using the effective interest method. Interest income on
Audit Fee Payable 78,050 44,600 assets held at fair value through profit or loss is include
Sahayogi Dividend Payables 2,479,431 - in the net gains/ (losses) on financial instruments. Other
Notice Publication 93,652 57,350 changes in fair value for such instruments are recorded in
TDS Payable 74,346 92,417 accordance with the policies described in Note 6.
Right Refund -
Sundry Creditors 654,249 The effective interest method is a method of calculating the
772,664
Payable to Regulatory Authorities 7,356,811 amortizedcostofafinancialassetorfinancialliabilityand
733,928
Service to be rendered 654,764 111,830 of allocating the interest income or interest expense over
Other Payable 1,527,712 354,278 the relevant period. The effective interest rate is the rate
Total 44,587,282 7,056,807 that exactly discounts estimated future cash payments
or receipts throughout the expected life of the financial
instrument, or a shorter period where appropriate, to
12. IMPAIRMENT the net carrying amount of the financial asset or liabilit
The company assesses at each reporting date whether
When calculating the effective interest rate, the Company
thereisobjectiveevidencethatafinancialassetorgroup
estimates cash flows considering all contractual terms o
offinancialassetsisimpaired.Afinancialassetoragroup
thefinancialinstrumentbutdoesnotconsiderfuturecre
of financial assets is impaired and impairment losses
losses. The calculation includes all fees paid or received
are incurred if, and only if, there is objective evidence of
between the parties to the contract that are an integral
impairment as a result of one or more events occurring
part of the effective interest rate, including transaction
after the initial recognition of the asset (a loss event), and
costs and all other premiums or discounts.
that loss event (or events) has an impact on the estimated
futurecashflowsofthefinancialassetorgroupoffinancial
Dividend income is recognized on the ex-dividend date
assets.
net of withholding tax.
13. REVENUE RECOGNITION

Revenue is recognized to the extent that it is probable that
the economic benefit will flow to the Company and the
l 342 l
ALNU REPOT 2017/8
A. INCOME FROM MERCHANT BANKING

This Year Previous Year Repairs and renewals are charged to the income
Income from Issue Management 4,677,640 540,500 statement in the year in which the expenditure is incurred.
Income from Depository Participant 21,138,091 2,297,660 The profit earned by the Company is before income tax
Income from Share Registrar 1,845,377 279,979 expense and after making provision for all known liabilities
Income from Portfolio Management 457,142 29,723 and for the depreciation of property, plant & equipment.
Services
Total 28,118,250 3,148,062 A. MERCHANT BANKING EXPENSES
B. INCOME FROM MUTUAL FUND Depository Participant Expense 9,048,873 1,724,189
RTS Expense 91,552 22,774
Income from Mutual Fund 5,820,731 -
Portfolio Management Expenses 94,057 -
Total 5,820,731 -
Issue management Expenses 233,882 -
License Fee to SEBON 325,000 -
C. INTEREST INCOME
Merchant Banking Membership 500,000 350,000
This Year Previous Year Renewal Fee to SEBON
Interest on Fixed 16,283,137 3,225,206 Incentive for PMS Referral - 50,000
Deposit
Trademark Expenses - 2,000
Interest on Call 6,898,522 6,844,599
Accounts Membership Fee – Merchant Banking - 80,000
Association
Total 23,181,659 10,069,805
Total 10,293,364 2,228,963
D. OTHER INCOME:
This Year Previous B. MUTUAL FUND EXPENSES
Year
NetRealised(losses)/Gainsonfinancial 37,765 1,016,689
AssetsatFairValueThroughProfitorloss Mutual Fund Expenses 291,037 -
Dividend Income & Miscellaneous Income 13,875 3,000 Fund Manager License Renewal Fee to 125,000 200,000
SEBON
NetUnrealisedGainsonfinancialassets
45,288
at 44,053
FairValueThroughProfitorLoss Total 416,037 200,000
96,927 1,063,743
Net Realized Gains on Financial Assets at 37,765 1,016,689
FairvaluethroughProfitorLoss C. STAFF COST
(Losses)/Gains on disposal of equity 37,765 1,016,689
securities Staff Service from NIC ASIA 574,290 500,461
Remuneration 10,599,229 2,810,989
ContributiontoDefinedContribution
332,968 8,382
14. EXPENDITURE Plan (PF)
All expenses except specially mentioned are accounted Dashain Allowances 272,520 -
on accrual basis. All expenditure incurred in running of Other Staff Expenses 153,422 5,050
the business and in maintaining the property, plant & Incentives for Staff 83,349 35,426
equipment in a state of efficiency has been charged to Training 8,000 -
revenueinarrivingattheprofitfortheyearandLeave presented
Encashment and Gratuity 1,050,523 56,984
instatementofprofitorloss. Staff Bonus* 2,100,915 314,288

