Annual Report 2009 10 English

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ALWAYS WITH
NIC BANK I 13th Annual Report 2009/10
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TABLE OF CONTENTS
About us Organizational Structure Financial Highlights Vision Mission Board of Directors Directors Report Chairmans Speech Senior Management Team CEO Speaks Management Discussion and Analysis Report Review of Operation Products and Services Trade in Bullion Corporate Social Responsibility Branch Managers Auditors Report Balance Sheet Profit & Loss Account Profit & Loss Appropriation Account Statement of Changes in Equity Cash Flow Statement Schedules We Are At 2 4 5 6 7 8 12 22 24 28 30 32 42 44 46 48 50 52 53 54 55 56 57 104
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About us
Nepal Industrial & Commercial Bank Limited (NIC Bank) commenced its operation on 21 July 1998. The Bank was promoted by some of the prominent business houses of the country. Promoters hold 51% of the shares while 49% is held by the general public.
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NIC Bank has over 34,000 shareholders. The shares of the Bank are actively traded in Nepal Stock Exchange with current market capitalization of about NPR 8,210 million. The Bank has grown rapidly with 26 branches throughout the country while several branches are planned to be opened this year. All branches are inter-connected through optical fiber as well as V-Sat and are capable of providing real time on-line transactions.
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NIC Bank was the first commercial bank in Nepal
The Only ISO Certified Bank in Nepal
to have received ISO 9001:2000 certification for its Quality Management System in the year 2006. The Bank has recently been certified under the upgraded ISO 9001:2008 standards for the Banks Quality System on Commercial Banking Activities for the first time in Nepal.
Furthermore, NIC Bank became the first Bank in Nepal to be provided with a line of credit by International Finance Corporation (IFC), an arm of World Bank Group under its Global Trade Finance Program, enabling the Banks Letters of Credit and Guarantees to be accepted/ confirmed by banks worldwide. The Bank believes in continuously offering new and value added services to its customers, with commitment to quality and value to its clients at the same time. Accordingly, the Bank has been in the forefront in launching innovative products having unique customer friendly features with immense success.
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The First Bank to be Provided Line of Credit by IFC
Organizational Structure
NIC Banks organizational structure is designed to support its business goals. However, it is flexible enough in seeking to ensure effective control and supervision and consistency in standards across all businesses at the same time. NIC Bank has successfully embarked on a multi-pronged strategy of consolidation, administrative streamlining, human resource up-skilling, strategic cost management, focused nonperforming assets management, balance sheet and treasury management and controlled asset growth in tandem with strengthening the credit culture as well as strategic marketing and sales. The Corporate Center comprises all shared services and corporate functions including finance, company affairs, risk management, legal, human resources, branding and corporate communications.
REVENUE
NPR IN MILLION
1,600
154
91
24
76
Interest from Loans Interest from Investments Interest - others Commission and discounts Other Operating Income FX Income Other Non-Operating Income/ Write Backs
49
68
Financial Highlights
Particluars Operating Performance Operating Profit (NPR millions) Net Profit (NPR millions) Financial Position Total Assets (NPR millions) Loans and Advances (NPR millions) Deposits and Borrowings (NPR millions) Paid-up Capital (NPR millions) Shareholders fund (NPR millions) Core Capital (NPR millions) Key Indictors Earning Per Share (NPR) Return on Equity (%) Return on Assets (%) Cost-income ratio (%) Capital Adequacy Ratio (%) Non-performing assets (%) Dividend Payout Ratio (%) Stock Price Share price: year end (NPR) Market capitalization (NPR Million) Price to Earning Ratio (%) Others Employees Branch offices
*Includes
FY 2004/05 202 114 7,508 4,909 6,692 500 684 680 22.75 17.44 1.69 30.98 13.29 3.78 30.00 366 1,830 16.09 157 8
FY 2005/06 212 97 10,384 6,902 9,224 600 767 761 16.10 14.12 1.08 32.67 13.54 2.60 10.53 496 2,976 30.81 166 8
FY 20006/07 291 159 11,679 9,129 10,420 660 919 912 24.01 20.68 1.36 29.09 12.20 1.11 21.05 950 6,270 39.56 189 10
FY 2007/08 393 243 15,239 11,465 13,420 944 1,303 1,294 25.75 22.57 1.60 28.06 13.11 0.86 21.05 1,284 12,119 49.86 232 16
FY 2008/09 526 317 18,751 13,916 16,240 *1,312 1,660 1,649 27.83 24.23 1.88 26.99 12.42 0.93 15.79 1,126 12,842 40.46 270 20
FY 2009/10 705 450 20,309 12,929 17,692 1,312 1,765 1,750 34.30 27.09 2.30 26.67 12.92 0.72 26.32 626 8,210 18.25 327 26
proposed bonus shares of Rs. 171 millions & paid up capital of Rs. 1,141 millions.
NPR IN MILLION
1,031
COSTS
Tax Provisions
450
Staff Expenses Transferred to Reserve

138
195
82
119
Interest Expenses Other Operating Expenses Expense from Extra-Ordinary Activities

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to become one of the most respectable banks in Nepal based on honorable conduct and long-term financial performance.
to become a leading bank in Nepal by providing complete financial solutions to our customers, superior value to our shareholders and promising growth opportunities to our employees.
From Right (Anti-Clockwise) : Mr. Lokmanya Golchha (Board Director) Mr. Rajendra Aryal (Board Director) Mr. Birendra Kumar Sanghai (Board Director) Mr. Sashin Joshi (CEO) Mr. Jagdish Prasad Agrawal (Board Chairman) Mr. Tulsi Ram Agrawal (Board Director) Mr. Ganesh Man Shrestha (Board Director) Mr. Nirmal Kumar Agrawal (Board Director) Mr. Niraj Shrestha (General Manager Business Banking)
Board of Directors
NIC Bank is run by professionals and it believes in the highest standards of corporate governance. The Directors of NIC Bank are eminent personalities from various fields and they bring to the Board a wide range of professional experience and skills. They have signed a declaration to abide by the code of ethics as laid down by Nepal Rastra Bank (the central bank) and they are independent of management and free from any business or other relationship with the Bank. The directors retire every 4 years and if eligible, qualify for reappointment. The Boards mandate is to oversee the Banks strategic direction, review corporate performance, authorize and monitor strategic investments, ensure regulatory compliance and corporate governance and safeguard interests of all stakeholders.
NIC Bank Board of Directors
Jagdish Prasad Agrawal Chairman (Promoter Group)
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Tulsi Ram Agrawal Director (Promoter Group)
Lokmanya Golchha Director (Promoter Group)
Rajendra Aryal Director (Public Shareholder Group)
Nirmal Kumar Agrawal Director (Promoter Group)
Birendra Kumar Sanghai Director (Public Shareholder Group)
Ganesh Man Shrestha Professional Director

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Directors Report
Directors of NIC are highly elated to present their report together with Balance Sheet and Profit and Loss statement for the year ended 16th July 2010. The report is in conformity with prevailing Company Act 2063, Banks and Financial Institutions Act 2063 and the directives issued by the central bank from time to time.
Financial Highlights The financial performance of NIC Bank for FY 2009/2010 is summarized below:
NPR in million Particulars
2009/10 26.32% 2005/06 10.53%
2006/07 21.05%
Paid-up Capital Deposits & Borrowings Risk Assets Investments Total Assets Net Worth Operating Profit before provision Net Profit
Year ended Year ended % Change 16 July 2010 15 July 2009 1,140 15 1,312 16,240 9 17,692 13,916 (7) 12,929 3,026 63 4,947 18,751 8 20,309 1660 6 1765 526 34 705 317 42 450
2008/09 15.79%
2007/08 21.05%
The Bank posted total income and net profit of NPR 705 million and NPR 450 million with a growth of 34% and 42%, respectively.
DIVIDEND PER SHARE (INCLUDING BONUS) %

2009/10 - 705
Appropriations
Out of the net profit after tax of NPR 450 million for FY 2009/10, NPR 89.96 million (previous year NPR 63.49 million) has been transferred to General Reserve Fund, NPR 3.01 million (previous year NPR 1.84 million), to Exchange Fluctuation Reserve and NPR 40 million (same as previous year) to NIC Bond Redemption Reserve as per statutory requirements, NPR 0.3 million has been written back from Deferred Tax Reserve (previous year NPR 3.1M provided). The total distributable profit, including NPR 31 million retained earnings of the previous year, is NPR 347.24 million. We have a track record of moderate but steady dividend declaration with a healthy dividend payout ratio which is guided by dual objective, first to provide appropriate reward to the shareholders and second to maintain healthy Capital Adequacy Ratio to support our business growth every year. In line with this objective, the Board of Directors has recommended a Cash Dividend of 26.31579% .
NPR IN MILLION
OPERATING PROFIT
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2005/06 - 212
2006/07 - 291
2007/08 - 393
2008/09 - 526
Capital Adequacies The Banks capital position is satisfactory with Capital Adequacy Ratio of 12.92% as on 16 July 2010 compared to minimum requirement of 10% under the Basel II framework. This reflects a sound position of the Bank. Performance Update The financial highlights of the Bank as at the end of 1st quarter of the current fiscal year as compared to the same period last year are as follows:
14.00 13.50 13.00 12.50
CAPITAL ADEQUACY (%)
NPR in million 1st two months Particulars ended 16 Sept 2010 Operating Profit before 165 provision Total Deposit 16,002 Loan & Advances 13,051 1st two months Growth ended (%) 16 Sept 2009 122 35 15,841 13,534 1 (4)
12.00 11.50 2005/06 2006/07 2007/08 2008/09 2009/10
Capital Adequacy Ratio
In line with the Banks policy to gradually serve customers from its own premises, the Bank has already started to provide services from its own building at Biratnagar. Similarly, construction of Corporate Building on the land purchased at Kamaladi, Kathmandu is planned to be started soon.
2005/06 - 10,384
Branch Network The Bank in line with its strategy to expand its reach and customer base through expansion of branch network, has added six new branches in the review year, viz, Satdbato, Teku and Pepsi chowk in Kathmandu valley and Narayanghat, Malangawa and Mahendranagar outside the Valley. The Bank has already established two new branches in the current fiscal year and plans to establish additional four during the current year taking its number of branches to thirty four.
NPR IN MILLION
BALANCE SHEET SIzE
2006/07 - 11,679
2007/08 - 15,239
2008/09 - 18,751
2009/10 - 20,309
The Banks performance for the first two months in the current fiscal year has been encouraging despite the countrys challenging economic condition, fluid political situation and increasing competition, and it is expected that the Bank will be able to achieve a stable growth as in the past despite the challenges.
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Products and Branding The Bank takes pride in being able to consistently introducing new and upgraded services to its customers. Some of the new products and services that the Bank launched during the review period include:
Happy Savings Account NIC Social Account
Happy Savings Account is an interest bearing account which is targeted towards Women and Senior Citizens by providing 0.5% more interest than to other depositors, encouraging them to save more. NIC Social Account is targeted to non-profit organizations. It is an interest - bearing account which is as good as a current account. During the review period, various product and services like VISA Debit Card, Internet banking, PSTN bill payment, Mobile bill payment, Utility bill payment etc. were introduced. 25 new ATMs were installed in this review period and the Bank is planning for the installation of an ATM Switch and 10 new ATMs in the current year. More and more of our branches have started offering extra-banking services including 365 days banking services. The Bank has continuously enriched its brand building to increase value to its business. The Bank believes that image is a valuable intangible asset which has already been proven by the fact that NIC is the first commercial bank in the country to be awarded ISO 9001:2000 and ISO 9001:2008 certification for Quality Management System and to get a line of credit from International Finance Corporation (IFC), an arm of World Bank Group, under its Global Trade Finance Program. In the same line NIC Bank has also been provided a line of credit by Asian Development Bank (ADB) under its Trade Finance Facilitation Program.
Technology Development / Information Management System

The Bank has been consistently successful in keeping pace with technology advancement and has been able to network all of its branches, which have helped to process transactions on a real-time online basis which not only have saved time but also helped to minimize operational risk and improve its MIS. In line with the Banks technology policy we will be centralizing data processing and other back-office functions in order to enhance processing efficiencies and to establish a reliable disaster recovery mechanism. The Bank places high priority in managing and protecting its information resources and system for which it has a comprehensive IT policy which cover data center operation, hardware, network security and computer system related issues under strict supervision of the Banks Internal Audit and Compliance Department.
Human Resource Management The Bank has always viewed its human resource as its main resource. The Banks staffing need continued to increase during the year due to
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significant increase in the business and the Banks strategic expansion projects. The Bank has always viewed its human resource as a strategic partner for its success. Hence, the development and management of human capital is an essential element of our strategy and a key management activity. The Bank continues to focus on the development of its employees through both in-house and external training. Continuous enhancement of knowledge and skills is vital, given the rapidly changing business environment and the constant challenges they pose. The bank believes that building a learning organization is critical for being competitive, meeting customer expectations and bringing new ideas and technology to the organization.
Directors Mr. Ganesh Man Shrestha has been appointed as an in dependent Professional Director effective from 1st November 2009. We would like to take this opportunity to welcome him on the Board.
Mr. Lokmanya Golchha has resigned from Board of Directors from 25th October 2010 due to personal reasons. We would like to express our gratitude for his support and guidance to the Bank during his tenure.
Auditors The Statutory Auditor Mr. Gopal P. Rajbahak, FCA will retire at the conclusion of the forthcoming Annual General Meeting and is not eligible for re-appointment. We would like to thank him for his contributions to the Bank. Based on the recommendation of the Banks Audit Committee, the Board of Directors has proposed appointment of another Auditor for the fiscal year 2010/2011. Directors Responsibility Statement In adherence to the provisions of the Companies Act 2063, Nepal Rastra Bank and based on the information provided by the management, the Directors state that:
During the preparation of annual accounts, the applicable accounting standards have been followed. Accounting policies adopted were applied consistently. Reasonable and prudent judgments and estimates were made so as to give a true and fair view of the state of affairs of the Bank as at 16th July 2010 and of the profit of the Bank for the year ending on that date. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Company Act for safeguarding the assets of the Bank and for preventing and detecting frauds and other irregularities. The annual accounts of the Bank have been prepared on a going concern basis. There is no amount receivable by the Bank from Directors, Chief Executive Officer, substantial shareholders and their close relatives as well as associated firms, companies that have a potential conflict of interest with the bank at large.
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Management Discussion and Analysis The Management Discussion and Analysis Report is a part of this annual report as required by Company Act 2063. Corporate governance NIC Bank has always believed on best practice in corporate governance. The Banks corporate governance policy is directed not only towards compailance of regulatory and legal requirements but also towards adherence to best business practices, transparency and disclosure to all stakeholders. The corporate governance framework in the Bank is based on effective independent Board, which is not involved in day-today management, and the constitution of different Board Committees with independent Directors to oversee critical issues. There are three such committees viz. Board Credit/ Management Committee, Audit Committee and Building Construction Committee in the Bank.
The Board of Directors fully support and are committed to the corporate governance model adopted by the Bank, which encompasses the principles of full disclosure and transparency, social responsibility and accountability, zero tolerance compliance culture, business and customer confidentiality, non-tolerance of conflict of interests and independent management. In line with NRBs directives a Corporate Governance Committee comprising of Head Audit and Compliance (Coordinator), Manager Operations, Legal Officer and Manager Human Resource have been established. The main purpose of this committee is to review the corporate governance status of the Bank and suggest the Management on improvements.
Composition of Board of directors The composition of the board of directors of the Bank is as per the Company Act 2063 and Bank & Financial Institution Act 2063. Directors of the Bank have signed a declaration as per regulations related to the code of ethics issued by Nepal Rastra Bank. The directors are independent of management and free from any business or other relationship with the Bank which could materially interfere with the exercise of their judgment. Renowned personalities from various sectors comprise the Directors of the Bank which bring a wide range of experience, skills and ideas. The Directors retire every four years and if eligible, qualify for reappointment.
The Board of Directors provides the Management with guidance and strategic direction without any interference on day to day business and represents the interests of the Banks shareholders in optimizing longterm value. The Boards mandate is to oversee the Banks strategic direction, review corporate performance, authorize and monitor strategic investments, ensure regulatory compliance and safeguard interests of shareholders.
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Board Meetings Meetings of the Board of Directors are generally scheduled in advance and notice of each board meeting is given in writing to each Director along with the agenda and other pertinent information. Board members are free to propose any agenda to the board meeting if they feel its needed. Board members have complete access to all the information of the Bank. Senior Management is also invited to attend the Board meetings, so as to provide additional inputs to the issue being discussed by the Board.
During this review period, a total of twelve Board Meetings were held. The attendance of each Director at the Board meetings and at the last Annual General Meeting along with sitting fees paid is enlisted below: Board of Directors Mr. Jagdish Prasad Agrawal Mr. Tulsi Ram Agrawal Mr. Birendra Kumar Sanghai Mr. Nirmal Kumar Agrawal Mr. Rajendra Aryal Mr. Lokmanya Golcha Mr. Ganesh Man Shrestha Mr. Niraj Shrestha (General Manager- Business Banking & Company Secretary) Mr. Sashin Joshi (Chief Executive Officer) Board Meeting Annual General Number of Sitting Fees Meeting Attendance Meetings Attended Paid NPR 12 88,000 12 77,000 7 42,000 12 77,000 12 77,000 12 77,000 10 63,000 12 12
Board Committees The Board delegates particular matters to the committee of the Board to deal with specific areas of operation and to enable better and more focused attention on the affairs of the Bank. These committees prepare the groundwork for the decision-making and report at the subsequent Board meeting.
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2.60%
Board Credit/Management Committee The Board Credit/Management Committee comprises of Chief Executive Officer or his nominee and other non-executive independent directors. Committee provides advice and assistance to the Board in formulation of strategic plans for overall improvement of the Bank. The Committee assists the Board in credit approvals exceeding the Credit Approval Discretion delegated by the Board to Chief Executive Officer. The Committee also assists the Board in any other assignments/responsibilities assigned to it by the Board from time to time. Committee meetings were held twelve times during the review period. The attendance was as under:
1.11%
0.86%
0.93%
0.23%
0.72% 2009/10 0.18%
0.06%
2005/06
2006/07
0.06%
2007/08
0.11%
NON PERFORMING ASSETS (NPA) TO RISK ASSETS

Board Credit/Management Committee Mr. Tulsi Ram Agrawal, Chairman Mr. Nirmal Kumar Agrawal, Member Mr. Ganesh Man Shrestha, Member Mr. Birendra Kumar Sanghai, Member Mr. Sashin Joshi, Chief Executive Officer, Member Mr. Niraj Shrestha, General Manager Business Banking Number of Meetings Attended 12 12 5 1 8 10 Sitting Fees Paid ( NPR) 84,000 84,000 35,000 7,000 -
2008/09
Audit Committee In adherence to the provisions of the central bank, the Bank has an Audit Committee, which is responsible for independently evaluating the adequacy of all internal controls, audit procedures and techniques, overseeing financial reporting processes and disclosures to ensure that the financial statements are correct, sufficient and credible. It also ensures that operating and business units adhere to internal processes and procedures as well as to regulatory and legal requirements. In addition to this, the Committee also pro-actively recommends improvements in operational process and service quality.
The Committee objectively reviews the reports of internal auditors and statutory auditors ensuring that adequate follow-up is done by Management on observations and recommendations made by the auditors. To maintain objective, professional and cost-effective relationship, the Committee reviews the performance of the Banks statutory auditors at the time of appointment. It is the Audit Committees
2005/06
16.10%
2006/07
24.01%
2007/08
25.78%
2008/09
27.83% 2009/10
EARNING PER SHARE

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34.30%
prerogative to invite senior executives and external auditors whom it considers appropriate to be present at the meetings. The Bank practices extensive internal controls including restricted access to the Banks computer system, appropriate segregation of front and back office operations and strong audit trails. The Audit Committee of the Board also reviews the performance of the Audit & Compliance Department and reviews the effectiveness of controls and compliance with regulatory guidelines. The Committee reviews the internal audit reports and makes suggestions to the Management and the Board to improve internal controls. The Committee also reviews annual accounts, statutory audit report, Nepal Rastra Banks inspection report and recommends their adoption by the Board of Directors. The Committee met seven times during the year under review. The Committee also met prior to the finalization of the accounts for the year ended on 16th July 2010.
Audit Committee Mr. Rajendra Aryal, Coordinator Mr. Birendra Kumar Sanghai, Member Mr. Lokmanya Golchha, Member Mr. B.K. Agrawal, Invitee Mr. Purna Man Napit, Head Audit & Compliance, Member Secretary
Number of Meeting Attended 7 3 6 1 7
Sitting Fees Paid (NPR) 49,000 21,000 42,000 7,000 -
Building Construction Committee Building Construction Committee has been formed to assist the Board in carring out necessary tasks for the construction of the Banks Corporate Building at Kamaladi, Kathmandu. The Committee met six times during the review period.
Building Construction Committee Mr. Lokmanya Golchha, Coordinator Mr. Rajendra Aryal, Member Mr. Birendra Kumar Sanghai, Member Number of Meeting Attended 6 6 3 Sitting Fees Paid (NPR) 42,000 42,000 21,000
Annual General Meetings The details regarding date and venue of Annual General Meetings (AGM) held in the last three years are as follows:
AGM Tenth General Meeting Eleventh General Meeting Twelfth General Meeting Date Venue Dec 14, 2007 Meeting hall of Morang Udhyog Sangathan, Biratnagar Dec 17, 2008 Meeting hall of Morang Udhyog Sangathan, Biratnagar Dec 18, 2009 Meeting hall of Morang Udhyog Sangathan, Biratnagar
At the last AGM, shareholders of the Bank holding in aggregate 67.03% of the share capital attended either in person or by proxy.
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Communication and Relationship with Shareholders

