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in Asia, Africa and the Middle East

Annual Report and Accounts 2009-2010

Leading the way

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Our performance

Financial highlights

FYE 2009/10

Non-fi nancial highlights

Operational highlights

2298m

14.60%

1612m

42918

32.22%

40,213m

70%

Operating Income

(in NPR where applicable)

Points of representation

Capital Adequacy

Operating Profit

Employees

Return on equity

Total Assets

Dividend

Stable Income Growth

Stable Profit Growth

Robust balance sheet

Sound capital base

Sound risk management

Sustainable business

(Including

Bonus Shares)

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1www.standardchartered.com/np

About UsStandard Chartered Bank Nepal Limited has been in operation in Nepal since 1987 when it was initiallyregistered as a joint-venture operation. Today the Bank is an integral part o Standard Chartered Group

having an ownership o 75% in the company with 25% shares owned by the Nepalese public. The

Bank enjoys the status o the largest international bank currently operating in Nepal.

Standard Chartered Bank Nepal Limited has

been in operation in Nepal since 1987 when

it was initially registered as a joint-venture

operation. Today the Bank is an integral

part o Standard Chartered Group having

an ownership o 75% in the company with25% shares owned by the Nepalese public.

The Bank enjoys the status o the largest

international bank currently operating in Nepal.

Standard Chartered PLC is a leading

international bank, listed on the London,

Hong Kong and Mumbai stock exchanges.

It has operated or over 150 years in some

o the world’s most dynamic markets and

earns more than 90 per cent o its income

and prots in Asia, Arica and the Middle East.

This geographic ocus and commitment to

developing deep relationships with clients andcustomers has driven the Bank’s growth in

recent years.

With 1,700 oces in 70 markets, Standard

Chartered oers exciting and challenging

international career opportunities or more

than 80,000 sta. It is committed to building

a sustainable business over the long term

and is trusted worldwide or upholding high

standards o corporate governance, social

responsibility, environmental protection and

employee diversity. The Bank’s heritage and

values are expressed in its brand promise,‘Here or good’.

With 18 points o representation, 23 ATMs

across the country and with more than 400

sta, Standard Chartered Bank Nepal Ltd. is

in a position to serve its customers through an

extensive domestic network. In addition, the

global network o Standard Chartered Group

gives the Bank a unique opportunity to provide

truly international banking services in Nepal.

Standard Chartered Bank Nepal Limited oers

a ull range o banking products and services

in Wholesale and Consumer banking, catering

to a wide range o customers encompassing

individuals, mid-market local corporates,

multinationals, large public sector companies,

government corporations, airlines, hotels,

SME’s as well as the DO segment comprising

o embassies, aid agencies, NGOs and INGOs.

The Bank has been the pioneer in introducing

‘customer ocused’ products and services

in the country and aspires to continue to

be a leader in introducing new products in

delivering superior services. It is the rst Bank

in Nepal that has implemented the Anti-MoneyLaundering policy and applied the ‘Know Your

Customer’ procedure on all the customer

accounts.

Corporate Social Responsibility is an integral

part o Standard Chartered’s ambition to

become the world’s best international bank

and is the mainstay o the Bank’s Values.

Standard Chartered throughout its long history

has played an active role in supporting those

communities in which its customers and sta

live. It concentrates on projects that assist

children, particularly in the areas o healthand education. Environmental projects are

also occasionally considered. It supports

non-governmental organisations involving

charitable community activities The Group

launched two major initiatives in 2003 under

its ‘Believing in Lie’ campaign- ‘Living with

HIV/AIDS’ and ‘Seeing is Believing’.

2 Chairman’s Statement8 CEO & Director’s Report14 Our Approach to Corporate

Responsibility20 Here or people, Here or good

People Strength:

Business review overview Corporate Governance Financial Statements and Notes

41 Auditor’s Report42 Balance Sheet43 Prot & Loss Account44 Prot & Loss Appropriation Account45 Statement o Changes in Equity46 Cash Flow Statement47 Schedules76 Signicant Accounting Policies

78 Notes to Accounts83 Disclosure as per Bank’s disclosure

policy under the Basel –II Capital Accord o Nepal Rastra Bank

86 Nepal Rastra Bank’s Approval andDirections

87 Five Years Financial Summary

26 Our Approach to Corporate Governance32 Additional Inormation36 Board o Directors38 Management Team40 Branches and ATM’s

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Chairman’s

Statement

“Our in-depth understanding o this market, ability to

quickly adapt to the changing landscape and the fair o

our management to execute Bank’s strategy has played

a crucial role in achieving a sustained growth. ”– Neeraj Swaroop, Chairman

It is with great pleasure I report thatStandard Chartered Bank Nepal Limitedhas once again maintained its trackrecord o consistent perormance andhas registered an impressive result or thescal year ended 16 July 2010. Deliveringrecord results in this challenging economicand socio-political environment is indeeda commendable accomplishment. Theoundation o success has been built mainlyon our ability to ollow a consistent strategyand ocus o business in the areas o our

strength.

During the year under review, the Bank gavecontinuity to its projects involving ootprintexpansion. A Branch as well as three new ATMs were added during the year. We alsolaunched various innovative products bothunder Consumer and Wholesale Banking. These steps have had a positive bearing onour overall perormance.

During our presence in Nepal or overtwenty three years, we have been ableto consolidate our position by eectivelyblending our global capability, deep local

knowledge and creativity to outperorm ourcompetitors. This ability has helped us toserve our customers well, it also makesus part o their community. Our in-depthunderstanding o this market, ability toquickly adapt to the changing landscapeand the fair o our management to executeBank’s strategy has played a crucial role inachieving a sustained growth.

Against the back-drop o a rapidly changingworld, we have been working very closely withour people, customers, regulators, industryand the community. This has provided uswith enormous strength to successullyhandle the changing business & economicenvironment encompassing the country.

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Business review overview

I would like to reiterate that our brand is themost valuable asset which is at the heart o our strategic intent i.e, to be the world’s bestinternational Bank, leading the way in Asia, Aricaand the Middle East. Recent launch o our newbrand promise `Here or good’ has given ourbrand a new dimension. While the Bank nowhas a new brand promise, `Here or good’ is, inreality, its oldest belie. It is what we have beendoing or the past 150 years, and its aims orthe next. It complements the Bank’s strategy,and also its values – Trustworthy, International,

Responsive, Courageous and Creative. Thisrenewed thrust and commitment will ensureStandard Chartered to continue to remain thebest brand in this market.

Results – A Synopsis

Financial Highlights

Net Prot ater tax rose by 5.93 percentto Rs.1.086 billion compared to Rs. 1.025billion in the previous year

Earnings per share is lower by Rs. 32.34due to increase in the number o shareslast year

Risk Assets increased by 16.54 percentto Rs.16.18 billion compared to Rs. 13.88billion last year

Deposits contracted by 0.5 percent to Rs.35.18 billion

A Consistent Perormance The Bank has been consistently deliveringgood perormance year on year. As a result o another good year, the Bank has contributed anamount o Rs. 466 million to the GovernmentExchequer as compared to Rs. 443 million lastyear on account o corporate tax.

In accordance with the statutory requirements,the Board recommends a transer o Rs.

21,381,278 to Exchange Fluctuation Reserverom current year’s prots and the statutorytranser o Rs. 217,174,339 into GeneralReserve Fund. In line with the revised capital

requirements as stipulated by the CentralBank, the Board has proposed to increase thecapital by issuing 15 percent bonus share orwhich Rs. 209,772,540 has been allocatedrom current year prot.

