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Understanding Paid-Up Capital: What Every Business Owner Should Know

Paid-Up Capital

Every business owner should have a solid understanding of the fundamental financial concept of paid-up capital. It is essential in figuring out a company’s financial stability and health. A company’s share capital can be raised by public involvement, which is one goal of an IPO. Paid-up capital is a term used to describe one of a company’s share capital types. However, today we are going to address the factors that affect the paid-up capital as well as its characteristics and importance.

What is Paid-Up Capital?

The amount of money shareholders have given a corporation in return for equity is known as paid-up capital. A firm generates paid-up capital when it sells its shares to investors on the open market, typically through an initial public offering (IPO). No new paid-up capital is produced when investors trade shares on the secondary market since the selling shareholders receive the money rather than the issuing business.

Factors Determining the Paid-Up Capitals?

Paid-up capital is calculated by multiplying the number of shares issued by the price at which they were issued. For example, if a company issues 1,000 shares at $10 per share, the paid-up capital would be $10,000. As shareholders purchase more shares or the company issues additional shares, the paid-up capital increases. The following are the factors that determine the Paid-up Capital:

  • Business Type: The kind and size of your company can have a big impact on the amount of paid-up capital needed. Higher capital requirements are usual for larger, more sophisticated enterprises.
  • Industry Standards: Businesses may be required to abide by certain capital requirements or regulations in some sectors.
  • Market Conditions: The quantity of capital investors are ready to provide can be influenced by market demand and economic conditions.

How does Paid-up capital work?

Anyone involved in business operations or investment choices must have a solid grasp of paid-up capital since it is a crucial part of a company’s financial structure. When shareholders make financial commitments by buying firm shares, this capital is created. The quantity of shares issued and the price at which they are issued define the value of paid-up capital. It is essential to the company’s capacity to maintain its financial stability since it acts as a safety net of real money that can be used to pay for both early starting fees and continuing operating costs. 

Paid-up capital, as opposed to loans or debt, does not have to be returned to shareholders; instead, it stays permanently invested in the business, enhancing its long-term financial stability. Paid-up capital, which represents the shareholders‘ ownership interest, is included in shareholder equity on the company’s balance sheet. The fact that many nations have legal requirements for a minimal amount of paid-up capital that firms must keep in order to operate legally also makes it important in the eyes of regulators.

Why is Paid-up capital Important?

A company’s financial environment is significantly shaped by its paid-up capital. First and foremost, it acts as the foundation of monetary stability by providing a safety net of cash to pay for both early launch expenditures and continuing operations costs. This financial safety net is especially important when a company is just getting started and profitability is hazy. The trustworthiness of a corporation is also strengthened by a high paid-up capital level. It makes a clear statement to creditors, investors, and possible business partners that stockholders have a significant stake in the company. This promotes trust and confidence in the business’s capacity to handle financial difficulties and keep its promises.

Its importance is further reinforced by the various countries’ regulatory requirements for minimum paid-up capital. Penalties or even the inability to conduct business legally may result from non-compliance. Paid-up capital also increases a company’s ability to borrow money since lenders consider it positively when determining a company’s creditworthiness. Last but not least, investors are drawn to companies with robust paid-up capital since it implies a sincere commitment from the current owners, which lowers perceived risks and makes the firm a more appealing investment prospect.

A larger paid-up capital can also help a company’s borrowing capability because lenders frequently take it into account when determining creditworthiness. Last but not least, a firm with a high paid-up capital may draw investors since it shows a strong commitment from its current owners, which lowers perceived risks and makes the company a more desirable investment option

Characteristics of Paid-Up Capital

  • Paid-up capital serves as a proxy for shareholders‘ ownership interests in the business. By purchasing business stock, shareholders can become owners, and their investment is represented in the paid-up capital.
  • Paid-up capital is seen as a permanent kind of capital since, unlike loans and debt, it is not intended to be repaid to shareholders. It supports ongoing business operations and growth and stays involved in the firm over the long term.
  •  Paid-up capital is provided by a company’s founders or early investors to begin operations. This initial capitalization provides the money needed to pay for launch expenses, buy assets, and finance first operations.
  • To function lawfully, a corporation must maintain a minimum of paid-up capital as required by law in many nations and jurisdictions. These specifications were put in place to make sure that companies had a minimal amount of financial stability and could fulfill their responsibilities.
  • Paid-up capital functions as the company’s financial safety net. It serves as a buffer against financial troubles, assisting the company to withstand downturns in the economy, unforeseen costs, or losses.
  • Paid-up capital is a part of shareholder equity on the balance sheet of the corporation. Paid-up capital is one of the sources of this equity, which reflects the company’s remaining stake in its assets after obligations have been subtracted.
  • Potential investors, creditors, and business partners may have more faith in a company with a greater paid-up capital. It shows that current investors are dedicated to the company’s development and are prepared to devote considerable money.
  • Paid-up capital is one factor in the basis for valuation, which affects how much a firm is worth. Investors and analysts frequently compare the paid-up capital to other financial measures when determining a company’s worth.
  • Companies have the option to raise their paid-up capital by issuing more shares to buy, even if there may be regulatory limitations for a minimum amount. With this flexibility, they can obtain more equity capital if necessary.

Authorized Capital vs. Paid-up Capital. 

Authorized capital, sometimes referred to as authorized shares or registered capital, is the most capital that a business is permitted by law to distribute to its shareholders. It is the top limit specified in the charter or articles of formation of the firm whereas the term “paid-up capital,” also known as “paid-in capital” or “contributed capital,” refers to the real sum of money that shareholders have contributed to the business by acquiring shares. The amount of permitted capital that has been issued and paid for by shareholders is known as the authorized capital.

AspectAuthorized CapitalPaid-Up Capital
RepresentsPotential capital issued by the company.Actual capital invested by shareholders.
Initial SettingSpecified in the articles of incorporation.Determined by shares issued and their value.
FlexibilityCan be adjusted through formal processes.Varies with share issuance and investments.
PurposeSets the upper limit for equity shares.Reflects tangible funds available for use.
Legal RequirementMandatory in some jurisdictions.Not a legal requirement but affects compliance.
RelationshipMay be higher than, equal to, or lower than paid-up capital.Always a portion of authorized capital.
Change ProcessTypically requires formal processes and regulatory approvals.Changes with additional share purchases or issuances.
ExampleAuthorized capital: $1 million, Paid-up capital: $500,000.Shareholders invest $500,000; paid-up capital is $500,000.

Minimum Paid-up Capital Required for Companies

The Nepal Insurance Authority, formerly known as the Insurance Board of Nepal, initially gave insurance companies a year to increase their paid-up capital. Due to most firms not meeting the required limit, they extended the deadline until the end of the current fiscal year (mid-July).

The authority set a minimum paid-up capital of NPR 5 billion for life insurance firms and NPR 2.5 billion for non-life insurance. This was a significant increase from the previous requirements of NPR 2 billion for life insurers and NPR 1 billion for non-life insurers.

However, as the deadline neared, only a handful of companies met the new capital requirements. In the life insurance sector, Nepal Life Insurance, Himalayan Life Insurance, and National Life Insurance reached the specified levels. In the non-life insurance category, IGI Prudential Insurance, Siddharth Premier Insurance, Shikhar Insurance, and Sagarmatha Lumbini Insurance also met the capital requirements.

It’s vital to remember that overseas company branches were not required to increase their capital. This regulation change sought to improve the financial soundness of Nepali insurance businesses.

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FAQS:

Can paid-up capital be zero?

No, paid-up capital cannot be zero. It represents the actual funds invested by shareholders and is a fundamental financial metric for a company. Having no paid-up capital would mean there are no shareholder investments in the company, which is not a viable or legal business structure in most jurisdictions.

Why is paid-up capital important?

Paid-up capital is important because it ensures financial stability and money for operating costs, especially in the beginning. Credibility is increased, stakeholders are seen to be committed, and investors are drawn in. Its relevance is further highlighted by the legal requirements and the effect it has on borrowing power.

Can I change my paid-up capital?

Yes, you can change your paid-up capital by issuing additional shares or buying back existing shares, subject to legal and regulatory requirements. The process typically involves shareholder approval and may impact the company's financial structure and ownership distribution.

What is meant by paid-up capital?