NIC Bank has more than 34000 shareholders as at fiscal year ended 16th July 2010. The main channel of communication to the shareholders is through the annual report, which includes the Chairmans Statement, Directors Report, Management Discussion & Analysis, Chief Executive Officers comment, and the audited financial results. The AGM is the principal forum for face-to-face communication with shareholders, where the entire Board is answerable to specific queries of the shareholders. The Board acknowledges its responsibility towards its shareholders and, therefore, encourages open and active dialogue with all its shareholders, be it individuals or the corporate investors. Regular communication with shareholders ensures that the Banks strategy is delivered with clear understanding. Shareholders can also keep track of quarterly performance and financial position of the Bank through the press and the Banks website, www. nicbank.com.np. The Annual Report also contains general shareholders information including list of major shareholders.
2005/06
1.05%
2006/07
1.44%
2007/08
1.81%
2008/09
1.88%
RETURN ON ASSETS
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2009/10
2.30%
Related Party Transactions There were no related party transactions with Directors, Management, Subsidiaries or relatives of Directors that have potential conflict with the interests of the Bank at large. Going Concern We consider it appropriate to adopt the going concern principle of accounting in preparing financial statements since we are satisfied that the Bank has adequate resources to continue its business for the foreseeable future. Acknowledgements The trust and confidence of our shareholders has always acted as a catalyst in the success of the Bank. They have always been a faithful partner in every step of our progress. The Bank is also committed to work for augmenting shareholders value. In our path towards excellence in banking services, our customers, patrons and well-wishers have stood by us throughout.
The Board of Directors expresses their gratitude for all the guidance and co-operation for the continued support received from the Nepal Rastra Bank, Securities Board, Nepal Stock Exchange, Company registrars Office, Ministry of Finance and other government and regulatory agencies for their continued support and guidance to the Bank from time to time. The Board of Directors would also like to take this opportunity to express their appreciation for the hard work and dedicated efforts put in by the Banks employees and look forward to their continued contribution in building one of the most respectable banks in Nepal based on honorable conduct and long-term financial performance. NIC Bank considers itself to be fortunate enough to be blessed with such a work force.
3.44%
32.67%
2.87%
29.09%
28.06%
26.99%
2005/06
2006/07
2007/08
2008/09
2009/10
26.67%
2005/06
2.74%
2006/07
2007/08
2008/09
2.83% 2009/10
COST TO REVENUE
NET INTEREST MARGIN

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3.75%
CHaiRmaN SpeakS
On behalf of the Board of Directors of NIC Bank, it is my pleasure to extend a warm welcome to all the shareholders and distinguished guests at the Banks 13th Annual General Meeting.
Today, I am delighted to report yet another milestone in our growth. The Bank has been able to achieve excellent performance in the review year 2009/10 with a net profit growth of 42% over last year to Rs.449.84 million. Total assets have now reached Rs. 20, 309 million. The Bank believes in prudential and managed asset growth which are also reflected in our healthy nominal Non Performing Assets of a mere 0.7%. Our Capital Adequacy Ratio as on 17th July 2010 is at a comfortable 12.92 % under the modified Basel II framework. It gives me immense pleasure to announce that the Board of Directors has recommended a cash dividend of 26.31579 % to the shareholders. I am privileged to announce that your NIC Bank is the first and only bank in Nepal to have been awarded the ISO 9001:2008 certification for the Banks Quality Management System on Commercial Banking Activities. This certification has been accepted as a symbol of excellence and quality worldwide In order to expand reach and network, the Bank added 6 new branches in the review fiscal year, viz, at Satdobato (Lalitpur) , Narayanghat, Malangawa, Teku (Kathmandu), Mahendranagar & old Sinamangal Pepsi chowk (Kathmandu). Two more have been added in the current year with additional 4 planned making a total of 34 branches by the end of the year. We have installed 25 ATMs spread all over Nepal from Mechi to Mahakali with 10 more in the pipeline. Our ATM terminals accept ATM Cards issued by any institution under SCT & Visa Network. The Bank is proud to announce that it has also launched both domestic & international VISA Cards. The Bank has already moved to its new building NIC Bhawan at Biratnagar and in the same line we are in the process of constructing our corporate office in Kathmandu soon. The performance of the Bank in the year has been outstanding with increase in business volume and expansion of branches throughout the country. The Bank will continue to strive to improve its performance and the directors are confident of delivering superior results in the current year. I would like to take this opportunity on behalf of the Board to thank our esteemed shareholders for their trust in and support to us. Likewise, I would like to express my gratitude to our customers for their continued faith and patronage without which we could not have reached where we are today. I would also like to thank the Government of Nepal, Nepal Stock Exchange and Nepal Rastra Bank for their continued cooperation as well as guidance. Likewise, I would also like to thank the whole team of NIC Bank- the management & the staff members for their dedication and commitment, which have been the a key factor in ensuring such stellar performance of the Bank. NIC Banks performance at every stage in the past has been commendable and I am confident that we will be able to sustain enduring growth in the years to come.
Thank you.
Jagdish Prasad Agrawal Chairman
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Senior management Team

NIC Banks Board of Directors is supported by a management team comprising of well-qualified and experienced professionals.
Sashin Joshi Chief Executive Officer
Niraj Shrestha General Manager - Business Banking
Bimal Daga Asst. GM Risk Management
Purna Man Napit Head Audit & Compliance
Sunil Pokharel Head Retail Banking
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Prabin Basnet Manager - Operations
Binay Dahal Branch Manager Biratnagar
Sudhir Agrawal Branch Manager Birgunj
Saurabh Bahadur Singh Manager - Consumer Credit Consumer Banking
Bhanu Dabadi Manager - Consumer Lending
Saroj Shrestha Senior Manager Business Banking
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Senior management Team
Saroj Guragain Head - Financial Markets, Commodities & Investment
Deepak Shrestha Manager Liability Marketing
Sushil Bhattarai Manager Information Technology
Arjun Chhetri Relationship Manager Transaction Banking
Yunesh Puri Head Cards
Prahlad Nidhi Tiwari Head Credit Support Unit
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Ritesh Aryal Manager - SME
Sanchita Gorkhali Manager Human Resource
Shrina Joshi Manager Corporate Affairs
Sudeep Subedi Officer Accounts
Bishwa Subedi Officer Legal
Sunamrata Shrestha Officer Administration
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NIC BANK I 13th Annual Report 2009/10 CeO SpeakS
2009/10 was yet another year of impressive performance achieved in the backdrop of very difficult market conditions that prevailed throughout the year.
The Bank has been ableto maintain a strong momentum across all financial parameters. Our Net Profit for the year was NPR 449.84 million, a smart increase of 42 % on the prior year growth of 31%. The Bank increased the balance sheet size by a mere 8.31%. Our non performing loans is at a nominal 0.7%. This is a clear realization of the benefits of our strategy of extracting better value through managed growth and a better risk profile. These results are in stark contrast to that of many others in the financial sector. Our Return on Equity, our key management metric, which has been improving gradually over the years, was 27.09% in 2009/10 whereas the return on Assets was 2.30% which were 24.23% % and 1.88%, respectively last year. This puts us amongst the best performing banks in the industry. The Bank being a performance driven company, is guided by the need to deliver on value creation for our stakeholders. Our performance distinctiveness is uniquely defined by our work culture. Our corporate culture begins with our five values that drive everything we do - Trust, Integrity, Commitment, Innovation and Involvement. The key to our business success is meeting and exceeding our clients needs, diversifying business and our priority - to enhance our service levels and product offerings, to maintain and improve our existing client relationships, and to take advantage of new business opportunities as they emerge.
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Our business model is not predicated on taking advantage of inflating asset prices or speculative short-term opportunities but on long-term sustainable relationships. Our robust customer base consists of commercial end-users including large trading, processing and manufacturing establishments; small & medium enterprises; and individuals in our retail segment who have a regular need for our services. We largely avoided the pitfalls that have imperiled some other larger banks in the past and produced a satisfactory ROE for the year. We are in the business of taking risks not only to optimize our returns on investment but also to provide our customers with efficient service delivery and banking facilities, which add value to them. We have a commitment to our shareholders, customers, regulators and employees to manage these risks and to keep them within manageable limits. We believe that our risk management systems are sound and robust. There is no substitute to experience and common sense to ensure that we do not place our organization at risk. However, the days ahead in the Nepali financial market appear to be ever more challenging with a plethora of new untested players coming into the market in an environment of continuing political fluidity, tight liquidity, growing asset bubble, unhealthy business practices, increasing labour activism and lackluster economic growth. Market turmoil can be anticipated and we need to remain vigilant and cautious. Last year, we expanded our network of branches to 26 by adding 6 more to last years 20, spanning all across the country from Mechi in the east to Mahakali in the far west. To increase our reach further in the semi-urban areas, we have already opened 2 more in the current year and plan to open another 4 by the end of the year. In the course of improving service delivery and our distribution channel we have installed 25 ATMs cross the country with 10 more planned and have introduced internet banking & NIC Visa Debit Cards - both Domestic and International. Once again, we are extremely proud of being the first and only bank in Nepal to have been awarded the upgraded ISO 9001:2008 certification for the Banks Quality System on Commercial Banking Activities. This certification has been accepted as a symbol of excellence worldwide. This certification attests to the ability of the Bank to consistently provide quality products and services that meet customers requirements in line with international standard and enhance their satisfaction level through effective application of the systems and processes. We are committed to the highest standards of corporate governance. This, along with our prudent risk management practices, zero-tolerance compliance culture; and system-driven and performance-driven environment that we operate under have been the bedrock of NIC Banks foundation which we believe is the mantra of our success that will also help us in getting through the challenges ahead, in addition to being a good corporate citizen by engaging ourselves with charity organizations for the benefit of the communities we live in. To conclude, I would like to express my sincere thanks to all my colleagues at the Bank for their contribution, dedication and commitment to this years exceptional performance and my Board of Directors for their unstinted support, prudent counsel, long term vision, and the trust & confidence placed on our team. I am confident that we will continue to enhance value and meet the expectations of all our stakeholders.
Sashin Joshi Chief Executive Officer
Once again, we are extremely proud of being the first and only bank in Nepal to have been awarded the upgraded ISO 9001:2008 certification for the Banks Quality Systemon Commercial Banking Activities.
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management Discussion and analysis Report
Taking into consideration the economic condition of the country and unstable political condition, the macro-economic indicators for the review period doesnt seem to be encouraging. Based on the preliminary estimates of the Central Bureau of Statistics, the gross domestic product (GDP) has witnessed a growth of 3.5 percent at basic price and 4.6 percent at producers price in the review period in comparison to the growth rates of 3.9 percent and 4.9 percent respectively the previous year. The agriculture and non-agriculture sectors are estimated to have grown at 1.1 percent and 5.1 percent respectively in the review period. Such growth rates were 3.0 percent and 4.7 percent respectively in the previous year. The annual average consumer price inflation moderated to 10.5 percent in 2009/10 compared to an increase of 13.2 percent in 2008/09. The y-o-y consumer price index rose by 10.1 percent in Mid-July 2010, as against a rise of 11.4 percent in the previous year. The annual average wholesale price inflation rose by 12.6 percent in 2009/10 compared to a 12.8 percent rise in the previous year. The y-o-y wholesale price inflation moved up by 7.0 percent in mid-July 2010 compared to an increase of 15.3 percent in the previous year. Nepals merchandise exports declined to NPR 61.13 billion (9.7 percent) in the review period. Such exports had grown to NPR. 67.70 billion (14.2 percent) a year ago. The merchandise imports, on the other hand, grew to NPR 378.80 billion (33.2 percent) in 2009/10. Such imports had grown to NPR 284.47 billion (28.2 percent) last year. The balance of payments posted a loss of NPR 2.62 billion in 2009/10 as against a surplus of NPR 44.76 billion last year. The current account also registered a deficit of NPR 32.35 billion as against a surplus of NPR 41.44 billion last year. The gross foreign exchange reserves dropped by 7.0 percent to NPR 266.57 billion in mid-July 2010 from a level of NPR 286.54 billion as at mid-July 2009. Such reserves had grown by 34.8 percent last year. The government budget deficit, on cash basis, increased by 13.8 percent to NPR 39.1 billion in 2009/10, such deficit was NPR 34.4 billion in 2008/09. The ratio of budget deficit to GDP remained at 3.3 percent in the review year, as against 3.5 percent in the previous year. The government expenditure, on cash basis, increased by 20.2 percent to Rs.248.37 billion in 2009/10 compared to an increase of 37.8 percent to NPR 206.69 billion in the previous year. In the review year, the governments recurrent expenditure rose by 20.7 percent to NPR 144.38 billion compared to an increase of 35.4 percent in the previous year. An upward revision in the salary and allowances of the civil servants and teachers by the Government of Nepal mainly attributed to such a rise in the recurrent expenditure. Likewise, increasing expenditure on special security plan, growing amount of subsidies to public schools and increment in the distribution of economic assistance accounted for such a rise in the recurrent expenditure. In 2009/10, revenue mobilization of the government increased significantly by 25.4 percent to NPR 179.95 billion, which accounted to 101.9 percent of annual budget estimate. The revenue had risen by 33.3 percent to NPR 143.47 billion in 2008/09.
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Consequently, the revenue to GDP ratio moved up to 15.2 percent in 2009/10 from that of 14.5 percent in 2008/09. Amongst the components of revenue in 2009/10, VAT constituted a share of 29.7 percent followed by income tax (18.7 percent), customs duties (19.5 percent), and excise duties (13.5 percent). In the previous year, such compositions were 27.6 percent, 19.2 percent, 18.6 percent and 11.3 percent respectively. (Source: Current Macroeconomic Situation: Based on annual data of 2009/10, published by Nepal Rastra Bank)
Financial Sector Overview The banking sector grew with more new players coming into the market during the review period. There are currently 27 commercial banks, 79 development banks and 79 financial companies besides more than hundreds of other credit and saving co-operatives and macro-finance institutions in the country. More than 260 banks and financial institution with an aggregate asset size of more than NPR 700 billion is an important part of Nepalese economy. With increasing competition there is a growing pressure on financial institutions to enhance their competitiveness by differentiation in products and services and up-gradation and adaptation of international technology along with the challenge to maintain quality asset. Poor business condition, stringent regulatory norms and above all the challenge of maintaining higher growth in terms of profitability value and satisfying the growing expectation of shareholders and customers has been a challenge and will continue in upcoming year.
In 2009/10, deposit mobilization of commercial banks increased by 12.6 percent (NPR 69.0 billion) amounting to NPR 618.9 billion as at mid-July 2010. The total deposits had increased by 30.4 percent (NPR 128.3 billion) in the previous year. In the review period Loans and Advances of commercial banks increased by 14.0 percent (NPR 72.9 billion) to NPR 593.6 billion. The liquid assets of the commercial banks stood at NPR 211.7 billion as at mid-July 2010. Of the components of liquid assets, liquid fund increased by 4.9 percent. In the review year, balance held abroad slightly increased by NPR 59.0 million amounting to NPR 60.0 billion while the balance with NRB increased by NPR 5.3 billion. However, another component of liquid assets, commercial banks investments in government securities, increased by NPR 11.1 billion in the review year. The credit-deposit ratio increased to 82.5 percent in mid-July 2010 from 81.6 percent in mid-July 2009. Similarly, the liquidity-deposit ratio declined to 34.2 percent in mid-July 2010 from 35.4 percent in mid-July 2009. (Source: Current Macroeconomic Situation: Based on annual data of 2009/10, published by Nepal Rastra Bank)
2005/06 - 212
OPERATING PROFIT
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2006/07 - 291
2007/08 - 393
2008/09 - 526
NPR IN MILLION
2009/10 - 705
Review of Operation
Financial Condition In this review period also the Bank was able to achieve a significant growth. Total assets increased by 8% to NPR 20,309.33 million. Similarly, Net worth of the Bank increased to NPR 1,765 million from NPR 1,660 million in the previous year. Paid up capital of the Bank after issuance of 15% bonus share has increased by 15% to NPR 1,312 million.
The Core Capital of the Bank stood at NPR 1,750.46 million with a total Capital fund (including supplementary capital of NPR 260.10 million) of NPR 2,010.56 million as on 16th July 2010. The Banks Capital Adequacy ratio of 12.92 percent as per Basel II framework exceeded the statutory requirement by 2.92 percent. These figures clearly evidence a sound financial position of the Bank.
Deposits Total deposits grew by 3 percent to NPR 15,969 Million. Total deposits comprises of 97 percent in Local Currency and 3 percent in Foreign Currency. The Bank was able to post a growth of 4 percent in case of local currency deposits.
Non-interest bearing deposits grew substantially by 43 percent over the previous year. Savings deposit decreased by 7% over the previous year whereas in Call Account the Bank was able to achieve a 9 percent growth.
Composition of Funds:
NPR. In million Particulars Deposits Local Currency Foreign Currencies Borrowings including subordinate debt Year ended 16 July 2010 15,969 15,485 484 1,923 Year ended 15 July 2009 15,580 14,881 699 860 % Change 2 4 (31) 124
Loan Portfolio The Banks total loans and advances outstanding at the end of the review year was NPR 12.9 billion at the fiscal year end. The Bank in accordance with its strategy has concentrated on SME and Consumer Lending sector and has been able to significantly increase the portfolio in the review year. The Bank aims to gradually realign its book to increase the share of sustainable and diversified non-corporate loans, with particular focus on SMEs with a strategy to cater to a wider range of customers across the country, whilst also continuing to expand its reach and services to the corporate clientele on selective basis.
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In line with the strategic approach adopted, the Bank managed to develop significant new business relationships with SMEs during the review year, with total clients in this segment crossing six hundred thirty with loans outstanding of NPR 1.83 billion at the fiscal end. The Bank believes that SMEs play a significant role in the countrys economy and provide longer-term sustainable and diversified business opportunities. A dedicated and skilled team has been placed for tapping opportunities in this segment. The Banks Consumer Lending customer base has also increased to more than three thousand two hundred with an outstanding of NPR 3.79 billion (i.e., 29% of the Banks total loan outstanding), spread over an array of customized and innovative loan products.
(NIC BHAWAN - BIRATNAGAR )
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Review of Operation
The Bank has quality processes placed (and consistently improved) across its branches for enhancement of customized lending business and reduced turnaround time. The Banks main focus elements of non-corporate lending are innovative product development, parity pricing, cross selling, customer convenience, easy access to finance and customer focus, while in case of corporate lending the strategy is geared towards providing comprehensive and customized financial solutions to its customers. The Bank offers a complete range of corporate banking products including transaction banking, trade finance services, foreign exchange and corporate financing solutions including project & infrastructure finance, working capital & term loans, structured financing, syndications, cash management and treasury and advisory services. The Bank has always believed in prudent Risk Management, selective asset growth strategy and effective diversifications of the credit portfolio which, has resulted in gross Non Performing Assets (NPA) being contained to 0.72 percent of total loans and net NPA at a mere 0.18 percent, which is a clear reflection of very sound Risk Asset portfolio. Loans overdue for more than 90 days are included in Gross NPAs. As per the prudential norms prescribed by Nepal Rastra Bank (central bank), the Bank has a loan loss provision of NPR 197 million as at 16th July 2010 including an increase of NPR 17.04 million charged to the Profit and Loss account during the year. The loan loss provision is adequate to cover 213 percent of gross NPAs, thereby, having minimal impact on the bottom line on account of potential write offs.
Investment The Bank was able to register a growth of 63 percent in investments over the previous year with a significant increase of 390 percent growth in government securities. Total investments comprises of 58% in government securities, 6 percent in foreign securities, 8 percent in foreign banks and remaining as equity investments and interbank lending.
During the review year the Bank invested in NPR 1.2 million in National Banking Training Institute, promoted by Banks and Financial Institutions. The Banks investment is guided by the Banks investment strategy which mandates adequate levels of liquidity to support core business requirements, high degree of safety and optimization of returns consistent with acceptable levels of risk which are closely monitored and regularly reviewed by the Board.
Deployment of Funds
NPR in million Particulars Loans and Advances Investments Local Currency Foreign Currency Year ended 16 July 2010 12,929 4,947 4,237 710 Year ended 15 July 2009 13,916 3,026 2,242 784 % Change (7) 63 89 (9)
Unclaimed Dividend The Banks distributed 30 percent cash cum stock dividend in FY 2004/05, 10.53 percent
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cash cum stock dividend in FY 2005/06, 21.05 percent cash cum stock dividend in FY 2006/07, 21.05 percent cash cum stock dividend in FY 2007/08 and 15.79 percent cash cum stock in FY 2008/09. Dividend amount of NPR 1.84 million has not been claimed by shareholders as on 16th July 2010 and the Bank has been intimating the shareholders from time to time to collect the dividend through newspaper notices.
Operating Result The Bank has been able to achieve a significant growth both in Operating Profit before provisions and net profit. Profit before provisions has increased by 34 percent to NPR 705.40 million with a significant growth in net interest income and non-interest income.
Net profit after tax has increased by 42 percent to NPR 449.84 million mainly due to remarkable growth in non-operating income and loan loss provision written back.
Net Interest Income Net Interest Income for the review year has increased significantly by 44 percent to NPR 745.69 million mainly due to higher growth of interest income as compared to last year. The net interest margin for the review year was 3.75 percent as compared to previous year at 2.83 percent. Average rate of return on Loans and Advances and Investment was 10.65 percent which is 2.19 percent over last year. Similarly Average cost of deposits and borrowings increased to 6.90 percent in the review year from 5.63 percent in the previous year. Non-Interest Income Fee Based income and Foreign Exchange income increased by 6 percent to NPR 216 million with a remarkable increase of 22 percent in Commission & Discount income. Non-Interest Income is 22 percent of total revenue. Risk Management Risk is an integral part of banking business and the Banks aim is to maximize the stakeholders value by achieving an appropriate balance between risk and returns and safeguard their deposits and investments. The Bank is exposed to various risks, e.g. credit risk, market risk, liquidity risk an operations risk. The Banks risk management strategy is based on a clear understanding of various risks, measurement procedures, continuous monitoring and control. In order to carry out adequate risk management, the Operations Manuals, Country/Operations circulars, policies issued from time to time, covering various products and services for mitigating various risks are continuously benchmarked with international best practices.
The Bank follows a self-audit system at its branches and units through verification of transactions/documents by an independent staff of branches/units so that errors are identified, and timely mitigated. After implementation of this procedure, the Bank has experienced much improvement in human/system error and also able to trace out the areas where control, guidance and training of staff are required. Further, the Bank has been conducting corporate level and regional level in-house training programs on various areas, e.g. Nepal Rastra Bank Directive/Circulars, products and procedures, corporate governance, Anti Money Laundering and Know Your Customer Due Diligence, Capital Adequacy-Basel II, negotiable instrument, cash and teller, etc, and to cover all the branches in order to achieve high personal effectiveness and to update
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with current regulation/activities. General awareness, competencies are given to staff by conducting in house trainings so that corrective and preventive actions can be taken in order to mitigate these risks.
Credit Risk While financial institutions have faced difficulties over the years for a multitude of reasons, the major cause of serious banking problems continues to be directly related to lax credit standards, poor portfolio risk management, or a lack of attention to changes in economic or other circumstances that can lead to a deterioration in the credit standing of a banks counterparties. This has led to financial institutions being more aware of the need to identify, measure, monitor and control credit risk. Credit risk can simply be defined as the potential that a bank borrower or counterparty will fail to meet its obligations in accordance with agreed terms. The goal of credit risk management is to maximize a banks risk-adjusted rate of return by maintaining credit risk exposure within acceptable parameters. Banks need to manage the credit risk inherent in the entire portfolio as well as the risk in individual credits. Banks should also consider the relationships between credit risk and other risks. The effective management of credit risk is a critical component of a comprehensive approach to risk management and essential to the long-term success of any banking organization. In order to minimize the credit risk, appropriate diversification of the loan portfolio and appropriate monitoring and control of the same is vital.
NIC Bank has ensured credit risk management through stringent credit norms/ procedures by operating under a sound credit granting practice that includes a wellestablished procedure of comprehensive credit appraisal. The Bank has standardized credit approval process followed by maintaining an appropriate credit administration, measurement and monitoring process and ensuring adequate control over credit risk. As a part of our ongoing risk mitigation initiatives, we attempt to work with clients to modify and structure their loans to terms that better align with their business needs and cash flow which leads to a more effective way to meet obligations to the Bank. All credits are extended in strict compliance with the directives/circulars of Nepal Rastra Bank issued and amended from time to time. Further, the Bank also takes prudent measures even beyond the regulatory requirement to ensure better credit standards. The loan approval process of the Bank is decentralized, with varying approval limits which are delegated based on experience, knowledge and capabilities of each such individual. The Bank reviews its credit process and procedures through its credit committee at the Management and Board levels. In the Small & Medium Business lending and Consumer lending sector, the Bank has standardized products, policies, procedures and services. Standard product policies are reviewed and updated from time to time in accordance with the market scenarios. Sales and credit functions of the Bank are distinct and are independent of each other. This has led to proper identification of credit risk inherent in an exposure. The Bank also has an Independent recovery cell in place for effective monitoring and recovery. Credit monitoring is a critical element in maintaining the safety and soundness of a
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banks exposure. The resultant Non Performing Loans as a ratio of Risk Assets is a reflection of NIC Banks effective monitoring and control standards in its Credit Risk Management.
Market Risk Market risk is the risk of loss resulting from changes in interest rates, foreign currency exchange rate, equity, and commodity prices. Our exposure to market risk is a function of our trading, asset and liability management activities and our role as a financial intermediary in customer related transactions. The objective of the market risk management is to minimize the impact of losses on earnings and equity capital due to market risk.
The Bank has an ALCO (Asset Liability Management Committee) which meets at least every month to review and asses the Markets Risks and to adopt necessary measures to effectively manage any perceived risk. Treasury ensures adequate liquidity at all times through systematic funds planning and maintenance of liquid investments as well as by focusing on more stable funding sources e.g. retail deposit. The structural liquidity and interest rate sensitivity gap reports are prepared in line with the central bank guidelines to monitor the liquidity and interest rate risk which are also reported to the central bank on regular basis. Treasury back office monitors the treasury activities in adherence to regulatory/internal policies guidelines. It is also responsible for processing treasury transactions, tracking the daily fund position and ensuing compliance with all treasury related management and regulatory reporting requirements.
Operational Risk Operations risk has been a major concerned in the banking area, due to not managing operations risk many banks and financial institution have incurred a huge loss. The Basel II Committee defines Operations risk as:
The risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. It is a risk arising from execution of a banking transactions which refers to the risk of unforeseen financial risk/loss that can result from a various factors, including failure to obtain proper internal authorizations, improperly documented transactions, failure of operational and information security procedures, computer systems, software or equipment, fraud, inadequate training and employee errors/lapses and external factors which is not under the Banks control as well. Our approach to manage operational risk is to mitigate the risk by maintaining a comprehensive system of internal controls, establishing various systems and procedures to monitor transactions, maintaining proper back-up procedures and undertaking regular contingency planning. Effective operational risk management system would ensure that Bank has sufficient information to make appropriate decisions about additional controls, adjustments to controls, or other risk responses. Banks operational risk management policy aims at minimizing losses and customer dissatisfaction due to failure in processes, focusing on flaws in products and their design that can expose the Bank to losses due to fraud, analyzing the impact of failures in technology/systems,
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developing mitigants to minimize the impact and developing plans to meet external shocks that can adversely impact continuity in the Banks operations.
Audit and Compliance Unit The Bank has an independent Audit and Compliance Unit to undertake comprehensive independent audits of all branches, business groups and other functional areas of the Bank in accordance with its approved annual audit plan. This plan allocates audit resources based on an assessment of the operational, credit, market, and liquidity risks in the various businesses/transactions. The reports of internal audits are submitted to Audit Committee for review on periodic basis. Based of the weight of finding the concerned branches are instructed to take corrective and preventive action in other to mitigate these risks.
Besides, the unit also performs surprise audits/checks and review of major risk areas to maintain Banks health by mitigating various risks. Periodic offsite audits are also carried out by the unit in order to monitor and control various unforeseen risk of the Bank. The Bank has not observed any major operations lapses/risk/loss so far. Since the Bank has been certified ISO 9001:2008 for its Quality Management Service (QMS), the Bank has adopted QMS in each area to ensure that the services provided by the Bank is in line with international standard by mitigating all types of risks. In order to maintain the quality in line with ISO 9000:2008, the Audit and Compliance unit also covers QMS audit during its audit which are also ensured by the Auditor of ISO during their annual surveillance audit and confirm whether the transactions are in line with its approved procedures or not. The Bank has adopted a self audit system at all the branches through independent checks and review of transactions which has further strengthened its Operation Risk Management. The Bank has developed a set of guidelines to all the branches/ department/units to perform self-audits of their transactions on daily, monthly and quarterly basis based on the gravity of risk and mitigate such risk, if any in time under advice to the Management.
Capital Adequacy Framework Basel II Capital risk is also a major risk of the Bank, banks are required to maintain sufficient capital in line with Nepal Rastra Bank guidelines, failing to meet the capital as prescribed by Nepal Rastra Bank is breaching of compliance and various penalties/restriction are imposed. Nepal Rastra Bank issued its final guidelines on Capital Adequacy requirement in July 2007 in order to adopt a more risk sensitive approach to capital requirements in accordance with the Document issued by the Basel Committee on Banking Supervision (popularly known as Basel II).
In line with Nepal Rastra Banks instruction, the Bank has been reporting it capital adequacy report on monthly basis. The Capital Adequacy of the Bank is sufficient in line with the new framework. The Bank is reviewing its business and activities in line with the new framework and is confident to meet the requirement thereon.
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Know Your Customer and Anti Money Laundering The Bank has been strictly complying with the directives on Anti Money Laundering (AML) and Know Your Customer (KYC) guidelines issued by Nepal Rastra Bank, Financial Information Unit. Reporting on large value cash transactions and suspicious transactions are being done in line with the directives.
In order to meet the international standard on AML and KYC requirements, the Bank is taking measures for preventing money laundering activities. In fact the Bank has been strictly implementing AML and KYC due diligence measures since 2005 much before the directive issued by NRB. The Bank has developed an Operation Manual on Know Your Customer (KYC) and Anti Money Laundering (AML) policy in line with international standards which have been strictly implemented at all branches. In order to develop awareness among the Banks staff in this area, the Bank has been providing in-house trainings on KYC and AML on periodic basis with a test covering 100% banking staff as an ongoing process.
Corporate Governance Good Corporate Governance is the key to the integrity of banks, therefore, the Bank is obliged to comply with corporate governance effectively. In line with Nepal Rastra Bank Directives, the Bank has a Corporate Governance Committee comprising of Head Audit and Compliance (Coordinator), Manager Operations, Legal Officer and Manager Human Resources (members). The unit meets once in a month to review the corporate governance status of the Bank. Further the unit also carries out corporate governance test of the Bank on quarterly basis and appropriate recommendations made to the Management. Information Technology The Bank has always focused on Information Technology with its policy of adopting new and advanced technology. Each and every branch of the Bank is interlinked and transactions take place in real time basis. In line with Banks technology policy centralizing data processing, up-gradation of software and hardware will be achieved in the current year in order to enhance processing efficiencies and to establish a reliable disaster recovery mechanism. The Bank has always used technology as a tool for its better and smooth service delivery and with VISA debit card, internet banking, ATMs, Utility payment system etc., the Bank has enhanced its service delivery with a personal touch to the customers. The Bank has brought 25 ATMs in operation in the review year and is planning to install 10 more ATMs in the current year. The Bank is serious about its data resource and system integrity which is guided by the Banks IT policy.
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Human Resources The Bank has continuously been following the practice of enriching and up-skilling its human assets so that they deliver value to business. This is rooted on the belief that the Banks human resources are the most valuable intangible asset, with potential for continuous appreciation in value. In line with its mission statement of providing promising growth opportunities to its employees, the prime focus of HRD of the Bank has been to develop and implement human resource management policies and strategies that enable the Bank to attract, recruit, develop, retain and maintain a high quality performing and productive workforce in a safe environment.
The Bank is run by professionals and believes in the highest standards of corporate governance. The Bank takes leadership providing programs and policies that are responsive to the diverse needs of staff and which foster a positive work environment that places high value on professional and collaborative work relationships while recognizing the importance of individual contributions. It also plays an important role in developing and implementing communication channels within the Bank as a reliable resource to managers and employees who have questions or issues relating to workplace policies and procedures, particularly in the areas of procedures, rules and regulations, entitlements, discipline and grievances. The Bank in all its activities strives to ensure transparency, fairness, equity and uniformity in the application and administration of all human resources policies, rules and regulations and the optimal utilization of the Banks human resources. The Bank also recognizes that accelerating the learning process within the organization is crucial to enhancing competitiveness. The acquisition of knowledge and its appropriate application to structure value-added solutions at the point of interface with customers is critical. During the year, customized functional in-house training programmed on various aspects was conducted. The Bank conducted 25 in-house trainings covering various aspects like KYC, AML, and Customer Service Excellence etc. Staff members were also nominated to attend external programmes. The Bank makes extensive use of external training resources of reputed training institutions in Nepal and abroad. The strength of the Banks HR also lies in its transparent performance management and appraisal system. In order to enhance the development of human resources and to align it with the strategic goal, the Bank has been following Performance Incentive programme for the last two years, which effectively measures, and rewards employee performance and identifies potential. Under this system employees who excel are rewarded giving the employees the motivation to perform better each time. Moreover, job rotation and job enrichment are also put into practice, which have led to enhanced productivity and motivation among the staff. Staff Managerial Staff Support Staff Auxiliary staff Total Staff Total Staff Cost (NPR in million) Staff Cost to total cost (%) Staff Cost to Income (%) Staff cost per Employee ( NPR in 000) Net Profit per Employee ( NPR in 000)
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Year ended 16-Jul-10 65 233 29 327 119 46.3 12.36 364 1376
Year ended 16-Jul-09 58 183 29 270 84.5 43.5 11.74 313.1 1175.7
Remuneration, allowances and facilities given to Chief Executive Officer (CEO) and managers/Officers of the Bank during the year is as under: Particulars Salary Allowances Dashain Allowance Provident Fund Leave Fare Allowance Vehicle Loan House Loan Insurance Coverage Total Number Chief Executive Officer 6,098 1,742 508 609 508 Yes 1 Managers/Officers 19,254 12,487 1,431 1,925 1,994 Yes Yes Yes 65
Telephone facility and office car with driver are provided to CEO. The managers are given vehicle facility with fuel as per the Bank policy. Insurance coverage includes accidental insurance and medical insurance. All eligible staffs are paid bonus and provided other facilities as per regulations/staff rules.
Community Development For the welfare of the community, the Bank has actively been involved in charity and community support under its Corporate Social Responsibility (CSR) obligation.The Bank has promoted an independent and autonomous organization, namely NIC Foundation. The main objective behind it is to bring about positive changes in society through charitable works by helping underprivileged children & communities. The Bank contributes 0.5% of its annual net profit for this purpose. NIC Bank is the only Bank in the banking industry to set aside a fixed proportion of profit for such charitable work.
NIC Foundation has provided scholarships for underprivileged but meritorious & deserving girl children in the age group below 16 years from remote rural areas for the last three years. Likewise, it has facilitated visually challenged students to pursue higher education. NIC Foundation and the Bank have also raised funds to donate ambulances. NIC Foundation is also providing help to old age homes in Dhankuta, Sunsari and Kathmandu and has helped in the construction of an underground water tank for the Old Age Management/ Social Welfare Trust in Kathmandu. NIC Foundation believes in generating synergy by collaborating with institutions in bringing positive change in society and has joined hands with partners like Rotary in reaching to a wider and larger part of the community. The Bank has also set an example by organizing an annual Blood Donation campaign in order to reduce the shortage of blood at blood banks in Kathmandu, Bhaktapur and Biratnagar. The Bank has also donated computers to schools in remote areas and provided financial assistance to an orphanage at Birgunj.
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NIC BANK I 13th Annual Report 2009/10 products

