Nepal SBI Bank LTD

Glimpses of 24th Annual General Meeting
2
Annual Report FY 2017/18 www.nepalsbi.com.np
ACCOLADES AND
ACHIEVEMENTS
Rated AA by ICRA (Nepal)-highest
ranking ever to any company in Nepal.
Highest Rating by SBI Management
Audit-Rated A+
Received “Best Presented Annual
Report Award 2017-2nd Runner Up”
for our Annual Report of FY 2073/74
awarded by Institute of Chartered
Accountants of Nepal (ICAN).
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THE CONTENTS
STRATEGIC REPORT
About Us 5
Key Performance Indicators 7
Previous years Financial Summary 8
New Initiatives launched and Key Events of the year 9
Tech Initiatives 17
Product and Services 20
Our Esteemed Customers 23
CORPORATE GOVERNANCE
Message from Chairman 24
Message from Managing Director 25
Organizational Structure 26
Board of Directors 27
Central Management Committee 28
Senior Management Team 29
Heads of Department 30
Risk Governance Structure 31
Report of the Board of Directors 42
Additional Information 51
Shareholder Information 57
CONTRIBUTION TO SOCIETY
Corporate Social Responsibility 58
Human Resource Information 68
Staff Engagement 69
FINANCIAL STATEMENTS
Independent Auditors’ Report 70
Consolidated Financial Statements as per NFRS 72
Subsidiary’s Financial Statements 157
Scan to view our Annual Report,

Financial Statements and Other
Information or
Visit our website @
www.nepalsbi.com.np
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Strategic Report
Corporate Governance
ABOUT US
Nepal SBI Bank Ltd (NSBL) is the first ever and Jaipur, State Bank of Hyderabad, State Adopted Green Initiative and planted
bank in Nepal rated “AA” by ICRA Nepal, Bank of Mysore, State Bank of Patiala and 2500+ trees across Nepal.
and is a subsidiary of State Bank of India State Bank of Travancore) and Bharatiya
Conducted more than 100 financial
(SBI). SBI holds 55% of ownership, Nepal Mahila Bank with itself has entered into
literacy programs across Nepal
Employee Provident Fund (Karmachari the league of Top 50 Banks with a balance
to support the financial inclusion
Sanchaya Kosh) holds 15% and the sheet size of INR 41 trillion, 277,000
objective of the government.
balance 30% shares are held with the employees, 500 million customers and
Contribution to Society
general public. State Bank of India-India’s 22,000+ branches and 59,000+ ATMs and Conducted Blood Donation Program
largest bank, a fortune 500 company and another 206 foreign offices in 35 countries at various centers and collected more
global top 50 banks. Established in July across the world. than 350 pints of blood.
1993, the Bank has completed 25 years
Nepal SBI Bank Ltd also has a wholly Conducted various CSR activities at
of successful operation in Nepal. A big
owned subsidiary, Nepal SBI Merchant more than 60 centers across Nepal.
thank you and sincere gratitude to our
Banking Ltd (NSMBL), which commenced
regulators, customers and shareholders Committed to open at least 15
its operations since December 2016,
for all their support. branches in Rural areas/Gaunpalikas
with license from Securities Board of
out of which 7 branches have been
Your bank is one of the largest joint Nepal (SEBON). Currently, NSMBL offers
opened.
ventures of SBI, providing banking services like Issue Management, Portfolio
services through its 88 offices including Management, and Registrar to Share, Nepal SBI Bank Ltd is committed to
76 Branches, 7 Extension Counters, 1 Underwriting and D-Mat services. It aims its customers to provide them world
INTOUCH Outlet, 3 Regional Offices and to position itself as pioneer in the field of class services in an affordable manner.
a Corporate Office, network of 113 ATMs Nepalese merchant banking and capital Towards this, NSBL has been continuously
(including 2 Mobile ATMs and 4 CRMs), market offering complete solutions to the upgrading its existing technological
Financial Statements
more than 800 POS machines. Further, clients across all stages of business cycle. initiatives as well as introducing new
with proposed expansion plan to reach technologies. As we celebrate 25 years
On this occasion of silver jubilee year
over 100 offices by this fiscal year and with of operations, we rededicate ourselves to
celebration, your bank has re-stated the
the roll out of BLBs (Branchless Banking continue to contribute even more to the
Mission, Vision and Value Statement of the
Units), we will have coverage to almost all society and towards nation building.
Bank.
the districts of the country.
We also conducted various activities to
Our Parent, State Bank of India, with a 212
mark the Silver Jubilee celebration of our
years history, after the merger of its five
bank:
Associate Banks (State Bank of Bikaner
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Strategic Report
KEY PERFORMANCE INDICATORS
Strategic Report
Net Profit Earning Per Share
(Rs. in crore) (Rs.)
202.35 36.78
34.83 33.46
34.48
156.47
125.37 25.16
92.30 97.41
FY2070/71 FY2071/72 FY2072/73 FY2073/74 FY2074/75 FY2070/71 FY2071/72 FY2072/73 FY2073/74 FY2074/75
Total Shareholders’ Fund Return on Shareholders’
(Rs. in crore) 22.85
Fund (in %)
1,280.11
17.46
1,053.97 17.08 14.85 15.81
717.98
570.30
453.58
Market Value per Share Market Capitalisation
(at the year end) (Rs.) (at the year end)(Rs. in Billion)
499 72.82
64.06
925
1,280 1,875
40.15
887 925 33.92
499 27.12
Return on Total Assets NPA/ Total Loan

(in %) (in %)
0.26
1.97
1.64
1.50 1.59 1.57
0.19 0.20
0.14
0.10
Note: Figures from FY 2071/72 has been restated as per NFRS whenever applicable, for consistent comparison.
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FINANCIAL SUMMARY Figure in Crore
Statement of Financial Position
Assets FY 2074/75 FY 2073/74 FY 2072/73 FY 2071/72
Strategic Report
Cash and cash equivalent 1,048.02 880.35 396.18 377.33

Due from Nepal Rastra Bank 564.73 731.30 642.80 466.24
Placement with Bank and Financial Institutions - 1,036.16 1,328.66 553.05
Other trading assets 2.04 2.30 2.48 1.84
Loan and advances to B/FIs 287.22 229.85 152.39 119.14
Loans and advances to customers 7,236.37 6,182.20 4,547.50 3,868.89
Investment securities 864.61 783.71 615.13 385.18
Current tax assets 21.95 17.18 11.74 3.80
Investment in susidiaries 18.89 10.00 10.00 -
Property and equipment 84.40 73.95 62.25 62.04
Goodwill and Intangible assets 0.45 0.20 - -
Deferred tax assets 23.62 9.73 3.41 12.88
Other assets 101.56 38.15 101.64 80.01
Total Assets (A) 10,253.87 9,995.09 7,874.19 5,930.40
Liabilities and equity FY 2074/75 FY 2073/74 FY 2072/73 FY 2072/71
Due to Bank and Financial Instituions 270.96 615.54 418.47 -
Derivative financial instruments 0.68 - - -
Deposits from customers 8,422.73 8,081.88 6,521.35 5,162.82
Other liabilities 179.38 143.69 116.39 97.27
Debt securities issued 100.00 100.00 100.00 100.00
Total liabilities (B) 8,973.76 8,941.11 7,156.21 5,360.10
Shareholder's Fund (A-B) 1,280.11 1,053.97 717.98 570.31
Equity - - - -
Share capital 804.69 692.49 388.37 305.81
Share premium 38.18 - - 7.92
Retained earnings 121.88 114.50 122.50 82.54
Reserves 315.37 246.99 207.11 174.04
Total Equity 1,280.11 1,053.97 717.98 570.31
Figure in Crore
Statement of Profit and Loss
Particulars FY 2074/75 FY 2073/74 FY 2072/73 FY 2071/72
Interest income 906.98 599.17 400.74 384.97
Interest expense 492.48 299.45 156.52 177.38
Net interest income 414.50 299.72 244.23 207.59
Fee and commission income 91.29 85.03 75.05 56.12
Fee and commission expense 8.47 7.39 - -
Net fee and commission income 82.82 77.64 75.05 56.12
Net interest, fee and commission income 497.32 377.36 319.28 263.71
Net trading income 23.35 20.28 13.64 11.95
Other operating income 4.29 2.19 1.00 3.07
Total operating income 524.96 399.82 333.91 278.73
Impairment charge/(reversal) for loans and other 27.23 12.95 3.89 8.44
losses
Net operating income 497.73 386.87 330.02 270.29
Operating expense - - - -
Personnel expenses 137.54 95.76 81.48 69.75
Other operating expenses 70.31 57.73 52.36 41.22
Depreciation & amortisation 13.71 11.40 10.70 11.67
Operating Profit 276.17 221.99 185.48 147.66
Non operating income 3.89 2.09 0.61 -
Non operating expense - - - 0.65
Profit before income tax 280.05 224.08 186.09 147.01
Income tax expense - - - -
Current Tax 94.21 68.70 59.31 52.69
Deferred Tax Income/ (Expenses) 16.50 1.09 (1.41) 3.09
Profit for the period 202.35 156.47 125.37 97.41
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New Initiatives launched and Key events of the year
Strategic Report
Branchless Banking (BLB)
An easy, convenient and secure Banking elements of the BLB. Branchless Banking bio-metric POS device with finger print
System whereby NSBL will reach to large (BLB) represents a significantly cheaper scanner and thermal printer are as follows:
customer bases through correspondents' alternative to conventional branch-based
i) Cash Deposit and Withdrawal; ii) A/C to
networks using reliable electronic devices banking that allows financial institutions to
A/C fund transfer; iii) Mobile Topup (PIN
with state-of-the-art technology and offer financial services outside traditional
less recharge and) / Electronic Recharge
also offering diversified products to the bank premises by using delivery channels
Coupon; iv) Bill Payment and Merchant
customers including real time account like retail agents and technology.
Payment; v) A/C balance enquiry / Mini
opening. Technology, third party outlets
The salient features of Branchless Banking Statement etc; vi) Remittances
(the agents/business correspondents),
(BLB) System through electronic device
proper cash management are the key
which will comprise of smart tablet,
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Strategic Report
N E PA L SBI BANK LTD.

S e r v i n g y o u si n c e 7 J u l y 1 993
th
OUR SILVER JUBILEE CELEBRATIONS
28th May 2018 – CSR Activities at S

Jaharsingh Pauwa
29th May 2018 – Everest Day Celebration at
E Namche Bazar
2nd June 2018 - Silver Jubilee Badminton
R
Tournament
8th June 2018 – Blood Donation Program
I
9th June 2018 – Silver Jubilee Futsal
Tournament E
16th June 2018 – Silver Jubilee Cricket
S Tournament
18th June 2018 – Silver Jubilee Painting
Competition
23rd June 2018 – Silver Jubilee Cycle Rally
O
27th June 2018 – CSR at Adarsha Kanya
School F
29th June 2018 - Silver Jubilee Talent Hunt
30th June 2018 – Silver Jubilee FIFA PS4

Carnival E 5th July 2018 – FINTECH 2018
Staff Retreat
V
6th July 2018 – CSR at Nepal Orthopedic 7th July 2018
Hospital - Cake cutting at Corporate Office
E
- Re-stated new vision, mission &
values statement
N - Opening of 3 Rural Branches
- Launch of Branchless Banking (BLB)
T - Launch of Pari 2.0
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GLIMPSES OF SILVER JUBILEE CELEBRATIONS
Strategic Report
Silver Jubilee Celebrations at Corporate Office, Kesharmahal
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Strategic Report
Re-stating New Mission, Vision and Value statement of Nepal SBI

Bank Limited
Felicitation of Staff completing 25

years of service in Nepal SBI Bank Ltd
Glimpses of Fintech 2018-Banking Conclave organized by Nepal SBI Bank Ltd with the theme “Future of Banking: Digital Only”
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Strategic Report
Nepal SBI Bank adopted ‘Green Initiative’ and issued Green Certificate to Distinguished Guests
NSBL Silver Jubilee Cricket Tournament
NSBL Silver Jubilee FIFA 18 PS4 Carnival
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Strategic Report
NSBL Silver Jubilee Talent Hunt
NSBL Silver Jubilee Painting Competition
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Strategic Report
NSBL Silver Jubilee Badminton Tournament.
NSBL Silver Jubilee Futsal Tournament.
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Strategic Report
NSBL Silver Jubilee Cycle Rally.
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TECH INITIATIVES
Nepal SBI Intouch Outlet
Strategic Report
Launched during the previous year, Innovation” product in Nepal. The outlet Human-Robot Interaction (in Nepali
the Intouch outlet has received wide will shortly have PARI 2.0, the upgraded and English) using Natural Language
appreciation of Tech Savvy Nepalese. version of PARI 1.0, which will be fully Processing (NLP).
Apart from 24*7 access to ATM, CRM, loaded with advanced and enhanced
NSBL is exploring the possibility of
Self Service Kiosk and Internet Desk, the features like:
introduction of Robotics and Artificial
outlet facilitates account opening in a
Autonomous navigation in the Intelligence for customer service in
paperless manner with instant delivery of
Intouch Outlet. Nepalese Banking Industry.
personalized ATM Cards to our customers.
Facial detection and recognition for
PARI: A humanoid robot named “Pari”
human-robot interaction.
is placed at Nepal SBI Intouch Outlet,
Durbarmarg as meter-greeter. The “Pari” Extract and read QR Code.
initiation was voted as the “Best Tech
Exhibition of human like gestures.
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Nepal SBI Digital Mero Saathi –
Village Mobile Banking
Your Bank is the first bank in Nepal to roll The bank has recently up-graded the
Strategic Report
out the Digital Village initiative on 7th mobile banking system “Mero Saathi
July 2017 with an aim to transform the “ to make it more popular among our
selected village into cashless ecosystem existing and prospective customers. It
by adopting safe, healthy and vibrant is premium mobile banking service that
digital channels for financial transactions. can be operated through mobile phone
Nepal SBI Digital Village at Jaharsingh which runs in both GPRS as well as SMS
Pauwa, is able to add 2200 people to the channel for connecting with Bank’s
financial system. Your Bank is constantly server. The up-graded “Mero Saathi” have
engaged with the local population there personalization feature where customers
and conducting various CSR activities and can upload photos in their profile and also
financial literacy programs for the benefit manage their list of quick payments and
of local population. NSBL supported the favorite merchants. Similarly the app also
Birthing Centre at Lapsiphedi Health displays’ graphic advertisement where
Post by providing medical and other customer can view various products
equipments like baby warm heater, baby and offerings placed by the Bank. ‘Mero
resuscitation table which has helped Saathi’ can navigate the customer to the
increase the number of safe delivery of Bank’s branches and ATMs. The service
babies in the Health Post. has become instrumental not only in
bringing previously unbanked population
E-Corner into the formal banking channel but also
E-Corner consists of ATM/CRM/CDM, to add convenience to serving existing
SSK and Internet Desk through which customers. In additional, customer can pay
customers can deposit and withdraw cash. utility bills such as telephone bills, ADSL
They can also deposit cheques through bills by using Mobile banking service.
SSK (Self Service Kiosk). Further, Internet
Banking can also be accessed from the
e-corner. During the year, we have added
one more e-corner at Birgunj.
Internet Banking
Internet Banking is available through
w w w. n e p a l s b i . c o m . n p / c o n t e n t / e -
banking.com for both retail and corporate
customer of the Bank. This online banking
channel provides access to banking
services 24x7 from anywhere. E-statement,
Fund transfer, utility bill payments, Indian
railway ticket booking etc. are available on
the internet banking platform.
IRCTC Ticket Online

Booking Utility
This product was launched in February
2014 with a view to facilitate hassle-free
booking of tickets of Indian Railways.
NSBL is the first and the only Bank
outside India to offer this facility. With
this utility, NSBL Internet Banking users
can book tickets through IRCTC’s Online
Passenger Reservation System and can
make payment through Nepal SBI Internet
Banking.
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Automated Teller Machine (ATMs) and POS

Nepal SBI Bank has one of the largest Disaster Relief Fund and Pashupati • Account to Account transfer:
networks of ATM terminals. Presently, the Area Development Trust. It facilitates Customers can transfer funds
bank has installed 113 ATMs (including 2 online and hassle free collection of between their accounts linked with
Strategic Report
mobile ATMs and 4 CRMs for Kathmandu such donations/contributions for the ATM card through the use of this
valley and Pokhara Valley) around the credit to the said Fund. utility.
country. Our ATMs can also be used by
• On boarding of Mobile Banking Your bank is also providing POS service
holders of various International Cards.
customers: NSBL has developed in different places of Nepal. Till date we
Your bank has introduced the following a utility through which NSBL card have already installed more than 800 POS
functionalities/utilities in our ATMs that holders can register for Mobile terminals in Nepal. We are planning to
would enhance the scope of our ATM cum Banking using NSBL ATM terminals. expand the same in coming year as there
debit cards. is good demand of this service by various
• Fund transfer facility through NSBL
corporate institution and retail trading
• Donation utility: NSBL has developed ATMs for collection of donations from
units of Nepal.
donation utility through its ATM devotees for credit to the accounts
terminals. Through this utility NSBL of Pashupati Area Development Trust
Card holders can donate funds to PM’s (PADT).
Group photo after inauguration of Pashupati Nath Temple ATM outlet. It is the first ATM of Nepal SBI Bank Ltd. in World heritage site of Nepal.
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PRODUCTS AND SERVICES
REMITTANCE CARD PRODUCTS
Strategic Report
Your bank has vast global network through Your Bank is providing chip based card
its group which enables it to provide having advance security features
remittance services to its customer in a
fastest and safer manner. The Bank has Nepal SBI Debit Card
its own technological platform “NSBL This is ATM cum Debit card which can
Payment Gateway” that provides real be used for cash withdrawal as well as
time remittance to and from India to for merchandise payments at more than
Nepal without any substantial cost to 600,000 merchant outlets in Nepal and
the customers. As India being one of the India. NSBL Debit Card users can have
major source of remittance to Nepal your access to 113 ATMs of NSBL and other VISA
bank has following India centric products; enabled ATMs all over the country and in
NSBL Payment India at nominal charge.
Gateway Bharat Yatra Card

NSBL Payment gateway facilitates transfer Popularly known as BYC, this is a Nepalese
of funds/payments between Nepal & India. Rupees denominated pre-paid card suited
It is a cost effective electronic remittance
channel and it is the fastest, convenient
Indo-Nepal Remit for Nepalese population visiting India for
medical treatment, pilgrimage, education,
and hassle free money transfer system The product was introduced by Reserve tours etc. The card can be used for cash
through the banking channel. Bank of India in consultation with Nepal withdrawal at all State Bank ATMs and VISA
Rastra Bank on Electronic Fund Transfer enabled ATMs in India. BYC was launched
(EFT) platform for smooth and speedy in November 2008 and is able to attract
remittance from India to Nepal, State substantial number of customers.
Bank of India in India and Nepal SBI Bank
Ltd. in Nepal are the nodal point for this
remittance. Remittance can be originated
through more than 117,000 NEFT enabled Vishwa Yatra Card
branches of various Banks in India.
Vishwa Yatra Card, is a USD denominated
RTGS international prepaid card which the
customers can use for cash withdrawal in
Real Time Gross Settlement is a product all the ATM terminals under VISA network
from which customers can send in any part of the world (except Nepal
Remittance to India at a real time in more and India) and also for merchandise
than 75,000 branches of 106 banks in payments. It provides safety, security and
India. convenience to overseas travelers.
For domestic remittance service your
bank has tie up with Prabhu Money
Transfer which allows customer to send
and receive money to and from across the
country. We have also tie up with Western
Union Money transfer and Prabhu Money
SBI Nepal Express Transfer for inward remittances from
Remit across the globe.

For remittance from Gulf we have our own
Remittance through Electronic Fund
platform;
Transfer (EFT) mechanism provides
money transfer facility at minimal cost
to Nepali migrant population residing SBI Express Remit
and working in India. Remittance can be Gulf-Nepal (GLS)
originated through more than 22,000 SBI Express Remit Gulf-Nepal (GLS)
branches of State Bank of India located provides easy, convenient and safe Further, Your Bank is also in process of
in various parts of India. We receive more international money transfer service from introducing credit card.
than 450 remittances on an average per Exchange Houses in gulf countries to our
working day. customer’s account on Straight Through
Process (STP) enabled model.
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DEPOSIT PRODUCTS
Your Bank has customized deposit and NSBL Normal Savings Scheme NSBL Baal Bachat Khata
loan products to cater the requirement
This scheme is designed to facilitate easy Savings account especially designed for
Strategic Report
of customers.
and regular deposit of funds as and when minors in order to inculcate the saving
required and simultaneously earning of
Nepal SBI Premium income on the balance that is kept in the
habits and make them financially literate.
Parents or Guardians can open and
Saving Scheme account. operate the account to secure the future
Savings account especially designed of their children.
to take care of banking & savings
requirements of High Net worth
Karnadhaar Bachat Khata
A special savings account designed
for minor who is literate enough to
read & write, can sign uniformly. It is an
opportunity to cultivate the savings habit
from childhood and become responsible
to manage your spending, independently.
Students Account
This scheme has been introduced with an
objective to inculcate saving habits to the
students. Under this scheme, any student
of college can open this Savings account.
Ujjwal Bhavisya Bachat

Nepal SBI Corporate Khata (Recurring Deposit)
Salary Package This saving account is designed with a semi
Under this scheme, Corporate/MNC/ fixed deposit nature in which customer
Institutions/Establishments can open the deposit fixed amount each month and
salary accounts of their employees for withdraw lumpsum amount on maturity,
Individuals customer. The scheme is easy disbursement of salaries. interest credited quarterly in principal
bundled with various free facilities and
account and interest capitalization in
digital products of the Bank like Mobile Varistha Nagarik every 3 month.
Banking, Internet Banking etc. Bachat Khata
NSBL Combo Saving Scheme
Saluting your years of service to this great NSBL Nari Bachat Khata
nation and society, we have brought
Savings account designed for Nepalese
NSBL Combo Savings Scheme is a merged peerless banking account service to
female above 18 years of age with an aim
variant of Saving Bank (Public) and NSBL you—Varistha Nagarik Bachat Khata. The
to develop saving habits and to enhance
Mobile Banking Scheme for residential respected senior citizen—aged 50 and
self-determination among them.
and non-residential individuals of any age above—can open this Saving Account
group. with minimum balance of Rs. 500/- only.
Karmachari Bachat Khata Indreni Bachat Khata

Under this scheme, any individual
We have come with a special zero balance
including minor (account to be operated
deposit scheme—Karmachari Bachat
by guardian) can open the account. The
Khata—with special focus on salaried
interest is calculated on daily basis.
employees from government and/or non-
government organizations. Swarnim Bachat
Under this scheme, any individual and

Saral Bachat Khata institution can open the account. The
This scheme is designed to facilitate easy interest is calculated on daily basis payable
and regular deposit of funds as and when quarterly.
required and simultaneously earning of
income on the balance that is kept in the Vishesh Bachat Khata
account.
We have come up with special deposit
scheme—Vishesh Bachat—enriched
with bundle of additional benefits to our **Detail features are available on our
valued customers. website.
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LOANS AND ADVANCES
CORPORATE AND RETAIL LOANS EDUCATION LOAN
BUSINESS LOANS Retails
Strategic Report
loans largely comprise of auto Under this scheme, the Bank extends
finance, home loan and credit for financial assistance to students for
The bank offers corporate and business consumer durables. Credit card is not pursuing Diploma, Bachelors, Masters or
loan to large corporate and institutional in offer yet. Other personal loans like vocational studies in Nepal, Australia or
customers including public sector entities Mortgage and Mortgage Plus are personal other countries.
and service them with offerings ranges credit given to individuals on the basis of
from loans to meet operational funding their income level.
requirements as well as service related to
MORTGAGE AND
strategic expansions, syndications, project
finance etc.
MORTGAGE PLUS LOANS
These products offer personal credit
RETAIL AND SME on easy terms to individuals on the
LOANS basis of their income level and value of
mortgaged property. Simplified loan
SME LOANS processes and quick turn-around time
Small & medium Enterprises (SME) is ensures smooth delivery to the customer.
vital to the economic growth of the HOUSING LOAN
country. The sector not only generates
employment but also stands auxiliary to The Bank provides loan facilities for
big industrial/corporate projects. SME purchase or construction of building/
Convenient loan is a customized loan flat, extending or renovation of building/
product designed to meet the financing flat or reimbursement facility for recently
needs of manufacturing, trading, constructed or bought building on the
business enterprise and self-employed basis of cost of buying or construction
professionals in Small and Medium cost and source of income.
Enterprise (SME) sector.
Other retail loans largely comprise of auto
finance, credit for consumer durables, and
loan for retired Nepalese pensioners of
Indian Armed Forces etc.
Besides these, the Bank also provides
Trust Receipt loans, Pre-shipment and
Post-shipment credit and non-fund based
facilities like Letter of Credit and Bank
Guarantees etc.
22
OUR ESTEEMED CUSTOMERS
Strategic Report
NSBL Financing Hydro Power Project.
NSBL Financing Tea Estates.
NSBL Financing Cement and Iron Steel Company.

23
Message from the Chairman
Dear Stakeholders, Accountants of Nepal (ICAN). We
It gives me immense pleasure to being rated “AA” again, the highest
welcome you all to the 25th Annual rating received in Nepal by any
General Meeting of Nepal SBI company, by ICRA reaffirms that
Bank Ltd., which has grown leaps we are developing exciting, world-
and bounds and has stood tall with class Banking opportunities while
pride in all these years with your meeting the challenge of changing
patronage and guidance. market conditions head-on.
Consistent with our vision to “Be As we prosper in the society, we are
the most preferred Bank for a obliged to work hand in hand with
transforming Nepal”, our Bank it. We have continued to extend
has strengthened its delivery our support to the underprivileged
and brought a significant changes heighten our customer’s trust
platforms & service capabilities to in us, minimize risks, maximize
provide high quality, reliable and in their education, lifestyle and
life as a whole. We have, through profitability by reducing our
innovative financial solutions to cost and ultimately benefit the
our stakeholders and customers. our corporate social responsibility
initiatives, promoted sports & customers and stakeholders at
Our Bank has booked profit after culture, preserved heritage sites, large. Our global presence and
tax of Rs 202.35 crore for FY upgraded health facilities and strength is an added advantage
2074-75, reporting a growth of hygiene, initiated environment for us for tapping new businesses
29.32% which has reinstated the protection etc. With our green and ideas for the betterment of
trust of 8.50 lakh customers and initiatives, we have discouraged NSBL and the nation too.
our stakeholders at large. Effective the use of plastics and rather opted On this note, I would like to thank
risk management, clear strategy, for environment friendly notions our stakeholders for their trust,
transparency, ethics and social for various Banking celebrations confidence and support for the
responsibility, self-evaluation, and activities. Bank. I am proud of our people and
fairness and adherence to a very confident in their abilities to deliver
high compliance culture which are Over the 25 years of operations,
we have sustained our forward industry-leading performance.
the marks for good governance And I’m grateful for the confidence
have been clearly adopted by looking, strategic outlook,
focusing on our priorities of you’ve put in Nepal SBI Bank
our Bank. We have added yet Ltd. With a strong and capable
another feather in our cap with customer orientation, culture,
brand & communications and management team, our Bank is
“Best presented Annual report poised for greater expansion and
Award 2017-2nd runner up” for environmental, social and ethical
issues. We strive to work in the higher performance in the years to
our Annual Report of FY 2073/74 come.
(2017/18) by Institute of Chartered digital era adopting innovative
technologies which would further
24
Message from Managing Director

Dear Stakeholders, of the young and enthusiastic
As we embark into the 26th year employees for carrying forth the
Strategic Report
of successful operation in Nepal, Bank's outstanding legacy and
I would like to congratulate enduring commitment to serving
and acknowledge every single the public with utmost sincerity. Our
stakeholders, customers, excellence in work is derived from
employees and everyone our Good governance skills which
associated with our Bank because is deeply ingrained in our work
this milestone was attained only and processes. We’re recognized
due to your continuous support not only as a great place to bank,
and cooperation. but also a great place to work in.
This year had its share of Our Bank’s leading executives are the advantages of competing in
opportunities and challenges. In actively associated with various a larger space with more avenues
the FY 2074-75, Bank’s balance Associations and organizations for innovation and growth.
sheet size crossed the mark of Rs. which in itself is a pride. This has I, as a Managing Director of the
100 billion. Loans and advances expanded our reach and visibility Bank will continue to be focused
portfolio has reached at Rs. in the Banking and non-Banking on accelerating the execution of
7523.59 crore (net of provisions), arena which has further elevated our growth strategy while pursuing
registering growth of 14.77% our business. to build the strength of our brand.
from previous year. Similarly, While we are investing more on With your support, our Bank will
total deposits size reached at Rs. technology to ensure seamless continue to grow from strength
8422.73 crore. operations and customer service, to strength and stay committed
Our subsidiary, NSMBL started innovation would remain a top to its shareholders by way of
offering financial advisory services, priority in coming year. Our maximizing the wealth through
portfolio management services, significant and long-established sustained growth under the overall
issue management service among presence throughout Nepal, with ambit of the spirit of a private
other services and registered a net a network stretching from East to sector Bank, to optimally balance
profit of Rs 84.00 lakhs during the west, connects powerful regional the commercial objectives and the
FY 2074-75. economies driven by natural goals of social service to the nation
resources and agriculture. Our at large.
In the context of liquidity crunch new tie ups in the energy sector will
prevailing in Nepal for the last facilitate financing and investment
3 years and stagnant financial activity in the new provinces in the
sector, we outgrew our peers and coming year. We are embracing
emerged as a winner. I am proud
25
26 Corporate Governance
Nepal SBI Bank Limited

Organization Structure
Board of Directors
Employee Service Risk Management Company

Audit Committee Managing Director
Facility Committee Committee Secretary
Internal Audit
Subsidiary NSMBL
Head
Chief Operating Officer Chief Business Special Chief Credit Project Chief Financial Chief Risk and Group Risk CENMAC
Chief Technology Province1 & Deputy CEO - (IBO) Development Officer and
Officer - (IBO) Branches Officer Financing & Officer -(IBO) Compliance
Infrastructure Officer Compliance
Lending - Officer- (IBO)
Province 2 Deposit
Credit Corporate (IBO)
Administration Marketing
Human Resources Credit Integrated Risk
Finance
Information, Province 3 Management
and
Communication and Remittance Planning
Recovery/NPA
Technology Marketing & SME &
Province 4 Compensation
Mobile/Internet product Retail Credit Planning
CIC and and Benefits
Banking Development and Credit Risk
Reporting
Province 5 HR Planning & Budgeting
Connectivity and Deprived and
Server Maintainence/ Development Digital Rural Sector Financial Market Risk
Monitoring Marketing Lending Reporting
Legal
Province 6 (POS/Card/INB)
Grievance MIS and Operational
Branch IT Support Handling and Reporting Risk
Disciplinary Cell
Province 7 IBO’s Secretariat New Business Central
NSBL Payment Group Accounts Information
Performance
Gateway Security
Management
Central Corporate Head - Forex
IT Research and Operations
Gerneral Communication & Treasury
Development
Services (IBO/JIBO) Compliance
IPS/ NSBL Branding/
MIS Department Payment Promotion/
(Core Banking Getway Marketing Front Office
System) Procurement/
KYC/AML
Branch Support
Alternate Banking ECC New Product Mid Office
Channel Development Regulatory and
Asset Management
Internal
Card Operations SWIFT and Maintainence/
Branch Reconciliati Compliances
Unit Administration
Expansion on
Remittance (Planning)
ATM Service Unit Branch
Expansion/ relocation Call Centre
Treasury (construction
and Customer
Internet Banking Back office
Unit Management
Merchant CSM
Acquiring
THE BOARD OF DIRECTORS
Strategic Report
Mr. Sujit Kumar Varma
Chairman
Mr. R.S. Ramesh Mr. Deepak Rauniar
Director Director
Mr. Keshav Raj Acharya Mr. Bala Krishna Shrestha
Professional Expert Director Director
Mr. Anukool Bhatnagar

Managing Director (CEO)
27
CENTRAL MANAGEMENT COMMITTEE
Mr. Anukool Bhatnagar

Managing Director & CEO
Mr. Subhakanta Kanungo Mr. Priya Ranjan

Chief Operating Officer & Dy CEO Chief Financial Officer
Mr. Chhapi Raj Pant Mr. Dev Raj Adhikari

Chief Risk & Compliance Officer Chief Credit Officer
28
SENIOR MANAGEMENT TEAM
Strategic Report
Left to Right: Mr. Dev Raj Adhikari (CCO), Mr. Prabhakar K. Singh (Head-PFIL), Mr. Priya Ranjan (CFO), Mr. Saket K. Nayak (GRCO),
Mr. Anukool Bhatnagar (MD & CEO), Mr. Subhakanta Kanungo (COO & Dy. CEO), Mr Chhapi Raj Pant (CRCO and MD & CEO, NSMBL),
Mr. Dhawal Bharat Dave (CTO), Mr. Ritwik Guha Thakurta (Head-Treasury)
Mr. Bishnu Dev Yadav Mr. Arjun Nepal Mr. Binod Kumar Dhungel Mr. Umesh Bdr. Karki Contribution to Society
CM, Durbarmarg Branch CM, Commercial Branch Head-Corporate Credit RM-East
Ms. Roshani Bharati Mr. Jeeban Babu Subedi

RM-Central RM-West
29
HEAD OF DEPARTMENTS
Mr. Suraj Manandhar Ms. Soma Roy Gupta Ms. Damayanthi Joshi
HoD-Retail Credit HoD-Central Operations HoD-Human Resource
Mr. Lekha Nath Pokharel Mr. Shreedhar Adhikari Mr. Harish Rana Mr. Min Bahadur Gurung Mr. Santosh Bhandari
HoD-Internal Audit HoD-Compliance HoD-NBG HoD-General Services HoD-Finance & Planning
Mr. Kiran Tiwari Mr. Vishma Neupane Mr. Bigyan Adhikari Mr. Vikas Budathoki Mr. Prabin Acharya
HoD-Reconciliation CS & HoD-Law HoD-MIS HoD-ICT HoD-Alternate Banking
30
Risk Governance Structure:

Bank has a separate and independent processes, reports and recommend/ position of trading book, counterparty
Risk Governance Structure. The Board report to the Risk Management exposure limits, Net Open Position,
has the ultimate responsibility for Committee of the Board for review
Strategic Report
and breaches, if any. Group Risk &
monitoring and managing the risk and further recommendation to the Compliance Officer (GRCO) looks after
profile of the Bank. The Board approves Board for approval. Chief Risk and the Risk Management functions of the
the overall Risk Management policies Compliance Office (CRCO) is the Bank and its subsidiary and acts as a
and sets risk appetite, both of which are Member Secretary of RMCB, Credit bridge between NSBL and SBI on Risk
designed to ensure that we manage Risk Management Committee (CRMC), Management related issues.
our risks in the right way to achieve Operational Risk Management
our agreed strategic objectives. Board Committee (ORMC) and Market The Board and senior management
has established a dedicated board Risk Management Committee encourage a culture of transparency
level Risk Management committee, (MRMC). Further, ALCO Committee and openness to ensure that issues
i.e. Risk Management Committee of is the apex body operating for asset are escalated promptly to them where
the Board (RMCB), which monitors liability management & Liquidity Risk required. The Board approved RMFs
the performance of the Bank’s Risk management, and ICAAP Review and risk appetite statements are put
Management Frameworks (RMFs) Committee reviews adequacy of into effect using an enterprise-wide
under close and regular scrutiny capital under various stress scenarios. framework which applies to every area
and interact closely with the Risk of the business and covers all types
Integrated Risk Management of risk. The framework is designed
Management Committees at various
Department (IRMD) looks after to ensure we follow a consistent
levels.
managing, assessing, identifying, approach to risk management and
Various risk committees at executive monitoring and reducing all pertinent reporting, so that all risks are fully
level have been formed for the business risks that could interfere understood and managed in relation
management of various risks. These with the Bank’s objectives and goals. to our agreed risk appetite levels. It
committees are responsible for Information Security Officer (ISO), who includes our policies, procedures,
management of risks in their areas. looks after Information Technology controls and reporting.
They ensure effective implementation (IT) and cybersecurity risks, reports
of laid down policies and procedures. to CRCO. Treasury Mid Office reports A Risk Governance Structure in the
They also review the policies, to CRCO as well with regard to the Bank is shown in the diagram below;
Board of Directors
Audit Committee of the Employee Service Facility Risk Management
Managing Director Company Secretary
Board Committee Committee of the Board
Chief Risk & Compliance Group Risk & Compliance

Chief Financial Officer (CFO) 1. Central Management Committee
Officer (CRCO) Officer (GRCO)
(CENMAC)
Integrated Risk 2. ALCO Committee
Management 3. ICAAP Committee
4. Credit Risk Management
Credit Risk Committee (CRMC)
5. Operational Risk Management
Committee (ORMC)
Operational Risk
6. Market Risk Management
Committee (MRMC)
Market Risk
Forex & Treasury

Information Security
Front Office Compliance
Mid Office KYC/AML/CFT
Regulatory & Internal

Compliances
31
All policies and manuals are reviewed, best outcome for customers and the macroeconomic environment
updated and approved by the Board stakeholders. remains but the potential impacts of
at least annually to reflect any changes external factors have been considered
The most significant risks which could
in the nature of our business and in all principal risks and uncertainties
impact the delivery of our long-term
external regulations, law, corporate to ensure any material uncertainties
strategic objectives and our response,
governance and industry best continue to be monitored and are
are detailed below
practice. This helps us to ensure we appropriately mitigated. Principal risks
continue to meet our responsibilities The Bank has considered many of the and uncertainties are reviewed and
to our customers, shareholders and potential implications following the reported regularly.
regulators. substantial increment of capital, new
reporting standard like NFRS and the
Our risk appetite framework and
impact to its customers and products
risk management related policies
− as well as legal, regulatory, tax,
& manuals define clear parameters
finance and capital implications.
within which our business units
must operate in order to deliver the Continued uncertainty surrounding
Principal Risks Key Mitigating Actions

Credit risk
The risk that customers and/or other counterparties whom we have either lent money to or - Loan Policy & Credit Risk Management Policy, incorporating prudent lending criteria, aligned
entered into a financial contract with, or other counterparties with whom we have contracted, with Board approved risk appetite, to effectively manage risk.
fail to meet their financial obligations, resulting in loss to the Bank. - Robust risk assessment and credit sanctioning to ensure we lend appropriately and respon-
Adverse changes in the economic and market environment we operate in or the credit quality sibly.
and/or behavior of our customers and counterparties could reduce the value of our assets - Extensive and thorough credit processes and controls to ensure effective risk identification,
and potentially increase our write downs and allowances for impairment losses, adversely management and oversight.
impacting profitability. - Monitoring of quality of credit portfolio on a periodical basis, identify problems and correcting
deficiencies.
- Strengthening of internal Credit Risk scoring model.
- Monitoring of sectorwise credit concentration.
- Moving towards risk-based pricing.
Operational risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people - Implementation of Business Continuity Plan (BCP) to ensure the Bank’s continued operability
and systems or from external events. in the face of any emergency, disaster, crisis.
We face significant operational risks which may result in financial loss, disruption of services to - Continual review of our IT environment to ensure that systems and processes can effectively
customers, and damage to our reputation. These include the availability, resilience and security support customers’ requirements.
of our core IT systems and the potential for failings in our customer processes. - Enhancing the resilience of systems that support critical business processes with independent
verification of progress on an annual basis.
- Enhancing operational risk awareness through Risk and Control Self- Assessment (RCSA)
process.
- Improving early warning information through implementation of Key Risk Indicators (KRIs).
Market risk
The risk that our capital or earnings profile is affected by adverse market rates, in particular, - Equity and interest spread risks are closely monitored and, where appropriate, asset liability
changes in interest rates, foreign exchange rate, equity and commodity prices. matching is undertaken to mitigate risk.
- Stress and scenario testing of risk exposures.
- Ensure that there is clear accountability, responsibility and adherence to the regulatory
guidelines including best practices for management and mitigation of market risk.
- Monitoring of mark-to-market positions of trading book, Net Open Position, counterparty
exposure limits, breaches, if any, by Treasury Mid Office and reporting to the Chief Risk &
Compliance Officer.
32
Strategic Report Corporate Governance Contribution to Society Financial Statements
33
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41
Report of the Board of Directors
Dear Shareholders, Ladies and Gentlemen,
On behalf of the Board of Directors and on my own behalf, it gives me immense pleasure to welcome all of you on the
occasion of the 25th Annual General Meeting of Nepal SBI Bank Limited (NSBL), bank has completed glorious 25 years
of successful operation and I would like to extend sincere gratitude to our regulators, customers, shareholders, staff and
stakeholders for their support. The annual report for the financial year ending 32nd Ashad, 2075 (16 July, 2018), along
with the Director’s Report, Audited Annual Accounts and the Auditor’s Report of your Bank including the details of the
achievements and initiatives taken by your Bank have already been provided to you in the form of Annual Report. With
your permission, I place before you the Report of Board of Directors containing highlights of your Bank’s performance.
I am happy to inform you that during fiscal year 2074-75, your Bank has achieved remarkable growth in business.
NSBL’s operational performance during the year clearly depict that your Bank is on the path of setting higher performance
standards for itself. I would like to share the highlights of NSBL’s performance during fiscal year 2074-75, the business
environment, challenges faced and future outlook of the Bank.
Operational and Financial Performance during FY2074-75;

During the financial year 2074-75, and installed 14 numbers of ATMs, Rastra Bank (NRB), Commercial
NSBL has once again demonstrated signed MOU with LIC Nepal for cross Banks are required to present its
its ability to mould its efforts and selling of life insurance policies. annual accounts and interim reports
activities in line with emerging Further, your bank has a plan to as per Nepal Financial Reporting
market challenges and trends establish 24 new branch/extension Standard replacing the previous
registering consistent performance. counter to reach its network to 100 annual accounts and interim report
Since its inception in July 1993 the during the current fiscal year. standard and format w.e.f. FY2074-
Bank has emerged as one of the The Technical Service Agreement 75. I assume all the investors
leading Bank of Nepal, with 871 (TSA) between NSBL and SBI has are aware about the changed
skilled and dedicated Nepalese been revised during the year and as accounting standards and reporting
employees working in total 87 per the revised TSA now 4 additional requirement. Further, you will be
outlets, which includes 76 branches, India Based Officers (IBOs) have happy to note that your Bank has
7 extension counters, 3 Regional been deputed who are experts in adopted these standards from last
Offices and a Corporate Office. the areas of Risk and Compliance, year itself. Annual Report for the FY
With presence in 44 districts out of IT, Project Finance & Infrastructural 2073-74 for your Bank has been
77 in Nepal, the Bank is providing Lending and Forex and Treasury. This awarded with the “Best Presented
value added services to its customers will enable your Bank to develop Annual Report Award 2017- 2nd
through its wide network of 113 expertise in these areas and face Runner Up” by the Institute of
ATMs (including 2 Mobile ATMs the emerging challenges in banking Chartered Accountants of Nepal
and 4 CRMs), internet banking, industry. (ICAN).
mobile banking, INTOUCH outlet, As per accounting regulatory body An overall synopsis of the Bank’s
e-corners etc. of the country Accounting Standard performance during Financial Year
During the year 2074-75, we Board of Nepal (ASB) and Institute 2074-75 is as under:
have opened 10 new branches, of Chartered Accountants of Nepal
established 505 numbers of POS, (ICAN) and instruction of Nepal
Amount in NPR crore
Particulars FY2074-75 FY2073-74 YoY Growth in Amount YoY Growth in %
Paid-up Capital 804.69 800.00 4.69 0.59%
Reserve & Surplus 475.42 361.48 113.94 31.52%
Debenture 100.00 100 0.00 0.00%
Borrowing 270.96 615.54 -344.58 -55.98%
Deposits 8,422.73 8,081.88 340.85 4.22%
Loan and Advances (including staff loans) 7,523.59 6,412.05 1,111.54 17.34%
Investments & Placements 885.54 796.01 89.53 11.25
Total Assets 10,253.87 9,995.08 258.79 2.59%
Net Interest Income 414.50 299.72 114.78 38.30%
Non-Interest Income 118.93 107.49 11.44 10.64%
Operating Profit 276.17 221.99 54.18 24.41%
Net Profit 202.35 156.47 45.88 29.32%
Return on Assets % 1.97 1.57 (+) 40 bps
Return on Equity % 15.81 14.85 (+) 96 bps
Loan Loss Provision % (as per NRB) 0.20 0.10 (+) 10 bps
Earnings per Share (Rs.) 25.16 25.86 (-) 70 bps
42
The Bank registered a Net Profit of NRB i.e. 25%. Similarly, deprived at 3.7 percent for 2018–19, 0.2
Rs. 202.35 Crore, growth of 29.32% sector lending reached at level of Rs. percentage point lower for both
YoY, which is largely attributable to: 368.65 Crore. The total exposure to years than forecast in April. The
Net Interest Income growth of deprive sector lending reached at downward revision reflects surprises
38.30% YoY. 5.11% of total Loans and Advance, that suppressed activity in early
Strategic Report
Non-Interest Income growth of which is more than minimum level 2018 in some major advanced
10.64% YoY. prescribed by NRB i.e. 5%. economies, the negative effects of
Recovery of written of loan Rs. 3.60 the trade measures implemented or
crore.
CREDIT MANAGEMENT approved between April and mid-
Bank has implemented robust September, as well as a weaker
Loans and Advances registered
credit assessment system to ensure outlook for some key emerging
a growth of 17.34% from Rs.
booking of high quality assets. market and developing economies
6,412.05 Crore as on Ashad’74 to
Continuous monitoring and follow arising from country-specific
Rs. 7,523.59 Crore as on Ashad’75.
up for recovery of impaired asset factors, tighter financial conditions,
To support the growth in Loans & has resulted lowest level of non- geopolitical tensions, and higher oil
advances, effective and efficient performing assets (NPA) in the import bills
resource mobilization strategy were industry since many years. Bank
adopted. Funds released from low Asia has achieved tremendous
is pursuing both preventive and
yielding investments and placements economic progress over the past few
curative management strategies for
were deployed towards higher decades, with hundreds of millions
controlling NPAs. Strong credit risk
yielding Assets mainly Loans & of people lifted out of poverty and
assessment mechanism is in place
Advances. successive waves of economies
to filter out likely NPAs. The non-
transitioning to middle-income and
Accordingly, Balance amount performing loan ratio to total loan
even advanced-economy status. No
required for Loans & Advances is 0.20% and Net NPA ratio is zero.
doubt the region faces important
growth were mobilized through PAID-UP CAPITAL AND challenges, but these can be
growth in Deposits. addressed with smart policy making.
CAPITAL ADEQUACY
RETAIL PRODUCT SEGMENT The Bank has achieved capital India’s economy is gaining
The Bank focused on retail banking augmentation as prescribed by NRB, momentum, due to the
segment having high retention, during the last fiscal year, within the implementation of several recent
margin and low cost. During stipulated time frame. The current noteworthy policies—such as the
FY2074-75, retail segment deposits paid-up capital of the Bank is Rs. enactment of the long-awaited
i.e. CASA (Current and Savings) 804.69 Crore, which is more than goods and services tax, and the
recorded a growth of Rs.146.39 minimum paid-up capital prescribed country opening up more to foreign
Crore and reached at level of Rs. by NRB i.e. Rs. 800 Crore. investors. Therefore, it is expected
3,735.07 Crore. During the year, that economic growth would pick
Bank’s Tier 1 and Tier 2 Capital up to reach at about 7.3 percent
we have opened 123,579 (net) Adequacy Ratios (CAR) were
new savings deposit accounts and for fiscal year 2018/19 from 6.7
13.38% and 1.77% respectively and percent in the year prior. Meanwhile,
2,887 (net) new current accounts. overall CAR was 15.15%. Capital
Vigorous marketing effort, launching inflation has edged higher, in part
position is adequate to meet our due to a reduction of economic
of various campaigns and better expected current year business
customer service resulted in excellent slack.
growth and exceeds the capital Projected growth in China remains at
performance in account opening adequacy requirement under Basel
during the year. 6.6 percent for 2018 and is expected
III capital accord norm i.e. 11% to moderate to 6.2 percent in 2019,
During the year retail segment of implemented by NRB. Our Internal with some increase in medium-
loans and advances increased by Capital Adequacy Assessment term risks reflecting a possibly
Rs. 180.03 (YoY 8.23%) Crore and Process (ICAAP) prescribed minimum slower pace of deleveraging as the
reached a level of Rs. 2,367.83 12% of CAR in line with Group authorities introduce stimulus to
Crore. Campaigns during festival ICAAP, following a prudent capital offset the impact of trade measures.
season resulted growth in retail management approach.
Loans and Advances such as Hire (Source: World Economic Outlook,
Purchase, loans to ex-servicemen WORLD ECONIMIC OUTLOOK October 2018, IMF)