Paid-up capital is the money a company collects when it gives out shares to its owners.

How is paid-up capital calculated?

Paid-up capital is calculated using the following formula: Paid-up Capital = (TSR – LT Debt) + LT Equity. where: TSR: Total Shareholder's Funds, LT Debt: Long-term debt, and LT Equity: long-term equity

Conclusion:

Having paid-up capital is essential for running a company as it goes beyond just being a financial metric. Understanding its importance and effectively managing it can contribute to the long-term growth and sustainability of your business. Paying close attention to your paid-up capital is crucial for making educated financial decisions and developing trust with stakeholders, whether you’re a novice or a seasoned business owner.

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A Step-by-Step Guide to Applying for a Police Clearance Certificate

Police Clearance Certificate

To apply for employment, immigration, or visa in Nepal, one must first get a Police Clearance Certificate, also known as a police report online. The majority of the time, companies and government agencies need this document as confirmation of your lack of a criminal record.

In this guide, we will walk you through the process of applying for a police report online in Nepal, both online and offline, ensuring you navigate the system with ease.

What Is a Police Clearance Certificate?

A police clearance certificate, also known as a police report, a police check, or a criminal history check, is a legal document issued by law enforcement or other government bodies. This document records a person’s criminal history or absence thereof in a particular area or nation. A police certificate is primarily used to confirm if a person has a criminal history or any active criminal charges.

Documents required for a police clearance certificate in Nepal

Gather the required paperwork in advance to speed up the application process. Typically, you’ll need:

  • Citizenship, picture of the front and back
  • Recently taken passport-size photo
  • Passport photo (Pages no. 1, 2, and 30) including the bio page
  • A sheet with the passport’s immigration stamp is also required if you are presently traveling overseas
  • Nabalik Pramanpatra (If applicant is under age)
  • Your Contact Number
  • Your Email ID

For Refugees

  • Scanning of unexpired travel documents of refugees.
  • Scan travel documents with the Nepal Immigration Department upon arrival/departure when entering/exiting Nepal. 
  • Scanning the refugee card. 
  • A letter from the refugee in question.
  • Passport size color photograph – 1 piece.

For Foreigners

  • Scan your unexpired passport.
  • Copy of arrival and departure salary of Nepal Immigration Department (if the person is not in Nepal) in the passport at the time of entry and exit to Nepal. 
  • Letter of recommendation from the applicant’s organization. 
  • Passport size color photograph – 1 copy.

NOTE: Ensure that all documents are clear, legible, and up to date.

Steps to Complete Police Report Online Form in Nepal

Filling out an online police form or requesting a police report involves several steps.

Step 1: Visit the Official website

login pcc

Step 2: Now click on “Register” to create an account.

Step 3: Choose one of them: I’m Nepali, I’m Foreign or I’m a refugee and click Next.

pcc-who-u-are

Step 4: Enter your full name, select your gender, mobile number, and email, complete the captcha, and then click “Register” to complete the registration process.

Register

Step 5: You’ll receive a temporary password in your email or SMS. Next, modify the password and log in again.

Password reset

Step 6: You must now complete the online form in five stages. These include filling out personal information, address, documentation, self-declaration, and confirmation.

pcc personal-info

Step 7: Fill up all the details correctly, according to your citizenship document/ passport.

Step 8: Upload your photo and document that is clearly visible in the document section.

Step 9: Complete the passport issuing authority details by filling in the space with the stamp on page 3. If your document is unclear, your application can be refused or rejected.

Step 10: If you have a criminal background, you can disclose it in the self-declaration area.

Step 11: Lastly recheck and submit your application.

Eligibility for the Police Clearance Certificate

Depending on the particular needs of the granting body and the intended use of the certificate, the eligibility requirements for applying for a Police Clearance Certificate or a Police Report Online in Nepal may change. The following people are eligible to apply for a police clearance certificate in Nepal.

  • The applicant must have a valid e-passport /MRP passport and a valid residence document.
  • Age: 16 years and above. Application for minors must be made by a parent exercising parental authority if the minor is under 16 years of age.
  • The applicant’s current address must match the address on the passport and other supporting documents.
  • Applicants who need a residence, work, or long-term visa or immigration to another country.

The processing time required for a Police Report Online

A Police Clearance Certificate’s processing time in Nepal might change based on several variables, including the workload of the authorities. Plan if you want to get your certificate; it can take a few weeks. Applying far in advance of when you want the certificate is advised.

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FAQs:

How much does a police clearance certificate cost in Nepal?

Application processing fee of NRs. 500/- per application. Fees can be paid online using eSewa, connect IPS, through Global IME Bank.

How long does it take to prepare a police character certificate?

The processing time for a police character certificate in Nepal varies, but it typically takes several weeks to months to receive the certificate, depending on the specific requirements and workload of the authorities.

How long is a police report valid in Nepal?

It is valid only for one year in the context of Nepal. After the validity is completed, you have to apply for another police report.

Where can I get a police report stamp in Nepal?

This is located at the Department of Passport (or Ministry of Foreign Affairs) in Thamel.

Conclusion:

For many formal purposes, it is essential to get a police clearance certificate or a police report online in Nepal. You may complete the application procedure whether you select the time-saving offline option or the standard online one by following the guidelines provided in this article. Plan and make sure all of your paperwork is to prevent needless delays in receiving your certificate.

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Step-by-Step Guide: Apply Online E-passport Nepal

Online E-passport Nepal

When you hear the word ‘E-Passport’, you may think it’s the virtualization of our physical password. Well, this article is here to tell you, that you’re wrong. E-passports have the physical hardcopy of a passport with the addition of a ‘chip’ in it. It is comparatively better than the MRP(Machine Readable Passport) which reads a code that provides the person verifying all the information about you to cross-check your authenticity. 

By the end of the article, you will understand what an e-passport is, why Nepal introduced e-passports?, the process of getting an e-passport, and all the necessary documents you require to get your e-passport in Nepal.

What is an E-Passport?

Your e-passport verifies your authenticity when traveling. It is very similar to MRP(Machine Readable Passport). What is the difference? Well, it is the chip. Yes, a tiny chip in front of the passport and a small chip in the pages of your passport. 

This chip when scanned, provides the verifier with your biometrics(i.e. your iris scan, fingerprint scan, and the scan of your facial structure). And you’re permitted to enter the country only after they match you with your biometrics.

On 17 November 2021, the first electronic passport, or e-passport was introduced. 

What documents are required for an online e-passport Nepal application?

Date booking for biometrics should be done by filling out the online form. The basic requirements for the first Issuance online e-passport Nepal are as follows:

For Minor’s Passport:

  • Certificate of Minor Citizenship 
  • Marriage Registration Certificate of Parents
  • Parents’ citizenship certificates (front and rear page)
  • District Verification Letter with Photograph of Applicant

For Adult’s Passport:

  • Citizenship Certificate (front and back)
  • National Identity Number (Validated)

What documents are required for passport renewal in Nepal?

The basic requirements for renewing or replacing an e-passport in Nepal are as follows:

 For Minor’s Passport:

  • Certificate of Minor Citizenship (first and second pages).
  • The current passport’s photo page, page 3 and page 31
  • Parents’ citizenship certificates (front and rear page)

For Adult’s Passport:

  • Citizenship Certificate (front and back Page)
  • National Identity Number (Validated) 
  • The current passport’s photo page, page 3 and page 31.

Colour of the e-passports in Nepal

Colour of the e-passport in Nepal

Who is it for?

Crimson-red

Diplomats

Navy-blue

Government Officials

Orange

Peacekeepers

Chocolate- brown

Ordinary e-passport

What is the process of applying for an e-passport in Nepal?

Follow the given steps to apply for an online e-passport in Nepal.

Step 1: Visit the Official website

Step 2: Select among First Issuance/Renewal/ Replacement (Lost/Stolen)/Replacement (Damaged).

Step 3: You have two options: Ordinary 34 pages and Ordinary 66 pages. Select according to your need, then click “Proceed”.

passport pages

Step 4: Now select “I agree”.

i agree e passport

Step 5: Book your appointment and click “Next”.

book-appointment

Step 6: Fill out the required fields, which are marked with an asterisk (*): Demographic Information, Citizenship Information, Applicant’s Contact Details, and Contact Details in Case of Emergency. There is no need for a National Identity Number (NIN).