NIC Happy Savings Account An exclusive savings deposit product with high interest bearing that yields 6.5% interest rate and additional 0.5% interest to senior citizens and women, which is calculated on daily balance. This product was designed to give good financial return and can be opened with minimum balance of NPR. 1000. The deposit in Happy Savings Account has already crossed NPR 1 billion mark within 8 months of the launch. NIC Life Savings Account One of the pioneer interest bearing savings product of the bank with free annual health check up facility in partnership with Norvic Hospital. This interest bearing account comes with life insurance and accidental insurance cover facilities. Along with these facilities, discount on various services like Safe deposit lockers, travelers cheque, fund transfers etc are also provided in this account. Account holders will also be eligible for a discount on hospitalization charges on comprehensive Cardiac Check-up - all these with a minimum balance of Rs. 10,000 only. Mero Bachat Very simple and easy to operate interest bearing account which can be opened with just NPR. 10. Launched in March 2009, this product has been so much popular that it serves the purpose of savings as well as fulfills the requirement of having account in the bank. As of July 2010, 29,000 customers are already benefited from this account. Karmashil Bachat Khata Very popular and successful product bundled with various other facilities as well as interest bearing account specially designed for middle level working professionals, employees and students to cultivate the banking habit. Bundles with other feature, this product has been very successful and appreciated by 27,000 customers as of July 2010. NIC Savings Plus Specially designed for individuals to meet the needs of banking facility with high return on their savings upto 6.5% interest rate on daily balance. This product offer free issuance of Debit card for 2 years and Free ABBS facility up to NPR. 1 million per day. NIC Sikshya Kosh Proper education plays the most important role in making a childs future. Education today has become very expensive and thus one needs to save today to meet the needs for their childs future education. NIC Shikshya Kosh allows parents to save every possible paisa today so as to give a lump sum amount with lots of other benefits later on for their childs future education. Re-launched in the year 2010 with interest rate up to 8%, its a runaway success with close to 9,000 depositors as of July 2010.
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NIC Shareholders Savings Account This product was launched in the year 2007 to provide easy access banking service to our bestowing shareholders plus a good return on their savings. This product will facilitate our shareholders to credit their dividend payment directly in their account and now shareholders will no longer be required to queue up to receive dividend payments. The product all features insurance facility to the shareholders. NIC Business Account NIC Business Account is an interest bearing current account, launched on October 2007. It encourages business, firms and companies by offering interest on daily balance. This will carry out the need of banking which can be opened with NPR. 1,000 and lot of free discount and banking facilities. NIC USD Super Savings Account This deposit product, enhanced with many additional facilities, was launched in 2006 and has gained popularity amongst individuals who earn in foreign currencies. NIC Super Deposit This innovative time deposit product offers a unique investment opportunity with high returns in a fixed deposit and the flexibility of a savings account. NIC Social Account It is a complete banking to the non-profit making organizations, launched in 2010. It is an interest bearing current account specially designed to avail banking opportunity to NGOs/ INGOs, trusts, government and local government offices, hospitals, educational institutes, diplomatic missions, embassies, club/societies/community organizations, etc. This offer provides interest on daily balance with lots of banking facitilities and fulfills the banking requirement for those organizations. NIC Corporate Super Account Highly beneficial for institutions and organizations, a high yield interest bearing account on daily balance with unlimited deposit and withdrawal facilities. This account helps the business unit to increase their income by offering attractive interest of up to 6% p.a. on daily balance that can be opened with just NPR. 100,000 with Free ABBS facility.
43
Trade in Bullion
NIC Bank launched NIC Pure Gold, a firstof-its-kind innovative product never before introduced by any bank in Nepal. NIC Bank imports certified 99.5% pure gold from reputed international mints/suppliers.
NiC pure Gold

The Bank was also the first among financial institutions in Nepal to import 99.9% pure silver granules from international mints/ suppliers. With the introduction of NIC Silver, NIC Bank is contributing to the silver crafts and jewellery industry by providing an easy access to pure silver granules. NIC Bank has also launched NIC Pure Gold, a first of its kind innovative product never before introduced by any bank in Nepal. Although, there is a sizeable demand for gold in Nepal, Nepali consumers are always uncertain of the quality available in the market. With NIC Bank importing certified 99.5%/99.9% pure gold from reputed international mints/suppliers, quality is now assured. The Bank also offers multiple finance option to avail loans to purchase gold and provides custodial service under which buyers may choose to keep the purchased gold safely in the Bank instead of taking the high risk of storing it at home.
After the encouraging response that we got from the market in gold and silver, once again for the first time in the local bullion industry, the Bank commenced sale of small denomination medallions like 5 grams, 8 grams and 10 grams targeting small buyers.
44
NiC pure Silver

NIC Bank is also the first in Nepal to import 99.9% pure silver granules from international mints/suppliers. With the introduction of NIC Silver, the Bank is contributing to the silver crafts and jewellery industry by providing an easy access to pure silver granules ensuring quality products.
NiC pure Gold medallion

With the introduction of Pure Gold Medallion in September 2009, NIC Bank is also taking care of the protection of interest of small buyers. The small buyers were facing the difficulties to buy pure gold medallion in small denominations like 5 grams/ 10 grams etc which were not available in purity of 99.9%. in the market as it is claimed. Now with the easy access to get the NIC Pure Gold even in small denomination like 5 grams, 8 grams and 10 grams, it is expected that the small buyers too can invest in gold with assured quality.
Treasury & Correspondent Banking

NIC Bank operates a full- fledged Treasury Department within the parameters of the foreign exchange rules and regulations issued by Nepal Rastra Bank (NRB) central bank of Nepal. The bank offers a full range of treasury services, which includes buy/ sell of foreign currencies in both spot and forward market, money market dealings, buy/ sell of government treasury bills/bonds and treasury advisory services. It looks into banks liquidity & market risk management, ALM, banks balance sheet management, transfer pricing, investment and correspondent banking
45
Corporate Social Responsibility
NIC Banks initiatives of establishing NIC Foundation, a non profit organization, to take up social activities to bring about positive changes in the society have been widely appreciated and recognized. Some of the projects taken by NIC Foundation during the year have enhanced image of the Bank in the community. Health Camp organized at Sipadol, Bhaktapur was an exemplary partnership between the Bank, the Foundation and the Community which helped poor and down trodden children and elderly people deprived from the basic medical access to have medical check up from doctors and free medicines provided to them brought a smile of relief. NIC Foundation has made financial contribution towards relief of Jajarkot epidemic victims to show our concern and give them the feeling that we care for our fellow citizens in bad times. Scholarships provided by the Foundation to girl students in various schools across the country is an initiative in promoting girl child education. Financial support to orphanages in Morang, sankhuwashabha and Parsa has assured the innocent children making the orphanage their home in search of care and love that there are organizations like NIC Foundation committed in extending arms of support to help them see better future,neutralize the pain they endured in the past. NIC Foundation has demonstrated by providing help to Oldage home in Dhankuta, Sunsari and Kathmandu that it cares elderly people and provide them with adequate services they deserve in recognition of their contribution to society they made in their past.
Scholarship from NIC Foundation to the Visually Challenged

46 Mr. Parshuram Acharya, Miss Shanti Bhattarai Miss Amrita Budthapa
Scholarship from NIC Foundation to the Visually Challenged

From Left Top:
Mr. Rajendra Aryal, Mr. Sashin Joshi, Mr. Ashok Kumar Agrawal, Mr. Bhanu Dawadi Miss Shanti Bhattarai, Miss Amrita Budthapa and Mr. Parshuram Acharya
NIC Foundation believes in generating synergy by collaborating with institutions in bringing positive change in society and has joined hands with partners like Rotary Fund in reaching to wider and larger part of community.
Construction of an underground water tank for the Old Age Management/ Social Welfare Trust, Kathmandu gave the elderly mothers and orphans taking shelter in the Trust enough water to drink and wash improving overall health and hygine in the Trust, and gave the care taker Mrs Dil Shobha Shrestha further encouragement improving conditions of the abandoned elderly mothers. Completing a mountain trail which Mr. Krishnalal of Parbat district had initiated was a challenge as he had exhausted all resources and energy and was hopelessly on the verge of abandoning the project while NIC Foundation stepped in as a rescue and contributed financially to complete the route. This mile stone in NIC Foundations projects in bringing about difference in the life of rural citizens of the country. NIC Foundation believes in generating synergy by collaborating with institutions in bringing positive change in society and has joined hands with partners like Rotary Fund in reaching to wider and larger part of community.
Co-ordinators of NIC Foundation handing over Cheque to

