NRB to issue bond for migrant workers offering 12.50% interest

By A Staff Reporter,Kathmandu, Feb. 25: Nepal Rastra Bank (NRB) is issuing the Foreign Employment Saving Bond with an offer of 12.50 per cent interest rate. The central bank of the country is set to issue foreign employment saving bond worth Rs. 500 million with a maturity period of five years.

The bond named “Foreign Employment Saving Bond 2084 Ka” targets Nepali workers working abroad, those who have returned from the foreign employment, and non-resident Nepalis, according to a notice issued by Monetary Management Department (MMD) of the NRB.

The foreign employment saving bonds is one of the instruments that the central bank issues on behalf of the government to raise domestic debt to fund budget deficit. The government plans to raise Rs. 256 billion in domestic debt to finance budget deficit of the current fiscal year 2022/23.

It is mentioned in the notice that Nepali citizens or non-resident Nepalis who are engaged in employment abroad and who have returned from employment abroad for less than six months can purchase it in the name of themselves or their family members (father, mother, husband, wife, son and daughter only).

The bank said that the eligible interested parties would have to apply through its online system from February 26 to March 17, 2023.

The bond will be allotted on March 24, 2023. The payment of interest will be made semi-annually. The tax is applicable in the earned interest income.Eligible interested parties can apply for bonds ranging from Rs. 10,000 to the amount not exceeding the size of total issue divisible by Rs. 10,000.

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. The interest of the bonds will be paid on each six months.

The central bank has been issuing foreign employment bonds 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 utilised for ‘nation building’.

According to the notice, one can download the application form for foreign employment savings card from the bank’s website and apply online with the help of banks and financial institutions that have obtained the license as sales agent.

Interest payments can be collected from commercial banks, market maker licensed banks and financial institutions and regional offices of NRB outside Kathmandu Valley.