(Indian Army), education loan, etc. Global growth for 2018–19 is NEPALESE ECONOMIC OUTLOOK
projected to remain steady at its
PRIORITY AND DEPRIVED 2017 level, but its pace is less On the domestic front, successful
SECTOR LENDING vigorous than projected in April conclusion of elections, formation
Bank’s exposure in Agriculture, and it has become less balanced. of governments and the formulation
Energy and Tourism sector reached Downside risks to global growth of budget at all three levels of
at Rs. 2,085.22 Crore (28.89% of have risen in the past six months and government have the potential to
total loans and advances), which is the potential for upside surprises has create a conducive environment for
more than minimum prescribed by receded. Global growth is projected economic activities going forward.
43
Economic growth has gained RECENT DEVELOPMENTS borrower or renewing such credit
momentum since 2016/17. The IMPACTING BANK’S BUSINESS facility, rating of the borrower
economy is estimated to have grown institution as provided by credit
by 5.9 percent in 2017/18 while The Monetary Policy for 2075/76 rating agency shall have to be
such growth was 7.4 percent in has been formulated to meet the considered as basis for assessment
2016/17. The GoN has announced budgeted target to achieve 8% of loan.
a target growth rate of around 8 economic growth. The monetary
policy has tried to come up with CRR (cash reserve ratio)
percent for 2018/19. requirement reduced to 4% from
provisions to maintain interest rates
The total number of BFIs licensed within appropriate bounds so as to existing 6%. Similarly, SLR (statutory
by NRB stands 151 in mid-July minimize its volatility, as projected in liquid ratio) requirement reduced to
2018 from 149 a year ago. As of the policy. 10% from existing 12%. However,
mid-July 2018, the number of this reduction in CRR/SLR will not
commercial banks stood at 28, Monetary policy has prioritized increase loanable funds as CCD
development banks 33, finance agriculture, tourism, energy, requirement of minimum 80% is still
companies 25 and microfinance small and cottage industries and binding.
institutions 65. The branch network liquidity management. The policy
has defined Hydroelectricity, Interest on deposits and loans
of BFIs expanded to 6651 in mid- and advances should be determined
July 2018 from 5068 a year ago. Agriculture, Export, Tourism, SME
Industries, Pharmaceuticals, Cement in such a way that average interest
Of the total 753 local levels, spread is not more than 4.5% by the
commercial banks extended their and Garment Industry as priority

productive sectors. Commercial end of Asadh, 2076 from prevailing
branch network in 631 levels as of 5%.
mid-July 2018. banks are now required to disburse
at least 10% of their loan portfolio Bank rate has been reduced to
As of 16 July 2018, 162 banks in agriculture, 15% on energy and 6.5% from existing 7%.
and financial institutions underwent tourism sectors for a total of 25% to
merger and acquisition process Commercial banks to obtain
be lent to priority sectors. mandatorily credit rating from
after implementation of merger and
acquisition policy by NRB. Of these, Existing provision that requires national or international institutions
license of 121 institutions were commercial banks to lend 5% of from FY 2075/76.
repealed to consolidate their license their total loan portfolio to deprived Commercial Banks can bring in
to 41 BFIs. sectors is intact. foreign loan in convertible foreign
Credit to the private sector from BFIs Margin lending has now been currencies worth 50% of its core
increased 22.5 percent in the review limited to 40 percent of core capital for investment in prescribed
year compared to a rise of 18.2 capital towards margin sector infrastructure sectors. Extending the
percent in the previous year. loans. Similarly, the margin for same provision, banks can bring in
keeping shares of a single company this loan in Indian currency too.
Deposits at Banks and Financial as collateral will account for a
Institutions (BFIs) increased 19.2 maximum of 10% of total margin.
CORPORATE GOVERNANCE
percent in the review year compared Your Bank has been an epitome of
to an increase of 14.0 percent in Down payment for Auto loan has
trust across the length and breadth
the previous year. been increased to 50% from existing
of the country. Good corporate
35%. Limit for Personal loans not
The workers’ remittances, which governance practices and ethical
disclosing the purposes including
contribute to deposit resource to business conduct remain at the
overdraft reduced to Rs. 50 Lakhs
BFIs, increased 8.6 percent to core of NSBL’s value system. Fully
from existing Rs. 75 Lakhs.
Rs.755.06 billion compared to a committed to adopt and implement
growth of 4.6 percent in the previous During sanction and renewal of the best practices on Corporate
year. the credit facility of working capital Governance, NSBL ensures
nature, statement of current assets transparency in its activities with
In the review year, capital expenditure and liabilities submitted by the special emphasis on accountability,
increased 20.4 percent to Rs. borrower has to be certified by the financial prudence, ensuring
239.91 billion compared to a growth auditor if the loan amount is above stake-holders satisfaction and
of 72.2 percent in the previous year. Rs. 25.00 crore. safeguarding investor’s interest.
The capital expenditure in the review
year accounted for 71.6 percent of While sanctioning credit facilities INTERNAL CONTROL,
the budget estimate of Rs.335.18 to the firm and companies or
renewing the loan availed by them,
INSPECTION AND AUDIT
billion.
latest tax clearance certificate and/or Your bank believes in strong
(Source: Monetary Policy for FY2018/19 updated tax clearance/submission financial discipline and compliance
and Annual Macro Economic Analysis for certificate or E-Statement has to be mechanism. Bank has a well-
FY2017/18 issued by NRB) obtained. established independent internal
audit system and structure to ensure
While sanctioning credit facilities
adequate internal control for safe and
of Rs. 50.00 crore or above to the
44
sound operations. Internal Auditor The risks to which a bank is Management Department (IRMD)
reports to the Audit Committee particularly exposed in its operations is in place at the bank headed by
with findings during internal audit are: operational risk, credit risk, Chief Risk and Compliance Officer
process to strengthen and improve market risks (interest rate risk, (CRCO) to further strengthen the Risk
control mechanism in the Bank. The foreign exchange risk and risk Management structure. The role of
Strategic Report
Audit Committee of the Bank under from change in market price of IRMD team is focused on assessing,
chairmanship of a non-executive securities, financial derivatives and identifying, monitoring and reducing
director reviews the financial commodities), liquidity risk, exposure pertinent business risks. Further,
position of the Bank, adequacy risks, investment risks, risks relating being a subsidiary of State Bank of
of its internal control systems and to the country of origin of the entity India, your bank is also required
issues appropriate guidelines based to which a bank is exposed, legal to comply with the requirements of
on the feedback received from the risk, reputational risk and strategic the Group Risk Management Policy
internal audit reports. The Audit risk. of State Bank of India who are
Committee from time to time reviews To address the above issues, Nepal continuously monitoring our systems
its policy and circulate instructions SBI Bank has been implementing & controls. Your bank received A+
and guidelines to operative level an independent risk monitoring rating, the highest rating in the last
for further improvement, control structure for better control and Management Audit conducted by
and compliance of extant rules, mitigation of risk. Banking business SBI Audit & Inspection team. Group
regulation and instructions. involves a trade-off between risk and Risk and Compliance Officer has
The bank has adopted and return. A fine balance between risk been deputed by SBI under TSA
successfully implemented Risk and return ensures continuity and agreement to monitor and improve
Focused Internal Audit (RFIA), prosperity of the bank. risk management in the Bank.
whereby a provision of 11 different The various Risk management ASSET LIABILITY MANAGEMENT
types of Audits has been made in the committees are in place in the Bank Asset liability management (ALM) is
Audit Manual. Under RFIA, branches to manage and control all facets of the administration of policies and
are categorized into three groups as risk arising out of different areas of procedures that address financial
per risk perception and are subject banking business, viz. Market Risk risks associated with changing
to various degrees of audit. The Management Committee, Credit interest rates, foreign exchange rates
periodicity of audit is determined Risk Management Committee, and other factors that can affect a
by the classification of the branches Operational Risk Management company’s liquidity. Your bank is
according to the extent of control Committee, Assets and Liabilities efficient in ensuring asset liability
quantified by previous RFIA. Self- Management Committee, management and is undertaking
Audit of operating units has also been ICAAP Review Committee. These timely review of the ALM positions
introduced, under which audit of a committees identify, assess, mitigate, of the bank. The bank has
branch is carried out by the branch
control and monitor risk strictly in implemented a comprehensive Asset
itself providing greater insight and line with the policy frameworks for Liability Management (ALM) System
controlling tools for the Regional such areas of banking business. for effective management of Market
Managers and the Management for These risk management committees Risk covering Liquidity Risk, Interest
effective supervision of qualitative together with the Audit Committee Rate Risk and Foreign Exchange
parameters of operations. form the structure through which the Risk.
RISK MANAGEMENT Board oversees the risk management
Liquidity and Interest Rate Risks
function.
In the course of operations, we are are measured through Structural
invariably faced with different types Your bank has already migrated to Liquidity Report. Both the risks on
of risks that may have a potentially Basel-III norms and the Capital to Foreign Assets & Liabilities are
negative effect on our day to Risk Weighted Assets Ratio (CRAR) being monitored through Maturity
day business. Risk management is also being worked out as per & Position (MAP) and Sensitivity
in bank operations includes risk the guidelines of Basel-III. To to Interest Rate (SIR) reports. The
identification, measurement and control, obviate and mitigate the monitoring of liquidity on a dynamic
assessment, and its objective is operational risk, the Bank has put basis over a time horizon spanning
to minimize negative effects risks in place comprehensive operational 1-90 days and more is in place.
can have on the financial result guidelines and has also issued
The Asset Liability Management
and capital of a bank. Banks are various manuals, such as Cash
Policy coupled with Investment
therefore required to form a special Module Manual, IT manual, Finacle
Policy of the Bank specifies various
organizational unit in charge of Job cards, TFCPC manual, Internet
prudential limits for management
risk management. Also, they are Banking guidelines, Mobile Banking
of Liquidity and Interest Rate Risks.
required to prescribe procedures for operational guidelines, Credit
A system of daily monitoring of
risk identification, measurement and assessment and process guidelines
inflows and outflows of deposits is
assessment, as well as procedures for the operating units.
in place for managing Liquidity on
for risk management. A separate Integrated Risk a day-to-day basis. Stress Testing on
45
Liquidity, Interest rate and Foreign TECHNOLOGY INITIATIVES BRANCHLESS BANKING (BLB)
Exchange positions has also been
The contours of banking sector are Nepal SBI Bank, to reach a large
undertaken during the year. The
changing in line with the aspirations customer bases through huge
structural liquidity report is being
of technology oriented Nepalese correspondents’ networks using
prepared and reviewed regularly.
people. Your Bank is a strong reliable electronic devices with
Scenario analysis on market risk, as
proponent of leveraging information state-of-the-art technology and
prescribed by Nepal Rastra Bank is
technology to deliver convenience to also to offer diversified products to
also being ensured.
its customer. We are also committed the customers including real time
CODE OF ETHICS towards transforming ourselves into account opening, has launched
For smooth operation of day to day a digitized organization. Some of Branchless Banking (BLB) System.
banking and policy level decision the achievements towards this are as Technology, third party outlets (the
and strategies to be initiated by under; agents/business correspondents),
the bank, the Bank has devised proper cash management are the
NEPAL SBI INTOUCH OUTLET
and implemented its own ‘Code of key elements of the BLB. Branchless
In the era of Technological Banking (BLB) represents a
Ethics’ to be followed meticulously
advancements, Nepal SBI Bank Ltd significantly cheaper alternative to
by all the members of its Board
(NSBL) has been continuously taking conventional branch-based banking
of Directors, Management Team
steps to upgrade the systems and that allows financial institutions
and staff at all levels. The Code
processes and adopt world class to offer financial services outside
of Ethics implemented by your

technologies to facilitate banking traditional bank premises by using
bank is consistent with the spirit of
services to its customers in Nepal. delivery channels like retail agents
Good Governance Act and is fully
Technical Services Agreement with and technology.
compliant with Nepal Rastra Bank’s
our parent Bank, State Bank of India
guidelines on maintaining good CORE BANKING SOLUTION (CBS)
has enabled us to acquire the new
corporate governance in the bank.
technologies and process at almost Nepal SBI Bank has been using
All the members of the Board have
negligible cost. Towards this, one the Finacle Core Banking Solution
observed the code of conduct/ ethics
such step Nepal SBI Bank Ltd has software which is a real time 24X7
prescribed under NRB Directives.
taken is, by opening Nepal SBI account processing platform which
CREDIT RATING OF NSBL INTOUCH Outlet at Durbar Marg, has a layered Service Oriented
ICRA Nepal Limited has assigned Kathmandu which has become Architecture (SOA), Straight through
and reaffirmed issuer rating of very popular among tech savvy Processing capabilities and web
“[ICRANP-IR] AA” (pronounced young Nepalese population. The enabled technology. On this core
ICRA NP Issuer Rating Double A) to INTOUCH outlet not only provides platform are integrated various value
Nepal SBI Bank Limited on October Alternate channels to our customers added services like SMS/Mobile
2017. “[ICRANP-IR] AA” rating is for banking but also helps in making Banking and Internet Banking in
considered as high credit quality paperless banking a reality. The addition to ATM cards which is
rating assigned by ICRA Nepal and outlet has a robot named ‘PARI’ superior in terms of security features
the rated entity carries low credit who welcomes and greets customers and speed of processing data.
risk. The above rating received by visiting the outlet. PARI is the ROBOT
CARD PRODUCTS
the bank is the highest rating ever first time used in the Banking Services
in Nepal. Your Bank has offered various
assigned by ICRA Nepal to Nepalese
Visa branded debit card services
listed companies. E-CORNER to its customers and subsequently
As per ICRA Nepal, the rating The bank has been providing services upgraded the security features over
assignment/reaffirmation factors through number of alternative the time. ATM cum Debit Card,
the bank’s strong promoter profile, channels such as ATM, E-Banking, Bharat Yatra Card, VishwaYatra
existence of Technical Service Mobile banking, CDM, Kiosks etc. Card are the debit card products
Agreement (TSA) with State Bank All these utilities combined creates an offered by the Bank and are VBV
of India, established track record unique experience for the customers (Verified by Visa) enabled, an extra
(operating since 1993) and adequate of bank wherein the customers will layer of security that helps to prevent
franchise leading to good market be able to enjoy services offered unauthorized use of the cards while
positioning in Nepal. ICRA Nepal’s by the bank without any manual online shopping. All the Card issued
Rating Certificate further states that intervention at any time preferred by NSBL has been converted to Chip
the rating was assigned to the Bank by the customer. Our e- corner Based Card.
by taking into consideration bank’s outlet at Durbarmarg Main Branch, AUTOMATED TELLER MACHINES
experienced senior management, Kesharmahal, which provides easy
improved deposits profile, strong (ATMs)
and hassle free, various Alternative
asset quality, adequate capitalization Channels such as Cash Recycler With a view to provide hassle
levels, moderate portfolio growth Machine (CRM), ATMs and Self free and easy banking, the Bank has
and adequate earnings profile. Service Kiosk (SSK) etc. for NSBL installed 113 ATMs (including 4 CRM
customers. and 2 mobile ATM) all over the
46
country including 2 mobile ATMs 181,541 with growth of 24% over situated 20 KMs north-east side of
for Kathmandu valley and Pokhara the last year (146,942 customer Kathmandu and launched the same
Valley for all over the country to availed mobile banking last year). accordingly amidst the program. The
provide 365 days banking services to INFORMATION TECHNOLOGY & village is inhabited by approximately
its customers. Your bank is planning 450 households with population of
Strategic Report
SYSTEMS SECURITY
to add more ATM in different places 2,200. Major economic activities
of Nepal in coming days. Further the Nepal SBI bank is having a in the area are traditional farming
Bank has already added modern comprehensive IT and Information and animal husbandry. The aim
features in its ATMs viz. fund transfer, Systems (IS) Security systems to of the initiatives is to ensure 100%
request for SMS/Mobile banking control the threat and risk associated financial inclusion with focus on
registration, Donation utility, etc. with IT enabled services which migration to alternate channels
Various international cardholders address all the concerns including through POS, ATMs, CDM, Mobile
can also transact easily from our maintenance of customers’ banking, Internet Banking which will
ATMs at nominal charge. confidentiality, security and integrity ultimately convert this village into
of data. Bank’s data center where cash-less eco system. Further, to
INTERNET BANKING the Bank’s CBS database resides improve overall living conditions of
Your bank is providing highly (both Primary and Disaster Recovery the people in the area credit linkages
secured internet banking service to Site) has acquired the accreditation and coverage under deprived sector
its valued customer. E-statement, for the international standard for has also been started and initiated.
Fund transfer, utility bill payments, Information Security Management
Indian railway ticket booking, Locker Systems. All the Banking applications POS TERMINAL SERVICES
Module etc. are available on the of the bank are highly secured The bank has established POS
internet banking platform. Further, have built-in security features like terminals at different strategic
One Time Password (OTP) and ATM access control, data encryption business location to facilitate the
card blocking features have been and transmission through secured valued customers. The total number
added in E-banking. In order to channels as per the requirement of of POS Terminal of Nepal SBI Bank
develop awareness and encourage the application. The threat of virus has reached to 680 by end of Fiscal
customers to use E-banking facility is minimized by having a centralized year 2074/75.
for quick and hassle-free banking anti-virus solution. Adequate
experience, the Bank in time to time Firewalls and Intrusion Detection
REMITTANCES
launching E-banking mobilization Systems are in place so as to prevent Nepalese economy is heavily relying
campaign. The number of e-banking unauthorized access to the network. on remittance as a major source
user as at the end of Fiscal year of income. Having products and
A state of art, highly secured
2074/75 has reached to 66,377 mechanism like NSBL Payment
Disaster Recovery Plan (DRP) for all
against 56,277 by registering a gateway for real time remittance to
the operations is in place. The Bank
growth of 18 percent against last and from India, Indo Nepal Workers
has taken steps to increase security
year. remittance, SBI Nepal Express
awareness amongst staff as well as
Remittance, GLS platform for
MOBILE BANKING customers and to ensure compliance
remittance from gulf countries etc.
of IT security. All the branches and
The modern technology based SBI group has vast global reach and
operating units have been provided
banking product and services like infrastructure to tap such businesses.
a detailed booklet for guidelines
Mobile/SMS Banking has already
been made available to our valued
on IT Policy containing IS Security CUSTOMER SERVICE
related matters etc. for day to day At Nepal SBI Bank we know that
customer, which has been upgraded
operation. we have to bring banking to the
to app based application currently.
This service of the Bank allows its NEPAL SBI DIGITAL VILLAGE fingertips of our customers. We
customers to view account balance, realize that modern banking is
As part of our consistent effort
inquiry of exchange rates, banking about enabling our customers to
towards financial inclusion
hours, check mini statement, have a meaningful relationship with
and adopting Technological
transaction alert, fund transfer, their money. The customer wish to
advancements for the banking in
utility bill payment, book airlines transact more quickly, accurately
unbanked areas, Nepal SBI has
ticket, etc. Bank is planning to add and efficiently than ever before.
rolled out a new initiative “Nepal SBI
more features and make mobile Keeping customers in its first priority
Digital Village”. The project aims at
banking more convenient, secure the Bank continues to render
transforming the selected villages
and popular among its customers. better customer service by devising
into cashless ecosystem by adopting
Bank’s Mobile Banking App is simplified processes and innovative
safe, healthy and vibrant digital
available for free download from delivery channels accordingly over
channels for financial transactions.
Bank’s website and Google Play the years. Providing value added
NSBL has launched similar initiative
store. The total number of customer services, leveraging core Banking
in Nepal and to begin with, has
availing Mobile banking service up technology and re-designing key
identified a village “Jaharsing
to Ashad end 2075 has reached to business processes in line with the
Pauwa” in Sankarapur Municipality,
47
requirements of the customers, have the Bank incurred expenses of Rs. 2017 and duly approved by NRB
helped in providing customers a 95,29,716 (Rupees Ninety Five on 06.11.2017 and recorded by
satisfying banking experience with Lakh Twenty Nine Thousand Seven OCR on 08.11.2017. As a result of
international standards. Today’s Hundred Sixteen) in connection with approval and recording of amended
customers evaluate and choose the various CSR activities. The details for provisions of the Bank’s AoA, the
banks based in their provision of CSR activities have been presented office of directorship of Directors
self-service banking tools. To the separately in this annual report. Shri Siddhartha Sen Gupta, DMD,
possible extent, customers do not IBG, SBI, Shri Niranjan Kumar
prefer to visit the bank and wait for
INDUSTRIAL AND BUSINESS Tibrewala and Shri Sanjay Kumar
an hours in a serpentine queue to RELATIONS OF THE BANK Sureka ended on 08.11.2017.
get their cash deposited, cheque Like in the previous years, the Upon the retirement of Shri Krishna
paid, statement printed, queries industrial relations in the Bank Prasad Acharya, ex-Chairperson
addressed, etc. In order to fulfill remained cordial during the of the Board, from the service of
these needs, our Bank has installed review year. The Bank has devised Employees’ Provident Fund, EPF has
technology driven products like permanent industrial relations nominated Shri Deepak Rauniar,
ATMs, SMS/Mobile Banking, Internet architectures (IRA) to address and Chief Officer in the Board of NSBL
Banking and Live support SSK (self- redress IR issues in the Bank. The and he has been inducted as Director
service Kiosk) CRM (Cash Recycler Industrial Peace Award won by the in the Board on 27.10.2017.
Machine ), Mobile ATM services etc. Bank in year 2016 recognizes IRA in Similarly, Shri R.S. Ramesh, General
place in the Bank. Manager (Retail & Subsidiaries),

CUSTOMER COMPLAINT
AND RESOLVE OF SUCH Bank is the members of State Bank of India (SBI) has
various industrial and business been inducted on the Board on
COMPLAINT organizations, for exploring the 16.06.2018 upon his nomination
During the FY2074/75, Bank has business opportunities and for by SBI in place of Shri Vijay Kumar
received 11 number of complaint wellbeing of the industry and Tyagi, General Manager (Retail and
from customers and all complaints community. The Bank has taken Subsidiary) IBG, SBI. Shri Bishnu
are resolved by the Bank’s membership and engaged with Prasad Poudel, Deputy Chief Officer
management. Nepal Bankers’ Association, Nepal (Acting), EPF has been nominated
India Chamber of Commerce & as Alternate Director representing
SOCIAL RESPONSIBILITY
Industry, Federation of Nepalese EPF on the Board replacing Shri
INITIATIVES Chamber of Commerce & Industry, Dhruba Bhattrai, Senior Manager,
Nepal SBI Bank Ltd has been Confederation of Nepalese Industry, EPF. Shri Dhruba Bhattrai was earlier
executing various social banking Foreign Exchange Money Dealers nominated as Alternate Director
initiatives under Corporate Social Association, Nepal Banking representing Employees Provident
Responsibility (CSR). As part of our Institute, Credit Information Center Fund (EPF) on the Board of NSBL on
customer education initiative, we Ltd., Deposit and Credit Guarantee 25.08.2017. Similarly, 24th AGM of
have already started with NSBL Fund, CDS and Clearing Ltd. the Bank held on 3rd January 2018
Tech Learning Centers (to increase elected Shri Bala Krishna Shrestha
awareness of bank’s Technology THE BANK’S SUBSIDIARY: unopposed as Director representing
products among the people), Nepal SBI Merchant Banking general public shareholder in the
launched at three Regional centers, Ltd (NSMBL) Board of the Bank.
with meeting to be observed on the The bank has its wholly owned The Board further places on record
third Thursday of every month. This subsidiary company Nepal SBI our appreciation for the contribution
has drawn a lot of interest and in Merchant Banking Ltd (NSMBL) with made by Shri Krishna Prasad
due course will be extended to more a view to provide merchant banking Acharya, ex-Chairperson of the
centers. and capital market related services Board, Shri Siddhartha Sen Gupta,
Nepal SBI Bank Ltd. remains always to our valued customers. The Bank DMD, IBG, SBI, Shri Vijay Kumar
conscious about its responsibility has appointed its subsidiary as Tyagi, General Manager (Retail and
towards the society as a whole its Registrar to Shares (RTS). The Subsidiary) IBG, SBI, Shri Niranjan
every year the bank is allocating progress of the subsidiary has been Kumar Tibrewala and Shri Sanjay
minimum 1% of Last Year Net Profit presented separately in the Annual Kumar Sureka, Shri Dhruba Bhattrai
for the progress of the community Report. in guiding the affairs of the Bank
and country through several during their tenure and welcome
CSR initiatives. NSBL supported
CHANGE IN THE BANK’S BOARD Directors Shri Deepak Rauniar, Shri
directly or in partnership with Bank’s Board underwent change R.S. Ramesh, Shri Bala Krishna
other organizations, to various due to amendment in the Bank’s Shrestha and Shri Bishnu Prasad
individuals, groups or institutions in AOA relating to the Board’s Poudel in the Board of the Bank.
wider area of social life including structure, which was adopted by
natural calamities, education, majority in the Special General
sports, culture, etc. During the year Meeting (SGM) held on 28th August
48
FURTHER INFORMATION AND Europe, US, Australia, Singapore, Further, the bank is also planning to
DISCLOSURES Malaysia, etc. by enabling linkages add another 24 branches/extension
and arrangements with various counterswithin March 2019. We are
All the statutory requirements on domestic and international remittance in process of Business initiation with
disclosure of information, including companies and agencies. China Union Pay, Master Card issuing,
Strategic Report
under Section 109(4) of the YONO, Nepal SBI Credit card, SBI
Companies Act, 2063, and report Nepal SBI has proved itself as one of
the initiator of digital technology in e-Payment Gateway of Nepal SBI
under Rule 26(2) of Securities for India to Nepal remittance, Up
Registration and Issuance Regulation banking and has complete package of
modern technology based alternative gradation of Gulf Nepal express remit
2073 and other discloures and to support Credit to other Bank and
reports to be furnished in the annual delivery channels: Automated Teller
Machines, SMS/Mobile Banking, Cash Payout and NCHL’s Connect IPS
report have been embodied as and Signature verification module to
annexure to this report. Similarly, Internet Banking, e-corner having
CRM (Cash Recycler Machine) and enhance our business area.The Bank
information regarding the Bank’s is also focusing to provide extant
Corporate Social Responsibility SSK (Self-service kiosk) mobile ATM
Van, launching of POS terminals, banking services in underserved and
initiatives, Corporate Governance un-served areas on the country through
and Risk Management and useful etc. The Bank has introduced various
additional facilities like IRCTC Ticket technology i.e. Digital Banking.
information for Shareholders
can be found in their respective Online Booking Utility, Telephone, Post- FUTURE OUTLOOK
sections. Financial Statements Paid Mobile, Electricity bill payment
Bank is supporting the campaign
including Statement of Financial and ADSL bill payment through
of Government of Nepal financial
Position, Statement of Profit and Mobile Banking, Internet Banking and
access to all Nepalese people by
Loss, Statement of Comprehensive the Branches. Your bank proposes
expanding its branches in rural
Income, Statement of Change in to approach the new businesses with
areas. Similarly, our objective will
Equity and Statement of Creditors more tech savvy product ranges and
be expanding the customer base at
followed by the schedules prepared integrated solutions like fund transfer
the same time by maintaining strong
as prescribed by Nepal Rastra Bank and remittance service through ATM
customer relationship. Digitized
and notes to financial statements machine, online payment through
and modern technology based
thereto can be found subsequently. Debit cards, installation of Point of
banking service and innovative tools
Sale machines at different business
OUR STRATEGIES FOR THE will be adopted in order enhance
centers to ensure hassle free, high
the efficiency and to provide
CURRENT YEAR (2075-76) quality customer service at low cost.
international standard customer
The bank is focusing to introduce Our strategies will continue on service.
digital banking initiatives in banking focusing stable and long term low-cost
Competition among Commercial
sector thereby launching various deposits, expansion of retail advances
banks and financial institutions is
innovative products. The Bank has to improve efficiency parameters and
in increasing trend and NSBL has
launched its digital initiatives NSBL- the market share, maintaining asset
to keep up with the challenges in
In touch, Digital village, POS service, quality of high standard, developing
the current market scenario and
etc. The bank has already introduced innovative/competitive products
continue to growth its business to
its own remittance gateway which and improving delivery channels,
retain its leading position.
is cost effective facilitates for trade restructuring business processes
and non-trade remittance to India. in the techno-driven environment,
Additional remittance product, Global further strengthening the sophisticated
Link Services (GLS) utility for remittance risk management systems, ensuring
business is in place for facilitating high quality of customer service and
inward remittance from abroad, adopting best Corporate Governance
including gulf countries. Emphasis practices, would continue to remain
will be given to bring more and more guiding factors and strategy for your
remittances from gulf nations, India, Bank.
PROGRESS FOR THE CURRENT YEAR

Current year’s first quarter performance and achievement in comparison with previous year’s corresponding period is
as follows:
Q1FY2075/76 Q1FY2074/75
Particulars Growth in %
NPR in crore NPR in crore
Loans and Advances 8,462.58 6,817.03 24.13%
Deposits 9,446.79 8,662.00 9.06%
Net Profit (P/L) 48.98 43.89 11.60%
The Bank has opened 4 new branches respectively at Okhaldunga, Khotang, Nuwakot, Baitadi. With this the network of
the Bank reached at 76 branches.
49
ACKNOWLEDGEMENTS
On behalf of the Board of Directors, I am indeed grateful for the cooperation,
guidance and support extended by the Government of Nepal, Nepal Rastra Bank,
Office of the Company Registrar, Securities Board of Nepal and other regulatory
bodies. I also place on record my special thanks to all Board members, shareholders,
valued customers, employees and stakeholders of the Bank for extending their
valuable support and cooperation.
Thank you for your kind support.
For and on behalf of the Board of Directors

Chairman
Place: Kathmandu
Date: 2075/08/29 (15.12.2018)
50
Annexure to BOD Report

ADDITIONAL INFORMATION REQUIRED TO BE FURNISHED AS PER SECTION 109 (4) OF
THE COMPANIES ACT, 2063
(i) No shares have been forfeited by the Bank during the fiscal year 2074/75.
Strategic Report
(ii) Main transactions carried out by the Bank and its subsidiary during the financial year 2074/75, and any important change in the
business of the Bank during the period:
Bank and its subsidiary carried out transactions as per objectives/functions detailed in the Memorandum of
Association and Articles of Association. The highlights of the business have been detailed in the Directors’ Report/
Annual Report. There was no significant change in the nature of the business performed by the Bank and its
subsidiary during the year.
(iii) No information has been received by the Bank from its basic shareholders as per the provisions of the Companies Act, 2063.
(iv) No shares were taken up by the Directors and key office-bearers of the Bank during the year nor were they found to have engaged in
the share transactions of the Bank’s shares in contravention of the prevailing laws.
(v) No information was received from any Director or any of his/her close relatives about his/her personal interest in any agreement
connected with the Bank signed during the financial year 2074/75.
(vi) The Bank has not so far purchased any of its own shares.
(vii) Particulars of the Total Management expenses of the financial year
S. N. Particulars Amount in Rupees
1 Staff Expenses (Including Bonus) 1,375,420,104.00
2 Other Operating Expenses 924,858,826.00
(viii) The Bank has an Audit Committee comprising of the following members
S. N. Name of the Members Position
i. Mr. Deepak Rauniar, Director representing EPF Chairperson
ii. Mr. R. S. Ramesh, Director representing SBI, India Member
iii. Mr. Lekha Nath Pokhrel (Internal Auditor) Member Secretary
NUMBER OF AUDIT COMMITTEE MEETINGS HELD DURING 2074/75: 6 (SIX) MEETINGS

MEETING ALLOWANCES PAID TO THE MEMBERS : RS. 60,000.00
ROLE PLAYED BY THE AUDIT COMMITTEE
Review of quarterly performance of the Bank and report to Board.
Review of the Bank’s internal controls in different areas of Bank’s operations.
Finalization of Internal Audit Program.
Reviewing the implementation of recommendations made by the Statutory Auditors and NRB Inspection
Team.
Recommending the appointment of Statutory Auditors to the AGM.
Ensuring that the Financial Statements to be submitted to the Board of Directors are true and correct.
Reviewing the status of Nostro Accounts.
SUGGESTIONS GIVEN BY THE AUDIT COMMITTEE:
Management to arrange for invariably issuance of renewal sanction letter and get it acknowledged from
borrower and PG holders.
Management to arrange for timely renewal and debit freeze of loan accounts unless it is renewed.
Management is advised to devise the suitable internal control system to alert on expiry of collateral insurance
as proactive measure.
Management is advised to arrange compliance audit from controllers on the periodic manner so that the
reported lapses will be rectified at the earliest possible.
Management is advised to arrange for rectification and establish a suitable internal control system of TFCPC
units so that those operational observations may not persist in future.

Management is advised to approach the Board for post facto approval wherein the actual expenditure has
exceeded the budget.
51
(ix) The under noted amounts were paid as remunerations, allowances and facilities to the Directors, the Managing Director and other office
bearers.
1. Allowances/facilities to the Members of the Board:
A total of Rs. 750,000 was paid to the Board members as Board Meeting fee during 2074/75 {@ Rs.12,500.00
per meeting for the Chairman and @ Rs.10,000.00 per meeting for other Directors} which includes Rs 170,000
paid to Directors for attending the meeting of Risk Management Committee of the Board, Rs 60,000 for attending
Audit Committee of the Board and Rs 40,000 for attending the meeting of Employee Service Facility Committee of
the Board.
2. Managing Director & Other Office Bearers:
a) No remuneration was paid to the Managing Director & other India Based Officers during the year (Management
team seconded by SBI) except the payment of Rs 70,05,909.00 towards rent for their residential quarters and
payment of permissible allowances and expenses. Their salary and allowances are paid by SBI under Technical
Services Agreement.
b) Other Office Bearers: A total of Rs 10,857,609 was paid to other office bearers of the bank as their remuneration,
allowances and facilities.
(x) Dividends yet to be collected by the shareholders:
Dividends pertaining to the following financial years are yet to be collected by the shareholders as on 32nd Ashadh
2075:
S. N. Fiscal Year Amount Rs.

1. FY2052/53 255,000
2. FY2053/54 239,600
3. FY2054/55 272,200
4. FY2055/56 163,400
5. FY2056/57 245,600
6. FY2059/60 533,482
7. FY2062/63 439,679
8. FY2063/64 651,139
9. FY2066/67 789,616
10. FY2067/68 896,256
11. FY2068/69 1,164,694
12. FY2069/70 2,273,923
13. FY2070/71 3,580,380
Total 11,504,971
(xi) No property was purchased or sold by the Bank during the year as stipulated under Section 141 of the Companies Act, 2063.
(xii) Transaction held between the Bank and its associate companies during the year as stipulated under Section 175 of the Companies Act,
2063: Transaction including those related to regular business held between the Bank and its associate companies during the year has
been disclosed in the Financial Statements under related party transactions.
(xiii) Other required information:
a) Amount of penalty paid by the Directors, office bearers and shareholder as per section 81 of the Companies Act,
2063:
None of the directors, office bearers and shareholders of the Bank paid any penalty to the office of the Company
Registrar.
b) Information in regard to close relative of the Directors or office Bearers working at the office (office of the company
Registrar), securities Board of Nepal or any other regulators in an officer or above level as required under Directives
no. 45 of the Company Directives, 2072:
Name of the Directors/Office Details of relative
S.N.
bearers Name Relation Regulatory Organ Position held
A. Directors Nil
B. Office Bearers
1. Rabin Ghimire Shyam K. Dahal Maternal Uncle Director (O)
Nepal Rastra Bank
2. Manoj Chapagain Jayanti Poudel (Chapagain) Aunt Assistant Director
Jagdish Rijal Brother Officer
3. Kishor Rijal Nepal Stock Exchange Ltd.
Sanju Kandel Sister-in-Law Officer
B.S. 2075/08/29 Mr. Sujit Kumar Varma
Place: Kathmandu Chairman

52
DISCLOSURE RELATED TO SUB RULE (2) OF RULE 26 OF SECURITIES REGISTRATION

AND ISSUANCE REGULATION, 2073
1. Report of Board of Directors: Enclosed
2. Report of the Auditors: Enclosed
Strategic Report
3. Audited Financial Details: Enclosed
4. Details relating to Legal Action
A. Law Suits filed by/against the Bank:
(i) The Bank has filed an Administrative Review before Inland Revenue Department against the Amended Tax
Assessment by Large Tax Payers Office for FY 2070-71. 19 lawsuits have been filed against the Bank in respect
to Credit/NPA and general matters.
(ii) One lawsuit has been filed by the Bank against different borrowers/guarantors for recovery of dues during the period.
B. Law Suits filed by/against the promoters/directors involving charge of regulatory violations or criminal offences:
No information received by the Bank till date.
C. Case filed against any promoters/directors for financial fraud: No information received by the Bank till date.
5. Analysis of share transaction and progress of Organized Institution:
a. Management view on share transactions of the Bank on Nepal Stock Exchange:
As the Nepal Stock Exchange is operating under the supervision of Securities Board of Nepal, management has
no comment on the same.
b. Maximum, minimum and closing share price of organized institution including total transacted number of
shares and transacted days during the Year 2074-75 (as per the table):
Total Transacted
Quarter Maximum Minimum Closing Total Number of
Number of
(Months) Share Price (Rs.) Share Price (Rs.) Share Price (Rs.) Trading Days
Shares
First Quarter (Ashwin End 2074) 965.00 765.00 830.00 376,639 56
Second Quarter (Poush End 2074) 835.00 585.00 595.00 433,374 57
Third Quarter (Chaitra End 2074) 610.00 495.00 550.00 330,932 56
Fourth Quarter (Ashadh End 2075) 634.00 481.00 499.00 307,890 63
6. Problems and Challenges
a. Problems and Challenges Faced:
i. Internal:
• Maintaining consistency in Return in Equity amidst increase in Capital.
• Maintaining liquidity and regulatory prescribed ratios, with growth of business.
ii. External:
• Challenges to attract low cost deposit.
• Limited avenue for long term Lending and Investment.
b. Strategy followed by the management in solving such problems and challenges:
• Increased focus on retail loan portfolio.
• Augmentation in liability products by way of more focus on CASA
• Regular In-House training to enhance work performance.
• Good industrial relations.
• Use of state of art technology for better service.
• Focus on business with compliance.
7. Corporate Governance
i. The Bank has been complying with the directions, guidelines issued by NRB regarding Corporate Governance.
ii. Regular Central Management Committee Meetings to review progress in various areas of operations.
iii. Board of Directors and its Committees’ meeting on regular basis.
iv. ALCO and Risk Management Committees (Operation, Credit and Market) meetings are held regularly.
v. Formation of Good Governance Committee for review of status of good governance.
8. Declaration of Chairman/Chief Executive on truthfulness, correctness:

I, as on date, personally take responsibility on the truthfulness of the information and description presented in
this report. Further, I declare that as far as I know and understand, the descriptions in this report are true, fair
and complete and have not concealed any necessary particulars, notices and information to the investors to take
informed decision.
Anukool Bhatnagar
Managing Director
Nepal SBI Bank Ltd.
Date: 2075/08/29
53
SUMMARY OF THE COMPLIANCE REPORT CONTAINING MAJOR POINTS OF REPORT UNDER CLAUSE
20(3) OF THE CORPORATE GOOD GOVERNANCE DIRECTIVES ISSUED FOR LISTED INSTITUTION,
2074 TO BE PLACED IN THE ANNUAL REPORT
Nepal SBI Bank has established compliance department in • The Bank has disclosed all the information with
the Bank under the control of Chief Risk and Compliance regulators which supplements and requires for
Officer, who oversees overall compliance function and risk assessment of financial position of the Bank.
management function in the Bank. Head of Compliance • None of the directors, employees, shareholders or
Department acts as the Compliance Officer in the Bank. professional service providers to the Bank or any
For the period under review, compliance status of the other person having direct or indirect contact with
Bank with respect to the Securities Act, 2063, its rules them has been found involved in insider trading.
and Corporate Governance Directives issued for listed • The Bank has published quarterly financial statements
Institutions, 2074 has been found at good level. along with the information required to be disclosed
The bank has been found adopting following principles of • Provisions regarding election, nomination of
corporate good governance in its operation: directors/ independent directors and their tenure
• Responsibility toward shareholders have been found as per the provisions of prevailing
• Equitable treatment among shareholders laws applicable for Bank and Financial Institutions.
• Accountability • Organization structure of the Bank has been found
• Transparency and disclosure formed and updated from time to time.
• Responsibility of Board of Directors
• Responsibility towards stakeholders

Glimpse of compliance status as per the compliance Note: This is only the summary of the report approved by
report is furnished below: the Board and Certified by the Statuory Auditor. The detail
• The Bank did not make any public offering or right report has been submitted to SEBON.
issue in the FY 2074/75, hence the provisions to be
fulfilled in those respects are not applicable.
• The bonus share issued by the Bank is registered with
SEBON.
SUMMARY STATEMENT IN REGARD TO COMPLIANCE OF ASSETS (MONEY) LAUNDERING

PREVENTION ACT, RULES, DIRECTIVES, ORDERS AND POLICIES:
The Bank has formulated and implemented a in the bank including due diligence of customers/
comprehensive policy- Policy and Procedural transactions, screening and monitoring. Regular training
Guidelines-2011 on Know Your Customer (KYC), Anti- programmes have been conducted in the bank for updating
Money Laundering (AML) and Combating of Financing the staff on AML/CFT issues and achieving higher level
of Terrorism (CFT) to lay down policy framework of the of compliance status. The application-Ace Pelican OFAC
Bank for abiding by KYC norms, AML/CFT measures as is in place for screening customers and cross-border
set out by Nepal Rastra Bank, based on the provisions SWIFT transactions and Anti Money laundering solution,
of Asset (Money) Laundering Prevention Act, its rules AMLOCK is being used for the purpose of monitoring
and international guidelines. The policy was last revised customer transactions on ongoing basis. Various alert
by the Board of the Bank on 17th June 2018.In this scenarios have been set in AMLOCK and revised from
regard, the Bank has put in place the process, procedure time to time for generation of transaction alerts. Alerts
and mechanism for compliance to AML/CFT norms/ so generated are monitored and analyzed and necessary
guidelines. A dedicated Compliance Department headed reporting is done in case of suspicious transactions. The
by Deputy Manager level official under the control of application/ solution used by the bank for monitoring
Chief Risk and Compliance Officer (CRCO) of AGM level and screening are integrated with Bank’s Core Banking
has been established in the Bank to look after overall System (CBS). Correspondent banking relationships have
matters relating to AML/CFT measures. The Bank has been managed keeping in view a risk-based approach.
designated KYC Compliance Officer/ Money Laundering
Reporting Officer (MLRO) in each of its branch/ office Internal Audit Department of the Bank has conducted
to ensure compliance of AML/CFT policy, procedures Audit of the Bank’s Departments/ Branches/ Offices/
and guidelines at the relationship points. The Bank has Extension Counters to ensure that the provisions of the
submitted requisite reports to the concerned regulatory AML laws, rules and directives are fully complied with.
bodies within the specified timelines and in the manner Status of AML/CFT compliance is reviewed on quarterly
as prescribed in the relevant directives, law, rules and basis by Risk Management Committee of the Board
regulations. The Bank has maintained proper recording (RMCB) and further reported to the Board for review.
of the transactions as per the prevailing laws. Observation made by the auditors and Nepal Rastra
Bank during their respective audits have been taken into
For effective implementation of the provision of AML/CFT account and remedial action has been taken accordingly.
guidelines, necessary measures have been implemented
54
REMARKS/OBSERVATION IN STATUTORY AUDIT REPORT FOR THE FY 2074/75 (2017-18)

VIS-A-VIS STATUS OF COMPLIANCE
TO INCORPORATE IN BANK’S ANNUAL REPORT 2075
Strategic Report
S. No. Observations Management Response/Status of Compliance
Bank follows credit rating model for commercial advances. Different risk parameters and
1 Bank follows same credit rating model for all types of facilities appropriate risk weights are captured for Manufacturing and Trading units. Further, Credit Rating
model for retail/schematic loans is also being developed for implementation
Meeting of the consortium should be concluded in every four months’ time As a participating Bank, we have been intimating/requesting the lead bank for convening the
2 frame. However, the consortium meetings were not conducted within the consortium meeting well within specified periodicity. We note to ensure compliance in all such
prescribed interval consortium lending.
Instances were noted where the documents were not systematically kept in the We have a circular in place regarding segregation of loan documents systematically so as to
3 credit files in sequential order or indexing thereby creating difficulty in retrieval retrieve information easily. As advised, we shall reiterate the instructions to our branches for
of relevant information keeping the entire documents systematically.
The audited financial statements obtained by the Bank were not within the
signing limit of the registered auditor as prescribed by ICAN. Thus, the legality Noted for compliance. As suggested, we have sought clarification from the Borrowers and then
4
of the financial statement, on the analysis of which the loans are sanctioned, Auditors. We note to ensure verifications of the same from the list published by ICAN in future
is questioned
Special resolution not obtained in cases of the loan provided to borrowers in
5 excess of the paid up capital and general reserve of the company as required by Since been obtained for the cited cases. We ensure strict compliance on the same
the sec 105(2) of the Companies Act 2063
The audited financial statements obtained by the Bank are incomplete with
respect to mostly accounting policies, notes to accounts and previous period
Complete financial statements have since been obtained for the mentioned cases. We shall
comparative figures and in a few cases, cash flow statement and statement of
6 ensure that the complete set of documents are obtained while assessing the loan proposals on
changes in equity. The financial position and performance of the borrower can
an ongoing basis
only be acknowledged and analyzed by the complete study of the financial
statements
The Bank is obtaining tax clearance certificate from the borrower and the figures are being
Difference between audited financial statement and tax clearance certificate verified with the submitted financial statements from current financial year as per the NRB
7
noted. guidelines. We have sought clarification from the borrowers of such differences in the financials.
However, our outstanding as on date is fully covered.
Building completion certificate of the building kept as the collateral is not
8 Since been obtained for the cited cases. We ensure strict compliance on the same.
obtained as required by the provision of the NRB Directive
9 Labor audit was not conducted as required by Section 100 of Labor Act 2074 Noted for compliance
55
THREE COLUMN FORMAT (TIN-MAHALE) OF THE AMENDMENTS IN THE
MEMORANDUM AND ARTICLES OF ASSOCIATION OF NEPAL SBI BANK LIMITED.
(PROPOSED TO THE 25TH ANNUAL GENERAL MEETING)
Section/ Section/ Reason for change
Existing Provision Proposed Amendment
Article Article
Memorandum of Association:
5(1)(b) The Issued Capital of the Bank shall be Rs. 8,046,905,260.00 5(1)(b) The Issued Capital of the Bank shall be Rs. 8,449,250,523.00 To issue Bonus Shares.
(Rupees Eight Billion Forty Six Million Nine Hundred Five (Rupees Eight Billion Four Hundred Forty Nine Million Two
Thousand and Two Hundred Sixty) which shall be divided Hundred Fifty Thousand and Five Hundred Twenty Three)
into 80,469,052.60 (Eighty Million Four Hundred Sixty Nine which shall be divided into 84,492,505.23 (Rupees Eighty Four
Thousand fifty Two and Sixty only) ordinary shares of Rs.100 Million Four Hundred Ninety Two Thousand Five Hundred Five &
(Rupees One Hundred) each. 23/100) ordinary shares of Rs.100 (Rupees One Hundred) each.
5(1)(c) The Paid-up Capital of the Bank shall be Rs. 8,046,905,260.00 5(1)(c) The Paid-up Capital of the Bank shall be Rs. 8,449,250,523.00 To issue Bonus Shares.
(Rupees Eight Billion Forty Six Million Nine Hundred Five (Rupees Eight Billion Four Hundred Forty Nine Million Two
Thousand and Two Hundred Sixty). Hundred Fifty Thousand and Five Hundred Twenty Three)
Articles of Association:
Article 6(2) In the absence of the Chairman for any reason, the General Article 6(2) In the absence of the Chairman for any reason, the General To comply with section
Meeting shall be presided over by the Vice-Chairman of the Meeting shall be presided over by the person nominated by the 74(1) of the Companies
Board of Directors and in case the Vice-Chairman is also absent, Directors from amongst themselves. Act, 2063.
a person nominated by the Directors from among themselves
shall preside over the meeting.
Article 8(6) A person chosen by the Directors from among themselves shall Article 8(6) A person chosen by the Directors from among themselves shall To comply with section 14
be the Chairman of the Board of Directors. The Vice-Chairman be the Chairman of the Board of Directors. and section 21(3) of the
of the Board of Directors shall be elected from and among the BAFIA, 2073.
Directors representing SBI. However, if the Chairman of the
Board of Directors is elected from the Directors representing
SBI, the Vice-Chairman of the Board of Directors shall be elect-
ed from and amongst the Directors representing shareholders
other than the SBI.
Article 10(3) The Directors must be present in the meeting in person. Article The Directors must be present in the meeting in person. Such To allow the directors to
However, the Directors representing SBI and EPF may be 10(3) presence can be made through Video/Tele Conference attend the Board meeting
present in the meeting through their alternates. However, the Directors representing SBI and EPF may be present through Video/Tele Confer-
in the meeting through their alternates. ence as provisioned under
point No. 1(11) of the NRB
Unified Directives 6/075.
Article 10(5) All meetings of the Board of Directors shall be presided over by Article All meetings of the Board of Directors shall be presided over by To comply with section 14
the Chairman. In case the Chairman remains absent at the time 10(5) the Chairman. In case the Chairman remains absent at the time and section 21(3) of the
of meeting the Vice Chairman shall preside over the meeting of meeting, the meeting shall be presided over by a Director BAFIA, 2073.
of the Board of Directors. In the absence of both the Chairman chosen from among themselves by majority of the Directors
and Vice-Chairman, the meeting shall be presided over by a present.
Director chosen from among themselves by majority of the
Directors present.
56
SHAREHOLDER INFORMATION
Our shares are listed and traded through Nepal Stock Exchange under symbol “SBI”.
Strategic Report
Shareholding by members of the Board and CENMAC
Name Position No. of Share

Mr. Bala Krishna Shrestha Director 724,112
Mr. Chhapi Raj Pant Chief Risk and Compliance Officer 14300
Mr. Dev Raj Adhikari Chief Credit Officer 5490
Analysis of shareholders
At the end of FY 2074/75 shareholding of two institutional promoters were 70 % of total shares (State Bank of India 55
% and Employee Provident Fund 15 %) and remaining 30 % shares held by general public.
As at 32 Ashad 2075
Shareholders Number of ordinary shares
Size of shareholding
Number % Number %
Public shareholder 44,352 99.995 24,140,715 30
up to 100 21,440 48.33 496,708 0.62
101 - 500 12,737 28.71 3,303,179 4.1
501 - 1000 6,179 13.93 4,209,531 5.23
1001 - 5000 3,427 7.72 6,920,668 8.6
5001 - 10000 369 0.83 2,474,969 3.08
10001 - 50000 170 0.38 3,271,979 4.07
50001 and above 30 0.06 3,463,681 4.30
Promoter shareholder 2 0.0046 56,328,337 70
State Bank of India 1 0.0023 44,257,979 55
Employee Provident Fund 1 0.0023 12,070,358 15
Total 44,354 100 80,469,053 100
57
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES OF
NEPAL SBI BANK LTD
Nepal SBI Bank Ltd has shown its commitment to the society at society, specially for education to make sustainable social change
large and has engaged in various social banking initiatives under in their lives, promote sports and culture in the country, preserve
Corporate Social Responsibility (CSR). As a partner in progress and develop heritage sites, help to upgrade health facilities, natural
of the community, the Bank always remains conscious about its environment protection program, help the people to overcome
responsibility towards the society as a whole. Every year, the Bank is effect of natural calamities and disaster etc.
contributing certain portion of its earnings for the progress of the We supported directly, or with partnership with other organizations,
community and the country through several initiatives. to various individuals, groups or institutions in wider area of social
Nepal SBI’s approach to corporate social responsibility focuses life including natural calamities, education, sports, culture etc. The
on three dimensions of sustainability to create economic, list of CSR activities conducted by the Bank during the year is listed
environmental and social value. Our priorities under CSR are as below:
supporting the less fortunate and underprivileged people of the
Amount (in
S.No. CSR Activity conducted
Rs.)
1. Provided computer and other educational equipments to Shri Gaurishankar Madhyamik Vidyalaya, Hemja, Pokhara 3,68,100/-
2. Contribution towards organizing Childrens’ Day Program at Maiti Nepal 1,50,000/-
3. Installation of CC Camera and related accessories at Pashupati Prasad Gan, Ilam 3,50,000/-
4. Installation of CC Camera at Kawasoti Bazar Area, Kawasoti 15,000/-
5. Provided computer, sports items and other educational equipments to Shri Ram Sakhi Mohit Singh Janata Secondary School, Balara-5, Sarlahi 3,99,000/-
6. Contribution towards National Street Child Football League-Road to World Cup organized by Shelter Ashray Nepal 2,00,000/-
7. Provided computer, sports items and other educational equipments to Bhagawati Hugher Secondary School, Madhumalla 60,000/-
8. Provided computer, sports items and other educational equipments to Bhimsen Secondary School, Battar 1,50,000/-
9. Contribution towards “Songs of the Himalayas”, an event organized by Aarogya Foundation for support of Aarogya Foundation Kidney Hospital 50,000/-
10. Contribution towards Robotics Training Workshop and Pre-olympiad conducted by STEM Foundation Nepal 2,00,000/-
11. Provided computers and other related accessories for computer lab at Shri Janata Secondary School, Biratnagar 3,79,973/-
12. Contribution towards participation in Street Child World Cup Football 2018 3,00,000/-
13. Contribution towards Pinkathon Kathmandu 2018 8,00,000/-
14. Provided white stick with blind fold for blind people of Maitri Samaj Nepal 33,000/-
15. Contribution towards 3rd COAS Open Marathon 2074 4,00,000/-
16. Felicitation of National Cricket Players and Under-19 Coach of Nepal 1,50,000/-
17. Support towards “We Are All Able” Charity Golf Tournament, organized by Ability Development Society of Nepal 1,00,000/-
18. Scholarship to SEE pass students of 2073 Batch of Shri Nandi Madhyamik Vidyalaya 1,98,000/-
19. Provided cleaning equipments to Pashupati Area Development Trust 5,00,000/-
20. Contribution towards installation of CCTV Surveillane system at Main Market Area of Nuwakot 40,000/-
21. Conducted personal hygiene awareness program for girl students of Shri Kalika Sharan Madhyamik Vidyalaya, Jaharsingh pauwa and distributed sanitary kits 1,00,000/-
Contribution towards Grand Open Volleyball Competition 2018 organized by Namche Yuva Samuha in coordination with District Sports Development
22. 5,00,000/-
Committee at Namche
23. Contribution towards “Green Concert-Nepal Environment Week 2018” organized by Department of Environment and STEM Foundation Nepal 1,00,000/-
24. Contribution towards installation of CCTV Camera at prime locations of Nepalgunj Municipality 25,000/-
25. Financial support towards building Blood Bank by Nepal Red Cross Society at Bardibas 20,000/-
26. Financial assistance for construction of community hall at Ichhapurneshwor Mahadev Shiva Mandir premises at Belkotgadi, Nuwakot 35,000/-
27. Provided medical and other equipments to Nepal Orthopedic Hospital, Jorpati and distributed foods to the patients 6,04,735/-
28. Provided Computers and Printer to Adarsha Kanya Niketan School, Patan 1,44,000/-
29. CSR activities conducted by branches and extension counters during its 25th anniversary celebrations 10,40,000/-
30. Tree plantation at Kailali Multiple Campus, Dhangadi 45,000/-
31. Tree plantation at Lumbini Development Trust 49,000/-
32. Tree Plantation at Manoram Town Society, Jadibuti, Kathmandu 1,50,000/-
33. Tree plantation at Jhapa Gaunpalika, Jhapa in coordination with Nepal Integrated Village Developers 3,50,000/-
58
GLIMPSES OF CORPORATE SOCIAL RESPONSIBILITY
Strategic Report
ACTIVITIES CONDUCTED DURING THE YEAR
59
CSR activities at Jaharsingh Pauwa: Nepal
SBI Bank Limited handed over Portable
Waste Incinerator to Lapsiphedi Health
Post and conducted sanitary awareness
program for girl students of Shree Kalika
Sharan Mahyamik Vidyalaya, Jaharsingh
Pauwa.
CSR activities at Namche Bazar on the

occasion of Everest Day
60
Strategic Report
CSR at Nepal Orthopedic Hospital: Nepal

SBI Bank Limited provided medical
equipments and distributed foods to the
patients.
61
Nepal SBI bank Ltd organized Blood Donation
Program across the country and collected 350
pints of blood.
Children’s Day celebrations at Maiti Nepal.