(Care taker of Old Age Management/ Social Welfare Trust)
From Left:
Mr. Ashok Kumar Agrawal, Mr. Rajendra Aryal, Mrs. Mrs. Dil Shobha Shrestha
NIC Foundation donating incense making equipment donated to children centre at Dallu From Left:
Mr. Ashok Kumar Agrawal, Mr. Rajendra Aryal 47
NIC BANK I 13th Annual Report 2009/10 Branch managers
48
49
auditors Report
50
51
Balance Sheet
As at 32 Ashad 2067 (16 July 2010)
Schedule 1 2 3 4 5 6 capital & liabilities 1. Share Capital 2. Reserves and Funds 3. Debentures & Bonds 4. Borrowings 5. Deposits 6. Bills Payable 7. Proposed Dividend 8. Income Tax Liabilities 9. Other Liabilities total 7 current Year nPR 1,311,552,000 453,400,168 200,000,000 1,723,250,000 15,968,917,926 17,542,684 345,145,263 32,571,596 256,950,979 20,309,330,616 current Year nPR 530,610,696 589,322,223 966,197,190 100,000,000 4,946,777,670 12,732,014,319 297,191,956 147,216,562 20,309,330,616 Schedule 17 Schedule 29 Schedule 30 Schedule 30 (a) Schedule 31 Schedule 32 Schedule 33 Schedule 34 Schedule 35 Schedule 36 Previous Year nPR 1,311,552,000 348,701,729 200,000,000 660,405,000 15,579,930,904 265,106,722 9,003,789 10,892,640 365,040,413 18,750,633,197 Previous Year nPR 337,349,455 970,981,465 152,819,629 3,026,022,185 13,679,393,779 259,324,965 703,250 324,038,469 18,750,633,197
assets 1. Cash Balance 2. Balance with Nepal Rastra Bank 3. Balance with Banks/Financial Institutions 4. Money at Call and Short Notice 5. Investments 6. Loans, Advances and Bills Purchased 7. Fixed Assets 8. Non-Banking Assets 9. Other Assets total
Schedule 8 9 10 11 12 13 14 15 16
Contingent Liabilities Directors Declaration Capital Adequacy Risk Weighted Assets Principal Indicators Principal Accounting Policies Notes to Accounts Statement of Loans Availed by Promoters /Shareholders under Promoters Group from Other BFIs Unaudited Financial Results (Provisional) Comparision of Unaudited and Audited Financial Statement
Schedules 1 to 17, 33 and 34 form integral part of this Balance Sheet.
Prabin Basnet Manager Fin. & Ops. Sashin Joshi Chief Executive Officer Kathmandu Date: 4th October, 2010
lokmanya Golchha Director Ganesh Man Shrestha Prof. Director
nirmal Kumar agrawal Director Rajendra aryal Director
tulsi Ram agrawal Director Birendra Kumar Sanghai Director Jagdish Prasad agrawal Chairman
As per our report of even date
Gopal P. Rajbahak, FCA G.P. Rajbahak & Co. Chartered Accountants
52
For the period from 1 Shrawan 2066 to 32 Ashad 2067 (16 July 2009 to 16 July 2010)
Particulars 1. 2. 3. 4. 5. 6. 7. 8. 9. Interest Income Interest Expenses net interest income Commission & Discount Other Operating Incomes Exchange Fluctuation Income total operating income Staff Expenses Other Operating Expenses Exchange Fluctuation Loss operating Profit Before Provision for Possible losses Provision for Possible Losses operating Profit 10. Non - Operating Income/(Expenses) 11. Loss Provision Written Back Profit from Regular activities 12. Income/(Expense) from Extra-Ordinary Activities Profit from all activities 13. Provision for Staff Bonus 14. Provision for Income Tax Current Years Deferred Tax Previous Years net Profit /(loss)
Schedule 18 to 28, 33 and 34 form integral part of this Profit and Loss Account
PRofit and loSS account

Schedule 18 19 20 21 22 23 24 22 25 26 27 28
current Year nPR 1,777,165,668 1,031,474,076 745,691,592 76,064,466 49,345,027 90,908,819 962,009,904 118,858,070 137,749,539 705,402,295 17,740,842 687,661,453 11,458,240 56,204,075 755,323,768 (46,204,075) 709,119,693 64,465,427 194,810,564 194,485,541 325,023 449,843,702
Previous Year nPR 1,283,520,711 767,196,816 516,323,895 61,895,316 44,028,178 97,673,440 719,920,829 84,544,834 109,784,146 525,591,849 39,509,378 486,082,471 2,489,084 3,913,125 492,484,680 7,617,108 500,101,788 45,463,799 137,203,851 137,910,184 (739,281) 32,948 317,434,138
53
PRofit and loSS aPPRoPRiation account

Fiscal Year 2066/2067 (2009/2010)
Particulars income 1. Accumulated Profit upto Previous Year 2. Current Years Profit 3. Exchange Equilization Fund total expenses 1. Accumulated Loss upto Previous Year 2. Current Years Loss 3. General Reserve 4. Contingent Reserve 5. Institution Development Fund 6. Dividend Equalization Fund 7. Employees Related Fund 8. Proposed Dividend 9. Proposed Issue of Bonus Share 10. Special Reserve Fund 11. Exchange Fluctuation Fund 12. Capital Redemption Reserve 13. Capital Adjustment Fund 14. NIC Bond 2070 Redemption Reserve 15. Deferred Tax Reserve 16. Investment Adjustment Fund total 15. Accumulated Profit (Loss) 89,968,740 345,145,263 3,012,954 40,000,000 (325,023) 504,620 478,306,554 2,094,621 288,503,750 30,557,473 63,486,828 9,003,789 171,072,000 1,841,092 40,000,000 3,100,041 30,557,473 449,843,702 480,401,175 1,627,085 317,434,138 319,061,223 current Year nPR Previous Year nPR
54
StateMent of chanGeS in equitY

Fiscal Year 2066/2067 (2009/2010)
amount in nPR
Particulars
Share capital
accumulated Profit/loss
General Reserve
capital adjustment fund Share Premium deferred tax Reserve
exchange fluctuation fund
investment adjustment Reserve
other Reserves & fund
total amount
opening Balance as at 1st Shrawan 2066

325,023 (325,023) -
1,140,480,000 171,072,000
171,072,000 1,311,552,000 2,094,621 310,539,220 41,873,580 (504,620) (40,000,000) 2,775,018 (3,012,954) (345,145,263) (89,968,740) 89,968,740 3,012,954 13,421,328 449,843,702 -
30,557,473 (28,787,875) 89,968,740 3,012,954 504,620

504,620 504,620
220,570,480
41,873,580
3,100,041
10,408,374
213,263,781
-
1,660,253,729
-
Transfer to Deferred Tax Reserve
adjustments for the Year
(131,072,000)
(171,072,000) 40,000,000 82,191,781
104,698,439
449,843,702 (345,145,263) 1,764,952,168
Net profit for the year
Transfer to General Reserve
Proposed Dividend
Issue of Bonus Share
Transfer to Exchange Fluctuation Fund
Issue of unsubscribed number of Right shares
Proposed Bonus Shares
Transfer to Bond Redemption Reserve
Transfer to Investment Adjustment Reserve
closing Balance as at 32 ashad 2067
55
For the period from 1 Shrawan 2066 to 32 Ashad 2067 (16 July 2009 to 16 July 2010)
Particulars (a) cash flow from operating activities 1. cash Receipts 1.1 Interest Income 1.2 Commission and Discount Income 1.3 Exchange Gain 1.4 Recovery of Loan Written off 1.5 Other Income 2. cash Payments 2.1 Interest Expenses 2.2 Staff Expenses 2.3 Other Operating Expenses 2.4 Payment of Income Tax 2.5 Other Expenses cash flow before changes in working capital decrease/(increase) in current asset from operating activities 1. Decrease/(Increase) in Money at Call and Short Notice 2. Decrease/(Increase) in Other Short Term Investments 3. Decrease/(Increase) in Loans, Advances and Bills Purchased 4. Decrease/(Increase) in Other Assets increase/(decrease) in current liabilities from operating activities 1. Increase /(Decrease) in Deposit/Liabilities 2. Increase /(Decrease) in Certificate of Deposits 3. Increase /(Decrease) in Short Term Borrowings 4. Increase /(Decrease) in Other Liabilities (B) cash flow from investing activities 1. Decrease/(Increase) in Long Term Investments 2. Decrease/(Increase) in Fixed Assets 3. Interest Income from Long Term Investments 4. Dividend Income 5. Others (c) cash flow from financing activities 1. Increase /(Decrease) in Long Term Borrowings (Bond, Debentures etc.) 2. Increase /(Decrease) in Paid in Capital 3. Increase /(Decrease) in Other Liabilities 4. Increase /(Decrease) in Refinance/facilities from Nepal Rastra Bank (d) income/loss from change in exchange rate of cash and Bank Balance (e) current Years cash flow from all activities (f) opening cash and Bank Balance (G) closing cash and Bank Balance current Year (nPR) 1,561,572,446 1,994,796,541 1,764,870,915 76,073,364 94,507,235 10,000,000 49,345,027 (1,435,121,757) (993,734,013) (116,889,896) (103,029,447) (172,806,597) (48,661,804) 1,001,897,663 (50,607,630) (100,000,000) (1,055,533,082) 930,341,869 174,583,583 1,052,505,293 388,987,023 1,062,845,000 (399,326,730) (908,593,897) (866,378,800) (60,511,947) 15,773,750 2,523,100 (24,400,573) (15,242,119) (9,158,455) (3,598,416) 624,979,561 1,461,150,549 2,086,130,110 Previous Year (nPR) 374,018,917 1,473,516,877 1,257,870,151 62,178,848 98,822,592 10,617,108 44,028,178 (1,070,081,805) (722,447,258) (83,325,094) (84,258,857) (140,977,552) (39,073,044) (29,416,155) (3,138,079,160) 160,000,000 (653,166,980) (2,453,057,030) (191,855,150) 3,108,663,005 2,495,242,232 325,405,000 288,015,773 (136,704,802) (61,981,459) (86,295,565) 10,373,750 1,198,472 32,636,800 (5,280,759) 37,917,559 (1,149,152) 268,801,763 1,192,348,786 1,461,150,549
caSh flow StateMent
56
ShaRe caPital and owneRShiP

As at 32 Ashad 2067 (16 July 2010)
Particulars 1. Share capital 1.1 authorised capital a) 16,000,000 Ordinary Shares of Rs 100 each b). Non-Redeemable Shares of Rs _ each c).. Redeemable Shares of Rs _ each 1.2 issued capital a) 13,115,520 Ordinary Shares of Rs 100 each (Previous year 11,404,800 Ordinary Shares of Rs. 100 each) b)...Non-Redeemable Shares of Rs _ each c)...Redeemable Shares of Rs _ each 1.3 Paid up capital a) 13,115,520 Ordinary Shares of Rs 100 each (Previous year 11,404,800 Ordinary Shares of Rs. 100 each) b) .Non-Redeemable Shares of Rs _ each c) .Redeemable Shares of Rs _ each 1.4 Proposed Bonus Share 1.5 calls in advance 1,600,000,000 1,600,000,000 1,311,552,000 1,311,552,000 1,311,552,000 1,311,552,000 current Year nPR
Schedule 1
Previous Year nPR 1,600,000,000 1,600,000,000 1,140,480,000 1,140,480,000 1,140,480,000 1,140,480,000 171,072,000 -
ShaRe owneRShiP
As at 32 Ashad 2067 (16 July 2010)
Particulars % a. local ownership 1.1 Government of Nepal 1.2 KA Class Licensed Institutions 1.3 Other Licensed Institutions 1.4 Other Institutions 1.5 General Public 1.6 Others B. foreign ownership total 1 99 100 100 Share capital this Year nPR 1,311,552,000 17,837,107 1,293,714,893 1,311,552,000 Share capital Previous year nPR 1,140,480,000 14,256,000 1,126,224,000 1,140,480,000 100 1 99 % 100
57
ShaReholdeRS holdinG MoRe than 0.5% ShaReS

As at 32 Ashad 2067 (16 July 2010)
number of Shares held 78,718 82,555 106,099 229,520 475,470 513,824 552,586 555,713 622,423 623,537 643,672 655,775 667,277 716,896 716,906 1,312,931 Sn 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Sushila Devi Sanghai Rajani Amatya Govinda Lal Sanghai Nirmal Kumar Agrawal Anuj Agrawal Jagdish Prasad Agrawal Nikunj Agrawal Ashok Kumar Agrawal Trilok Chand Agrawal Vishal Agrawal Basu Dev Golyan Pawan Kumar Golyan Tulsi Ram Agrawal Diwakar Golchha Lokmanya Golchha Subhash Chandra Sanghai name amount (nPR) 7,871,800 8,255,500 10,609,900 22,952,000 47,547,000 51,382,400 55,258,600 55,571,300 62,242,300 62,353,700 64,367,200 65,577,500 66,727,700 71,689,600 71,690,600 131,293,100
Schedule 1
% of Shareholding 0.60 0.63 0.81 1.75 3.63 3.92 4.21 4.24 4.75 4.75 4.91 5.00 5.09 5.47 5.47 10.01
ReSeRve and fundS

As at 32 Ashad 2067 (16 July 2010)
Particulars 1. General Reserve Fund 2. Capital Reserve Fund a. Share Premium 3. Capital Redemption Reserve 4. Capital Adjustment Fund 5. Other Reserve & Fund a. Contingent Reserve b. Institution Development Fund c. Dividend Equalisation Fund d. Special Reserve Fund e. Assets Revaluation Reserve f. Other Free Reserves g. Bond Redemption Reserve h. Deferred Tax Reserve i. Investment Adjustment Reserve 6. Accumulated Profit/Loss 7. Exchange Fluctuation Fund total current Year nPR 310,539,220 41,873,580 41,873,580 85,471,419 82,191,781 2,775,018 504,620 2,094,621 13,421,328 453,400,168 Previous Year nPR
Schedule 2
220,570,480 41,873,580 41,873,580 45,291,822 42,191,781 3,100,041 30,557,473 10,408,374 348,701,729
58
deBentuRe & Bond

As at 32 Ashad 2067 (16 July 2010)
Particulars 1. 6% NIC Bond of Rs 1,000 each Issued on 26 June 2006 and Maturing on 25 June 2013 [Redemption Reserve: NPR 82,191,781 (Previous year NPR 42,191,781)] 2. 3. total current Year nPR 200,000,000 200,000,000 Previous Year nPR
Schedule 3
200,000,000 200,000,000
As at 32 Ashad 2067 (16 July 2010)

Particulars a. local 1. Government of Nepal 2. Nepal Rastra Bank 3. Repo Obligations 4. Inter-bank and Financial Institutions 5. Other Financial Institutions 6. Others total B. foreign 1. Banks 2. Others total total (a+B ) 1,723,250,000 660,405,000 1,287,100,000 436,150,000 1,723,250,000 660,405,000 660,405,000 current Year nPR Previous Year nPR
BoRRowinGS
Schedule 4
59
As at 32 Ashad 2067 (16 July 2010)

Particulars 1. non-interest Bearing accounts a. current deposits 1. local currency 1.1 Government of Nepal 1.2 "KA" Class Licensed Institutions 1.3 Other Licensed Financial Institutions 1.4 Other Organized Institutions 1.5 Individuals 1.6 Others 2. foreign currency 2.1 Government of Nepal 2.2 "KA" Class Licensed Institutions 2.3 Other Licensed Financial Institutions 2.4 Other Organized Institutions 2.5 Individuals 2.6 Others B. Margin deposits 1. Employees' Guarantee 2. Guarantee Margin 3. Letters of Credit Margin c. others 1. local currency 1.1 Financial Institutions 1.2 Other Organized Institutions 1.3 Individuals 2. foreign currency 2.1 Financial Institutions 2.2 Other Organized Institutions 2.3 Individuals total of non-interest Bearing accounts 1,219,899,614 1,187,504,775 121,687,045 76,422,976 146,392,130 667,634,840 37,413,491 137,954,293 32,394,839 2,587,587 66,192 29,611,834 129,227 121,515,096 40,626,145 80,888,951 1,341,414,710 834,693,910 814,947,678 131,244,303 5,113,719 142,762,827 403,868,063 131,958,766 19,746,232 170,918 10,782,080 8,465,402 327,832 102,185,720 329,400 30,672,844 71,183,476 936,879,630 current Year nPR Previous Year nPR
dePoSitS
Schedule 5
60
dePoSitS contd...
As at 32 Ashad 2067 (16 July 2010)
Particulars 2. interest Bearing accounts a. Savings deposits 1. local currency 1.1 Institutions 1.2 Individuals 1.3 Others 2. foreign currency 2.1 Institutions 2.2 Individuals 2.3 Others B. fixed deposits 1. local currency 1.1 Institutions 1.2 Individuals 1.3 Others 2. foreign currency 2.1 Institutions 2.2 Individuals 2.3 Others c. call deposits 1. Local Currency 1.1 KA Class Licensed Institutions 1.2 Other Licensed Financial Institutions 1.3 Other Institutions 1.4 Individuals 1.5 Others 2. foreign currency 2.1 KA Class Licensed Institutions 2.2 Other Licensed Financial Institutions 2.3 Other Institutions 2.4 Individuals 2.5 Others d. certificate of deposits 1. Institutions 2. Individuals 3. Others total of interest Bearing accounts total deposits (1+2) 3,715,846,822 3,641,308,885 24,555,214 3,331,589,861 285,163,810 74,537,937 74,196,976 340,961 7,554,059,836 7,232,544,253 5,457,391,249 1,255,984,774 519,168,230 321,515,583 108,256,500 213,259,083 3,357,596,558 3,302,445,225 38,430,641 1,201,221,778 1,658,310,565 399,872,619 4,609,621 55,151,333 4,288,694 50,862,640 14,627,503,216 15,968,917,926 current Year nPR Previous Year nPR
Schedule 5
3,993,715,640 3,916,310,119 469,159,247 3,413,010,633 34,140,239 77,405,521 10,614,010 65,668,671 1,122,840 7,580,059,764 7,118,281,894 6,104,194,119 965,965,744 48,122,031 461,777,870 461,777,870 3,069,275,870 2,928,941,402 331,701,782 899,638,440 1,086,883,919 259,905,307 350,811,954 140,334,468 84,571,844 55,762,624 14,643,051,274 15,579,930,904
61
As at 32 Ashad 2067 (16 July 2010)

Particulars 1. Local Currency 2. Foreign Currency total current Year nPR 10,639,595 6,903,089 17,542,684 Previous Year nPR 238,022,636 27,084,086 265,106,722
BillS PaYaBle
Schedule 6
otheR liaBilitieS
As at 32 Ashad 2067 (16 July 2010)
Particulars 1. Pension/Gratuity Fund 2. Employees' Provident Fund 3. Employees' Welfare Fund 4. Provision for Staff Bonus 5. Interest Payable on Deposits 6. Interest Payable on Borrowing [Includes payable on NIC Bond NPR 4,201,264 (Previous year NPR 7,410,507)] 7. Unearned Discount and Commission 8. Sundry Creditors 9. Branch Adjustment Account 10. Deferred Tax Liability 11. Dividend Payable 12. Others a. Provision for Leave Encashment b. Payable to Others total current Year nPR 64,465,427 83,409,857 16,922,546 611,500 67,667,923 1,841,318 22,032,408 5,235,015 16,797,393 256,950,979 Previous Year nPR
Schedule 7
45,463,799 57,702,670 12,918,734 602,602 144,682,883 1,995,983 101,673,742 4,466,842 97,206,900 365,040,413
As at 32 Ashad 2067 (16 July 2010)

Particulars 1. Local Currency ( Including Coins) 2. Foreign Currency total current Year NPR 525,592,283 5,018,413 530,610,696 Previous Year NPR 325,224,644 12,124,811 337,349,455
caSh Balance
Schedule 8
62
Balance at nePal RaStRa BanK

As at 32 Ashad 2067 (16 July 2010)
foreign currency inR others total Particulars 1. nepal Rastra Bank a. Current Account b. Other Account local currency nPR 589,322,223 589,322,223 current Year nPR 589,322,223 589,322,223 -
Schedule 9
Previous Year nPR 970,981,465 970,981,465 -
Balance with BanKS/financial inStitutionS

As at 32 Ashad 2067 (16 July 2010)
foreign currency inR 131,502,769 131,502,769 131,502,769 others 449,504 449,504 124,009,611 124,009,611 124,459,115 total 449,504 449,504 255,512,380 255,512,380 255,961,884 Particulars 1. local Banks a. Current Account b. Other Account 2. foreign Banks a. Current Account b. Other Account total local currency nPR 710,235,306 710,235,306 710,235,306 current Year nPR 710,684,810 710,684,810 255,512,380 255,512,380 966,197,190
Schedule 10
Previous Year nPR 28,031,521 28,031,521 124,788,108 124,788,108 152,819,629
Note: Balance with Nepal Rastra Bank and with Banks/Financial Institutions as per confirmations and statements received from respective banks is NPR 1,676,785,809 and the differences are reconciled.
MoneY at call and ShoRt notice

As at 32 Ashad 2067 (16 July 2010)
Particulars 1. Local Currency 2. Foreign Currency total current Year nPR 100,000,000 100,000,000 Previous Year nPR
Schedule 11
63
As at 32 Ashad 2067 (16 July 2010)

Purpose Particulars 1. Nepal Governments Treasury bills 2. Nepal Governments Savings Bonds 3. Nepal Governments Others Securities 4. Nepal Rastra Bank Bonds 5. Foreign Securities 6. Local Licensed Institutions 7. Foreign Banks 8. Corporate Shares 9. Corporate Bonds & Debentures 10. Other Investments total investment Less : Provision net investment trading nPR others nPR 2,893,428,383 1,085,472,252 291,162,330 230,000,000 418,923,205 27,791,500 4,946,777,671 4,946,777,671 current Year nPR 2,893,428,383 1,085,472,252 291,162,330 230,000,000 418,923,205 27,791,500 4,946,777,670 4,946,777,670 Previous Year nPR 1,973,614,670 221,389,015 20,000,000 784,427,000 26,591,500 3,026,022,185 3,026,022,185
inveStMentS
Schedule 12
inveStMentS in ShaReS, deBentuReS and BondS

As at 32 Ashad 2067 (16 July 2010)
current Year cost Price 27,791,500 25,231,000 1,235,500 125,000 1,200,000 not listed not listed not listed not listed Market value
Schedule 12 (A)
Particulars 1. investment in Shares 1.1 Rural Microfinance Development Centre Ltd. (252,310 Ordinary Shares of Rs. 100 each) 1.2 Credit Information Centre Ltd. (12,355 Ordinary Shares of Rs. 100 each) 1.3 Nepal Clearing House Ltd. (25,000 Ordinary Shares of Rs. 100 each - Rs. 5 paid up) 1.4 National Banking Traninig Institute (12,,000 Ordinary Shares of Rs. 100 each ) 2. investment in debentures and Bonds 2.1 .. 2.2 .. 2.3 ... total investment 3. Provision for loss 3.1 Upto Previous Year 3.2 Adjustment This Year total Provision
Provision -
Previous Year nPR 26,591,500 25,231,000 1,235,500 125,000 -
27,791,500 27,791,500
26,591,500 26,591,500
Credit Information Centre Ltd. has not declared dividend for the past three years.
64
inveStMentS (held foR tRadinG)