Step 7: The requested documents must be in jpeg/png format and no larger than 300kb. Click Next after uploading them. When submitting papers, choose Minor for candidates under the age of 16, and Major for applicants beyond the age of 16.

Step 8: After filling in all the pages with your information, you will get a ‘Request Code’. Take a screenshot or note the code down. You will be asked to present this ‘Request Code’ to the Department of Passports of Nepal. 

Step 9: Book a date for when you will be visiting the office.

NOTE: You will be required to present your National Identity Number from your National Identity Card(Rashtriya Parichaya Patra) to get your e-passport in Nepal.

Why did Nepal introduce e-passports?

Have you faced any problems at the airport? Do you remember how long and boring it was to wait for your verification? Now, after the initiation of e-passport in Nepal, the verification process will be smoother and less time-consuming. And the risk of your passport duplication is also significantly lowered. 

Your passport is secure for you and it’s also easy for the Department of Passports of Nepal to keep precise track with the help of the chip embedded in your e-passport. You also save your passport from being misused.

All passports issued from now on will be e-passports. If you hold a Machine Readable Passport (MRP), it will also work. If you need to renew your old passport, the new one will be an e-passport. The Department of Passports of Nepal has stated that those passports can be used for the next 10 validations.

Who can apply for an Electronic passport in Nepal?

Here’s who can apply for an online E-passport in Nepal:

  • Nepali citizens
  • Minors
  • Adults
  • A person whose E-passport if it is lost, stolen, damaged, or has expired can request for a replacement or renewal of your old Nepali passport.
  • People from Nepal who have never previously had a passport are also eligible to apply for their first E-passport.
  • If your personal information changes, like a name change due to marriage, you can update it on your E-passport in Nepal.

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How to make an emergency e-passport in Nepal?

Nepali applicants in urgent need of a passport may submit their applications to the Passport Department in Kathmandu, subject to approval by the regional or district office. Emergency passports can be issued by the office within one, two, or three days. Expedited services are not available in the Ministry of Labor, Regional Ministry of Labor, and Nepalese foreign ministries. When requesting emergency service to the Department, you must bring the following documents with you. For minors, Parents or elders must be present.

  • Copy of Online Application Form
  • Original and 1 copy of Nepal Citizenship Certificate
  • Photo declaration from Regional Office
  • E-Passport Fee

How much does it cost to issue an e-passport in Nepal?

The cost of issuing an e-passport depends on the number of pages you want.

Number of Pages in the E-Passport

Cost of issuing an E-Passport

34 Pages

Rs. 5,000

66 Pages

Rs. 10,000

34 Pages (Immediately)

Rs. 12,000

66 Pages (Immediately)

Rs. 20,000

FAQs:

Who was the first person to receive an e-passport in Nepal?

The service was launched on March 1 last year with the first e-passport to Satya Mohan Joshi, a culture scholar.

What is the difference between ePassport and non ePassport?

An ePassport (electronic passport) contains a microchip storing biometric data, enhancing security and facilitating automated border control, while a non-ePassport lacks this technology.

Does ePassport expire?

Yes, ePassports, like non-ePassports, have an expiration date. Typically, ePassports are valid for 10 years for adults and 5 years for minors.

What is the purpose of an E-Passport?

The primary purpose of an E-Passport is to enhance security by storing biometric data and digital information, making it harder to counterfeit and streamlining immigration processes at borders.

What is the 6 month passport rule?

The 6-month passport rule states that your passport must be valid for another six months before you depart for international travel.

How long does it take to get e-passport in Nepal?

It generally takes 2 to 3 working days after the enrollment. It may take some extra time if photograph as per ICAO criteria is not met and the details of citizenship, old passport, National Identity Card and other important document are not verified.

Conclusion:

Nepalese Passports have been considered one of the weakest in the world, Changing the MRP to E-Passport will probably help increase our strength by securing the authenticity of the passports and keeping up with other nations with strong passports. If you have an MRP, do not worry, you do not have to convert to E-Passports now. You will be fine till it expires. The process is almost the same to get your e-passports and is even quicker and more efficient now.

Your passport is a vital document that lets you explore the world, so keep it safe and secure and make sure the dates are right!

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Exploring the Best Banks in Nepal for Your Financial Needs

Best Banks in Nepal
Ranking the Best Banks in Nepal: A Comprehensive Review

Nepal’s banking sector has witnessed remarkable growth and transformation over the years, offering a wide range of financial services to its customers. With numerous banks serving the diverse needs of individuals and businesses, it can be challenging to determine which ones stand out. 

For any person or even a corporate organization, banks are fairly important. Banks are the preferred method for transferring money, conducting transactions, and storing money for security. Loans and other services are offered by reputable banks in Nepal at affordable prices. All the banks in Nepal remain under the supervision of the central bank.

In this article, we will explore the best banks in Nepal that are distinguished for their unique offerings and commitment to excellence in the financial industry. The best banks in Nepal are categorized on the following basis:

    • Paid-up capital
    • Earning per share (EPS)
    • Reserve and surplus
    • Net profit
    • Capital Adequacy Ratio (CAR)
    • Non-Performing Loan

Top 10 banks in Nepal

Paid up Capital

The following are the best banks in Nepal on the basis of Paid Up Capital.

S.NCompaniesSymbolPaid-up Capital (in Arba)
1Global IME Bank LtdGBIME35.77
2Nepal Investment Mega Bank LtdNIMB34.13
3Nabil Bank LimitedNABIL27.06
4Kumari Bank LtdKBL26.23
5Prabhu Bank LtdPRVU23.54
6Himalayan Bank LtdHBL34
7Prime Commercial Bank LtdPCBL19.40
8Agricultural Development Bank LtdADBL18.88
9NMB Bank LtdNMB18.37
10Rastriya Banijya Bank LtdRBB15.64

Earning Per Share (EPS)

The following are the best banks in Nepal on the basis of Earnings Per Share.

S.NCompaniesSymbolPaid-up Capital (in Arba)
1NIC Asia Bank LtdNICA46.29
2Standard Chartered Bank LtdSCB36.91
3Everest Bank LtdEBL30.74
4Rastriya Banijya Bank LtdRBB30.50
5Nabil Bank LtdNABIL25.21
6Nepal SBI Bank LtdSBI23.76
7NMB Bank LtdNMB19.47
8Sanima Bank LtdSANIMA18.32
9Machhapuchhare Bank LtdMBL17.57
10Prime Commercial Bank LtdPCBL16.96

Reserve and Surplus

The following are the best banks in Nepal on the basis of Reverse and Surplus.

S.NCompaniesSymbolPaid-up Capital (in Arba)
1Nabil Bank LtdNABIL27.35
2Standard Chartered Bank LtdSCB22.82
3Nepal Bank LtdNBL20.86
4Global IME Bank LtdGBIME20.03
5Rastriya Banijya Bank LtdRBB19.60
6NIC Asia Bank LtdNICA23.76
7Agricultural Development Bank LtdADBL13.76
8Everest Bank LtdEBL13.46
9Himalayan Bank LtdHBL12.16
10Kumari Bank LtdKBL10.57

Net Profit

The following are the best banks in Nepal on the basis of Net Profit.