The Bank contributed towards organizing the
program.
Officials of Nepal SBI Bank Ltd providing sports

and other educational equipments to Shree Ram
Sakhi Mohit Singh Secondary School, Balara.
62
Strategic Report
Nepal SBI Bank contributes towards
National Street Children Football League-
Road to World Cup in association with
Shelter Ashraya Nepal, a non-profit making
organization working for the upliftment of
street children in Nepal.
Nepal SBI Bank Ltd supports Bhimsen
Secondary School, Battar, by providing
computers, printer and furniture to
the school as part of its Corporate
Social Responsibility Initiative. The Bank
conducted the program on the occasion
of inauguration of Battar Branch. Mr.
Narayan Paudel, Executive Director, Nepal
Rastra Bank, Mr. Anukool Bhatnagar,

Managing Director, Nepal SBI Bank, Mr.
Subhakanta kanungo, Chief Operating
Officer, Nepal SBI Bank, Mr. Priya Ranjan,
Chief Financial Officer, Nepal SBI Bank and
other high ranking officials of the Bank
were present during the program.
63
As part of its Corporate Social
Responsibility initiative, Nepal SBI Bank Ltd
provided book shelves for library, sports
items and musical instruments for the
students of Bhagwati Higher Secondary
School, Madhumalla in the presence of Mr.
Chinta Mani Siwakoti, Deputy Governor,
Nepal Rastra Bank, Mr. Subhakanta
Kanungo, Chief Operating Officer and Mr.
Priya Ranjan, Chief Financial Officer.
Nepal SBI bank Ltd provided computer and other accessories to Shri
janata Secondary School, Biratnagar for setting up computer lab in
the school.
Officials of Nepal SBI Bank Ltd along

with teachers and students of Shri
Nandi Madhyamik Vidyalaya.
64
Strategic Report
As part of Corporate Social Responsibility, Nepal SBI Bank Ltd extends financial support towards providing white stick with blind fold for
visually disable people of Maitri Samaj Nepal at their “Orientation Mobility and Money Identification Training.
As part of Corporate Social Responsibility, Nepal SBI Bank Ltd extends financial support for sponsorship and participation in Pinkathon
Kathmandu 2018 as Banking Partner. The event was organized by United Sister’s Foundation through Leisure Port with a noble public
message on the Women Breast Cancer Awareness with slogan “This time, it’s for you”.
Nepal SBI Bank Ltd felicitates National

Cricket Players and Under-19 Coach of
Nepal. The Bank has always supported for
the promotion of sports in Nepal.
65
As part of its corporate social responsibility, Nepal SBI bank ltd provides cleaning equipments to Pashupati Area Development Trust. The bank
has been providing support in maintaining cleanliness of the temple area.
In line with the “Green Initiative” adopted by the Bank, Nepal SBI
Bank Ltd has planted 2500+ trees in various parts of the country.
66
Strategic Report
Further, as part of its 25th year celebration, branches and extension counters have conducted various CSR activities.
67
HUMAN RESOURCE INFORMATION
Human Resource plays an instrumental role in securing The Bank seeks to retain, develop and continue to attract
the future success of the Bank. The HRM function is people with the requisite skills to help shape a better
guided by its long-term vision of working in partnership Bank and foster employees’ engagement and motivation
to create an environment where employees can thrive throughout the implementation process.
and are enabled to deliver sustainable organizational
performance. Specifically, three longer-term strategic Diversity is a key enabler for long-term success. Only
priorities have been identified for HR: by building teams of people with different backgrounds,
education, skills and experiences we can create
to apply its human capital expertise more assertively sustainable value across the Bank. Our staffs are the key
to support the business verticals in order to deliver factor that differentiates us from other banks in Nepal.
results; Our human resource come from diverse backgrounds in
to strengthen its role as a control function for the education, language and culture.
Bank for human capital risks;
to build the capabilities of managers and staff.
In FY2017/18, our HR activities were in line with these

priorities, which have come into particular focus with
Bank’s Strategy and its execution over the coming years.
Composition of Male and
Female Employees
Staff Category Male Female Total

Female
Managerial 57 6 63
Officer 209 88 297
Assistant 284 137 421 Male
Support 88 2 90
Total 638 233 871
BUILDING THE CAPABILITIES OF STAFF HEALTH AND WELLBEING OF THE STAFF

Investment in skills and accelerating employees’ The bank has been providing life insurance facility
professional and personal development are essential to its confirmed staff. The staff who are willing to opt
components of the Bank’s people agenda. Our Bank for the life insurance facility provided by the bank are
is committed to strengthening the capability of staff and covered under the policy within the limit applicable
holding them accountable to enable employees to thrive to their cadre. The bank has also introduced Medical
and meet their full potential, which includes a recalibrated Insurance Policy, which is a facility provided to the
offering that helps to develop and nurture future leaders confirmed staff, and covers medical expenses for staff
who are accountable, who champion the Bank’s values along with their dependents, which covers two types of
and who inspire the best in their colleagues. expenses i.e. OPD and Hospitalization. Similarly, the
bank has also introduced Group Accidental Insurance
These are the summary of staff capabilities program Policy, which provides assurance of financial support to
conducted during the year: the staff and his/her family in case of death or disability
of the staff during the service tenure in the bank. All the
Trainings Number of Number of Staff staff (including probationary staff) are covered under this
Trainings Participated scheme within the limit applicable to their cadre.
In-House/ Internal 77 834
Outsourcing/ External 175 350
Total 252 1184
*Total no. of participants including IBOs and Directors
68
STAFF ENGAGEMENT ACTIVITIES
Strategic Report
Nepal SBI Bank organizes Annual Conclave
and Felicitation Program every year in
order to evaluate the performance of
the Bank for the previous fiscal year and
felicitate Branches for their outstanding
performance.
Participation of NSBL Team in Corporate Super Sixes Cricket Tournament 2017
Participation of NSBL Staff in Kantipur Half Marathon

Participation of NSBL Staff in

Pinkathon Kathmandu 2018-
an event organized for raising
awareness on women’s health and
breast cancer
69
70
71
www.nepalsbi.com.np
Nepal SBI Bank Ltd.
Consolidated Statement of Financial Position
As on Asar 32, 2075 (16.07.2018)
Group Bank
Current Previous Current Previous

Note Year Year Year Year
Assets
Cash and cash equivalent 4.1 10,483,612,597 8,803,465,489 10,480,237,366 8,803,465,489
Due from Nepal Rastra Bank 4.2 5,647,349,586 7,313,015,502 5,647,349,586 7,313,015,502
Placement with Bank and Financial Institutions 4.3 9,500,000 10,361,550,000 - 10,361,550,000
Derivative financial instruments 4.4 - - - -
Other trading assets 4.5 21,332,281 23,007,450 20,404,281 23,007,450
Loan and advances to B/FIs 4.6 2,872,201,921 2,298,513,105 2,872,201,921 2,298,513,105
Loans and advances to customers 4.7 72,363,660,048 61,822,035,652 72,363,660,048 61,822,035,652
Investment securities 4.8 8,646,148,778 7,837,090,659 8,646,148,778 7,837,090,659
Current tax assets 4.9 221,915,853 175,841,954 219,486,240 171,842,525
Investment in susidiaries 4.10 - - 188,888,889 100,000,000
Investment in associates 4.11 - - - -
Investment property 4.12 - - - -
Property and equipment 4.13 849,895,606 744,289,247 843,967,110 739,494,028
Goodwill and Intangible assets 4.14 5,210,736 2,786,271 4,533,821 2,049,170
Deferred tax assets 4.15 236,073,744 97,192,163 236,210,436 97,319,506
Other assets 4.16 1,016,992,514 395,205,951 1,015,581,419 381,468,326
Total Assets 102,373,893,664 99,873,993,443 102,538,669,895 99,950,851,412
Liabilities
Due to Bank and Financial Instituions 4.17 2,709,590,000 6,155,387,985 2,709,590,000 6,155,387,985
Due to Nepal Rastra Bank 4.18 - - - -
Derivative financial instruments 4.19 6,812,345 - 6,812,345 -
Deposits from customers 4.20 84,027,267,545 80,720,360,147 84,227,327,384 80,818,815,835
Borrowing 4.21 - - - -
Current tax liabilities 4.9 - - - -
Provisions 4.22 - - - -
Deferred tax liabilities 4.15 - - - -
Other liabilities 4.23 1,805,095,366 1,442,768,304 1,793,836,373 1,436,904,751
Debt securities issued 4.24 1,000,000,000 1,000,000,000 1,000,000,000 1,000,000,000
Subordinated liabilities 4.25 - - - -
Total liabilities 89,548,765,256 89,318,516,436 89,737,566,102 89,411,108,571
Equity
Share capital 4.26 8,046,905,260 6,924,892,999 8,046,905,260 6,924,892,999
Share premium 381,759,941 - 381,759,941 -
Retained earnings 1,231,817,312 1,160,848,872 1,218,765,930 1,144,987,363
Reserves 4.27 3,164,645,895 2,469,735,136 3,153,672,662 2,469,862,479
Total equity attributable to equity holders 12,825,128,408 10,555,477,007 12,801,103,793 10,539,742,841
Non-controlling interest - - - -
Total equity 12,825,128,408 10,555,477,007 12,801,103,793 10,539,742,841
Total liabilities and equity 102,373,893,664 99,873,993,443 102,538,669,895 99,950,851,412
Contingent liabilities and commitment 4.28 35,067,740,533 25,592,883,605 35,067,740,533 25,592,883,605

Net assets value per share 159.38 152.43 159.08 152.20
(Priya Ranjan) (Anukool Bhatnagar) (Sujit Kumar Varma)

Chief Financial Officer Managing Director Chairman
(Bala Krishna Shrestha) (R.S Ramesh) (Deepak Rauniar)

Director Director Director
(Keshav Raj Acharya) (CA. Shashi Satyal), Managing Partner
Director T. R Upadhya & Co.,
Chartered Accountants
72
Nepal SBI Bank Ltd.

Consolidated Statement of Profit or Loss
For the year ended Asar 32, 2075 (16.07.2018)
Strategic Report
Group Bank

Interest income 4.29 9,070,350,954 5,991,658,675 9,069,778,508 5,991,658,675
Interest expense 4.30 (4,911,241,588) (2,989,081,666) (4,924,810,880) (2,994,483,069)
Net interest income 4,159,109,366 3,002,577,009 4,144,967,628 2,997,175,606
Fee and commission income 4.31 919,118,747 869,646,476 912,860,285 850,313,827
Fee and commission expense 4.32 (84,662,040) (73,930,370) (84,662,040) (73,930,370)
Net fee and commission income 834,456,707 795,716,106 828,198,245 776,383,457
Net interest, fee and commission income 4,993,566,073 3,798,293,115 4,973,165,873 3,773,559,063
Net trading income 4.33 233,440,976 202,781,765 233,512,976 202,781,765
Other operating income 4.34 42,884,666 21,855,519 42,884,666 21,855,519
Total operating income 5,269,891,715 4,022,930,399 5,249,563,515 3,998,196,347
Impairment charge/(reversal) for loans and other losses 4.35 (272,273,854) (129,461,171) (272,273,854) (129,461,171)
Net operating income 4,997,617,861 3,893,469,228 4,977,289,661 3,868,735,176
Operating expense
Personnel expenses 4.36 (1,375,420,104) (957,608,755) (1,375,420,104) (957,608,755)
Other operating expenses 4.37 (710,005,651) (580,747,352) (703,066,694) (577,281,313)
Depreciation & amortisation 4.38 (138,099,951) (114,411,083) (137,130,092) (113,965,012)
Operating Profit 2,774,092,155 2,240,702,038 2,761,672,771 2,219,880,096
Non operating income 4.39 37,667,749 20,908,168 38,867,749 20,908,168
Non operating expense 4.40 - - - -
Profit before income tax 2,811,759,904 2,261,610,206 2,800,540,520 2,240,788,264
Income tax expense 4.41
Current Tax (944,871,455) (692,068,166) (942,063,178) (686,986,416)
Deferred Tax Income/ (Expenses) 165,023,247 10,676,587 165,033,782 10,886,898
Profit for the period 2,031,911,696 1,580,218,627 2,023,511,124 1,564,688,746
Profit attributable to:
Equity holders of the Bank 2,031,911,696 1,580,218,627 2,023,511,124 1,564,688,746
Profit for the period 2,031,911,696 1,580,218,627 2,023,511,124 1,564,688,746
Earnings per share
Basic earnings per share (Restated) 25.26 26.11 25.16 25.86
Diluted earnings per share (Restated) 25.26 26.11 25.16 25.86



73
Nepal SBI Bank Ltd.
Consolidated Statement of Comprehensive Income
Group Bank

Profit for the year 2,031,911,696 1,580,218,627 2,023,511,124 1,564,688,746
Other comprehensive income, net of income tax - - - -
a) Items that will not be reclassified to profit or loss
Gains/(losses) from investments in equity (67,906,176) (106,206,656) (67,906,176) (106,206,656)
instruments measured at fair value
Gains/(losses) on revalution - - - -
Atuarial gains/(losses) on defined benefit plans (6,144,220) (59,517,390) (6,144,220) 59,517,390
Income tax relating to above items 22,215,119 52,333,157 22,215,119 52,333,157
Net other comprehensive income that will not be reclassi- (51,835,277) (113,390,889) (51,835,277) 5,643,891
fied to profit or loss
b) Items that are or may be reclassified to profit or loss
Gains/(losses) on cash flow hedge - - - -
Exchange gains/(losses) (arising from translating - - - -
financial assets of foreign operation)
Income tax relating to above items - - - -
Reclassify to profit or loss - - - -
Net other comprehensive income that are or may be - - - -
reclassified to profit or loss
c) Share of other comprehensive income of associate - - - -
accounted as per equited method
Other comprehensive income for the year, net of income (51,835,277) (113,390,889) (51,835,277) 5,643,891
tax
Total comprehensive income for the year 1,980,076,419 1,466,827,738 1,971,675,847 1,570,332,637
Total comprehensive income attributable to:
Equity holders of the Bank 1,980,076,419 1,466,827,738 1,971,675,847 1,570,332,637
Total comprehensive income for the year 1,980,076,419 1,466,827,738 1,971,675,847 1,570,332,637



74
Nepal SBI Bank Ltd.
Statement of Changes in Equity
Bank
Attributable to equity holders of the Bank
Exchange Other Non-
Share Share General Regulatory Fair value Revaluation Retained
Capital premium reserve equalization reserve reserve reserve earning reserve Total controlling Total equity
reserve interest
Balance at Shrawan 1, 2074 6,924,892,999 - 1,694,804,484 19,814,792 97,319,505 165,227,628 1,144,987,363 471,924,355 10,518,971,126 - 10,518,971,126
Adjustment/Restatement: - -
Corporate Social Repsonsibility Fund - - - - - - - - 15,232,375 15,232,375 - 15,232,375
Staff Training and Development Fund - - - - - - - - 5,539,340 5,539,340 - 5,539,340
EIR adjustment on loan - - - - - - - (30,966,862) - (30,966,862) - (30,966,862)

Previous Year NFRS reserve - - - - - (49,568,288) - 49,568,288 - - - -
Deferred Tax adjustment - - - - (48,357,971) - - - - (48,357,971) - (48,357,971)
Adjusted/Restated balance at Shawan 1, 2074 6,924,892,999 - 1,694,804,484 19,814,792 48,961,534 115,659,340 - 1,163,588,789 492,696,070 10,460,418,008 - 10,460,418,008
Comprehensive income for the year - - - - - - - - - - - -
Profit for the year - - - - - - - 2,023,511,124 - 2,023,511,124 - 2,023,511,124
Other comprehensive income, net of tax - - - - - - - - - - - -
Gains/(losses) from investments in equity - - - - - (47,534,323) - - - (47,534,323) - (47,534,323)
Gains/(losses) on revalution - - - - - - - - - - - -
Atuarial gains/(losse) on defined benefit plans - - - - - - - - (4,300,954) (4,300,954) - (4,300,954)
Gains/(losses) on cash flow hedge - - - - - - - - - - - -
Exchange gains/(losses) (arising from - - - - - - - - - - - -
translating financial assets of foreign operation)
Total comprehensive income for the year - - - - - (47,534,323) - 2,023,511,124 (4,300,954) 1,971,675,847 - 1,971,675,847
Transfer to reserve during the year - - 404,702,225 8,591,186 297,428,802 - - (843,101,435) 132,379,222 - - -
www.nepalsbi.com.np
Transfer from reserve during the year - - - - - - - 9,529,716 (9,529,716) - - -
Transactions witth owners, directly recognised in equity - - - - - - - - - - - -
Share issued 46,905,260 381,759,941 - - - - - - - 428,665,201 - 428,665,201
Share based payments - - - - - - - - - - - -
Dividends to equity holders - - - - - - - - - - - -
Bonus shares issued 1,075,107,001 - - - - - - (1,075,107,001) - -
Cash dividend paid - - - - - - - (56,584,579) (56,584,579) (56,584,579)
Others (Share issue expenses) - - - - - - - (3,070,684) (3,070,684) (3,070,684)
Total contributions by and distributions 1,122,012,261 381,759,941 404,702,225 8,591,186 297,428,802 - - (1,968,333,983) 122,849,506 369,009,938 - 369,009,938
Balance at Asar end 2075 8,046,905,260 381,759,941 2,099,506,709 28,405,978 346,390,336 68,125,017 - 1,218,765,930 611,244,622 12,801,103,793 - 12,801,103,793
75
Financial Statements Contribution to Society Corporate Governance Strategic Report

76 Financial Statements
Nepal SBI Bank Ltd.

Bank
Exchange Non-
Share Share General equalization Regulatory Fair value Revaluation Retained Other Total controlling Total equity
Capital premium reserve reserve reserve reserve earning reserve interest
reserve
Balance at Shrawan 1, 2073 3,883,735,565 - 1,390,157,003 15,944,951 - 271,434,284 - 1,224,964,738 393,560,638 7,179,797,179 - 7,105,221,680
Adjustment/Restatement: - - - - - - - - - - - -
Capital Adjustments - - - - - - - (5,583,040) 5,583,040 - - -
Adjustments : Bonus Share - - - - - - - - - - - -
NFRS Adjustments (Opening adjustments) - - - - - - - (74,575,499) - (74,575,499)

Adjusted/Restated balance at Shawan 1, 2073 3,883,735,565 - 1,390,157,003 15,944,951 - 271,434,284 - 1,144,806,199 399,143,678 7,161,806,259 - 7,105,221,680
Comprehensive income for the year - - - - - - - - - - -
Gains/(losses) from investments in equity instru - - - - - - - (74,344,659) - (74,344,659) - -
ments measured at fair value
Atuarial gains/(losse) on defined benefit plans - - - - - - - 79,988,550 - 79,988,550 - -
Exchange gains/(losses) (arising from - - - - - - - - - - - -
translating financial assets of foreign operation)
Total comprehensive income for the year - - - - - - - 1,570,332,637 - 1,570,332,637 - 1,570,332,637
Transfer to reserve during the year - 304,647,481 3,869,841 - - - (625,268,682) 170,100,182 (146,651,178) - (146,651,178)
Transfer from reserve during the year - (59,025,815) - - - (106,206,656) - 165,232,471 - - - -
Transactions with owners, directly recognised in equity - - - - - - - - - - - -
Share issued 1,951,813,887 59,025,815 - - - - - - - 2,010,839,702 - 2,010,839,702
Bonus shares issued 1,089,343,547 - - - - - - (1,089,343,547) - - - -
Cash dividend paid - - - - - - - (56,584,579) - (56,584,579) - (56,584,579)
Others (Staff Training & CSR Fund) - - - - - - - (20,771,715) 20,771,715 - - -
Total contributions by and distributions 3,041,157,434 - 304,647,481 3,869,841 - (106,206,656) - (1,570,151,473) 190,871,897 1,864,188,529 - 1,864,188,524
Balance at Asar end 2074 6,924,892,999 - 1,694,804,484 19,814,792 - 165,227,628 - 1,144,987,363 590,015,575 10,539,742,841 - 10,539,742,841
Nepal SBI Bank Ltd.
Group
Exchange Non-
Share Share General equalization Regulatory Fair value Revaluation Retained Other Total controlling Total equity
Capital premium reserve reserve reserve reserve earning reserve interest
reserve
Balance at Shrawan 1, 2074 6,924,892,999 - 1,694,804,484 19,814,792 97,192,162 165,227,628 - 1,160,848,872 471,924,355 10,534,705,292 - 10,534,705,292
Corporate Social Repsonsibility Fund - - - - - - - - 15,232,375 15,232,375 - 15,232,375
Staff Training and Development Fund - - - - - - - - 5,539,340 5,539,340 - 5,539,340
NSMBL adjustment - - - - - - - (110,123) - (110,123) - (110,123)

EIR adjustment on loan - - - - - - - (30,966,862) - (30,966,862) - (30,966,862)
Previous Year NFRS reserve - - - - - (49,568,288) - 49,568,288 - - - -
Deferred Tax Adjustment - - - - (48,357,971) - - - - (48,357,971) - (48,357,971)
Adjusted/Restated balance at Shrawan 1, 2074 6,924,892,999 - 1,694,804,484 19,814,792 48,834,191 115,659,340 - 1,179,340,175 492,696,070 10,476,042,051 - 10,476,042,051
Gains/(losses) from investments in equity - - - - - (47,534,323) - - - (47,534,323) - (47,534,323)
Atuarial gains/(losse) on defined benefit plans - - - - - - - - (4,300,954) (4,300,954) - (4,300,954)
Gains/(losses) on cash flow hedge - - - - - - - - - - -
Exchange gains/(losses) (arising from translating - - - - - - - - - - - -

Total comprehensive income for the year - - - - - (47,534,323) - 2,031,911,696 (4,300,954) 1,980,076,419 - 1,980,076,419
Transfer to reserve during the year - - 404,702,225 8,591,186 297,418,267 - - (843,090,900) 132,379,222 - - -
www.nepalsbi.com.np
Transfer from reserve during the year - - - - - - - 9,529,716 (9,529,716) - - -
Share issued 46,905,260 381,759,941 - - - - - - - 428,665,201 - 428,665,201

Bonus shares issued 1,075,107,001 - - - - - - (1,086,218,112) 11,111,111 - - -
Cash dividend paid - - - - - - - (56,584,579) - (56,584,579) - (56,584,579)
Others (Share issue expenses) - - - - - - - (3,070,684) - (3,070,684) - (3,070,684)
Total contributions by and distributions 1,122,012,261 381,759,941 404,702,225 8,591,186 297,418,267 - - (1,979,434,559) 133,960,617 369,009,938 - 369,009,938
Balance at Asar end 2075 8,046,905,260 381,759,941 2,099,506,709 28,405,978 346,252,458 68,125,017 - 1,231,817,312 622,355,733 12,825,128,408 - 12,825,128,408
77

Nepal SBI Bank Ltd.

Group
Exchange Non-
Share Share General equalization Regulatory Fair value Revaluation Retained Other Total controlling Total
Capital premium reserve reserve reserve reserve earning reserve interest equity
reserve
Balance at Shrawan 1, 2073 3,883,735,565 - 1,390,157,003 15,944,951 - 271,434,284 - 1,225,083,746 393,516,263 7,179,871,812 - 7,179,871,812
Capital Adjustments - - - - - - - (5,583,040) 5,583,040 - - -
Adjustments : Bonus Share 1,089,343,547 - - - - - - (1,089,343,547) - - - -
NFRS Adjustments (Opening adjustments) - - - - - - - (74,575,499) - (74,575,499) - (74,575,499)

Adjusted/Restated balance at Shrawan 1, 2073 4,973,079,112 - 1,390,157,003 15,944,951 - 271,434,284 - 55,581,660 399,099,303 7,105,296,313 - 7,105,296,313
Gains/(losses) from investments in equity instru - - - - - - - (74,344,659) - (74,344,659) - (74,344,659)
ments measured at fair value
Atuarial gains/(losse) on defined benefit plans - - - - - - - 79,988,550 - 79,988,550 - 79,988,550
Exchange gains/(losses) (arising from translating - - - - - - - - - - - -
Total comprehensive income for the year - - - - - - - 1,585,862,518 - 1,585,862,518 - 1,585,862,518
Transfer to reserve during the year - - 304,647,481 3,869,841 - - - (625,056,062) 170,017,214 (146,521,526) - (146,521,526)
Transfer from reserve during the year - (59,025,815) - - - (106,206,656) - 165,232,471 - - - -
Share issued 1,951,813,887 59,025,815 - - - - - - - 2,010,839,702 - 2,010,839,702
Bonus shares issued - - - - - - - - - - - -
Cash dividend paid - - - - - - - - - - - -
Others (Staff Training & CSR Fund) - - - - - - - (20,771,715) 20,771,715 - - -
Total contributions by and distributions 1,951,813,887 - 304,647,481 3,869,841 - (106,206,656) - (480,595,306) 190,788,929 1,864,318,176 - 1,864,318,176
Balance at Asar end 2074 6,924,892,999 - 1,694,804,484 19,814,792 - 65,227,628 - 1,160,848,872 589,888,232 10,555,477,007 - 10,555,477,007
(Priya Ranjan) (Anukool Bhatnagar) (Sujit Kumar Varma) (Bala Krishna Shrestha) (R.S Ramesh)
Chief Financial Officer Managing Director Chairman Director Director
(Keshav Raj Acharya) (Deepak Rauniar) (CA. Shashi Satyal), Managing Partner
Director Director T. R Upadhya & Co.,
www.nepalsbi.com.np
79

Nepal SBI Bank Ltd.
Consolidated Statement of cash flows
Group Bank

Year Year Year Year
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received 9,083,920,246 5,898,841,097 9,069,778,508 5,898,841,097
Fees and other income received 1,246,673,077 1,161,461,516 1,238,109,084 1,155,653,154
Divided received 3,526,443 3,131,018 3,526,443 3,131,018
Receipts from other operating activities 34,364,743 19,000,000 34,364,743 19,000,000
Interest paid (4,827,010,880) (2,853,886,718) (4,827,010,880) (2,859,288,121)
Commission and fees paid (84,662,040) (73,930,370) (84,662,040) (73,930,370)
Cash payment to employees (1,282,039,048) (666,594,094) (1,281,761,652) (666,594,094)
Other expense paid (1,655,368,964) (1,472,770,212) (1,645,129,872) (1,465,256,266)
Operating cash flows before changes in 2,519,403,577 2,015,252,237 2,507,214,334 2,011,556,418
operating assets and liabilities
(Increase)/Decrease in operating assets
Due from Nepal Rastra Bank 1,665,665,916 166,788,574 1,665,665,916 166,788,574
Placement with bank and financial institutions 10,323,685,000 38,241,426 10,361,550,000 38,241,426
Other trading assets - 32,533,769 - 32,533,769
Loan and advances to bank and financial institutions (573,688,816) - (573,688,816) -
Loans and advances to customers (10,895,130,017) (16,209,151,527) (10,895,130,017) (16,209,151,527)
Other assets (1,547,295,650) (476,372,634) (1,558,721,103) (472,282,500)
(1,026,763,567) (16,447,960,392) (1,000,324,020) (16,443,870,258)
Increase/(Decrease) in operating liabilities
Due to bank and financial institutions (3,445,797,985) 276,045,270 (3,445,797,985) 276,045,270
Due to Nepal Rastra Bank - - - -
Deposit from customers 3,335,272,398 16,176,731,419 3,408,511,549 16,174,983,671
Borrowings - 1,124,955,155 - 1,124,955,155
Other liabilities 269,296,747 137,981,100 265,273,257 133,496,652
Net cash flow from operating activities 158,771,160 17,715,712,944 227,986,821 17,709,480,748
before tax paid
Income taxes paid
Net cash flow from operating activities 1,651,411,170 3,283,004,789 1,734,877,135 3,277,166,908
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investment securities - - (88,888,889) -
Receipts from sale of investment securities - - -
Purchase of property and equipment (247,444,627) (239,749,298) (245,396,934) (233,910,844)
Receipt from the sale of property and equipment 4,862,509 768,328 4,862,509 768,328
Purchase of intangible assets (3,304,400) - (3,304,400) -
Receipt from the sale of intangible assets - - - -
Purchase of investment properties - - - -

Receipt from the sale of investment properties - - - -
80
Interest received - - - -
Dividend received 4,744,480 3,367,395 4,744,480 3,367,395
Net cash used in investing activities (241,142,038) (235,613,575) (327,983,234) (229,775,121)
CASH FLOWS FROM FINANCING ACTIVITIES
Strategic Report
Receipt from issue of debt securities - - - -
Repayment of debt securities - - - -
Receipt from issue of subordinated liabilities - - - -
Repayment of subordinated liabilities - - -
Receipt from issue of shares 425,594,517 2,010,839,702 425,594,517 2,010,839,702
Dividends paid (57,916,541) (118,774,702) (57,916,541) (118,774,702)
Interest paid (97,800,000) (97,800,000) (97,800,000) (97,800,000)
Other receipt/payment - - - -
Net cash from financing activities 269,877,976 1,794,265,000 269,877,976 1,794,265,000
Net increase (decrease) in cash and cash 1,680,147,108 4,841,656,214 1,676,771,877 4,841,656,787
equivalents
Cash and cash equivalents at Sawan 1, 2074 8,803,465,489 3,961,809,275 8,803,465,489 3,961,808,702
Effect of exchange rate fluctuations on cash and - - - -
cash equivalents held"
Cash and cash equivalents at Asar end 2075 10,483,612,597 8,803,465,489 10,480,237,366 8,803,465,489


81
Nepal SBI Bank Ltd.
Notes to the consolidated financial statements
For the year ended 32 Ashad 2075 (16 July 2018)
1. Reporting Entity
Nepal SBI Bank Limited (NSBL or the Bank), is a activities of the NSMBL consist of issue management
limited liability publicly listed company registered service, registrar to share, underwriting, portfolio
with Office of Company Registrar in Nepal on
management and corporate advisory services.
28 April 1993. Registered office of the Bank is
situated at Kesharmahal, Kathmandu, Nepal. The 2. Basis of Preparation
Bank carries out commercial banking activities and
other financial services in Nepal under the license 2.1 Statement of Compliance
from Nepal Rastra Bank (NRB), The Central Bank The Financial Statements have been prepared
of Nepal as “Ka Class” (Class A) licensed financial in accordance with Nepal Financial Reporting
institution. Standards (NFRSs) issued by Accounting Standard
It is a subsidiary of State Bank of India, incorporated Board – Nepal (ASB) pronounced on 13 September
in India, which holds 55.00% shares in the Bank. 2013.These standards require financial statements
NSBL offers a wide range of banking services in Nepal to be prepared under accrual basis. The structure
which includes, deposits, loans and advances, trade of the financial statements is in accordance with the
finance, treasury services, remittance, e-banking, Directive No. 4 of Nepal Rastra Bank.
Indian railway ticket booking, mobile banking, ATM Historical cost convention has been used for
Services, cash deposit machines (CDMs) etc. NSBL financial statement recognition and measurement
payment gateway is provided for easy processing except otherwise required by NFRS. Where, other
of trade / non-trade remittance to and from India method(s), other than historical costs, such as fair
which is in addition to SBI Nepal Express Remit for value has been applied these have been disclosed in
remitting funds from India to Nepal. accordance with the applicable reporting framework.
The Group represents the Bank and its wholly owned
subsidiary, Nepal SBI Merchant Banking Ltd (NSMBL).
NSMBL is a limited liability company incorporated
on 19 April 2016 and licensed by Securities
Board of Nepal on 9 December 2016. The core
2.2 Reporting Period and Approval of Financial Statements

The Bank follows the Nepalese financial year based on the Nepalese calendar. The corresponding dates for the
English calendar are as follows:
Nepalese Calendar English Calendar
Relevant Financial Statement
Date / Period Date / Period
Comparative SFP* Date 31 Ashad 2074 15 July 2017
Comparative reporting period 1 Shrawan 2073 - 31 Ashad 2074 16 July 2016 - 15 July 2017
First NFRS SFP Date 31 Ashadh 2074 15 July 2017
Current NFRS reporting period 1 Shrawan 2074 - 32 Ashad 2075 16 July 2017 - 16 July 2018
*SFP = statement of financial position
The Financial Statements for the year ended 32Ashad 2075 (16July 2018) have been authorised for issue by the
Board of Directors in its meeting held on 15/12/2018 and have recommended for approval of shareholders in the
Annual General Meeting.
2.3 Functional and Presentation Currency for recognition and measurement of elements in
The functional currency of the Bank is Nepalese the financial statements. Management’s selection
Rupees, which is also the presentation currency of of the accounting policies, which contain critical
the financial statements. The financial statements estimates and judgements, is listed below.It reflects
have been presented in the nearest Nepalese Rupees the materiality of the items to which the policies
(NPR). are applied, the high degree of judgement and
estimation uncertainty involved:
2.4 Use of Estimates, Assumptions and • Impairment of loans and advances
Judgments • Valuation of financial instruments
In preparation of the financial statements, the Bank • Provisions
is required to make estimates and apply judgements • Estimation of useful lives of property plant and
equipment and intangible assets
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2.5 Changes in Accounting Policies a remaining maturity of less than 12 months, a

The Bank is required to adopt and apply the Probability of Default (PD) is used that corresponds
accounting policies in conformity with NFRS. The to the remaining maturity. Interest will be calculated
accounting policies are applied consistently, on the gross carrying amount of the financial asset
changes, if any, are disclosed with the financial before adjusting for ECL
Strategic Report
impact to the extent possible. When polices are Stage 2: Lifetime ECL – Significantly increased credit
not guided by the reporting framework, NFRS, risk in the event of a significant increase in credit risk
other reporting standards and generally accepted since initial recognition, a provision is required for
accounting principles are followed. the lifetime ECL representing losses over the life of
the financial instrument (life time ECL).
2.6 New Standards Issued but not yet Effective
Interest income will continue to be recognised on a
For the reporting of financial instruments, NAS 32
gross basis.
Financial Instruments, Presentation, NAS 39 Financial
Instruments Recognition and Measurements and Stage 3: Lifetime ECL – Defaulted Financial
NFRS 7 Financial Instruments – Disclosures have instruments that move into Stage 3 once credit
been applied. NRFS 9 has been complied for the impaired and purchases of credit impaired assets
classification of Financial Instruments. will require a lifetime provision. Interest income will
be calculated based on the gross carrying amount
A number of new standards and amendments to
of the financial asset less ECL
the existing standards and interpretations have
been issued by IASB after the pronouncements of The management is still assessing the potential
NFRS with varying effective dates. Those become impact on its financial statements, if Expected Credit
applicable when ASB Nepal incorporates them Loss (ECL) model is introduced.
within NFRS.
2.7.2 IFRS 15 – Revenue from Contracts
2.7 New Standards and Interpretation not with Customers
Adopted In 2014, the IASB issued IFRS15 Revenue from
There have been, and are expected to be, a number Contracts with Customers, which will replace IAS18
of significant changes to the Bank’s financial Revenue and IAS11 Construction Contracts. It
reporting as a result of amended or new accounting applies to all contracts with customers except leases,
standards, specifically IFRSs, that have been or financial instruments and insurance contracts. This
will be issued by the IASB. These standards will standard will establish a more systematic approach
be applicable when adopted in Nepal. The most for revenue measurement and recognition.
significant of these are as follows:
2.7.3 IFRS 16 – Leases
2.7.1 IFRS 9 ‘Financial Instruments’- In January 2016, the IASB issued IFRS 16 Leases,
Impairment which will replace IAS 17 Leases. Under the new
IFRS 9 ‘Financial Instruments’ was issued by the requirements, lessees would be required to recognise
IASB in July 2014 and effective internationally assets and liabilities arising from both operating and
for the financials beginning on or after 1 January finance leases on the balance sheet. The expected
2018. ASB endorsed NFRS 9 Financial Instruments effective date as announced by IASB is 1 January
with some exceptions, mainly in the impairment. 2019.
Currently, Incurred Loss Model as specified in NAS 2.8 Discounting
39 is used. The requirement of IFRS 9 is Expected When the realisation of assets and settlement
Credit Loss Model. of obligation is for more than one year, the Bank
Expected Credit Loss Model (ECL) of Impairment considers the discounting of such assets and
The Expected Credit Loss (ECL) model is a forward- liabilities where the impact is material. Various
looking model. The ECL estimates are unbiased, internal and external factors have been considered
probability-weighted, and include supportable for determining the discount rate to be applied to
information about past events, current conditions, the cash flows of the Bank.
and forecasts of future economic conditions. 2.9 Reporting Pronouncements
Under the general approach, IFRS 9 recognizes The Bank has, for the preparation of financial
three stage approach to measure expected credit statements, adopted the NFRS pronounced by ASB
losses and recognized interest income. as effective on 13 September 2013. The NFRS
Stage 1: 12-month ECL – No significantly increased conform, in all material respect, to International
credit risk Financial instruments that have not Financial Reporting Standards (IFRS) as issued by the
had a significant increase in credit risk since International Accounting Standards Board (IASB).
initial recognition require, at initial recognition a However, the Institute of Chartered Accountants of
provision for ECL associated with the probability of Nepal (ICAN) vide its notice dated 20 September
default events occurring within the next 12 months 2018 has resolved that Carve-outs in NFRS with
(12-month ECL). For those financial assets with Alternative Treatment and effective period shall be
83
provided to the Banks and Financial Institutions 2.9.4 NAS 39: Financial Instruments:
regulated by NRB on the specific recommendation Recognition and Measurement
of ASB. Details of carve outs provided are as follows. a) Impairment
2.9.1 NFRS 10: Consolidated Financial In para 58, an entity shall assess at the end of each
reporting period whether there is any objective
Statements
evidence that a financial asset or group of financial
In para 19 of NFRS 10, a parent shall prepare
assets measured at amortized cost is impaired. If any
consolidated financial statements using uniform
such evidence exists, the entity shall apply paragraph
accounting policies for like transactions and
63 to determine the amount of any impairment loss
other events in similar circumstances unless it is
unless the entity is bank or financial institutions
impracticable to do so.
registered as per Bank and Financial Institutions
The carve-out is optional and has been provided Act, 2073. Such entities shall measure impairment
for the FY2017-18 to FY2019-20. The Bank has loss on loan and advances as the higher of amount
opted the carve out. Accordingly, Bank’s investment derived as per norms prescribed by Nepal Rastra
in NSMBL, a 100% owned subsidiary, has been Bank for loan loss provision and amount determined
consolidated. as per paragraph 63; and shall apply paragraph 63
2.9.2 NAS 17: Lease to measure the impairment loss on financial assets
In para 33, lease payments under an operating lease other than loan and advances. The entity shall
shall be recognized as an expense on a straight-line disclose the impairment loss as per this carve-out
basis over the lease term unless either: and the amount of impairment loss determined as
per paragraph 63.
(a) Another systematic basis is more representative of
the time pattern of the user’s benefit even if the The carve out is not optional and has been provided
payments to the lessors are not on that basis; or for the FY 2017-18 to 2019-20.Bank will measure
the impairment of loan and advances to customers
(b) The payments to the lessor are structured to increase as higher of the impairment as assessed under NFRS
in line with expected general inflation to compensate or as per the norms prescribed by Nepal Rastra
for the lessor’s expected inflationary cost increases. Bank. The provision is mandatory where impairment
If payments to the lessor vary because of factors under NFRS and impairment under NRB norms has
other than general inflation, then this condition is been disclosed for comparison and the higher of the
not met. two is charged as impairment and recognised in the
The carve out is optional and provided for FY 2017- financial statements.
18 only. Accordingly, the Bank has not opted the b) Impracticability to determine transaction cost of all
carve out.Bank operates its branches and ATMs previous years which is the part of effective interest
in number of leased facilities under operating rate
lease agreements. The payments to the lessors In para 9, the effective interest rate is the rate that
are structured to increase in line with the general exactly discounts estimated future cash payments or
inflation to compensate for the lessor’s expected receipts through the expected life of the financial
inflationary cost increases.Bank has applied straight- instrument or, when appropriate, a shorter period
line recognition criteria as prescribed by NFRS for to the net carrying amount of the financial asset
recognition of such lease expenses. or financial liability. When calculating the effective
2.9.3 NAS 34: Interim Financial Reporting interest rate, an entity shall estimate cash flows
In para 2, if an entity’s interim financial report is considering all contractual terms of the financial
described as complying with NFRSs, it must comply instrument (for example, prepayment, call and similar
with all of the requirements of this Standard. options) but shall not consider future credit losses.
Paragraph 19 requires certain disclosures in that The calculation includes all fees and points paid or
regard. However, an entity shall not require to restate received, unless it is immaterial or impracticable to
its corresponding previous interim period balance if determine reliably, between parties to the contract
it is impracticable to restate. that are an integral part of the effective interest rate
(see NAS 18 Revenue), transaction costs and all
The carve out is optional and has been provided other premiums or discounts. There is a presumption
for the FY 2017-18 and 2018-19. Accordingly, that the cash flows and the expected life of a group
the Bank has opted the carve out. Bank will avail of similar financial instruments can be estimated
this option to report the comparative figures in the reliably. However, in those rare cases when it is not
interim financial statements for the non-availability possible to estimate reliably the cash flows or the
of NFRS information for the previous periods. expected life of a financial instrument (or group
of financial instruments), the entity shall use the
contractual cash flows over the full contractual term
of the financial instrument (or group of financial
instruments).
The carve out is optional and has been provided
84
for the FY 2017-18 and 2018-19. However, the • the fair value of the consideration transferred,
Bank has not opted the carve out. Bank has applied plus
effective interest rate to recognise it financial • the recognized amount of any non-controlling
assets measured at amortised cost for the previous interests in the acquire, plus
periods as well and has not availed this carve out • if the business combination is achieved in stages,
Strategic Report
option. The methodology applied in recognition at the fair value of the pre-existing equity interest in
effective interest rate is disclosed in note 4.29. the acquire, less
c) Impracticability to determine interest income on • the net recognized amount (generally fair value)
amortized cost of the identifiable assets acquired and liabilities
In para AG 93, once a financial asset or a group assumed.
of similar financial assets has been written down as • When the excess is negative, a bargain purchase
a result of an impairment loss, interest income is gain is recognized immediately in profit or loss.
thereafter recognized using the rate of interest used • The consideration transferred does not include
to discount the future cash flows for the purpose amounts related to the settlement of pre-existing
of measuring the impairment loss. Interest income relationships. Such amounts are generally recognized in
shall be calculated by applying effective interest profit or loss.
rate to the gross carrying amount of a financial • Transaction costs, other than those associated
asset unless the financial asset is written off either with the issue of debt or equity securities, that
partially or fully. the Bank incurs in connection with a business
The carve out is optional and has been provided combination are expensed as incurred.
for the FY 2017-18 and 2018-19. Accordingly, the • Any contingent consideration payable is
Bank has opted the carve out. measured at fair value at the acquisition date. If the
contingent consideration is classified as equity, then
2.10 Going Concern it is not re-measured, and settlement is accounted
The financial statements are prepared on the for within equity. Otherwise, subsequent changes
assumption that the Bank is a going concern and in the fair value of the contingent consideration are
will continue in operation for the foreseeable recognised in profit or loss.
future. b. Non-Controlling Interest (NCI)
For each business combination, the Bank elects
2.11 Materiality to measure any non-controlling interests in the
The Bank for the preparation of financial statements
acquire either:
determines materiality based on the nature or
• at fair value; or
magnitude, or both. Materiality is a pervasive
• at their proportionate share of the acquire
constraint in financial reporting because it is
identifiable net assets, which are generally at fair
pertinent to all of the qualitative characteristics.
value.
3. Significant Accounting Policies Changes in the Bank’s interest in a subsidiary that
do not result in a loss of control are accounted
3.1 Basis of Measurement
for as transactions with owners in their capacity as
The financial statements have been prepared under
owners. Adjustments to non-controlling interests
the historical cost convention modified to include
are based on a proportionate amount of the net
the fair valuation to the extent required or permitted
assets of the subsidiary. No adjustments are made
under NFRS as set out in the relevant accounting
to goodwill and no gain or loss is recognised in
policies. Financial information recorded and reported
profit or loss.
to comply with Directive of Nepal Rastra Bank
c. Subsidiaries
and relevant business practices followed by the
Subsidiaries are the entities controlled by the Bank.
Bank are disclosed separately, where there have
The Bank controls an entity if it is exposed, or has
been deviations with recognition and presentation
rights, to variable returns from its involvement with
criteria of NFRS.
the investee and has the ability to affect those
3.2 Basis of Consolidation returns through its power over the investee. The
a. Business Combination Financial Statements of subsidiaries are included
in the Consolidated Financial Statements from the
Business combinations are accounted for using the

acquisition method as at the acquisition date i.e. date that control commences until the date that
when control is transferred to the Bank. Control is control ceases.
the power to govern the financial and operating The Bank reassesses whether it has control if there
policies of an entity to obtain benefits from its are changes to one or more of the elements of
activities. In assessing control, the Group takes into control. In preparing the consolidated financial
consideration potential voting rights that currently statements, the financial statements are combined
are exercisable. line by line by adding the like items of assets,
The Bank measures goodwill at the acquisition liabilities, equity, income, expenses and cash
date as: flows of the parent with those of its subsidiary.
85
The carrying amount of the parent’s investment 3.3 Cash and Cash Equivalent
in subsidiary and the parent’s portion of equity of For the purposes of the cash flow statement, cash
subsidiary are eliminated in full. All intra group comprises cash on hand and demand deposits and
assets and liabilities, equity, income, expenses cash equivalents comprise highly liquid investments
and cash flows relating to transactions between that are convertible into cash with an insignificant
entities of the group (such as interest income and risk of changes in value with original maturities
technical fee) are eliminated in full while preparing of three months or less. Repurchase and reverse
the consolidated financial statements. repurchase agreements and back to back foreign
d. Loss of Control currency investment are not considered to be part
Upon the loss of control, the Bank derecognizes of cash equivalents.
the assets and liabilities of the subsidiary, carrying
amount of non-controlling interests and the 3.4 Financial Instruments: Financial Assets
cumulative translation differences recorded in and Financial Liabilities
equity related to the subsidiary. Further parent’s
share of components previously recognized in 3.4.1 Recognition
Other Comprehensive Income (OCI) is reclassified The Bank recognises financial assets and liabilities
to profit or loss or retained earnings as appropriate. when it becomes a party to the terms of the contract,
Any surplus or deficit arising on the loss of control which is the trade date or the settlement date.
is recognized in the profit or loss. If the Group Financial assets and liabilities
retains any interest in the previous subsidiary, then The Bank applies NAS 39 Financial Instruments:
such interest is measured at fair value at the date Recognition and Measurement the recognition,
that control is lost. Subsequently, it is accounted for classification and measurement, and de-
as an equity-accounted investee or in accordance recognition of financial assets and financial
with the Group’s accounting policy for financial liabilities, the impairment of financial assets, and
instruments depending on the level of influence hedge accounting.
retained Financial asset is any asset that is:
a. Cash;
e. Special Purpose Entities b. an equity instrument of another entity;
Special purpose entities (SPEs) are entities that are c. a contractual right:
created to accomplish a narrow and well-defined – to receive cash or another financial asset from
objective. An SPE is consolidated if, based on an another entity; or
evaluation of the substance of its relationship with – to exchange financial assets or financial liabilities
the Bank and the SPE’s risks and rewards, the Bank with another entity under conditions that are
concludes that it controls the SPE. potentially favourable to the entity; or
The following circumstances may indicate a d. a contract that will or may be settled in the entity’s
relationship in which, in substance, the Bank own equity instruments and is:
controls and consequently consolidates an SPE: - a non-derivative for which the entity is or may be
• The activities of the SPE are being conducted on obliged to receive a variable number of the entity’s
behalf of the Bank according to it specific business own equity instruments; or
needs so that the Bank obtains benefits from the - a derivative that will or may be settled other
SPE’s operation. than by the exchange of a fixed amount of cash
• The Bank has the decision-making powers to or another financial asset for a fixed number of the
obtain the majority of the benefits of the activities of entity’s own equity instruments.
the SPE or, by setting up an ‘autopilot’ mechanism; A financial liability is any liability that is:
the Bank has delegated these decision-making a. contractual obligation:
powers. – to deliver cash or another financial asset to
• The Bank has rights to obtain the majority of the another entity; or
benefits of the SPE and therefore may be exposed – to exchange financial assets or financial liabilities
to risks incident to the activities of the SPE. with another entity under conditions that are
• The Bank retains the majority of the residual or potentially unfavourable to the entity; or
ownership risks related to the SPE or its assets in b. a contract that will or may be settled in the entity’s
order to obtain benefits from its activities. own equity instruments and is:
f. Transaction Elimination on Consolidation – a non-derivative for which the entity is or may be
All intra-group balances and transactions, and obliged to deliver a variable number of the entity’s
any unrealized income and expenses (except for own equity instruments; or
foreign currency transaction gains or losses) arising – a derivative that will or may be settled other
from intra-group transactions are eliminated in than by the exchange of a fixed amount of cash
preparing the consolidated financial statements. or another financial asset for a fixed number of the
Unrealized losses are eliminated in the same way entity’s own equity instruments.
as unrealized gains, but only to the extent that there At initial recognition, the Bank measures financial
is no evidence of impairment.
86
3.4.2 Classification and measurement