As at 32 Ashad 2067 (16 July 2010)
last Market Price (a) Particulars 1. Nepal Governments Treasury Bills 2. Nepal Governments Savings Bonds 3. Nepal Governments Others Securities 4. Nepal Rastra Bank Bonds 5. Foreign Securities 6. Shares of Domestic Licensed Institutions 7. Debenture & Bonds of Domestic Licensed Institutions 8. Shares, Debentures & Bonds of Domestic Institutions 9. Placement in Foreign Banks 10. Interbank Lending 11. Other Investments total investment Par value current Market Price (b) current Year Gain/(loss) (a-b) Previous Year Gain/(loss) -
Schedule 12.1
Remarks
inveStMentS (held foR MatuRitY)

As at 32 Ashad 2067 (16 July 2010)
cumulative loss (b) 1,085,472,252 291,162,330 418,923,205 230,000,000 4,918,986,170 Particulars 1. Nepal Government's Treasury Bills 2. Nepal Government's Savings Bonds 3. Nepal Government's Others Securities 4. Nepal Rastra Bank Bonds 5. Foreign Securities 6. Shares of Domestic Licensed Institutions 7. Debenture & Bonds of Domestic Licensed Institutions 8. Shares, Debentures & Bonds of Domestic Institutions 9. Placement in Foreign Banks 10. Other Investments total investment Par value (a) 2,893,428,383 current Year loss amount (c) current Year Gain/(loss) (a-b-c) Previous Year Gain/(loss) -
Schedule 12.2
Remarks
Bond
65
inveStMentS (availaBle foR Sale)

As at 32 Ashad 2067 (16 July 2010)
last Market Price (a) 27,791,500 27,791,500 current Market Price (b) current Year Reserve adjustment amount (a-b) 504,620 504,620
Schedule 12.3
Particulars
Par value
Previous Year Gain/(loss) -
Remarks
1. Nepal Government's Treasury Bills 2. Nepal Government's Savings Bonds 3. Nepal Government's Others Securities 4. Nepal Rastra Bank Bonds 5. Foreign Securities 6. Shares of Domestic Licensed Institutions 7. Debenture & Bonds of Domestic Licensed Institutions 8. Shares, Debentures & Bonds of Domestic Institutions 9. Placement in Foreign Banks 10. Other Investments total investment
Share not listed
66
claSSification of loanS, advanceS and BillS PuRchaSed and PRoviSionS

As at 32 Ashad 2067 (16 July 2010)
Schedule 13
advances domestic deprived non insured nPR nPR 12,373,474,535

12,373,474,535 12,813,601,634 6,600,000 16,609,811 23,209,811
Bills Purchased and discounted foreign nPR 12,813,601,634 6,600,000 16,609,811 23,209,811 total advances nPR local nPR foreign nPR 12,836,811,445
12,836,811,445 -
Particulars others
insured nPR 440,127,099
total Bills Purchased & discounted current Year nPR
Previous Year nPR
1. Performing loan
440,127,099
13,786,671,603
13,771,077,435 15,594,168
A. Pass loans
B. Restructured Loan
2. non Performing loan

10,166,098 44,508,425 54,674,524 19,170,414 19,170,414 18,647,708 18,647,708
10,166,098
82,326,548
92,492,646
92,492,646
18,647,708 19,170,414 54,674,524
129,178,432
2,422,097 61,131,299 65,625,036
2.1 Sub Standard
2.2 Doubtful
2.3 Loss
total loans (a)

10,166,098 44,508,425 54,674,524 9,585,207 9,585,207 4,661,927 4,661,927 4,401,271 123,734,745 128,136,016 66,000
450,293,197
12,455,801,083
12,906,094,280
6,600,000
16,609,811
166,098 -
23,209,811
232,098 -
12,929,304,091
128,368,114 4,661,927 9,585,207 54,674,523
13,915,850,035
137,710,775 1,949,271 605,524 30,565,650 65,625,036
3. loan loss Provision
3.1 Pass Loans
3.2. Restructured Loan
3.3 Sub Standard
3.4 Doubtful
3.5 Loss
total Provisions (B)

399,498 65,225,538 30,565,650 605,524 1,949,271 4,223,959 133,065,749 155,700 137,445,408 1,949,271 605,524 30,565,650 65,625,036
14,567,369
182,490,305
197,057,674
66,000
2,000 -
166,098
263,367 -
232,098
265,367 -
197,289,772
137,710,775 1,949,271 605,524 30,565,650 65,625,036
236,456,256
113,504,578 2,088,628 2,408,076 5,880,214 76,774,413
4. Provision upto Previous Year
4.1 Pass Loans
4.2 Restructured Loans
4.3 Sub Standard
4.4 Doubtful
4.5 Loss
total Provision upto Previous Year (c) -
4,623,457
231,411,732
155,700 -
236,190,889 -
2,000 -
263,367 -
265,367 -
236,456,255 (56,204,075)
17,037,592 (39,166,484)
200,655,909 (3,000,000)
38,800,347 35,800,347
write back from last year provision (d)
Additional Provision during this year
Net Change this year
net loan (a-B)
435,725,828
12,273,310,778
12,709,036,606
6,534,000
16,443,713
22,977,713
12,732,014,319
13,679,393,779
67
SecuRitieS aGainSt loanS, advanceS and BillS PuRchaSed

As at 32 Ashad 2067 (16 July 2010)
current Year nPR 12,929,304,091 11,250,324,803 300,968,599 139,158,500 3,824,100 185,385,365 185,340,365 45,000 4,975,582 1,044,667,142 total 12,929,304,091 Previous Year nPR
Schedule 13 (A)
Particulars (a) Secured 1. Collateral of Movable/Immovable Assets 2. Guarantee of Local Licensed Institutions 3. Guarantee of Government of Nepal 4. Guarantee of Internationally Rated Banks 5. Export Documents 6. Fixed Deposit Receipts (a) Own FDR (b) FDR of other Banks 7. Government Bonds 8. Counter Guarantees 9. Personal Guarantee 10. Other Securities (B) unsecured
13,915,850,035 12,264,712,298 333,500,543 63,051,814 2,066,649 256,001,836 190,207,081 65,794,755 996,516,895 13,915,850,035
68
As at 32 Ashad 2067 (16 July 2010)

Schedule 14
fixed aSSetS
assets Building nPR 19,778,322 317,015 20,095,337 1,150,684 932,227 (9,147,708) 2,082,912 18,012,425 42,640,197 8,855,963 14,330,273 6,865,900 (538,079) 6,334,096 1,598,869 10,289,894 (3,819,427) 52,133,430 54,183,916 17,143,885 5,805,110 45,662,963 56,970,470 15,721,863 106,317,346 34,516,060 13,485,985 3,642,563 (738,387) 16,390,161 18,125,899 (11,642,015) (559,324) (4,123,423) (770,008) 24,095,670 4,597,147 32,960,424 10,206,950 44,516,815 11,684,040 77,480,345 25,079,118 178,538,640 72,177,206 (17,094,770) 233,621,076 83,248,627 22,797,649 (14,243,601) 91,802,676 141,818,400 116,903,586 4,869,225 33,600,745 18,012,425 42,640,197 8,855,963 54,183,916 18,125,899 297,191,956 vehicles nPR Machinery nPR office equipment nPR others nPR current Year nPR
Particulars
Previous Year nPR
1. at cost 142,607,779 42,108,086 (5,691,500) (485,724) 178,538,641 70,671,373 16,790,730 (4,213,463) 83,248,640 95,290,001 126,492,551 7,202,920 30,339,493 259,324,965
a. Previous Years balance
b. Additions this year
c. Revaluation/Written back this year
d. This year sold
e. This year written off
total cost (a+b+c+d+e)
2. depreciation
a. Upto Previous Year
b. For this year
c. Depreciation on revaluation/written back
d. Depreciation adjustment/Written off
total depreciation
3. written down value (1-2)
4. land
5. capital construction (to be capitalised)
6. leasehold assets (net of amortisation)
total (3+4+5+6)
69
non BanKinG aSSetS

As at 32 Ashad 2067 (16 July 2010)
Gross non Banking assets nPR 740,000 691,000 1,431,000 name & address of Borrower 1. Ganapati Rice Mills 2. N.B. Corner total date of assuming non Banking assets 13/04/2006 07/06/2009 Provisions % 100 100 nPR 740,000 691,000 1,431,000 net non Banking assets nPR -
Schedule 15
Previous Year nPR 185,000 518,250 703,250
As at 32 Ashad 2067 (16 July 2010)

Particulars 1. Stock of Stationery 2. Income Receivable on Investments 3. Accrued Interest on Loans Accrued Interest on Loans Less: Interest Suspense 4. Commision Receivable 5. Sundry Debtors 6. Staff Loans and Advances 7. Prepayments 8. Cash-in-Transit 9. Other Transit Items ( including cheques) 10. Drafts Paid Without Notice 11. Expenses not Written off 12. Branch Adjustment Accounts 13. Deferred Tax Asset 14. Others (Including gold, silver) a. Coin and Valuable b. Purchased Asset - Bullion (Gold) c. Purchased Asset - Silver d. Purchased Asset - Gold Coin c. Stock of Gold Coins e. Others Less: Provision total 27,459,592 (27,459,592) 8,204,630 16,302,713 42,431,252 19,289,305 10,486,655 444 2,775,018 6,848,958 55,199 3,640,000 3,127,824 25,935 147,216,562 current Year nPR 5,329,655 35,547,932 Previous Year nPR 4,107,724 37,870,533 16,381,079 (16,381,079) 123,519,677 27,677,430 6,944,308 10,428,636 525 3,100,041 110,389,595 55,199 110,308,461 25,935 351,281 (351,281) 324,038,469
otheR aSSetS
Schedule 16
70
otheR aSSetS (additional StateMent)

As at 32 Ashad 2067 (16 July 2010)
this Year nPR upto 1 year 27,007,186 444 1 to 3 years 116,675 above 3 years 335,731 total 27,459,592 444 Particulars 1. Accrued Interest on Loans 2. Draft Paid without Notice 3. Branch Adjustment Account 4. Local/Foreign Agency Accounts
Schedule 16 (A)
Previous Year nPR 16,381,079 525 -
continGent liaBilitieS
As at 32 Ashad 2067 (16 July 2010)
Particulars 1. Claims on Bank but not Accepted by the Bank 2. Letters of Credit (Full Amount) a. Letter of Credit With Maturity Less than 6 Months b. Letter of Credit With Maturity More than 6 Months 3. Rediscounted Bills 4. Unmatured Guarantees/Bonds a. Bid Bonds b. Performance Bonds c. Other Guarantee/Bonds 5. Unpaid Shares in Investment 6. Forward Exchange Contract Liabilities 7. Bills under Collection 8. Acceptances and Endorsements 9. Underwriting Commitments 10. Irrevocable Loan Commitments 11. Guarantees issued against Counter Guarantee of Inlly Rated Foreign Banks 12. Advance Payment Guarantees 13. Financial Guarantees 14. Contingent Liabilities on Income Tax 15. .. total current Year nPR 8,943,000 1,059,419,575 1,038,366,623 21,052,952 330,650,047 33,694,100 296,955,947 2,375,000 57,579,262 84,088,952 3,576,293,480 43,053,332 32,022,857 5,194,425,504 Previous Year nPR
Schedule 17
8,943,000 1,342,578,965 1,077,494,666 265,084,299 311,335,319 31,426,320 279,908,999 2,375,000 75,876,655 211,327,133 2,554,430,074 112,855,805 14,091,677 4,633,813,628
71
For the period from 1 Shrawan 2066 to 32 Ashad 2067 (16 July 2009 to 16 July 2010 )
Particulars a. on loans, advances and overdrafts 1. Loans and Advances 2. Overdrafts B. on investment 1. Nepal Governments Securities a. Treasury Bills b. Development Bonds c. National Savings Certificates 2. Foreign Securities a. USD Bond b. 3. Nepal Rastra Banks Bonds 4. Debentures and Bonds 5. Interest on Interbank Placements a. Bank/ Financial Institutions b. Other Institutions c. on agency Balances 1. Local Banks/Financial Institutions 2. Foreign Banks d. on Money at call and Short notice 1. Local Banks/Financial Institutions 2. Foreign Banks e. on others 1. Certificates of Deposit 2. Inter Banks/Financial Institutions Loan 3. Others total current Year nPR 1,599,538,166 1,229,131,143 370,407,023 153,935,158 129,570,541 111,236,810 18,333,731 11,792,953 11,792,953 12,571,664 12,571,664 57,261 57,261 21,526,155 21,526,155 2,108,928 2,108,928 1,777,165,668 Previous Year nPR 1,135,067,342 874,904,815 260,162,527 136,335,431 111,738,420 101,722,529 10,015,891 24,597,011 24,597,011 1,036,891 1,036,891 9,966,298 9,966,298 1,114,749 1,114,749 1,283,520,711
inteReSt incoMe
Schedule 18
72
Particulars a. on deposit liabilities 1. Fixed Deposits 1.1 Local Currency 1.2 Foreign Currency 2. Savings Deposits 2.1 Local Currency 2.2 Foreign Currency 3. Call Deposits 3.1 Local Currency 3.2 Foreign Currency 4. Certificate of Deposits B. on Borrowings 1. Debentures & Bonds 2. Loan from Nepal Rastra Bank 3. Inter Bank/Financial Institutions Borrowings 4. Other Organized Institutions 5. Other Loans c. on others 1 2 total current Year nPR 942,287,309 584,005,310 568,464,202 15,541,108 163,742,820 163,069,072 673,748 194,539,179 193,561,387 977,792 89,186,767 12,032,876 56,885,112 20,268,779 1,031,474,076 Previous Year nPR 715,161,580 462,832,830 445,556,918 17,275,912 133,009,998 131,836,367 1,173,631 119,318,752 117,253,241 2,065,511 52,035,236 12,000,000 4,573,170 35,462,066 767,196,816
inteReSt exPenSeS
Schedule 19
Particulars a. Bills Purchased and discounted 1. Local 2. Foreign B. commission 1. Letters of Credit 2. Guarantees 3. Collection Fees 4. Remittance Fees 5. Credit Cards 6. Share Underwriting /Issues 7. Government Transactions 8. Agency Commission 9. Exchange Fee* c. others total
*Income from exchange fee is not segregated and is included under Trading Gains (Schedule 22)
coMMiSSion and diScountS

current Year nPR 569,365 135,851 433,515 34,253,607 14,650,122 6,418,186 3,701,032 5,029,896 4,454,371 41,241,494 76,064,466
Schedule 20
Previous Year nPR 530,523 69,461 461,062 29,663,034 12,134,286 6,140,208 3,093,501 4,832,997 3,462,042 31,701,759 61,895,316
73
Particulars 1. Rental on Safe Deposit Lockers 2. Issue and Renewal of Credit Cards 3. Issue and Renewal of ATM Cards 4. Telex/ T. T. 5. Service Charges 6. Renewal Fees 7. Others total current Year nPR 1,026,593 1,654,970 3,550,825 28,092,444 9,340,205 5,679,990 49,345,027 Previous Year nPR 768,722 284,207 3,594,966 32,819,205 5,154,443 1,406,635 44,028,178
otheR incoMe
Schedule 21
Particulars A. Revaluation Gain B. Trading Gain (including exchange fee) total current Year nPR 12,051,816 78,857,003 90,908,819 Previous Year nPR 7,364,366 90,309,074 97,673,440
exchanGe Gain/loSS
Schedule 22
Particulars 1. Salary 2. Allowances 3. Contribution to Provident Fund 4. Training Expenses 5. Uniform 6. Medical 7. Insurance 8. Pension and Gratuity Expenses 9. Others total current Year nPR 53,895,954 37,115,065 4,269,431 980,459 1,166,310 1,776,545 7,558,337 12,095,969 118,858,070 Previous Year nPR 39,758,090 27,330,439 3,160,310 904,029 1,195,486 1,428,266 3,213,888 7,554,326 84,544,834
Staff exPenSeS
Schedule 23
74
Particulars 1. House Rent 2. Electricity and Water 3. Repairs and Maintenance a. Building b. Vehicles c. Others (Office Equipment and Furniture) 4. Insurance 5. Postage, Telex, Telephone, Fax 6. Office Equipment 7. Travelling Allowance and Expenses 8. Printing and Stationery 9. Books and Periodicals 10. Advertisements 11. Legal Fees & Expenses 12. Donations 13. Expenses Relating to Board of Directors a. Meeting Fees b. Other Expenses 14. Annual General Meeting Expenses 15. Expenses Relating to Audit a. Audit Fees b. Other Expenses 16. Commission on Remittances 17. Depreciation on Fixed Assets 18. Amortization of Preliminary Expenses 19. Share Issue Expenses 20. Technical Services Fees 21. Entertainment 22. Written off Expenses 23. Security Expenses 24. Credit Guarantee Premium 25. Commission and Discount 26. Others Expenses a. Other Fees and Taxes b. Membership Fees c. Anniversary Expense d. Other Expenses total 150,000 310,414 1,032,106 22,797,649 1,498,879 11,414,664 13,072,083 11,981,318 2,837,956 781,389 158,022 8,203,951 137,749,539 914,000 1,896,443 1,075,359 460,414 396,498 784,047 3,643,641 3,977,907 11,288,199 342,317 6,115,794 5,424,919 119,486 5,266,662 823,116 2,317,871 2,810,443 current Year nPR 19,508,517 11,597,650 4,824,186 Previous Year nPR 15,962,010 9,104,800 3,653,263 104,166 648,497 2,900,600 3,427,364 10,307,222 282,909 5,333,465 4,320,038 107,898 4,410,347 1,393,573 1,977,529 2,143,078 738,000 1,405,078 859,086 639,150 140,000 499,150 1,224,666 16,790,731 1,206,653 8,441,964 9,347,381 8,851,020 2,543,256 768,204 2,028,416 3,511,144 109,784,146
otheR oPeRatinG exPenSeS
Schedule 24
75
Particulars 1. Increase in Loan Loss Provision 2. Increase in Provision for Loss on Investment 3. Provision for Non Banking Assets 4. Provision for Other Assets total current Year nPR 17,037,592 703,250 17,740,842 Previous Year nPR 38,800,347 357,750 351,281 39,509,378
PRoviSion foR PoSSiBle loSSeS
Schedule 25
Particulars 1. Profit (Loss) on Sale of Investments 2. Profit (Loss) on Sale of Assets (Includes Gain on sale of Land Rs.4,885,542) 3. Dividend 4. Subsidies Received from Nepal Rastra Bank a. Reimbursement of Losses of Specified Branches b. Interest Subsidy c. Exchange Counter d. . 5. Others total current Year nPR 8,935,140 2,523,100 11,458,240 Previous Year nPR 1,290,612 1,198,472 2,489,084
non-oPeRatinG incoMe/(exPenSeS)
Schedule 26
loSS PRoviSion wRitten BacK

Fiscal Year 2066/2067 (2009/2010)
Particulars 1. Loan Loss Provision Written Back 2. Provision For Non Banking Assets Written Back 3. Provision For Investment Written Back 4. Provision For Other Assets Written Back total current Year nPR 56,204,075 56,204,075 Previous Year nPR
Schedule 27
3,000,000 913,125 3,913,125
76
incoMe/(exPenSeS) fRoM extRaoRdinaRY activitieS

Particulars 1. Recovery of Loan Written off 2. Voluntary Retirement Scheme Expenses 3. Loan Write Offs {28 (A)} 4. Other Expense/Income 5. .. total current Year nPR 10,000,000 (56,204,075) (46,204,075) Previous Year nPR
Schedule 28
10,617,108 (3,000,000) 7,617,108
detailS of loan wRite offS

Fiscal Year 2066/2067 (2009/2010)
amount written off nPR (34,970,000) type of Security Land & Building Basis of valuation Panchakrit Valuation/ Property Valuation by Authorized Valuator loan approved by name/ designation authority K.R. Iyer; then CEO initiations made for Recovery Borrower, Shareholders and Directors of the unit blacklisted. Recovery suit filed with Debt Recovery Tribunal. Borrower, Shareholders and Directors of the unit blacklisted. Recovery suit filed with Debt Recovery Tribunal.
Schedule 28 (A)
S. n 1
loan type Working Capital Loan
Remark -
2 3
Project Loan Fixed Assets Loan (21,234,075) Land & Building Panchakrit Valuation/ Property Valuation by Authorized Valuator K.R. Iyer; then CEO -
4 5
Personal Loan Other Loan total (56,204,075)
77
StateMent of loanS & advanceS extended to diRectoRS/chief executive/ PRoMoteRS/eMPloYeeS and ShaReholdeRS holdinG MoRe than 1 PeRcent ShaReS As at 32 Ashad 2067 (16 July 2010)
Schedule 29
The Statement of amount included under total amount of Bills purchases ,Loans, Advances and Overdraft, provided to Directors, Chief Executives, Promoters, Employees, Shareholders holding more than 1% shares and to the individual member of their undivided family or against the guarantee of such persons or to the Organisation or Companies in which such individuals are managing agent are as follows
name of Promoter/ director/chief executive (A) Directors 1 2 3 (B) Chief Executive 1 2 3 (C) Promoters 1 2 3 (D) Employees 1 2 3 (E) Shareholders holding more than 1% Shares 1 2 3 total
last Years Balance Principal nPR interest nPR -
this Years Recovery Principal nPR interest nPR -
this Years additions nPR -
Balance as at 32 ashad 2067 interest nPR additions nPR -
Note: Loans given to employees as per Employees Rules and to Directors and Promoters against Fixed Deposits/Government Securities have not been presented above.
78
caPital adequacY taBle