Our Tier 1 and Tier 2 Capital AdequacyRatios were 12.61 percent and 1.99 percentrespectively with an overall ratio o 14.60percent, post appropriations. Our capitalposition is more than adequate to meet ourbusiness needs and exceeds the current

Nepal Rastra Bank’s capital adequacyrequirement under the Basel II capital accordand also exceeds the international norms.

Economic Environment

Global Scenario

We are presently living in an increasinglydynamic economic environment. Apart rombeing the witness o upheavals o past coupleo years, the year 2010 has also experiencedan isolated Greek crisis metamorphosed intoa pan-euro zone crisis – which resulted in thenancial sector across the globe, questioningthe sovereign debt undamentals.

The timely intervention & prudent approacho regulators seems to be a step in theright direction. Extraordinary liquidityprovision, combined with guarantees orbank liabilities, had addressed ears aboutbanks’ survival. Meanwhile, low interest ratesregime has helped in reviving economiesand bringing business condence back.Debate is increasingly ocused on timing o Governments withdrawing stimulus – whichwill depend on the condence that recoveryhas rmly been established.

However, we think that although we are

past the worst - but yet to be out o thewoods. Our markets – Asia, Arica and theMiddle East – are bouncing back, but tosustain that momentum Western World too

needs to start growing. The global nancialcrisis made it conspicuous that the nancialworld is extraordinarily interconnected andinterdependent to be viewed in silos.

Nepal

The volatile political situation coupled withlow economic growth, widening trade decit,high infation and liquidity crunch in thebanking system continued to remain themajor challenges. Liquidity crunch was mainlyattributed to the slow down in remittances,unds getting locked up in non productivesectors and weakening o condence resultingin lower deposit mobilization.

Owing to political conundrum, the FiscalBudget or year 2010/11 remains pending.Nevertheless, with the objective o arrestingthe widening trade decit, ensuring smoothfow o credit to productive sectors,addressing the illiquid market and boostingboth employment & growth, Nepal RastraBank announced its annual monetary policyor 2010/11, which, inter alia, projected GDPat 5.5 percent and expects to contain infationwithin 7 percent.

In FY 2009/10, Nepal’s GDP grew by 3.5percent at constant prices. Agriculture,manuacturing and service sectors areestimated to have grown by 1.2 percent, 3.9percent and 6.9 percent respectively.

In the eleven months o 2009/10 ending mid-June, revenue mobilization o the governmentgrew by 26.7 percent to Rs. 153.59 billion.Similarly total government expenditureincreased by 29.1 percent to Rs. 188.65billion. The high growth in recurrent as wellas capital expenditure accounted or such an

increase in the government expenditure.

On a monthly basis, exports grew by 14.1percent during the month o May–June over

Proft Ater Tax in Rs. Mio Market value per share in Rs.

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the previous month. However, compared tothe corresponding period o previous year, theexports have declined by 9.8 percent to Rs.55.37 billion. The merchandise imports, onthe other hand, grew by 35.2 percent to Rs.342.99 billion.

Despite the rise in trade decit, the Balanceo Payment (BOP) improved gradually rom arecord high decit o Rs. 23.53 billion in mid-March to Rs. 15.07 billion by mid-June. This isattributed to a surplus generated in the transer

account that includes grants, pension receiptsand remittance. As a result, the level o grossoreign exchange reserve improved to Rs.247.42 billion in mid-June which is sucient ornancing merchandise imports o 8.1 monthsand service imports o 6.8 months.

The year on year (y-o-y) infation as measuredby the consumer price index moderated to 9.6percent in mid-June 2010 compared to 12.3percent in the corresponding period last year.

In line with the appreciation o the IndianRupees against the US dollar, the Nepalesecurrency vis-à-vis the US dollar appreciated

by 4.62 percent in mid-June 2010 comparedto mid-July 2009. Nepalese rupee has a xedparity o 1:1.6 with the Indian Rupee. Theexchange rate o one US dollar stood at Rs.74.60 in mid-June 2010 compared to Rs.78.05 in mid-July 2009.

The Year AheadSCB Nepal‘s prudent unding, liquidity andhigh asset quality policies have stood it in goodstead during the dicult times. During thisperiod, the bank remained adequately liquidto support the credit needs o the clients romboth the businesses viz. Wholesale and Retail.We will continue to manage our balance sheetin a conservative manner, maintaining highliquidity and strong capital ratios.

We believe that great opportunities lie aheadas the government is committed to attainaccelerated growth rate in the economy andcontain infation. Needless to mention, it willlargely depend upon the political stability and thesecurity environment. We have a rm belie thatthe nancial services sector, in which we are aplayer, will continue to grow and develop into amajor pillar o the Nepalese economy.

The agriculture sector, which is largelydependent upon the weather conditions, is

likely to experience a setback because o thelate arrival o monsoon this year. However,this is likely to be mostly compensated bythe ongoing expansion o cultivation area andenhancement in distribution o inputs andservices in the rural areas owing to improvingsecurity situation. The industrial sector isestimated to grow at an average pace in thecoming year. For the act that the governmenthas reiterated its commitment to increaseinrastructural expenditure and improvementin the operating environment, some stability inthe economy can be envisaged.

The year 2011 is being celebrated as `Visit

Nepal Year.’ This is expected to provide somemomentum in the tourism related activities.

Corporate GovernanceGovernance across the Bank is robust. As you may all appreciate, banking is arelationship business. We highly value therelationships that we have with our people,regulators, clients and the other stakeholders;all eorts will be made to urther deepen thisrelationship.

We are committed to ensuring the integrityo governance. In addition to the establishedcommittees, we have committees onDiversity and Inclusion, Health and Saety,the Environment, Outserve Plus and

Community Partnership. The initiatives takenby these committees have added value to ourstakeholders and delighted them. We believegood governance provides clear accountabilities,ensures strong controls, instills the rightbehaviors and reinorces good perormance.

Mr. Anurag Adlakha, Mr. Sushen Jhingan andMr. Sujit Mundul nominated by the StandardChartered Grindlays Australia and Mr. RamBd. Aryal as Proessional/Independent Directorcontinue to be in the Board o SCB Nepal

Limited. I, Neeraj Swaroop, continue to representthe Standard Chartered Group on the Board o Standard Chartered Bank Nepal Limited.

As on the date o this report, the Board ismade up o the Non-Executive Chairman, oneExecutive Director and our Non-ExecutiveDirectors o which one is proessional / independent Director appointed as per theregulatory requirement. Director, Mr. ArjunBandhu Regmi, representing the publicshareholders, has submitted his resignationrom the post o Public Director citing personalreasons and the same has been acceptedin the 264th Board meeting o the Bank held

on 5th July 2010. The Board is currently inthe process o ullling the vacant post asper the provisions o the Companies Act. Iwould like to thank Mr. Arjun Bandhu Regmior his contribution during his tenure as PublicDirector o the Bank.

In Conclusion The global economy in 2010 started lookingbetter than it did a year ago. Our markets– and particularly Asia – are better placedthan most parts o the world to weather therisks, but they are not immune; so we cannotremain complacent. We must appreciate thatthe policymakers in most part o Asia havebeen eective in responding to the twistsand turns o the crisis. Whilst the economic

Earning Per Share in Rs. Return on Total Assets

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uncertainties continue, we start the year with ablend o caution and condence.

