KATHMANDU, June 16: Nepal Rastra Bank (NRB) has opened the subscription of the Foreign Employment Bond with an offer of 10 percent interest rate. Through the ‘Foreign Employment Bond 2080’ with the maturity period of five years, the central bank plans to collect Rs 250 million from the Nepalese workers who have been working abroad, nor resident Nepali or those who returned from the foreign employment. This is the third and last edition of the foreign employment bond that the central bank plans to issue in the current fiscal year -- FY2017/18 on behalf of the government.
The government has already issued two rounds of foreign employment bonds worth a total of Rs 750 million.
Nepali workers abroad or returnee workers can subscribe for the bonds until July 5, according to the NRB notice. Only those who have returned from foreign employment not before four months can apply for the bonds. The bonds are tradable in the secondary market while they can be pledged as collateral in bank and financial institutions for loan. According to the NRB, any worker can fill up the form by downloading it from its website and submit it in the nearby agent office. The NRB has appointed sales agents for the foreign employment bonds in various countries like Qatar, Kuwait, the UAE, Japan, Saudi Arabia, Korea, Malaysia, Iraq, India, the USA and Israel.
NRB issues foreign employment bonds
Copy of passport, visa where the worker is working, identity card of employer and evidence of the use of formal channel to bring foreign currency inside the country are documents that are needed while applying for the bonds. According to the NRB, it plans to carry out allotment on July 11. The interest of the bonds will be paid on each six months.
Despite higher return, there has not been much interest toward the bonds from the workers in foreign employment.
The bonds had remained largely undersubscribed in both rounds, indicating less attraction toward the safer investment instrument. Out of the foreign employment bonds issued worth Rs 50 million in December last year, only Rs 28.23 million of bonds, 5.65 percent, were subscribed. Another round of offer of foreign employment bonds worth Rs 250 million also remained largely undersubscribed.
According to the NRB data, only 8.95 million worth of bonds was purchased by workers who are in foreign employment or returnee workers.
The central bank has been issuing foreign employment bonds since FY2009/10 in a bid to bring foreign currency savings of Nepalis working abroad through a formal channel and encourage them for investment in Nepal so that their capital can be utilized for ‘nation building’.
The foreign employment saving bonds is one of the instruments that the central bank issues on behalf of the government to raise domestic debt for deficit financing of the budget. The government plans to raise Rs 145 billion in domestic debt for deficit financing of the budget worth Rs 1,278 billion. In line with the government’s plan, the NRB has floated Rs 500 million of foreign employment saving bonds.