As at 32 Ashad 2067 (16 July 2010)
Particulars 1. 1 RiSK weiGhted exPoSuReS
a b c Risk Weighted Exposure for Credit Risk Risk Weighted Exposure for Operational Risk Risk Weighted Exposure for Market Risk Add: 3% of the total RWE due to non compliance of Disclosure Requirement (6.4 a10) Add: ..... of the total deposit due to insufficient Liquid Assets (6.4 a6) Add: 1% of the total Risk Weighted exposure as per NRB inspection total Risk weighted exposures (a+b+c) after adjustment 1.2 caPital core capital (tier i) a b c d e f g h i j k l m Paid up Equity Share Capital Irredeemable Non-cumulative preference shares Proposed Bonus Equity Shares Share Premium Statutory General Reserves Retained Earnings Un-audited current year cumulative profit Bond Redemption Reserve Deferred Tax Reserve Capital Adjustment Reserve Dividend Equalization Reserves Other Free Reserve Less: Goodwill Miscellaneous Expenditure not written off Investment in equity in licensed Financial Institutions Investment in equity of institutions with financial interests Investment in equity of institutions in excess of limits Investments arising out of underwriting commitments Reciprocal crossholdings Other Deductions adjustment under Pillar - ii Less : Shortfall in Provision (6.4 a 1) Less : Loans and facilities extended to related parties and restricted lending (6.4 a 2) Supplementary capital (tier ii) a b c d e f g h Cumulative and/or Redeemable Preference Share Subordinated Term Debt Hybrid Capital Instruments General loan loss provision Exchange Equalization Reserve Investment Adjustment Reserve Assets Revaluation Reserve Other Reserves total capital fund (tier i and tier ii) 1.3 caPital adequacY RatioS Capital to Total Risk Weighted Exposures (Tier I) Capital to Total Risk Weighted Exposures (Tier I and Tier II) 260,102,281 117,808,219 128,368,114 13,421,328 504,620 2,010,561,500 current Period 11.25% 12.92% 567,002 14,466,352,141 851,163,538 87,781,060 154,052,967.39 15,559,349,706 current Year 1,750,459,218 1,311,552,000 41,873,580 310,539,220 2,094,621 82,191,781 2,775,018 -
Schedule 30 (A)
amount in nPR
current Year
Previous Year
15,021,347,498 647,081,764 73,184,667 15,741,613,929 Previous Year 1,649,007,425 1,140,480,000 171,072,000 41,873,580 220,570,480 30,557,473 42,191,781 3,100,041 837,930 305,927,368 157,808,219 137,710,775 10,408,374 1,954,934,793 Previous Period 10.48% 12.42%
adjustment under Pillar ii
79
RiSK weiGhted exPoSuRe foR cRedit RiSK

As at 32 Ashad 2067 (16 July 2010)
current Year Book value (a) 530,610,696 589,322,223 6,793,759 3,978,900,635 165,707,962 202,500,000 1,083,062,987 20,709,730 465,908,111 304,832,213 208,527,474 Specific Provision (b) 3,182,000 eligible cRM (c) net value d=a-b-c 530,610,696 589,322,223 6,793,759 3,978,900,635 165,707,962 202,500,000 1,079,880,987 20,709,730 465,908,111 304,832,213 208,527,474 Risk weighted (e) 0% 0% 0% 0% 0% 0% 0% 0% 20% 50% 100% 150% 0% 100% 20% 50% 100% 150% 20% 100% 20% 50% 100% 150% 20% Risk weighted exposure f=d*e 303,750,000 215,976,197 20,709,730 93,181,622 304,832,213 41,705,495 assets a. Balance Sheet exposures Cash Balance Balance With Nepal Rastra Bank Gold/Silver Investment in Nepalese Government Securities All other Claims on Government of Nepal Investment in Nepal Rastra Bank securities All other claims on Nepal Rastra Bank Investment in Foreign Government Securities (ECA Rating 0-1) Investment in Foreign Government Securities (ECA Rating -2) Investment in Foreign Government Securities (ECA -3) Investment in Foreign Government Securities (ECA-4-6) Investment in Foreign Government Securities (ECA -7) Claims On BIS, IMF, ECB, EC and on Multilateral Development Banks recognized by the framework Claims on Other Multilateral Development Banks Claims on Public Sector Entity (ECA 0-1) Claims on Public Sector Entity (ECA 2) Claims on Public Sector Entity (ECA 3-6) Claims on Public Sector Entity (ECA 7) Claims on domestic banks that meet capital adequacy Requirements Claims on domestic banks that do not meet capital Adequacy Requirements Claims on foreign bank (ECA Rating 0-1) Claims on foreign bank (ECA Rating 2) Claims on foreign bank (ECA Rating 3-6) Claims on foreign bank (ECA Rating 7) Claims on foreign bank incorporated in SAARC region operating with a buffer of 1% above their respective regulatory capital requirement Claims on Domestic Corporates Claims on Foreign Corporates (ECA 0-1) Claims on Foreign Corporates (ECA 2) Claims on Foreign Corporates (ECA 3-6) Claims on Foreign Corporates (ECA 7) Regulatory Retail Portfolio (Not Overdue) Claims fulfulling all criterion of regulatory retail except granularity Claims secured by residential properties Claims not fully secured by residential properties Claims secured by residential properties (Overdue) Claims secured by Commercial real estate Past due claims (except for claim secured by residential Properties) High Risk claims Investments in equity and other capital instruments of institutions listed in the stock Exchange Investments in equity and other capital instruments of institutions not listed in the stock Exchange Other Assets (as per attachment) total
Schedule 30 (B)
amount in nPR
Previous Year Book value 337,349,455 970,981,465 110,334,396 2,195,003,685 85,992,373 40,732,938 142,731,814 11,094,223 553,343,904 2,066,649 15,616,670 355,871,204 Risk weighted exposure 61,099,407 20,136,536 11,094,223 110,668,781 1,033,324 15,616,670 71,174,241
6,534,407,363 2,955,022,603 1,115,970,458 5,305,244 357,436,551 87,187,402 1,455,558,181 27,791,500 408,062,028 20,503,617,119 68,921,658 1,326,311 67,595,347 -
158,112,636 21,743,427 5,333,218 188,371,282
6,376,294,726 2,933,279,176 1,115,970,458 3,978,933 357,436,551 19,592,055 1,450,224,963 27,791,500 408,062,028 20,246,324,179
100% 20% 50% 100% 150% 75% 100% 60% 150% 100% 100% 150% 150% 100% 150% 100%
6,376,294,726 2,199,959,382 669,582,275 3,978,933 357,436,551 29,388,083 2,175,337,444 41,687,250 408,062,028 13,241,881,928
7,022,170,586 2,140,319,566 2,253,895,138 7,921,468 473,047,197 152,023,166 1,637,382,652 26,591,500 449,519,361 18,983,989,411
6,953,670,586 1,603,289,675 1,352,337,083 5,320,879 473,047,197 101,691,137 2,417,649,159 39,887,250 449,519,361 13,687,325,508
80
RiSK weiGhted exPoSuRe foR cRedit RiSK contd...

As at 32 Ashad 2067 (16 July 2010)
current Year B. off Balance Sheet exposures Book value (a) 57,579,262 1,038,366,623 Specific Provision (b) 21,052,952 262,113,752 63,075,000 3,135,500 2,325,795 43,053,332 84,088,952 2,375,000 3,552,267,231 24,026,249 40,965,857 5,194,425,504 25,698,042,623 68,921,658 eligible cRM (c) 70,847,059 995,107 33,195,706 117,000 3,967,300 109,122,171 297,493,453 net value d=a-b-c 57,579,262 967,519,565 20,057,845 228,918,046 63,075,000 3,135,500 2,208,795 39,086,032 84,088,952 2,375,000 3,552,267,231 24,026,249 40,965,857 5,085,303,334 25,331,627,513 Risk weighted (e) 0% 0% 10% 20% 20% 50% 100% 150% 50% 20% 50% 100% 150% 50% 20% 50% 100% 150% 50% 100% 100% 100% 100% 100% 100% 20% 50% 100% 200% Risk weighted exposure f=d*e 193,503,913 10,028,923 114,459,023 12,615,000 1,567,750 3,313,193 39,086,032 84,088,952 2,375,000 710,453,446 12,013,125 40,965,857 1,224,470,213 14,466,352,141 -
Schedule 30 (B)
amount in nPR
Previous Year Book value 75,876,655 1,077,494,666 265,084,299 243,858,594 49,102,500 10,234,225 8,140,000 112,855,805 211,327,133 2,375,000 2,537,834,880 16,595,194 23,034,677 4,633,813,627 23,617,803,038 Risk weighted exposure 205,379,939 129,641,150 106,651,789 9,820,500 10,234,225 12,210,000 107,573,005 211,327,133 2,375,000 507,566,976 8,297,597 23,034,677 1,334,111,990 15,021,347,498 -
Revocable Commitments Bills Under Collection Forward Exchange Contract Liabilities LC Commitments With Original Maturity Up to 6 months (Domestic Counterparty) ECA Rating 0-1 ECA Rating 2 ECA Rating 3-6 ECA Rating 7 LC Commitments With Original Maturity Over 6 months (Domestic Counterparty) ECA Rating 0-1 ECA Rating 2 ECA Rating 3-6 ECA Rating 7 Bid Bond and Performance Bond (Domestic Counterparty) ECA Rating 0-1 ECA Rating 2 ECA Rating 3-6 ECA Rating 7 Underwriting commitments Lending of Bank's Securities or Posting of Securities as Collateral Repurchase Agreements, Assets sale with recourse (including repo/reverse repo) Advance Payment Guarantee Financial Guarantee Acceptances and Endorsements Unpaid portion of Partly paid shares and Securities Irrevocable Credit commitments( Short Term) Irrevocable Credit commitments( Long Term) Other Contingent Liabilities Unpaid Guarantee Claims total total Rwe for credit Risk (a) +(B) Adjustment under Pillar II Add: 10% of loan and facilities in excess of Single Obligor Limits (6.4 a 3) Add: 1% of the contract (sale) value in case of the sale of credit with recourse (6.4 a 4) total Rwe for credit Risk (after Bank's adjustments of Pillar ii)
25,698,042,623
68,921,658
297,493,453
25,331,627,513
14,466,352,141
23,617,803,038
15,021,347,498
81

Schedule 30 (C)
eliGBle cRedit RiSK MitiGantS

As at 32 Ashad 2067 (16 July 2010)
deposits with other banks/fi (b) Gold (c) Govt.& nRB Securities (d) deposits with Bank (a) Gtee of Govt. of nepal (e) Sec/Gtee of other Sovereigns (f ) Gtee of domestic banks (g) Gtee of MdBs (h)
amount in nPR
credit exposures
Sec/ Gtee of foreign Banks (i)
total
Balance Sheet exposures

Cash Balance Balance With Nepal Rastra Bank Gold/Silver Investment in Nepalese Government Securities All other Claims on Government of Nepal Investment in Nepal Rastra Bank securities All other claims on Nepal Rastra Bank Investment in Foreign Government Securities (ECA Rating 0-1) Investment in Foreign Government and Central Bank (ECA-2) Investment in Foreign Government and Central Bank (ECA-3) Investment in Foreign Government and Central Bank (ECA-4-6) Investment in Foreign Government and Central Bank (ECA-7) Claims on Other Multilateral Development Banks Claims on Public Sector Entity (ECA 0-1) Claims on Public Sector Entity (ECA 2) Claims on Public Sector Entity (ECA 3-6) Claims on Public Sector Entity (ECA 7) Claims on domestic banks that meet capital adequacy requirements Claims on domestic banks that do not meet capital adequacy requirements Claims on foreign bank (ECA Rating 0-1) Claims on foreign bank (ECA Rating 2) Claims on foreign bank (ECA Rating 3-6) Claims on foreign bank (ECA Rating 7) Claims on foreign bank incorporated in SAARC region operating with a buffer of 1% above their respective regulatory capital requirement Claims on Domestic Corporates Claims on Foreign Corporates (ECA 0-1) Claims on Foreign Corporates (ECA 2) Claims on Foreign Corporates (ECA 3-6) Claims on Foreign Corporates (ECA 7) Regulatory Retail Portfolio (Not Overdue) Claims fulfilling all criterion of regulatory retail except granularity Claims secured by residential properties Claims not fully secured by residential properties Claims secured by residential properties (Overdue) Claims secured by Commercial real estate Past due claims (except for claim secured by Residential Properties) High Risk claims Investments in equity and other capital instruments of institutions not listed in the stock exchange Investment in Equipment Investments in equity and other capital instruments of institutions listed in the stock exchange Other Assets (as per attachment) total 3,182,000 3,182,000 -
155,937,636 18,791,080 5,333,218 183,243,934
2,240,466 2,240,466
711,882 711,882
2,175,000 2,175,000
158,112,636 21,743,427 5,333,218 188,371,282
82

Schedule 30 (C)
eliGBle cRedit RiSK MitiGantS contd...

As at 32 Ashad 2067 (16 July 2010)
deposits with other banks/fi (b) Gold (c) Govt.& nRB Securities (d) deposits with Bank (a) Gtee of Govt. of nepal (e) Sec/Gtee of other Sovereigns (f ) Gtee of domestic banks (g) Gtee of MdBs (h)
amount in nPR
credit exposures
Sec/ Gtee of foreign Banks (i)
total
off Balance Sheet exposures

Revocable Commitments Bills Under Collection Forward Exchange Contract Liabilities LC Commitments With Original Maturity Up to 6 months (domestic counterparty) Foreign Counterparty (ECA Rating 0-1) Foreign Counterparty (ECA Rating 2) Foreign Counterparty (ECA Rating 3-6) Foreign Counterparty (ECA Rating 7) LC Commitments With Original Maturity Over 6 months (domestic counterparty) Foreign Counterparty (ECA Rating 0-1) Foreign Counterparty (ECA Rating 2) Foreign Counterparty ECA Rating 3-6 Foreign Counterparty (ECA Rating 7) Bid Bond and Performance Bond (domestic) Foreign Counterparty (ECA Rating 0-1) Foreign Counterparty (ECA Rating 2) Foreign Counterparty (ECA Rating 3-6) Foreign Counterparty (ECA Rating 7) Underwriting commitments Lending of Bank's Securities or Posting of Securities as collateral Repurchase Agreements, Assets sale with recourse Advance Payment Guarantee Financial Guarantee Acceptances and Endorsements Unpaid portion of Partly paid shares and Securities Irrevocable Credit commitments Other Contingent Liabilities total Grand total 995,107 32,919,706 117,000 3,643,700 108,299,471 291,543,405 2,240,466 711,882 276,000 323,600 822,700 2,997,700 70,623,959 223,100 70,847,059 995,107 33,195,706 117,000 3,967,300 109,122,171 297,493,453
83
oPeRationS RiSK
As at 32 Ashad 2067 (16 July 2010)
65/66 516,323,895 61,895,316 44,028,178 97,673,440 3,467,391 723,388,220 15% 108,508,233 85,116,354 10 851,163,538 851,163,538 Particulars Net Interest Income Commission and Discount Income Other Operating Income Exchange Fluctuation Income Additional Interest Suspense during the period Gross income (a) alfa (b) fixed Percentage of Gross income [c=(ab)] capital Requirement for operational risk (d) (average of c) Risk weight (reciprocal of capital requirement of 10%) in times (e) equivalent Risk weight exposure [f=(de)] Pillar ii adjustments If Gross Income for all the last three years is negative (6.4 a 8) Total Credit and Investment (net of Specific Provision) Capital Requirement for operational risk (5%) Risk Weight (reciprocal of capital requirement of 10%) in times Equivalent Risk Weight Exposure [g] equivalent Risk weigh exposure [h=f+g)] 64/65 425,404,683 43,373,395 48,554,195 39,657,785 556,990,058 15% 83,548,509 -
Schedule 30 (D)
amount in nPR
63/64 304,444,089 36,017,034 26,583,726 44,276,889 10,627,060 421,948,798 15% 63,292,320 -
As at 32 Ashad 2067 (16 July 2010)

amount in nPR
MaRKet RiSK
exchange Rate 1.60 74.70 114.97 65.59 12.74 53.80 96.40 45.50 19.99 19.58 9.51 10.96 2.11 0.86
Schedule 30 (E)
S.no. 1 2 3 4 5 6 7 8 9 10 11 12 13 14
currency INR USD GBP AUD DKK SGD EURO XAG UAE SRL HKD CNY THB JPY
open Position (fcY) 83,633,788 455,724 (14,809) 13,720 300 518 (2,150) 80,000 80 2,670 210 300 (900) 1,280,926
open Position (nPR) 133,876,786 34,042,557 (1,702,593) 899,830 3,822 27,868 (207,285) 3,640,000 1,599 52,279 1,997 3,288 (1,899) 1,100,315
Relevant open Position 133,876,786 34,042,557 1,702,593 899,830 3,822 27,868 207,285 3,640,000 1,599 52,279 1,997 3,288 1,899 1,100,315 175,562,120 5 8,778,106 10 87,781,060
total open Position (a) fixed Percentage (b) capital charge for Market Risk [c=(ab)] Risk weight (reciprocal of capital requirement of 10%) in times (d) equivalent Risk weight exposure [e=(cd)]
84
net liquid aSSetS to total dePoSit Ratio

As at 32 Ashad 2067 (16 July 2010)
Particulars total deposit and Borrowing (a) Total Deposit (as per NRB Ni.Fa. 9.1) Total Borrowings (as per NRB Ni. Fa. 9.1) liquid assets (B) Cash (9.1) Bank Balance (9.1) Money at call and short notice (9.1) Investment in government Securities (9.1) Placement upto 90 days Borrowings payable upto 90 days ( c ) net liquid assets (d) = (B-c) net liquid assets to total deposit Shortfall in Ratio amount to be added to Risk weighted exposures amount Rs.
Schedule 30 (F)
amount in nPR
17,892,167,926 15,968,917,926 1,923,250,000 6,506,480,744 530,610,696 1,555,519,413 100,000,000 3,978,900,635 341,450,000 500,000,000 6,006,480,744 37.61 -
85
foRM no. 4 exhiBit of claiMS with cRedit RiSK MitiGantS

As at 32 Ashad 2067 (16 July 2010)
facility
amount in nPR
eligible cRM
S.n.
counterparty
category
outstanding
nature
Gross amount 496,847 7,600 49,982,207 4,166,305 49,966 7,022,252 50,000 225,000 180,000 300,000 3,690,640 51,473 476,246 359,859 1,700,000 400,000 1,082,000 90,869,184 1,430,725 2,803,634 1,348,554 1,188,116 936,377 539,642 81,413 359,809 249,792 261,157 259,353 159,920 165,146 139,161 699,202 1,727,872 363,530 49,630 3,812 367,651 8,999,858 183,243,933 2,800,582 2,800,582 2,175,000 2,175,000 68,088 307,000 251,277 85,517 711,882 188,931,398
haircut 560,116 560,116 560,116
net amount 496,847 7,600 49,982,207 4,166,305 49,966 7,022,252 50,000 225,000 180,000 300,000 3,690,640 51,473 476,246 359,859 1,700,000 400,000 1,082,000 90,869,184 1,430,725 2,803,634 1,348,554 1,188,116 936,377 539,642 81,413 359,809 249,792 261,157 259,353 159,920 165,146 139,161 699,202 1,727,872 363,530 49,630 3,812 367,651 8,999,858 183,243,933 2,240,466 2,240,466 2,175,000 2,175,000 68,088 307,000 251,277 85,517 711,882 188,371,282
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39
Metropolis College Harish Kumar Poddhar Hulas Wires Ind. Ltd Raj Kumar Golchha Anita Devi Chaudhary Hem Trading Laxmi K. Poudel Chhetri Manik Raj Bhusal Shobhakhar Kandel Rekha Sunar Nirmal Kr Agrawal Mahabir Churi Bhandar Pravin/Satya Narayan Agrawal Moti Lal Tamang Lal Prasad Shrestha Bed Bdr Gharti Tejendra Prasad Sapkota Ashwins Medical College & Hospital Krishna Man Joshi Bhudeo Trading P. Ltd. Maha Prasad Adhikari Mahesh Ram Bhandary Raju Karki Durga Polythine & Plastic Sangita Satyal Dilip Kumar Shrestha Sabita Aryal Durga Bhandary Bhisma Raj Dhungana Amrit Ratna Tuladhar Vikash Saraf Hari Prasad Dhungana Cheerful Holiday Pvt. Ltd Kanta Singh Sanju Upadhyay Maheshwor Lal Shrestha Antu Hill Travels (P). Ltd. Akendra Raj Chalise Biddhya Laxmi Kasaju
Claims on Domestic Corporates Claims on Domestic Corporates Claims on Domestic Corporates Claims on Domestic Corporates Claims on Domestic Corporates Claims on Domestic Corporates High Risk Claims High Risk Claims High Risk Claims High Risk Claims High Risk Claims High Risk Claims High Risk Claims High Risk Claims Claim on domestic banks that meet capital adequacy requirement Claim on domestic banks that meet capital adequacy requirement Claim on domestic banks that meet capital adequacy requirement Claims on Domestic Corporates Claims on Regulatory Retail Portfolio Claims on Domestic Corporates Claims on Regulatory Retail Portfolio Claims on Regulatory Retail Portfolio Claims on Regulatory Retail Portfolio Claims on Domestic Corporates Claims on Regulatory Retail Portfolio Claims on Regulatory Retail Portfolio Claims on Regulatory Retail Portfolio Claims on Regulatory Retail Portfolio Claims on Regulatory Retail Portfolio Claims on Regulatory Retail Portfolio Claims on Regulatory Retail Portfolio Claims on Regulatory Retail Portfolio Claims on Regulatory Retail Portfolio Claims on Regulatory Retail Portfolio Claims on Regulatory Retail Portfolio Claims on Regulatory Retail Portfolio Claims on Regulatory Retail Portfolio Claims on Regulatory Retail Portfolio Claims on Regulatory Retail Portfolio
Overdraft Overdraft Overdraft Overdraft Overdraft Overdraft Loan against FD Loan against FD Loan against FD Loan against FD Overdraft Overdraft Overdraft Overdraft Loan against FD Loan against FD Loan against FD Overdraft Auto Loan Overdraft Overdraft Overdraft Overdraft Fixed Term Loan Overdraft Overdraft Overdraft Overdraft Overdraft Overdraft Overdraft Overdraft Overdraft Overdraft Overdraft Overdraft Overdraft Overdraft Overdraft
496,847 7,600 49,982,207 4,166,305 49,966 7,022,252 50,000 225,000 180,000 300,000 3,690,640 51,473 476,246 359,859 1,700,000 400,000 1,082,000 90,869,184 1,430,725 2,803,634 1,348,554 1,188,116 936,377 539,642 81,413 359,809 249,792 261,157 259,353 159,920 165,146 139,161 699,202 1,727,872 363,530 49,630 3,812 367,651 8,999,858 183,243,933
Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank Deposits With Bank total of deposit with own Bank Deposit with other BFIs deposits with other Banks/fi Other Claims on Nepal Rastra Bank total claims on nRB Gold/Silver Gold/Silver Gold/Silver Gold/Silver total of Gold/Silver
Multiple Trading Concern
Claims on Regulatory Retail Portfolio
Overdraft
2,800,582 2,800,582
Nepal Co-Oper.Fin.Soc.Ltd
Claims on Domestic Corporates
Overdraft
2,175,000 2,175,000
1 2 3 4
Rajib Bhattarai Amit Agrawal Bimal Dhakal Shiva Ohm Shrestha
Claims on Regulatory Retail Portfolio Claims on Regulatory Retail Portfolio Claims on Regulatory Retail Portfolio Claims on Regulatory Retail Portfolio
Overdraft Overdraft
68,088 307,000 251,277 85,517 711,882
Grand total
188,931,398
86
Summary of category High Risk Claims Claims on Domestic Corporates Claim on domestic banks that meet capital adequacy requirement Claims on Regulatory Retail Portfolio total
deposits with Bank 5,333,218 155,937,636 3,182,000 18,791,080 183,243,934
Gold/Silver 711,882 711,882
deposits with other Banks/fi 2,240,466 2,240,466
claims on nRB 2,175,000 2,175,000
total 5,333,218 158,112,636 3,182,000 21,743,427 188,371,282
foRM no.5 otheR aSSetS