S.NCompaniesSymbolNet Profit (in Arba)
1Nabil Bank LtdNABIL7.53
2Global IME Bank LtdGBIME4.36
3Rastriya Banijya Bank LtdRBB4.92
4NIC Asia Bank LtdNICA4.65
5Nepal Investment Mega Bank LtdNIMB4.29
6Standard Chartered Bank LtdSCB3.53
7NMB Bank LtdNMB3.41
8Nepal Bank LtdNBL3.41
9Everest Bank LtdEBL3.39
10Himalayan Bank LtdHBL3.27

Capital Adequacy Ratio (CAR)

The following are the best banks in Nepal on the basis of Capital Adequacy Ratio (CAR)

S.NCompaniesSymbolCAR (Capital Adequacy Ratio)
1Standard Chartered Bank LtdSCB17.12
2Agricultural Development Bank LtdADBL15.05
3Nepal Bank LtdNBL14.79
4Sanima Bank LtdSANIMA14.13
5Nepal Investment Mega Bank LtdNIMB14.10
6Rastriya Banijya Bank LtdRBB13.65
7Machhapuchare Bank LtdMBL13.57
8Laxmi Sunrise Bank LtdLSBL13.43
9NIC Asia Bank LtdNICA13.39
10Global IME Bank LtdGBIME13.37

Non-Performing Loan

The following are the best banks in Nepal on the basis of NPL

S.NCompaniesSymbolNPL (Non-Performing Loans Ratio)
1Everest Bank LtdEBL0.79%
2NIC Asia Bank LtdNICA0.80%
3Standard Chartered Bank LtdSCB1.17%
4Nabil Bank LtdNABIL1.23%
5Sanima Bank LtdSANIMA1.30%
6Siddhartha Bank LtdSBL2.01%
7Machhapuchare Bank LtdMBL2.12%
8Nepal SBI Bank LtdSBI2.43%
9Agricultural Development Bank LtdADBL2.48%
10NMB Bank LtdNMB2.72%

Global IME Bank, which among its competitors has the highest paid-up capital, has posted earnings of 4.35 billion. The company with the highest Earnings Per Share (EPS), NIC Asia Bank, trades under the code NICA and has an EPS of Rs. 46.29. The biggest net profit was recorded by Nabil Bank, reaching Rs 7.53 Arba. Having a high level of financial stability, Standard Chartered Bank Ltd. has taken the top spot with a Capital Adequacy Ratio (CAR) of 17.12. However, Everest Bank is in first place with the lowest non-performing loan ratio, which is a remarkable 0.79%.

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FAQs:

Which is the best bank in Nepal 2023?

Nepal Investment Mega Bank Limited (NIMB) has been honored with the “Best Bank in Nepal” at the Euromoney Awards for Excellence 2023.

Which bank is best for deposits in Nepal?

Global IME Bank (GBIME)has the highest deposits from customers among the commercial banks of Nepal.

Which is the safest bank in Nepal?

Rastriya Banijya Bank Limited (RBBL) is the most trusted and safest bank fully owned by the Government of Nepal.

What is the best time to bank in money 2023?

The most auspicious hours to deposit money are 9am – 11am and 11am – 1pm.

Which bank gives the highest interest rate on FD in Nepal?

Corporate Dev · 12.00% gives the highest interest Rate on FD in Nepal.

Which is the No 1 Bank of Nepal?

Certainly, here's the corrected sentence with proper grammar: These banks have had good performance in the past and can be considered as the number one banks: Global IME Bank Ltd, Nepal Investment Mega Bank Ltd, Nabil Bank Limited, NABIL, and Kumari Bank Ltd.

Conclusion:

These banks provide a wide range of alternatives to satisfy your needs, whether you’re an individual seeking simple banking services or a corporation in need of specialized financial solutions. These organizations are anticipated to play a significant role in determining the financial landscape of Nepal for many years to come as the country’s economy expands.

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Exploring the Central Bank of Nepal: Key Functions and Objectives

Central Bank of Nepal
Exploring the Central Bank of Nepal: Key Functions and Objectives

Central Bank of Nepal is the reserve bank of Nepal, also known as “Nepal Rastra Bank (NRB)”. It acts as Nepal’s primary monetary authority and financial sector regulator, developing and carrying out monetary policy, issuing and managing the Nepalese Rupee (NPR), and supervising the activities of the nation’s banks and financial institutions. In this article, we will discuss the role and significance of the Nepal Rastra Bank,  its functions, history, and impact on Nepal’s economy.

Kathmandu is home to the headquarters office of the Nepal Rastra Bank (NRB). Additionally, it has opened regional offices in several Nepalese provinces to supervise and administer banking operations there. This is a paraphrase of the original.

  • The NRB’s primary office is situated in Kathmandu.
  • In Province 1, the Central Bank operates from Biratnagar.
  • In Province 2, its office is based in Janakpur.
  • For Bagmati Province, the Central Bank’s presence is in Birgunj, which also serves as the provincial office.
  • In Gandaki Province, the NRB has an office located in Pokhara.
  • Province 5 is served by two provincial offices, Nepalgunj and Siddharthanagar (Rupandehi).
  • Surkhet office serves as the provincial office for Karnali Province.
  • Dhangadhi office serves Sudur Paschim Province.

A Brief History on Nepal Rastra Bank

The Nepal Rastra Bank became hooked on April 26, 1956, under the Nepal Rastra Bank Act, 1955, and represents a sizable turning factor in Nepal’s economic improvement. It started as a step in modernizing the state’s monetary sector and has significantly impacted the direction of Nepal’s financial policies and the supervision of its banking and economic institutions.

Objectives of Nepal Rastra Bank 

The Nepal Rastra Bank (NRB) has several key objectives, as outlined in its governing legislation, the Nepal Rastra Bank Act, 2002. These objectives aim to promote Nepal’s economy’s stability, growth, and development. Here are the main goals of the Nepal Rastra Bank:

  • Price Stability: NRB’s objectives are to manipulate inflation and stabilize expenses to shield the shopping power of the Nepalese Rupee (NPR). 
  • Monetary Management: It manages the cash supply through policies like hobby rate adjustments and open marketplace operations. 
  • Exchange Rate Stability: NRB continues a stable exchange fee through dealing with forex reserves. 
  • Financial Sector Regulation regulates and supervises banks and economic institutions to ensure a valid economic system. 
  • Financial Sector Development: NRB promotes cutting-edge banking practices, innovation, and competition in Nepal’s financial region. 
  • Financial Inclusion: It encourages financial institutions to attain underserved regions, decreasing earnings disparities. 
  • Foreign Exchange Management: NRB guarantees suitable enough forex reserves to fulfill international price obligations. 
  • Economic Development: It helps financial increase through sound economic policies and funding-pleasant environments. 
  • Research and Data Collection: NRB conducts financial research and collects statistics for informed policy choices. 
  • Payment System Development: It complements electronic payment techniques and infrastructure for green transactions.

The functions of Nepal Rastra Bank

  • create banknotes and coins 
  • create necessary monetary regulations enforce or reason to be applied 
  • create vital foreign exchange policies and put them in force or reason to implement them. 
  • establish the gadget of forex price. 
  • manage and perform foreign exchange reserves. 
  • supply commercial banks and financial establishments licenses permitting them to behavior banking and monetary operations and to manipulate, oversee, look at, and screen such activities, 
  • serve as the government of Nepal’s banker, counselor, and financial representative, Serving as the lender of the ultimate in and serving as the banker for industrial banks and financial institutions, 
  • create and increase the price, clearing, and agreement device and to govern these operations, Conduct open marketplace transactions the use of the gear required for liquidity management, 
  • carry out or motive to finish any further crucial responsibilities that the Bank needs to complete to fulfill its obligations underneath the NRB Act of 2002.
  •  maintain the stability of the banking and monetary area.

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Impact on Nepal’s Economy

Overestimating the impact of the Nepal Rastra Bank on the national economy takes a lot of work. The legal system in Nepal has an immediate influence on inflation, interest rates, and the overall stability of the country’s economic system. Managing the currency and foreign exchange reserves guards the monarchy from financial shocks and external weaknesses.

Furthermore, by focusing on economic inclusion, the NRB has helped extend banking services to underserved and rural communities, increasing their financial independence and closing wage inequities.

Board of directors

The Nepal Rastra Bank Board of Directors comprises seven people under the Nepal Rastra Bank Act 2002. The chairman of the board is the Bank’s Governor. The five-year terms of the Governor, Deputy Governors, and other Directors are determined by the Government of Nepal, specifically the Council of Ministers. If it is considered essential, the government may nominate the departing Governor for another term.

 

S.noNamePositionMember Since
01Mr. Maha Prasad AdhikariChairmanApril 6, 2020
02Mr. Krishna Hari PushkarMember (Secretary, Ministry of Finance)August 17, 2022
03Mr. Bam Bahadur MishraMember (Deputy Governor)March 9, 2021
04Dr. Neelam Dhungana TimsinaMember (Deputy Governor)March 9, 2021
05Dr. Suvod Kumar KarnMemberApril 24, 2018
06Mr. Chinta Mani SiwakotiMemberMay 20, 2022
07Dr. Shankar Prasad AcharyaMemberMay 20, 2022

FAQs:

What is the central bank now?

It is the country's financial services regulator for most categories of financial firms

What are the main aims of a national central bank?