Total 15,175,215 3,731,579
Expenditure incurred for the purpose of acquiring,

*Provision for staff bonus is made as per the Prevalent Practices at ten
expanding or improving assets of a permanent nature by percentofnetprofitincludingsuchbonus.
means of which to carry on the business or for the purpose
of increasing the earning capacity of the business has
been treated as capital expenditure.
l 343 l
ALNU REPOT 2017/8
D. PREMISES COST Software AMC Charges 9,415 -

Lease rental for premises are charged on straight line Legal Charges - 12,000
basis in accordance to the lease. All other expenses are Printing & Stationery Expenses 479,899 414,310
recognised when they become due for payment. Shared Service From Bank 476,189 178,575
This Year Previous Year Software Support Charges 279,500 -
OfficeRent 2,258,520 1,223,365 Transportation Charges 10,950 -
OfficeRent(AsperNFRSonOperating 233,380 230,244 Travelling Expenses 38,645 -

Lease) Vehicle Tax 8,000 -
Store Room Rent 95,450 - Board Meeting Expenses 151,010 902
Utility Expenses 901,064 369,560 Total 2,824, 331 1,620,548
Security Charge 407,369 208,837
Total 3,895,783 2,032,006
15. INCOME TAX EXPENSE

*Note-The company has entered into lease agreement from 1 Poush 2073 for
a period of 6 years with Siddhartha Insurance Ltd for lease property Income tax on the profit for the year comprises current
and deferred tax. Income tax is recognized directly in
E. ADVERTISEMENT AND PROMOTION the statement of profit or loss except to the extent tha
EXPENSES it relates to items recognized directly in equity or other
comprehensive income.
Advertisement Expenses 69,156 73,224

Domain Registration Charge 2,825 2,260
A. CURRENT TAX
Marketing & PR 1,211,422 275,065
Current tax is the expected tax payable on the taxable
Program Expenses 55,225 -
income for the year, using tax rates enacted at the reporting
Social Service Expenses 13,865 10,000
date, and any adjustment made to tax payable in respect
Web & Mail Hosting 39,550 19,775
of previous years. The amount of current tax payable or
Website Development 3,000 67,800
receivable is the best estimate of the tax amount expected
Total 1,395,043 448,124
to be paid or received that reflects uncertainty relate
income taxes, if any.
F. GENERAL ADMINISTRATIVE EXPENSES
Taxation
Insurance Expenses 33,494 9,473
OfficeAccessories&Equipment 41,892 74,049
Income Tax Expenses 5,587,978 671,955
Messenger Service 155,735 365,349
Deferred Tax
(301,499) 89,132
OfficeExpenses 873,752 403,096 Expenses/(Income)
Repair & Maintenance 47,455 63,124 Total 5,262,934 761,087
AGM Expenses 18,543 -