Financial assets are classified under four categories as required by NFRS 9, namely,
NFRS 9 classification - Financial Assets Subsequent measurement
1 Held at fair value through Profit or Loss At Fair Value – through Profit or Loss
Strategic Report
2 Held at fair falue through Other Comprehensive Income Fair Value through Other Comprehensive Income
3 Held at amortised cost using effective interest rate At Amortised cost using effective interest rate
Financial Liabilities are classified under four categories as required by NFRS 9, namely,
NFRS 9 classification - Financial Liabilities Subsequent measurement
1 Held at fair value through Profit or Loss At fair value through Profit or Loss
2 Held at amortised cost using effective interest rate At Amortised cost using effective interest rate

instruments (financial assets and liabilities) at its fair transaction price is the fair value unless there is
value plus, in the case of a financial asset not at observable information available in an active
fair value through profit or loss, transaction costs market to the contrary. The best evidence of an
that are directly attributable to the acquisition of instrument’s fair value on initial recognition is
the financial asset. Transaction costs of financial typically the transaction price.
assets carried at fair value through profit or loss are Various factors influence the availability of
expensed in profit or loss. observable inputs and these may vary from product
3.4.3 De-recognition to product and change over time. Factors include
The Bank derecognises a financial asset, or a the depth of activity in the relevant market, the type
portion of a financial asset, from its financial of product, whether the product is new and not
statements where the contractual rights to cash widely traded in the marketplace, the maturity of
flows from the asset have expired, or have been market modelling and the nature of the transaction
transferred, usually by sale, and with them either (bespoke or generic). To the extent that valuation is
substantially all the risks and rewards of the asset based on models or inputs that are not observable
or significant risks and rewards, along with the in the market, the determination of fair value can
unconditional ability to sell or pledge the asset. be more subjective, dependent on the significance
of the unobservable input to the overall valuation.
Financial liabilities are derecognised when the Unobservable inputs are determined based on
liability has been settled, has expired or has been the best information available, for example by
extinguished. reference to similar assets, similar maturities or
3.4.4 Determination of fair value other analytical techniques.
The Bank applies NAS 39. All financial instruments The sensitivity of valuations used in the financial
are initially recognised at fair value on the date statements to possible changes in significant
of initial recognition and, depending on the unobservable inputs is not applicable to the Bank.
classification of the asset or liability, may continue
to be held at fair value either through profit or loss Critical accounting estimates and
or other comprehensive income. The fair value judgements
of a financial instrument is the price that would The valuation of financial instruments often
be received to sell an asset or paid to transfer a involves a significant degree of judgement and
liability in an orderly transaction between market complexity, in particular where valuation models
participants at the measurement date. make use of unobservable inputs (‘Level 3’ assets
and liabilities). This note provides information on
Wherever possible, fair value is determined
these instruments, including the related unrealised
by reference to a quoted market price for that
gains and losses recognised in the period, a
instrument. For many of the Bank’s financial assets
description of significant valuation techniques and
and liabilities, quoted prices are not available,
unobservable inputs, and a sensitivity analysis.

and valuation models are used to estimate fair
value. The models calculate the expected cash Valuation
flows under the terms of each specific contract, NFRS 13 Fair Value Measurement requires an
and then discount these values back to a present entity to classify its assets and liabilities according
value based on interest rate yields and volatility of to a hierarchy that reflects the observability of
currency rates. significant market inputs. The three levels of the fair
The financial liabilities are measured at amortised value hierarchy are defined below.
cost using effective interest rate.
On initial recognition, it is presumed that the
87
Quoted market prices – Level 1 Individually assessed loans and advances
Assets and liabilities are classified as Level 1 if Loans and advances to customers with significant
their value is observable in an active market. Such value (Top 50 borrowers and borrowers classified
instruments are valued by reference to unadjusted as bad as per Nepal Rastra Bank Directive) are
quoted prices for identical assets or liabilities in assessed for individual impairment test. The
active markets where the quoted price is readily recoverable value of loan is estimated on the basis
available, and the price represents actual and of realizable value of collateral and the conduct
regularly occurring market transactions. An active of the borrower/past experience of the Bank.
market is one in which transactions occur with The factors considered in determining whether
sufficient volume and frequency to provide pricing a loan is individually significant for the purposes
information on an ongoing basis. of assessing impairment include the size of the
loan, the number of loans in the portfolio, and the
Valuation technique using observable importance of the individual loan relationship, and
inputs – Level 2 how this is managed. Loans that are determined
Assets and liabilities classified as Level 2 have been to be individually significant based on the above
valued using models whose inputs are observable in and other relevant factors are individually assessed
an active market. Valuations based on observable for impairment, except when volumes of defaults
inputs uses market standard pricing techniques, and losses are sufficient to justify treatment under
and are commonly traded in markets where all the a collective methodology. Loans considered as
inputs to the market standard pricing models are individually significant are typically to corporate
observable. and commercial customers, are for larger amounts
Valuation technique using significant and are managed on an individual basis. For these
loans, the group considers on a case-by-case
unobservable inputs – Level 3
basis at each reporting date whether there is any
Assets and liabilities are classified as Level 3 if their
objective evidence that a loan is impaired. The
valuation incorporates significant inputs that are not
criteria used to make this assessment include:
based on observable market data (unobservable
• known cash flow difficulties experienced by the
inputs). A valuation input is considered observable
borrower;
if it can be directly observed from transactions in
• contractual payments of either principal or interest
an active market, or if there is compelling external
being past due for more than 90 days;
evidence demonstrating an executable exit price.
• the probability that the borrower will enter
Unobservable input levels are generally determined
bankruptcy or other financial realisation;
via reference to observable inputs, historical
• a concession granted to the borrower for economic
observations or using other analytical techniques.
or legal reasons relating to the borrower’s financial
Level 3 – valuation technique with significant
difficulty that results in forgiveness or postponement of
unobservable inputs: financial instruments valued
principal, interest or fees, where the concession is not
using valuation techniques where one or more
insignificant; and
significant inputs are unobservable.
• there has been deterioration in the financial
3.4.5 Impairment condition or outlook of the borrower such that its
ability to repay is considered doubtful. For loans
(A) Impairment of financial assets held at where objective evidence of impairment exists,
amortised costs impairment losses are determined considering the
Impairment of financial assets is considered when following factors:
the carrying values of the assets are more than the -the group’s aggregate exposure to the customer;
recoverable amount from the assets. Impairment is -the viability of the customer’s business model and
tested for all financial assets except those measured their capacity to trade successfully out of financial
at fair value. difficulties and generate sufficient cash flow to
Impairment of loans and advances to customers service debt obligations;
and bank and financial institutions -the amount and timing of expected receipts and
i) As per NAS 39 recoveries;
-the likely dividend available on liquidation or
Losses for impaired loans are recognised promptly

when there is objective evidence that impairment bankruptcy;
of a loan or portfolio of loans has occurred. -the extent of other creditors’ commitments ranking
Impairment allowances that are calculated on ahead of, or pari passu with, the group and the
individual loans or on groups of loans assessed likelihood of other creditors continuing to support
collectively are recorded as charges to the profit or the company;
loss and are recorded against the carrying amount -the complexity of determining the aggregate
of impaired loans on the statement of financial amount and ranking of all creditor claims and the
position. Losses, which may arise from future extent to which legal and insurance uncertainties
events, are not recognised. are evident;
• the realisable value of security (or other credit
88
mitigants) and likelihood of successful repossession; such that the actual level of inherent losses at
• the likely costs of obtaining and selling collateral the reporting date is likely to be greater or less
as part of foreclosure; than that suggested by historical experience.
• the ability of the borrower to obtain, and The period between an impairment occurring
make payments in, the currency of the loan if not and its identification is estimated by local
Strategic Report
denominated in local currency; and management for each identified portfolio based
• when available, the secondary market price of on economic and market conditions, customer
the debt. behaviour, portfolio management information,
The determination of the realisable value of credit management techniques and collection
security is based on the market value at the time the and recovery experiences in the market.
impairment assessment is performed. The value is • Statistical methods are used to determine
not adjusted for expected future changes in market collective impairment losses for homogeneous
prices, though adjustments are made to reflect groups of loans not considered individually
local conditions such as forced sale discounts. significant.
Impairment losses are calculated by discounting For the purpose of collective assessment of
the expected future cash flows of a loan, which impairment bank has categorized assets in to
includes expected future receipts of contractual sixteen broad products as follows
interest, at the loan’s original effective interest rate 1 Agricultural and Forest Related
and comparing the resultant present value with the 2 Fishery Related
loan’s current carrying amount. The impairment 3 Mining Related
allowances on individually significant accounts 4 Agriculture, Forestry & Beverage Production
are reviewed at least quarterly and more regularly Related
when circumstances require. 5 Non-food Production Related
6 Construction
Collectively assessed loans and advances 7 Power, Gas and Water
Impairment is assessed collectively to cover 8 Metal Products, Machinery & Electronic
losses, which have been incurred but have not Equipment & Assemblage
yet been identified on loans subject to individual 9 Transport, Communication and Public Utilities
assessment or for homogeneous groups of loans 10 Wholesaler & Retailer
that are not considered individually significant. 11 Finance, Insurance and Real Estate
Retail lending portfolios are generally assessed 12 Hotel or Restaurant
for impairment collectively as the portfolios 13 Other Services
are generally large homogeneous loan pools. 14 Consumption Loans
15 Local Government
Individually assessed loans for which no evidence 16 Others
of impairment have been specifically identified
ii. Impairment model under Nepal Rastra Bank
on an individual basis are grouped together
Directives
according to their credit risk characteristics for a
Impairment in respect of loans and advances are
collective impairment assessment. These credit
based on management’s assessment of the degree
risk characteristics may include type of business
of possible losses of the loans and advances, and
involved, type of products offered, security
subject to the minimum impairment prescribed
obtained or other relevant factors. This assessment
in NRB Directives. Impairment is charged for
captures impairment losses that the bank has
possible losses on loans and advances including
incurred as a result of events occurring before
bills purchased at 1% to 100% on the basis of
the balance sheet date, which the bank is not
classification of loans and advances, overdraft and
able to identify on an individual loan basis, and
bills purchased in accordance with NRB directives,
that can be reliably estimated. When information
which is principally based on the overdue criteria of
becomes available which identifies losses on
the receivables.
individual loans within the group, those loans are
removed from the group and assessed individually. iii. Policy adopted
The collective impairment allowance is determined As per the carve out notice issued by ICAN, the
after taking into account: Bank has measured impairment loss on loan and
• historical loss experience in portfolios of similar advances as the higher of amount derived as per
credit risk characteristics (for example, by norms prescribed by Nepal Rastra Bank for loan
industry sector, loan grade or product); loss provision and amount determined under NFRS
• the estimated period between a loss occurring (paragraph 63 of NAS 39).
and the loss being identified and evidenced by Reversals of impairment
the establishment of an appropriate allowance If the amount of an impairment loss decreases in
against the individual loan; and a subsequent period, and the decrease can be
• management’s judgement as to whether related objectively to an event occurring after the
current economic and credit conditions are impairment was recognised, the excess is written
89
back by reducing the loan impairment allowance • for an available-for-sale debt security, a subsequent
account accordingly. The write-back is recognised decline in the fair value of the instrument is
in the income statement. recognised in profit or loss when there is objective
Write-off of loans and advances evidence of impairment as a result of further
decreases in the estimated future cash flows of the
Loans (and the related impairment allowance financial asset. Where there is no further objective
accounts) are normally written off, either partially evidence of impairment, the decline in the fair
or in full, when there is no realistic prospect of value of the financial asset is recognised in other
recovery. Where loans are secured, this is generally comprehensive income. If the fair value of a debt
after receipt of any proceeds from the realisation of security increases in a subsequent period, and the
security. In circumstances where the net realisable increase can be objectively related to an event
value of any collateral has been determined and occurring after the impairment loss was recognised
there is no reasonable expectation of further inprofit or loss, or the instrument is no longer
recovery, write-off may be earlier. impaired, the impairment loss is reversed through
(B) Available for sale financial instruments profit or loss;
• Available-for-sale debt securities. In assessing • for an available-for-sale equity security, all
objective evidence of impairment at the reporting subsequent increases in the fair value of the
date, the bank considers all available evidence, instrument are treated as a revaluation and are
including observable data or information about recognised in other comprehensive income.
events specifically relating to the securities, which Impairment losses recognised on the equity security
may result in a shortfall in the recovery of future are not reversed through profit or loss. Subsequent
cash flows. Financial difficulties of the issuer, as decreases in the fair value of the available-for-sale
well as other factors such as information about equity security are recognised in profit or loss to
the issuers’ liquidity, business and financial risk the extent that further cumulative impairment losses
exposures, levels of and trends in default for similar have been incurred.
financial assets, national and local economic
trends and conditions, and the fair value of 3.4.6 Offsetting of financial assets and financial
collateral and guarantees may be considered liabilities
individually, or in combination, to determine Financial assets and financial liabilities are offset
if there is objective evidence of impairment. and the net amount is reported in the balance sheet
In addition, the performance of underlying collateral when there is a legally enforceable right to offset
and the extent and depth of market price declines the recognised amounts and there is an intention to
is relevant when assessing objective evidence of settle on a net basis, or realise the asset and settle
impairment of available-for-sale securities. The the liability simultaneously (‘the offset criteria’).
primary indicators of potential impairment are
3.5 Trading Assets
considered to be adverse fair value movements
Financial assets are classified as trading assets (held
and the disappearance of an active market for
for trading) if they have been acquired principally
a security, while changes in credit ratings are of
for the purpose of selling in the near term, or form
secondary importance.
part of a portfolio of identified financial instruments
• Available-for-sale equity securities. Objective that are managed together and for which there is
evidence of impairment may include specific evidence of a recent pattern of short- term profit-
information about the issuer as detailed above, taking. They are recognised on trade date, when
but may also include information about significant the group enters into contractual arrangements
changes in technology, markets, economics with counterparties, and are normally derecognised
or the law that provides evidence that the cost when sold. They are initially measured at fair
of the equity securities may not be recovered. value, with transaction costs taken to profit or
A significant or prolonged decline in the fair value loss. Subsequent changes in their fair values are
of the equity below its cost is also objective evidence recognised in profit or loss in ‘Net trading income’.
of impairment. In assessing whether it is significant,
the decline in fair value is evaluated against the 3.6 Derivative Assets and Derivative Liabilities
original cost of the asset at initial recognition. In Derivatives are financial instruments that derive
assessing whether it is prolonged, the decline is their value from the price of underlying items such
evaluated against the continuous period in which as equities, bonds, interest rates, foreign exchange,
the fair value of the asset has been below its credit spreads, commodities and equity or other
original cost at initial recognition. indices. Derivatives are initially recognised, and
are subsequently re-measured, at fair value.
Once an impairment loss has been recognised, Fair values of derivatives are obtained either
the subsequent accounting treatment for changes from quoted market prices or by using valuation
in the fair value of that asset depends on the type techniques.
of asset: Embedded derivatives are bifurcated from the host
90
contract when their economic characteristics and is not held for trading or designated at fair value.
risks are not clearly and closely related to those of The bifurcated embedded derivatives are measured
the host non-derivative contract, their contractual at fair value with changes therein recognised in the
terms would otherwise meet the definition of a income statement.
stand-alone derivative and the combined contract
Strategic Report
3.7 Property and Equipment
The Bank applies NAS 16 Property, Plant and Equipment and NAS 40 Investment Properties. Property, plant and
equipment is stated at cost, which includes direct and incremental acquisition costs less accumulated depreciation
and provisions for impairment, if required. Subsequent costs are capitalised if these result in an enhancement to
the asset.
Depreciation is provided on the depreciable amount of items of property, plant and equipment on a straight-line
basis over their estimated useful economic lives. Depreciation rates, methods and the residual values underlying
the calculation of depreciation of items of property, plant and equipment are kept under review to take account of
any change in circumstances. The Bank uses the following useful lives in calculating depreciation of property, plan
and equipment:
Asset category Sub category Useful life Remarks
Based on
Building & Leasehold Structure Leasehold Structures 12 average leasehold
period and asset use
Furniture & Fixtures Metal Furniture 10
Wooden Furniture 5
Other Furniture 5
Machinery Machinery 5
Office Equipment Computer & Accessories 5
Other Equipment 5
Battery 3
Mobile Phone 3
Small Equipment 4
Vehicle Vehicle 7
Low value assets costing less than NRs 5,000 each are charged as operational expenses in the year of purchase.
3.8 Goodwill and Intangible Assets The assessment of whether an asset is exhibiting
Intangible assets: Intangible assets other than indicators of impairment as well as the calculation
goodwill are accounted for in accordance with of impairment, which requires the estimation of
NAS 38 Intangible Assets and NAS 36 Impairment future cash flows and fair values less costs to sell,
of Assets. also requires the preparation of cash flow forecasts
and fair values for assets that may not be regularly
Intangible assets include software and licences.
bought and sold.
They are initially recognised when they are
separable or arise from contractual or other legal 3.9 Investment Property
rights, the cost can be measured reliably and, in Land or a building or part of a building or both
the case of intangible assets not acquired in a owned by the Bank or held by the Bank as the
business combination, where it is probable that lessee under a finance lease to earn rentals or for
future economic benefits attributable to the assets capital appreciation or both, rather than for:
will flow from their use. • use in the production or supply of goods or
Intangible assets are stated at cost (which is, in the services or for administrative purposes; or
case of assets acquired in a business combination, • sale in the ordinary course of business.
the acquisition date fair value) less accumulated

amortisation and impairment, if any. These are are classified as investment properties.
amortised over their useful lives in a manner that
reflects the pattern to which they contribute to Investment properties are measured initially at its
future cash flows. cost. Transaction costs are included in the initial
measurement. After initial recognition, the Bank
Intangible assets are reviewed for impairment when
chooses the cost model to measure its investment
there are indications that impairment may have
properties in accordance with NAS 16.
occurred
Determining the estimated useful lives of intangible
assets requires an analysis of circumstances.
91
3.10 Income Taxes which can be reliably estimated. Provision is made
The Bank applies NAS 12 Income Taxes in for the anticipated costs when an obligation exists.
accounting for taxes on income. Income tax payable
3.13 Revenue Recognition
on taxable profits (Current Tax) is recognised as an
The Bank applies NAS 39 Financial Instruments:
expense in the period in which the profits arise.
Recognition and Measurement. Interest income on
Withholding taxes are also treated as income taxes.
loans and advances at amortised cost, available
Income tax recoverable on tax allowable losses is
for sale debt investments, and interest expense
recognised as a current tax asset only to the extent
on financial liabilities held at amortised cost, are
that it is regarded as recoverable by offset against
calculated using the effective interest method which
taxable profits arising in the current or prior period.
allocates interest, and direct and incremental fees
Current tax is measured using tax rates and tax laws
and costs, over the expected lives of the assets and
that have been enacted or substantively enacted at
liabilities.
the statement of financial position date.
The effective interest method requires the Bank to
Deferred tax is provided in full, using the assets
estimate future cash flows, in some cases based on
and liability method, on temporary differences
its experience of customers’ behaviour, considering
arising from the differences between the tax bases
all contractual terms of the financial instrument,
of assets and liabilities and their carrying amounts
as well as the expected lives of the assets and
in the consolidated financial statements. Deferred
liabilities. Due to the large number of products
tax is determined using tax rates and legislation
and types (both assets and liabilities), in the normal
enacted or substantively enacted by the statement
course of business there are no individual estimates
of financial position date, which are expected to
that are material to the results or financial position.
apply when the deferred tax asset is realised or the
deferred tax liability is settled. Deferred tax assets 3.14 Interest Expense
and liabilities are only offset when there is both a Covered together with Interest income in note 3.13
legal right to set-off and an intention to settle on a
net basis. 3.15 Employee Benefit
Critical accounting estimates and judgments: The Bank applies NAS 19 Employee benefits for
Bank is subject to corporate income taxes under accounting most of the components of staff costs.
the Income Tax Act 2058. There may be many Short-term employee benefits
transactions and calculations for which the ultimate Salaries, allowances, socials security expenses,
tax treatment is uncertain and cannot be determined performance bonuses as provided in the law and
until resolution has been reached with the relevant other employee related expenses are recognised
tax authority. Liabilities relating to these matters are over the period in which the employees provide
based on estimates of whether additional taxes will services to which the payments relate.
be due after taking into account external advice
where appropriate. Post-retirement benefits - Defined Contribution
Scheme
Deferred tax assets have been recognised based
on business profit forecasts. Further detail on the The Bank provides provident fund contribution as
recognition of deferred tax assets is provided in the post-retirement benefits under defined contribution
deferred tax assets and liabilities section of this tax scheme. A percentage of basic salary is paid into
note. the scheme on monthly basis. Bank recognises
contributions due in respect of the accounting
3.11 Deposits, Debt Security Issues and period to profit and loss. Any contributions unpaid
Subordinate Liabilities at the reporting date are included as a liability.
Borrowings (which include deposits from banks, The Bank provides gratuity for the staff who have
customer deposits, debt securities in issue and joined the bank on or after 4 September 2017under
subordinated liabilities) are recognised initially defined contribution schemes. Under the scheme,
at fair value, being their issue proceeds net of 8.33% of basic salary shall be deposited into Social
transaction costs incurred. These instruments are Security Fund (SSF) as prescribed in the Labour Act
subsequently stated at amortised cost using the 2017.
effective interest method.

Post-retirement benefits - Defined Benefit Schemes
3.12 Provisions The Bank continues to operate gratuity (for
The Bank applies NAS 37 Provisions, Contingent employees who joined before 4 September 2017),
Liabilities and Contingent Assets in accounting for accumulated annual leave payments and sick leave
non-financial liabilities. payments as post-retirement benefits as defined
Provisions are recognised for present obligations benefit schemes. For employees who joined the
arising as consequences of past events where it is bank before 4 September 2017, gratuity liability
more likely than not that a transfer of economic is based on number of completed years of service.
benefit will be necessary to settle the obligation, Such scheme Liabilities under each of those
92
schemes are valued at fair value using actuarial translated into Nepalese Rupees at the period end
re-measurement. Bank presents obligation less exchange rates. Exchange rate gains and losses on
the fair value of the assets after applying the asset such balances are taken to profit or loss.
ceiling test. Bank intends to fund the liabilities with
scheme assets, though there are no scheme assets 3.18 Financial Guarantee and Loan Commitments
Strategic Report
as at reporting date. Guarantee liabilities are possible obligations whose
existence will be confirmed only by uncertain future
Changes in scheme liabilities or assets (re- events, and present obligations where the transfer
measurements) that do not arise from regular of economic resources is uncertain or cannot be
service costs, net interest on net defined benefit reliably measured. Guarantee liabilities are not
liabilities or assets, settlements or contributions to classified as on-SFP but are only disclosed unless
the scheme, are recognised in other comprehensive the outflow of economic resources is probable.
income, except for leave compensations that are
taken directly to the profit or loss. Loan commitment is the commitment where the
Bank has confirmed its intention to provide funds to
Re-measurements comprise experience a customer or on behalf of a customer in the form
adjustments (differences between previous actuarial of loans, overdrafts, future guarantees, whether
assumptions and what has actually occurred), the cancellable or not, or letters of credit and the Bank
effects of changes in actuarial assumptions, return has not made payments at the reporting date,
on scheme assets (excluding amounts included those instruments are included in these financial
in the interest on the assets) and any changes in
statements as commitments.
the effect of the asset ceiling restriction (excluding
amounts included in the interest on the restriction). 3.19 Share Capital and Reserves
The Bank classifies capital instruments as financial
3.16 Leases liabilities or equity instruments in accordance
Agreements which transfer substantially all the with the substance of the contractual terms of the
risks and rewards incidental to the ownership instruments. Equity is defined as residual interest
of assets are classified as finance leases. As a in total assets of the Bank after deducting all its
lessor under finance leases, the group presents liabilities. Common shares are classified as equity
the amounts due under the leases, after deduction of the Bank and distributions thereon are presented
of unearned charges, in ‘Loans and advances to in statement of changes in equity.
banks’ or ‘Loans and advances to customers’. As a
lessee under finance leases, the group presents the Dividends on ordinary shares and preference
leased assets in ‘Property, plant and equipment’ shares classified as equity are recognized in equity
and the corresponding liability to the lessor is in the period in which they are declared.
included in ‘Other liabilities’. A finance lease and Incremental costs directly attributable to the issue of
its corresponding liability are recognised initially at an equity instrument are deducted from the initial
the fair value of the asset or, if lower, the present measurement of the equity instruments considering
value of the minimum lease payments. the tax benefits achieved thereon.
All other leases are classified as operating The reserves include retained earnings and other
leases. As a lessor, the group presents assets statutory reserves such as general reserve, bond
subject to operating leases in ‘Property, plant redemption reserve, foreign exchange equalization
and equipment’. Impairment losses are reserve, regulatory reserve, investment adjustment
recognised to the extent that the carrying values reserve, staff training and development fund, CSR
are not fully recoverable. As a lessee, leased reserve etc.
assets are not recognised on the balance sheet.
The finance income or charges on finance leases
3.20 Earnings Per Share including diluted
The calculation of basic earnings per share is
are recognised in ‘Net interest income’ over the
based on the profit attributable to equity holders of
lease periods so as to give a constant rate of return.
the Bank and the basic weighted average number
Rentals payable or receivable under operating
of shares. When calculating the diluted earnings
leases are spread on a straight-line basis over the
per share, the weighted average number of shares
lease periods and are recognised in ‘General and
in issue is adjusted for the effects of all dilutive
administrative expenses’ or in ‘Other operating

potential ordinary shares held in respect of the
income’.
Bank
3.17 Foreign Currency Translation
The Bank applies NAS 21 The Effects of Changes
3.21 Segment Reporting
The Bank’s segmental reporting is in accordance
in Foreign Exchange Rates. Transactions and
with NFRS 8 Operating Segments. Operating
balances in foreign currencies are translated into
segments are reported in a manner consistent with
Nepalese Rupees at the rate ruling on the date
the internal reporting provided to the bank’s central
of the transaction. Foreign currency balances are
management committee, which is responsible for
allocating resources and assessing performance of
93
the operating segments. All transactions between
business segments are conducted on an arm’s
length basis, with intra-segment revenue and costs
being eliminated in Head Office. Income and
expenses directly associated with each segment
are included in determining business segment
performance.
3.22 Investment in Associates and Joint
Ventures
The Bank applies NAS 28 Investments in Associates
and NFRS 11 Joint Arrangements. Associates are
entities in which the Bank has significant influence,
but not control, over the operating and financial
policies. Generally, the Bank holds more than
20%, but less than 50%, of their voting shares.
Joint ventures are arrangements where the Bank
has joint control and rights to the net assets of the
entity.
The Bank’s investments in associates and joint
ventures are initially recorded at cost and increased
(or decreased) each year by the Bank’s share of the
post-acquisition profit/(loss). The Bank ceases to
recognise its share of the losses of equity accounted
associates when its share of the net assets and
amounts due from the entity have been written off
in full, unless it has a contractual or constructive
obligation to make good its share of the losses.
In some cases, investments in these entities may
be held at fair value through profit or loss, for
example, those held by private equity businesses.
94
4.1 Cash and cash equivalent

Cash Balance and Balances with other Bank and Financial Institutions (B/FIs) are financial instruments that have been
classified as Loans and Receivables, under Financial Assets in accordance with NAS 39 Financial Instruments – Recognition
and Measurement. These have been recognised at amortised cost using effective interest rate. The bank maintains a level
Strategic Report
of liquidity in the form of cash and balances in nostro accounts for operational requirements.
Cash at vault and cash in transit are insured for physical risks. Cash is subject to risks of changes in time value of money.
Cash held in foreign currency denomination, which are converted, using the closing rates, are subject to risk of movement
in currency prices. The Bank has the system to continuously monitor and timely manage the risks. Bank considers that
these instruments are subject to insignificant risks.
Group Bank
Particulars Current Previous Current Previous
Year Year Year Year
Cash in hand 2,374,354,666 1,984,553,390 2,374,354,666 1,984,553,390
Balances with B/FIs 2,923,436,076 3,932,112,099 2,920,060,845 3,932,112,099
Money at call and short notice - - - -
Other 5,185,821,855 2,886,800,000 5,185,821,855 2,886,800,000
Total 10,483,612,597 8,803,465,489 10,480,237,366 8,803,465,489
4.2 Due from Nepal Rastra Bank

The Bank, under regulatory requirement, is required to maintain a level of liquidity in the form of Cash Reserve Ratio,
which includes current account balances maintained with the central bank. There is restriction for utilisation of these
deposits within the set regulatory limits.
These balances have been classified as Loans and Receivables under NAS 39 Financial Instruments – Recognition
and Measurement. These have been recognised at amortised cost using effective interest rate. The bank perceives
insignificant risks with these balances except the changes in foreign exchange rates and time value of money, as these
balances do not generate any returns. Other deposit and receivable from NRB includes foreign currency deposits and
receivable from NRB
Group Bank
Year Year Year Year
Statutory balances with NRB 5,605,019,651 7,279,602,614 5,605,019,651 7,279,602,614
Securities purchased under resale agreement - - - -
Other deposit and receivable from NRB 42,329,935 33,412,888 42,329,935 33,412,888
Total 5,647,349,586 7,313,015,502 5,647,349,586 7,313,015,502
4.3 Placements with Bank and Financial Instituitions

These balances have been classified as Loans and Receivables under NAS 39 Financial Instruments – Recognition and
Measurement. The carrying values of these balances are measured at amortised costs using effective interest rates.
Risks associated with these balances are regularly monitored and managed. The bank considers that the returns on
these instruments are sufficient to cover for associated risks, if any. Placement with domestic Bank includes deposit held
by subsidiary in domestic bank.

Group Bank

Year Year Year Year
Placement with domestic B/FIs 9,500,000 - - -
Placement with foreign B/FIs - 10,361,550,000 - 10,361,550,000
Less: Allowances for impairment - - - -
Total 9,500,000 10,361,550,000 - 10,361,550,000
95
4.4 Derivative financial instruments
Group Bank
Year Year Year Year
Held for trading
Interest rate swap - - - -
Currency swap - - - -
Forward exchange contract - - - -
Others - - - -
Held for risk management
Other - - - -
Total - - - -
4.5 Other trading assets
Equities: Investment in Mututal Fund has been classified as Held for trading and recognised at fair value through profit
or Loss. Mutual Fund Units are listed in stock exchange and the movements in the market price of the units are adjusted
at each reporting date through profit and loss.
Group Bank
Year Year Year Year
Teasury bills - -
Government bonds - - - -
NRB Bonds - - - -
Domestic Corporate bonds - - - -
Equities/ Mutual Fund Units 21,332,281 23,007,450 20,404,281 23,007,450
Other - - -
Total 21,332,281 23,007,450 20,404,281 23,007,450
Pledged - - - -
Non-pledged 21,332,281 23,007,450 20,404,281 23,007,450
4.6 Loan and advances to B/FIs
These balances have been classified as financial assets at amortized cost as per NFRS 9,Financial Instruments. Bank and Financial Institutions
have been regulated by the Central Bank and the risks associated with these balances are considered nominal and no specific impairment has
been identified. Bank regularly monitors and manages posssible risks with these loans and advances under credit risk management framwork.
Bank measure the impairment of loan and advances to customers as higher of the impairment as assessed under NFRS or as per the norms
prescribed by Nepal Rastra Bank. Since this provision is mandatory for application the impairment under NFRS and impairment under NRB
norms has been disclosed for comparison in Para 3.23.5. For current year impairment under NRB norms has been taken accordingly.
Group Bank
Year Year Year Year
Loans to microfinance institutions 2,901,214,062 2,320,792,715 2,901,214,062 2,320,792,715
Other - - - -
Less: Allowances for impairment (29,012,141) (22,279,610) (29,012,141) (22,279,610)
Total 2,872,201,921 2,298,513,105 2,872,201,921 2,298,513,105
4.6.1: Allowances for impairment
Group Bank
Year Year Year Year
Balance at Shrawan 1 22,279,610 14,771,537 22,279,610 14,771,537
Impairment loss for the year:
Charge for the year 6,732,531 7,508,073 6,732,531 7,508,073
Recoveries/reversal - - - -
Amount written off - - - -
Balance at Asar end 29,012,141 22,279,610 29,012,141 22,279,610
96
4.7 Loans and advances to customers

Loans and advances to customers are held at amortised cost. That is, the initial fair value (which is normally the amount advanced) and the amortisation
of coupon, fees and expenses to represent the effective interest rate of the asset. Service cost charged on loans and advance to customers have been
spread systematically as interest income over the loan tenure which may approximate the effective interest rate by appropriate adjustment to loans and
advances. Risks associated with Loans and Advances to customers are regularly monitored and managed. The impairment on these loans and advances
Strategic Report
to customers has been changed under the regulatory impairment model as per NRB directive no. 2 which stands slightly higer than total impairment as
per NAS 39. Under regulatory impairment model good loans are charged with 1% portfolio impairment and speciifc impairments are to be charged on
the overdue basis and identification of some risk triggers. Detailed comparision of impairment as per NRB directive and as per NFRS has been diclosed
in Note no. 5.15
Group Bank
Year Year Year Year
Loan and advances measured at amortized cost 73,303,828,808 62,496,663,089 73,303,828,808 62,496,663,089
Less: Impairment allowances
Collective impairment (785,916,094) (585,129,584) (785,916,094) (585,129,584)
Individual impairment (154,252,666) (89,497,853) (154,252,666) (89,497,853)
Net amount 72,363,660,048 61,822,035,652 72,363,660,048 61,822,035,652
Loan and advances measured at FVTPL - - - -
Total 72,363,660,048 61,822,035,652 72,363,660,048 61,822,035,652
4.7.1: Analysis of loan and advances - By Product
The bank has invested on various types of loan and advances. The product wise seggregation of customer loan is as under:
Group Bank
Year Year Year Year
Product
Term loans 7,890,878,463 3,851,542,586 7,890,878,463 3,851,542,586
Overdraft 688,551,057 1,075,602,873 688,551,057 1,075,602,873
Trust receipt/Import loans 7,532,680,109 2,592,234,249 7,532,680,109 2,592,234,249
Demand and other working capital loans 31,626,771,628 29,304,340,135 31,626,771,628 29,304,340,135
Personal residential loans 2,197,565,513 1,832,509,214 2,197,565,513 1,832,509,214
Real estate loans 4,812,872,561 4,912,364,589 4,812,872,561 4,912,364,589
Margin lending loans - - - -
Hire purchase loans 1,714,688,047 1,640,206,218 1,714,688,047 1,640,206,218
Deprived sector loans 760,271,327 758,798,160 760,271,327 758,798,160
Bills purchased 1,317,752 1,619,565,345 1,317,752 1,619,565,345
Staff loans 724,665,032 1,039,413,854 724,665,032 1,039,413,854
Other 15,344,592,242 13,844,176,003 15,344,592,242 13,844,176,003
Gross Loan 73,294,853,731 62,470,753,226 73,294,853,731 62,470,753,226
EIR adjustments (131,255,823) (50,024,055) (131,255,823) (50,024,055)
Sub-total 73,163,597,908 62,420,729,171 73,163,597,908 62,420,729,171
Interest receivable 140,230,900 75,933,918 140,230,900 75,933,918
Grand total 73,303,828,808 62,496,663,089 73,303,828,808 62,496,663,089
4.7.2: Analysis of loan and advances - By Currency
The bank has invested on various types of loan and advances. The currencywise seggregation of customer loan is as under:
Group Bank
Year Year Year Year
Nepalese rupee 68,207,101,921 60,477,261,387 68,207,101,921 60,477,261,387

Indian rupee 1,317,752 2,402,090 1,317,752 2,402,090
United State dollar 5,095,409,135 1,991,089,749 5,095,409,135 1,991,089,749
Great Britain pound - - - -
Euro - - - -
Japenese yen - - - -
Chinese yuan - - - -
Other - - - -
Total 73,303,828,808 62,470,753,226 73,303,828,808 62,470,753,226
97
4.7.3: Analysis of loan and advances - By Collateral
The bank has invested on various types of loan and advances. The collateralwise seggregation of gross loan included in schedule 4.6 and 4.7 is presented below:
Group Bank
Year Year Year Year
Secured
Movable/immovable assets 64,448,715,168 55,131,957,651 64,448,715,168 55,131,957,651
Gold and silver 1,154,513 848,525 1,154,513 848,525
Guarantee of domestic B/FIs 3,401,550,720 2,870,120,648 3,401,550,720 2,870,120,648
Government guarantee 156,119,132 156,120,721 156,119,132 156,120,721
Guarantee of international rated bank - - - -
Collateral of export document 180,000,000 64,300,000 180,000,000 64,300,000
Collateral of fixed deposit receipt 720,392,948 1,088,792,602 720,392,948 1,088,792,602
Collateral of Governement securities - - - -
Counter guarantee - - - -
Personal guarantee - - - -
Other collateral 4,395,896,327 3,158,613,079 4,395,896,327 3,158,613,079
Subtotal 73,303,828,808 62,470,753,226 73,303,828,808 62,470,753,226
Unsecured - - - -
Grant Total 73,303,828,808 62,470,753,226 73,303,828,808 62,470,753,226
4.7.4: Allowances for impairment

The impairment of loan mentioned in Schedule 4.7 is presented below:
Group Bank
Year Year Year Year
Specific allowances for impairment
Balance at Shrawan 1, 2074 89,497,853 77,337,451 89,497,853 77,337,451
Charge for the year 64,754,813 12,160,402 64,754,813 12,160,402
Recoveries/reversal during the year - - - -
Write-offs - - - -
Exchange rate variance on foreign currency impairment - - - -
Other movement - - - -
Balance at Asar 31, 2075 154,252,666 89,497,853 154,252,666 89,497,853
Collective allowances for impairment
Balance at Shrawan 1, 2074 585,129,584 455,668,413 585,129,584 455,668,413
Charge/(reversal) for the year 200,786,510 129,461,171 200,786,510 129,461,171
Exchange rate variance on foreign currency impairment - - - -
Other movement - - - -
Balance at Asar 31, 2075 785,916,094 585,129,584 785,916,094 585,129,584
Total allowances for impairment 940,168,760 674,627,437 940,168,760 674,627,437
4.8 Investment securities
Investment securities measured at amortized cost: mandatory priority / deprived sector lending that is to be made by the
Government Bonds: Government Bonds are classified as held to maturity bank. The ordinary shares of these companies are actively traded in
instruments, initially recognised at fair value and subsequently measured the stock market. The Bank holds promoters shares of these companies
at amortised cost using effective interest rate. The bank has both which are not actively traded. The fair value of these instruments has
intention and capacity to hold these instruments until their designated been determined considering the for promoter share of companies
maturity. Since these are sovereign backed, the bank considers that traded in the stock market in relation to the trading price of the ordinary
these instrumenst pose insignificant risk to the bank and the intrinsic shares. The Bank does not have intention to dispose these investments
returns of these insturments adequately compensates for associated risk, in the short term.
if any. b. Credit Information Bureau (CIB), Nepal Clearing Hose Limited
Investment in equity measured at FVTOCI: (NCHL), Nepal Banking Institute (NBI) – these investments have been
Investments in corporate securities classified as Available for sale: made as a strategic investments along with other Banks and Financial
Ta. Rural Microfinance Development Centre (RMDC) and Nepal Institutions. These securities are not listed and/or traded in the market.
Grameen Bikas Bank Limited (NGBBL) - These investments have The face value of share of these investments are considered to represent
been made as a part of regulatory compliances, as these qualify for the fair values.