Monetary Stability, Financial System Regulation, and Currency Issuance are the three main aims of a national central bank.

Who is the head of the Central Bank of Nepal?

Maha Prasad Adhikari is the head of the Central Bank of Nepal and is also the governor of the Central Bank of Nepal.

Who is the CEO of Nepal Rastra Bank?

Maha Prasad Adhikari currently serves as the Chairman of the Board of Directors and holds the position of the 17th Governor at Nepal Rastra Bank (NRB), which is the central banking authority of Nepal.

What is another name for a central bank?

Another name for a central bank is a reserve bank or national bank.

Is the central bank a good bank?

Conclusion

The central bank of Nepal, Nepal Rastra Bank, acts as a guardian of all other commercial and cooperative banks of the country. Its primary work revolves around making the policy for all the other banks operating inside the country to act as a currency issuance body. It is a significant government body to safeguard the nation’s financial interests.

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News Finance

Choosing the Best Shares to Buy in Nepal

Shares to Buy in Nepal
Smart Investing: Choosing the Right Shares to Buy in Nepal

Share refers to the percentage of the equity in a company or financial assets. Shares which are also known as units of stocks and commonly phrased as stocks are the part of large portions of units divided among the investors or buyers. Here we have summed up the ideas of the share market and the Best Shares to Buy in Nepal.

What is a share market?

Share market refers to the place where buyers and sellers deal together for trading the stocks. The buying and selling of any stock represent the ownership claims of the business. The stock market is considered a component of the free market economy.

Commonly, the share market is the place where the companies are allowed to raise the money by presenting stock shares and corporate bonds which also provides the investors equal possibility to participate in the financial achievements of the company. The value of a single common share is 100 NPR.

 Primary Share market

The primary share market is the place where securities are created. It enables companies, governments, and other institutions to raise additional funds through the sale of debt and equity-related securities. These companies issue the securities to the public which is known as IPO.

The primary market securities may include notes, bills, government bonds, corporate bonds, and stock of companies.

 Secondary Share Market 

The secondary market is the trading ground where those secured shares that are issued in the primary share market are traded. Here the investors purchase securities and assets from other investors. Here, we trade the stocks that have already been issued by companies and corporations.

While we deal with the buying and selling of stocks and shares we must learn that the only stock exchange of Nepal is NEPSE.

NEPSE 

Nepal Stock Exchange (NEPSE) is the only stock exchange for the secondary market in Nepal. It provides a platform for investors to buy and sell shares of publicly traded companies in various sectors of Nepal. You can trade on NEPSE after you sign up for a broker account.

It was founded in January 1994. The owner of the Nepal Stock Exchange is the government itself.

Top Shares to Buy in Nepal: Blue Chip Companies

Blue chip companies are those companies that have a great track of making money. Blue-chip companies are more reliable and safer to invest in. We have listed some top Shares to Buy in Nepal.

Commercial Banks

a) Nabil Bank Limited

SymbolNABIL
P/E Ratio21.32
Earnings Per Share (EPS)27.82
Paid-up Value100.00
Total Pidup value27,056,997,000.00
Listed Shares270,569,970.00

 

b) GBIME  Global IME Bank Limited 

SymbolGBIME
P/E Ratio10.04
Earnings Per Share (EPS)20.28
Paid up Value100.00
Total Pidup value35,771,060,000.00
Listed Shares357,710,600.00

 

3) Nepal Investment Mega Bank Limited 

SymbolNIMB
P/E Ratio13.83
Earnings Per Share (EPS)12.59 (FY:079-080, Q:4)
Paid-up Value100.00
Total Pidup value34,128,595,000.00
Listed Shares341,285,950.00

Development Banks

a) Muktinath Bikas Bank Ltd. 

SymbolMNBBL
P/E Ratio18.30
Earnings Per Share (EPS)21.24 (FY:079-080, Q:4)
Paid-up Value100.00
Total Pidup value6,420,900,273.00
Listed Shares64,209,002.73

 

b) Garima Bikas Bank Limited

SymbolGBBL
P/E Ratio15.99
Earnings Per Share (EPS)23.47 (FY:079-080, Q:4)
Paid-up Value100.00
Total Pidup value5,187,687,057.00
Listed Shares51,876,870.57

Life insurance

a) Nepal Life Insurance Co. Ltd.

SymbolNLIC
P/E Ratio0.00
Earnings Per Share (EPS)0.00 (FY:079-080, Q:4)
Paid-up Value100.00
Total Pidup value8,207,966,550.00
Listed Shares82,079,665.50

 

 b) Life Insurance Co. Nepal 

SymbolLICN
P/E Ratio0.00
Earnings Per Share (EPS)0.00 (FY:079-080, Q:4)
Paid-up Value100.00
Total Pidup value2,653,200,000.00
Listed Shares26,532,000.00

Non life insurance

a) Shikhar Insurance Co. Ltd. 

SymbolSICL
P/E Ratio49.57
Earnings Per Share (EPS)15.19 (FY:079-080, Q:4)
Paid-up Value100.00
Total Pidup value2,654,947,200.00
Listed Shares26,549,472.00

 

b) Himalayan Everest Insurance Limited 

SymbolHEI
P/E Ratio31.94
Earnings Per Share (EPS)17.41 (FY:079-080, Q:4)
Paid-up Value100.00
Total Pidup value2,301,535,000.00
Listed Shares23,015,350.00

 

Microfinance

a) Chhimek Laghubitta Bikas Bank Limited

SymbolCBBL
P/E Ratio25.53
Earnings Per Share (EPS)37.45 (FY:079-080, Q:4)
Paid-up Value100.00
Total Pidup value2,835,402,000.00
Listed Shares28,354,020.00

 

b) Nirdhan Utthan Laghubitta Bittiya Sanstha Limited 

SymbolNUBL
P/E Ratio14,552.50
Earnings Per Share (EPS)0.04 (FY:079-080, Q:4)
Paid-up Value100.00
Total Pidup value2,612,079,750.00
Listed Shares26,120,797.50

 

Hydropower

a) Chilime Hydropower Company Limited

SymbolCHCL
P/E Ratio50.17
Earnings Per Share (EPS)9.57 (FY:079-080, Q:4)
Paid-up Value100.00
Total Pidup value7,258,179,280.00
Listed Shares72,581,792.80

 

b) Butwal Power Company Limited

SymbolBPCL
P/E Ratio39.02
Earnings Per Share (EPS)7.84 (FY:079-080, Q:4)
Paid-up Value100.00
Total Pidup value3,409,065,000.00
Listed Shares34,090,650.00

 

Other important shares

Nepal Telecom (NTC)

SymbolNTC
P/E Ratio19.76
Earnings Per Share (EPS)43.36 (FY:079-080, Q:4)
% Dividend40.00 (FY:078-079)
Paid-up Value100.00
Total Pidup value18,000,000,000.00
Listed Shares180,000,000.00

 

 Himalayan Distillery Limited       

SymbolHDL
P/E Ratio71.81
Earnings Per Share (EPS)27.17 (FY:079-080, Q:4)
Paid-up Value100.00
Total Pidup value2,429,566,650.00
Listed Shares24,295,666.50

 

Unilever Nepal Limited

SymbolUNL
P/E Ratio17.61
Earnings Per Share (EPS)1,987.08 (FY:079-080, Q:4)
Paid-up Value100.00
Total Pidup value92,100,000.00
Listed Shares921,000.00

 

Chimmek Laghubitta Bittiya Sanstha Limited

SymbolCLBSL
P/E Ratio25.53
Earnings Per Share (EPS)37.45 (FY:079-080, Q:4)
Paid-up Value100.00
Total Pidup value2,835,402,000.00
Listed Shares28,354,020.00

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FAQs

Which is the best stock to buy in Nepal?

There best stock to buy in Nepal is NABIL since it provides an average dividend of more than 43% in the last 10 years.

What is IPO?

IPO (Initial Public Offering) is the process where companies offer their shares to the investors in the primary market.

What is the Share market?

The share market is the place where companies are allowed to raise money by presenting stock shares and corporate bonds which also provides the investors equal possibility to participate in the financial achievements of the company.

Is it better to invest in bank stocks?

Bank stock can be worth a long-term investment. The average dividend returns of bank stocks are comparatively higher than other stocks' average dividends.