Vehicle Expenses 34,098 - B. DEFERRED TAX
Audit Fee 79,100 45,200 Deferred tax is recognized in respect of temporary
Audit Expenses 3,265 2,285 differences between the carrying amounts of assets and
Bank Charge 5,758 14,980 liabilitiesforfinancialreportingpurposesandtheamoun
Capital Increment Fees 30,000 - used for taxation purposes.
CertificationCharge 5,650 -
Courier Charges 27,634 - The measurement of deferred tax reflects the tax
Fine & Penalties 5,486 1,850 consequences that would follow the manner in which
General Expenses 8,862 - the Company expects, at the end of the reporting period
Inauguration Expenses - 35,355
l 344 l
ALNU REPOT 2017/8
to cover or settle the carrying amount of its assets and Temporary difference from Unrealized gain 44,053
liabilities. on Investment
Temporary difference from Operating Lease (230,244)
(Rent)
Deferred tax is measured at the tax rates that are expected
Temporary difference from Employee (56,984)
to be applied to temporary differences when they reverse, Benefits
using tax rates enacted or substantively enacted at the Brought forward Tax Loss - -
reporting date. Temporary Difference (782,993) 266,405
Tax @ 30% 25%
Deferred tax assets and liabilities are offset if there is a
legally enforceable right to offset current tax liabilities
and assets, and they relate to taxes levied by the same
16. SHARE CAPITAL
The detail of share ownership is presented below
tax authority on the sametaxableentity,or on different tax
entities, but they intend to settle current tax liabilities and This Year
Previous
Year
assets on a net basis or their tax assets and liabilities will
Per Unit
Number Amount Amount
be realized simultaneously. Value
Authorized
2,000,000 100 200,000,000 100,000,000
Capital
A deferred tax assets is recognized for unused tax losses,
Issued
tax credits and deductible temporally differences to the Capital
2,000,000 100 200,000,000 100,000,000
extentthatitisprobablethatthefuturetaxableprofitswill
Subscribed
2,000,000 100 200,000,000 100,000,000
be available against which they can be utilized. Deferred Capital
tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that the Paid Up Shares (Number) This Year Previous Year
related tax benefit will be realized, based on the level of
Fully Paid Ordinary Shares at the
1,000,000 -
futuretaxableprofitforecastsandtaxplanningbeginning strategies.of the Year
Number of Shares subscribed 1,000,000 1,000,000
Deferred tax liabilities are recognized for all taxable Fully Paid Ordinary Shares at the
2,000,000 1,000,000
end of the Year (Number)
temporary differences.
Per unit Value of the Shares
100 100
Ordinary Shares (Amount)
Deferred Tax Asset
Fully Paid Ordinary Shares
200,000,000 100,000,000
(Amount)
This Year Previous
Year
Balance at the beginning of the Year 22,531

Share Ownership Detail % Share Capital (Rs.)
Provision/ Release of timing difference 449,630 49,276
made during the Year 1. Domestic ownership 100 200,000,000
Balance as at the end of the Year 449,630 71,807 1.1 NIC ASIA Bank Limited 100 200,000,000
2. Foreign Ownership - -
13.2 Deferred Tax Liability Total 100 200,000,000
Balance at the beginning of the Year -

Provision/ Release of timing difference
made during the Year
214,732 138,408 17. CAPITAL COMMITMENTS &
Balance as at the end of the Year 214,732 138,408
CONTINGENCIES
Contingent liabilities are possible obligations whose
Net Deferred Tax (Asset)/ Liability (234,898) 66,601
existencewillbeconfirmedonlybyuncertainfutureevent
or present obligations where the transfer of economic
13.3 Deferred Tax Liability relates to the
following benefitsisnotprobableorcannotbereliablymeasured.
Temporary difference from Property, Plant 509,579
& Equipment
l 345 l
ALNU REPOT 2017/8
18. EVENTS AFTER THE REPORTING 21. EVENTS AFTER REPORTING

DATE. PERIOD
The materiality of the events after the reporting date The company monitors and assesses events that may
has been considered and appropriate adjustments and have potential impact to qualify as adjusting and / or non-
provisions have been made in the financial statements adjusting events after the end of the reporting period. All
wherever necessary. adjusting events are adjusted in the books with additional
disclosures and non-adjusting material events are
19. SEGMENTAL REPORTING discloses in the notes with possible financial impact, to
The company is organized for management and reporting the extent ascertainable.
purposes into segments such as: Portfolio Management
Services, Issue Management Services, Registrar There are no material events that have occurred
to Shares, Depository Participants and Others. The subsequenttoJuly 16 till
2018 thesigningofthisfinancial
segmental information is immaterial. statement.
20. RELATED PARTY TRANSACTION 22. PROPOSED DIVIDEND