98
Group Bank
Year Year Year Year
Investment securities measured at amortized cost 8,518,871,826 7,641,907,531 8,518,871,826 7,641,907,531
Strategic Report
Investment in equity measured at FVTOCI 127,276,952 195,183,128 127,276,952 195,183,128
Total 8,646,148,778 7,837,090,659 8,646,148,778 7,837,090,659
4.8.1: Investment securities measured at amortized cost

Group Bank
Year Year Year Year
Debt securities - - - -
Government bonds 7,437,400,000 5,800,000,000 7,437,400,000 5,800,000,000
Government treasury bills 1,081,471,826 1,841,907,531 1,081,471,826 1,841,907,531
Nepal Rastra Bank bonds - - - -
Nepal Rastra Bank deposits instruments - - - -
Other - - - -
Less: specific allowances for impairment - - - -
Total 8,518,871,826 7,641,907,531 8,518,871,826 7,641,907,531
Government bonds of Rs. 1,600,000,000 has been pledged for borrowing of USD 8,000,000 from Agricultural Development Bank Ltd.
4.8.2: Investment in equity measured at fair value through other comprehensive income
Group Bank
Year Year Year Year
Equity instruments
Quoted equity securities 114,842,252 185,993,328 114,842,252 185,993,328
Unquoted equity securities 12,434,700 9,189,800 12,434,700 9,189,800
Total 127,276,952 195,183,128 127,276,952 195,183,128
Investment in quoted equity securities of RMDC Laghubitta Bittiya Sanstha Ltd. and Grameen Bikas Laghubitta Bittiya Sanstha Ltd. (Promoter
share) have been valued at 50% of the market value at the end of the year considering approximate ratio of promoter and public share price
on last promoter share transaction date.
Investment in unquoted equity securities have been valued at face value per share.
4.8.3: Information relating to investment in equities

Group Bank
Particulars Year Year Year Year
Cost Fair Value Cost Fair Value Cost Fair Value Cost Fair Value
Investment in quoted equity
RMDC Laghubitta Bittiya Sanstha Ltd. 18,895,000 86,349,582 18,895,000 137,241,169 18,895,000 86,349,582 18,895,000 137,241,169
264066 shares of Rs. 100.00 each
Grameen Bikas Laghubitta Bittiya Sanstha Ltd. 6,125,000 28,492,670 6,125,000 48,752,159 6,125,000 28,492,670 6,125,000 48,752,159
92810 shares of Rs. 100.00each
Subtotal 25,020,000 114,842,252 25,020,000 185,993,328 25,020,000 114,842,252 25,020,000 185,993,328

Investment in unquoted equity
Karja Suchana Kendra Ltd. 1,235,500 8,234,700 1,235,500 5,489,800 1,235,500 8,234,700 1,235,500 5,489,800
82347 shares of Rs.100.each
Nepal Clearing House Ltd. 2,500,000 3,000,000 2,500,000 2,500,000 2,500,000 3,000,000 2,500,000 2,500,000
30000 shares of Rs. 100 each
National Banking Institute 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000
12000 shares of Rs. 100 each
Subtotal 4,935,500 12,434,700 4,935,500 9,189,800 4,935,500 12,434,700 4,935,500 9,189,800
Total 29,955,500 127,276,952 29,955,500 195,183,128 29,955,500 127,276,952 29,955,500 195,183,128
99
4.9 Current tax assets
Group Bank
Year Year Year Year
Current tax assets
Current year income tax assets 966,029,710 745,099,103 963,600,097 741,162,789
Tax assets of prior periods 2,735,244,761 1,994,145,087 2,735,244,761 1,994,081,972
Current tax liabilities
Current year income tax liabilities 915,956,382 686,716,416 915,956,382 686,716,416
Tax liabilities of prior periods 2,563,402,236 1,876,685,820 2,563,402,236 1,876,685,820
Total 221,915,853 175,841,954 219,486,240 171,842,525
4.10 Investment in subsidiaries

The bank has invested in Nepal SBI Merchant Banking Ltd (NSMBL) as a wholly owned subsidiary of the bank. The equity of NSMBL is not
quoted. The investment in the subsidiary is a strategic investment and bank intended to hold on its stake for forseeable future. The investment
has been recognised at cost in standalone financial statement of the bank and has been eliminated on consolidation.
Bank
Particulars
Current Year Previous Year
Investment in quoted subsidiaries - -
Investment in unquoted subsidiaries 188,888,889 100,000,000
Total investment - -
Less: Impairment allowances - -
Net carrying amount 188,888,889 100,000,000
The book value of investment in wholly owned subsidiary, NSMBL is Rs. 212,913,504 at closing date .
4.10.1: Investment in quoted subsidiaries

Bank
Particulars Current Year Previous Year
Cost Fair Cost Fair
…………………………………….Ltd. - - - -
…………shares of Rs. …….each"
…………………………………….Ltd. - - - -
Total - - - -
4.10.2: Investment in unquoted subsidiaries

Bank
Cost Fair Cost Fair

Nepal SBI Merchant Banking Ltd. 188,888,889 212,913,504 100,000,000 115,731,450
2,000,000 shares of Rs. 100 each
…………………………………….Ltd. - - - -
…………shares of Rs. …….each
Total 188,888,889 212,913,504 100,000,000 115,731,450
The fair value of investment in subsidiary has been taken on the basis of net worth of subsidiary as on closing date i.e.
Asadh end 2075
100
4.10.3: Information relating to subsidiaries of the Bank

Bank
Particulars Percentage of ownership held by the Bank
Strategic Report
Nepal SBI Merchant Banking Ltd. 100% 100%
…………………………………….Ltd. - -
…………………………………….Ltd. - -
…………………………………….Ltd. - -
4.10.4: Non controlling interest of the subsidiaries

The bank has 100% control over its subsidiary and therefore has not calculated Non controlling interest as in the scope
of NFRS-10 Consolidated Financial Statements
Bank
Particulars Current Year
...Ltd …Ltd. ...Ltd …Ltd.
Equity interest held by NCI (%) - - - -
Profit/(loss) allocated during the year - - - -
Accumulated balances of NCI as on Asar end…….. - - - -
Dividend paid to NCI - - - -
Group
Particulars Previous Year
...Ltd …Ltd. ...Ltd …Ltd.
Equity interest held by NCI (%) - - - -
Profit/(loss) allocated during the year - - - -
Accumulated balances of NCI as on Asar end…….. - - - -
Dividend paid to NCI - - - -
4.11 Investment in associates
The bank has not made any investment with significant influence as in the scope of NAS 28-Investment in associates

Group Bank

Year Year Year Year
Investment in quoted associates - - - - - - -
Investment in unquoted associates - - - - - - -
Total investment - - - - - - -
Less: Impairment allowances - - - - - - -
Net carrying amount - - - -
4.11.1: Investment in quoted associates

Group Bank

……………………….Ltd. - - - - - - - -
……shares of Rs. …….each"
"……………………….Ltd. - - - - - - - -
…………………………. - - - - - - - -
Total - - - - - - - -
101
4.11.2: Investment in unquoted associates
Group Bank
……………………….Ltd. - - - - - - - -
……shares of Rs. …….each"
"……………………….Ltd. - - - - - - - -
…………shares of Rs. ……each"
…………………………. - - - - - - - -
Total - - - - - - - -
4.11.3: Information relating to associates of the Bank

Group Bank
Particulars Percenttage of ownership Percentage of ownership held
held by the Bank by the Bank
Current Year Previous Year Cost Fair Value
…………………………………….Ltd. - - - -
…………………………………….Ltd. - - - -
…………………………………….Ltd. - - - -
…………………………………….Ltd. - - - -
Total - - - -
4.11.4: Equity value of associates

Group
Particulars Current Previous
Year Year
…………………………………….Ltd. - -
…………………………………….Ltd. - -
………………………………. - -
Total - -
4.12 Investment properties

The bank has not made any investment in investment properties with intention to earn through rentals or through capital
appreciation (or both)
Group Bank
Year Year Year Year
Investment properties measured at fair value
Balance as on Sawan 1, …….. - - - -
Addition/disposal during the year - - - -
Net changes in fair value during the year - - - -
Adjustment/transfer - - - -
Net amount - - - -
Investment properties measured at cost
Balance as on Sawan 1, …….. - - - -
Addition/disposal during the year - - - -
Adjustment/transfer - - - -
Accumulated depreciation - - - -
Accumulated impairment loss - - - -
Net amount - - - -
Total - - - -
102

Group
Bank owns a land property acquired for the purpose of construction of its corporate office. Freehold land has been
recognised at cost as the bank uses cost model for recognition of property plant and equipment. Considering
Strategic Report
the upward movement of the real estate values, the land if revalued, could have material increase in value.
Low value assets costing less than NRs 5,000 each are charged as operational expenses in the year of purchase.
Subsidiary’s property plant and equipment has been adjusted for the common accounting policy of the group.
Furniture Ma-
Leasehold Computer & Equipment Total Asar Total Asar
Particulars Land Building Properties Accessories Vehicles & chin- & Others end 2075 End 2074
Fixture ery
Cost
As on Shrawan 1, 2073 259,160,000 - 124,559,148 260,869,716 278,636,018 219,220,621 - 293,865,966 1,436,311,469 1,344,584,581
Addition during the Year - - - - - - - - - -
Acquisition - - 26,396,041 46,044,889 10,146,919 68,161,749 - 87,179,827 237,929,425 108,210,082
Capitalization - - - - - - - - - -
Disposal during the year - - (2,179,289) (2,762,224) - (1,226,728) - (6,044,944) (12,213,185) (16,483,196)
Adjustment/Revaluation - - - - - - - - - -
Balance as on Asar end 259,160,000 - 148,775,900 304,152,381 288,782,937 286,155,642 - 375,000,849 1,662,027,709 1,436,311,467
2074
Acquisition - - - - - - - - - -
Capitalization - - 25,267,347 79,786,983 77,951,000 21,982,478 - 42,353,465 247,341,273 237,929,427
Disposal during the year - - (2,501,396) (12,234,608) (5,342,660) (6,151,350) - (10,522,107) (36,752,121) (12,213,185)
2075
Depreciation and - - - - - - - - - -
Impairment
As on Shrawan 1, 2073 - - 63,111,626 223,466,255 128,431,066 156,690,702 - 243,907,018 815,606,667 727,469,906
Opening Adjustement for - - - - - - - - - -
Sawan 1 2073
Depreciation charge for the - - 10,666,611 17,197,242 33,744,508 22,059,738 - 29,778,315 113,446,414 105,607,385
Year
Impairment for the year - - - - - - - - -
Disposals - - (1,571,820) (2,758,192) - (1,062,178) - (5,922,429) (11,314,619) (17,470,624)
As on Asar end 2074 - - 72,206,417 237,905,305 162,175,574 177,688,262 - 267,762,904 917,738,462 815,606,667
Impairment for the year
Year
Disposals - - (2,425,025) (11,934,117) (2,462,565) (5,276,698) - (10,093,562) (32,191,967) (11,314,619)
Adjustment - - (6,820) 13,408 14,765 (2,099) - (14,510) 4,744
As on Asar end 2075 - - 82,496,705 251,648,969 194,944,450 198,438,077 - 295,193,054 1,022,721,255 917,738,462
Capital Work in Progress - - - - - - - - - -
Net Book Value - - - - - - - - - -
As on Asar end 2073 259,160,000 - 61,447,522 37,403,461 150,204,952 62,529,919 - 49,958,948 620,704,802 617,114,675
As on Asar end 2074 259,160,000 - 76,569,483 66,247,076 126,607,363 108,467,380 - 107,237,945 744,289,247 620,704,800
As on Asar end 2075 259,160,000 - 89,045,146 120,055,787 166,446,827 103,548,693 - 111,639,153 849,895,606 744,289,247
103
Bank
Furniture Ma-
Leasehold Computer & Equipment Total Asar Total Asar
Particulars Land Building Properties Accessories Vehicles & chin- & Others end 2075 End 2074
Fixture ery
Cost
As on Shrawan 1, 2073 259,160,000 - 124,513,383 260,869,716 278,636,018 219,166,833 - 293,815,374 1,436,161,324 1,344,584,581
Acquisition - - 25,060,722 45,911,389 6,606,200 68,130,109 - 87,160,650 232,869,070 108,059,939
Capitalization - - - - - - - - - -
Disposal during the year - - (2,179,289) (2,762,224) - (1,226,728) - (6,034,444) (12,202,685) (16,483,196)
2074
Acquisition - - - - - - - - - -
Capitalization - - 25,225,986 79,289,983 77,776,000 21,345,853 - 41,759,112 245,396,934 232,869,070
Disposal during the year - - (2,501,396) (12,234,608) (5,342,660) (6,151,350) - (10,522,107) (36,752,121) (12,202,685)
2075
Depreciation and - - - - - - - - - -
Impairment
As on Shrawan 1, 2073 - - 63,111,626 223,466,255 128,431,066 156,690,142 - 243,905,351 815,604,440 727,469,906
Year
Impairment for the year - - - - - - - - - -
Disposals - - (1,571,820) (2,758,192) - (1,062,178) - (5,919,909) (11,312,099) (17,470,624)
Adjustment - - - - - - - - - -
As on Asar end 2074 - - 72,138,063 237,905,305 161,877,142 177,678,242 - 267,734,929 917,333,681 815,604,440
Impairment for the year - - - - - - - - - -
Year
Disposals - - (2,425,025) (11,934,117) (2,462,565) (5,276,698) - (10,093,562) (32,191,967) (11,312,099)
Adjustment - - - - - - - - - -
As on Asar end 2075 - - 82,329,613 251,576,547 194,096,470 198,391,290 - 295,111,492 1,021,505,412 917,333,681
Capital Work in Progress - - - - - - - - - -
Net Book Value - - - - - - - - - -
As on Asar end 2073 259,160,000 - 61,401,757 37,403,461 150,204,952 62,476,691 - 49,910,023 620,556,884 617,114,675
As on Asar end 2074 259,160,000 - 75,256,753 66,113,576 123,365,076 108,391,972 - 107,206,651 739,494,028 620,556,884
As on Asar end 2075 259,160,000 - 87,789,793 119,497,709 163,579,088 102,873,427 - 111,067,093 843,967,110 739,494,028
104
4.14 Goodwill and Intangible Assets

Group
Core banking software that the bank has been using is under support from the SBI group and the bank management,
maintenance and up-gradation fees. The system in use has been installed in the year 2008. Other software that the
Strategic Report
bank is using is recognised along with the office equipment, such as MICR and ATM software, as those software are
necessary in operating those equipment. There are no other intangible assets of the bank.

Software Total Asar Total Asar end
Particulars Goodwill Other
Purchased Developed end 2075 2074
Cost
As on Shrawan 1, 2073 27,091,039 - - 27,091,039 27,031,039
Addition during the Year - - - - -
Acquisition 1,819,871 - - 1,819,871 60,000
Capitalization - - - - -
Disposal during the year - - - - -
Adjustment/Revaluation - - - - -
Balance as on Asar end 2074 28,910,910 - - 28,910,910 27,091,039
Acquisition 3,407,755 - - 3,407,755 1,819,871
Disposal during the year (206,450) - - (206,450) -
Adjustment/Revluation - - - - -
Amortization and Impairment - - - - -
As on Shrawan 1, 2073 25,159,970 - - 25,159,970 23,777,789
Amortization charge for the Year 964,669 - - 964,669 1,382,181
Impairment for the year - - -
Disposals - - - - -
Adjustment - - - - -
As on Asar end 2074 26,124,639 - - 26,124,639 25,159,970
Amortization charge for the Year 929,935 - - 929,935 964,669
Impairment for the year - - - - -
Disposals (153,095) - - (153,095) -
As on Asar end 2075 26,901,479 - - 26,901,479 26,124,639
Capital Work in Progress - - - - -
Net Book Value - - - - -
As on Asar end 2073 1,931,069 - - 1,931,069 3,253,250
As on Asar end 2074 2,786,271 - - 2,786,271 1,931,069
As on Asar end 2075 5,210,736 - - 5,210,736 2,786,271
105
Goodwill and Intangible Assets
Bank
Software Total Asar Total Asar end
Particulars Goodwill Other
Purchased Developed end 2075 2074
Cost
As on Shrawan 1, 2073 27,091,039 - - 27,091,039 27,031,039
Addition during the Year - - - -
Acquisition 1,041,773 - - 1,041,773 60,000
Disposal during the year - - - - -
Adjustment/Revaluation - - - - -
Acquisition 3,304,400 - - 3,304,400 1,041,773
Disposal during the year (206,450) - - (206,450) -
Adjustment/Revluation - - - - -
Amortization and Impairment - - - - -
As on Shrawan 1, 2073 25,159,970 - - 25,159,970 23,777,789
Amortization charge for the Year 923,672 - - 923,672 1,382,181
Impairment for the year - - -
Disposals - - - - -
As on Asar end 2074 26,083,642 - - 26,083,642 25,159,970
Amortization charge for the Year 766,394 - - 766,394 923,672
Impairment for the year - - - - -
Disposals (153,095) - - (153,095) -
As on Asar end 2075 26,696,941 - - 26,696,941 26,083,642
Capital Work in Progress - - - - -
Net Book Value - - - - -
As on Asar end 2073 1,931,069 - - 1,931,069 3,253,250
As on Asar end 2074 2,049,170 - - 2,049,170 1,931,069
As on Asar end 2075 4,533,821 - - 4,533,821 2,049,170
106
4.15 Deferred Tax

Group Bank
Current Year Current Year
Net Net
Strategic Report
Particulars Deferred Deferred Deferred Deferred
Deferred Deferred
Tax Tax Tax Tax
Tax Assets/ Tax Assets/
Assets Liabilities Assets Liabilities
(Liabilities) (Liabilities)
Deferred tax on temporory
differences on following items
Loan and Advance to B/FIs - - - - - -
Loans and advances to customers - - - - -
Investment properties - - - - -
Investment securities - - - - - -
Other trading assets (mutual fund) - 385,356 (385,356) - 385,356 (385,356)
Investment in equity measured at - 29,196,436 (29,196,436) - 29,196,436 (29,196,436)
FVTOCI
Property & equipment 36,986,780 - 36,986,780 36,986,780 - 36,986,780
Employees' defined benefit plan 208,147,664 - 208,147,664 208,147,664 - 208,147,664
Lease liabilities 13,949,971 - 13,949,971 13,949,971 - 13,949,971
Provisions - - - - -
Draft under litigation 6,707,813 - 6,707,813 6,707,813 - 6,707,813
Staff Bonus - - - - - -
Interest Receivable - - - - - -
Other temporory differences 39,569 203,599 (164,030) - - -
Deferred tax on temporory 265,831,797 29,785,391 236,046,406 265,792,228 29,581,792 236,210,436
differences
Deferred tax on carry forward of - - - - - -
unused tax losses
Deferred tax due to changes in tax - - 27,338 - - -
rate
Net Deferred tax asset/ - - 236,073,744 - - 236,210,436
(liabilities) as on year end of
Ashad 32, 2075
Deferred tax (asset)/liabilities as on - - 97,192,163 - - 97,319,506
shrawan 1, 2075
Origination/(Reversal) during - - 138,881,581 - - 138,890,930
the year
Deferred tax expense/(income) - - (165,023,247) - - (165,033,782)
recognised in profit or loss
Deferred tax expense/(income) - - (22,215,119) - - (22,215,119)
recognised in other comprehensive
income
Deferred tax expense/(income) - - 48,357,971 - - 48,357,971
recognised in directly in equity
107
4.15 Deferred Tax
Group Bank
Previous Year Previous Year
Net Net
Particulars Deferred Deferred Deferred Deferred
Deferred Deferred
Tax Tax Tax Tax
Tax Assets/ Tax Assets/
Assets Liabilities Assets Liabilities
(Liabilities) (Liabilities)
Deferred tax on temporory
differences on following items
Loan and Advance to B/FIs - - - - - -
Loans and advances to customers 5,884,331 - 5,884,331 5,884,331 - 5,884,331
Investment properties - 49,568,288 (49,568,288) - 49,568,288 (49,568,288)
Investment securities - 1,166,307 (1,166,307) - 1,166,307 (1,166,307)
Property & equipment - 38,796,874 (38,796,874) - 38,796,874 (38,796,874)
Employees' defined benefit plan 143,289,615 143,289,615 143,289,615 143,289,615
Lease liabilities - 11,504,424 (11,504,424) - 11,504,424 (11,504,424)
Provisions - - - - - -
Draft under litigation 6,707,813 - 6,707,813 6,707,813 - 6,707,813
Staff Bonus 65,253,815 - 65,253,815 65,253,815 - 65,253,815
Interest Receivable - 22,780,175 (22,780,175) - 22,780,175 (22,780,175)
Other temporory differences(NSM- - 152,811 (152,811) - - -
BL)
Deferred tax on temporory 66,340,672 37,190,664 97,166,695 66,340,672 37,144,820 97,319,506
differences
Deferred tax on carry forward of - - - - - -
unused tax losses
Deferred tax due to changes in tax - - 25,468 - - -
rate
Net Deferred tax asset/ - - 97,192,163 - - 97,319,506
(liabilities) as on year end of
Ashad 31, 2074
Deferred tax (asset)/liabilities as on - - 34,055,075 - - 34,099,450
sawan 1, 2074
Origination/(Reversal) during - - 63,137,088 - - 63,220,056
the year
Deferred tax expense/(income) - - 10,676,587 - - 10,886,898
recognised in profit or loss
Deferred tax expense/ - - 52,333,157 - - 52,333,157
(income) recognised in other
comprehensive income
Deferred tax expense/(income) - - - - - -
recognised in directly in equity
108
4.16 Other assets

Other assets comprises of both financial and non financial assets. The financial assets are carried at amortised costs
and assets other than financial assets are carried at cost. These instruments are regularly monitored for risk and possible
impairment.
Strategic Report
Group Bank
Year Year Year Year
Assets held for sale - - - -
Other non banking assets - - - -
Bills receivable - - - -
Accounts receivable 181,050,758 170,666,461 179,938,775 170,666,461
Accrued income 88,838,879 139,418,012 88,838,879 139,418,012
Prepayments and deposit 43,196,618 47,556,741 42,909,951 47,556,741
Income tax deposit - - - -
Deferred employee expenditure 692,260,260 - 692,260,260 -
Other:
Stationery stock 11,375,518 10,428,690 11,363,073 10,428,691
Receivable 270,481 27,136,047 270,481 13,398,421
Draft Under Litigation Receivable(Ref Note no. 5.16) 22,359,375 22,359,375 22,359,375 22,359,375
Provision for Draft Under Litigation (22,359,375) (22,359,375) (22,359,375) (22,359,375)
Total 1,016,992,514 395,205,951 1,015,581,419 381,468,326
109
4.17 Due to Bank and Financial Institutions
These are short-term borrowings from other banks and financial institutions. These are recognised at amortised costs.
Group Bank
Particulars
Year Year Year Year
Money market deposits
Interbank borrowing 877,600,000 845,732,830 877,600,000 845,732,830
Other deposits from BFIs 1,831,990,000 5,309,655,155 1,831,990,000 5,309,655,155
Settlement and clearing accounts - - - -
Other deposits from BFIs - - - -
Total 2,709,590,000 6,155,387,985 2,709,590,000 6,155,387,985
4.18 Due to Nepal Rastra Bank
The bank does not possess any liabilitity to NRB bank as on reporting date
Group Bank
Particulars
Year Year Year Year
Refinance from NRB - - - -
Standing Liquidity Facility - - - -
Lender of last report facility from NRB - - - -
Securities sold under repurchase agreements - - - -
Other payable to NRB - - - -
Total - - - -
4.19 Derivative financial instruments
Group Bank
Particulars
Year Year Year Year
Held for trading
Others - - - -
Held for risk management
Forward exchange contract 6,812,345.00 - 6,812,345 -
Other - - - -
Total 6,812,345.00 - 6,812,345 -
4.20 Deposits from customers
All customer deposits are accounted for at amortised costs. For interest bearing accounts the coupon rates represent the
effective interest rate as there are no other incremental costs
Group Bank
Particulars
Year Year Year Year
Institutions customers:
Term deposits 31,370,883,310 32,908,796,839 31,557,383,310 32,988,796,839
Call deposits 2,418,506,786 3,133,702,529 2,432,066,625 3,152,158,217

Current deposits 6,665,684,914 5,853,158,214 6,665,684,914 5,853,158,214
Other 1,431,021,023 853,885,650 1,431,021,023 853,885,650
Individual customers:
Term deposits 12,887,211,715 8,791,067,181 12,887,211,715 8,791,067,181
Saving deposits 28,644,687,856 28,373,122,731 28,644,687,856 28,373,122,731
Current deposits 467,419,014 352,213,382 467,419,014 352,213,382
Other 141,852,927 454,413,621 141,852,927 454,413,621
Total 84,027,267,545 80,720,360,147 84,227,327,384 80,818,815,835
110
4.20.1: Currency wise analysis of deposit from customers

The bank holds various types of deposit from customer. The currency wise seggregation of total deposit is presented as below:
Group Bank
Particulars
Strategic Report
Year Year Year Year
Nepalese rupee 81,637,338,911 71,256,448,725 81,837,398,750 71,871,466,328
Indian rupee 217,463,020 112,793,338 217,463,020 112,793,338
United State dollar 2,154,783,905 9,311,783,839 2,154,783,905 8,795,221,924
Great Britain pound - - - -
Euro 16,117,087 10,934,996 16,117,087 10,934,996
Japenese yen 1,564,622 28,399,249 1,564,622 28,399,249
Chinese yuan - - - -
Other - - - -
Total 84,027,267,545 80,720,360,147 84,227,327,384 80,818,815,835
4.21 Borrowing
The bank does not have any borrowings
Group Bank
Particulars
Year Year Year Year
Domestic Borrowing
Nepal Government - - - -
Other Institutions - - - -
Other - - - -
Sub total - - - -
Foreign Borrowing
Foreign Bank and Financial Institutions - - - -
Multilateral Development Banks - - - -
Other Institutions - - - -
Sub total - - - -
Total - - - -
4.22 Provisions
The bank does not have any obligation that meets the definition of provision under NAS 37 Provisions, Contingent Liabilities and
Contingent Assets
Group Bank
Particulars
Year Year Year Year
Provisions for redundancy
Provision for restructuring - - - -
Pending legal issues and tax litigation - - - -
Onerous contracts - - - -
Other - - - -
Total - - - -
4.22.1: Movement in provision

Group Bank
Particulars
Year Year Year Year
Balance at Shrawan 1
Provisions made during the year - - - -
Provisions used during the year - - - -
Provisions reversed during the year - - - -
Unwind of discount - - - -
Balance at Asar end - - - -
111
4.23 Other liabilities
These are financial liabilities carried at amortised cost.
Group Bank
Particulars
Year Year Year Year
Liability for employees defined benefit obligations 693,885,442 477,632,051 693,825,547 477,632,051
Liability for long-service leave - - - -
Short-term employee benefits - - - -
Bills payable 327,917,015 219,745,914 327,917,015 219,745,914
Creditors and accruals 118,927,475 90,200,629 120,470,366 90,200,629
Interest payable on deposit 41,892,181 66,743,073 41,892,181 66,743,073
Interest payable on borrowing 53,354,866 55,395,151 53,354,866 55,395,151
Liabilities on defered grant income - - -
Unpaid Dividend 11,504,971 12,836,933 11,504,971 12,836,933
Liabilities under Finance Lease - -
Employee bonus payable 311,171,169 217,512,718 311,171,169 217,512,718
Other 246,442,247 302,701,835 233,700,258 296,838,282
Total 1,805,095,366 1,442,768,304 1,793,836,373 1,436,904,751
Other includes mainly TDS payable and other payables for operating expenses
4.23.1: Defined benefit obligations

Defined Benefit Plans are not funded therefore there are no DBP assets and DBP Obligation represents the net DBP
Obligation
Group Bank
Particulars
Year Year Year Year
Present value of unfunded obligations 693,885,442 477,632,051 693,825,547 477,632,051
Present value of funded obligations - - - -
Total present value of obligations 693,885,442 477,632,051 693,825,547 477,632,051
Fair value of plan assets - - - -
Present value of net obligations 693,885,442 477,632,051 693,825,547 477,632,051
Recognised liability for defined benefit obligations 693,885,442 477,632,051 693,825,547 477,632,051
4.23.2: Plan assets

The bank does not have any plan assets
Group Bank
Particulars
Year Year Year Year
Equity securities - - - -
Government bonds - - - -
Bank deposit - - - -
Other - - - -
Total - - - -
Actual return on plan assets
4.23.3: Movement in the present value of defined benefit obligations

These are financial liabilities carried at amortised cost.

Group Bank
Particulars
Year Year Year Year
Defined benefit obligations at Shrawan 1 477,632,051 353,753,271 477,632,051 353,753,271
Actuarial losses 9,254,050 68,237,200 9,254,050 68,237,200
Benefits paid by the plan (22,289,444) (5,302,290) (22,289,444) (5,302,290)
Current service costs and interest 229,228,890 60,943,870 229,228,890 60,943,870
Defined benefit obligations at Asar end 693,825,547 477,632,051 693,825,547 477,632,051
112
4.23.4: Movement in the fair value of plan assets

Group Bank
Particulars
Year Year Year Year
Strategic Report
Fair value of plan assets at Shrawan 1 - - - -
Contributions paid into the plan - - - -
Benefits paid during the year - - - -
Actuarial (losses) gains - - - -
Expected return on plan assets - - - -
Fair value of plan assets at Asar end - - - -
4.23.5: Amount recognised in profit or loss
Group Bank
Particulars
Year Year Year Year
Current service costs 185,000,150 30,804,090 185,000,150 30,804,090
Interest on obligation 44,228,740 30,139,780 44,228,740 30,139,780
Acturial (gain)/loss on leave 3,109,830 3,109,830 (8,719,810)
Expected return on plan assets - - - -
Total 232,338,720 60,943,870 232,338,720 52,224,060
4.23.6: Amount recognised in other comprehensive income
Group Bank
Particulars
Year Year Year Year
Acturial (gain)/loss 6,144,220 59,517,390 6,144,220 59,517,390
Total 6,144,220 59,517,390 6,144,220 59,517,390
4.23.7: Actuarial assumptions
Group Bank
Particulars
Year Year Year Year
Discount rate 9.50% 9.50% 9.50% 9.50%
Expected return on plan asset - - - -
Future salary increase 6.50% 6.50% 6.50% 6.50%
Withdrawal rate (20-35 years) 6.00% 6.00% 6.00% 6.00%
Withdrawal rate (36 - 58 years) 1.00% 1.00% 1.00% 1.00%
4.24 Debt securities issued
Debentures are recognised at amortised cost using effective interest rates. The coupon rates of these instruments represent the effective interest rates. Effective
Interest Rate is expected to cover for the credit risk and time value of money on these instruments as these are solely for the purpose of principal and interest.
Group Bank
Particulars
Year Year Year Year
Debt securities issued designated as at fair value through profit or loss - - - -
Debt securities issued at amortised cost 1,000,000,000 1,000,000,000 1,000,000,000 1,000,000,000
Total 1,000,000,000 1,000,000,000 1,000,000,000 1,000,000,000
The above debt securities comprises of three debt securities issued by the bank. The terms and condition of the same has been
disclosed under Note no:5.2.2 a. iii. The debt securities issued are subordinated to the depositors
4.25 Subordinated Liabilities

Group Bank
Particulars
Year Year Year Year
Redeemable preference shares - - - -
Irredemable cumulative preference shares - - - -
(liabilities component)
Other - - - -
Total - - - -
113
4.26 Share capital
Group Bank
Particulars
Year Year Year Year
Ordinary shares 8,046,905,260 6,924,892,999 8,046,905,260 6,924,892,999
Convertible preference shares (equity component only) - -
Irredemable preference shares (equity component only) - -
Perpetual debt (equity component only) - -
Total 8,046,905,260 6,924,892,999 8,046,905,260 6,924,892,999
4.26.1: Ordinary shares
Bank
Particulars
Current Previous
Year Year
Authorized Capital
100,000,000 Ordinary share of Rs. 100 each 10,000,000,000 10,000,000,000
Issued capital
80469052.60 Ordinary share of Rs. 100 each 8,046,905,260 6,971,798,259
(Previous year 69,717,982.59 of Rs. 100 each)
Subscribed and paid up capital
80469052.60 Ordinary share of Rs. 100 each 8,046,905,260 6,924,892,999
(Previous year 69,248,929.99 of Rs. 100 each)
Total 8,046,905,260 6,924,892,999
4.26.2: Ordinary share ownership
Bank
Particulars
Percent Amount Percent Amount
Domestic ownership
Nepal Government
"A" class licensed institutions - - - -
Other licensed intitutions - - - -
Other Institutions 15.00% 1,207,035,841 15.10% 1,045,769,739
Public 30.00% 2,414,071,523 29.53% 2,044,634,218
Other - - - -
Foreign ownership 55.00% 4,425,797,896 55.37% 3,834,489,042
Total 100.00% 8,046,905,260 100.00% 6,924,892,999
1) None of the General Public Shareholders hold 0.50% or more of the shares of the Bank individually.
2) Other institution reported is Karmachari Sanchaya Kosh
3) Foreign ownership reported is State Bank of India
4.27 Reserves
Statutory General Reserve: There is a regulatory requirement by the central Capital Redemption Reserve: The Bank sets aside a portion of its profit to
bank to set aside 20% of the net profit after tax every year as general create a reserve for repayment of debenture liabilities when they mature.
reserve to build up the capital until the general reserve fund balance is On maturity and settlement of the debentures there reserves will be
twice the paid up share capital. This is the restricted reserve and cannot available as free reserve
be freely used. The Bank appropriates 20% of the regulatory net profit Other Regulatory Reserves
every year and transfers to the general reserve fund. Corporate Social Responsibility Reserve: Bank has regulatory requirement to
Exchange Reserve: Central bank’s regulatory directives requires the bank set aside 1% of the net profit for corporate social responsibility activities.
to transfer 25% of the translation gain as at the year end to this reserve Staff Training Reserve: Bank has regulatory requirement to set aside 3% of
account. The foreign currency balances as at the year-end are translated the previous year’s staff cost for staff training as such amount are set aside
using the year-end rates and in case of gains on such translation, 25% of in the reserves.
such gains are transferred to the foreign exchange reserve. Deferred Tax Reserve: It is banks policy to appropriate the equivalent portion
Fair value Reserve: Assets that are not classified as Fair Value Through Profit of the deferred tax assets when a net deferred tax asset arises. In event
and Loss, Held To maturity and Loans and Receivables are categorised as where deferred tax liability arises such amounts are reclassified within the
Available for Sale financial instruments. The Bank has under regulatory equity to retained earning.
provisions a requirement to appropriate the upward movements in fair Accrued Income Reserve: Regulator requires to set aside amount equivalent
value under AFS reserve. The accounting of gain or loss in the fair value to accrued interest receivables recognised during the year for loans and
movement of AFS Financial Assets is done though other comprehensive advances from customers.
income under NAS 39.
114
Group Bank
Particulars
Year Year Year Year
Statutory general reserve 2,099,506,709 1,694,804,484 2,099,506,709 1,694,804,484
Strategic Report
Exchange equilisation reserve 28,405,978 19,814,792 28,405,978 19,814,792
Corporate social responsibility reserve 40,000,000 15,232,375 40,000,000 15,232,375
Capital redemption reserve 559,461,188 459,461,188 559,461,188 459,461,188
Regulatory reserve 346,252,458 97,192,162 346,390,336 97,319,505
Investment adjustment reserve - - - -
Capital reserve 12,463,167 12,463,167 12,463,167 12,463,167
Assets revaluation reserve - - - -
Fair value reserve 68,125,017 165,227,628 68,125,017 165,227,628
Dividend equalisation reserve - - - -
Actuarial gain - - - -
Special reserve - - - -
Other reserve - - - -
Bonus Share issued by NSMBL 11,111,111 - - -
Acturial loss (4,300,954) - (4,300,954) -
Staff Training Fund 3,621,221 5,539,340 3,621,221 5,539,340
Total 3,164,645,895 2,469,735,136 3,153,672,662 2,469,862,479
4.28 Contingent liabilities and commitments

Group Bank
Particulars
Year Year Year Year
Contingent liabilities 14,097,315,118 8,033,511,489 14,097,315,118 8,033,511,489
Undrawn and undisbursed facilities 20,337,905,662 16,928,987,701 20,337,905,662 16,928,987,701
Capital commitment 14,578,776 21,606,718 14,578,776 21,606,718
Lease Commitment 616,044,885 606,881,605 616,044,885 606,881,605
Litigation 1,896,092 1,896,092 1,896,092 1,896,092
Total 35,067,740,533 25,592,883,605 35,067,740,533 25,592,883,605
4.28.1: Contingent liabilities
Group Bank
Particulars
Year Year Year Year
Acceptance and documentary credit 2,959,103,001 260,245,322 2,959,103,001 260,245,322
Bills for collection 189,748,219 137,754,358 189,748,219 137,754,358
Forward exchange contracts - 757,609,635 - 757,609,635
Guarantees 10,948,463,898 6,877,902,174 10,948,463,898 6,877,902,174
Underwriting commitment - - - -
Other commitments - - - -
Other - - - -
Total 14,097,315,118 8,033,511,489 14,097,315,118 8,033,511,489
4.28.2: Undrawn and undisbursed facilities

Group Bank
Particulars
Year Year Year Year
Undisbursed amount of loans 12,014,330,801 9,955,115,457 12,014,330,801 9,955,115,457
Undrawn limits of overdrafts 1,164,703,349 1,000,327,850 1,164,703,349 1,000,327,850
Undrawn limits of credit cards - - - -
Undrawn limits of letter of credit 7,158,871,512 5,973,544,394 7,158,871,512 5,973,544,394
Undrawn limits of guarantee - - - -
Total 20,337,905,662 16,928,987,701 20,337,905,662 16,928,987,701
115
4.28.3: Capital commitments
Capital expenditure approved by relevant authority of the bank but provision has not been made in financial statements
Group Bank
Particulars
Year Year Year Year
Capital commitments in relation to Property and Equipment
for branch expansion
Approved and contracted for 13,229,887 21,606,718 13,229,887 21,606,718
Approved but not contracted for 1,348,889 1,348,889
Sub total 14,578,776 21,606,718 14,578,776 21,606,718
Capital commitments in relation to Intangible assets
Approved and contracted for - - - -
Approved but not contracted for - - - -
Sub total - -
Total 14,578,776 21,606,718 14,578,776 21,606,718
4.28.4: Lease commitments
Group Bank
Particulars
Year Year Year Year
Operating lease commitments - - - -
Future minimum lease payments under non cancellable operating - - - -
lease, where the bank is lessee
Not later than 1 year 15,071,015 1,866,003 15,071,015 1,866,003
Later than 1 year but not later than 5 years 215,775,860 247,725,167 215,775,860 247,725,167
Later than 5 years 385,198,010 357,290,435 385,198,010 357,290,435
Sub total 616,044,885 606,881,605 616,044,885 606,881,605
Finance lease commitments - - - -
Future minimum lease payments under non cancellable operating - - - -
lease, where the bank is lessee
Not later than 1 year - - - -
Later than 1 year but not later than 5 years - - - -
Later than 5 years - - - -
Sub total - - - -
Grand total 616,044,885 606,881,605 616,044,885 606,881,605
4.28.5: Litigation
I. A writ petetion was filed against the bank for which the liability may arise of Rs. 1,896,091.52. Keeping in view of the
contingency, the figure has been disclosed as part of contingent liability.
4.29 Interest income
Group Bank
Particulars
Year Year Year Year
Cash and cash equivalent 7,860,314 6,467,836 7,287,868 6,467,836
Due from Nepal Rastra Bank 390,374,141 271,235,495 390,374,141 271,235,495
Placement with bank and financial institutions 203,934,294 261,097,369 203,934,294 261,097,369
Loan and advances to bank and financial institutions 264,625,795 116,319,481 264,625,795 116,319,481
Loans and advances to customers 8,097,731,442 5,279,759,137 8,097,731,442 5,279,759,137

Investment securities - - - -
Loan and advances to staff 56,008,621 29,986,076 56,008,621 29,986,076
Other (Notional interest on staff loan) 49,816,347 26,793,281 49,816,347 26,793,281
Total interest income 9,070,350,954 5,991,658,675 9,069,778,508 5,991,658,675
Interest income from loans and advances to customers has been recognised applying recognition method that approximates
the effective interest rate. Loans and advances to customers while recognising at amortised costs has multiple uncertain
variables that include the repayment of principal amounts, the date of repayment, the period of the loan and advances
and the actual interest charged and recovered. However these financial assets are held under SPPI (solely for the purpose
116
of principal and interest) model. The only incremental costs that affects the EIR calculation is management / service fee
charged while issuing and/or renewing the loans and advances. These incremental costs are nominal considering the
bank’s interest income. For the compliance of amortised cost recognition, such management / service fee has been
systematically as interest income over the loan tenure which may approximate the effective interest rate by appropriate
adjustment to loans and advances.
Strategic Report
4.30 Interest expense
Group Bank
Particulars
Year Year Year Year
Due to bank and financial institutions 113,671,494 12,053,817 113,671,494 12,053,817
Due to Nepal Rastra Bank - - - -
Deposits from customers 4,699,770,094 2,807,271,445 4,713,339,386 2,812,672,848
Borrowing - 71,956,404 - 71,956,404
Debt securities issued 97,800,000 97,800,000 97,800,000 97,800,000
Subordinated liabilities - - - -
Other - - - -
Total interest expense 4,911,241,588 2,989,081,666 4,924,810,880 2,994,483,069
4.31 Fees and Commission Income
Group Bank
Particulars
Year Year Year Year
Loan administration fees 101,474,550 88,802,268 101,474,550 88,802,268
Service fees 25,464 - - -
Consortium fees - - - -
Commitment fees 4,576,781 3,349,318 4,576,781 3,349,318
DD/TT/Swift fees 16,494,993 13,146,340 16,494,993 13,146,340
Credit card/ATM issuance and renewal fees 47,142,682 29,746,038 47,142,682 29,746,038
Prepayment and swap fees 44,997,121 17,406,433 44,997,121 17,406,433
Investment banking fees - - - -
Asset management fees - - - -
Brokerage fees - - - -
Remittance fees 112,266,039 122,457,370 112,266,039 122,457,370
Commission on letter of credit 61,485,677 60,365,589 61,485,677 60,365,589
Commission on guarantee contracts issued 101,403,681 94,851,059 101,403,681 94,851,059
Commission on share underwriting/issue 6,315,642 - - -
Locker rental 10,207,430 7,891,090 10,207,430 7,891,090
Other fees and commission income 412,728,687 431,630,971 412,811,331 412,298,322
Total fees and Commission Income 919,118,747 869,646,476 912,860,285 850,313,827
Other Fees and commission income mainly comprises income from card business, POS, Mobile banking
4.32 Fees and commission expense

Group Bank
Particulars
Year Year Year Year

ATM management fees 3,296,497 4,388,053 3,296,497 4,388,053
VISA/Master card fees 64,592,964 58,490,171 64,592,964 58,490,171
Guarantee commission - - - -
Brokerage - - - -
DD/TT/Swift fees 2,359,619 1,531,824 2,359,619 1,531,824
Remittance fees and commission - - - -
Other fees and commission expense 14,412,960 9,520,322 14,412,960 9,520,322
Total fees and Commission Expense 84,662,040 73,930,370 84,662,040 73,930,370
117
4.33 Net trading income
Group Bank
Particulars
Year Year Year Year
Changes in fair value of trading assets (2,675,169) (2,661,316) (2,603,169) (2,661,316)
Gain/loss on disposal of trading assets - - - -
Interest income on trading assets - - - -
Dividend income on trading assets - - - -
Gain/loss foreign exchange transation 236,116,145 205,443,081 236,116,145 205,443,081
Other - - - -
Net trading income 233,440,976 202,781,765 233,512,976 202,781,765
Change in fair value of trading assets included change in fair value of mutual fund
4.34 Other operating income

Group Bank
Particulars
Year Year Year Year
Foreign exchange revauation gain 34,364,745 15,479,364 34,364,745 15,479,364
Gain/loss on sale of investment securities - - - -
Fair value gain/loss on investment properties - - - -
Dividend on equity instruments 8,270,923 6,498,413 8,270,923 6,498,413
Gain/loss on sale of property and equipment 248,998 (122,258) 248,998 (122,258)
Gain/loss on sale of investment property - - - -
Operating lease income - - - -
Gain/loss on sale of gold and silver - - - -
Locker rent - - - -
Other - - - -
Total 42,884,666 21,855,519 42,884,666 21,855,519
4.35 Impairment charge/(reversal) for loan and other losses

Group Bank
Particulars
Year Year Year Year
Impairment charge/(reversal) on loan and advances to B/FIs 6,732,531 7,508,073.00 6,732,531 7,508,073
Impairment charge/(reversal) on loan and advances to customer 265,541,323 121,953,098 265,541,323 121,953,098
Impairment charge/(reversal) on financial Investment - - - -
Impairment charge/(reversal) on placement with banks and financial - - - -

institutions
Impairment charge/(reversal) on property and equipment - - - -
Impairment charge/(reversal) on goodwill and intangible assets - - - -
Impairment charge/(reversal) on investment properties - - - -
Total 272,273,854 129,461,171 272,273,854 129,461,171
118
4.36 Personnel Expense

Group Bank
Particulars
Year Year Year Year
Strategic Report
Salary 391,186,934 338,322,809 391,186,934 338,322,809
Allowances 261,679,126 222,495,214 261,679,126 222,495,214
Gratuity expense 204,501,600 68,052,991 204,501,600 41,259,710
Provident fund 38,032,417 31,487,594 38,032,417 31,487,594
Uniform 579,947 1,060,488 579,947 1,060,488
Training & development expense 25,632,305 10,930,273 25,632,305 10,930,273
Leave encashment 33,772,606 10,964,350 33,772,606 10,964,350
Medical 11,010,148 10,103,197 11,010,148 10,103,197
Insurance 26,967,098 26,542,770 26,967,098 26,542,770
Employees incentive - - - -
Cash-settled share-based payments - - - -
Pension expense - - - -
Finance expense under NFRS 49,816,347 - 49,816,347 26,793,289
Other expenses related to staff 21,070,407 20,136,352 21,070,407 20,136,352
Subtotal 1,064,248,935 740,096,038 1,064,248,935 740,096,038
Employees bonus 311,171,169 217,512,717 311,171,169 217,512,717
Grand total 1,375,420,104 957,608,755 1,375,420,104 957,608,755
4.37 Other operating expense
Group Bank
Particulars
Year Year Year Year
Directors' fee 750,000 1,050,000 750,000 1,050,000
Directors' expense 1,296,950 779,158 1,296,950 779,158
Auditors' remuneration 2,316,500 2,316,500 2,316,500 2,316,500
Other audit related expense - - - -
Professional and legal expense 32,075,012 23,409,038 32,075,012 23,409,038
Office administration expense 277,216,425 241,990,366 278,321,956 241,990,366
Operating lease expense 166,752,058 147,780,556 166,752,058 147,780,556
Operating expense of investment properties - - - -
Corporate social responsibility expense 9,529,716 5,819,882 9,529,716 5,819,882
Onerous lease provisions - - - -
Other 220,068,990 157,601,852 212,024,502 154,135,813
Total 710,005,651 580,747,352 703,066,694 577,281,313
Other comprises mainly of repair maintenance of property, plant and equipment, pos acquiring fees etc
4.38 Depreciation & Amortisation
Group Bank
Particulars
Year Year Year Year
Depreciation on property and equipment 137,170,016 113,446,414 136,363,698 113,041,340
Depreciation on investment property
Amortisation of intangible assets 929,935 964,669 766,394 923,672

Total 138,099,951 114,411,083 137,130,092 113,965,012
4.39 Non operating income

Group Bank
Particulars
Year Year Year Year
Recovery of loan written off 36,000,000 19,000,000 36,000,000 19,000,000
Other income 1,667,749 1,908,168 2,867,749 1,908,168
Total 37,667,749 20,908,168 38,867,749 20,908,168
119
4.40 Non operating expense
Group Bank
Particulars
Year Year Year Year
Loan written off - - - -
Redundancy provision - - - -
Expense of restructuring - - - -
Other expense - - - -
Total - - - -
4.41 Income tax expense

Group Bank
Particulars
Year Year Year Year
Current tax expense
Current year 918,764,659 691,798,166 915,956,382 686,716,416
Adjustments for prior years 26,106,796 270,000 26,106,796 270,000
Deferred tax expense
Origination and reversal of temporary differences (165,023,247) (10,676,587) (165,033,782) (10,886,898)
Changes in tax rate - - - -
Recognition of previously unrecognised tax losses - - - -
Total income tax expense 779,848,208 681,391,579 777,029,396 676,099,518
4.41.1: Reconciliation of tax expense and accounting profit

Group Bank
Particulars
Year Year Year Year
Profit before tax 2,811,759,904 2,261,610,206 2,800,540,520 2,240,788,264
Tax amount at tax rate of 30% 843,527,971 678,483,062 840,162,156 672,236,479
Add: Tax effect of expenses that are not deductible for tax purpose 91,460,340 34,204,930 91,456,223 34,353,412
Less: Tax effect on exempt income -15,661,998 -175,146 -15,661,998 -175,146

Add/less: Tax effect on other items -561,656 -20,714,680 0 -19,698,329
Total income tax expense 918,764,657 691,798,166 915,956,381 686,716,416
Effective tax rate 32.7% 30.6% 32.7% 30.6%
120
Nepal SBI Bank Ltd.

Statement of distributable profit or loss
For the year ended 32 Asadh 2075
Strategic Report
(As per NRB Regulation)
Bank
(Ashad 2075) (Ashad 2074)
Opening Retained Earning 1,144,987,363.00 1,224,964,738.00
Adjustment: - -
Capital Adjustment - (5,583,040.00)
Share Premium Transferred - 59,025,815.00
NFRS adjustment opening - (17,990,920.00)
Bonus and Cash dividend for previous year (1,131,691,580.00) (1,145,928,126.00)
EIR adjustment for previous year (30,966,862.00) -
Fair Value Reserve adjustment for previous year 49,568,288.00 -
Deferred Tax Reserve adjustment of previous year 48,961,534.00 -
Restated Retained Earning as on 1st Shrawan 80,858,743.00 114,488,467.00
Net profit or (loss) as per statement of profit or loss 2,023,511,124 1,564,688,746
Appropriations:
a. General reserve (404,702,225) (304,647,481)
b. Foreign exchange fluctuation fund (8,591,186) (3,869,841)
c. Capital redemption reserve (100,000,000) (100,000,000)
d. Corporate social responsibility fund (24,767,625) (15,232,375)
e. Employees' training fund 1,918,119 (5,539,340)
f. Other:
Capital adjustment - (6,880,127)
Fair value reserve through OCI (74,344,658)
Share issue expenses (3,070,684)
Profit or (loss) before regulatory adjustment 1,565,156,266 1,168,663,391
Regulatory adjustment :
a. Interest receivable (-)/previous accrued interest received (+) (105,878,947)
b. Short loan loss provision in accounts (-)/reversal (+) - -
c. Short provision for possible losses on investment (-)/reversal (+) - 106,206,656
d. Short loan loss provision on Non Banking Assets (-)/resersal (+) - -
e. Deferred tax assets recognised (-)/ reversal (+) (236,210,435) (63,220,055)
f. Goodwill recognised (-)/ impairment of Goodwill (+) - -
g. Bargain purchase gain recognised (-)/resersal (+) - -
h. Acturial loss recognised (-)/reversal (+) (4,300,954) 79,988,550
i. Other (+/-) -
NFRS adjustment (146,651,179)
Distributable profit or (loss) 1,218,765,930 1,144,987,363
121
Nepal SBI Bank Ltd.
Unaudited Financial Results (Quarterly)
Fourth Quarter ended of Fiscal Year 2074/2075 as on Asar 32, 2075 (16.07.2018)
As per Nepal Financial Reporting Standards (NFRS) Rs. in ‘000’
Corresponding
This Quarter Previous
Statement of Financial Position Previous Quarter
Ending Quarter Ending
Ending
Assets Group Bank Group Bank Group Bank
Cash and cash equivalent 5,296,007 5,294,416 5,356,867 5,354,077 8,803,465 8,803,465
Due from NRB and placements with BFIs 10,052,640 10,040,640 13,401,334 13,580,308 17,674,566 17,674,566
Loan and advances 75,885,697 75,885,697 74,052,724 74,052,724 64,120,549 64,120,549
Investments Securities 9,651,792 9,651,792 9,398,164 9,398,164 7,860,098 7,860,098
Investment in subsidiaris and associates - 188,889 188,889 188,889 - 100,000
Goodwill and intangible assets - - - - 2,786 2,049
Other assets 1,600,604 1,581,146 3,888,958 3,873,037 1,412,529 1,390,124
Total Assets 102,486,740 102,642,580 106,286,936 106,447,199 99,873,993 99,950,851
Capital and Liabilities
Paid up Capital 8,046,905 8,046,905 8,046,905 8,046,905 6,924,893 6,924,893
Reserves and surplus 4,773,463 4,748,735 4,362,446 4,344,583 3,630,584 3,614,850
Deposits 84,025,321 84,216,418 83,658,017 83,845,651 80,720,360 80,818,816
Borrowings 2,709,590 2,709,590 6,893,777 6,893,777 6,155,388 6,155,388
Bond and Debenture 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
Other liabilities and provisions 1,931,461 1,920,932 2,325,791 2,316,283 1,442,768 1,436,905
Total Capital and Liabilities 102,486,740 102,642,580 106,286,936 106,447,199 99,873,993 99,950,852
Up to Corrosponding Previous
Up to this Quarter Up to Previous Quarter
Statement of Profit or Loss Year Quarter
Group Bank Group Bank Group Bank
Interest income 9,054,300 9,053,698 6,550,591 6,547,715 5,991,659 5,991,659
Interest expense (4,911,242) (4,924,811) (3,594,747) (3,600,796) (2,989,082) (2,994,483)
Net interest income 4,143,058 4,128,887 2,955,844 2,946,919 3,002,577 2,997,176
Fee and commission income 902,200 896,937 691,934 691,867 869,646 850,314
Fee and commission expense (85,519) (85,519) (54,822) (54,822) (73,930) (73,930)
Net fee and commission income 816,681 811,418 637,112 637,045 795,716 776,384
Other operating income 276,398 276,398 184,978 184,978 224,637 224,637
Total operaing income 5,236,137 5,216,703 3,777,934 3,768,942 4,022,930 3,998,197
Impairment charge/(reversal) for loans and other losses (191,066) (191,066) (140,504) (140,504) (129,461) (129,461)
Net operating income 5,045,071 5,025,637 3,637,430 3,628,438 3,893,469 3,868,736
Personnel expenses (1,293,956) (1,293,956) (1,003,327) (1,003,327) (957,609) (957,609)
Other operating expenses (890,669) (883,474) (564,329) (558,989) (695,158) (691,246)
Operating profit 2,860,446 2,848,207 2,069,774 2,066,122 2,240,702 2,219,881
Non operating income/expense 38,868 38,868 38,140 38,140 20,908 20,908
Profit before tax 2,899,314 2,887,075 2,107,914 2,104,262 2,261,610 2,240,789
Income tax (1,013,811) (1,010,568) (690,071) (689,134) (681,392) (676,100)

Profit /(loss) for the period 1,885,503 1,876,507 1,417,843 1,415,128 1,580,218 1,564,689
Other comprehensive income 14,832 14,832 20,440 20,440 5,644 5,644
Total comprehensive income 1,900,335 1,891,339 1,438,283 1,435,568 1,585,862 1,570,333
Distributable Profit
Net profit/(loss) as per profit or loss 1,900,335 1,891,339 1,438,283 1,435,568 1,585,862 1,570,333
Add/Less: Regulatory adjustment as per NRB (546,324) (546,324) - - (436,168) (436,168)
Directive
Free profit/(loss) after regulatory adjustments 1,354,011 1,345,015 1,438,283 1,435,568 1,149,694 1,134,165
122
Up to Corrosponding Previous
Up to this Quarter Up to Previous Quarter
Statement of Profit or Loss Year Quarter
Group Bank Group Bank Group Bank
Strategic Report
Ratios
Capital fund to RWA 15.48% 15.26% 14.72% 14.51% 15.92% 15.76%
Non performing loan (NPL) to toal loan (As per 0.20% 0.20% 0.13% 0.13% 0.10% 0.10%
NRB Directive)
Total loan loss provision to Total NPL (As per NRB 628.00% 628.00% 858.31% 858.31% 1132.98% 1132.98%
Directive)
Cost of Funds 5.45% 5.45% 5.25% 5.25% 3.54% 3.54%
Credit to Deposit Ratio ( As per NRB Directive) 74.38% 74.38% 79.25% 79.25% 75% 75%
Base Rate 10.12% 10.12% 9.89% 9.89% 8.98% 8.98%
Basic Earning Per Share 23.43 23.32 23.49 23.45 32.57 25.86
Diluted Earning Per Share 23.43 23.32 23.49 23.45 32.57 25.86
Nepal SBI Bank Ltd.
Comparison Unaudited and Audited Financial Statements as of FY Asadh End 2075
At the month end of Asadh 2075
Statement of Financial Position As per Unau- As per Variance

dited Financial Audited Financial Reasons for Variance
Assets Statement Statement In amount In %
Cash and cash equivalent 5,294,416 10,480,237 5,185,821 - change in assets classification
Due from NRB and placements with BFIs 10,040,640 5,647,350 (4,393,290) -43.76% change in assets classification
Loan and advances 75,885,697 75,235,862 (649,835) -0.86% change in provision for impairment
of loans, effective interest rate
adjustments and staff loan fair value
adjustment
Investments Securities 9,651,792 8,666,553 (985,239) -10.21% change in revaluation price taken
for Investments, change in assets
classification
Investment in subsidiaris and associates 188,889 188,889 - - -
Goodwill and intangible assets - 4,534 4,534 - Regrouping of fixed and intangible
assets
Other assets 1,581,146 2,315,245 734,099 46.43% change in deferred tax assets, group-
ing of other assets and liabilities and
staff loan fair value adjustment
Total Assets 102,642,580 102,538,670 (103,910) -0.10% -
Capital and Liabilities
Paid up Capital 8,046,905 8,046,905 - 0.00% -
Reserves and surplus 4,748,735 4,754,199 5,464 0.12% change in Profit
Deposits 84,216,418 84,227,327 10,909 0.01% regrouping of Good for payment
cheque amount
Borrowings 2,709,590 2,709,590 - 0.00% -
Bond and Debenture 1,000,000 1,000,000 - 0.00% -
Other liabilities and provisions 1,920,932 1,800,649 (120,283) -6.26% change grouping of liabilities and
assets
Total Capital and Liabilities 102,642,580 102,538,670 (103,910) -0.10% -
123
Statement of Financial Position As per Unau- As per Variance
dited Financial Audited Financial Reasons for Variance
Statement of Profit or Loss Statement Statement In amount In %
Interest income 9,053,698 9,069,779 16,081 0.18% change in interest income recogni-
tion as per NFRS
Interest expense (4,924,811) (4,924,811) - 0.00% -
Net interest income 4,128,887 4,144,968 16,081 0.39% due to above
Fee and commission income 896,937 912,860 15,923 1.78% additional income booked
Fee and commission expense (85,519) (84,662) 857 -1.00% regrouping of expenses
Net fee and commission income 811,418 828,198 16,780 2.07% due to above
Other operating income 276,398 276,398 - 0.00%
Total operaing income 5,216,703 5,249,564 32,861 0.63% due to above
Impairment charge/(reversal) for loans and other (191,066) (272,274) (81,208) 42.50% impairment recognised as per NRB
losses norms
Net operating income 5,025,637 4,977,290 (48,347) -0.96% due to above
Personnel expenses (1,293,956) (1,375,420) (81,464) 6.30% change in staff bonus
Other operating expenses (883,474) (840,197) 43,277 -4.90% accounting of provisions changed,
additional expenses booked and
regrouping of expenses
Operating profit 2,848,207 2,761,673 (86,534) -3.04% due to above
Non operating income/expense 38,868 38,868 - 0.00% -
Profit before tax 2,887,075 2,800,541 (86,534) -3.00% due to above
Income tax (1,010,568) (777,029) 233,539 -23.11% due to aboveand change in deferred
tax
Profit /(loss) for the period 1,876,507 2,023,512 147,005 7.83% due to above
Other comprehensive income 14,832 (51,835) (66,667) -449.48% change in fair value, deferred tax,
acturial loss
Total comprehensive income 1,891,339 1,971,677 80,338 4.25% -
Distributable Profit
Net profit/(loss) as per profit or loss 1,891,339 2,023,512 132,173 6.99% -
Add/Less: Regulatory adjustment as per NRB (546,324) (885,604) (339,280) 62.10% change in regulatory adjustment
Directive required as per NRB directives
Free profit/(loss) after regulatory adjustments 1,345,015 1,137,908 (207,107) -15.40%
Nepal SBI Bank Ltd.