Based on the data recently released by thegovernment, economic indicators were justseen to be satisactory during the reviewperiod. Key obstacles in resuscitating theweakening economy were seen to be theissues such as taming o infation, creatinginvestor-riendly environment and pushingthe exports up to bridge the widening tradedecit. Despite the challenging situation,

the Bank was able to record a satisactoryoutcome due mainly to the commitment andocus exhibited by the management team increating shareholders value.

Our top priority is to maintain our track recordo delivering superior nancial perormance. To do this we need to sustain the momentumin both Wholesale and Consumer Banking.We are staying ocused on the basics o banking; on the way we manage liquidity,capital, risks and costs. We are deepeningour relationships by getting closer to ourclients. We are also expanding the productcapabilities and solutions we provide to them.

For both the businesses, the depth and qualityo our customer relationships are critical to ourstrategy and success.

We are cautious in expanding our riskassets portolio and are satised the waywe are growing in Wholesale and ConsumerBanking. Under both the businesses, wehave been ollowing risk managementtechniques that minimize the likelihood o “any surprises”. Costs are well controlled.We are committed to stick to our strategyand will continue to ocus on deepening ourrelationships with our clients.

Our brand is all about commitment. Weare Here or good, to create value or our

shareholders, to support and partner ourclients and to make a positive contributionto the broader community. We are hereor the long term. Building a sustainablebusiness is an integral part o our long-termstrategy to enhance shareholder value. Manyo our employees chose to get involvedin community activities, and this urtherunderpins our standing as being amongstthe most customer and community caringinstitutions in Nepal.

Continued support and trust endowed uponus by our valuable customers, shareholdersand other stakeholders has enabled us toremain the best Bank in Nepal. I sincerelyappreciate their eorts to bestow us withtheir encouragement, trust and loyalty. SCBNepal was the recipient o ̀Bank o the Year’award or 2009 rom the Financial Times; it isa testimony o this act.

Our intention is to make meaningulcontribution in accelerating the economicactivities o the country to attain a highergrowth rate. We are looking at the year aheadwith cautious optimism. We have to remain

vigilant, prudent and ocused on the soundmanagement o our balance sheet – this willremain key areas o ocus.

Ministry o Finance and the Central Bank havebeen playing key roles in driving the nancialsector reorms in Nepal. We welcome andappreciate the initiatives that are aimed atstrengthening the overall nancial system inthe country. Support and guidance receivedrom our Regulators and the high level o governance o the Standard CharteredGroup have been the cornerstones orus in consistently delivering good results,in maintaining exemplary governancestandards and in providing superiorproducts and services.

“ We are Here or good,

to create value or our

shareholders, to support

and partner our clients

and to make a positive

contribution to the broader

community.

” Being the only international Bank in the countrywith strong perormance and values culture,SCB Nepal clearly edges past rest o thecompetition or being the ̀Employer o Choice’. The Bank aims at retaining this coveted position.We have been placing continuous ocus onsta’s learning & development and in buildingtheir leadership capabilities. In an endeavor toaddress the diverse need o our people and tocreate a conducive work environment, we havebeen embracing work-lie balance.

The Diversity and Inclusion Council, which isplaying a key role in taking orward our D &I agenda, continued to address the dierentstrands o diversity including women, and thedierently-abled.

On behal o SCB Nepal’s Board o Directors,I take this opportunity to thank all thestakeholders or their patronage. Let metake this opportunity to express my sincereappreciation towards our valued customers andshareholders or standing by us in our journey.I would also like to thank all our employees ortheir untiring eorts and loyalty towards theorganization. They were instrumental in enabling

us to deliver these good results.

What we achieved during this year will soonbe history. There are good reasons or usto be thrilled about our past laurels but wenow need to look orward and concentrate indelivering another good year. Whilst I do notunderestimate the challenges and uncertaintiesbeore us, I am excited by the opportunities.We are equipped and are in a better positionto deal with the emerging challenges.

Neeraj Swaroop

Chairman

Total Shareholder Equity

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Leading the way in helping

realize local dreams

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Krishna Textiles Udhyog

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In Rs. ‘000s In Rs. ‘000s

16-Jul-10 15-Jul-09 % Change

Operating Prot 1,612,467 1,506,109 7%

Transer to General Loan Loss Provision 76,974 56,635 36%

Provision or Tax 450,496 442,091 2%

Net Prot Ater Provision and Tax 1,085,872 1,025,115 6%

Issue o Bonus Shares 209,773 465,983 (55)%

Proposed Cash Dividend 769,166 465,983 65%

The CEO & Director presents this reporttogether with the Balance Sheet andstatement o Prot and Loss or theyear ended 16 July 2010. The report isin conormity with the provisions o theCompanies Act 2063 and Bank & FinancialInstitution Act 2063 including the directivesissued by the Nepal Rastra Bank.

The Bank is in good shape and we havedelivered yet another year o stable nancialperormance. Our strategy remains the same

and through a disciplined execution o ourstrategy the Bank has been able to deliveron its promises. An increase in the net protater tax o 6 percent over last year to Rs. 1.09billion is commendable in the backdrop o anextremely challenging business environment. This has been achieved by relentless ocuson cost and risk management while pursuingbusiness growth.

There is an increase in the volume o riskassets by 16.54 percent to Rs 16.18 bill ioncompared to Rs 13.88 bil lion last year. TheBank has been able to manage its creditportolio better as a result o which the Non-

perorming credit to Total credit has reducedrom 0.66 percent to 0.61 percent. Theprovisions made are adequate to cover all thepotential credit losses o the Bank as o thebalance sheet date.

Ater transer to general reserve Rs.217.17million, exchange fuctuation reserve Rs 21.38million, proposed dividend Rs. 769.17 million,proposed issue o bonus shares Rs. 209.77million and to other regulatory reservesRs. 77.91 million, total retained earnings asat 16 July 2010 stood at Rs. 29.96 million. This perormance refects a good momentum

“ The Bank is in good shape and we have delivered

yet another year o stable nancial perormance.

” – Sujit Mundul, CEO

CEO &

Director’s Report

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in the underlying businesses and disciplinedmanagement o risks and costs.

Representation As at 16 July 2010, the Bank maintainedeighteen points o representation which includedourteen branches and our extension counters.In addition to this, services were also extendedto our customers through twenty three ATMslocated at dierent parts o the country.

Wholesale Banking

WB delivered another year o strongperormance. What was achieved in the last oneyear is o signicance because o the dicultoperating environment, characterized by loweconomic growth, widening trade decits, tightliquidity coupled with volatile political situation.

Opportunities that met our lending criteriawere limited. WB was extremely careul inbooking new exposures. At the same timewe ocused on select clients by activelyproviding enhanced level o acilities and themore sophisticated products viz. FX options,structured deposits, cross currency swaps,supranational trade nance, etc. This enabled

our clients to hedge their FX and interest raterisks and undertake business that they wouldnot have been able to close, had such productoerings not been available to them. It wouldbe apposite to mention that we remainedopen or business “as usual” even during themost testing situation o liquidity crisis.

While it would be challenging to operatesuccessully in an environment which isexpected to remain dicult– we are condento maintaining the upward trajectory and at thesame time will ensure that all risks be it credit,market, operational, etc. are well managed.We will continue to review our strategy so

that we remain ahead o competition andcan respond to the changing dynamics o themarket aster than anyone else.