a) The total interest income earned by NIC ASIA Capital The Board of Directors meeting of NIC ASIA Capital
Limited on Bank Accounts maintained in NIC ASIA Bank Limited hasproposed cash dividendof 7.36842%
Ltd. for FY 2074/75 is Rs. 10,605,840.12. Among it, the (includingcorporatedividendtax)forfiscalyear2074/5.
interest income earned on Fixed Deposit Bank Account
@ 11% p.a. for 75 days maintained at NIC ASIA Bank
Limited for FY 2074/75 is Rs. 4,294,520.55.
b) The Company has been appointed as the Share
Registrar of NIC ASIA Bank Limited for an annual fee of
Rs. 750,000.
c) The company has reimbursed NPR 977,054.00 as staff
expense as per the Service Level Agreement with the
Bank for providing necessary operational and technical
support.
l 346 l
ALNU REPOT 2017/8
NETWORK OF NIC ASIA BANK
9.1. Bank’s Network.............................................348

9.2. Subsidiaries..................................................350
9.3. Business Partners.........................................351
NETWORK OF
NIC ASIA BANK
l 347 l
ALNU REPOT 2017/8
9.1 PROVINCE 6
BANK’S NETWORK
07
BRANCHES
1
1
1
1
08
ATMs
1
15
1
1
1
1
1 1
1 1
1 1
1
3
2
35
2 1 1
8 1 1
7 3
3 13
1
PROVINCE 7 3
1 2 9
2
16
7
94
1 2
1
5 1 1
1
6
BRANCHES 3 1 1
1
14
1
PROVINCE 5 6
21
5
6
6
ATMs
51
3 3 Nawalpur
16
03
BRANCHLESS
BRANCHES
BANKING
38 TOTAL
02 ATMs
EXTENSION
COUNTERS 03
BRANCHLESS
270
BRANCHES
289 ATMs
BANKING
02 22
BRANCHLESS
37
EXTENSION
EXTENSION
COUNTERS BANKING COUNTERS
l 348 l
ALNU REPOT 2017/8
PROVINCE 4
31
BRANCHES
PROVINCE 3
24 70
BRANCHES
ATMs
05 140 PROVINCE 1
53
ATMs
BRANCHLESS
BANKING
03 BRANCHES
03
EXTENSION
BRANCHLESS
BANKING
46
COUNTERS
27 ATMs
07
63
EXTENSION 34
COUNTERS 87 5
11 BRANCHLESS
240
BANKING
1
5
17 03
EXTENSION
109
2 COUNTERS
3
3
6 4
5 4 1
1 1 1
8
3 3
r 1
6 5
3
1
1
3
4
6 1
2 1 1
4 5 4 2 2
1
2 1
1 9 1 1 1
2
5
10 2
4 5 4 14
4 17
9 16
42 19 01
15
PROVINCE 2 BRANCHES ATMs BRANCHLESS