FORM NO. 1 CAPITAL ADEQUACY TABLE
1.1 RISK WEIGHTED EXPOSURES As on Asadh end 2075 As on Asadh end 2074
a Risk Weighted Exposure for Credit Risk 81,858,269,368 67,288,105,098

b Risk Weighted Exposure for Operational Risk 5,116,192,430 4,263,968,168
c Risk Weighted Exposure for Market Risk 1,084,114,166 746,800,606

Total Risk Weighted Exposures (a+b+c) 88,058,575,964 72,298,873,872
Adjustments Under Pillar II - -
Add RWE equvalent to reciprocal of capital charge of 2 % of gross income. 818,341,278 663,958,446
"Add: 2% of the total RWE as Supervisor is not satisfied with the overall risk 1,761,171,519 1,445,977,477
Management Policies and Procedures (6.4 a 9)"
Add: .% of the total deposit due to insufficient Liquid Assets (6.4 a 6) - -
Total Risk Weighted Exposures (After Bank's Adjustment of Pillar II) 90,638,088,761 74,408,809,795
124
1.2 CAPITAL As on Asadh end 2075 As on Asadh end 2074
Core Capital (Tier 1) 12,125,439,485 10,067,869,529

a Paid up Equity Share Capital 8,046,905,260 6,924,892,999
Strategic Report
b Irredeemable Non-cumulative preference shares - -
c Share Premium 381,759,941 -
d Proposed Bonus Equity Shares - 1,075,107,001
e Statutory General Reserves 2,099,506,709 1,694,804,484
f Retained Earnings - -
g Un-audited current year cumulative profit 1,218,765,930 2,778,690
h Capital Redemption Reserve -
I Capital Adjustment Reserve 12,463,167 12,463,167
j Dividend Equalization Reserves - -
k1 Other free Reserves - Debenture Redemption Reserve 559,461,188 459,461,188
k2 Other free Reserves - Deferred Tax Reserve - -
l Less: Goodwill (software) (4,533,821) (1,638,000)
m Less: Deferred Tax Assets - -
n Less: Fictitious Assets - -
o Less: Investment in equity in licensed Financial Institutions - -
p Less: Investment in equity of institutions with financial interests (188,888,889) (100,000,000)
q Less: Investment in equity of institutions in excess of limits - -
r Less: Investments arising out of underwriting commitments - -
s Less: Purchase of land & building in excess of limit and unutilized - -
t Less: Other Deductions - -
Adjustments 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 2) 1,603,334,213 1,624,208,503

a Cumulative and/or Redeemable Preference Share - -
b Subordinated Term Debt 760,000,000 920,000,000
c Hybrid Capital Instruments - -
d General loan loss provision 814,928,235 663,121,596
e Investment Adjustment Reserve - 500,400
f Assets Revaluation Reserve - -
g Exchange Equalization Reserve 28,405,978 19,814,792
h Other Reserves - 20,771,715
Total Capital Fund (Tier I and Tier II) 13,728,773,698 11,692,078,032
1.3 CAPITAL ADEQUACY RATIOS As on Asadh end 2075 As on Asadh end 2074
Tier 1 Capital to Total Risk Weighted Exposures (After Bank's adjustments of Pillar II) 13.38% 13.53%
Tier 1 and Tier 2 Capital to Total Risk Weighted Exposures (After Bank's adjustments of 15.15% 15.71%
Pillar II)
125
Nepal SBI Bank Ltd.
FORM NO.2 RISK WEIGHTED EXPOSURE FOR CREDIT RISK
Specific
Provision & Risk
Eligible
A. Balance Sheet Exposures Book Value Valuation Net Value Risk Weight Weighted
CRM
Adjust- Exposures
ments
a b c d=a-b-c e f=d*e
Cash Balance 2,374,354,666 - - 2,374,354,666 0% -
Balance With Nepal Rastra Bank 5,626,588,559 - - 5,626,588,559 0% -
Gold - - - - 0% -
Investment in Nepalese Government Securities 12,393,935,705 - - 12,393,935,705 0% -
All Claims on Government of Nepal 156,119,132 - - 156,119,132 0% -
Investment in Nepal Rastra Bank securities - - - - 0% -
All claims on Nepal Rastra Bank 23,397,617 - - 23,397,617 0% -
Claims on Foreign Government and Central Bank (ECA 0-1) - - - - 0% -
Claims on Foreign Government and Central Bank (ECA -2) - - - - 20% -
Claims on Foreign Government and Central Bank (ECA-4-6) - - - - 100% -
Claims On BIS, IMF, ECB, EC and on Multilateral - - - - 0% -
Development Banks (MDB's) recognized by the framework
Claims on Other Multilateral Development Banks - - - - 100% -
Claims on Public Sector Entity (ECA 0-1) - - - - 20% -
Claims on Public Sector Entity (ECA 2) - - - - 50% -
Claims on Public Sector Entity (ECA 3-6) - - - - 100% -
Claims on Public Sector Entity (ECA 7) - - - - 150% -
Claims on domestic banks that meet capital adequacy requirements 2,938,016,717 - - 2,938,016,717 20% 587,603,343
Claims on domestic banks that do not meet capital adequacy requirements 149,935,346 - - 149,935,346 100% 149,935,346
Claims on foreign bank (ECA Rating 0-1) 105,677,744 - - 105,677,744 20% 21,135,549
Claims on foreign bank (ECA Rating 2) 292,586,129 - - 292,586,129 50% 146,293,065
Claims on foreign bank (ECA Rating 3-6) - - - - 100% -
Claims on foreign bank (ECA Rating 7) - - - - 150% -
Claims on foreign bank incorporated in SAARC region operating with a 2,852,554,399 - - 2,852,554,399 20% 570,510,880
buffer of 1% above their respective regulatory capital requirement
Claims on Domestic Corporates 49,388,374,213 - 629,689,534 48,758,684,679 100% 48,758,684,679
Claims on Foreign Corporates (ECA 0-1) - - - - 20% -
Claims on Foreign Corporates (ECA 2) - - - - 50% -
Claims on Foreign Corporates (ECA 3-6) - - - - 100% -
Claims on Foreign Corporates (ECA 7) - - - - 150% -
Regulatory Retail Portfolio (Not Overdue) 17,723,770,384 - 90,374,033 17,633,396,351 75% 13,225,047,263
Claims Fullfilling all criterion of regulatory retail except granularity - - - - 100% -
Claims secured by residential properties 2,018,118,205 - - 2,018,118,205 60% 1,210,870,923
Claims not fully secured by residential properties - - - - 150% -
Claims secured by residential properties (Overdue) 32,527,217 281,877,169 - 11,650,048 100% 11,650,048
Claims secured by Commercial real estate 376,018,694 - - 376,018,694 100% 376,018,694
Past due claims (except for claim secured by residential properties) 169,794,893 133,295,461 - 36,499,432 150% 54,749,148
High Risk Claims 2,705,385,923 - 88,391,152 2,616,994,771 150% 3,925,492,157
Investments in equity and other capital instruments of institutions 135,246,533 89,822,252 - 45,424,281 100% 45,424,281
listed in the stock exchange
Investments in equity and other capital instruments of institutions not 12,434,700 7,499,200 - 4,935,500 150% 7,403,250
listed in the stock exchange
Staff loan secured by residential property 986,597,598 - - 986,597,598 60% 591,958,559
126
Interest Receivable / Claim on Govt. Securities - - - - 0% -

Cash in Transit and other cash Items in the process of collection 80,038 80,038 - - 20% -
Other Assets (as per attachment) 2,921,839,288 1,071,170,618 - 1,850,668,670 100% 1,850,668,670
TOTAL 103,383,353,700 1,322,744,738 808,454,719 101,252,154,243 71,533,445,855
Strategic Report
Risk
Gross Book Specific Eligible
B. Off Balance Sheet Exposures Net Value Risk Weight Weighted
Value Provision CRM
Exposures
a b c d=a-b-c e f=d*e
Revocable Commitments - - - 0% -
Bills Under Collection 189,748,218.69 - - 189,748,218.69 0% -
Forward Foreign Exchange Contract Liabilities - - - - 10% -
LC Commitments With Original Maturity Up to 6 months Domestic 7,158,871,511.70 - 223,616,411.73 6,935,255,099.97 20% 1,387,051,019.99
Counterparty
Foreign Counterparty (ECA Rating 0-1) - - - - 20% -
Foreign Counterparty (ECA Rating 2) - - - - 50% -
LC Commitments With Original Maturity Over 6 months Domestic - - - - 50% -
Counterparty
Bid Bond, Performance Bond and Counter guarantee Domestic 2,048,722,190.40 - 215,792,944.86 1,832,929,245.54 50% 916,464,622.77
Counterparty
Underwriting commitments - - - - 50% -
Lending of Bank's Securities or Posting of Securities as collateral - - - - 100% -
Repurchase Agreements, Assets sale with recourse - - - - 100% -
Advance Payment Guarantee 67,295,998.65 - 1,738,865.10 65,557,133.55 100% 65,557,133.55
Financial Guarantee 230,000.00 - 113,000.00 117,000.00 100% 117,000.00
Acceptances and Endorsements 2,959,103,000.81 - 6,547,384.00 2,952,555,616.81 100% 2,952,555,616.81
Unpaid portion of Partly paid shares and Securities - - - - 100% -
Irrevocable Credit commitments (Short Term) 13,179,034,149.40 - 159,818,023.47 13,019,216,125.93 20% 2,603,843,225.19
Irrevocable Credit commitments (Long Term) - - - 50% -
Claims on foreign bank incorporated in SAARC region operating with a 8,832,045,708.83 - - 20% 1,766,409,141.77
buffer of 1% above their respective regulatory capital requirement 8,832,045,708.83
Other Contingent Liabilities 632,519,752.52 - - 632,519,752.52 100% 632,519,752.52
Unpaid Guarantee Claims 170,000.00 - 17,000.00 153,000.00 200% 306,000.00
TOTAL 35,067,740,531.00 - 607,643,629.16 34,460,096,901.84 - 10,324,823,512.60
Total RWE for credit Risk Before Adjustment (A)+(B) 138,451,094,231.00 1,322,744,738.00 1,416,098,348.16 135,712,251,144.84 - 81,858,269,367.60
Adjustments under Pillar II
Add: 10% of the 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) - - - - - -
127
Nepal SBI Bank Ltd.
FORM NO.3 ELIGIBLE CREDIT RISK MITIGANTS
Depos- Sec/ G'tee Sec/

Govt.&
its with G'tee of G'tee of of do- G'tee G'tee
Deposits NRB of of For-
Credit Exposures other Gold Govt. of other mes- Total
with Bank Securi-
banks/
ties
Nepal Sover- tic MDBs eign
FI eigns banks Banks
(a) (b) (c) (d) (e) (f) (g) (h) (I)
Balance Sheet Exposures
Claims on Foreign Government and Central Bank - - - - - - - - - -
(ECA -2)
(ECA -3)
(ECA-4-6)
(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 0.00 0.00 0.00 0.00 - - - - - -
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 629,689,533.73 0.00 - 0.00 - - - - 0.00 629,689,533.73
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) 90,374,032.78 - 0.00 - - - - - - 90,374,032.78
Claims Fullfilling 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 87,236,638.79 - 1,154,512.84 - - - - - - 88,391,151.63
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 807,300,205.30 - 1,154,512.84 - - - - - - 808,454,718.14
128
Sec/ Sec/
Deposits Govt.& G'tee G'tee G'tee
G'tee of G'tee of
Deposits with NRB of do- of of For-
Credit Exposures Gold Govt. of other Total
with Bank other Securi- mestic eign
Nepal Sover- MDBs
banks/FI ties banks
eigns Banks
Strategic Report
(a) (b) (c) (d) (e) (f) (g) (h) (I)
Off Balance Sheet Exposures
Forward Foreign Exchange Contract - - - - - - - - - -
LC Commitments With Original Maturi- 223,616,411.73 - 223,616,411.73
ty Up to 6 months (domestic)
ECA Rating 0-1 - - - - - - - - - -
ECA Rating 2 - - - - - - - - - -
ECA Rating 3-6 - - - - - - - - - -
ECA Rating 7 - - - - - - - - - -
LC Commitments With Original Maturi- - - - - - - - - - -
ty Over 6 months (domestic)
ECA Rating 0-1 - - - - - - - - - -
ECA Rating 2 - - - - - - - - - -
ECA Rating 3-6 - - - - - - - - - -
ECA Rating 7 -
Bid Bond, Performance Bond 215,792,944.86 - - 215,792,944.86
and Counter Guarantee 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 1,738,865.10 - - - - - - - - 1,738,865.10
Financial Guarantee 113,000.00 - - - - - - - - 113,000.00
Acceptances and Endorsements 6,547,384.00 - - - - - - - - 6,547,384.00
Unpaid portion of Partly paid shares - - - - - - - - - -
and Securities
Irrevocable Credit commitments (Short 159,767,536.31 50,487.16 0.00 - 0.00 - - 0.00 159,818,023.47
Term)
Irrevocable Credit commitments (Long - - - - - - - - - -
Term)
Other Contingent Liabilities - - - - - - - - - -
Unpaid Guarantee Claims 17,000.00 - - - - - - - - 17,000.00
Subtotal 607,593,142.00 - 50,487.16 - - - - - - 607,643,629.16
Total 1,414,893,347.30 - 1,205,000.00 - - - - - - 1,416,098,347.30
129
Nepal SBI Bank Ltd.
FORM NO.5 OTHER ASSETS
S.No. Assets Gross Amount Specific Provision Net Balance
1 Cash and Cash Items in Transit 80,037.50 80,037.50 -

2 Miscellaneous Expenditure not written off - -
3 Fixed Assets 1,896,703,284.00 1,048,202,353.00 848,500,933.24
4 Interest Receivable on Other Investment - - -
5 Interest Receivable on Loan 105,878,947.45 - 105,878,947.45
6 Non Banking Assets - - -
7 Reconciliation Account - - -
8 Draft Paid Without Notice 22,359,375.00 22,359,375.00 -
9 Sundry Debtors 179,938,775.00 - 179,938,775.00
10 Advance payment and Deposits 42,909,951.00 - 42,909,951.00
11 Staff Loan & Advance 464,679,646.45 - 464,679,646.45
12 Stationery 11,363,073.09 - 11,363,073.09
13 Other 198,006,235.58 608,889.58 197,397,346
TOTAL 2,921,839,287.57 1,071,170,617.58 1,850,668,669.99
Nepal SBI Bank Ltd.

FORM NO.6 RISK WEIGHTED EXPOSURE FOR OPERATIONAL RISK
Particulars Year 1 (2071/72) Year 2 (2072/73) Year 3 (2073/74)
Net Interest Income 2,047,484,035 2,416,111,412 2,916,886,949

Commission and Discount Income 340,354,037 465,797,307 487,594,890
Other Operating Income 307,691,033 318,084,154 447,952,705
Exchange Fluctuation Income 119,469,424 136,369,939 220,922,445
Addition / Deduction Interest Suspense during the period 5,887,696 -16,570,581 18,349,401
Gross income (a) 2,820,886,225 3,319,792,231 4,091,706,390
Alfa (b) 15% 15% 15%
Fixed Percentage of Gross Income [c=(a×b)] 423,132,934 497,968,835 613,755,959
Capital Requirement for operational risk (d) (average of c) 511,619,243 - -
Risk Weight (reciprocal of capital requirement of 10%) in 10 - -
times (e)
Equivalent Risk Weight Exposure [f=(d×e)] 5,116,192,430 - -
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 10 - -
Equivalent Risk Weight Exposure [g] - - -
Equivalent Risk Weight Exposure [h=f+g] - - -
130
Nepal SBI Bank Ltd.

FORM NO.7 RISK WEIGHTED EXPOSURE FOR MARKET RISK
Strategic Report
S. No. Currency Open Position (FCY) Rate Open Position (NPR) Relevant Open Position
1 AUD 30,705.07 81.89 2,514,438.18 2,514,438.18

2 CAD 2,765.00 83.15 229,909.75 229,909.75
3 CHF 340.00 109.53 37,240.20 37,240.20
4 CNY 13,984.00 16.42 229,617.28 229,617.28
5 EUR 19,039.28 128.59 2,448,261.02 2,448,261.02
6 GBP 39,669.72 145.86 5,786,225.36 5,786,225.36
7 HKD 79,130.00 14.00 1,107,820.00 1,107,820.00
8 INR 1,268,782,123.94 1.60075 2,031,002,984.90 2,031,002,984.90
9 JPY 22,034,561.00 0.98 21,593,869.78 21,593,869.78
10 SGD 7,539.00 80.58 607,492.62 607,492.62
11 USD 931,017.69 109.70 102,132,640.59 102,132,640.59
12 DKK 9,550.00 17.36 165,788.00 165,788.00
13 KRW - - 0.00 -
14 MYR 2,100.00 27.14 56,994.00 56,994.00
15 AED 4,335.00 v 29.61 128,359.35 128,359.35
16 QAR 4,831.00 29.57 142,852.67 142,852.67
17 THB 5,300.00 3.28 17,384.00 17,384.00
18 SAR 810.00 29.29 23,724.90 23,724.90
19 SEK 220.00 12.41 2,730.20 2,730.20
Total Open Position (a) 2,168,228,332.80
Fixed Percentage (b) 5%
Capital Charge for Market Risk [c=(a×b)] 108,411,416.64
Risk Weight (reciprocal of capital requirement of 10%) in times (d) 10
Equivalent Risk Weight Exposure [e=(c×d)] 1,084,114,166.40
Nepal SBI Bank Ltd.
FORM NO.8 NET LIQUID ASSETS TO TOTAL DEPOSIT RATIO
Particulars Amount
Total Deposit and Borrowing (A) 87,896,662,953.86

Total Deposit ( as per NRB Ni Fa. 9.1) 84,187,072,953.86
Total Borrowing ( as per NRB Ni Fa. 9.1) 3,709,590,000.00
Liquid Assets (B) 24,604,250,871.62
Cash (9.1) 2,374,354,666.13
Bank Balance (9.1) 8,546,649,403.49
Money at Call and Short Notice (9.1) -

Investment in Government Securities (9.1) 13,167,656,802.00
Placement upto 90 days 515,590,000.00
Borrowings payable upto 90 days ( C) 2,709,590,000.00
Net Liquid Assets (D) = (B-C) 21,894,660,871.62
Net Liquid Assets to Total Deposit 26.01%

Shortfall in Ratio
Amount to be added to Risk Weighted Exposures
131
Nepal SBI Bank Ltd.
FORM NO.9 LEVERAGE RATIO
At the month end of Asadh 2075 Rs. in million
Particulars As on Asadh end 2075 As on Asadh end 2074
Exposure Measure 138,820.33 124,881.25

1. On Balance Sheet Assets (Net of Specific Provision) 103,782.20 100,202.96
2. Repurchase Agreements and Securities Finance
A
3. Derivatives
4. Off Balance Sheet Exposure 35,414.96 24,967.29
Less : Regulatory Deductions from CET1 Capital (CAF 2.7 B.I.b) (376.83) (289.00)
Capital Measure 12,284.22 10,067.87
B 1. Common Equity Tier 1 Capital ( After Regularory Adjustment) 12,284.22 10,067.87
2. Additional Tier 1 Capital - -
C Leverage Ratio in Percentage 8.85% 8.06%
132
5. Disclosure of Additional Information

5.1 Risk Management Framework governed by following Board’s approved policies
The Bank has to deal with various risk associated and procedures. Through this policy, the Bank seeks
with its business operations and it has a forward- to:
Strategic Report
looking approach in managing risks. The Bank has i) Decide the policy and strategy for Integrated Risk
robust internal control system in place focused on Management covering the various risk exposures of
extensive risk management framework for effective the Bank.
assessment, measurement and mitigation of risk. ii) Set up policies and guidelines for identification,
Primary goal of the risk management framework measurement, monitoring and control and reporting
is long-term sustainability of the Bank and having of Credit Risks.
appropriate balance between risk and return, in iii) Ensure that the Credit Risk Management Process
order to enhance shareholder value. is as per the guidelines given in the Bank’s policy.
iv) Review and approve Credit Risk limits.
The Bank has strong credit appraisal and risk
v) Ensure robustness of financial models, and
assessment practices in place for identification,
effectiveness of systems used to calculate Credit
measurement, monitoring and control of the credit
Risk.
risk exposures. The Bank uses internal Credit Risk
Assessment Models and scorecards for assessing There is a well-defined credit risk management
credit risk under different exposure segments. structure of the Bank, which comprises of
Internal ratings of the Bank are subject to • Risk Management Committee of the Board (RMCB)
comprehensive rating validation framework. The • Credit Risk Management Committee (CRMC)-
Risk Management Committee of the Board (RMCB) The Credit Risk Management Committee (CRMC),
oversees overall risk governance framework of monitors Credit Risk, ensuring compliance and
The Bank. The Committee, on an on-going basis implementations of Credit Risk policy/strategy
monitors the effectiveness of the risk management approved by the Board and incorporation of
and internal control systems. The Board is apprised Regulatory Compliance in Bank’s Policies and
regularly by the RMCB regarding appropriateness Guidelines.
and adequacy of the existing risk identification and i) Maximum exposure to credit risk
measurement system put in place in the Bank and The Bank has financial assets consisting mainly of
makes recommendation for devising appropriate loans & advances and investments at amortized
system & procedures. cost. In these cases, the maximum exposure to credit
risk is the carrying amount of the related financial
5.1.1 Credit Risk
assets.
Credit risk is the risk of financial loss that the Bank
may face as a result of a borrower or counterparty ii) Credit quality of neither past due nor impaired and
not meeting its obligations in line with the original past due or impaired
contract. Since majority of the Bank’s assets are The table below shows the credit quality by class of
in the form of loans and advances, management asset for all financial assets exposed to credit risk,
of credit risk becomes the most crucial task. based on the Bank’s internal credit rating system as
Bank’s approach to Credit Risk Management is of 32 Ashad 2075.
Past due
Neither past Past due Past due
Particulars More Individually
due less 91 to Total
(Amount in NPR lakhs) than 180 impaired
nor impaired 90 days 180 days
days
Financial Assets
Assets carried at Amortised Cost
Cash and cash equivalent 104,802 - - - - 104,802
Due from Nepal Rastra Bank 56,474 - - - - 56,474
Placement with Bank and Financial Institutions - - - - - -
Loan and advances to B/FIs 28,722 - - - - 28,722

Loans and advances to customers 712,291 9,803 - - 1,543 723,637
Fair Value through Profit and Loss (FVTPL) -
Derivative financial instruments. - - - - - 0
Fair Value through Other - - - - - -
Comprehensive Income (FVTOCI) - - - - - -
Investment securities 86,461 - - - - 86,461
Investment in subsidiaries 1,889 - - - - 1,889
Total 990,639 9,803 - - 1,543 1,001,985
133
5.1.2 Market Risk supervision/management of Market Risk (mainly
Market risk refers to the risk to a bank resulting interest rate and liquidity risks). ALCO is the apex
from movements in market prices, in particular, body for assets liabilities management, within the
changes in interest rates, foreign exchange rates, risk parameters laid down by the Bank’s Board and
and equity and commodity prices. Market risk is it shall remain inter alia in charge of
defined as the risk of losses in on and off-balance • Asset Liability Management
sheet positions arising from movements in market • Structural Balance Sheet Risk and Policy
prices. The risks subject to this requirement are: Bank is required to manage market risk and ensures
a. Interest Rate Risk: Interest rate risk is the risk that the capital requirements for market risk are
that the fair value or future cash flows of a being maintained on a continuous basis. Capital
financial instrument will fluctuate because of assessment is essential to limit risk and reduce the
changes in market interest rates. effect of potential and unexpected losses
b. Currency Risk: Foreign exchange risk is the
potential for the Bank to experience volatility in 5.1.3 Operational Risk
the value of its assets, liabilities and solvency Operational Risk is risk of loss resulting from
and to suffer actual financial losses as a result inadequate or failed internal processes, people and
of changes in value between the currencies system or from external events. The Operational
of its assets and liabilities and its reporting Risk Management Committee (ORMC) reviews
currency. the operational risk profile of the Bank at periodic
c. Equity Price Risk: Equity price risk is the risk intervals and recommends suitable controls/
that the fair value or future cash flows of a mitigation for managing operational risk in the
financial instrument will fluctuate because Bank. The Committee anticipates changes and
of changes in equity prices (other than those threats, concurs on areas of highest priority and
arising from interest rate risk or currency risk), related mitigation strategies and ensures that
whether those changes are caused by factors adequate resources are being assigned to mi
specific to the individual financial instrument gate risks as needed. The Operational Risk
or its issuer, or by factors affecting all similar Management Committee (ORMC) is an executive
financial instruments traded in the market. Committee. Its principal objective is the mitigation
of operational risks within the Bank by creation and
One of the key challenges in market risk is
maintenance of an operational risk management
quantification of risks. Appropriate models/
process.
measures need to be used based on the materiality
of identified risks. Accurate assessment will help to All the staffs are well trained about risks and are
reduce loss. There are many sensitivity measures guided on the areas of their operation. The Bank
available to quantify market risk. However, no continues to strengthen its risk management system
single measure can reflect all aspects of market through various measures to address the risks
risk. The Bank utilizes various statistical and non- posed by a multitude of factors, which ultimately
statistical risk measures to enhance the stability helps the Bank to reaffirm its position as one of
of risk measurement. Overall these risk measures the best-managed bank in Nepal. For assessment
provide a comprehensive view of market risk of Pillar I risks and Pillar II risks such as liquidity
exposure more than any single measure by itself. risk and interest rate risk, as well as adequacy of
Market risk is assessed and monitored using the capital and overall risk management practices
measures such as: Net Open position, Gap Limits, under normal and stressed conditions, the Bank
Modified duration and Stop Loss calculation, VaR has comprehensive Internal Capital Adequacy
Model, Stress Testing, Approved Risk limits, etc. Assessment Process (ICAAP) in place.
prescribed in the internal and regulatory policies The Operational Risk Management Framework
for various products. has been established with an explicit mandate
The Market Risk Management Committee (MRMC) to support the implementation of an effective
has the overall responsibility to identify, monitor / Operational Risk Management process and to
manage various market risk exposures of the Bank meet Basel, NRB and RBI requirements. This will
through Market risk limits, stop loss limits, etc., at entail:
a more granular level. MRMC is headed by the a. Increasing Operational Risk & Loss
Managing Director, CFO is functional head and transparency by incident reporting;
CRCO is member secretary. The MRMC reviews b Enhancing Operational Risk awareness
structured liquidity, interest rate risk, open position through Risk and Control Self-assessment
of currencies and risk associated investment (RCSA) process;
risk etc. MRMC meets at quarterly intervals. The c. Improving early warning information through
Member secretary and functional head will ensure implementation of Key Risk Indicators (I(RIs);
regulatory compliances. d. Facilitate speedy resolution of risk issues by
Assets Liability committee (ALCO)is a senior effectively tracking and follow-up of assessment
management level committee responsible for outcomes; and
134
e. Finally, allocation of risk ownership and operational risk profile of the Bank. Approve
responsibilities. policy-related mitigation plans.
Key Roles of ORMC: • Review roll-out plans for implementation
• Review the risk profiles understand future of ORM initiatives. Proactively review and
manage potential risks which may arise from
Strategic Report
changes and threats, and concur on areas of
highest priority and related mitigation strategy. regulatory changes/or changes in economic /
• Assure that adequate resources are being political environment in order to keep ahead.
assigned to mitigate risks as needed. 5.1.4 Liquidity Risk
Liquidity risk is defined as the risk that the Bank
• Communicate with business units and staff will encounter difficulty in meeting obligations
about the importance of operational risk associated with financial liabilities that are settled by
and assure adequate participation and delivering cash or another financial asset. Liquidity
cooperation. risk arises because of the possibility that the Bank
• Review and approve the development might be unable to meet its payment obligations
and implementation of operational when they fall due as a result of mismatches in the
risk methodologies and tools including timing of the cash flows under both normal and
assessments, reporting, capital and loss event stress circumstances. Such scenarios could occur
databases. when funding needed for illiquid asset positions
• Receive and review reports/presentations from is not available to the Bank on acceptable terms.
various business groups, support departments To limit this risk, management has arranged for
(IT, HR etc.) and business units, processing diversified funding sources in addition to its core
cells about their risk profiles and mitigation deposit base and adopted a policy of managing
programs. assets with liquidity in mind and monitoring future
• To discuss and recommend suitable controls/ cash flows and liquidity on a daily basis. The Bank
mitigations for managing operation risks has developed internal control processes and
• Analyze frauds, potential losses, non- contingency funding plans for managing liquidity
compliance, breaches etc. and recommend risk. The Bank always maintains liquid assets higher
corrective measures to prevent recurrences. than regulatory prescription to mitigate the liquidity
• Discuss any issues arising / directions in any risk.
one business unit/product which may impact
Maturity profit of financial assets and liabilities at
the risks of other business/products.
closing date of financial year, which is used by the
• Continually promote risk awareness across all
management to monitor and take necessary action
business units so that complacency does not
to liquidity management in the bank, is as under:
set in.
• Monitor and ensure that appropriate ORM
frameworks are in place.
• Review the reports presented by Central
Operations Department (COD) with respect to
135
*NPR In
As on 32 Ashad2075
Lacs
1-7 8-30 31-90 91-180 181-270 271-365 More than
S.N. Particulars Total
days days days days days days 1 year
Assets
1 Cash and cash equivalent - - - - - - - -
Cash in hand 23,744 - - - - - - 23,744
Balances with B/FIs 29,201 40,667 5,940 5,250 - - - 81,058
Money at call and short notice - - - - - - - -
2 Due from Nepal Rastra Bank - - - - - - - -
Statutory balances with NRB 56,050 - - - - - - 56,050
Securities purchased under resale agreement - - - - - - - -
Other deposit and receivable from NRB 423 - - - - - - 423
3 Placement with Bank and Financial Institutions - - - - - - - -
4 Derivative financial instruments - - - - - - - -
5 Other trading assets - - - - - - - -
Treasury bills - - - - - - - -
Government bonds - - - - - - - -
NRB Bonds - - - - - - - -
Domestic Corporate bonds - - - - - - - -
Equities/ Mutual Fund Units - - - - - - - 204
6 Loan and advances to B/FIs - 1,980 2,775 6,126 4,547 13,295 - 28,723
7 Loans and advances to customers 16,380 61,256 149,965 118,158 82,824 93,806 201,248 723,637
8 Investment securities - - - - - - -
Investment securities measured at amortized cost - - - 10,483 - - 74,374 84,857
Investment in equity measured at FVTOCI - - - - - - 1,604 1,604
9 Current tax assets - - - - - 2,195 2,195
10 Investment in subsidiaries - - - - - - 1,889 1,889
11 Investment in associates - - - - - - -
12 Investment property - - - - - - -
13 Property and equipment - - - - - - 8,440 8,440
*NPR In
As on 32 Ashad2075
Lacs
1-7 8-30 31-90 91-180 181-270 271-365 More than
S.N. Particulars Total
days days days days days days 1 year
14 Goodwill and Intangible assets - - - - - - 45 45
15 Deferred tax assets - - - - - - 2,362 2,362
16 Other assets - - - - - 3,233 6,923 10,156
Total (A) 125,798 103,903 158,680 140,017 87,371 112,529 297,089 1,025,387
Liabilities - - - - - -
1 Due to Bank and Financial Institutions 8,776 - 18,320 - - - - 27,096
2 Due to Nepal Rastra Bank - - - - - - - -
3 Derivative financial instruments - - 68 - - - - 68
4 Deposits from customers 147,114 17,083 57,202 118,953 69,796 64,695 367,431 842,274
5 Borrowing - - - - - - - -
6 Current tax liabilities - - - - - - - -
7 Provisions - - - - - - - -
8 Deferred tax liabilities - - - - - - - -
9 Other liabilities 7,888 - - 3,112 - - 6,938 17,938
10 Debt securities issued - - - - - - 10,000 10,000
11 Subordinated liabilities - -- -- - -- -- - -
Total (B) 163,778 17,083 75,590 122,065 69,796 64,695 384,369 897,376
Net Assets (A-B) (37,980) 86,820 83,090 17,952 17,575 47,834 (87,280) 128,011
www.nepalsbi.com.np
Cumulative Net Assets (37,980) 48,840 131,930 149,882 167,457 215,291 128,011 -
Assumption:
1 Categorization of Current Deposit
NPR 560.54 crore minimum level for this year i.e. in more than 1 year bucket ; remaining in 1-7 days bucket
2 Categorization of Saving Deposit
Saving Deposit : 20% as volatile deposits i.e. for 1-7 days bucket and 80% as stable deposits i.e. more than 1 year bucket ;
Call Deposit : 30% 1-7 days bucket , 20% in 8-30 days bucket and 50% above 1 year bucket
137

5.2 Capital Management
5.2.1 Qualitative disclosures
The objective of capital management is to ensure that the Bank has adequate Capital to support material risks in
the business as also to encourage the Bank to develop and use better Risk Management Techniques for monitoring
and managing risks.
The Bank has devised ICAAP, which is intended to ensure that we have adequate capital to support all the risks
in business, to improve upon them over time and achieve better risk management techniques in monitoring
and managing risks. ICAAP Committee meets at quarterly intervals to review the internal capital assessment
commensurate with the risk profile and review the portfolios which require capital charge. ICAAP Committee
also reviews strengthening of risk management, applying internal limits, strengthening the level of provisions and
reserves, and improving internal controls.
We have planned our Business and capital growth in such a way that our Capital Adequacy Ratio (CAR) does not
fall below 12% in the next five years. The Business growth targets and capital plan is revised to align with changes
in macro and micro economic situation in the country from time to time.
5.2.2 Quantitative disclosures
a) Capital structure and capital adequacy
i. Tier 1 capital and a breakdown of its components
1.2 CAPITAL 32 Ashad 2075 31 Ashad 2074
Core Capital (Tier 1) 12,125,439,485 10,067,869,529
a Paid up Equity Share Capital 8,046,905,260 6,924,892,999
b Irredeemable Non-cumulative preference shares - -
c Share Premium 381,759,941 -
d Proposed Bonus Equity Shares - 1,075,107,001
e Statutory General Reserves 2,099,506,709 1,694,804,484
f Retained Earnings - -
g Un-audited current year cumulative profit 1,218,765,930 2,778,690
h Capital Redemption Reserve - -
I Capital Adjustment Reserve 12,463,167 12,463,167
j Dividend Equalization Reserves - -
k1 Other free Reserves - Debenture Redemption Reserve 559,461,188 459,461,188
k2 Other free Reserves - Deferred Tax Reserve - -
l Less: Goodwill (software) (4,533,821) (1,638,000)
m Less: Deferred Tax Assets - -
n Less: Fictitious Assets - -
o Less: Investment in equity in licensed Financial Institutions - -
p Less: Investment in equity of institutions with financial interests (188,888,889) (100,000,000)
q Less: Investment in equity of institutions in excess of limits -
r Less: Investments arising out of underwriting commitments - -
s Less: Purchase of land & building in excess of limit and unutilized - -
t Less: Other Deductions - -
Adjustments 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) - -

138
ii. Tier 2 capital and a breakdown of its components

32 Ashad 2075 31 Ashad 2074
Supplementary Capital (Tier 2) 1,603,334,213 1,624,208,503
Strategic Report
a Cumulative and/or Redeemable Preference Share -
b Subordinated Term Debt 760,000,000 920,000,000
c Hybrid Capital Instruments -
d General loan loss provision 814,928,235 663,121,596
e Investment Adjustment Reserve - 500,400
f Assets Revaluation Reserve -
g Exchange Equalization Reserve 28,405,978 19,814,792
h Other Reserves - 20,771,715
iii. Detailed information about the Subordinated Term Debts with information on the outstanding amount, maturity, and
amount rose during the year and amount eligible to be reckoned as capital funds.
32 Ashad 2075(Amount
Particulars 32 Ashad 2075 31 Ashad 2074
eligible for capital fund)
1. 12.5% Nepal SBI Bank Debentures 2078 of NPR1,000 each 400,000,000 240,000,000 400,000,000
(Unsecured) Issued on 12.02.2012 and maturing on 11.02.2022
(Outstanding balance of Redemption Reserve NPR256,776,256)
2. 8% Nepal SBI Bank Debentures 2079 of NPR1,000 each 400,000,000 320,000,000 400,000,000
(Outstanding balance of Redemption Reserve NPR 217,863,014)
3. 7.9% Nepal SBI Bank Debentures 2080 of NPR1,000 each 200,000,000 200,000,000 200,000,000
(Outstanding balance of Redemption Reserve NPR 84,821,918)
Total (1+2+3) 1000,000,000 760,000,000 1000,000,000
*Interest payable on half-yearly basis.
iv. Deductions from capital

32 Ashad 2075 31 Ashad 2074
Goodwill(software in our case) 4,533,821 1,638,000
Investment in equity of institutions with financial interests (subsidiary NSMBL) 188,888,889 100,000,000
Total 193,422,710 101,638,000
v. Total qualifying capital

32 Ashad 2075 31 Ashad 2074
Tier 1 Capital 12,125,439,485 10,067,869,529
Tier 2 Capital 1,603,334,213 1,624,208,503
Total 13,728,773,698 11,692,078,032
vi. Capital Adequacy Ratio

CAPITAL ADEQUACY RATIOS 32 Ashad 2075 31 Ashad 2074
Tier 1 Capital to Total Risk Weighted Exposures (After Bank's adjustments of Pillar II) 13.38% 13.53%
Tier 1 and Tier 2 Capital to Total Risk Weighted Exposures (After Bank's adjustments of Pillar II) 15.15% 15.71%
vii. Summary of the terms, conditions and main features of all capital instruments, especially in case of subordinated
term debts including hybrid capital instruments
Ordinary share capital: The Bank has only one class of equity shares having a par value of NPR 100 per share.
Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Bank, holder of
equity shares will be entitled to receive remaining assets of the Bank after distribution of preferential amount.The
distribution will be in proportion to the number of equity shares held by the shareholders.
The Bank has issued debentures as mentioned in Note iii. These debentures do not carry any voting rights. These
debentures are subordinate to the depositors of the Bank.
139
b) Risk Exposures
Risk weighted exposures for Credit Risk, Market Risk and Operational Risk
S.N RISK WEIGHTED EXPOSURES 32 Ashad 2075
1 Risk Weighted Exposure for Credit Risk 81,858,269,368
2 Risk Weighted Exposure for Operational Risk 5,116,192,430
3 Risk Weighted Exposure for Market Risk 1,084,114,166
4 Regulatory Adjustment 2,579,512,797
Total Risk Weighted Exposures 90,638,088,761
Risk weighted exposure under each of 11 Categories of Credit Risk

S.N RISK WEIGHTED EXPOSURES 32 Ashad 2075
1 Claims on government & central bank -
2 Claims on other official entities -
3 Claims on banks 1,475,478,183
4 Claims on corporate & securities firms 48,758,684,679
5 Claims on regulatory retail portfolio 13,225,047,263
6 Claims secured by residential properties 1,814,479,530
7 Claims secured by commercial real estate 376,018,694
8 Past due Claims 54,749,148
9 High risk claims 3,925,492,157
10 Other assets 1,850,668,670
11 Off balance sheet item 10,324,823,513
Total 81,858,269,368
c) Total risk weighted exposure calculation table

1.1 RISK WEIGHTED EXPOSURES 32 Ashad 2075 31 Ashad 2074
a Risk Weighted Exposure for Credit Risk 81,858,269,368 67,288,105,098
b Risk Weighted Exposure for Operational Risk 5,116,192,430 4,263,968,168
c Risk Weighted Exposure for Market Risk 1,084,114,166 746,800,606
Total Risk Weighted Exposures (a+b+c) 88,058,575,964 72,298,873,872
Adjustments Under Pillar II
Add RWE equivalent to reciprocal of capital charge of 2% of gross income. 818,341,278 663,958,446
Add: 2% of the total RWE as Supervisor is not satisfied with the overall RiskManagement 1,761,171,519 1,445,977,477
Policies and Procedures (6.4 a 9)
Add: .% of the total deposit due to insufficient Liquid Assets (6.4 a 6) -
Total Risk Weighted Exposures (After Bank's Adjustment of Pillar II) 90,638,088,761 74,408,809,795
d) Amount of NPA (Gross and Net) as on 32 Ashad 2075

S.N Particulars Gross NPA Net NPA

1 Restructured - -
2 Substandard - -
3 Doubtful - -
4 Loss 154,252,666 -
Gross NPA 154,252,666 -
140
5.2.3 Compliance with external requirements

The commercial banks were required by the Monetary Policy 2015/16 to attain a stipulated minimum paid up
capital of NPR 8 billion by mid-July 2017. At the reporting date, the Bank’s paid up capital stood at NPR 8.05
billion against the requirement of NPR 8 billion.
Strategic Report
Paid-up Capital
Cumulative Paid up
Financial Year Remarks
Share Capital NPR
2050/051 (199z3/94) 119,820,000 Opening Share Capital at NPR 100 Paid up. First issue of Share Capital was NPR 120,000,000.00
2051/052 (1994/95) 119,871,000 Further allotment and subscription of Share Capital of NPR 51,000.00
2052/053 (1995/96) 119,977,000 Further allotment and subscription of Share Capital of NPR 106,000.00
2053/054 (1996/97) 119,946,000 Further allotment and subscription of Share Capital of NPR 19,000.00 and cancellation of share of NPR
50,000.00
2054/055 (1997/98) 119,946,000
2055/056 (1998/99) 119,946,000
2056/057 (1999/00) 119,946,000
2057/058 (2000/01) 143,935,200 Issuance of 20% Bonus Shares
2058/059 (2001/02) 424,893,300 Issuance of 1:2 Right Shares
2059/060 (2002/03) 425,157,300 Further allotment previous Right Issue
2062/063 (2005/06) 640,236,100 Issuance of 2:1 Right Shares
2064/065 (2007/08) 874,527,840 Issuance of 35% Bonus Shares
2065/066 (2008/09) 874,527,840
2066/067 (2009/10) 1,861,324,239 Issuance of 40% Bonus Shares and issuance of 2:1 Right Shares
2067/068 (2010/11) 2,102,966,165 Issuance of 12.5% Bonus Shares and allotment of previously unsubscribed right issue.
2068/069 (2011/12) 2,355,738,504 Issuance of 12.5% Bonus Shares and cancellation of last year’s allotment of previously unsubscribed
right issue.
2069/070 (2012/13) 2,650,205,804 Issuance of 12.5% Bonus Shares
2070/071 (2013/14) 3,049,083,104 Issuance of 15.05% Bonus Shares
2071/072 (2014/15) 3,883,735,565 Issuance of 27% Bonus Shares
2072/073 (2015/16) 4,973,079,112 Issuance of 28% Bonus Shares
2073/074 (2016/17) 6,924,892,999 NPR 6,776,787.00 raised by issue of FPO and NPR 1,945,037,100.00 raised by right issue.
2074/075 (2017/18) 8,046,905,260 NPR 46,905,260.38 raised by auction of unsubscribed right issue and NPR 1,075,107,001.00 by
issuance of 15.42% Bonus Shares
141
5.3 Classification of Financial Assets and Financial Liabilities
As on 32 Ashad 2075 NPR

Assets at fair value Assets at amortized costs
Financial Assets Notes Designated Available for Held to Loans and Total
Trading
at FVTPL sale Maturity Receivables
Cash and cash equivalent 4.1 - - - - 10,480,237,366 10,480,237,366
Due from Nepal Rastra Bank 4.2 - - - - 5,647,349,586 5,647,349,586
Placement with Bank and Financial 4.3 - - - - - -
Institutions
Derivative financial instruments 4.4 - - - - - -
Other trading assets 4.5 20,404,281 - - - - 20,404,281
Loan and advances to B/FIs 4.6 - - - - 2,872,201,921 2,872,201,921
Loans and advances to customers 4.7 - - - - 72,363,660,048 72,363,660,048
Investment securities 4.8 - - 127,276,952 8,518,871,826 8,646,148,778
Current tax assets 4.9 - - - - 219,486,240 219,486,240
Investment in subsidiaries 4.10 - - - - - -
Investment in associates 4.11 - - - - - -
Investment property 4.12 - - - - - -
Property and equipment 4.13 - - - - - -
Goodwill and Intangible assets 4.14 - - - - - -
Deferred tax assets 4.15 - - - - - -
Other assets 4.16 - - - - 961,037,914 961,037,914
20,404,281 - 127,276,952 8,518,871,826 92,543,973,075 101,210,526,134