Consumer BankingConsumer Banking continues to adoptcustomer and segment ocused approach,balancing the banking solutions with appropriaterisk control measures. Product and serviceinnovation, sales through service excellence,appropriate risk based pricing and investmentor the uture are the essential ingredients o our

operating business model.

During FY 2009/2010, the business continuedto encounter numerous challenges stemmingrom the political conundrum and lacklustereconomic environment ranging rom policychanges to load shedding, impactingadversely the overall operating environment.Whilst these challenges have been there orquite sometime, Liquidity crisis took the centerstage decelerating the growth in deposits withurther compression in margins.

To remain competitive, the Bank had toraise interest rates on its Structured Call and

Fixed Deposits.

However, given our well managed balancesheet and Credit Deposit Ratio, the businesscontinued to lend despite the liquiditychallenges acing the market. SME, Auto,Mortgage, Personal Loans and CreditCards showed steady growth. Auto andMortgage loans contributed signicantly to theConsumer Banking Lending Portolio.

During the period under review, the Bankopened a branch in New Road and addedthree more ATMs.

Customer Charter Workshop in progress Launch o Priority Banking card

In line with the Consumer Bank’stransormation agenda, Customer Charterdening customer ocus was rolled out to theentire Consumer Banking sta. The CustomerCharter primarily ocuses on Customers basedon the ollowing three principles:

Friendly, Fast and Accurate Service Solution to our Customers’ nancial needs Recognition o overall banking relationship

with our Customers

As a testimony o our commitment towardsCustomer Charter, the Bank, inter alia, haslaunched the ollowing:

Amulya Bachat Khata - A special SavingsScheme whereby higher interest rate up tothe maximum o 6.5 percent p.a is givenon the daily balances.

Added two more branches under the 365days banking service - Naya BaneshwarBranch and New Road branch (ormeropens on all holidays and latter closes onlyon Saturdays).

Extended banking hours by one houracross the branch network between

Sunday and Thursday and hal an hour onFriday.

In order to gauge the satisaction level o ourcustomers and to continuously improve theway we work, regular eedback and surveysare undertaken. These eedback and surveysprovide us with valuable insights about ourproducts, services and people. This alsoenables us to improvise and introduce variouspolicies, procedures, products and valueadded services that meet our customers’needs whilst addressing the encompassingrisk issues.

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Our commitment to Treating CustomersFairly and our policies on Mis-selling and Mis-representation remain core to our values.

We will continue to invest in ootprintexpansion and our chosen segments.However, given the fuidity in the operatingenvironment we will continue to remaincautiously optimistic in our approach.

As in the past we will strike a careul balancebetween risk and reward or a sustainable

growth.

Outserve Plus - ContinuouslyImproving the Way We WorkContinuously improving the way we workis one o the Bank’s ve strategic priorities. The Bank has an Outserve Plus programmewhich works as the vehicle or continuouslyimproving the way we work. Through OutservePlus, we have made great progress in creatinga culture o continuous improvement.

We have an Outserve Council which over theyears, has acted as a catalyst or continuousimprovement. Outserve Plus allows us

to place greater ocus on the underlyinginrastructure and processes o the Bankthat underpin customer service, productivityand control environment. The ambition oreveryone in the Bank thereore is to workSimpler, Faster and Better.

Through Outserve Plus we will continue tolook or the ways to be more ecient andeective in what we do, ensuring that we are“Here or good” and “Here or customers”.

Future PlansWe will continue to make appropriateinvestments in our ranchise based onthe operating environment. For the year2010/2011, our key ocus will be onCustomer Service and SME. Bancassuranceis another area where we will be makingsignicant investment or generating eeincome. Lending products like Auto,Mortgage, Credit Cards and Personal Loanwill continue to be oered to our targetsegments and improvements in the turn-

around time will receive our prime attention.Similarly we will continue to accelerateour deposit drive in order to maintain abetter semblance in our balance sheet.We are also committed to providing easybanking solutions to our Visually Challengedcustomers within the existing rameworkand constraints.

We also intend to enhance our Onlinebanking capabilities by adding additionaleatures thereby obviating the need orcustomers to visit the bank or their basicbanking requirements. Along with this, wewill also be driving our e-statement agenda inorder to ensure that customers receive theirstatements in a more ecient manner.

Inward remittances, an importance source o oreign currency earning, will continue to play akey role in the expansion o our consumer base.

On the WB side, we will continue to oer “totalsolutions” to our clientele with new productsand seamless services. Our endeavorwill be to urther deepen our relationships

SCB Nepal was the recipient o ‘Bank o the Year’ award or 2009 by The Financial T imes,London

CEO addressing a town hall to mark thelaunch o Bank’s rereshed brand promise- Here or good.

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and achieve core banking status or all thecorporate customers.

Nepal holds a huge potential to become apopular tourist destination. The year 2011,which is being celebrated as `Visit Nepal Year’, is expected to provide momentum tothe tourism related activities. The steadyeconomic growth o the two neighboringcountries i.e. India and China is likely tooer opportunities or Nepal to act as atrade corridor. Suitable policy decisions to

capitalize on these opportunities will help ouragenda o achieving higher business growth.We will closely ollow the opportunitiesor investment in inrastructural areas viz.hydropower, agriculture and other servicesector industries.

In line with our revised brand promise, `Hereor good’ we have ull commitment toinvesting in our people, processes andsystems with a view to improve the qualityo our service or delighting our customers. As we have been doing in the past, we willcontinue to make a real dierence to ourcommunities. We will consciously drive and

maintain our high level o governance. Forour shareholders we shall strive to continueproviding them with superior returns.

Credit Environment The risk management remained extremelychallenging in the last scal year. The instabilityand uncertainty in the global economybrought about by the Western nancial crisispersisted till recently. Though Nepal wasbelieved to be relatively insulated rom the

global nancial crisis, its lagging eects wereseen in the last FY in terms o decelerationin workers remittance, a key component inNepal’s GDP, and decline in exports. Duringthe past FY, Nepalese Economy witnessedlow economic growth, widening trade decitand liquidity shortage in the banking system. The continued security concerns and politicaluncertainty, double-digit infation, growingenergy crisis and nation-wide long strikeswere some other key actors that aectedthe country’s credit environment. Decline

in oreign exchange reserves, slowdown indeposit mobilization and reportedly aggressivefow o credit to unproductive sectors led toliquidity crisis, aecting the productive sectorsin terms o inadequate credit support andhigh cost o borrowing.

Against the backdrop o a dicult political andeconomic environment, the Bank has beenable to maintain its credit quality owing to itsproactive risk management approach. The Bankcontinues to stick to the undamentals o goodbanking. Clear strategy and discipline, strongrelationship with the clients, rigors around thequality and debate on risk-return dynamics, etc

are the ew key elements that contributed to thesuccess in the risk management. We are welldisciplined in our liquidity management which iscorroborated by our conservative C/D ratio andhigh capital adequacy.

AuditorM/S S. R. Pandey & Co., Chartered Accountants, were appointed as Statutory Auditors or FY 2009/10 by the 23rd AnnualGeneral Meeting o the Bank held on 4th

November 2009. We would like to thankthem or their contribution made during theirtenure as Auditors o the Bank. As per therecommendation o the Audit Committee, thismeeting will decide on the appointment o theauditor or next year.