BANKING 62
l 349 l
ALANNUAL
NU REPOT 2017/8 REPORT 2017/2018
9.2
9.2
SUBSIDIARIES
SUBSIDIARIES
NIC ASIA LAGHUBITTA

LAGHUBITTA NIC
NICASIA
ASIACAPITAL
CAPITAL LIMITED
LIMITED
BITTIYA SANSTHA
BITTIYA SANSTHALIMITED
LIMITED (Subsidiary
(SubsidiaryofofNIC
NICASIA
ASIABank
BankLimited)
Limited)
(Subsidiary of
(Subsidiary of NIC
NIC ASIA
ASIA Bank
Bank Limited)
Limited)
3rd
3rdFloor,
Floor,Siddhartha
SiddharthaInsurance
InsuranceComplex
Complex
Bheri-4, Khalanga
Khalanga ,Jajarkot
,Jajarkot Babar
BabarMahal,
Mahal,Kathmandu
Kathmandu
Bheri-4,
Tel No:089
No:089 430366/68
430366/68 Tel
TelNo:
No:+977-01-5705994
+977-01-5705994(Hunting
(HuntingLine),
Line),5705664,
5705664,
Tel
Fax No:
No: 089
089 4300367
4300367 5706318,
5706318,5705337
5705337
Fax
Email :: info@nicasialaghubitta.com
info@nicasialaghubitta.com Fax
FaxNo:
No:977-1-5706458
977-1-5706458
Email
Website: www.nicasialaghubitta.com
www.nicasialaghubitta.com Email:
Email:info@nicasiacapital.com
info@nicasiacapital.com
Website:
Website:
Website:www.nicasiacapital.com
www.nicasiacapital.com
BRANCHESOF
BRANCHES OFNIC
NICASIA
ASIALAGHUBITTA
LAGHUBITTABITTIYA
BITTIYA SANSTHA
SANSTHA LIMITED
LIMITED
S.N. Branch Name Address S.N. Branch Name Address
1 Khalanga Branch Jajarkot,Bheri Malika-4 15 Bethari Branch Rupandehi,Mayadevi GA PA-6
2 Thalah Branch Jajarkot,chhedagadh-5 16 Manpakadi Branch Rupandehi,Suddhodhan GA PA-5
3 Chaurjahari Branch Rukum,Chaurjahari-1 17 Shankarpur Branch Rupandehi,Devadaha-12
4 Kotihawa Branch Rupandehi,Tilottama-15 18 Gadawa Branch Dang,Gadawa-6
5 Sallibazar Branch Salyan,Bangadh Kupinde-1 19 Mehelkuna Branch Surkhet,Gurbhakot-8
6 Lawani Branch Kapilvastu,Suddhodhan GAPA-3 20 Sardi Branch Nawalparasi,Binayi-4
7 Bhutaha Branch Nawalparasi,Bardaghat-10 21 Bhumai Branch Nawalparasi,Sunwal-12
8 Imiliya Branch Kapilvastu,Buddha Bhumi-9 22 Baruwa Branch Nawalparasi,Susta-1
9 Simli Branch Rukum,Sani Bheri GA PA-9 23 Padampur Branch Chitwan,Kalika-04
10 Chhinchu Branch Surkhet,Bheriganga-12 24 Joshipur Branch Kailali,Joshipur-2
11 Chappargaudi Branch Banke,Kohalpur,-12 25 Punarbas Branch Kanchanpur,Punarbaas-3
12 Ramapur Branch Rupandehi,SainaMaina-10 26 Jumla Branch Jumla,ChandanNath-6
13 Jamunebazar Branch Surkhet,simta-9 27 Bestada Branch Dailekh,Bhagwatimai Ga Pa-1
14 Chhapiya Branch Rupandehi,Siyari GA PA-4 28 Shamshergunj Branch Banke,Raptisunari-8
l 348
350 l
ALANNUAL
NU REPOT 2017/8 REPORT 2017/2018
9.3
9.3
BUSINESS PARTNERS
BUSINESS PARTNERS
BANCASSURANCE PARTNERS
BANCASSURANCE PARTNERS
S.N. Life Insurance S.N Non- Life Insurance 10 Prabhu Insurance Ltd. 10 Prudential Insurance Company Ltd
1 Nepal Life Insurance Company 1 Prabhu Insurance Company Ltd 11 Asian Life Insurance Company 11 Sagarmatha Insurance Company