Assets at fair value Assets at amortized costs
Financial Assets Notes Designated Available for Held to Loans and Total
Trading
at FVTPL sale Maturity Receivables
Cash and cash equivalent 4.1 - - - - 5,916,665,489 5,916,665,489
Due from Nepal Rastra Bank 4.2 - 7,313,015,502 7,313,015,502
Placement with Bank and Financial 4.3 - - - - 13,248,350,000 13,248,350,000
Institutions
Derivative financial instruments 4.4 - - - - - -
Other trading assets 4.5 23,007,450 - - - - 23,007,450
Loan and advances to B/FIs 4.6 - - - - 2,298,513,105 2,298,513,105
Loans and advances to customers 4.7 - - - - 61,822,035,652 61,822,035,652
Investment securities 4.8 - - 195,183,128 7,641,907,531 - 7,837,090,659
Current tax assets 4.9 - - - - 171,842,525 171,842,525
Investment in subsidiaries 4.10 - - - - - -
Investment in associates 4.11 - - - - - -
Investment property 4.12 - - - - - -
Property and equipment 4.13 - - - - - -

Goodwill and Intangible assets 4.14 - - - - - -
Deferred tax assets 4.15 - - - - - -
Other assets 4.16 - - - - 310,084,473 310,084,473
23,007,450 - 195,183,128 7,641,907,531 91,080,506,746 98,940,604,855
142

Liabilities at fair value
Liabilities at
Financial Liabilities Notes Designated at Total
amortized costs
Strategic Report
Trading
FVTPL
Due to Bank and Financial Institutions 4.17 - - 2,709,590,000 2,709,590,000
Due to Nepal Rastra Bank 4.18 - - -
Derivative financial instruments 4.19 - - -
Deposits from customers 4.20 - - 84,227,327,384 84,227,327,384
Other liabilities 4.23 - - 555,139,399 555,139,399
Debt securities issued 4.24 - - 1,000,000,000 1,000,000,000
Subordinated liabilities 4.25 - - -
- - 88,492,056,783 88,492,056,783

Liabilities at fair value
Liabilities at
Financial Liabilities Notes Designated at Total
Trading amortized costs
FVTPL
Due to Bank and Financial Institutions 4.17 - - 6,155,387,985 6,155,387,985
Due to Nepal Rastra Bank 4.18 - - - -
Derivative financial instruments 4.19 - - - -
Deposits from customers 4.20 - - 80,818,815,835 80,818,815,835
Other liabilities 4.23 - - 444,921,700 444,921,700
Debt securities issued 4.24 - - 1,000,000,000 1,000,000,000
Subordinated liabilities 4.25 - - - -
- - 88,419,125,520 88,419,125,520
143
5.3.1 Fair Value of Financial Assets and Financial Liabilities
Carrying Quoted Observable Unobservable
Assets and Liabilities Fair Value
amount market prices Inputs inputs
32 Ashad 2075
(Level 1) (Level 2) (Level 3)
Assets
Cash and cash equivalent 10,480,237,366 10,480,237,366 10,480,237,366
Due from Nepal Rastra Bank 5,647,349,586 5,647,349,586 5,647,349,586
Placement with Bank and Financial Institutions
Other trading assets 20,404,281 20,404,281 20,404,281
Loan and advances to B/FIs 2,872,201,921 2,872,201,921 2,872,201,921
Loans and advances to customers 72,363,660,048 72,363,660,048 72,363,660,048
Investment securities 8,646,148,778 8,646,148,778 8,646,148,778
Other assets 268,777,654 268,777,654 268,777,654
Liabilities
Due to Bank and Financial Institutions 2,709,590,000 2,709,590,000 2,709,590,000
Deposits from customers 84,227,327,384 84,227,327,384 84,227,327,384
Other liabilities 543,634,428 543,634,428 543,634,428
Debt securities issued 1,000,000,000 1,000,000,000 1,000,000,000
Carrying Quoted Observable Unobservable

Assets and Liabilities Fair Value
amount market prices Inputs inputs
31 Ashad 2074
(Level 1) (Level 2) (Level 3)
Assets
Cash and cash equivalent 5,916,665,489 5,916,665,489 5,916,665,489
Due from Nepal Rastra Bank 7,313,015,502 7,313,015,502 7,313,015,502
Placement with Bank and Financial Institutions 13,248,350,000 13,248,350,000 13,248,350,000
Other trading assets 23,007,450 23,007,450 23,007,450
Loan and advances to B/FIs 2,298,513,105 2,298,513,105 2,298,513,105
Loans and advances to customers 61,822,035,652 61,822,035,652 61,822,035,652
Investment securities 7,837,090,659 7,837,090,659 7,837,090,659
Other assets 310,084,473 310,084,473 310,084,473
Liabilities
Due to Bank and Financial Institutions 6,155,387,985 6,155,387,985 6,155,387,985
Deposits from customers 80,818,815,835 80,818,815,835 80,818,815,835
Other liabilities 432,084,767 432,084,767 432,084,767
Debt securities issued 1,000,000,000 1,000,000,000 1,000,000,000
144
5.4 Operating Segmental Information

5.4.1 General Information
The Bank’s segmental reporting is in accordance with NFRS 8, Operating Segments, Operating segments
are reported in a manner consistent with the internal reporting provided to the bank’s central management
Strategic Report
committee, which is responsible for allocating resources and assessing performance of the operating segments.
All transactions between businesses segments are conducted on an arm length basis with intra-segment are
included in determining business segment performance.
5.4.2 Information on profit or loss, assets and liabilities as on 32 Ashad 2075
Special Special
Particulars RO-KTM RO-EAST RO-WEST Business Business All Other Total
Unit 1 Unit 2
a Revenues from external 2,683,350,389 2,606,844,409 2,321,561,531 370,897,082 1,301,743,216 924,823,459 10,209,220,088
customer
b Intersegment revenues (164,070,412) (817,614,923) (416,654,704) 2,770,306,016 (561,530,340) (810,435,635) -
c Net Revenue 1,747,545,565 2,249,300,117 1,823,809,682 (2,253,113,402) 1,142,764,719 539,256,832 5,249,563,515
d Interest revenue 2,426,931,440 2,322,101,815 2,112,407,095 318,018,005 1,144,528,160 745,791,991 9,069,778,508
e Interest expense 935,804,824 357,544,291 497,751,848 2,624,010,485 158,978,496 350,720,934 4,924,810,880
f Net Interest revenue(b) 1,491,126,616 1,964,557,524 1,614,655,247 (2,305,992,480) 985,549,663 395,071,057 4,144,967,628
g Depreciation and 27,633,466 20,546,131 23,799,333 7,518,801 636,612 56,995,747 137,130,092
amortization
h Segment profit/(loss) 1,379,792,564 1,984,712,884 1,539,951,728 (2,418,474,384) 1,108,125,549 (793,567,823) 2,800,540,520
Before Income tax
i Entity’s interest in the - - - - - - -
profit or loss of associates
accounted for using equity
method
j Other material non-cash - - - - - - -
item
k Impairment of assets 244,483,943 324,350,613 246,081,859 44,314,877 109,949,561 - 969,180,853
l Segment assets 22,516,367,539 25,378,340,730 18,796,371,588 4,065,129,373 10,711,191,829 21,071,268,834 102,538,669,895
m Segment liabilities 22,516,367,539 25,378,340,730 18,796,371,588 4,065,129,373 10,711,191,829 8,270,165,042 89,737,566,103
5.4.3 Disclosure on measurement of operating segment profit or loss, assets and liabilities
a. Revenue from external customers includes gross interest revenue, gross fee and commission revenue, net
trading revenue and other operating incomes (does not include intersegment revenue).
b. Intersegment revenue is the transfer pricing charged by one segment to the other. This is nullified for the
bank as a whole.
c. Net Revenue includes net interest income, net fee and commission income, net trading revenue and net
other operating incomes.
d. Interest revenue includes gross interest revenue of the Bank.
e. Interest expense includes gross interest expense of the Bank.
f. Net Interest revenue is Interest revenue less interest expense (f=d-e).
g. Depreciation and amortisation for the segments’ identifiable assets has been allocated to the respective
segments.
h. Segment’s profit has been as per the respective segment results.Income taxes are managed on a group
basis and are not allocated to operating segments.
i. Bank does not have investment in associates and / or joint venture.
j. There are no material non-cash item.

k. Impairment of assets has been specifically identified for each segment assets and disclosed accordingly.
l. Segment Assets have been disclosed as identified for each segment.
m. It is Bank’s policy to keep segment’s asset to be equal to segment liabilities under transfer pricing
mechanism.
145
5.4.4 Reconciliation of reportable segments revenues, profit or loss, assets and liabilities as on 32 Ashad 2075

a. Revenue
Total revenues for reportable segments 10,094,832,264
Other revenues 974,639,806
Elimination of intersegment revenues (810,435,635)
Entity’s revenue 10,259,036,435

b. Profit or Loss
Total profit or loss for reportable segments 3,594,108,343
Other profit or loss (793,567,823)
Elimination of intersegment profits -
Unallocated amounts -
Profit before income tax 2,800,540,520
c. Assets
Total Assets for reportable segments 81,467,401,061
Other Assets 21,071,268,834
Unallocated amounts -
Entity's Assets 102,538,669,895
d. Liabilities
Total Liabilities for reportable segments 81,467,401,061
Other Liabilities 8,270,165,042
Unallocated liabilities
Entity's Liabilities 89,737,566,103
Information about product and services as on 32 Ashad 2075

Revenue from each type of product and services described in point no. 5.4.4a above:
S.N Particulars Amount NPR
1 Cash Credit 3,269,252,594
2 Overdraft 1,376,506,207
3 Term Loan 2,266,926,024
4 Bills Purchase 939,367
5 Packing Credit 444,474,055
6 Nostro Income 7,287,868
7 Demand Loan 1,060,621,069
8 NFB 171,056,037
9 Commission Others 294,611,888
10 Treasury Operation 870,457,080
11 Card 350,216,764
12 Locker 10,207,430
13 Remittance 136,480,052
Total 10,259,036,435
146
5.4.5 Information about geographical areas as on 32 Ashad 2075

Province wise revenue from following geographical areas
Particulars Amount NPR
a. Domestic
Strategic Report
Province 1 1,676,119,353
Province 2 839,487,433
Province 3 5,283,729,490
Province 4 847,677,707
Province 5 1,185,577,360
Province 6 53,167,736
Province 7 373,277,355
Sub-total(a) 10,259,036,435
b. Foreign -
Sub-total(b) -
Total(a+b) 10,259,036,435

5.4.6 Information about major customers
Revenue from a single external customer does not amount to 10 percent or more of the entity’s revenue.
5.5 Share Options and Share Based Payments
There are no share options and employees and directors are not given any share based payments whether equity
settled or cash settled.
5.6 Contingent liabilities and commitments
Details of contingent liabilities and commitments are given in note 4.28.
5.6.1 Income Tax Liability
Income Tax Assessment
The Large Taxpayers Office (LTO) can amend the tax returns submitted by the Bank within four years from the
date of submission except for assessment is inaccurate by reason of fraud. LTO can amend the tax liability of the
Bank and order to pay additional tax. However, if the Bank if of the view that the amended tax assessment by
LTO is not justifiable as per prevailing income tax act, the Bank can appeal against the amended tax assessment
by LTO. The process of appeal is to be done gradually with Director General of Inland Revenue Department for
Administrative Review, thereafter at the Revenue Tribunal and finally at the Supreme Court.
Till the date of Balance Sheet, the Bank’s corporate tax up to FY 2068/69 has been settled by the LTO. Similarly,
LTO has completed tax audit and raised a demand of additional tax liability of NPR 62,818,428 through the
amended assessment for FY 2069/70 and FY 2070/71. However, the Bank has disputed the demand raised
by the LTO and filed appeals with the IRD and Revenue Tribunal for Administrative Review and writ petition,
respectively.
Tax returns filed under self-assessments for the FY 2071-72, FY 2072-73 and FY 2073-74 are yet to be assessed
by the LTO.
147
5.7 Related Parties Disclosures
Parties are considered to be related if one party has the ability to control the other party or exercise significant
influence over the other party in making financial or operation decisions, or one other party controls both. The
definition includes subsidiaries, associates, directors, key management personnel and.
Particulars Relationship Remarks
State Bank of India Parent Company 55% holding in the Bank
Nepal SBI Merchant Banking Ltd. Wholly owned subsidiary
SBI Hong Kong Subsidiaries of State Bank of India Placements transactions
Employee Provident Fund Representing in the Board on institutional capacity 15.00 % holding in the Bank
Mr. Deepak Kumar Rauniyar, Director Key Management Personnel Directors nominated by EPF
Mr. Sujit Kumar Varma, Chairman Key Management Personnel Directors nominated by SBI
Mr. Anukool Bhatnagar, Managing Director & CEO Key Management Personnel
Mr. R.S. Ramesh, Director Key Management Personnel Directors nominated by SBI
Mr. Balakrishna Shrestha, Director Key Management Personnel Public Director
Mr. Keshav Raj Acharya, Director Key Management Personnel Professional Director
Mr. Subhakanta Kanungo, Chief Operating Officer & Dy. CEO Key Management Personnel
Mr. Priya Ranjan, Chief Financial Officer Key Management Personnel
Mr. Chappi Raj Pant, Chief Risk and Compliance Officer Key Management Personnel
Mr. Dev Raj Adhikari, Chief Credit Officer Key Management Personnel
Parent company
The parent company, which is also the ultimate parent company, is State Bank of India, which holds 55% of the
issued ordinary shares of the Bank.
State Bank of India (SBI) Group 32 Ashad 2075 31 Ashad 2074
Transaction during the year
Technical Service Fees 27,545,364 20,968,086
Interest on placements 198,977,176 244,851,838
Year end Balance
Placements 515,590,000 13,248,350,000
Nostro Balances 2,298,470,494 1,605,014,019
Card Transaction Receivables 128,209,056 147,922,005

Subsidiary
Transactions between the Bank and its subsidiaries, Nepal SBI Merchant Banking Limited, also meet the definition
of related party transactions. These transactions are eliminated on consolidation.
Subsidiary - Nepal SBI Merchant banking Company Ltd 32 Ashad 2075 31 Ashad 2074
Transaction during the year
Interest Paid on Deposit to NSMBL 13,569,291 5,401,403
Management fee accrued and receivable from NSMBL 1,200,000 720,000.00
RTS, D-Mat Service Charge accrued and payable to NSMBL 2,305,531 1,012,480
Year end Balance
Others payable to NSMBL 726,401 165,410
Others receivable from NSMBL 289,041 -
Deposit maintained with NSBL 191,097,299 98,455,306

Other Principal Promoter Representing in the Board (s)
Employee Provident Fund, Nepal holds 15% shares in the Bank and has a representation to the bank’s board is
also considered to be the related party of the bank.
Employee Provident Fund (EPF) Nepal 32 Ashad 2075 31 Ashad 2074
Year end Balance
Deposits 5,536,810,939 6,260,078,150
148
Directors and other Key Management Personnel (KMP)

The Bank’s Directors, Key Management Personnel and persons connected with them, are also considered to be
related parties for disclosure purposes. Personnel representing the Central Management Committee (CENMAC)
are considered as KMP.
Strategic Report
Directors
Transaction during the year 32Ashad 2075 31 Ashad 2074
18 no. of Board Meetings
6 no. of Audit Committee Meetings
750,000 1,050,000
6 no. of Risk Management Committee Meetings
4 no. of Employee Service Facility Committee Meetings
Food, Lodging Expenses for Board level meetings 491,770 569,000
Travelling & Halting Expenses for Board level meetings 805,180 210,158

Key Management Personnel
There is no observation of the transactions between the Bank and key management personnel other than as
prescribed under staff service bye-laws and relating to remuneration.
Salary to the key management personnel deputed from SBI is borne by State Bank of India, the parent company
under the Technical Service Agreement (TSA) entered with the Bank which is approved by the Nepal Rastra
Bank. The key management personnel are also provided with living, medical and other related facilities as per
TSA. The total expenses incurred for key management personnel deputed from SBI is NPR 70,05,909 and other
CENMAC members are NPR 10,857,609.
5.8 Merger and Acquisition
The Bank has not undertaken any mergers and acquisition during the year.
5.9 Additional Disclosures of Non-consolidated Entities
Not Applicable.
5.10 Events After Reporting Data
The Bank follows NAS 10 Events After Reporting Period for accounting and report for the events that occur after
the reporting period. Bank classifies those events as adjusting and non-adjusting in
Explanations
There are no material events both adjusting and non-adjusting for the reporting periods.
5.11 Disclosure effect of transition from previous GAAP to NFRSs
The bank published its first NFRS adopted financial statements for the Financial Year 2016-17 with an explicit
and unreserved statement in those financial statements of compliance with NFRSs. The Bank prepared the
opening Statement of Financial Position as per NFRS as of 1st Shrawan, 2072 (17 July 2015).
5.12 Employee Bonus
The Bank has provided employee bonus at the rate 10% of profit before employee bonus and tax as per
prevailing Bonus Act in Nepal.
5.13 Reserves
5.13.1 Corporate Social Responsibility
As per the NRB directive no. 6.16 on the Corporate Social Responsibility, the Bank has allocated 1% of the net
profit of current fiscal year for CSR activities. The amount allocated for corporate social responsibility reserve is
NPR 20,235,111 and NPR 15,232,375, for current year and previous year respectively. Additionally, the Bank
has allocated NPR 14,062,230 as CSR fund for few committed CSR activities such as Gate at Pashupati Temple
and beautification of Fewa Lake. Comparative table of CSR expenses and fund is as under:
Particulars Note 32 Ashad 2075 32 Ashad 2074

Net Profit during the year as per P/L account P/L 2,023,511,125 1,523,237,401
Minimum 1% to be appropriated for CSR as per NRB to be expended next year of Net Profit (A) 20,235,111 15,232,375
Additional fund appropriated to cover already committed projects in CSR 14,062,230 -
Total fund appropriated in CSR fund during the year 34,297,341 15,232,375
Opening balance in CSR fund 4.27 15,232,371 -
Less: Expenses incurred during the year in CSR 4.37 (9,529,716)
Balance outstanding in CSR fund from previous year (B) 5,702,659 -
Total balance outstanding in CSR fund as on Ashad 4.27 40,000,000 15,232,375
149
5.13.2 Staff Skill Development Fund
The Bank has expended NPR 25,632,305 for staff skill development purpose out of NPR 29,253,526 (3% of
Personnel expenses before employee bonus amounting NPR 790,472,873 previous year plus previous year
outstanding balance NPR 55,39,340) as per Nepal Rastra Bank Directive. The remaining balance of NPR
3,621,221 has been appropriated, which will be spent next year. Comparative table of staff training and skill
development expenses and fund is as under:
Particulars Note 32 Ashad 2075 32 Ashad 2074
Personal (staff) expenses before staff bonus previous year 4.36 790,472,873 548,987,096
Opening Staff Skill Development Fund 5,539,340 -
Minimum 3% to be expended in staff training and development as prescribed by NRB (A) 23,714,186 16,469,613
Less: Expenses incurred in staff training and development during the year (25,632,305) (10,930,273)
Total balance outstanding in staff skill development fund 4.27 3,621,221 5,539,340
5.14 Reconciliation Status of Agency Account Outstanding as on 32 Ashad 2075

Total <3 months >3=< 9month >9 months
Particulars No. of No of No of No of
Net Amount Net amount Net amount Net amount
entries entries entries entries
32 Ashad 2075 4,013 388,323 2,677 349,534 583 19,787 753 19,002
(Previous Year's) (4,012) (316,997) (2,888) (256,178) (210) (38,966) (914) (21,852)
The outstanding balance is total of debit and credit balance. The difference has been identified, reconciled
and are being reviewed on periodic basis.
5.15 Impairment of Loans and Advances
As per the carve out notice issued by ICAN, the Bank has measured impairment loss on loan and advances
as the higher of amount derived as per norms prescribed by Nepal Rastra Bank for loan loss provision and
amount determined as per paragraph 63 of NAS 39.
Loans and advances to customers with significant value (Top 50 (group exposure and borrowers classified
as Non Performing as per Nepal Rastra Bank Directive) are assessed for individual impairment test. The
recoverable value of loan is estimated on the basis of realizable value of collateral and the conduct of the
borrower/past experience of the bank. Assets that are individually assessed and for which no impairment
exists are grouped with financial assets with similar credit risk characteristics and collectively assessed for
impairment. The credit risk statistics for each group of the loan and advances are determined by management
prudently being based on the past experience. For the purpose of collective assessment of impairment bank
has categorized assets in to sixteen broad categories as follows:
1 Agricultural and Forest Related
2 Fishery Related
3 Mining Related
4 Agriculture, Forestry & Beverage
Production Related
5 Non-food Production Related
6 Construction
7 Power, Gas and Water
8 Metal Products, Machinery & Electronic Equipment & Assemblage
9 Transport, Communication and Public Utilities
10 Wholesaler & Retailer
11 Finance, Insurance and Real Estate
12 Hotel or Restaurant
13 Other Services
14 Consumption Loans
15 Local Government
16 Others
Since this provision is mandatory for application the impairment under NFRS and impairment under NRB
norms has been disclosed for comparison.
150
Particulars 32Ashad 2075 31 Ashad 2074

Individual impairment of loans and advances 44,573,604 89,497,853
Collective impairment of loans and advances 214,536,089 607,409,194
Total impairment allowance under NFRS 259,109,693 696,907,047
Strategic Report
Total impairment allowance under NRB norms 969,180,901 727,316,667
5.16 Change in Impairment Method from Previous Year

During the FY 2017-18, subsequent to the carve out issued by ICAN vide its notice dated 20 September 2018,
the Bank measures impairment loss on loan and advances as the higher of amount derived as per norms
prescribed by the Nepal Rastra Bank for loan loss provision and amount determined as per paragraph 63 of
NAS 39; and shall apply paragraph 63 to measure the impairment loss on financial assets other than loan and
advances.
In previous year, the Bank prepared the financial statements based on NFRS and provided impairment as per the
provisions of NAS 39. As a result of change in impairment model from the previous year due to the carve out,
the profit has decreased by NPR 291,152,923 and accordingly the net loans and advances decreased by NPR
291,152,923 during the year.
5.17 Dividend Payable
Fiscal Year 32 Ashad 2075 31 Ashad 2074
FY2052/53 255,000 256,200
FY2053/54 239,600 241,000
FY2054/55 272,200 273,400
FY2055/56 163,400 164,800
FY2056/57 245,600 247,700
FY2059/60 533,482 539,988
FY2062/63 439,679 452,799
FY2063/64 651,139 675,631
FY2066/67 789,616 860,513
FY2067/68 896,256 988,814
FY2068/69 1,164,694 1,316,361
FY2069/70 2,273,923 2,601,840
FY2070/71 3,580,380 4,217,887
Total 11,504,971 12,836,933

Not collected for more than 5 years 5,650,668 6,017,206
Not collected up to 5 years 5,854,303 6,819,727
Total 11,504,971 12,836,933
5.18 Legal Cases

Draft Paid Without Notice (FY A.D. 1998/99 – B.S.2055/56)
The Bank had filed a case with the Kathmandu District Court for recovery of NPR 32,000,000 on account
of loss incurred by the Bank due to the negligence of collecting Banks. Since the decision of the Kathmandu
District Court and Appellate Court was not in favour of the Bank, a review petition was filed with the Supreme
Court. Hearing on the Bank’s petition is under process. The Bank has already received NPR 9,640,625 from an
insurance company and collecting banks, for the balance, 100% provision has been made against possible loss
for the balance amount of NPR 22,359,375 since 15.07.2005. In theprevious year, NPR 9,640,625 received
from insurance company and collecting banks has been netted with the total amount of Draft paid without
notice; NPR 9,640,625 of previous year’s amount has also been regrouped. As a result, previous year total
other assets and other liabilities have been reduced by NPR 9,640,625.
151
5.19 Weighted Average Interest Spread
Particulars Rate %
Average Rate of return on Interest Earning Assets i.e. Loan and Advances(including staff loans), 9.70
investments in Fixed Deposits and Shares
Average Cost of fund on Deposits, Borrowings, Debenture and Interbank borrowing 5.45
Average Net Spread(Overall) 4.25
5.20 Summary of Concentration Exposure as on 32 Ashad 2075

Particulars Loans, Advances & Bills Purchased Deposits Contingent Liabilities
Total amount as on 16/07/2018 (as per NRB) 75,471,402,760 84,227,327,384 21,066,438,411
Highest exposure to a single unit(group) 2,059,229,932 5,536,810,939 486,062,479
Percentage of exposure to single unit/total 2.73% 6.57% 2.31%
5.21 Earnings per Share

The Bank measures earning per share on the basis of the earning attributable to the equity shareholders for
the period. The number of shares is taken as the weighted average number of shares for the relevant period as
required by NAS 33 Earnings per Share.
Year ended Year ended
Particulars Units
32 Ashad 2075 31 Ashad 2074
Profit attributable to equity shareholders (a) NPR’000 2,023,511 1,564,689
Weighted average of number of equity shares used in computing basic earnings per share (b) 80,429,215.26 60,511,381.93
Basic and diluted earnings per equity share of NPR100 each (a/b) NPR 25.16 25.86
As there are no potential ordinary shares that would dilute current earning of equity holders, basic EPS and
diluted EPS are equal for the period presented.
5.22 Proposed Distributions (Dividends and Bonus Shares)

The Board of directors in its meeting dated 15 December, 2018 has passed a resolution recommending for
distribution of bonus shares (stock dividend) at 5.00% and cash dividend at 10.79% of paid up capital as at 16
July 2018.
NPR ‘000
Cash Dividend Declared 868,219 56,585
Bonus Shares 402,345 1,075,107
Total 1,270,564 1,131,692
152
As per NRB
Restated as per NFRS reporting
Particulars Indicators reporting
2070/2071 2071/2072 2072/2073 2073/2074 2074/2075
1. Percent of Net Profit/Gross Income % 19.97 21.36 25.56 22.38 19.87
Strategic Report
2. Earnings Per Share NPR 34.83 34.48 36.78 33.46 25.16
3. Market Value per Share (as on Ashad end) NPR 1,280.00 887.00 1,875.00 925.00 499.00
4. Price Earnings Ratio Times 36.75 25.73 50.98 27.64 19.83
5. Dividend (including bonus) on share capital % 22.07 28.42 29.53 16.34 15.79
6. Cash Dividend on Share Capital % 7.02 1.42 1.48 0.82 10.79
7. Interest Income/Loans & Advances % 9.55 9.65 8.53 9.51 11.94
8. Staff Expenses (excluding staff bonus)/Total Operating % 46.68 50.60 49.69 46.87 53.26
Expenses
9. Interest Expenses/Total Deposit and Borrowings % 4.02 3.37 2.22 3.40 5.60
10. Exchange Gain/Total Income % 2.33 2.62 2.78 3.16 2.66
11. Staff (Statutory) Bonus/ Total Staff Expenses % 22.85 22.33 23.56 22.71 21.31
(excluding bonus)
12. Net Profit/Loans & Advances % 2.58 2.44 2.67 2.48 2.67
13. Total Credit/Deposit (as per NRB) % 65.54 78.39 72.90 78.07 89.60
14. Total Operating Expenses/Total Assets % 5.21 4.80 3.58 4.58 6.73
15. Adequacy of Capital Fund on Risk Weightage Assets
a. Core Capital % 10.19 11.18 10.98 13.53 13.38
b. Supplementary Capital % 3.09 2.85 2.51 2.18 1.77
c. Total Capital Fund % 13.28 14.03 13.49 15.71 15.15
16. Liquidity (CRR) % 9.32 10.92 8.33 10.04 7.18
17. Non Performing Credit/Total Credit (as per NRB % 0.26 0.19 0.14 0.10 0.20
provision)
18. Base Rate (For the month of Ashadh) % 8.78 7.71 5.98 8.98 10.12
19. Weighted Average Interest Rate Spread % 3.45 3.85 4.00 3.68 4.99
20. Book Net worth NPR 4,535,798,670 5,703,053,190 7,179,797,179 10,518,971,126 12,801,103,793
21. Total Shares No. 26,502,058 30,580,595 38,837,356 69,248,930 80,469,053
22. Total Employees No. 607 596 679 768 871
23. Return on Shareholder's Equity (on outstanding % 22.85 17.08 17.46 14.87 15.81
figure)
24. Return on Assets (on outstanding figure) % 1.50 1.64 1.59 1.57 1.97
25. Book Value Per Share NPR 171.15 186.49 184.87 151.90 159.08
26. Cost to Income Ratio (for NFRS cost excludes staff % 39.70 38.41 37.54 39.50 37.56
bonus and impairment provisions)
27. ATM/CDM/CRM Terminals No. 75 78 85 96 110
28. POS Terminals No. - - - 175 680
29. Branches No. 56 56 62 62 72
153
5.24 Disclosure of Actuarial Valuation for Leave and Gratuity
32 Ashad 2075 31 Ashad 2074
Particulars Annual Annual

Sick Leave Gratuity Sick Leave Gratuity
Leave Leave
(Unfunded) (Unfunded) (Unfunded) (Unfunded)
(Unfunded) (Unfunded)
Expenses Recognized In Income
Statement
Current service cost 7,330,060 3,547,360 174,122,730 6,094,410 2,903,640 21,806,040
Interest cost 7,517,940 6,331,930 30,378,870 5,844,440 4,841,670 19,453,670
Expected Return on Plan Assets - - - - - -
Actuarial (Gain)/ Loss (38,690) 3,148,520 6,144,220 3,019,770 5,700,040 59,517,390
Past Service Cost (5,277,957) (4,711,307) (12,300,180) (1,788,920) (1,468,460) (2,044,910)
Expenses recognized in the Profit & Loss 9,531,353 8,316,503 198,345,640 13,169,700 11,976,890 98,732,190
A/c
Amount recognized in Other
comprehensive Income
Change in Present Value Obligations

PV of Obligation at beginning of the year 81,766,381 68,804,030 327,061,640 68,596,681 56,827,140 228,329,450
Interest cost 7,517,940 6,331,930 30,378,870 5,844,440 4,841,670 19,453,670
Current Service Cost 7,330,060 3,547,360 174,122,730 6,094,410 2,903,640 21,806,040
Benefit paid (5,277,957) (4,711,307) (12,300,180) (1,788,920) (1,468,460) (2,044,910)
Actuarial (Gain)/ Loss (38,690) 3,148,520 6,144,220 3,019,770 5,700,040 59,517,390
Liability at the end of the year 91,297,734 77,120,533 525,407,280 81,766,381 68,804,030 327,061,640
Change in Fair Value of Plan Assets

FV of Plan Asset at Beginning of the Year - - - - - -
Interest Income - - - - - -
Expected Return on Plan Assets - - - - - -
Contribution by Employer - - - - - -
Benefit paid - - - - - -
Actuarial (Gain)/ Loss on Plan Assets - - - - - -
Fair Value of Plan Asset at End of - - - - - -
the Year
Amount Recognized in SOFP

Present Value of Obligations at Year End - - - - - -
Fair Value of Plan Assets at Year End 91,297,734 77,120,533 525,407,280 81,766,381 68,804,030 327,061,639
Unfunded Status 91,297,734 77,120,533 525,407,280 81,766,381 68,804,030 327,061,639
154
Actuarial assumption
Actuarial valuation of defined benefit plan obligation is done on the basis of the following assumption
Strategic Report
Discount Rate 9.5% 9.5%
Salary Escalation Rate 6.5% 6.5%
Expected Return on Assets NA NA
Mortality Rate Nepal Assured Mortality 2009 Nepal Assured Mortality 2009
Withdrawal Rate 20-58
20-35 6% 6%
36-58 1% 1%
Sensitivity analysis

Discount Rate
Effect on DBO – increase of discount rate by 1% -10% -10%
Effect on DBO – decrease of discount rate by 1% 12% 12%
Salary Escalation Rate
Effect on DBO – increase of salary rate by 1% 12% 12%
Effect on DBO – decrease of salary rate by 1% -10% -10%


155
156
Strategic Report
SUBSIDIARY INFORMATION
NEPAL SBI MERCHANT BANKING LIMITED
(NSMBL)
157
REPORT OF THE BOARD OF DIRECTORS
The Board of Directors of Nepal SBI Merchant Banking Limited (NSMBL) have pleasure in presenting this Annual Report
together with the audited statement of financial position and statement of profit or loss & other comprehensive income as
of/for the year ended on 32nd Ashad 2075 (16-07-2018).
NSMBL: A BRIEF ACCOUNT: Indian economy is projected to markets have generally improving
Nepal SBI Merchant Banking expand by 7.3 percent in 2018 and fundamentals, but could be
Limited was incorporated under the 7.5 percent in 2019. Such growth vulnerable to sudden tightening of
Companies Act, 2063 with the Office was 6.7 percent in 2017. Chinese global financial conditions. Banks
of the Company Registrar with Reg. economy, which grew 6.7 percent in have strengthened their balance
No. 148059/72/073 on 19thApril, 2016, is projected to expand by 6.6 sheets since the crisis, but parts
2016. It is a wholly owned subsidiary percent in 2018 and by 6.4 percent of the system face a structural US
of Nepal SBI Bank Limited with paid- in 2019. International Monetary dollar liquidity mismatch that could
up capital of Rs.20.00 crore. The Fund projects the consumer price be vulnerable. Crypto assets have
Company got the license to carry inflation of advanced economies to features that may improve market
out Merchant Banking activities from remain at 2.2 percent in 2018 and efficiency, but they could also
Securities Board of Nepal on 9-12- 2019. Such rate was 1.7 percent in pose risks if used with leverage or
2016. Objectives of the Company 2017. without appropriate safeguards.
among others are to provide Expansion in aggregate demand Policymakers and investors must
qualitative and reliable services is expected to have an inflationary remain attuned to the risks of
of different types as a Securities pressure ahead. Likewise,the rising interest rates and higher
Businessperson, to organize required inflation in India is projected to reach market volatility. Central banks
activities to promote reliability of the 5 percent in 2018 and remain at 5 should continue to normalize policy
investors towards Capital Markets, percent in 2019. Such rate was 3.6 gradually and communicate clearly,
to coordinate with Securities Board percent in 2017. Similarly, inflation while policymakers should address
of Nepal for development and in China is projected to remain at vulnerabilities by deploying and
expansion of related services in new 2.5 percent in 2018 and 2.6 percent developing macroprudential tools.
and the existing capital markets and in 2019; slightly on the higher side This GFSR also examines the short-
providing quality service by obtaining compared to that of 1.6 percent in and medium-term implications
approval wherever necessary, to 2017. US Federal Reserve has been for downside risks to growth and
provide facilities relevant to capital normalizing the unconventional financial stability of the riskiness
markets in rural and urban sectors monetary policy since December of corporate credit allocation. It
by properly mobilizing available skill, 2015. The Federal Reserve adopted documents the cyclical nature of
labour and capital, and to assist by such unconventional stance after the riskiness of corporate credit
actively participating for the overall the global financial crisis of 2008. allocation at the global and country
development of capital markets of The Fed increased target range for levels and its sensitivity to financial
the country by providing necessary Fed Fund rate by 0.25 percentage conditions, lending standards, and
financial resources, technical and in June 2018, while signaling two policy and institutional settings.
managerial consultancy services, additional rate hikes in 2018 and
three in 2019.
ECONOMIC ENVIRONMENT IN
training and technology for the
purpose etc. The IMF’s Global Financial Stability NEPAL:
Report (GFSR) states that short- Budget Speech for 2075/76 has
WORLD ECONOMY: term risks to financial stability targeted economic growth rate at
International Monetary Fund (IMF) have increased somewhat since around 8 percent while inflation will
projects the world economy to grow the previous GFSR. Medium-term be contained at 6.5 percent.
3.9 percent in 2018 and 2019. Such risks are still elevated as financial The share of consumption in the
growth was estimated at 3.5 percent vulnerabilities, which have built up gross domestic product for 2018/19
in 2017. Advanced economies, are during the years of accommodative isestimated to be 85 percent which
projected to grow at a rate above policies, could mean a bumpy was 88 percent in 2017/18. The
2.4 percent in 2018 and easing to road ahead and put growth at risk. ratio of gross national savings to
2.2 percent in 2019. Higher inflation may lead central GDP is estimated to remain at 15
Improvement in the world economy banks to respond more aggressively percent. The national savings ratio
is likely to have positive impact on than currently expected, which is higher due to the significant inflow
the least developed economies could lead to a sharp tightening of remittance. The y-o-y (Year-on-
including Nepal. However, slow of financial conditions. Valuations Year) unit value export price index
productivity growth and inward of risky assets are still stretched, based on customs data increased
looking policies in advanced and liquidity mismatches, leverage, 10.3 percent while import price
economies could possibly have and other factors could amplify index increased 12.5 percent in
downside risks to emerging market asset price moves and their impact mid-July 2018. Consequently, the
and least developed countries. on the financial system.Emerging TOT index decreased 2 percent
158
compared to a decrease of 1.2 companies 2.8 percent, hotels 1.7 Restructuring, Valuation, Business
percent in the corresponding period percent, trading 0.1 percent, and Plan, Loan Syndication, Working
of the previous year. Increase in others 10.2 percent respectively Capital Financing, Venture Capital,
price of export items such as carpet, THE INDUSTRY CLIMATE: Private Equity, Fund Management
pashmina, cardamom, black tea, The total number of companies like Hedge Fund, advisory services
Strategic Report
catechu, among others caused the listed at the NEPSE decreased to like Assets Management etc. In
rise in export price index whereas 196 in mid-July 2018 from 208 a order to ensure smooth functioning
uptick in the price of petroleum year ago. Of the listed companies, of the merchant banking and to
products, vehicles, tyres, refrigerator, 147 are BFIs (including insurance carry out the new functions the new
laptop, among others resulted an companies), 18 manufacturing regulation has also increased the
increase in import price index in the and processing industries, 19 mandatory capital ceiling to Rs.
review period. The annual average hydropower companies, 4 each 200 Million. The increase in the
consumer price inflation moderated hotels and trading institutions and capital aims to ensure infrastructural
to 4.2 percent in 2017/18 from 4 other sectors. However, financial and institutional strengthening of
4.5 percent in the previous year. access has widened along with the the merchant banking industry.
This rate of inflation is the lowest expansion of the branch network CAPITAL MARKET:
since 2004/05. Improvement in Deposits at Banks and Financial Securities Board of Nepal (SEBON),
the supply-chain management and Institutions (BFIs) increased 19.2 as an apex regulator of securities
the lower rate of inflation in India percent in the review year, compared market approved issuance of
contributed to the lower level of to an increase of 14.0 percent in the securities of Rs. 50,321 million
inflation in the review year. The y-o-y previous year. Of the total deposits during the fiscal year 2017/18.
consumer price inflation, however, at BFIs, while the share of saving The total amount includes Rs.
increased to 4.6 percent in mid-July deposits fell to 34.5 percent from 8,302 Million, Rs. 11,514 Million,
2018 from 2.7 percent a year ago. 35.4 percent, the share of demand Rs. 25,704 Million, and Rs. 4,800
This is indicative of recent built up deposits increased to 9.3 percent Million of IPO, FPO, Rights issue and
inflationary pressure. The annual from 8.7 percent and fixed deposits Mutual funds respectively. During
average wholesale price inflation increased to 44.8 percent in mid- the review period, 21 companies
further decelerated to 1.7 percent July 2018 from 43.2 percent a year got approval for issuance of IPO,
in 2017/18 from 2.7 percent in the ago. 55 for rights issue, six for the FPO
previous year. Government of Nepal Out of total 753 local levels, and four for the issuance of Mutual
had announced a total budget commercial banks extended their Fund. During the review period,
of Rs. 1315 billion for 2018/19. branch network in 631 levels as of Bonus shares of 112 companies
Of this, the estimates for capital mid-July 2018 amounting to Rs. 33,087 Million
spending and current spending As per the Capital Augmentation were registered in SEBON.
were Rs. 314 billion and Rs. 845 Directives of Insurance Board, During the twelfth month of
billion respectively while budget of Insurance Company have been 2017/18, the total turnover of the
Rs.156 billion has been allocated floating shares in the market in form securities decreased 46.2 percent
for Financial Management. of further public offering, rights issue to Rs.6.63 Billion compared to
The bearish drive in the stock market and bonus issue which has created the corresponding period of the
is prevalent in 2017/18. The NEPSE scope for Merchant bankers to previous year. The turnover of the
index on y-o-y basis decreased 23.4 increase the size of their of business. securities had decreased 61 percent
percent to 1212.4 points in mid-July The number of Merchant Bankers to Rs.12.33 Billion in the twelfth
2018. This index had decreased licensed by SEBON as on month of 2016/17
7.9 percent to 1582.7 points in 2018.08.20 has reached to 25. On y-o-y basis, total paid-up value
mid-July 2017.Stability in the stock SEBON has opened application for of the listed shares increased 21.6
market follows the macro prudential licensing of Merchant Bankers;there percent to Rs.352.09 Billion in
measures introduced by NRB. will be high competition among the mid-July 2018. Total additional
These, among others, consist of the merchant bankers in near future. securities worth Rs.131.53 Billion
policies lowering the concentration The apex regulator of securities were listed in the NEPSE during the
risk of BFIs in the stock market market in Nepal- SEBON- has review period. These consisted of
and real estate transactions, and widened the scope and functioning ordinary shares of Rs.30.83 Billion,
encouraging credit disbursement to of the Merchant Bankers through right shares of Rs.36.14 Billion,
the priority sector. The ratio of market amendment in the Securities Bonus shares of Rs.27.47 Billion and
capitalization to GDP stood at 47.7 Businessperson (Merchant Banker) government securities of Rs.36.47
percent in mid-July 2018. This ratio regulation, 2064. The Securities Billion.
was 70.3 percent a year ago. Of the Businessperson (Merchant Banker) SEBON has implemented Securities
total market capitalization, the share (First Amendment) regulation, Registration and Issue Regulation,
of banks, financial institutions and 2074 came into effect from 2073 and Securities Issuance and
insurance companies stood at 80.5 2074/04/03 which has included Allotment Guidelines, 2074. The
percent, hydropower 4.7 percent, the Advisory/Consultancy services new regulation encourages the real
manufacturing and processing which comprises of Corporate sector companies to go public with
159
the modality of Free Pricing with allowing only natural persons to the fiscal year. The successful
Some Cap and has provision for participate in the primary offering implementationof ASBA from 2073
international financial institutions like etc. Magh has been made effective
IFC, ADB, etc. to issue bond in local With the introduction of through 2575 branches of 63 BFI’s.
currency. The other major changes ASBA(Application Supported by SEBON has made ASBA compulsory
in the new regulation are setting Blocked Amount) in Public Issues with effect from Shrawan 1st 2074.
standard of premium pricing in the by SEBON, the reach of retail ASBA has been very effective in
primary offering and FPO allotting, investor-particularly who are the decentralization of the primary
if possible, at least 10 shares to all outside the capital- to the primary capital market and also provides
the applicants of primary offering, capital market has increased during hassle free services to the investors.
It has made public issues more simple and transparent. It has been very helpful in reducing the cost and time associated
with the process of issuance and registration of public offerings.
REVIEW OF THE FY 2074/75(2017-18):
NSMBL got license to carry out merchant banking activities from SEBON on 9.12.2016.During the year the Company
entered into Registrar to Shares (RTS) service agreement with Life Insurance Corporation (Nepal) Limited while the
company has worked as underwriter for Further Public issue of Nepal Bank limited and NMB bank Limited and as a issue
manager for IPO of Samudaik Laghubittta Biitiya Sanstha Limited, CBIL Capital Limited, Union Life Insurance Company
Limited and Sun Nepal Life Insurance Company Limited. NSMBL has worked as Private Placement Agent(PPA) for Private
equity placement of Dordi Khola Jalabidhyut Company Limited. NSMBL has provided Corporate Advisory Service to
United finance limited during the year 2074/75. The brief progress of the Company during the year is as under:
S.N. Particulars FY 2074/75 (Amount in Rs.)