Who holds the most shares in Nepal?

The government of Nepal holds most of the shares in Nepal. It has 58.66% of ownership of the stocks and shares in the share market.

How much does it cost to invest in a share?

There is no minimum or maximum amount required to invest in a share. You just need to have the amount that is enough to buy the quantity or unit that is fixed by the companies.

Conclusion:

Hence, entering the stock market with little understanding can be risky. Make sure you’ve got an idea of the common terms used in share markets to develop a place in the share market world. The stocks are intended for long-term investment. you must understand the fundamentals of the investment to gain success in the share market. However, we have made it easier for you by listing the best shares to buy in Nepal.

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News Finance

Simplified SIP registration and payment process: A step-by-step guide

SIP registration
Simplified SIP registration and payment process: A step-by-step guide

A systematic Investment Plan(SIP) is the process of investing a certain amount of funds within every investing time period with a determined rate of return. It is a very popular investment in Nepal and throughout the world. SIP primarily involves investing in mutual funds and is associated with Open-end mutual funds. Interest in SIP has been rapidly increasing among the people in Nepal and in different countries as SIP is a long-term investment. So let’s discuss on requirements to register SIP and continue the payment. We have also included the step-by-step procedure for registrations and payments along with its benefits.

What is SIP registration?

Systematic Investment Registration is an easier way to invest in mutual funds. It is the process that allows the users to invest on a timely basis agreement. The compounding effect, wherein the returns are reinvested, accelerates the growth of invested funds over time. This compounding factor makes SIP different from other investment options. Anyone having a bank account and internet banking facility can register on SIP online.

 Basic requirements for SIP registration

  1. Bank Account
  2. Demat account and BOID number.
  3. Personal phone number and an email account.
  4. Digital wallets for payments

How to register for SIP online?

STEP 1: Collect all the required documents

The required documents include a citizenship card, address details, or proof in the form of a license, utility bill, image of passport-size photos. And above all of this KYC is a mandatory requirement.

STEP 2: Be KYC complaint if you are not yet

The KYC investors need to provide all the basic information. It involves providing identity and proof of documents to comply with regulatory requirements.  

STEP 3: Fill out the SIP form

Obtain the SIP form from the mutual fund house or from an authorized website online. 

  • Fill in your personal details/applicant details
  • Application details
  • Bank Details 
  • Source of Fund (Salary, Business, Loan, others)

Decide the scheme (monthly, quarterly, semi-annually, or annually) plan or option you want to invest depending on your choice. Most of the investors choose the monthly frequency. 

You can also get help from the SIP Calculator in order to decide the time period and return rate for the investment.

STEP 4: Submit Application

Once you finish filling up all the details submit the application.

STEP 5: Payment method

After submitting the application, proceed to the payment method and choose the way you want to pay for the investments. You will have eSewa, Khalti, and Connect IPS as a payment method. Digital wallets may charge an extra Wallet Payment fee.

You will get a response within 24 hr after you have submitted and made payment. If not contact the respective office.

Benefits of SIP registration

  • Affordable: SIP allows one to invest in small amounts ie. from Rs 500 making it accessible to a wide range of investors. This makes it easier for people to invest even though they don’t have a lot of money to invest.
  • Long-term investment: SIP enables sustainable investment. It depends on the investors for how long they want to invest. Consistent investment for a longer period will lead to wealth maximization.
  • Online Access: As we can register our SIP account online, we can also keep on operating it online. We can monitor our SIP investment, view statements, and make changes to our SIP conveniently.
  • Convenient: It is convenient to register accounts and make payments online. We don’t have to go to the bank or do a personal visit if we have to make any kind of changes in our SIPs.
  • Professional Management: The Systematic Investment fund is managed by professional finance managers. Many financial advisors also give information and guides for investing in SIP.
  • Liquidity: Manu Mutual funds offer liquidity. Investors can redeem their units and also make partial withdrawals.

What is SIP payment?

SIP payment refers to the periodic payment that an investor makes in SIP. While registering SIP the investor chooses the interval period to make the investment. So, making a payment of that certain amount at the chosen time interval is known as an SIP payment. SIP payments are convenient and flexible allowing investors to make affordable investments.

SIP payment process

You need to open your mutual fund account and pay the amount you have selected to deposit at every interval. The payment can be made online with the help of an online payment method.

Payment MethodPayment charge
Capital’s BankRs. 5
eSewaRs. 5
KhaltiRs. 5
Connect IPSRs. 4

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FAQs

Which SIP is best to register in Nepal?

Choosing the best SIP depends upon various factors like your risk tolerance, your financial goals and also on the policies of the banks on which you think are best.

What is the Dividend Re-investment plan in SIP?

A Dividend Reinvestment plan is a type of investment plan where the dividend stocks gained form you previous investment is automatically reinvested. Which is beneficial in the long run showing up the effect of compounding.

How many SIPs are there in Nepal?

There are altogether 7 SIPs in Nepal till the date.

Can I cancel SIP anytime?

Yes, you can cancel SIP anytime.

How do I pay my missed SIP installment manually?

You can pay your missed SIP online. Login to your mutual fund account look for payment of the missed installment and make the payment for the missed installment.

How can I skip SIP for a month?

In order to skip your SIP for a month contact your mutual fund company and ask them for a skip of a month. You need to provide them the details of your account and they will set the specific amount date you want to skip and then the date you'll continue.

Can we skip SIP for one or two months in mutual fund investments?

Yes, you can usually skip one or two SIP payments in mutual funds, but it depends on the specific fund's rules. Check the fund's policy and consider reducing your SIP amount temporarily instead to avoid potential penalties. Always consult your respected mutual fund and read the scheme's documentation for guidance.

Conclusion:

After reading the article you’ll be able to register your account and make payments online. We have also talked about the benefits of SIP registration. SIP registration is a straightforward process and we can get a lot of benefits by investing in SIP.

Categories
News insurance

Innovative Technologies in the Insurance Industry: A Revolution in Progress

Technologies in the Insurance
Innovative Technologies in the Insurance Industry: A Revolution in Progress

Innovative technologies in the insurance industry are rapidly transforming the industry by enhancing efficiency, accuracy, and customer experience. Insurance is a contract represented by a policy in which a policyholder receives financial protection or reimbursement against losses from an insurance company.

It is also defined as the policy in which an insurer indemnifies another against losses from specific contingencies or perils. In this article, you can find the top ten technology trends that are primarily helping the insurance industry to revolve.

Top 10 tech trends in the insurance industry 

1. AI automation

AI will occupy the middle stage in insurance, driven by unique data channels, more reasonable data processing abilities, and advancements in AI algorithms and automation that will profoundly concern and improve business results in customer understanding. Customer demeanor and advancements in technology have extended the entrance for AI in the insurance market to assemble value, reduce costs, increase efficiency, and achieve higher customer satisfaction and trust.

2. Robotic Process Automation (RPA)

Companies operating in the technologies in the insurance industry pursue automation to improve the overall effectiveness of their business processes. Respectively, this is the moment when RPA offers the most promising prospects.

3. Transforming claims and underwriting with AI

At the moment, AI is making significant steps in the insurance industry, which puts it at the top of the tech trends list. AI finds its adoption in aspects like claims, pricing, and underwriting. In addition, the technologies in the insurance help with cost optimization and boosting the insurance clients’ overall experience.

4. Predictive insurance analytics

Predictive analytics has been the instrument that insurance companies operated for years. However, obtaining accurate discernment into customer behavior trends is problematic without proper utilization invariant with technologies in the insurance. Luckily in the past seven years, the scope of predictive analytics has altered.

5. Customer insurance applications

The number of customers exchanging insurance providers because of the shortage of good customer outlets has increased by 80%. In short, having a customer insurance app with a user-friendly interface is a game changer. These kinds of apps are the currently most preferred communication and servicing channels for customers.

6. Omnichannel customer understanding

The omnichannel customer platforms are showing different digital platforms and digital ways to create a linkage between the insuring staff and the customer. Many customers find it easier to communicate and understand the process and working of the insurance companies via video calls social platforms and more. So the company needs to find better channels to make communication effective.

7. Connected insurance Internet of Things (IoT) and telematics 

The Internet of Things (IoT) and telematics are significantly growing experiences. IoT tech automates the data collection and process. IoT devices can analyze the customers by their information and then use it on their insurance service on how they like and what they’ll find best for them.