Proposed Dividend and BonusShares The 266th meeting o the Board o Directorso the Bank has proposed dividend to theshareholders o the Bank or the year ended

16 July 2010 at the rate o 55 percent in cashand issue o bonus shares at the rate o 15percent.

Sujit Mundul

Director and CEO

The Bank has introduced extended bankinghours across the branch network.

The Bank expanded its ootprint by adding an ATM at the UN premises in Harihar Bhawan

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Leading the way by

touching lives

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“ Talking sustainability

is no longer optional or

a bank due to the crisis

that the banks have just

been through. We have to

prove that our business

model is sustainable.We have to demonstrate

that we make a

positive contribution to

sustainable growth and

development. ”

We maintained our commitment tobuilding a sustainable business as a bank,simultaneously creating value or ourshareholders, supporting our customers andcontributing to the communities in whichwe live and work. This has underpinned ourstrategy and success or over 150 yearsacross Asia, Arica and the Middle East; and itwill be the oundation or our uture.

Talking sustainability is no longer optionalor a bank due to the crisis that the banks

have just been through. We have to provethat our business model is sustainable. Wehave to demonstrate that we make a positivecontribution to sustainable growth anddevelopment.

We believe that through building a sustainablebusiness we can deliver, broadly, three positiveoutcomes: contributing to the real economy;promoting sustainable nance; and leadingthe way in our communities. Our commitment,to our clients, investors, regulators, in ourmarkets and to our sta, is to be Here orgood.

Contributing to the real economy The greatest impact we can make as aninternational nancial institution to the societiesin which we operate, is through our directcontribution to the real economy. By oeringproducts and services that serve the needso our customers we can assist individuals,corporates and other nancial institutions toact as agents o economic activity.

Access to nanceMany live within communities and theirinability to raise nance has a direct impact oneconomic activity. The Bank is committed toimprove access to nancial services to suchpopulation o Nepal by helping them bring inthe realm o nancial services.

Our Approach to

Corporate Responsibility

The Bank is the promoter o ew ruraldevelopment banks and Rural MicronanceDevelopment Centre (RMDC) which underlinesthe Bank’s association with this businesssince long time. The Bank is represented inthe Board o RMDC, an eminent wholesalelending micro nance entity. The Bank hasalso been lending to rural development banksand NGOs to acilitate onward lending tothe rural population or the development o micronance in Nepal.

Responsible selling and marketing Treating customers airly has moved tothe top o the agenda or many nancialregulators around the globe. We welcome thisdevelopment and will monitor and adopt newrules and regulations as they come into orcein the markets in which we operate.

Clarity around the segmentation o customershas been increased and we have developedproducts and services based on clearlyidentied needs in Consumer Banking. InWholesale Banking, we place much emphasison treating our clients airly and ensuring thatthey are sold appropriate products or their

needs. It is also central to our strategy tobecome the ‘core’ bank or more clients.

Tackling nancial crimeWe tackle nancial crime in three ways:we minimize the risk that our products andservices can be used by money launderers;we deny suspect terrorists access to ourbanking systems; and we build robust controlsagainst raud and corruption.

Great place to workWe are truly a diverse organization with 125nationalities represented among over 80,000employees. We have on the ground presencein 70 markets and use our in-depth localknowledge and understanding o cultures to

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Bank is the sponsor o prestigious ‘ProAmSurya Nepal Masters 2010’ gol tournament

Joining hands with Tilganga Eye Centre toprovide eye care services to the poor & underpriveleged

provide a unique service to our clients andcustomers.

Our culture and values are a source o competitive advantage which is hard toreplicate. They are a key ingredient in whatwe believe is a unique emotional connectionbetween the Bank and our employees, andbetween employees and our customers.In short, they encourage customers andemployees to join us and stay with us.

Community Investment As an international nancial institution, thegreatest contribution we can make to thesocieties in which we operate is through ourdirect contribution to the real economy. Webelieve in promoting sustainable nance tocontribute to the challenges and opportunitiespresented by social and environmental risk.

SCB Nepal has constituted StandardChartered Nepal Community PartnershipForum (SCNCPF) to undertake variouscommunity initiatives in Nepal. It is registeredwith District Administration Oce and hasreceived aliation rom Social Welare Council.

The two major initiatives o the Bank launchedin 2003 under its ‘Believing in Lie’ campaignare ‘Seeing is Believing’ and ‘Living with HIV’.

Seeing is BelievingSeeing is Believing is a public-privatepartnership that addresses avoidableblindness. Launched in 2003, the programmehas gone rom a simple sta –led initiativeto raise enough money to carry out 28,000cataract operations to $37 million globalunding initiative. In 2008, we launched A New Vision, our latest commitment to Seeing isBelieving. We will invest a urther $20 millionto provide sustainable eye-care services or20 million people in deprived communities in20 cities.

The Vitamin A Capsule (VAC) distributionprogram or 2010 in Kathmandu valleyconcluded successully on 2-3 November2009 and 19-20 April in April 2010. In linewith our ‘Seeing is Believing’ initiative, oursta members rom dierent branches joinedthe teams rom Helen Keller International/ Nepal (HKI/N) to raise awareness and providesupport to community health volunteers duringthe distribution days ater undergoing hal aday training at HKI/N. Since 2007, StandardChartered Bank’s ‘Seeing is Believing’

program has worked with HKI/N, the Ministryo Health and Population, and the Nepal Technical Assistance Group to strengthen Vitamin A awareness and distribution systemsin the Kathmandu Valley. VAC distributionprogram in Kathmandu valley is being partiallyunded by the SCB Group.

World Sight Day was celebrated on 8th o October 2009. An agreement was signedbetween the Bank and Tilganga Eye Centre(TEC) to conduct 700 cataract surgeries to thepoor and underprivileged people in dierentparts o the country in between October 2009-July 2010. In addition, an exhibition cum

sale o handicrat goods produced by visuallyimpaired people was held at the Bank’s Headoce. The Bank has been instrumental insupporting restoration o sight to ~4,900people till date, by sponsoring eye campsand intraocular lenses or cataract surgeriesin partnership with Tilganga Eye Centre (TEC)and other local hospitals.

International Agency or the Prevention o Blindness (IAPB), a working partner o SCBGroup under the Seeing is Believing program,signed an agreement on behal o the Bankwith Christian Blind Mission UK (CBM UK)in order or Eastern Regional Eye CareProgramme (EREC–P), Biratnagar to receiveUSD 1 million worth o nancial assistance

At a program organised to celebrate WorldEnvironment Day 2010

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rom the SCB Group. The assistance will beutilized towards construction, establishmento Eye Care Centres, Outreach Dept andCapacity building or local implementingpartners. The project is progressing and SCBNepal is closely monitoring developments o the project.

Standard Chartered Bank Nepal Walkathonis an annual und raising event through whichthe Bank provides a platorm to engage crosssections o our community to raise unds. We

have been conducting this event since 2003and it continues to remain a signature event o the Bank.

As a part o Wholesale Bank initiative, theBank raised unds worth USD 3,400 throughthe sale o rafe tickets. The unds raised romthe sale o rafe tickets will go to support theBank’s ‘Seeing is Believing’ initiative.

Lazimpat Branch organized ‘Football or Hope& Vision’, a und raising event or our ‘Seeingis Believing’ initiative targeted at raising undsrom our sta members by screening WorldCup ootball match live .

Living with HIV AIDS remains a global killer with no cure orvaccine. Over 33 million people are inected

by HIV and AIDS, with 6,800 new inectionseach day; 15-24-year-olds count or 45% o all new HIV inections. This pandemic has adevastating impact on many communitieswhere we do business. Education is a keycomponent o prevention strategies.