Ltd. Ltd
2 MetLife 2 Everest Insurance Company Ltd 12 Gurans Life Insurance Company 12 Shikhar Insurance Company Ltd
Ltd.
3 Jyoti Life Insurance Company Ltd. 3 Himalayan Insurance Company Ltd
13 Citizen Life Insurance 13 Siddhartha Insurance Company Ltd
4 National Life Insurane Company 4 Lumbini General Insurance
Limited Company Ltd 14 Life Insurance Corporation 14 General Insurance Company
(Nepal) Ltd. Nepal Ltd
5 Reliance Life Insurance Ltd.Nepal 5 NB /IME Insurance Company Ltd
15 Sanima Life Insurance 15 Ajod Insurance Company Ltd
6 Reliable Nepal Life Insurance Ltd. 6 Neco Insurance Company Ltd
16 Sun Life Insurance 16 United Insurance Company Ltd
7 Union Life Insurance Co. Ltd 7 Nepal Insurance Company Ltd
17 IME Life Insurance 17 Sanima Insurance Company Ltd
8 Surya Life Insurance Co. Ltd. 8 NLG Insurance Company Ltd
18 Mahalaxmi Life insurance Ltd.
9 Prime Life Insurance Co. Ltd. 9 Premier Insurance Company Ltd
REMITTANCE PARTNERS
REMITTANCE PARTNERS FOREIGN CORRESPONDENT
FOREIGN CORRESPONDENTBANKS
BANKS
S.N Domestic S.N International S.N. Bank Name Address
1 Annapurna Travels & tours Pvt Ltd 1 World Remit Ltd 1 ICICI Bank Hongkong
2 G.M.E. Remit Pvt Ltd 2 Hanpass 2 Mashreq Bank New York, USA
3 Cashway Money Transfer Pvt Ltd 3 Axis Bank 3 Commerz Bank Frankfurt, Germany
4 CFS Remit Pvt Ltd 4 RemitR 4 Standard Chartered Bank New York, USA
5 C.G. Remit Pvt Ltd 5 M&M Remit 5 Kookmin Bank Seoul, Korea
6 City Express Money Transfer Pvt Ltd 6 Sentbe 6 Standard Chartered Bank Mumbai, India
7 Easy Link Remittance Pvt Ltd 7 Orbit Remit 7 Mashreq Bank Mumbai, India
8 Garima Remit 8 Al Muqren Exchange 8 Axis Bank Mumbai, India
9 IME Ltd 9 ICICI Bank Mumbai, India
10 I PAY Remit Pvt Ltd 10 HDFC Bank Mumbai, India
11 J.M.E Remit Company Pvt Ltd 11 Standard Chartered Bank London, UK
12 Jyoti Remit 12 Commerz Bank Frankfurt, Germany
13 Lumbini Remit 13 Standard Chartered Bank Frankfurt, Germany
14 Muktinath Remit 14 Commerz Bank Frankfurt, Germany
15 Nepal Remit International Pvt Ltd 15 Bank of Tokyo Mitsubishi Tokyo, Japan
16 Prabhu Money Transfer Pvt Ltd 16 Standard Chartered Bank Tokyo, Japan
17 Ramro Remit Pvt Ltd 17 Westpac Banking Corporation Sydney, Australia
18 Remit to Nepal Pvt Ltd 18 Standard Chartered Bank Singapore
19 Samsara Remit Pvt Ltd
20 Sewa Remit Pvt Ltd
21 United Remit Pvt Ltd
22 Prithivi Remit
23 Sanima Xpress
24 Janata Bank
25 Century Remit
26 Mega Remit
27 Kumari Remit
l 349
351 l
ALNU REPOT 2017/8
NOTICE OF 21ST ANNUAL GENERAL MEETING
As decided by the 378th BoD meeting held on November 23, 2018, 21st Annual General Meeting (AGM) of the Bank will
be held on following date, place, and time:
Date, Time, and Place of Meeting
Date : December 19, 2018 (2075 Poush 04)