Now, guiding telematics allows users to convey data easily. Several insurance companies are using this to offer services.

8. Insurance is low and no code development

The low and no code development approach helps on entails robust, simplified configuration, testing development, and management of customer insurance apps. It preserves great customer interaction and product performance. Insurance low and no code makes it easier to adapt digital solutions making it a little less costly and better for the users.

9. API-based insurance 

API is present to save time, effort, and resources. According to surveys customers are satisfied with the digital experience their insurance companies offer. API is a significant technology in the insurance industry ensuring a cost-effective rapid and flawless insurers’ digital platform.

10. Streaming Blockchain 

Blockchain provides a safe and secure manner of sharing details and information by customers in a digital way. The technology works on identity management and provides effective ways. Blockchain equips the equilibrium of insurance and lowers the total cycle time of the insurance procedure. These benefits of Blockchain in insurance help the industry to attract more customers.

Benefit of technologies in the insurance industry

  • Ability to detect fraud: Companies have been connected with technologies in the insurance that easily find fraud in the contracts and help in the recognition of genuine customers. The different digital tools and technology provide flexible features for data collection and analysis of information. They can find out if all the collected information is right or not.
  • Track customer’s potentiality: Every customer provides their detailed personal information the technologies find out what are the potential of the customer and what field in insurance will be suitable for them to invest in. Hence, this positive activity from the technology and tools helps the insurance industry to increase their work.
  • Reduce overheads: Traditionally, Many of the works that are used to be done by a human force but the same work is done digitally without any more human effort. As the worker’s jobs are handled digitally the overheads are reduced. It frees up the budget for the business to grow.
  • Improve service offerings: Companies can invest more in a startup mindset as they do not need more upfront to launch. The internet can help them expand and become more promoting through different online sites. Significantly companies can expand on new services and offerings.
  • Reduction of operating costs: As much of the work is easily handled by the technologies, it has reduced the cost associated with the company running. Technologies can help in handling routine tasks that need less cost, time, and effort.

Information technology in the insurance sector

Technology in the insurance industry is prioritizing its focus on profitable growth. It has always become information-intensive and labor-intensive. Information technologies result in convenient transactions. Instead of just adding value to the insurance sector, information technology underpins its growth and evolution. Information technologies can increase productivity and reduce operating costs.

As technologies in the insurance industry improve it evolves and benefits from information technology because it helps in the communication and conveyance of information in every sector from customers to employees and their behavior to potential.

Here are some key aspects of how IT has influenced the insurance industry:

  • Data Analytics and Risk Assessment: with the help of IT insurance companies can collect and analyze large amounts of data to assess risks more accurately.
  • Claims Processing: IT systems have made the claiming process simple, faster, and more efficient. Insurance agents can use digital tools for the following purposes: Automatic claim submission, validation of information, Process payments, Reducing fraud, and Improving customer satisfaction.
  • Customer Engagement: IT is used by Insurance companies nowadays to engage customers with the help of digital channels have adopted digital channels. Websites, mobile apps, and chatbots provide easy ways for policyholders to access information, request quotes, make policy changes, and report claims.
  • Customer Data and Personalization: IT helps insurers to collect and analyze data of the customer for personal offerings. Insurers can provide policies, and discounts, and communicate to individual according to their needs.
  • Predictive Modeling: IT tools can use old data of the customer to create a future model according to the trend. This information helps insurance companies to make correct decisions about pricing and risk management.
  • Cybersecurity: IT plays an important role in protecting the sensitive data of insurance companies with the help of cybersecurity. Advanced cybersecurity tools protect against data breaches and cyberattacks, safeguarding customer information.
  • Blockchain and Smart Contracts: IT helps in creating transparent, secure, and automated smart contracts. So, nowadays insurance companies are exploring blockchain technology. These contracts can make a claim and payment automatically when conditions are met.
  • Fraud Detection: Advanced IT tools and algorithms help insurers to minimize losses caused by fraud. IT tools can detect patterns that indicate fraud claims or applications.
  • Back-Office Efficiency: IT makes internal processes like policy administration, billing, and accounting easy. This process reduces operational costs and human errors.

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FAQs

What is new technology in the insurance industry?

The new technologies that are evolving in the insurance industry are: AI automation Robotic Process Automation (RPA) Streaming Blockchain

What are the benefits of technology in the insurance sector?

Companies enhance their ability to detect fraud and productivity increases. It also reduces operating costs. Companies can adapt more start-up ideas. The employees can have more time to focus directly on customers and handle other processes.

What is Insurance?

Insurance refers to the financial protection a policyholder receives against the loss of their insured property.

What is AI automation?

AI automation refers to the process where AI handles the working process to achieve outcomes with minimal human input.

How is technology used in insurance?

Technology helps insurance by making it easier to set fair prices, handle claims faster, and keep your data safe. It also lets you buy insurance online and talk to virtual helpers.

What is the role of technology in life insurance?

Technology in life insurance helps set fair prices, process claims faster, and lets you manage policies online easily. It also uses data to predict trends and offers 24/7 customer support.

Conclusion

Hence, the above-explained trending technologies indicate the emerging challenges and opportunities for the insurance industry. Technologies in the insurance are increasingly prevalent in the insurance sector. It is found that most of the insurance companies are aware of the technologies prevailing in the insurance market throughout the world. New trends can be bred by new technologies.

Categories
News Finance

Unlocking Investment Opportunities: A Guide to Closed-End Mutual Funds

Closed-End Mutual Funds
Unlocking Investment Opportunities: A Guide to Closed-End Mutual Funds

Closed-end mutual funds sell a set number of shares to the public, which can be traded on the stock exchange. They issue all their shares at once through an initial public offering (IPO) to gather money for their initial investments.

Essentially, closed-end mutual funds collect capital by releasing a fixed number of shares in the market. In this article, we’ll discuss the characteristics, operation, benefits, and downsides of closed-end mutual funds.

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Features of closed-end funds

  • Actively Managed: The closed-end mutual funds are actively managed. All the specific numbers of the units and shares and the investors who are investing in the shares are guided properly throughout the process of investing.

  • Changing share price: The closed-end mutual funds can trade at a premium or a discounted rate. It doesn’t always sell under the Net Assets Value. Also though the Net Asset Value (NAV) fluctuates closed-ended mutual funds don’t stick with the same price.

  • A specific number of units: There will be a specific number of units in the fund that will be available for buying. There will be limited stocks on the trade market in closed-end mutual funds.

  • Fixed investment time period: Similar to a specific number of units, closed-end funds give a specific time period for the investors to issue the share. If the issue deadline of the share crosses then no investors can buy certain shares or stocks.

  • Frequently use leverage: This feature of closed-end mutual funds tends to pay higher dividends to the investors in part because they use leverage to help boost returns. They borrow money to fund their asset purchases and to increase returns.

List of closed-end mutual funds in Nepal

S.N      Name    Fund size Maturity period ending date
1.Sunrise First Mutual Fund (SMFL)   0.86 Arba2029/11/04
2.NIC Asia Balance Fund (NABF)   0.755 Arba2029/08/27
3.Siddhartha Investment Growth Scheme-2 (SIGS2)   11.2 Arba2029/08/26
4.Nepal Merchant Bank and Finance  (NMB 50) 1.25 Arba 2026/09/01
5.Citizen Mutual Fund-2 (CMF2) 1 Arba2026/07/08
6.Nabil Balanced Fund-2 (NBF2)1.2 Arba2029/05/31
7.NIC Asia Growth Fund (NICGF)0.8352 Arba2025/03/12
8.Global IME Sammunat Scheme -1 (GIMES1) 1 Arba2023/03/04
9.Laxmi Equity Fund  (LEMF)1.25 Arba 2024/06/12
10.Laxmi Value Fund-1 (LVF1)0.5 Arba2020/03/25

How do closed-end mutual funds work?

The closed-end mutual funds are launched like any other funds. An initial public offering is initiated and the fund houses list the funds or IPOs in the stock house or stock market.

Now the fund is available for buying and selling units. Then the share is issued to those who contribute capital to the mutual fund. However, the number of outstanding units will remain the same. The value of a closed-ended fund is dependent on NAV somehow but the actual price is determined by the demand and supply for the fund.