We have been running a workplace HIVeducation programme, called Living with HIVsince 1999, which currently involves a networko more than 1,150 HIV Champions in 50countries globally. In Nepal, we have 30 HIV

Champions who work to raise awareness o HIV and AIDS in the Bank and with externalorganizations.

The Bank, in partnership with Nepal Banker’s Association, rolled out its Living with HIVprogram to the senior ocials o variousBanks. The program was successullyconducted by our Bank’s HIV Champions.

All our HIV Champions have been receivingreresher training through ‘Train the Trainer’reresher sessions held at dierent intervals.

Like previous year, the Bank continued to

support the under privileged women/ girlsliving with HIV /AIDs residing at KarunaBhawan by sponsoring the cost o skill trainingprogram. The skill training program was

SCB sta volunteering during the Vitamin ACapsule distribution program

Patients ater undergoing eye surgery at aneye camp held in Putali bazar, Syangja

Celebrating the estival o ‘Teej’ with ourriends at Karuna Bhawan

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The Bank supported Mahendra Shanti School,Balkot, Bhaktapur with 20 computers orcomputer education

Walking together or a noble cause-Walkathon2009

imparted to these needy women/children soas to make them sel reliant and to be capableo earning their livelihood.

The Bank also continued to sponsor educationand living expenses o two LwHIV children atMaiti Nepal or three years.

Focus on Youth, Health, Educationand EnvironmentIn line with our commitment to reiteratethat the Bank is Here or good, we have

undertaken various initiatives viz.:

The Bank continues to support to thedeserving students o Shree MahendraShanti High School, Balkot by providingincentives/scholarships through VISCOSS– Nepal or the ninth consecutive year. TheBank also supported the school with 20sets o computers to help them providingcomputer education to their students.

To mark the World Environment Day, TreePlantation Campaign was organized bythe Bank on 5 June to mark the WorldEnvironment Day. The sta plantedaltogether ~500 tree saplings at the

Institute o Engineering, PulchowkCampus.

The Bank was actively engaged in theInternational Cricket Council World Cup-

Sta displaying placards on environmentalawareness at the Head Oce

Div 5 matches held during 20th -27thFebruary. The Bank is the co-sponsor o Nepal Cricket Team with branding rights.

Successul conclusion o the ‘Surya NepalMasters Gol Tournament 2010’ whichwas held rom 21-24 April. The eventis considered to be one o the biggestproessional gol tournaments organizedin Nepal and generated good level o visibility or the Brand like in the past. The Bank was the ProAm sponsor o thistournament.

The Bank sponsored ‘Vow 6th Top CollegeWomen Competition 2009’ – an eventthat highlights the achievements o young,talented and versatile women studentso Nepal and imparts them a platorm toexcel in their career. This was done mainlywith a view to drive our D & I agenda andto strengthen the Brand amongst theyoung and college going students in Nepal– the Bank has been supporting the eventor the last two years.

As a part o CB Credit initiative, the Bankraised unds worth USD 6,178 throughthe sale o rafe tickets. The unds raisedrom the sale o rafe tickets are intended

to be utilized towards the support o underprivileged children.

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Leading with

our sustainable business strategy

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Bhotekoshi Power Company Pvt. Ltd.

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Here or people, Here or good

People Strength:

New business initiatives supported bytransormation created opportunities or newpeople with diverse background to take upchallenging and exciting roles in the Bank. There were a total o 81 new hires to starttheir career in the Bank, majority inductedthrough job advertisements posted in ourSCB Career Webpage.

Our people strength has increased by 7%making a total o 429 sta as o 16 July, 2010as compared to 392 in 15 July, 2009. The

current mix o male and emale sta is 63:37.

During the year under review 14 o ouremployees completed 20 years, 4 completed15 years, 3 completed 10 years and 24employees completed 5 years o dedicatedservices to the Bank. The sta memberscompleting their long service periods wereelicitated on dierent occasions by the CEOwith certicates and awards.

Right Start and Engagement programs or our59 new joiners were conducted by the Bank atdierent dates. This was done with a view tomotivate our new entrants to welcome them to

work in a great place, live our culture and valuesand provide opportunity to build their career.

Our people strategy and priorities haveremained consistent over the last ew years.

Engagement:Recognizing the act that an important parto sustaining business perormance anddriving productivity comes rom engaging andmotivating our employees, the Bank ocused onemployee engagement and proved successulin maintaining the engagement level in spite o achallenging market environment.

This high participation rate in GallupQ12 Survey, which we use to measureengagement, refects a strong commitmentrom employees to voice their opinions anddemonstrates their trust in the process. Ouroverall score remained strong. We ensurethat teams create `action plans’ and `ollowthrough’ on their commitments. This involvesregular conversations with managers with anobjective to clariy what the expectations arethereby addressing the concerns and dicultquestions, i any.

Learning Week:Learning Week was successully organizedin conjunction with the SCB RegionalOrganization Learning Team targeting alllevels o employees in August. Variouslearning interventions, such as videosessions on “Even Eagles need a Push”were attended by 191 sta members. 28o our employees attended a session on“Power o Vision”.

SCB Drama Mania A pan Bank drama competition ‘SCB DramaMania’ was organized by the Bank during

the year under review. A total o eleventeams with sta representation rom allBranches and Units o the Bank participatedin this popular event. The event created avery high level o engagement, excitementand unravelled enormous amount o hidden talents within the Bank. Preliminaryrounds were held during the months o July and August with the nals o the eventheld in Kathmandu on 7th o August. Allperormances received great appreciationo the eminent external judges and a houseull o audience on both the occasions. Thisevent was ollowed by the annual s ta party.

“ Recognizing the act

that an important part

o sustaining business

perormance and driving

productivity comes rom

engaging and motivating

our employees, the Bank

ocused on employee

engagement and proved

successul in maintaining

the engagement level

in spite o a challenging

market environment. ”

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Honoring one o the women Gold medalistso 11th South Asian Games

External Extra Curricular Activities: Nine sta members representing various

departments and unctions o the Bankparticipated in the coveted “SoalteeCrowne Plaza Super Sixes Cricket Tournament – 2009”.

Health and Saety Campaign week wascelebrated in October with an objectiveto raise awareness and importanceo these areas in order to provide ourpeople with awareness, materials andbasic tips and training.

Ten sta members representing variousdepartments participated in the Inter Bank Volleyball Tournament 2010 organizedby the Nepal Rastra Bank (NRB) on theoccasion o its 55th Anniversary.

Employee Volunteering:It is crucial or the Bank to have our employeesa deep understanding o the local markets andcommunity where we operate. Our peoplehave been playing a key role in appreciatingthe challenges and demonstrating the requiredcommitment while working in partnership withthe communities to overcome these challenges. As ambassadors o our brand, we have beenempowering our employees by providing themopportunities to participate in various communityprograms through Employee Volunteering (EV)and champion networks. This activity is at theheart o our unique culture and is the reason whymany o our people choose to work or us.

Employee Volunteering program is an internalinitiative o the Bank whereby our sta members are encouraged to participate incommunity activities. As per the program,the sta are entitled or three days leave inaddition to their annual leave to volunteer inthe community related activities.