Time : 09:00 AM
Place : Heritage Garden, Sanepa, Lalitpur-2
Following agendas will be discussed at the Annual General Meeting
Ordinary Resolution
1. To approve Director’s Reports of FY 2017/18.
2. To approve the
Balance Sheet asof July16, 2018, ProfitandLossAccount, andCashFlowStatement forthe
year
ended thereon, together with Auditor’s Report after deliberation.
3. To approve the
consolidated financial statementthat includes
thefinancial
statement
of FY 2017/8 of theBank
and Bank’s subsidiary companies NIC ASIA Laghubitta Bittiya Sanstha Limited and NIC ASIA Capital Limited after
deliberation.
4. To appoint auditor
forFY 2018/9 (2075/6) andto fix theauditor’sremuneration
asperthe recommendation
of
Audit Committee. (Present auditor M/s. TR Upadhya & Co., Chartered Accountants are eligible for re-appointment)
Special Resolution
1. To approve the allocation of bonus share at the rate of 10% of paid-up capital equivalent to NPR 803,111,700 (NPR
eight hundred three million one hundred eleven thousand seven hundred only) and for the purpose of tax on same
cash dividend at the rate of 0.526% equivalent to NPR 42,269,037 (NPR forty-two million two hundred sixty-nine
thousand thirty-seven only) as proposed by Board of Directors.
2. To approve the increment of authorized capital of the Bank to NPR 8,840,000,000 (NPR eight billion eight hundred
forty million only) from NPR 8,040,000,000 (NPR eight billion forty million only), increment o issued capital to NPR
8,834,228,698 (NPR eight billion eight hundred thirty four million two hundred twenty eight thousand six hundred
ninety-eight) from NPR 8,031,116,998 (NPR eight billion thirty one million one hundred sixteen thousand nine
hundred ninety-eight) and increment of paid-up capital to NPR 8,834,228,698 (NPR eight billion eight hundred thirty
four million two hundred twenty eight thousand six hundred ninety-eight) from NPR 8,031,116,998(NPR eight billion
thirty one million one hundred sixteen thousand nine hundred ninety-eight).
3. To amend Memorandum of Association (MOA) and Articles of Association (AOA) as per the prevailing scenario.
4. Delegation of authority to the Board of Directors or the representative appointed by the Board of Directors for
making necessary adjustments in the MOA and AOA of the Bank in case any instructions are received from the
approving authority during approval of amendments of the MOA and AOA
By Order,
Deepen Karki
Company Secretary
l 352 l
ALNU REPOT 2017/8
OTHER INFORMATION REGARDING AGM:
1. Arrangement has been made to send the Notice of AGM and summary of Annual Financial Report of the Bank
to all the shareholders to the addresses maintained in the share register. Shareholders whose complete address
wasnot updated inthe registerorunable to receivethe documents cancontact any branch office of theBank to
inspect the Annual Financial Report, Director’s Report, and Auditor’s Report. Further, information related to the
same has been made available in the Bank’s website www.nicasiabank.com.
2. Shareholders interestedinparticipatinginthe AGM shall bring share certificate/proof of DEMAT account and
documents proving their identity or its copy (like citizenship card or other identity card with photo) along with them,
otherwise they will not be allowed to enter the meeting hall. To participate in the meeting, each shareholder should
be present in the place of meeting and sign in the shareholders’ attendance register. Shareholders attendance
register will be made available from 9:00 A.M. till the meeting ends.
3. Shareholders who want to appoint a proxy for attending the AGM can appoint only other shareholders as a
proxy. Shareholders interested inappointinga proxy forattendingthe AGM shall fillthe
proxy forminthe format
prescribed by the Companies Act and shall submit the form at least 48 hours before the AGM (i.e. within
09: A.M onDecember19, 2018 (2075/9) tothe registeredoffice of the
Bank,Trade Tower,Thapathali,
Kathmandu.
4. If any shareholder is juvenile or insane, then the person who is registered as his guardian in the shareholders’
register shall be entitled to take part, vote, or appoint a proxy in the AGM
5. If two or more shareholders jointly hold shares, then representative appointed by such partners, or the partner
whosenameappears first
inserial order inthe shareholders’ register,shallonlybe entitledtotake part inthe AGM.
6. If any shareholder wants to replace the previously appointed proxy or wants to participate himself, then he shall
submit suchinformation at least 36 hours before theAGM to theregistered office of the Bank,Trade Tower,
Thapathali, Kathmandu, or else proxy cannot be changed. If any shareholder who has appointed proxy presents
himself in the AGM, then the appointed proxy shall be automatically cancelled.
7. If any agenda falling under the others subject needs to be discussed in the AGM, the interested shareholders shall
give the notice of such agenda in writing to the Board of Directors through Company Secretary seven days before
the AGM.
8. Shareholders register book will be closed from December 5, 2018 (2075/08/19) to December19, 2018
(2075/09/04) for the purpose of the AGM. If the name of the shareholder is registered in shareholders’ register
book located in the Bank’s share registrar NIC ASIA Capital Limited, Babarmahal, Kathmandu within seven days
because of the transactions conducted in Share Stock Exchange till December 4, 2018 (2075/08/18), then such
shareholders can participate and vote in the AGM and are entitled to receive bonus share and cash dividend.
9. You are requested not to carry any bags while attending the AGM for security reasons. If required, security guards
can conduct a security check. Therefore, you are requested to cooperate with the security.
10. For any queries
regardingAGM, you arerequested
to contact
the
office of Company Secretary at
registered
office
of the
Bank,TradeTower,Thapathali
(Telephone
No. 01-57/8, Extension-257) within
office hours.
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21st Annual Report
2017/18
BANKING
THE UNBANKED
THE UNBANKED
BANKING
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21st Annual Report