However, as the name implies, the closed-end mutual fund doesn’t issue additional shares or buy back shares.

Advantages of Close end funds

  • Presence of Skilled Managers:  The mutual fund includes skilled portfolio managers who look after the issue of shares and the deadlines too. They analyze the whole stocks listed in the trade market and do an evaluation of the activities. The fund manager’s expertise plays a vital role in selecting funds.

  • Trade on the stock exchange: Like any other equity shares, the shares of closed-end funds are also listed in the stock exchange or trade exchange. From there the investors can choose to invest in the available shares as per their interest.

  • Flexibility: Unlike in open-end mutual funds, redemption is not allowed in closed-end mutual funds. The investors are given flexibility in order to sell their shares after the time period of the stocks are finished.

  • Liquidity: The shares that an investor holds can be sold at the trade exchange and it can be done in the form of cash. Therefore one can easily liquidate their investment.

  • Lower operating cost: Closed-end mutual funds have lower marketing costs and turnover rates. Hence less marketing costs results in lower operating cost as well.

Drawbacks of Closed-end mutual fund

Unlike the open-end mutual fund, the investor cannot review the historical performance of the shares. Over different market cycles, there can be different inflow and outflow of shares. Once the offering for issuing date is closed new investments cannot be made. The closed-ended mutual fund schemes don’t perform as well as the open-end mutual fund counterparts.

There are also many activities that need a portfolio manager or financial advisor to carry on the work which needs management and consultation fees.

What is the difference between an open-ended mutual fund and a closed-ended mutual fund?

The differences between open-ended mutual funds and closed-ended mutual funds are:

               Open-ended mutual funds

          Close-ended mutual fund

1. Open-ended funds can be bought and sold at any time.

1. Close-ended funds could only be bought at the time of introduction and redeemed when the funds investment tenure is over.

2. They are the schemes that offer different units to investors continuously.

2. They are the schemes that provide new units to investors for a limited time.

3. The fund size is flexible in open mutual funds.

3. The fund size is fixed in closed mutual funds.

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FAQs

What are closed-end mutual funds?

The closed-end funds are the financial instrument that collects capital by issuing a fixed number of shares in the market for a fixed maturity date.

What are the disadvantages of closed-end mutual funds?

The disadvantages of closed-end mutual funds are: Lack of track record Only lump sum investment Lower performance

What are the examples of closed-end mutual funds?

Examples of closed-end mutual funds are municipal funds, IPOs, cash funds, commodity funds, etc.

How long will be the maturity date of closed-end mutual funds?

The maturity period of a closed-end mutual funds can be from five to seven years.

How are closed-end mutual funds priced?

The price of the closed mutual fund is based on the changing value of assets in the portfolio in addition to supply and demand.

Conclusion

So the above details of closed-end mutual funds give you information on why you can invest in this mutual fund and the drawbacks show the risks of investing in a closed-end mutual fund. Closed-end mutual funds are similar to mutual funds they professionally manage portfolios of stocks, bonds, or other investments.

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Exploring the Benefits and Features of Open-End Mutual Funds

Open-End Mutual Fund
Exploring the Benefits and Features of Open-End Mutual Funds

Open-end mutual fund is a type of investment fund that issues and redeems shares continuously. The Open-end fund let you buy/sell shares based on the net asset value (NAV), while closed-end funds trade like stocks on exchanges with a fixed number of shares and market-driven prices. This means that investors can buy or sell shares of the fund at any time. 

To invest in open-end mutual funds, you need to go through the SIP registration process. In this article, we discuss the features, advantages, and drawbacks of an open-ended mutual fund.

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Features of Open-end Mutual Funds

  • Open for buying and selling anytime: You can buy and sell units of open mutual funds at any time. There is the absence of maturity period in the open mutual funds which means you can remain invested in the schemes for as long as you want.
  • Accessibility to the investors: The open mutual fund scheme gives accessibility to the investors as the investment can be done any period after the introduction of the shares as long as they want to.
  • NAV-based price: The Net Asset Value of a share determines the total earnings of the share per unit. The units of the funds can be purchased or sold at the Net Asset Value (NAV).

List of open-end mutual funds in Nepal

NameSymbolFund SizeWeekly NAV
NIBL Sahabhagita FundNIBLSF586,790,63010.70
Siddhartha Systematic Investment SchemeSSIS496,006,03010.69
NIC Asia Dynamic Debt FundNADDF219,819,3237.97
NMB Saral Bachat Fund – ENMBSBF561,645,3038.87
NABIL Flexi Cap FundNFCF750,000,0009.86
Shuva Laxmi KoshSLK281,459,61010.03

How does an open-end mutual fund work?

An open-end mutual fund issues shares as much as the investors want to buy. These shares are always open to investment. The investment can be done for as long as you want it to be. Hence the investors can purchase and redeem the units at existing NAV ( Net Assets Value).

The daily basis of the net asset value is on the value of a fund’s underlying securities and is calculated at the end of the trading day. You can predict the final value of the amount that you will gain before investing in SIP by using the SIP calculator.

Dividend Distribution History

Let’s do a head-to-head comparison of the SIP options currently available in Nepal based on their dividend history.

Mutual FundsFY: 76/77FY: 77/78FY: 78/79TotalAnnual Avg. Return
NIBL Sahabhagita Fund8.25%50.0%7.20%65.45%21.82%
NIC ASIA Dynamic Debt Fund-10.0%6%16.0%8.0%
Siddhartha Systematic Investment Scheme-----
NMB Saral Bachat Fund -E-----
Shubha laxmi Kosh-----
Nabil Flex Cap Fund-----
Kumari Sunaulo Lagani Yojana-----

Over the past few years, due to the stock market’s low performance most of the new mutual funds haven’t been able to give dividends.

Advantages of open-end mutual funds

  • High Liquidity: Liquidity refers to any financial instrument or asset that represents ease where one can convert it into cash negatively pricing. In open mutual funds, there will be maximum liquidity since the investors can redeem units. You can buy and sell the units anytime.
  • Availability of SIP: Open-ended mutual funds allow one to invest either a lump sum amount into the sum or optional for a systematic investment plan (SIP). This is particularly beneficiary for salaried investors and people without an investible corpus on hand.
  • Track record: The open-ended mutual fund shows every record or transaction of the share and its performance. This record of the shares and investment can help to track the record of past performance of the shares.
  • Multiple investment options: Open-ended mutual funds are very flexible in terms of shares, investments, and divided units of percentage. In an open mutual fund, there are a large number of shares. Investors can have a choice on which share to choose and they can withdraw easily if they want to.

Drawbacks of open-end mutual fund

Open-end mutual funds are very satisfactory to the public as they can invest in the shares for as long as they want. However, the market can behave in a dynamic manner which affects the NAV of the mutual fund. Hence, the NAV of an open-end mutual fund can fluctuate according to market fluctuation.

Open-ended mutual funds are prior to cash flow risks. If many investors are said to redeem their shares simultaneously, then the fund manager cannot regain the funds for the investors. Selling in the units of the market will be problematic. This is known as cash flow risk. Also, this kind of mutual fund is prone to significant investments and withdrawals.

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FAQs

What is the meaning of open-end mutual funds?

Open-end mutual fund is the type of mutual fund where you can invest in shares for as long as you want and take an exit.

Who can invest in an open-end mutual fund?

Anyone can invest in an open-end mutual fund. You must have the amount that the share cost. Any investor with a certain amount of funds can invest in an open-end mutual fund.

What are the disadvantages of Open-ended mutual funds?

The disadvantages of open-ended mutual funds are: 1. Highly volatile 2. Cash flow risk 3. Might cause lower profit

What are the types of mutual funds?

The types of mutual funds are: Money market funds, Bond funds, Stock funds, Equity funds.

Which is the best open-end mutual fund in Nepal?

NIBL Sahabhagita Fund, Siddhartha Systematic Investment Scheme, NMB Saral Bachat Fund – E are the top open mutual fund in Nepal according to their past performance and data.

Conclusion

An open-end mutual fund is the most popular fund among types of mutual funds. The merits that it holds make it favorable for investors to invest. Here you have learned about the pros and cons of open mutual funds. So, you should invest in an open-ended mutual fund according to your investment needs and capability. You can also further consult with financial advisors who can lead you in the Financial markets.