As at 32 Ashad 2067 (16 July 2010)
Gross amount 9,919,653 297,191,956 9,337,221 27,459,592 1,431,000 444 10,880,088 32,971,758 42,431,252 5,329,655 total 436,952,620
amount in nPR
S. no. 1 2 3 4 5 6 7 8 9 10 11 12 13
assets Cash and Cash Items in Transit Expense not Written off Fixed Assets Interest Receivable on Other Investment Interest Receivable on Loan Non Banking Assets Reconciliation Account Draft Paid Without Notice Sundry Debtors Advance payment and Deposits Staff Advance Stationery Other
Specific Provision 27,459,592 1,431,000 28,890,592
net Balance 9,919,653 297,191,956 9,337,221 444 10,880,088 32,971,758 42,431,252 5,329,655 408,062,028
87
PRinciPal indicatoRS
As at 32 Ashad 2067 (16 July 2010)
indicators Percent NPR NPR Ratio Percent Percent Percent Percent Percent Percent Percent Percent NPR NPR Percent Percent Percent Percent Percent Percent Ratio Ratio Percent Percent Percent NPR000 Nos.
Nos.
Schedule 31
description 1. Net Profit/Gross Income 2. Earnings Per Share 3. Market Value Per Share 4. Price Earning Ratio 5. Dividend (including bonus) on Share Capital 6. Cash Dividend on Share Capital 7. Interest Income/Loans and Advances & Investment 8. Staff Expenses/Total Operating Expenses 9. Interest Expenses/Total Deposits and Borrowings 10. Exchange Gain/Total Income 11. Total Cost/Total Revenue 12. Staff Bonus/Total Staff Expenses 13. Staff Cost Per Employee 14. Net Profit Per Employee 15. Total Credit/Deposits 16. Total Operating Expenses/Total Assets 17. Capital Adequacy (On Risk Weighted Assets) Core Capital Supplementary Capital Total Capital Fund 18. Liquidity (CRR) 19. Gross Non-Performing Credit/Total Credit 20. Net Non-Performing Credit/Total Credit 21. Weighted Average Interest Rate Spread 22. Return on Total Assets 23. Return on Equity 24. Book Net Worth 25. Number of Shares 26. Number of Staff
fY 2005/06 30.68 16.10 496 30.81 10.53 0.53 8.04 44.23 4.38 3.88 32.67 30.20 274,061 581,853 78.54 0.99 9.94 3.60 13.54 6.10 2.60 0.06 2.74 1.05 14.12 766,462 6,600,000 166
fY 2006/07 38.57 24.01 950 39.56 21.05 1.05 7.81 45.94 4.26 5.32 29.09 42.04 290,584 838,492 90.67 1.02 9.21 3.00 12.20 5.02 1.11 0.06 2.87 1.44 20.68 918,496 6,600,000 189
fY 2007/08 44.49 25.75 1,284 49.86 21.05 1.05 8.31 47.02 4.32 3.77 28.06 49.28 310,662 1,047,664 87.62 1.01 10.50 2.61 13.11 5.09 0.86 0.11 3.44 1.81 22.57 1,303,427 9,438,771 232
fY 2008/09 44.09 27.83 1,126 40.46 15.79 0.79 8.46 43.51 5.63 6.56 26.99 53.77 313,129 1,175,682 89.32 1.04 10.48 1.94 12.42 6.50 0.93 0.23 2.83 1.88 24.23 1,660,254 11,404,800 270
fY 2009/10 46.76 34.30 626 18.25 26.32 26.32 10.65 46.32 6.90 4.53 26.67 54.24 363,480 1,375,669 80.97 1.26 11.25 1.67 12.92 37.61 0.72 0.18 3.75 2.30 27.09 1,764,952 13,115,520 327
88
SiGnificant accountinG PolicieS

1. General information
Nepal Industrial & Commercial Bank Ltd (NIC Bank) is a limited liability company domiciled in Nepal. Its registered office is at Biratnagar, Nepal and has a corporate office at Kathmandu, Nepal. Shares of the Bank are listed with Nepal Stock Exchange Ltd. and provide full commercial banking services as authorized by Nepal Rastra Bank (NRB). The accompanied financial statements have been approved for publication by the Board of Directors of the Bank in its meeting held on 3rd October 2010.
Schedule 32
8. loans and advances including Bills Purchased

Loans and advances, overdrafts and bills purchased include overdrafts, term loans, working capital loans, consumer loans and loans given to Priority and Deprived Sectors and other loans extended to customers as per the Banks policy. These assets are graded as pass, substandard, doubtful and loss assets as per NRB directives. Loans and advances are presented net of loan loss provisions.
9. loan write off

The Bank has Management of Deteriorating Credits and Write off Policy approved by the Board of Directors, to provide a framework for efficient management of deteriorating credits as well as NonPerforming Assets which also provides a transparent and effective write-off policy. Specific loans that meet the criteria stipulated in the policy are written off without prejudice to Banks right of recovery.
2. Basis of Preparation
The financial statements are presented in Nepalese rupees (NPR) and are prepared on historical cost convention applying accrual basis of accounting except otherwise stated and prepared in accordance with the Nepal Accounting Standards (NAS), Generally Accepted Accounting Principles (GAAP), Banks & Financial Institutions Act (BAFIA) 2063, Nepal Rastra Bank (NRB) directives and the Company Act 2063.
10. Staff loans

Loans and advances granted to staff in accordance with the Banks policy are presented under Other Assets.
3. interest income
Interest income on loans and advances are recognized on cash basis as required by NRB Directive. However NAS requires revenue to be recognized on accrual basis. Interest income on investments is accounted for on accrual basis.
11. loan loss Provision

The provision for possible losses on loans and advances are provided at the rates ranging from 1% to 100% of the outstanding on the balance sheet date according to the grading of such assets as per NRB directives.
4. commission income
Commission income is accounted for on cash basis. However, commission receivable on Letters of Credit and Guarantees exceeding NPR 50,000 with a maturity period exceeding one year from the date of transaction is accounted for on accrual basis and prorated over the tenure of the transaction.
12. investments
Investments in Treasury Bills and Government Development Bonds are those, which the Bank purchased with the positive intent and ability to hold till maturity. Such securities are carried at their acquisition cost or at amortized cost if acquired at a premium over the face value. Investments in shares are valued at the lower of cost or market value. All investments are subject to periodic review by the Board of Directors of the Bank as required by NRB directives.
5. dividend income
Dividend on equity shares are recognized on cash basis, at net of withholding taxes.
6. foreign exchange transactions

Foreign currency assets and liabilities, including bullion, are translated into NPR at the mid-rate prevailing on the Balance Sheet date. Gain or loss realized on the foreign exchange transactions, including bullion, is recognized on the date of transaction and included under Exchange Gain/ (Loss) as the case may be as Trading Gain/(Loss). Gains/losses arising due to fluctuation in exchange rates of different foreign currencies including bullion is accounted for on a daily basis and shown as Revaluation Gain/(Loss). 25% of such revaluation gain is transferred to Exchange Fluctuation Reserve through Profit and Loss Appropriation Account as per NRB directives.
13. fixed assets and depreciation

a. Fixed assets are stated at cost less accumulated depreciation. b. Assets with a value of less than NPR 5,000 are charged off to revenue irrespective of their useful life in the year of purchase. c. Depreciation is charged to Profit & Loss Account on Writtendown-Value method over the estimated useful life of the relevant assets. The rates of depreciation based on the estimated useful life are as follows: nature of assets Buildings Vehicles Office Equipment Computers and Accessories Furniture depreciation Rate (%) 5 15-20 25 25 25 89
7. interest expense
Interest on deposit liabilities and borrowings from other banks are accounted for on accrual basis.
d. Depreciation is charged from the month subsequent to the month when assets were accounted for. In case of disposal depreciation is charged up to the previous month of such disposal.
18. Staff accumulated leave

Accumulated leave payable to staff is recognized on accrual basis as per the service rules of the Bank.
14. non-Banking assets

Non-Banking Assets (NBA) is valued at the lower of principal outstanding or distress value of the assets acquired. Provisions for NBA are made in accordance with NRB directives
19. Stationery Stock

Stationery purchased are stated at cost and charged to revenue at the time of consumption.
20. income taxes

Provision for taxation has been made with reference to taxable profit for the financial year determined in accordance with the provisions of Income Tax Act 2058. Deferred Tax is recognized and provided for on timing differences between taxable income and accounting income. Deferred tax assets are not recognized unless there is virtual/reasonable certainty that there will be sufficient future taxable income available to realize such assets.
15. Software expenses

Software applications purchased by the Bank are capitalized at acquisition cost and amortized over a period of five years from the date of acquisition.
16. leasehold improvement

Expenses incurred on improvement and renovation of leased property is amortized over a period of five years from the date of such improvements irrespective of the life of lease exceeding 5 years.
21. dividend and Proposed Bonus Shares

Dividend is provided as proposed by the Board of Directors pending approval by NRB and Annual General Meeting.
17. Retirement Benefits

The Bank has schemes of retirement benefits, viz Provident Fund and Gratuity. Periodic contributions made to Provident Fund are recognized at the time of contribution to the approved fund. Provision for Gratuity is made on accrual basis and is transferred to the approved retirement fund, independent from the Bank, for eligible employees.
90
noteS to accountS
1. Proposed dividend
The Board of Directors has proposed distribution of cash dividend of 26.31579% (including tax) of issued capital.
Schedule 33
2. Provisions for Staff Bonus 3. Staff housing fund
Provision for staff bonus has been provided at 10% of profit before tax as per the Bonus Act, 2030.
As the terms of service of the staff has a provision for extending housing loans to eligible staff, a separate housing fund has not been created under the Labour Act 2049.
4. General Reserve
As required by BAFIA, 2063, 20% of the current years net profit amounting to NPR 89,968,740 has been transferred to General Reserve through Profit and Loss Appropriation Account.
5. exchange fluctuation Reserve
As required by NRB directive, 25% of Revaluation Gain amounting to NPR 3,012,954 has been transferred to Exchange Fluctuation Reserve through Profit and Loss Appropriation Account.
6. Paid up Share capital

Paid up share capital of the Bank has moved over the years as follows:
financial Year cumulative no. of Shares Remarks
1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10
4,930,441 4,997,295 4,998,900 4,999,545 4,999,595 5,000,000 6,000,000 6,600,000 7,920,000 9,438,771 9,504,000
Opening Share Capital at Rs 100 Paid Up Due Share Amount Collection Due Share Amount Collection Due Share Amount Collection Due Share Amount Collection Due Share Amount Collection Issuance of 20% Bonus Shares of F/Y 2004/05 Issuance of 10% Bonus Shares of F/Y 2005/06 Issuance of 20% Bonus Shares of F/Y 2006/07 Issuance of 20% Right Share of F/Y 2006/07 Sale of unsubscribed portion of Right Share issued of FY 2006/07
11,404,800 Issuance of 20% Bonus Shares of F/Y 2007/08 13,115,520 Issuance of 15% Bonus Shares of F/Y 2008/09
7. deferred tax
a. component of deferred tax

as at ashad 31, 2067
Amount in NPR as at ashad 31, 2066
deferred tax asset On employees separation and retirement On fiscal allowance on fixed assets total deferred tax liability On fiscal allowance on fixed assets On other temporary differences total deferred tax assets net 437,402 518,085 955,487 2,775,018 670,418 670,418 3,100,041 91 3,730,505 3,730,505 3,142,618 627,841 3,770,459
Deferred tax asset for the current year has decreased by NPR 325,023 over the previous year and the same has been adjusted to profit and loss account. b. explanation of the relationship between tax expense and accounting profit Amount in NPR
current Year (2066-67) Previous Year (2065-66)
Accounting Profit Tax at the applicable rate of 30% Tax effect of expenses/income that are not deductible/included in determining taxable profit Fine and Penalties Donation Dividend Income Others Reduction in Deferred Tax Asset due to reduction in tax rate Movement in Other Timing difference Additional income tax of earlier year total tax expenses
644,654,266 193,396,280
454,637,989 136,391,397
695,361 756,930 (38,007) 194,810,564
8,522 563,259 105,384 112,417 (10,076) 32,948 137,203,851
8. Related Parties disclosures
a. Key Management Personnel Key Management Personnel include Chief Executive Officer and members of the Board of Directors of the Bank as follows: Mr. Jagdish Prasad Agrawal Mr. Tulsi Ram Agrawal Mr. Birendra Kumar Sanghai Mr. Nirmal Kumar Agrawal Mr. Rajendra Aryal Mr. Lokmanya Golchha Mr. Ganesh Man Shrestha Mr. Sashin Joshi Mr. Niraj Shrestha - Chairman - Director - Director - Director - Director - Director - Professional Director (w.e.f. 01.11.2009) - Chief Executive Officer - Company Secretary and General Manager Business Banking
Compensation to Key Management Personnel of the Bank Short-term employee benefit paid to the Chief Executive Officer NPR 8,450,640 (Previous Year NPR 7,914,259). In addition to the above, a company vehicle, phone, bonus, and other facilities have been provided to the Chief Executive Officer in terms of his appointment and Bank rules and regulations. Transaction with Key Management Personnel of the Bank The following provides transaction between the Bank and Key Management Personnel of the Bank during the year and the status of their outstanding balances as on 32 Ashad 2067 ( July 16, 2010). Amount in NPR
Particulars current Year (2009-10) Previous Year (2008-09)
Meeting Fees Paid Incidental Expenses Loans & Advances Outstanding From Directors* From Promoters*
Note: - Loans are against Banks Fixed Deposits.
914,000 1,782,076 3,690,640 59,808,092
702,300 1,303,779 3,966,525 66,875,395
Other than the above, there are no transactions with Directors, Promoters and other key management personnel or their relatives that have a potential conflict of interests with the Bank at large.
92
9. income tax Matters
The bank has filed tax returns with the Large Tax Payers Office, Inland Revenue Department for the financial years up to 2008/09 under selfassessment procedures. Inland Revenue Office has completed assessment/reassessment of Banks tax liability up to financial year 2005/06 wherein an additional demand of NPR 12,442,997.55 has been raised by the tax authorities. The Bank has disputed the claim of the tax authorities against which, Bank has filed appeals with the respective authorities. Matter is still pending with the authorities.
10. contingent liability
A claim of NPR 8,943,000 made against the Bank in 2003/2004 in respect of underwriting commitment of shares of Himalayan Distillery Limited, has not been accepted by the Bank. The Bank has contested the claim in a writ petition with the Supreme Court. The case is in under sub-judice.
11. transactions in Bullion
The bank deals in bullion (Gold/Silver) either on its own account or holds stock on consignment basis on behalf of suppliers as per the arrangement. The stock held on own account are included under other assets. The customs duty allocable to the consignment stock is included under other assets.
12. Summary of disbursement, recovery of loans and advances and principal and interest written off
Amount in 000 NPR Particulars current Year (2009-10)
Previous Year (2008-09) 33,208,108 30,757,594 3,000 1,376
Loans Disbursed Loans Recovered Loans Written Off Interest Written Off
33,708,291 34,694,838 56,204 -
13. Summary of changes in deposit liabilities

Amount in NPR Particulars current Year 2009-10 Previous Year 2008-09 changes
Current and Margin Accounts Savings Account Call Deposits Fixed Deposits total
1,341,414,710 3,732,556,185 3,340,887,196 7,554,059,836 15,968,917,927
936,879,630 3,993,715,640 3,069,275,870 7,580,059,764 15,579,930,904
404,535,080 (261,159,455) 271,611,326 (25,999,928) 388,987,023
14. Summary of concentration of exposure:

Amount in 000 NPR loans & advances and Bills current Year Total Amount Outstanding Highest Exposure to a Single Unit Concentration of exposure 12,929,304 254,075 3.91% Previous Year 13,915,850 274,400 2.49% deposits & Borrowings current Year 17,692,168 1,448,294 8.19% Previous Year 16,240,336 2,024,136 12.46% contingent current Year 5,187,144 504,929 0.41% Previous Year 4,633,814 643,118 5.72%
15. weighted average interest Spread:

Particulars current Year Rate (%) Previous Year Rate (%)
Average Yield on Advances and Investments Average cost of Deposits & Borrowings Net Spread
10.65 6.90 3.75
8.46 5.63 2.83
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16. Particulars of amortized expenses yet to be expensed off

Particulars opening addition amortization/adjustment
Amount in NPR
closing
Software VISA Membership Fee Leasehold Assets License Fees Bond Related Cost Right Share Related Cost
6,599,965 1,690,741 30,339,493 1,300,000 293,942 543,988
3,698,006 12,043,709 -
2,500,169 368,889 8,782,457 500,000 132,038 138,890
7,797,802 1,321,852 33,600,745 800,000 161,904 405,098
17. classification of assets and liabilities based on Maturity

S.no. assets 1-90 days 91-180 days 181-270 days 271 days -1 year over 1 year
NPR in Million
total
1 2 3 4 5 6 7 8 9 10 11 12 13
Cash Balance Bank Balance Investment in Foreign Banks Call Money Investment In GON Securities Investment in NRB Bonds Inter-Bank Lending Advance & Bill Purchase Accrued Interest Receivable Reverse Repo Receivable Under Commitments Paid For Services under s.n. 22,23,24 Others total assets liability
531 1,244 261 100 829 80 1,672 27 137 4,881 244 61 674 1,306 1,185 500 65 18 100 295 51 3,552
2 1,001 1,053 2,056 122 24 337 2,200 436 787 -
171 150 1,834 2,155 122 24 337 864 -
6 893 4,942 5,840 122 12 337 1,773 -
311 441 1,086 3,429 335 5,602 610 1,685 2,426 1,502 200 24
531 1,556 710 100 3,979 330 12,929 27 473 20,535 1,220 122 3,371 3,733 7,524 200 936 787 65 18 100 295 51 3,576
14 15 16 17 18 19 20
Current Deposits Margin Deposits Call Deposits Saving Deposits Fixed Deposits Debentures Borrowings a) Call/Short notice b) Inter-Bank/Financial Institutions c) Refinance d) Others
21
Other Liabilities and Provisions Sundry Creditors Bills Payable Interest Payable Provisions Others
22 23 94
Payable Under Commitments Unutilized Facilities
24 25 26 27
Letter of Credit Repurchase Paid Under s.n. 11 Others total liabilities net financial assets cumulative net financial assets
966 9,018 (4,137) (4,137)
72 3,979 (1,924) (6,061)
21 1,369 787 (5,274)
2,244 3,596 (1,678)
2,113 8,560 (2,958) (4,636)
1,059 2,113 25,171 (4,636) -
18. Borrowing by Bank against the collateral of own assets: nil 19. details of non Banking assets
Particular amount in nPR
opening Balance as on 16.07.2009 Addition During This Year Sales During This Year outstanding as on 16.07.2010
1,431,000 1,431,000
20. Rounding off/Previous Years figures