“Standard Chartered Nepal Walkathon

2009 – A Walk or a brighter tomorrow” is the Bank’s annual und raising eventconducted with an objective to raise undsor our various community initiatives,engage our sta and raise awarenessaround avoidable blindness, HIV/AIDS andenvironment. This event was organizedsuccessully on 21st Nov 09 in which 90%o our sta in Kathmandu walked about 5kms or this noble cause.

Seeing is Believing: About 20 sta volunteered 2 days each in

October ’09 and in April ’10 to distribute Vitamin A capsules in conjunction withHelen Keller Int’l and Nepal Technical Assistance Group. This is a SCB Groupunded project in Nepal.

In partnership with Tilganga Eye Centre(TEC) our sta members in Kathmanduvolunteered at eye camps held on 5thand 12th o June at Bhaktapur andSindhupalchowk. Further our sta inbranches outside Kathmandu have alsovolunteered in various eye camps in theirareas.

Living with HIVOur HIV Champions have been constantlyvolunteering their time to conduct awarenessand education sessions on HIV/AIDS ona bi-monthly basis to all new joiners in theBank and also conducted similar sessions orother external organizations such as schools,colleges, Rotary Clubs, Rotaracts andmanpower agencies.

World AIDS DayWorld AIDS Day was celebrated with a ocuson awareness and educational activities

Induction Programs are designed or the new joiners to help them gain better understandingabout the Bank.

Volunteers on a blissul note during ‘CleanRani Pokhari Campaign’ under Employee Volunteering initiative

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through engagement o our sta. Awarenessand education workshops were conductedby our sta HIV Champions or our trainees/ new-joiners. Similarly in association with NepalBanker’s Association (NBA), this workshop wasrolled-out to the representatives o 15 localbanks. Voluntary Counseling and Testing (VCT)was organized or our sta members in theBank premises. Sta creatively decorated theirbranches/departments with symbols, postersraising awareness on HIV/AIDS and displayedplacards with messages on HIV awareness.

World Environment Day Various programs were organized to mark theWorld Environment Day (WED) in June. Ouremployees made a dierence by volunteeringto plant 400 saplings at the premises o Pulchowk Engineering College, Pulchowk.Other activities included display o placards atthe Bank entrance, Car Pooling and severalinternal broadcasts on environment to buildawareness around the theme.

Building leadership capabilitiesStrong leadership is critical to our success.It is through our leaders that we motivate

employees, drive perormance and impart ourunique culture.

We oer emerging leaders a series o programs and workshops to support theirpersonal development, through one-on-onecoaching; through our fagship LeadershipDevelopment Programs and our GreatManagers workshops. An interactive sessionon “KFCI (Know, Focus, Care and Inspire) Awareness” was conducted or 42 managersand 19 o our Managers have completed acourse on Leadership Essentials.

In order to build leadership rom within, wehave a number o specic programmestargeted at our high potential employees ateach level, which help us to grow and developthem into our uture leaders by providingmentors, networking opportunities, careerdiscussions and specic learning opportunities.We provide support and skills to the Managersto help manage their talent pools. “Managing Talent in a Changing World” - a ull day programwas conducted or 12 People Managers.Senior Managers participated in the Country

Leadership Team meetings conducted in theyear under review. Nine o our employees weregiven opportunities outside Nepal or short termassignments. During the year under review,two employees took up roles in SCB Grouppoints in other countries. Our talents were givenopportunities to interact with Senior visitorsrom the Group to learn about the Group’socus, priorities and leadership skills.

Training And DevelopmentOpportunitiesWe strongly believe in the need to “KeepLearning, Keep Growing” and with thisbelie Bank has been encouraging sta to

actively involve in enhancing their knowledgeand skills through various types o learningprogram be it through classroom programs,web based learning, on the job, sel reading,assessments, attachment programs, sharingknowledge amidst each other. Number o learning opportunities - In-house trainings,Local programs by external trainers/ organizations, Global trainings, Short termattachment programs in the Group, On the joblearning inside and outside the country wereorganized during this scal year through whichour sta were able to develop their personal,

Roll out o ‘Know Focus Care & Inspire’(KFCI)workshop to sta

‘SCB Drama Mania’: The employees showcasedtheir hidden talent through this event.

“ Strong leadership is

critical to our success.

It is through our leaders

that we motivate

employees, drive

perormance and impart

our unique culture.

”

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proessional and leadership skills. A total o 995 mandays were spent in learning anddevelopment programs during the year underreview.

Similarly, an impactul session on “TeamEectiveness” was conducted or the Bank’smanagement team.

Strengthening perormance culture To reinorce our perormance culture, wehave launched a new global online system

or managing perormance which allows allemployees to set their annual objectives online. This reinorces the basics o good peoplemanagement and ongoing perormancecoaching by ensuring that all employees havestretching job objectives in place and are clearo what is expected o them.

The system captures all employeeperormance and values objectives online sothat managers and employees can agree andreview them at the click o a button throughoutthe year. It also provides a structured methodto capture progress and eedback romcolleagues and managers. This is a key actor

in high employee engagement and helpsreinorce our culture.

Diversity and inclusionOur ocus on diversity and inclusion providesus with a unique competitive advantageand we work hard to maintain this. Weconstantly strive to improve the way we workso that employees can balance their workand personal commitments, maximize theirpotential and perorm to their best. Keepingthis in mind, maternity leave period or ouremale sta members has been revised to 90

rom 45 days so that they can spend qualitytime with their newborn babies.

Festival o women olks, ‘Teej’ was celebratedby our emale sta by celebrating it in-houseand also by visiting the HIV aected womenshelter homes and providing them with clothesand sweets. ‘Bhai Tika’ was celebrated bywomen colleagues presenting a mufer as atoken o riendship and appreciation to all malecolleagues in the Bank.

International Women’s Day 2010International Women’s Day was celebrated byorganizing various activities at the behest o D&I Council.

Throughout this day, women wore beautiulscarves presented to them by their malecolleagues.

To make that special woman in their liveseel valued, sta expressed/dedicated theirmessages in poetry, quotes etc.

An exhibition cum sale was organized inthe Bank’s premises o products made bytracked children and women rescued byan NGO- The Esther Benjamins Trust.

HR Team visited one o the girls collegeand conducted an hour long interactivesession sharing the importance o bankingor women.

3 women who won medals at the SAFgames were invited and elicitated at a Town Hall.

We believe that our strong ocus on engagingour people around our brand, urtherembedding our unique culture and values willcontinue to provide us competitive advantage.

Senior Management in action during the‘Team Eectiveness’ session

‘Going Green’: The Bank planted 5,000 treesat Bisankhunarayan in Lalitpur

“ We believe that our

strong ocus on engaging

our people around our

brand, urther embedding

our unique culture and

values will continue to

provide us competitive

advantage. ”

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Leading the way in

nurturing the economy

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Rolpa Carpet Industries

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Our approach to

corporate governance

A SynopsisFollowing are the steps taken by themanagement or strengthening CorporateGovernance in the organization.

The Board o Standard CharteredBank Nepal Limited is responsible andaccountable to the shareholders andensures that proper corporate governancestandards are maintained.

The Audit Committee meets quarterlyto review the internal and external

inspection reports, control andcompliance issues and provideseedback to the Board as appropriate.

The Manco (Management Committee)represented by all Business and FunctionHeads is the apex body managing the dayto day operations o the Bank. Chaired bythe CEO, it meets at least once a monthor ormulating strategic decisions.

The Annual General Meeting is used asan opportunity to communicate with allshareholders.

