KHATMANDU: Local banks in the country have been urged to expand their portfolio through investments in sovereign bonds, treasuries and other financial instruments via Mashreq Bank.
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During an event organised by the United Arab Emirates-based Mashreq Bank to mark seven years of its presence in Nepal, Jan Willem Sudmann, executive vice president, International Banking Group of the bank, said that Mashreq has been providing service to the local banks as a custodian of their investments in various financial instruments abroad, including foreign currency investment.
Sudmann also urged the domestic banks to avail service from Mashreq Bank as it has been helping local banks in trade financing, letter of credit (L/C) confirmation and remittance services, among others. Recently, Mashreq Bank New York has also started dollar cheque clearing services, he informed.
Currently, local banks have been obtaining trade financing facility from Mashreq Bank, Standard Chartered Bank, and Germany-based Commerz Bank, among others. However, Mashreq has claimed that it has more than half of the market share in trade financing in Nepal. It has also been working in the areas of inward and outward remittances.
“We are happy to work with the Nepali banks and the Mashreq Nepal Representative Office has done a remarkable job,” said Sudmann.
Mashreq has also been rebating the commission charges to local banks that are taken on L/C and L/C confirmation services. As per Sudmann, Mashreq will focus on the Indian subcontinent and African countries in the coming days.
Domestic banks in Nepal have been investing in sovereign bonds, treasuries and other financial instruments up to the permissible level. Commercial banks have been investing their foreign currency deposits in the aforementioned products. Nepal Rastra Bank (NRB) — the central regulatory and monetary authority — has allowed the banks to invest up to 30 per cent of their core capital (Tier 1 capital) in the financial instruments analysing the risk-profile of the products. Local banks have foreign currency holdings of around $1 billion that they can invest abroad.
However, Samir M Gupta, managing director and head of Financial Institutions Origination and Client Coverage of Mashreq Bank, has claimed that Mashreq has been facilitating local banks to invest in credible treasury products of foreign banks for higher and secured returns.
Mashreq was established in 1967 and is the oldest bank in the UAE. It completed 50 years of operations in May this year. The Nepal Representative Office of Mashreq Bank was established in October, 2010, and it holds a licence issued by NRB to work in the country.