1. Share Capital 200,000,000
2. Reserve and Surplus 12,913,504
3. Current Liabilities & Provision 112,895
4. Trade & other Payables 12,688,991
5. Deferred Tax Liability 136,692
Total Equity & Liabilities 225,852,082
6. Property, Plant & Equipment plus Intangible (Net) 6,605,411
7. Cash & Cash Equivalents 16,935,070
8. Investment Securities 196,000,000
9. Financial Assets held for Trading 928,000
10. Other Assets 5,383,601
Total Assets 225,852,082
11. Total Income 22,705,731
12. Total Expenditure 10,516,488
13. Operating Income 12,189,243
14. Depreciation & Amortization 969,860
15. Profit Before Income tax 11,219,383
16. Provision for tax 2,808,277
17. Deferred tax (income)/Expenses 10,535
18. Net Profit/(loss) 8,400,571

19. No. of Shares 2,000,000
20. Earning per Shares(EPS) 5.67
21. Net worth (Book Value) 106.46
There is decrease in profitablity of NSMBL for FY 2017/18 as compared to FY 2016/17. The decrease is mainly
attributable to bearish drive in Capital market during FY 2017/18 and introduction of ASBA by SEBON decreasing the
scope of placement income that could have been earned under then exisiting manual share allotment system. Further,
160
some of business for IPO issuance planned to be issued obtainment of license, we have been rendering RTS &
during the FY could not be materialized as planned administration & management of DP, Corporate advisory,
CHANGES IN THE BOARD OF DIRECTORS: Issuemanagement services. Besides, the company will
There is no any change in composition of Board of focus on following activities during FY 2075/76.
Director during the FY 2074/75. Off late Company’s • Increase customer base of PMS product already
Strategic Report
Board underwent reconstituted due to resignation of Mr. launched.
Ramesh Ghimire, MD & CEO, NSMBL from the Service • Developing Mutual Fund Scheme and managing it.
of NSBL. Accordingly, Mr. Chhapi Raj Pant has been • Building team for research, analysis and marketing.
nominated as MD & CEO of NSMBL by NSBL w.e.f. • Tie-up or collaboration with SBI Group Companies
3/9/2018. On behalf of the Board of Directors, we in technical fronts, whenever necessary.
place on record our appreciation for the contribution • Increasing Corporate Advisory Service.
made by Mr. Ramesh Ghimire in guiding the affairs • Introduction of new schemes and products.
of the Company, during his tenure and welcome Mr. OUR STRATEGIES FOR THE CURRENT YEAR
Chhapi Raj Pant, Chief Risk and Compliance Officer,
NSBL as new member in the Board of the Company.
(2075-76):
During the year our strategies will be focused on
STATUTORY AUDITORS: developing technology based products to satisfy
M/S RPB & Associates, Chartered Accountants, conducted the need of the customers while leveraging income
the statutory audit of the Company for the FY 2074- generation activities such as Issue Management,
75 as appointed by the 2nd Annual General Meeting portfolio management, underwriting, DP etc. Further,
of the of NSMBL and is not eligible for continuance the Company will focus on introducing industry based
as per section 111(3) of the Companies Act, 2063. products and services by domestication of internationally
Audit Committee of the Company has recommended recognized products. The Company may have necessary
to the AGM for appointment of M/S G. S. Gairhe & tie-up or collaboration with SBI Group Companies in
Associates, Chartered Accountants as Statutory Auditors technical fronts. As SEBON has widened the scope of
of the Company for the year 2075/76(2018/19). Merchant Bankers, efforts will be given for providing
Advisory Services.NSMBL has already started service of
FURTHER INFORMATION AND DISCLOSURES: private equity placement.
All the statutory requirements on disclosure of
information—including under Section 109(4) of PROGRESS REPORT FOR THE CURRENT YEAR
the Companies Act, 2063 has been enclosed as Since the first quarter of FY 2075/76 has not
annexure. Financial Statements including Statement of completed,financial information has not been
Financial Position, Statement of Profit or Loss & Other mentioned. Besides, the Company entered into
Comprehensive Income and Cash Flow Statement agreement with Nepal Agro Microfinance Bittya Sanstha
prepared according to Nepal Financial Reporting Limited as Issue and Sales Manager for their initial Public
Standard (NFRS) and other relevant laws and notes to Offering (IPO) of their Shares and RTS/RTA agreement
financial statements thereto can be found subsequently. with Mirmire Laghubitta Bittya Sanstha Limited and Sun
Nepal Life Insurance Company.
PATH AHEAD:
NSMBL got license to carry out merchant banking
activities from SEBON on 09.12.2016. Core functions
permitted by SEBON are Issue Management Service,
Registrar to Share (RTS), Underwriting, Portfolio
Management and Corporate Advisory Service. Since
ACKNOWLEDGEMENT:
The Board of Directors is grateful to the regulators, esteemed shareholder(s) and the public at large for their patronage
shown to the Company. The Board of Directors also expresses its sincere thanks to the Office of the Company Registrar
(OCR), Securities Board of Nepal (SEBON), Nepal Stock Exchange Limited, CDS and Clearing Limited and other
regulatory bodies for their valuable support and guidance throughout the year.
The Board of Directors also places on record its appreciation of the commitment, sense of involvement and dedication
exhibited by the employees of NSMBL and employees deputed from NSBL while discharging their concurrent function.
For and on behalf of the Board of Directors.
Mr. Priya Ranjan

Chairman
Kathmandu
161
Annexure to BOD Report
ADDITIONAL INFORMATION REQUIRED TO BE FURNISHED AS PER SECTION 109 (4) OF
THE COMPANIES ACT, 2063 :
(i) Industrial or professional relations of the company:
The Company has cordial and professional relationship with regulators and its stakeholders. The company has
always attuned high priority to the compliance of related laws and directives issued by the regulators from time to
time.
(ii) Major things affecting the transactions:
Any changes in the legal provision relating to Securities laws basically Merchant Banking regulation, tax laws may
affect the transaction of the Company.
(iii) If there are any remarks in the audit report, the comments of the board of directors on such remarks:
Some minor comments incorporated in management letter, which are noted for future compliance.
(iv) Amount recommended for payment by way of dividend:
Stock Dividend of NRs.11,111,111 (i.e.11.11%) of paid up capital has been paid last year. No dividend
recommended for distribution during the review Fiscal Year.
(v) In the event of forfeiture of shares, details regarding the number of forfeited shares, face value of such shares, total amount received
by the company for such shares prior to the forfeiture thereof, proceeds of sale of such shares after the forfeiture thereof, and refund of
amount, if any, made for such forfeited shares;
No shares have been forfeited by the Company during the fiscal year 2074/75.
(vi) Major transactions completed by the company and its subsidiary company in the financial year and any material changes taken place
in the transactions of the company during that period;
The Company has carried out transactions that are permitted to carry as per the prevailing laws. The highlights of
the business have been detailed in the Directors’ Report/Annual Report.
(vii) Disclosures made by the substantial shareholders of the company to the company in the previous financial year;
The information provided by the promoter shareholder Nepal SBI Bank Ltd. has been maintained by the company.
(viii) Details of shareholding taken by the directors and officers of the company in the previous financial year and, in the event of their
involvement in share transaction of the company, details of information received by the company from them in that respect;
NSBL is wholly owned shareholder of NSMBL and the directors of the company have been nominated by NSBL and
the directors have no shareholding and involvement of trading thereon.
(ix) Details of disclosures made about the personal interest of any director and his/her close relative in any agreements related with the
company during the previous financial year;
No information was received from any Director or any of his/her close relatives about his/her personal interest in
any agreement connected with the Company signed during the financial year 2074/75.
(x) In the event that the company has bought its own shares (buy-back), the reasons for such buy-back ,number and face value of such
shares, and amount paid by the company for such buy-back;
The Company has not so far purchased any of its own shares.
(xi) Whether there is an internal control system in place or not; and details of such system, if it is in place;
System is being developed including constitution of various committees with the formulation of Financial
Administration Policy 2074, Investment Policy 2074 as well as other policies.
(xi) Details of total management expenses during the previous financial year;
S. N. Particulars Amount in Rupees
1 Management Service Fee 1,200,000
2 Other Operating Expenses 9,316,488
(xii) Name-list of the members of audit committee, remuneration, allowances and facilities received by them, details of the functions
performed by that committee, and details of suggestions, if any, made by that committee;
12th meeting of the Board of the Company held on 27th November 2017 has constituted Audit committee consisting
of following members;
• Hasana Sharma-Independent Director-Chairperson
• Santosh Kumar Bhandari-HOD-Finance and Planning Department of Parent Company (NSBL)-Member

• Keshav Prasad Neupane-Chartered Accountant from outsourced Audit Firm –Member Secretary
Role Played By Audit Committee:
• Review of Quarterly performance of NSMBL
• Review of Internal Control of NSMBL
• Finalization of Internal Audit Program
• Reviewing the implementation of recommendation of Statutory Auditors
• Recommending appointment of Statutory Auditor to AGM
• Ensuring Financial Statement Submitted to the Board are true and correct
162
Suggestion given by Audit Committee:

• To formulate internal Operating Manual.
• To comply with regulatory provision for holding of Board meeting.
• To arrange for Group Accidental and Medical Insurance of Staffs as per Employees service byelaws.
• To ensure compliance of Financial Administration byelaws.
Strategic Report
(xiii) Amount, if any, outstanding and payable to the company by any director, managing director, chief executive, substantial shareholder or
his/her close relative or by any firm company, corporate body in which he/she is involved;
Nil
(xiv) Amount of remuneration, allowances and faculties paid to the director, managing director, chief executive and officer;
1. Allowances/facilities to the Members of the Board:
A total of Rs. 64,000.00 was paid to the Board members as Board Meeting fee during 2074/75 (@Rs.8,000.00
per meeting to the independent director for attending 8 meetings of the Board) and Rs.42,000.00 was paid to
Independent Director for mobile and periodical expenses as per Articles of Association of the Company.
2. Managing Director & Other Office Bearers:
a) Managing Director: No remuneration was paid to the Managing Director. Managing Director appointed had
been assuming his concurrent charge as Chief Manager of the Nepal SBI Bank Ltd. and salary and allowance to
him is paid by NSBL.
b) Other Office Bearers: During this fiscal year company has paid Rs. 1,200,000 as a management service fee
against service of deputed staffs from the parent company except Managing Director.
(xv) Amount of dividends remaining unclaimed by the shareholders;
None
(xvi) Details of sale and purchase of properties pursuant to Section 141;
None
(xvii) Details of transactions carried on between the associated companies pursuant to Section 175
None
(xvii) Other required information:
a) Amount of penalty paid by Directors, office bearers and shareholders as per section 81 of the Companies Act,
2063: None of the directors, office bearers and shareholders of the Bank paid any penalty to the office of the
Company Registrar. However, an amount of Rs.5,000 was paid to the Office of the Company Registrar as notice for
holding of 2nd AGM was published only by providing 21 days instead of advance of at least twenty one days.
b) Information in regard to close relative of the Directors or office Bearers working at the office (office of the
company Registrar), securities Board of Nepal or any other regulators in an officer or above level as required under
section 45 of the Company Directives: Nil
Mr. Priya Ranjan
Chairman
B.S. 2075/06/14
Place: Kathmandu
163
164
165
www.nepalsbi.com.np
Nepal SBI Merchant Banking Limited
Statement of Financial Position
As at 32 Ashadh 2075 (16 July 2018)
Figures in NPR
32 Ashadh 2075 31 Ashadh 2074
Particulars Notes
(16 July 2018) (15 July 2017)
Assets
Cash & Cash Equivalents 4.1 16,935,070 18,455,688
Investment Securities 4.2 196,000,000 80,000,000
Financial Assets held for Trading 4.3 928,000 -
Property, Plant and Equipment 4.4 5,928,496 4,790,477
Intangible Assets 4.5 676,915 737,101
Other Assets 4.6 5,383,601 17,737,054
Total Assets 225,852,082 121,720,320
Liabilities
Current Liabilities & Provision 4.7 112,895 773
Trade & Other Payables 4.8 12,688,991 5,861,940
Deferred Tax Liability 4.9 136,692 126,157
Total Liabilities 12,938,578 5,988,870
Equity
Share Capital 4.10 200,000,000 100,000,000
Reserve & Surplus 4.11 12,913,504 15,731,450
Total Equity 212,913,504 115,731,450
Total Equity and Liabilities 225,852,082 121,720,320
As per our report of even date
Puspa Sharma Ramesh Ghimire Priya Ranjan CA. Bishnu Prasad Bhandari
Chief Financial Officer Managing Director/CEO Chairman Partner
R.P.B. & Associates
Anukool Bhatnagar Hasana Sharma Subhakanta Kanungo Chartered Accountants
166
Strategic Report
Statement of Profit or Loss and Other Comprehensive Income
For the period from 1 Shrawan 2074 to 32 Ashadh 2075 (15 July 2017 to 16 July 2018)
Figures in NPR
For the
For the period ended
period ended
Particulars Notes 32 Ashadh 2075
31 Ashadh 2074
(16 July 2018)
(15 July 2017)
Income
Fees & other income 4.12 8,563,993 21,192,232
Finance Income 4.13 14,141,738 5,401,403
Total Income 22,705,731 26,593,635
Expenditure
Loss on Financial Assets Held for Trading 4.14 72,000 -
Direct Expenses 4.15 4,562,803 1,749,274
Administrative Expenses 4.16 5,881,685 3,576,348
Total Expenditures 10,516,488 5,325,622
Income Before Depreciation & Taxes 12,189,243 21,268,013
Depreciation 4.4 806,319 409,353
Amortization 4.5 163,541 40,997
Provision for Investment Written Back - -
Income/(Loss) Before Tax 11,219,383 20,817,663
Current Taxes 2,808,277 5,080,910
Deferred Tax (Income)/Expenses 10,535 123,926
Net Income/(Loss) For the Year 8,400,571 15,612,827
Other Comprehensive Income
Net other comprehensive income/(loss) to be reclassified
- -
to profit or loss in subsequent periods:
Net other comprehensive income/(loss) not to be reclassified to profit or loss in
- -
subsequent periods
Other comprehensive income for the year,net of tax - -
Total comprehensive income for the year, net of tax 8,400,571 15,612,827
Attributable to:
8,400,571 15,612,827
Equity holders of parent
Earning Per Share (Basic) 4.18 5.67 15.61
Earning Per Share (Diluted) 4.18 - 10.54
R.P.B. & Associates
Anukool Bhatnagar Hasana Sharma Subhakanta Kanungo
167
Statement of Cash Flows
Figures in NPR
For the period For the period
Particulars ended 32 Ashadh ended 31 Ashadh
2075 (16 July 2018) 2074 (15 July 2017)
Cash flow from Operating Activities
Net Income for the year 8,400,571 15,612,827
Adjustments
Income Tax expense recognized in profit or loss 2,808,277 5,080,910
Amount transferred to Equilization reserve (107,406) -
Depreciation 806,319 409,353
Amortization 163,541 40,997
Deferred Tax 10,535 123,926
Movements in Working Capital
Add/ (Less): Increase / (Decrease) in Current Liabilities 4,130,896 485,020
Add/ (Less): (Increase) / Decrease in Other Assets 11,425,453 (17,673,189)
Income Taxes Paid - -
Write off other assets - 10,289
19,237,615 (11,522,694)
Net Cash flow from Operating Activities (A) 27,638,186 4,090,133
Cash from Investing Activities
Acquisition of property, plant and equipment (2,047,693) (5,838,454)
Investments (116,000,000) (80,000,000)
Net Cash flow from Investing Activities (B) (118,047,693) (85,838,454)
Cash from Financing Activities
Issue of Share Capital 88,888,889 -
Net Cash flow from Financing Activities (C) 88,888,889 -
Net Increase/(Decrease) in Cash (A+B+C) (1,520,618) (81,748,321)
Cash at the beginning of the Year 18,455,688 100,204,009
Cash and Bank balance at the End of the Year 16,935,070 18,455,688
R.P.B. & Associates
168
Figures in NPR
Share Revaluation Transalation Accumulated
Particulars Share Capital Total Amount
Premium Reserve Reserve Profit
Balance as of 1 Shrawan 2074 (16 July 2017) 100,000,000 - - - 15,731,450 115,731,450

Changes in accounting Policy/Restatement - - - - (107,406) (107,406)
Restated Balance 100,000,000 - - - 15,624,044 115,624,044
Net Profit/(Loss) for the year - - - - 8,400,571 8,400,571
Lease Equalization Reserve - - - - - -
Issue of Share Capital 88,888,889 - - - - 88,888,889
Issue of Bonus Share Capital 11,111,111 - - - (11,111,111) -
Proposed Dividend - - - - - -
Balance as on 32 Ashadh 2075 (16 July 2018) 200,000,000 - - - 12,913,504 212,913,504
www.nepalsbi.com.np
R.P.B. & Associates
169

Notes to Financial Statements
(Amount in Nepalese Rupees except otherwise stated)
Year ended 32 Ashadh 2075 (16 July 2018)
1. Corporate Information 2.2.2 Approval of financial statements
Nepal SBI Merchant Banking Limited (NSMBL or ‘the The accompanied financial statements have been approved
Company’) is a limited liability Company incorporated and authorized for issue by the Board of Directors in its
on 07 Baisakh 2073 (19 April, 2016) and licensed by meeting held 17 Bhadra 2075 (2nd September 2018) and
Securities Board of Nepal (SEBON) on 09 December have been recommended for approval by shareholders in
2016. The core activities of the company consist of Issue the Annual General Meeting.
Management Service, Registrar to Shares, Underwriting,
Portfolio Management and Corporate Advisory Services.
2.3 Functional and presentation currency
Financial statements are denominated in Nepalese
NSMBL is a wholly owned downstream subsidiary of Nepal
Rupees, which is the functional and presentation currency
SBI Bank Ltd (NSBL). The Company has its registered office
of the NSMBL
at Hattisar, Kathmandu, Nepal.
2. Basis of Preparation 2.4 Use of Estimates, assumptions and judgments
The preparation of the financial statements in accordance
The financial statements of the company have been
with NFRS requires management to make judgements,
prepared on accrual basis of accounting.
estimates and assumptions in applying the accounting
The financial statements comprise the Statement of
policies that affect the reported amounts of assets, liabilities,
Financial Position, Statement of Profit or Loss and Other
income and expenses. Due to the inherent uncertainty
Comprehensive Income, Statement of Changes in Equity,
in making estimates, actual results reported in future
Statement of Cash Flows and Notes to the financial
periods may be based upon amounts which differ from
statements.
those estimates. Estimates, judgements and assumptions
The significant accounting policies applied in the
are periodically evaluated and are based on historical
preparation of financial statements are set out below in
experience and other factors, including expectations of
Note 3. These policies are consistently applied to all the
future events that are believed to be reasonable under
years presented, except for the changes in accounting
the circumstances. Revisions to accounting estimates are
policies specifically.
recognized prospectively.
2.1 Statement of Compliance Disclosures of the accounting estimates have been
The financial statements of NSMBL has been prepared included in the relevant sections of the notes wherever the
in accordance with Nepal Financial Reporting Standards estimates have been applied along with the nature and
(NFRS) to the extent applicable and as issued by effect of changes of accounting estimates, if any.
Accounting Standard Board- Nepal.
2.5 Changes in Accounting policies
2.2 Reporting period and approval of financial NSMBL has adopted NFRS 09 for classification of financial
statements instruments, earlier classified as per NAS 39, as issued
2.2.1 Reporting Dates by ASB Nepal, which resulted in changes in accounting
NSMBL follows the Nepalese financial year based on the policies and adjustments to the amounts previously
Nepalese calendar starting the first day of Shrawan (Mid recognized in the financial statements.
July) of any year to the last day of Ashadh (Mid July) of The principal accounting policies adopted in the
the next year. The corresponding dates for the English preparation of financial statements are set out in
calendar are as follows : relevant notes for each items of the financial statements.
Accounting policies have been consistently applied to all
English the years presented, unless otherwise stated.
Nepalese
Relevant Financial Calendar
Calendar 3. Significant Accounting Policies
Statement Date /
Date / Period
Period 3.1 Cash and Cash Equivalent
Reporting Date 32 Ashadh 16 July 2018 Cash and cash equivalent comprise the total amount
2075 of cash-in-hand, balances with bank and financial

Comparative Reporting 31 15 July 2017 institutions, money at call and short notice, and highly
Date Ashadh2074 liquid financial assets with original maturities period of
three months or less from the acquisition date that are
Reporting period 1 Shrawan 2074 16 July 2017
subject to an insignificant risk of changes in their fair value
- 32 Ashadh - 16 July
and are used by NSMBL in the management of its short-
2075 2018
term commitments.
Comparative Reporting 1 Shrawan 2073 16 July 2016 Cash and Cash equivalents are measured at amortized
Period - 31 Ashadh - 15 July cost in the statement of financial position.
2074 2017
170
3.2 Financial assets and Financial liabilities are subsequently measured at fair value and changes in
The company classifies its financial assets into the following fair value are recognized in other comprehensive income.
measurement categories: a) Fnancial assets held at fair 3.2.2.2 Financial Liabilities
value through profit or loss; b) Financial assets held at fair NSMBL classifies the financial liabilities as follows
value through Other Comprehensive Income c) financial
Strategic Report
a. Financial liabilities recognized at fair value through
assets held at amortized cost. profit or loss
Financial liabilities are classified as either a) Held at fair
value through profit or loss, or b) Held at amortized cost. Financial liabilities are classified as fair value through
profit or loss (FVTPL) if they are held for trading or are
3.2.1 Recognition designated at fair value through profit or loss. Upon initial
Financial assets and financial liabilities are recognized recognition, transaction costs are directly attributable
when the entity becomes a party to the contractual to the acquisition are recognized in Statement of Profit
provisions of the instrument. Regular way purchases or Loss as incurred. Subsequent changes in fair value is
and sales of financial assets are recognized on recognized at Statement of Profit or Loss.
trade-date, the date on which NSMBL commits to purchase b. Financial liabilities recognized at amortized cost
and sell the asset. All financial liabilities other than measured at fair value
3.2.2 Classification though Statement of Profit or Loss are classified as
Earlier the financial assets & liabilities were classified as subsequently measured at amortized cost using effective
per NAS 39 whereas the same has been classified as per interest method.
NFRS 9 during this Financial Year. 3.2.3 Measurement Initial Measurement
3.2.2.1 Financial Assets At initial recognition, the company measures a financial
The company classifies the financial assets as subsequently assets or financial liability at its fair value plus or minus,
measured at amortized cost or fair value on the basis of in the case of financial asset or financial liability not at
company’s business model for managing the financial fair value through profit or loss, transaction cost that are
assets and the contractual cash flow characteristics of the incremental and directly attributable to the acquisition or
financial assets. The two classes of financial assets are as issue of the financial assets or financial liability, such as
follows :- commission and fees. The transaction cost of financial
assets and financial liabilities carried at fair value through
A. Financial assets recognized at amortized cost profit of loss are expensed in profit or loss. Immediately
The company classifies a financial asset measured at after initial recognition, impairment is recognized
amortized cost if both of the following conditions are met: for financial assets measured at amortized cost and
a. The asset is held within a business model whose objective investments in debt instruments measured at FVOCI.
is to hold assets in order to collect contractual cash flows Subsequent Measurement
and A financial asset or financial liability is subsequently
b. The contractual terms of the financial asset give rise on measured either at fair value or at amortized cost based
specified dates to cash flows that are solely payments of on the classification of the financial asset or liability.
principal and interest on the principal amount outstanding. Financial asset or liability classified as measured
B. Financial asset recognized at fair value at amortized cost is subsequently measured
Financial assets other than those measured at amortized at amortized cost using effective interest rate
cost are measured at fair value. Financial assets measured method. The amortized cost of a financial asset or
at fair value are further classified into two categories as financial liability is the amount at which the financial
below: asset or financial liability is measured at initial recognition
a. Financial assets at fair value through profit or loss minus principal repayments, plus or minus the cumulative
amortization using the effective interest method of any
Financial assets are classified as fair value through difference between that initial amount and the maturity
profit or loss (FVTPL) if they are held for trading or are amount, and minus any reduction for impairment or
designated at fair value through profit or loss. Upon initial uncollectability. Financial assets classified at fair value
recognition, transaction costs are directly attributable to are subsequently measured at fair value. The subsequent
the acquisition are recognized in profit or loss as incurred. changes in fair value of financial assets at fair value through
Such assets are subsequently measured at fair value and profit or loss are recognized in Statement of Profit or Loss
changes in fair value are recognized in Statement of Profit
whereas of financial assets at fair value through

or Loss. other comprehensive income are recognized in other
b. Financial assets at fair value through other comprehensive income.
comprehensive income
3.2.4 Derecognition
Investment in an equity instrument that is not held for
trading and at the initial recognition, NSMBL makes 3.2.4.1 Derecognition of Financial Assets
an irrevocable election that the subsequent changes in The company derecognizes a financial asset when the
fair value of the instrument is to be recognized in other contractual rights to the cash flows from the financial
comprehensive income are classified as financial assets at asset expire, or when it transfers the financial asset
fair value though other comprehensive income. Such assets in a transaction in which substantially all the risks and
171
rewards of ownership of the financial asset are transferred A financial asset or a group of financial assets is impaired
or in which the company neither transfers nor retains when objective evidence demonstrates that a loss event
substantially all the risks and rewards of ownership and it has occurred after the initial recognition of the asset(s),
does not retain control of the financial asset. and that the loss event has an impact on the future cash
Any interest in such transferred financial assets that flows of the asset(s) that can be estimated reliably.
qualify for derecognition that is created or retained by the If in a subsequent year, the amount of the estimated
company is recognized as a separate asset or liability. On impairment loss increases or decreases because of an
derecognition of a financial asset, the difference between event occurring after the impairment was recognized,
the carrying amount of the asset, and the sum of the previously recognized impairment loss is increased or
a. the consideration received and reduced by adjusting the allowance account.
b. any cumulative gain or loss that had been recognized in
other comprehensive income, is recognized in Statement
3.3 Trading Assets
NSMBL classifies financial assets or financial liabilities as
of Profit or Loss.
held for trading when they have been purchased or issued
The company enters into transactions whereby it transfers
primarily for short term profit making through trading
assets recognized on its Statement of Financial Position,
activities or form part of a portfolio of financial instruments
but retains either all or substantially all of the risks and
that are managed together for which there is evidence of a
rewards of the transferred assets or a portion of them.
recent pattern of short-term profit taking. Held for trading
If all or substantially all risks and rewards are retained,
assets and liabilities are recorded and measured in the
then the transferred assets are not derecognized. Transfers
statement of financial position at fair value. Changes in
of assets with retention of all or substantially all risks and
fair value are recognized in net trading income. Interest
rewards include, for example repurchase transactions.
and dividend income or expense is recorded in net trading
3.2.4.2 Derecognition of Financial Liabilities income according to the terms of the contract, or when
A financial liability is derecognized when, and only when the right to payment has been established. Included in this
it is extinguished (i.e. when the obligation specified in classification are debt securities, equities, short positions
contract is discharged, cancelled or expired). If the liability that have been acquired principally for the purpose of
is renegotiated with the original lender on substantially selling or repurchasing in the near term.
different contractual terms, the original liability is
derecognized and new liability is recognized.
3.4 Property, Plant and Equipment
Items of property, plant and equipment are initially
The difference between the carrying amount of a liability
recognized at cost. Cost includes the purchase price
(or portion) extinguished or transferred to another party
and other directly attributable costs as well as the
(including related unamortized cost) and the amount paid
estimated present value of any future unavoidable costs
for it (including any non-cash assets transferred or liability
of dismantling and removing items. The corresponding
assumed), should be included in Statement of Profit or
liability is recognized within provisions.
Loss for the period.
Freehold land and buildings are subsequently carried at
3.2.5 Determination of Fair Value fair value based on periodic valuations by a professionally
‘Fair value’ is the price that would be received to sell qualified valuator. These revaluations are made with
an asset or paid to transfer a liability (exit price) in an sufficient regularity to ensure that the carrying amount
orderly transaction between market participants at the does not differ materially from that which would be
measurement date in the principal or, in its absence, the determined using fair value at the end of the reporting
most advantageous market to which the company has period. Changes in fair value are recognized in other
access at that date. comprehensive income
The fair value of a liability reflects its non-performance and accumulated in the revaluation reserve except to the
risk. When available, the company measures the fair extent that any decrease in value in excess of the credit
value of an instrument using the quoted price in an balance on the revaluation reserve, or reversal of such a
active market for that instrument. A market is regarded transaction, is recognized in profit or loss.
as active if transactions for the asset or liability take place
with sufficient frequency and volume to provide pricing
3.4.1 Depreciation
Depreciation is provided on items of property, plant and
information on an ongoing basis.
equipment so as to write-off their carrying value over the
If there is no quoted price in an active market, then the
expected useful economic lives.
company uses valuation techniques that maximize the
Depreciation has been computed on Straight Line Method.

use of relevant observable inputs and minimize the use
The estimated useful lives for the assets are as follows:
of unobservable inputs. The chosen valuation technique
Years
incorporates all of the factors that market participants
Leasehold Asset 13.33
would take into account in pricing a transaction.
Furniture and Fixtures 6.67 to 10
3.2.6 Impairment Office Equipment 4 to 5
At each reporting date, NSMBL assesses whether there Computer & Accessories 5
is objective evidence that a financial asset or group of Motor Vehicles 6.67
financial assets not carried at fair value through Profit or
loss are impaired.
172
At the date of revaluation, the accumulated depreciation equity is recognized in equity and not in the statement of
on the revalued freehold property is eliminated against profit or loss. Management periodically evaluates positions
the gross carrying amount of the asset and the net amount taken in the tax returns with respect to situations in which
is restated to the revalued amount of the asset. The excess applicable tax regulations are subject to interpretation,
depreciation on revalued freehold buildings, over the and it establishes provisions where appropriate.
Strategic Report
amount that would have been charged on a historical
cost basis, is transferred from the revaluation reserve to
3.5.2 Deferred tax
Deferred tax is provided using the liability method on
retained earnings when freehold land and building are
temporary differences between the tax bases of assets
expensed through the statement of comprehensive income
and liabilities and their carrying amounts for financial
(e.g. through depreciation, impairment).
reporting purposes at the reporting date.
An item of property, plant and machinery is derecognized
Deferred tax liabilities are recognized for all taxable
on disposal or when no future economic benefits are
temporary differences, except:
expected from the use of that asset. The gain or loss arising
• When the deferred tax liability arises from the initial
from disposal of an item of property, plant and equipment
recognition of goodwill or an asset or liability in a
is the difference between the net disposals proceeds, if
transaction that is not a business combination and, at
any and the carrying amount. On disposal of the asset,
the time of the transaction, affects neither the accounting
the balance of the revaluation reserve is transferred to
profit nor taxable profit or loss.
retained earnings.
• In respect of taxable temporary differences associated
3.4.2 Intangible assets with investments in subsidiaries, associates and interests
Intangible assets acquired separately are measured on in joint arrangements, when the timing of the reversal
initial recognition at cost. Following initial recognition, of the temporary differences can be controlled and it is
intangible assets are carried at cost less accumulated probable that the temporary differences will not reverse in
amortization and accumulated impairment losses, if the foreseeable future.
any. Internally generated intangible assets, excluding Deferred tax assets are recognized for all deductible
capitalized development cost are not capitalized and temporary differences the carry forward of unused tax credits
expenditure is recognized in the statement of profit or loss and unused tax losses, to the extent that it is probable that
when it is incurred. taxable profit will be available against the deductible
The useful lives of intangibles assets are assessed as either temporary differences. The carry forward of unused tax
finite or indefinite. credits and unused tax losses can be utilized, except.
Intangibles assets with finite lives are amortized over • When the deferred tax asset relating to the
their useful economic lives and assessed for impairment deductible temporary difference arises from the
whenever there is an indication that the intangible assets initial recognition of an asset or liability in a
may be impaired. transaction that is not a business combination and,
Gains or losses arising from de-recognition of an at the time of the transaction, affects neither the accounting
intangible assets are measured as the difference between profit nor taxable profit or loss
net disposal proceeds and the carrying amount of the •In respect of deductible temporary differences associated
asset and are recognized in the statement of profit or loss with investments in subsidiaries, associates and interests in
when the asset is derecognized. joint arrangements, deferred tax assets are recognized only to
the extent that it is probable that the temporary differences
3.4.3 Computer Software will reverse in the foreseeable future and taxable profit will
Purchased computer software licenses are capitalized on
be available against which the temporary differences can
the basis of the costs incurred to acquire and bring to use
be utilized.
the software. These costs are amortized over the estimated
useful lives. 3.6 Inventories
Inventories are initially recognized at cost, and subsequently
3.4.4 Amortization at the lower of cost and net realizable value. Net realizable
Amortization is charged to the income statement on
value is the estimated selling price in the ordinary course
a straight-line basis over the estimated useful lives of
of business, less the variable selling expenses.
intangible assets. Goodwill is amortized from the date of
The cost is determined on first-in first-out (FIFO) method
initial recognition; other intangible assets are amortized
and includes expenditure incurred in acquiring the
from the date they are available for use.
inventories and bringing them to their present location
3.5 Income Tax and condition.

3.5.1 Current tax 3.7 Share Capital
Current income tax assets and liabilities for the current Financial instruments issued by the company are classified
period are measured at the amount expected to be as equity only to the extent that they do not meet the
recovered from or paid to the taxation authorities. The tax definition of a financial liability or financial asset.
rates and tax laws used to compute the amount are those The company’s equity shares are classified as equity
that are enacted, or substantively enacted at the reporting instruments.
date in Nepal.
Current income tax relating to items recognized directly in
173
3.8 Provisions and Contingencies term of the lease. Lease incentives received are recognized
Provisions are recognized when NSMBL has a present as an integral part of the total lease expense, over the
obligation (legal or constructive) as a result of a past event, term of the lease.
it is probable that an outflow of resources embodying The leases entered into by the company are primarily
economic benefits will be required to settle the obligation operating leases. Operating lease rentals payable are
and a reliable estimate can be made of the amount of charged to the profit and loss on a straight-line basis
the obligation. Contingent liabilities are disclosed after an over the period of the lease. When an operating lease is
evaluation of the facts and legal aspects of the matters terminated before the end of the lease period, any payment
involved. made to the lessor by way of penalty is recognized as an
expense in the period of termination.
3.9 Revenue Recognition
Revenue is recognized only when it is probable that the 3.10 Segment Information
economic benefits associated with the transaction will flow A segment is a distinguishable component of the company
to the entity. In some cases, this may not be probable that is engaged either in providing products or services/
until the consideration is received or until an uncertainty business segment, or in providing products or services
is removed. within a particular economic environment/geographical
Revenue comprises of interest income, fees and segment, which is subject to risks and rewards that are
commission etc. Revenue is recognized to the extent it different from those of other segments.
is probable that the economic benefits will flow to the
company and the revenue can be reliably measured.
Revenue is not recognized during the period in which its
recoverability of income is not probable.
Gain and losses arising in changes in fair value of financial
instrument held at fair value through profit or loss are
included in Statement of Profit or Loss in the period in
which they arise.
Payments made under operating lease are recognized in
Statement of Profit or Loss on straight line basis over the
4 Other Explanatory Notes

4.1 Cash and Cash equivalents
Cash and short-term deposits in the statement of financial position comprise cash at banks and short term deposits with
original maturity of three months or less, which are subject to an insignificant risk of changes in value. The details of cash
and cash equivalents are presented as follows:
Particulars FY 2074-75 FY 2073-74

Bank Balance:
Citizen Bank-891 1,325,411 18,455,688
Nepal SBI Bank Call Account-81 4,593,191 -
Citizens Bank FD F1813152003@11% 1,500,000 -
Gandaki Bikas Bank 269,820 -
Nepal SBI Bank-104 (Samudayik-BTI) A/c 4,284
Nepal SBI Bank-107 (Dordi-BTI ) A/c. 8,962,364 -
Kailash Bank (Dordi-BTI A/c) 180,000 -
Janata Bank (Dordi-BTI)A/c 100,000 -
Total Amount 16,935,070 18,455,688
174
4.2 Investment Securities

Investment securities are financial assets that are held for collection of contractual cashflows,where those cash flows
represent solely payment of principal and interest(SPPI),and that are not designated at FVPL ,are measured at amortized
cost. Details of such financial assets are presented as follows:
Strategic Report
FD @11 % - 914 29,000,000 -
FD@11%- 915 40,000,000 -
FD @ 12.5%-065591 2,500,000 -
Fixed Deposit – 204 25,000,000 -
Fixed Deposit Account-843 30,000,000 30,000,000
Fixed Deposit -CTZN 121 2,500,000 -
Gandaki Bikash Bank FD-88016727003 7,000,000 -
Nepal SBI Bank Ltd- FD-910 60,000,000 -
Fixed Deposit A/c-01 - 50,000,000
Total Amount 196,000,000 80,000,000
4.3 Financial Assets Held for Trading
The company has decided to designate Investment in Citizen Mutual Fund at fair value through profit or loss (FVTPL) as
they are held for trading. Detail as follows:
Trading Assets
Citizen Mutual Fund (1 lakh units @NPR 10) 1,000,000 -
Less: Trading Loss (100000*0.72) (72,000) -
Total Amount 928,000 -
Market Price is based on closing price of Citizen Mutual Fund (CMF-1) as at 16th July 2018, listed
at Nepal Stock Exchange.
4.4 Property, plant and equipment
Details of property, plant and equipment are presented as follows :
Leasehold Computers & Furniture & Fixtures Office Other
Particulars Vehicles Total
Assets Accessories Equipment assets
Wooden Metal
1. Cost Price.
a. Opening Balance 1,381,084 3,540,719 133,500 39,550 45,878 43,392 15,878 5,200,001
b. Addition during the year 41,361 175,000 497,000 354,550 191,787 357,805 326,835 1,944,338
c. Sales/Disposal - - - - - - - -
d. Revaluation/ written back this - - - - - - - -
year
e. Written off during the year - - - - - - -
Total Cost (a+b+c+d+e) 1,422,445 3,715,719 630,500 394,100 237,665 401,197 342,713 7,144,339
2. Depreciation
a. Upto Previous Year 61,534 313,197 13,408 6,285 1,636 10,154 3,311 409,353
b. For this year 105,558 534,783 59,014 23,481 10,916 32,293 40,273 806319
c. Depreciation on revaluation/ - - - - - - - -
written back
d. Depreciation on Assets sold/ - - - - - - - -
written off
Total Depreciation 167,092 847,980 72,422 29,766 12,552 42,447 43,584 1,215,843
3. Carrying Value (WDV) (1-2) 1,255,353 2,867,739 558,078 364,334 225,113 358,750 299,129 5,928,496
Carrying amount previous year 1,319,550 3,227,522 120,092 77,506 45,807 - 4,790,477
175
4.5 Intangibles
Intangibles comprises of Computer Software. Details of the same is presented as follows:
Balance on
Useful Amortized
Opening Renewal 32 Ashadh
Particulars Life - during the
Balance Addition 2075 (16
Years Year
July 2018)
Online D-mat Software 5 297,050 - 65,000 232,050
Web site -NSMBL 5 68,550 - 15,000 53,550
Tally Accounting Software 5 35,892 - 7,820 28,072
Share Plus Software 5 195,772 - 39,550 156,222
Professional Share Issue Management System (PSIMS) 5 139,837 - 28,250 111,587
C-ASBA Software 5 - 50,000 4,400 45,600
Share Software Upgrade 5 - 1 - 1
Share Plus Software 5 - 40,021 2,641 37,379
CDS & Clearing Ltd.-Software For Depository System 5 - 13,333 880 12,453
Total 737,101 103,355 163,541 676,915
4.6 Other assets

Other assets includes receivables, Advances and deposits. Details presented as follows:
Advance Tax 2,429,613 3,999,429
Other Deposit 86,100 11,100
Prepaid Insurance 17,540 16,400
Nepal SBI Bank Ltd. 1,542,891 127,070
Prepaid Expenses 182,689 -
LIC Nepal 21,644 -
Dordhi Jalabidhyut Company limited 861,339 -
Stationery Stock 12,447 -
Samudayik Lagubitta Bittiya Sastha Ltd-IPO 20,000 -
United Finance Company Ltd 200,000 -
Anil Khadgi 338 -
Oriental Insurance 9,000 -
NMB Capital Ltd. - 13,583,055
Total Amount 5,383,601 17,737,054
4.7 Current Liabilities and Provisions

Details of current liabilities and provisions are presented as follows :
Provision for Expenses 53,000 773
Provision for Gratuity 28,060 -
Provision for leave 31,835 -
Total Amount 112,895 773
176
4.8 Trade and other payables

Details of trade and other payable are presented as follows :
AFE. Home Decoration Pvt.Ltd. 53,788 53,788
Strategic Report
TDS Payable 194,616 15,216
Lease Liability NFRS Adjustment 250,614 -
Audit Fee Payable 211,850 83,625
Provision for tax - 5,080,910
Payable against Right Subscription- NSBL 13,589 67,482
SEBON & CDSCL Expense Payable 347,533 13,726
Cosmos Advertising & Media Pvt Ltd. 49,654 -
Payable to Ramesh Belbase 5,332 -
Samudayik Lagubitta Bittiya Sastha Ltd -MF 1,500,000 -
Other Payable 383 70
Ashra International Pvt. Ltd. - 208,123
Professional Computer System - 339,000
Payable To Dordhi Khola Jalabidhyut Co. Ltd. 9,237,000 -
Sub-underwriting Commission Payable 824,632 -
Total Amount 12,688,991 5,861,940
4.9 Deferred Tax Liability

Details of Deferred Tax Liability is presented are as follows:
Carrying carring Temporary
Particulars Tax Base
Amount Difference
Property, Plant and Equipment 5,928,496 5,282,945 645,551
Intangibles 676,915 643,803 33,112
Loss on Assets held for Trading 72,000 - (72,000)
Provision for leave 31,835 - (31,835)
Provision for Gratuity 28,060 - (28,060)
Total 6,737,306 5,929,748 546,768
Current Tax Rate 25%
Deferred Tax Liability 136,692
Opening Deferred Tax Liability 126,157
Transfer to Statement of Proft or Loss 10,535
4.10 Share Capital
The capital structure of the company is presented as follows :
Authorized Capital
1000000 equity shares of Rs. 100 each - 100,000,000
2500000 equity shares of Rs. 100 each 250,000,000 -
Issued Capital

Paid Up Capital - -

Total Amount 200,000,000 100,000,000
4.11 Reserve and Surplus
177
The details regarding reserve and surplus of the company is presented as follows :
Accumulated Profit & (Loss) 15,731,450 116,944
Less: Bonus Share Amount (11,111,111) -
Restatement/ Adjustment (107,406) 1,679
Profit During the year 8,400,571 15,612,827
Total Amount 12,913,504 15,731,450
4.12 Fees and Other Income
Incomes are recognized on accrual basis.The fees and other direct income earned are presented as follows:
Administration & Management Fee-NSBL DP 600,000 274,521
RTS Service Fee 625,464 274,521
Underwriting commission 5,709,868 -
Commission Private Equity Raising 370,480 -
PMS Service Charge 9,555 -
Issue Management Fee 235,294 -
Other Income 1,013,332 623,311
Interest Sharing Income - 19,511,854
Collection & Refund Commission - 508,025
Total Amount 8,563,993 21,192,232
4.13 Finance Income

NSMBL has earned an interest income amounting to NPR 14,141,738 on account of Fixed Deposits and other interest bearing
accounts with various Bank for the period ended 32 Ashadh 2075 (16 July 2018).
4.14 Loss on Financial Assets Held for Trading
Changes in fair value of NPR 72,000 relating to Citizen Mutual Fund (CMF-1) is recognized as trading loss during the reporting
period.
4.15 Direct Expenses
Direct expense include expenses directly related to the operation of the company. Details presented as under: Employee
cost relating to depute staffs has been booked in the Statement of Profit or Loss in terms of management service fee.
SEBON Licence Renewal Charge 500,000 -
RTS -Software Installation and Maintainance Charge 20,000 -
PMS Expenses 1,600 -
SEBON Application Charge 25,000 -
System X Application Expenses 25,077 -
Outsourcing Expenses- Private Equity Placement 8,729 -
Management Service Fee 1,200,000 720,000
Outsourcing Driver Service charge 267,363 301,990
Outsourcing Messanger Service Charge 921,935 649,820
Corporate Advisory License Fee 300,000 -
SEBON & CDSCL Charges 468,467 77,464
Sub-underwriting Commission Expense 824,632 -
Total Amount 4,562,803 1,749,274
As per Service Level Agreement between NSBL & NSMBL, dated 5th December 2017, annual management
service fee is NPR 1.2 million. NPR 110,309 for canteen has been reclassified as Administrative expenses,
previously classified as Direct expenses.
4.16 Administrative Expenses
The administrative expenses recognized on accrual basis are presented as follows:
178

Canteen Expenses 312,825 110,309
Advertisement Expenses 35,950 35,340
AGM Expenses 86,352 50,594
Strategic Report
Bank Charges 1,140 130
Board Meeting Allowance 64,000 21,883
Business Promotion & Hospitality Exp. 80,915 2,239
Cleaning Expenses 51,415 74,880
Insurance Premium 35,863 22,961
Lodging & Fooding Expenses 16,263 33,276
Newspaper and Magazine Expenses 53,200 11,920
Office Maintenance Expenses 49,131 3,620
Parking Expenses 4,914 4,250
Printing & Stationery Exp. 216,228 19,368
Publication Expenses 106,639 68,655
Rent Expenses 2,530,008 1,805,100
Repair & Maintenance Expenses 100,905 57,597
Security Guard Expenses 350,594 29,216
Telephone Expenses 20,301 14,552
Water & Electricity Expenses 238,038 158,481
Miscellaneous expenses 6,570 4,116
Fuel Expense 317,033 165,325
Leave Expense 31,835 -
Basic Employee Salary 355,946 -
Employees Allowance 191,816 -
PF Contribution-NSMBL 35,594 -
Overtime Expense 14,040 -
Gratuity Expense 29,651 -
AMC Charge 2,600 -
Annual Closing Expenses 2,695 -
Capital Increment Charge to OCR 60,000 -
Gift Expense 20,000 -
Income Tax Expense 30,864 -
Internship Expenses 20,000 -
Puja Expenses 1,500 -
Recruitment/ Selection Expenses. 9,700 -
Renewal Blue Book of Vehicle 21,200 -
Wages 300 -
Submission Delay Charge 5,000 -
Training Expenses 22,600 -
Travelling Expenses 35,350 -

Website Certification 1,170 -
Audit Committe Meeting Allowances 16,000 -
Audit Committe Meeting Expenses 3,238 -
Audit Fee
Statutory Audit Fee 2074/75 169,500 84,750
Internal Audit Fee 2074/75 90,400 -
Audit Expenses 12,275 -
179
Board meeting Expenses 20,127 -
SEBON Licence Fees - 350,000
Office Shifting Expenses - 18,150
Write off Other Assests (Bicycle) - 10,289
Meeting Expenses - 14,745
Membership Expenses (MAN) - 300,000
IPO/FPO Forms Expenses - 200
Kitchen Expenses - 46,720
Data Entry & Checking Expenses - 57,682
Total 5,881,685 3,576,348
NPR 110,309 for canteen expenses has been reclassified as Administrative expenses , previously classified as Direct
expenses.
4.17 Related Party
Parties are considered to be related if one party has the ability to control the other party or to exercise significant influence
over the other party in making financial or operational decisions.
The Holding Company
The ultimate holding company of NSMBL is Nepal SBI Bank Ltd., which is based and listed in Nepal.
Entity with significant influence over the Group
Nepal SBI Bank Ltd owns 100% of the ordinary shares in NSMBL.
The following table provides the total amount of transaction that has been entered into with related parties for the relevant
financial year.
Related Parties Disclosures
Nepal SBI Merchant Banking Limited has the following related parties:-
S.N Name Relationship
1 Nepal SBI Bank Limited Holding Company
The transactions and balances of the following related party have been narrated below:
Period ended Period ended 31
Particulars 32 Ashadh 2075 (16 Ashadh 2074 (15 July
July 2018) 2017)
Relationship Holding Company Holding Company
Nature of Transactions
Opening balance of (payable)/receivable 127,070 (86,672)
Reimbursement of sub lease rent - 15,000
Management Service Fee (Gross) 1,200,000 720,000
RTS, Administration & Management of D-Mat Service & ASBA sharing income 1,390,411 1,172,353
Closing balance of (payable)/receivable 1,542,891 127,070
NSMBL has placed financial assets (Term Deposit) amounting NPR 186,500,000 in Nepal SBI Bank Ltd. as of Ashadh
end 2075.
4.18 Earning Per Share
Basic earnings per share (EPS) is calculated by dividing the profit for the year attributable to ordinary equity holders by
the weighted average number of ordinary shares outstanding during the year. The company does not have any financial
instruments with potential dilutive effect during the reporting year. Therefore, the basic and diluted earnings per share
180
are the same.

The following table reflects the income and share data used in the basic EPS computation:
Period ended
Period ended
Description 32 Ashadh 2075 31Ashadh 2074
Strategic Report
(15 July 2017
(16 July 2018)
Total Comprehensive income for the period 8,400,571 15,612,827
Weighted average number of shares outstanding during the period 1,481,278.54 1,000,000
Earning Per Share (Basic) 5.67 15.61
Earning Per Share (diluted)* - 10.54
*Bonus share component in right share issuance is not considered while calculating diluted EPS for
FY 2073/74, due to non availability of Market Price of share.
4.19 Proposed Increase in Paid-up Share Capital
Neither Stock nor Cash dividend has been proposed during the year.
4.20 Employee Benefits
The company has incurred following employees expenses during the year:
Particulars Amount
Basic Salary 355,946
Employees Allowance 191,816
Provident fund 35,594
Overtime Expense 14,040
Gratuity Expense 29,651
Leave Expense 31,835
Total Amount 658,882
The company has booked employee related expense and liabilities based on actual rather than actuarial valuations.
Under section 6 of Bonus Act 2030 (1974), an employee who has worked for half of the period to be worked in a fiscal
year, shall be entitled for Bonus, however, the company does not have such employees being eligible for bonus.
4.21 Leases
The company has entered into an operating lease for the land and building located at Hattisar, Kathmandu jointly with
Nepal SBI Bank Limited. The total lease payment under the lease agreement is apportioned equally to Nepal SBI Bank
Limited and the company. The term of the lease is 5 years from 01 Kartik 2073 (17 October 2016). The lease is non-
cancellable upto 3 years from the date of commencement of the lease term.
The company has recognized lease expenses for operating lease on a straight- line basis over the lease term. The future
minimum lease payments under non-cancellable operating leases entered by NSMBL are as follows:
Minimum Lease Payment (NPR)
For the next year 2,530,008
For the period for 2nd and 3rd year of the reporting period 3,162,510
5. Post Balance Sheet Events

There have been no post balance sheet events that have come to our attention.
6. Key Management Personnel
Key Management Personnel of Nepal SBI Merchant Banking Limited includes;
Mr. Ramesh Ghimire Managing Director/CEO
Mr. Puspa Sharma Chief Financial Officer
7. Segment Reporting
NSMBL has one segment focusing on Issue Management Services, Registrar to Shares, Underwriting,
Portfolio Management and Corporate Advisory Services in Nepal. No additional disclosure is included in relation to
segment reporting, as NSMBL’s activities are limited to one business and geographic segment.
8. Interim Financial Reporting
NAS 34, ‘Interim Financial Reporting’ doesn’t mandate NSMBL to publish interim financial reports, how frequently, or
how soon after the end of the interim period. Since, the shares of NSMBL are not listed and is wholly owned by SBI Nepal
Bank Ltd. NSMBL is not required by any regulatory or other bodies which may govern its operating activities to publish
interim financial reports.
181
9. Limitations of NFRS
During NFRS implementation, wherever the information is not adequately available and the cost to develop the same
would exceed the benefit derived, if any, has been noted and disclosed in respective sections.
10. Re-grouping, Re-arranging and Rounding Off
The previous year figure has been re-grouped and re-arranged wherever found necessary for better presentation of
Financial Statements. The figures presented in financial statements have been rounded off to the nearest rupee.
182
PRESENCE OF NEPAL SBI BANK LIMITED ACROSS NEPAL
PROVINCE 1 PROVINCE 2 PROVINCE 3 PROVINCE 4 PROVINCE 5 PROVINCE 6 PROVINCE 7 TOTAL

16 10 30 12 13 2 4 87
OUR FEATURED SERVICES

SAVING ACCOUNT CARD SERVICES REMITTANCE SERVICES
• Combo Saving • Naari Bachat Khata • Baal Bachat Khata • ATM/Debit Card • Bharat Yatra Card • Vishwa Yatra Card • NSBL Payment Gateway • Global Link Services
• Vishesh Bachat Khata • Saral Bachat Khata • SBI Nepal Express Remit • Indo Nepal Remit
DIGITAL INITIATIVES • RTGS Services • SWIFT and Demand Draft
CREDIT FACILITY • Nepal SBI INTOUCH • Nepal SBI Digital Village • Domestic Remittance
• NSBL Gold Loan • Housing Loan • Vehicle Loan • Branchless Banking (BLB)
• Personal Loan • Business Loan • SME Loan OTHER SERVICES
• Education Loan • Loan to Professionals etc. ONLINE SERVICES • Safe Deposit Locker Facility • Self Service Kiosk (SSK)
• E-Banking • IRCTC Railway & Air Ticket Booking Facility • Mobile Banking • Cash Recycler Machine (CRM)
• Utility Bill Payment
184

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Glimpses of 24th Annual General Meeting

Scan to view our Annual Report,

KEY PERFORMANCE INDICATORS

Market Value per Share Market Capitalisation

Return on Total Assets NPA/ Total Loan

Cash and cash equivalent 1,048.02 880.35 396.18 377.33

New Initiatives launched and Key events of the year

N E PA L SBI BANK LTD.

OUR SILVER JUBILEE CELEBRATIONS

28th May 2018 – CSR Activities at S

30th June 2018 – Silver Jubilee FIFA PS4

GLIMPSES OF SILVER JUBILEE CELEBRATIONS

Silver Jubilee Celebrations at Corporate Office, Kesharmahal

Re-stating New Mission, Vision and Value statement of Nepal SBI

Felicitation of Staff completing 25

NSBL Silver Jubilee FIFA 18 PS4 Carnival

NSBL Silver Jubilee Talent Hunt

NSBL Silver Jubilee Painting Competition

NSBL Silver Jubilee Cycle Rally.

IRCTC Ticket Online

Automated Teller Machine (ATMs) and POS

Gateway Bharat Yatra Card

Remit across the globe.

Ujjwal Bhavisya Bachat

Karmachari Bachat Khata Indreni Bachat Khata

Under this scheme, any individual and

OUR ESTEEMED CUSTOMERS

NSBL Financing Cement and Iron Steel Company.

Message from Managing Director

Nepal SBI Bank Limited

Employee Service Risk Management Company

THE BOARD OF DIRECTORS

Mr. Anukool Bhatnagar

Mr. Anukool Bhatnagar

Managing Director & CEO

Mr. Subhakanta Kanungo Mr. Priya Ranjan

Mr. Chhapi Raj Pant Mr. Dev Raj Adhikari

SENIOR MANAGEMENT TEAM

Ms. Roshani Bharati Mr. Jeeban Babu Subedi

Risk Governance Structure:

Chief Risk & Compliance Group Risk & Compliance

Forex & Treasury

Front Office Compliance

Mid Office KYC/AML/CFT

Regulatory & Internal

Principal Risks Key Mitigating Actions

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Operational and Financial Performance during FY2074-75;

Purchase, loans to ex-servicemen WORLD ECONIMIC OUTLOOK October 2018, IMF)

commercial banks extended their and Garment Industry as priority

of Ethics implemented by your

place in the Bank. Manager (Retail & Subsidiaries),

PROGRESS FOR THE CURRENT YEAR

Thank you for your kind support.

For and on behalf of the Board of Directors

Annexure to BOD Report