Previous years figures are regrouped or rearranged, wherever necessary in order to facilitate comparison. All figures are rounded off to the nearest rupee.
95
StateMent of loanS availed BY PRoMoteRS/ ShaReholdeRS claSSified undeR PRoMoteRS GRouP fRoM otheR BanKS and financial inStitutionS BY PledGinG ShaReS undeR theiR owneRShiP
Promoters/ Shareholders classified under Promoters Group Shares Registered in the name of Promoters total no of. Shares % on total paid up capital Statement of loans name of Banks / financial institutions Providing loans Global Bank Ltd 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Vishal Agrawal Basu Dev Golyan Basu Dev Golyan Pawan Kumar Golyan Subhash Chandra Sanghai Ashok Kumar Agrawal Anuj Kumar Agrawal Basu Dev Golyan Pawan Kumar Golyan Pawan Kumar Golyan Jay Shree Golchha Diwakar Golchha Jay Shree Golchha Sanjay Golchha Trilok Chandra Agrawal Trilok Chandra Agrawal Lokmanya Golchha Diwakar Golchha 6,23,537 6,43,672 6,43,672 6,55,775 13,12,931 5,55,713 4,75,470 6,43,672 6,55,775 6,55,775 36,568 7,16,896 36,568 24,012 6,22,423 6,22,423 7,16,906 7,16,896 4.75% Nepal Investment Bank 4.91% 4.91% 5.00% 10.01% 4.23% 3.63% 4.91% 5.00% 5.00% 0.28% 5.47% 0.28% 0.18% 4.75% 4.75% 5.47% 5.47% Clean Energy Development Bank Ltd. Himalayan Bank Ltd. Himalayan Bank Ltd. Himalayan Bank Ltd. Himalayan Bank Ltd. Nepal Bank Ltd. Prime Commercial Bank Ltd. Prime Commercial Bank Ltd. Vibor Bikash Bank Ltd. Nepal Bank Ltd. NCC Bank Ltd. NCC Bank Ltd. NCC Bank Ltd. loan amount (Present o/S) 45,879,707 22,464,147 39,966,752 34,852,353 64,371,728 148,320,000 109,300,000 32,140,000 117,500,000 119,420,755 51,115,967 47,860,861 87,800,000 98,786,832 99,993,855 15,000,000 no. of Shares Pledged 50,000 1,57,368 1,10,000 97,103 115,874 203,769 649,339 341,154 181,406 292,058 214,762 96,000 5,300 1,74,871 2,132 14,000 58,632 2,89,030 2,13,397 81,520 Remarks
Schedule 34
S. n.
96
As at 4th Quarter ended on 32 Ashad 2067 (16 July 2010) of Fiscal Year 2066/2067 (2009/2010)
S. n. 1 1.1 1.2 1.3 1.4 1.5 Particulars total capital and liabilities (1.1 to 1.7) Paid Up Capital Reserves and Surplus Debentures and Bonds Borrowings Deposits (a+b) a. Domestic Currency b. Foreign Currency 1.6 1.7 2 2.1 2.2 2.3 2.4 Income Tax Liability Other Liabilities total assets (2.1 to 2.7) Cash and Bank Balance Money at Call and Short Notice Investments Loans and Advances a. Real Estate Loan b. Home/Housing Loan c. Margin Type Loan d. Term Loan e. Overdraft Loan/TR Loan/WC Loan f. Others 2.5 2.6 2.7 3 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11 3.12 3.13 Fixed Assets Non Banking Assets Other Assets Profit and loss account Interest Income Interest Expense a. net interest income(3.1-3.2) Fees, Commission and Discount Other Operating Income Foreign Exchange Gain/Loss (Net) B. total operating income (a+ 3.3+3.4+3.5) Staff Expenses Other Operating Expenses c. operating Profit Before Provision (B. - 3.6-3.7) Provision for Possible Loss d. operating Profit (c. - 3.8) Non Operating Income/Expenses (Net) Write Back of Provision for Possible Loss e. Profit from Regular activities (d.+3.9+3.10) Extraordinary Income/Expenses (Net) f. Profit before Bonus and taxes (e.+3.11) Provision for Staff Bonus Provision for Tax G. net Profit/loss (f. -3.12-3.13) 4 4.1 4.2 4.3 4.4 1 2 3 4 5 6 7 Ratios Capital Adequacy Non Performing Loans (NPL) To Total Loans Total Loan Loss Provision to Total NPL Cost of Funds (Deposit + Borrowings) other Key indicators Average Yield (Loans + Investments) Net Interest Spread Return on Equity (ROE) Return on Assets (ROA) CD Ratio Home Loans & Real Estate Loans to Total Loans Real Estate Loans to Total Loans 10.65% 3.75% 27.13% 2.32% 73.65% 19.60% 11.55% 10.03% 3.45% 21.47% 2.31% 92.51% 19.08% 11.57% this quarter ended 16.07.2010 20,309,420 1,311,552 801,417 200,000 1,723,250 15,968,918 15,485,318 483,600 31,732 272,551 20,309,420 2,086,232 100,000 4,946,839 12,732,014 1,470,317 1,025,626 648,227 1,011,576 4,516,395 4,059,874 297,257 147,078 up to this quarter 1,777,227 (1,031,905) 745,321 75,911 49,277 90,904 961,413 (118,858) (135,275) 707,280 (17,741) 689,539 11,458 56,204 757,201 (46,204) 710,997 (64,636) (193,646) 452,715 at the end of this Year 15.45% 0.72% 213.30% 6.90% Previous quarter ended 13.04.2010 17,985,814 1,311,552 667,399 200,000 1,470,625 13,843,915 13,381,211 462,704 26,670 465,654 17,985,814 1,489,182 50,000 2,038,611 13,947,251 1,614,184 1,047,147 788,396 890,916 5,167,412 4,439,195 257,758 203,012 up to Previous quarter 1,255,231 (735,889) 519,341 52,879 36,167 72,264 680,652 (78,414) (92,467) 509,770 (16,734) 493,036 7,773 500,809 500,809 (45,528) (136,584) 318,697 at the end of Previous Year 13.11% 1.10% 161.09% 6.58% corresponding Previous Year quarter ended 15.07.2009
unaudited financial ReSultS (quaRteRlY)
Schedule 35
Rs. in 000
18,750,828 1,140,480 527,990 200,000 660,405 15,579,931 14,880,667 699,264 13,171 628,851 18,750,828 1,461,151 3,026,492 13,679,394 1,496,681 1,084,024 812,013 755,627 5,352,041 4,179,007 259,325 703 323,763 up to corresponding Previous Year quarter 1,284,115 (767,003) 517,112 61,928 45,227 97,673 721,941 (84,545) (108,152) 529,243 (39,509) 489,734 1,291 3,913 494,937 7,617 502,555 (45,687) (140,222) 316,646 at the end of corresponding Previous Year quarter 12.42% 0.90% 183.00% 5.63% 8.46% 2.83% 24.23% 1.88% 84.19% 18.87% 10.94%
97
coMPaRiSion of unaudited and audited financial StateMent

As of 16.07.2010 Fiscal Year 2066/2067 (2009/2010)
as per unaudited financial Statement as per audited financial Statement variance in amount in % Reasons for variance
Schedule 36
Rs. in 000
S.n. Particulars
1 1.1 1.2 1.3 1.4 1.5
total capital and liabilities (1.1 to 1.7) Paid Up Capital Reserves and Surplus Debentures and Bonds Borrowings Deposits (a+b) a. Domestic Currency b. Foreign Currency
20,309,420 1,311,552 801,417 200,000 1,723,250 15,968,918 15,485,318 483,600 31,732 272,551 20,309,420 2,086,232 100,000 4,946,839 12,732,014 1,470,317 1,025,626 648,227 1,011,576 4,516,395 4,059,874 297,257 147,078 1,777,227 (1,031,905) 745,321 75,911 49,277 90,904 961,413 (118,858) (135,275) 707,280 (17,741) 689,539 11,458 56,204 757,201 (46,204) 710,997 (64,636) (193,646) 452,715
20,309,331 1,311,552 453,400 200,000 1,723,250 15,968,918 15,485,318 483,600 32,572 619,639 20,309,331 2,086,130 100,000 4,946,778 12,732,014 1,470,317 1,025,626 648,227 1,011,576 4,516,395 4,059,874 297,192 147,217 1,777,166 (1,031,474) 745,692 76,064 49,345 90,909 962,010 (118,858) (137,750) 705,402 (17,741) 687,661 11,458 56,204 755,324 (46,204) 709,120 (64,465) (194,811) 449,844
(89) (348,017) 840 347,088 (89) (102) (61) (65) 139 (61) 431 371 153 68 5 597 (2,474) (1,877) (1,877) (1,877) (1,877) 171 (1,165) (2,872)
(43.43) 2.65 127.35 (0.02) 0.09 (0.04) 0.05 0.20 0.14 0.01 0.06 1.83 (0.27) (0.27) (0.25) (0.26) (0.26) 0.60 (0.63) Actual move on profit. Change in income tax provision for the year and deferred tax. Adjustment of Community Partnership Calculation based on PAT. Miscellaneous Petty adjustments made Miscellaneous Petty adjustments made Miscellaneous Petty adjustments made Miscellaneous Petty adjustments made Adjustment of Amortization of Premium on government bond. Miscellaneous Petty adjustments made Miscellaneous Petty adjustments made Adjustment of Amortization of Premium on government bond. Change in income tax provision for the year and deferred tax. Cash Dividend and provision for community partnership. Change in current years profit and declaration of cash dividend
1.6 1.7 2 2.1 2.2 2.3 2.4
Income Tax Liability Other Liabilities total assets (2.1 to 2.7) Cash and Bank Balance Money at Call and Short Notice Investments Loans and Advances a. Real Estate Loan b. Home/Housing Loan c. Margin Type Loan d. Term Loan e. Overdraft Loan/TR Loan/WC Loan f. Others
2.5 2.6 2.7 3 3.1 3.2 3.3 3.4 3.5 3.6 3.7
Fixed Assets Non Banking Assets Other Assets Profit and loss account Interest Income Interest Expense a. net interest income(3.1-3.2) Fees, Commission and Discount Other Operating Income Foreign Exchange Gain/Loss (Net) B. total operating income (a+ 3.3+3.4+3.5) Staff Expenses Other Operating Expenses c. operating Profit Before Provision (B. - 3.6-3.7)
3.8 3.9 3.10 3.11 3.12 3.13
Provision for Possible Loss d. operating Profit (c. - 3.8) Non Operating Income/Expenses (Net) Write Back of Provision for Possible Loss e. Profit from Regular activities (d.+3.9+3.10) Extraordinary Income/Expenses (Net) f. Profit before Bonus and taxes (e.+3.11) Provision for Staff Bonus Provision for Tax G. net Profit/loss (f. -3.12-3.13)
98
diScloSuRe aS PeR caPital adequacY fRaMe woRK (BaSel ii)

1. capital structure and capital adequacy
Capital structure and Capital Adequacy of the Bank has been presented in Schedule 30 (A) and the supporting sheets are available in schedule 30 (B), 30 (C), 30 (D), 30 (E), 30 (F) and Form no 4 & 5. detail information of Subordinated term debts: nic Bond 2070 Face Value Total Value Issue date Maturity date Redemption Reserve For FY 2066/67 For FY 2065/66 For FY 2064/65 total : : : : : : : NPR 1,000 each, NPR 200 Million 26th June 2006 25th June 2013 NPR 40,000,000 NPR 40,000,000 NPR 2,191,781 nPR 82,191,781
Summary of Banks Internal Approach to assess Capital Adequacy Bank management is responsible for understanding and assessing the nature as well as level of risk taken by the bank and relating the risk to the capital adequacy level. The Credit Risk Management unit reviews the Credit Risk, analyzes the trend, and assesses the exposure impact on capital, which is vital in Credit decision-making. Also for managing Credit Risk Credit Policy, Credit Policy Manual and Product Papers have been developed for building risk awareness culture throughout the Organization. In respect of Operational Risk, Operations In-charges and Operation Managers of respective Branches and Departments provide operational loss data to Operation Manager, Corporate via regular reporting requirements stipulated by Operational Monitoring & Reporting Framework. These data are further analyzed, reported and appropriate action taken as per requirement. With regard to Market Risk, Treasury maintains net open position of all currency on daily basis. Head Treasury reviews / analyzes the trend and assesses the exposure impact on capital. The net open position report is discussed at the ALCO for discussion and further set up of strategy.
2. Risk exposure
Risk weighted exposures for Credit Risk, Market Risk and Operational Risk Risk weighted exposures a. Risk Weighted Exposure for Credit Risk b. Risk Weighted Exposure for Operational Risk c. Risk Weighted Exposure for Market Risk adjustment under Pillar ii 1% of Total Risk Weighted Exposure as per NRB Inspection total Risk weighted exposures (a + b + c) 154,053 15,559,350 15,741,614 current Year 14,466,351 851,164 87,782 Previous Year 15,021,347 647,082 73,185
NPR in 000
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Risk weighted exposures under each of 11 categories of credit Risk

NPR in 000 Particulars Claims on Government and Central Bank Claims on Other Official Entities Claims on Banks Claims on Corporate and securities firms Claims on Regulatory Retail Portfolio Claims secured by Residential Properties Claims secured by Commercial real estate Past due Claims High Risk Claims Other Assets Off Balance- Sheet Items total current Year 676,406 6,680,045 2,199,959 669,582 357,436 33,367 2,217,025 408,062 1,224,470 14,466,351 Previous Year 229,724 7,014,770 1,603,290 1,352,337 473,047 107,012 2,457,536 449,519 1,334,112 15,021,347
non Performing assets

Particulars Restructured / Reschedule Loans Sub Standard Loans Doubtful Loans Loss total nPas current Year Gross nPas 18,648 19,170 54,675 92,493 net nPas 13,986 9,585 23,571 Previous Year Gross nPas 15,594 2,422 61,131 65,625 144,772
NPR in 000 net nPas 13,645 1,817 30,566 46,028
Ratio of non Performing asset

Particulars Gross NPA to gross advances Net NPA to net advances current Year 0.72% 0.19% Previous Year 1.04% 0.34%
100
Movement of non performing assets

Particulars Opening NPA Addition during the Year NPA recovery during the Year Closing NPA current Year 144,772 37,135 89,414 92,493 Previous Year
NPR in 000 114,876 67,896 38,000 144,772
write off loan and interest Suspense:

Particulars Write off Loan Write off Interest current Year 56,204 Previous Year
NPR in 000 3,000 1,376
Movements in llP and interest Suspense:

Particulars Movements in Loan Loss Provisions Movements in Interest Suspense Additional LLP during the Year current Year (39,166) 11,079 17,038 Previous Year
NPR in 000 35,800 3,467 38,800
Segregation of investment Portfolio

Particulars Held for Trading Held for Maturity Available for Sale current Year 4,918,987 27,792 Previous Year
NPR in 000 2,999,431 26,592
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3. Risk Management function

The Bank has been building robust Risk Management Capabilities in order to achieve an effective Risk Management framework and contain the risks associated with the business; a fully functional risk management unit is responsible for identifying, reporting, controlling and managing credit, operational and market risk. credit Risk For Credit Risk Management a separate risk management unit (segregated from the sales function of business) has been created and directly reports to Chief Executive Officer. A dedicated sub unit within the risk management for management of non-performing / problem assets works towards implementing risk grading / credit scoring processes in order to achieve better management of credit risk and to achieve better efficiency in credit processing. operational Risk Effective Operational Risk Management systems aims to minimizing losses and customer dissatisfaction due to failure in processes, focusing on flows in products and their design that can expose the Bank to losses due to fraud, analyzing the impact of failures in technology / system, developing plans to meet external shocks that can adversely impact continuity in the Banks operations. Bank has introduced a Comprehensive Operational Risk Monitoring and Reporting Framework as well as Output checking at all branches covering all transactions on daily basis to minimize Operational Risk. Market Risk Bank has an ALCO (Asset Liability Management Committee) which meets periodically to discuss product pricing for deposits and advances and maturity profiles of assets and liabilities, articulating interest rate, view of bank, funding policy, transfer pricing policy and balance sheet management. The Audit and Compliance function is also independent from Bank Management; this unit focuses on development of internal procedures and check and control systems / procedures. The Internal Audit and Compliance unit undertakes a comprehensive audit of all business groups and other functions, in accordance with the approved audit plan. In order to mitigate above risks, further this unit function is also independent with separate reporting lines, with audit function reporting directly to Board Audit committee. The Bank has been working continuously towards risk diversification of its assets base so as to achieve better portfolio mix and to protect/enhance the overall risk on its loan book. The strategic focus of mapping business is gradually reducing high-risk assets and increasing low risk exposures.
102
approval of financial Statements for the fY 2066/67 by nepal Rastra Bank

Nepal Rastra Bank, vide its letter ref no. Bai. Su. Bi./offside/AGM/20/2067/068 dated 2067/07/10 (27 October, 2010) has approved the Balance Sheet, Profit and Loss and all related annexure of the annual audited accounts for the fiscal year 2066/67 (2009/010) including payment of cash dividend with the following remarks: The Bank shall rectify the shortcomings raised by Statutory Auditor and take corrective action not to repeat the same.
Management Response
Noted and agreed. The Bank has already rectified the shortcomings and corrective action has been taken accordingly.
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NIC BANK I 13th Annual report 2009/10
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corporate office 279 Kamaladi Sadak, Kathmandu, Nepal P.O.Box: 7367 Phone: 01-4262277 Fax 01-4241865 Kathmandu valley Kamaladi Branch Kamaladi Ganeshsthan, Kathmandu, Nepal Phone: 01-4262277 Fax 01-4241865 Battisputali Branch Battisputali, Kathmandu Metropolitan - 9, Nepal Phone/Fax: 01-4484713 Bhaktapur Branch Suryavinayak, Bhaktapur Phone: 01-6226996 Fax : 01-6619121 Samakhushi Branch Address: Kathmandu Metropolitan - 29, Samakhushi, Kathmandu, Nepal Phone: 01-4387055/01-4387056 Fax: 01-4387061 teku Branch Buddha Bari, Teku, Kathmandu Metropolitan - 12,Nepal Phone: 01-4104551 Fax 01-4104555 outside Kathmandu valley Biratnagar Branch Main Road, Biratnagar, Nepal Phone: 021-521921 Fax: 021-522748 dharan Branch Mahendra Path, Dharan, Nepal Phone: 025-526521 Fax: 025-520333 Birgunj Branch Adarsh Nagar, Birgunj, Nepal Phone: 051-527638 damak Branch Rajmarg Chowk, Damak, Jhapa, Nepal Phone: 023-585156 Fax: 023-585157 nepalgunj Branch Surkhet Road, Nepalgunj, Nepal Phone: 081-526604 Fax: 081-524416 lahan Branch Ganesh Chowk, Lahan, Siraha, Nepal Phone: 033-561012/033-561013 Fax: 033-561014 Gaighat Branch Triyuga Municipality - 02, Gaighat, Udayapur, Nepal Phone: 035-420934/ 420935 Fax: 035-420933 Malangawa Branch Main Chowk, Malangawa Municipality - 08, Malangawa, Sarlahi, Nepal Phone: 046-521441 Fax: 046-521443 Pokhara Branch P. O. Box: 587, Mahendra Pool Pokhara, Nepal Phone: 061-539645 Fax: 061-533809 Birtamod Branch Bhadrapur Road, Birtamod, Nepal Phone: 023-540977 Fax: 023-540811 Janakpur Branch Ram Mandir Chowk, Janakpur, Nepal. Phone: 041-525856 Butwal Branch Shrawan Path, Butwal, Rupandehi, Nepal Phone: 071-543238 Fax: 071-543250 Surkhet Branch Birendra Chowk, Birendra Nagar, Surkhet, Nepal Phone: 083-524092 Fax: 083-524093 dhangadhi Branch Dhangadhi Municipality - 3, Godawari Road, Chauraha, Kailali, Nepal Phone: 091-527061, 091-527062 Fax No.: 091-527060 narayanghat Branch Bharatpur Municipality - 04, Sahid Chowk, Narayanghat, Chitwan, Nepal Phone: 056-533941/056-533942 Fax: 056-533940 Mahendranagar Branch Line No. 05, Campus Road, Bhimdutta (Mahendra Nagar) Municipality- 04, Kanchanpur, Nepal Phone: 099-520384 Fax:099-520386 new Road Branch New Road, Kathmandu, Nepal Phone: 01-4227305 Fax: 01-4227507 SWIFT: NICE NP KA Pulchowk Branch Pulchowk, Lalitpur Phone: 01-5555662 Fax : 01-5550044 Kirtipur Branch Naya Bazar, Kirtipur Municipality - 17, Kathmandu, Nepal Phone: 01-4330237/01-4331164 Fax: 01-4330760 Satdobato Branch Satdobato, Lalitpur Phone: 01-5002517/01-5002518 Fax: 01-5002516 Pepsicola chowk Branch Pepsicola Chowk, Old Sinamangal Kathmandu-35 Phone: 01-4992785 Fax 01-4992789 Registered office Main Road-03. Biratnagar, Nepal P.O.Box: 232 Phone: 021-521921 Fax: 021-522748
BRANCHES OPENED AFTER 16TH JULY, 2010

new Baneshwor Branch New Baneshwor-10, Kathmandu, Nepal Telephone: 01-4784563, 01-4784564 Fax: 01-4784565 thamel Branch Bhagwanbahal-29, Thamel, Kathmandu, Nepal Telephone: 01-4423241/43 Fax: 01-4419836 thankot Branch Thankot-08, Thankot Buspark, Kathmandu, Nepal Telephone: 01-4312204 Fax: 01-4311232
BRANCHES OPENED AFTER 16TH JULY, 2010

hariwan Branch Hariwan VDC-09. Krishna Chowk, Sarlahi,Nepal Telephone No: 046-530630/32 Gaur Branch Gaur Minicipality-01, Rautahat, Nepal Telephone: 055-521417/1 arghakhanchi Branch Hall Line, Newroad Tole, Sandhikharka VDC-06, Arghakhanchi, Nepal Telephone: 077-420803, 077-420804 Fax: 077-420001
YOU
ALWAYS WITH
NIC BANK
Corporate O ce: 279 Kamaladi Sadak, Kathmandu, Nepal, P.O.Box: 7367, Phone: 01-4262277, Fax 01-4241865 Registered O ce: Main Road-03. Biratnagar, Nepal, P.O.Box: 232, Phone: 021-521921, Fax: 021-522748

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NIC BANK I 13th Annual Report 2009/10

NIC BANK I 13th Annual Report 2009/10

NIC BANK I 13th Annual Report 2009/10

NIC BANK I 13th Annual Report 2009/10

NIC Bank was the first commercial bank in Nepal

The Only ISO Certified Bank in Nepal

The First Bank to be Provided Line of Credit by IFC

NIC BANK I 13th Annual Report 2009/10

NIC BANK I 13th Annual Report 2009/10

Staff Expenses Transferred to Reserve

Interest Expenses Other Operating Expenses Expense from Extra-Ordinary Activities

NIC BANK I 13th Annual Report 2009/10

NIC BANK I 13th Annual Report 2009/10

NIC BANK I 13th Annual Report 2009/10

NIC BANK I 13th Annual Report 2009/10

NIC BANK I 13th Annual Report 2009/10

NIC Bank Board of Directors

Jagdish Prasad Agrawal Chairman (Promoter Group)

NIC BANK I 13th Annual Report 2009/10

Tulsi Ram Agrawal Director (Promoter Group)

Lokmanya Golchha Director (Promoter Group)

Rajendra Aryal Director (Public Shareholder Group)

Nirmal Kumar Agrawal Director (Promoter Group)

Birendra Kumar Sanghai Director (Public Shareholder Group)

Ganesh Man Shrestha Professional Director

NIC BANK I 13th Annual Report 2009/10

DIVIDEND PER SHARE (INCLUDING BONUS) %

NIC BANK I 13th Annual Report 2009/10

CAPITAL ADEQUACY (%)

12.00 11.50 2005/06 2006/07 2007/08 2008/09 2009/10

Capital Adequacy Ratio

BALANCE SHEET SIzE

NIC BANK I 13th Annual Report 2009/10

Technology Development / Information Management System

NIC BANK I 13th Annual Report 2009/10

NIC BANK I 13th Annual Report 2009/10

NIC BANK I 13th Annual Report 2009/10

NIC BANK I 13th Annual Report 2009/10

0.72% 2009/10 0.18%

NON PERFORMING ASSETS (NPA) TO RISK ASSETS

EARNING PER SHARE

NIC BANK I 13th Annual Report 2009/10

Number of Meeting Attended 7 3 6 1 7

Sitting Fees Paid (NPR) 49,000 21,000 42,000 7,000 -

NIC BANK I 13th Annual Report 2009/10

Communication and Relationship with Shareholders

NIC BANK I 13th Annual Report 2009/10

NET INTEREST MARGIN

NIC BANK I 13th Annual Report 2009/10

NIC BANK I 13th Annual Report 2009/10

NIC BANK I 13th Annual Report 2009/10

Senior management Team

Sashin Joshi Chief Executive Officer

Niraj Shrestha General Manager - Business Banking

Bimal Daga Asst. GM Risk Management

Purna Man Napit Head Audit & Compliance

Sunil Pokharel Head Retail Banking

NIC BANK I 13th Annual Report 2009/10

Prabin Basnet Manager - Operations

Binay Dahal Branch Manager Biratnagar

Sudhir Agrawal Branch Manager Birgunj

Saurabh Bahadur Singh Manager - Consumer Credit Consumer Banking