NRB plans publicity blitz to push bond salesNepal Rastra Bank (NRB) has planned to conduct a publicity blitz in coordination with the government and sales agents to push sales of foreign employment bonds as migrant workers have given them a lukewarm response in the past.
Nepal Rastra Bank (NRB) has planned to conduct a publicity blitz in coordination with the government and sales agents to push sales of foreign employment bonds as migrant workers have given them a lukewarm response in the past.
Last week, NRB issued bonds worth Rs250 million to raise money for the government and plans another Rs250-million bond issue next month.
A senior NRB official said that the central bank had sent a proposal to the Finance Ministry to carry out a publicity campaign in labour destinations with large populations of Nepali migrant workers and in Nepal among their families.
Min Bahadur Shrestha, chief of NRB’s public debt management department, said that the central bank had proposed to hold road shows and other publicity campaigns in at least four Nepali migrant destinations—Malaysia, Qatar, the UAE and Saudi Arabia or South Korea. “We will also reach out to families of migrant workers at home.
As per the working procedure, returned migrant workers who have been in the country for four months can subscribe to the foreign employment bonds for themselves or their family members (father, mother, husband, wife, son and daughter). The publicity campaign can be launched before the next issuance of foreign employment bonds, said Shrestha.
The government has been issuing foreign employment bonds annually since fiscal 2009-10 with the aim of mobilizing remittance for the country’s development effort. But there have been very few takers.
Only Rs219 million worth of foreign employment bonds had been sold as of the last fiscal year 2014-15. The government has issued bonds worth Rs8.75 billion so far. All the bonds have a maturity period of five years. In fiscal 2009-10, bonds worth Rs1 billion were issued but subscription totalled a mere Rs4 million. The following year, bonds worth Rs5 billion were issued out of which Rs3.3 million worth of bonds were sold.
The poor response led the government to slash the bond issue to Rs250 million annually during the last three fiscal years. Even then sales were slow.
“Lack of awareness among migrant workers about foreign employment bonds and restrictive local laws in some host countries have resulted in low sales,” said Suman Pokharel, chief executive officer of IME , a money transfer agency.
“For example, we tried to sell bonds in Qatar and Japan in the past, but failed due to local laws putting up many restrictions,” he said. “Particularly in Japan, Nepali bonds could not be sold without the approval of the Japanese authorities.”
IME, which has been appointed as one of the sales agents for this year’s foreign employment bonds, has been encouraging migrant workers to buy bonds through its website and various online portals, Pokharel said.
However, Shrestha said that they had not received any complaints about migrant workers not being able to buy bonds due to local laws. “The central bank will move to obtain the approval of the concerned agencies in the host country if that is the case,” he said. This fiscal year’s bonds pay 9 percent interest annually while the average interest rate on fixed deposits has dropped to 3 percent.
“These factors could help to increase subscription this year,” said Pokharel. Migrant workers employed in countries other than India can subscribe to the bond issue.