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NIC ASIA Bank believes that huge banking networks

footprint to rural and semi-urban population where 11 URBAN 6 7 URBAN 6

NIC ASIA BANK LIMITED

DETAILSOFLOANFACILITY NIC ASIA Capital provided portfolio management services

during its short period of operation, which accounts to

Tulsi Ram Agrawal

The NIC ASIA Board of Directors, while representing its promoters

Details of footprint expansion during 2017-18:

218 LOAN 143

2019/20 TILL 16-NOV-2018

CORPORATEGOVERNANCEANDRISK form of income tax and tax deducted at source which

TOTAL DEPOSIT LOAN NON PERFORMING

dividendofNPRhas 317 alreadybeendistributedonthat We believe that this is a notably extraordinary lev

NetProfit 1.3billion 3 billion 125%

FRONT LEFT TO RIGHT

BACK LEFT TO RIGHT

Further, we are determined to assume leading position in regards to majo

Now, I would like to present following overviews on the strategies undertaken by

A.CORPORATEGOVERNANCE evaluate and review the risk to keep it within acceptable

F.INCREASEINBUSINESS We were also able to achieve historic

NET INTEREST OTHER OPERATIONAL CUSTOMER-BASE

Review period 4.21 billion

strategies in order to implement the idea of digital

of rural areas. In accordance to the

we have fixed Turnaround Time (TAT) for our different M.SOCIALCORPORATERESPONSIBILITY

THE MANAGEMENT TEAM

FRONT LEFT TO RIGHT

BACK LEFT TO RIGHT

Mr. Dinesh Bhari

CHIEF HUMAN CHIEF

The DNA Oversight Committee has been envisioned

NRBDirectiveNo.has 6 detailedaCodeofConductto THE

THE After achievement of historic milestones in earlier

NIC ASIAN possessing extraordinary NIC Asia DNA, are fully

NIC ASIANs are

Mindset is a habitual or characteristic

NIC ASIA Bank had provided a loan amounting to NPR etc.Silwal,theproprietorofthebusiness,hasemployed

“The relationship with NIC ASIA

Ambirman Singh Silwal, customer

Registered Name of the Company NIC ASIA Bank Limited

Company Registration Number 658

Company Registration Date 30-May-1997

NRB License Number 658/053/54

Registered Office Ward No.11, Trade Tower, Thapathali

Province Offices Province 1: Biratnagar Metropolitan, Biratnagar, Ward no. 7

Company E-mail info@nicasiabank.com

Company Website www.nicasiabank.com

Card Center Kamaladi, Ganeshthan, Kathmandu Tel No: +977-01-4262277

Auditors TR Upadhya & Co.

NIC ASIA LAGHUBITTA BITTIYA OBJECTIVE

Thevisionofthefinancialinstitutionispoverty SAVING alleviation

Loan Products • Theorganizationhasopened28branchofficesover

Micro Enterprises loan

To become one of the leading investment and merchant

MUTUAL FUND • Providing Online access to your Account to view and

8.352 835.2 10.08

NUMBER OF VALUE OF NET ASSETS VALUE

SUBSEGMENTS: Non Funded Facilities

Large Corporate • Financingworkingcapital&capitalexpenditure

Auto Loan within a short period of time with simple documentation

in poverty alleviation and reduction of unemployment • LowCostHousing