To ensure compliance with applicablelaws, enhance resilience to externalevents and avoid reputational risk, theBoard has adopted SCB Group policiesand procedures.

Ultimate responsibility o eective RiskManagement rests with the Boardsupported by Audit Committee, Manco,Country Operational Risk Group (CORG), Asset and Liability Committee (ALCO) andRisk Management Committee (RMC)

Embracing exemplary standards o governance and ethics whereverwe operate is an integral part o ourStrategic Intent. The Group Code o Conduct is adopted to help us meet thisobjective by setting out the standards o behavior we must ollow with each otherand with our customers, communities,investors and regulators.

Analysis The Board o Standard Chartered BankNepal Limited is responsible or the overallmanagement o the Company and orensuring that proper corporate governancestandards are maintained. The Board is alsoresponsible & accountable to shareholders.

The report describes how the Board hasapplied the principles and provisions o theNepal Rastra Bank directives on CorporateGovernance and the provisions o Companies

Act, 2063 and Bank and Financial Institution Act, 2063 (the “Corporate GovernanceCode”). The directors conrm that:

Throughout FY 2066/067, the Companycomplied with all the provisions o theCorporate Governance Code. TheCompany complied with the listing rules o Nepal Stock Exchange Limited.

Throughout FY 2066/067, the Companywas in compliance with the SecuritiesRegistration and Issuance Regulation, 2065

The Company has adopted a Code o Conduct regarding securities transactionsby directors on urther terms no less thanrequired by the Nepal Rastra Bank Directivesand the Companies Act and that all theDirectors o the Bank complied with theCode o Conduct throughout FY 2066/067.

The Board As at the date o this report, the Board ismade up o the Non-Executive Chairman, oneExecutive Director and our Non-ExecutiveDirectors o which one is proessional / independent Director appointed as per theregulatory requirement. Director, Mr. ArjunBandhu Regmi, representing the publicshareholders, had submitted his resignationrom the post o Public Director citing personalreasons and the same was accepted by theBoard at 264th Board meeting o the Bank

“ The Group Code

o Conduct is adopted

to help us meet this

objective by setting

out the standards o

behavior we must ollow

with each other andwith our customers,

communities, investors

and regulators. ”

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Corporate governance

Corporate Governance


Sharing a presentation with NRB on ‘RiskManagement Strategies & Investment Products’

23rd AGM o the Bank in progress

held on 5th July 2010. The Board is currentlyin the process o ullling the vacant post asper the provisions o the Companies Act.

The Board composition complied with theregulatory requirements. Four Directorsincluding the Non-Executive Chairman arenominated by the SCB Group to represent itin the Board in proportion to its shareholding. The Board meets regularly and has a ormalschedule o matters specically reserved or itsdecision. These matters include determining

and reviewing the strategy o the Company,annual budget, overseeing statutory andregulatory compliance and issues related to theCompany’s capital. The Board is collectivelyresponsible or the success o the Bank.

During the year under review, the Board held14 board meetings o which 1 was held bycirculation. The Directors are given accurate,timely and clear inormation so that theycan maintain ull and eective control overstrategic, nancial, operational, complianceand governance issues.

The ollowing table illustrates the number o

Board and Audit Committee meetings heldduring the year under review:

Audit

Board Committee

Number of meetings 14 4

in FY 2066/067 Neeraj Swaroop 12* - Anurag Adlakha 4* 1Sushen Jhingan* 9* 1Sujit Mundul 14 -Ram Bahadur Aryal 14 4 Arjun Bandhu Regmi 10 -

* Chairman Mr. Neeraj Swaroop attended

Six Board meetings through his alternate DirectorMr. Aniruddha Bose and Mr. Sushen Jhinganattended two Board meeting through his alternateDirector Mr. Peter Warbano.

Audit Committee As required by the local regulations, theBoard has ormed an Audit Committeewith clear terms o reerence. The AuditCommittee meeting is normally held on aquarterly basis. The Committee reviewsinternal audit reports, Nepal Rastra BankInspection reports, Statutory Audit reports,Bank’s nancial condition, internal audit/ controls issues, compliance issues, etc. The Committee provides eedback to theManagement through the Board o Directors

as appropriate.

The Independent/Proessional Directorchairs the Committee or ensuring completeindependence. The composition o the AuditCommittee as on 16th July 2010 was as below:

Ram Bahadur Aryal - Non Executive Director-Chairman Anurag Adlakha - Director - MemberSushen Jhingan, Director - MemberGopi Krishna Bhandari - MemberPradip Shrestha - Member Secretary

All members o the Audit Committee areeither non-executive directors or independento business. The responsibilities o theCommittee are in congruence with theramework dened by the NRB Directives andthe Companies Act.

Management Committee (Manco) The Management Committee (Manco)represented by all Business and FunctionHeads o the Bank is the apex body thatmanages the Bank’s operation on a day to daybasis. Manco meets ormally at least once amonth and inormally as and when required. The strategies or the Bank are decided andmonitored on a regular basis and decisionsare taken jointly by this Committee. The CEOChairs the Manco.

As at the date o this report, the compositiono the Manco was as ollows:Mr. Sujit Mundul, Chie Executive OcerMr. Anurag Mishra, Head Wholesale BankingMs. Anju Sharma, Head Consumer BankingMs. Rakhi Singh, Chie Financial OcerMr. Sudesh Khaling, Chie Inormation OcerMr. Shobha Bd. Rana, Head, Legal andCompliance & AssuranceMr. Diwakar Poudel, Head, Corporate AairsMs. Bina Rana, Head, Human ResourcesMr. Gopi Bhandari, Senior Manager Credit

Relations with Shareholders

The Board recognizes the importance o goodcommunications with all the shareholders. There is regular inormation, both nancialas well as non-nancial, published by theCompany or the shareholder’s inormation. The AGM is used as an opportunity tocommunicate with all the shareholders.

The notice o the AGM, as required by theCompanies Act, was sent to shareholders atleast 21 days beore the date o the meetingat their mailing addresses available in theCompany’s records. In addition to that thenotice and agenda o the AGM were alsopublished twice in the national level dailynewspaper or the shareholders inormation.

Internal Control The Board is committed to managing risksand in controlling its business and nancialactivities in a manner which enables it tomaximize protable business opportunities,avoid or reduce risks which can cause lossor reputational damage, ensure compliancewith applicable laws and regulations andenhance resilience to external events. Toachieve this, the Board has adopted the

SCB Group policies and procedures o riskidentication, risk evaluation, risk mitigationand control/monitoring.

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unctional level. Inormation is communicatedthrough the unctional, business committeesto the Board which seeks to ensure that keyrisk issues are addressed at the appropriatelevels and to provide assurance that standardsand policies are being ollowed.

Credit RiskCredit risk is the risk that counterparty toa nancial instrument will cause a nancialloss to the Company by ailing to dischargean obligation. Credit exposure includesindividual borrowers and connected groupso counterparties and portolios, in thebanking and trading books. Standards areapproved by the Board and the delegation o credit authorities are overseen by the CEO.Procedures or managing credit risk aredetermined at the business level with specicpolicies and procedures being adapted todierent risk environment and business goals.Business risk ocers are in place to maximizethe eciency on decision making. The CreditRisk is managed by Risk ManagementCommittee, chaired by the CEO. ThisCommittee, inter alia, reviews and monitors

the Bank’s Assets Portolio.

Market RiskMarket risk is the exposure created bypotential changes/volatility in market pricesand rates. The Bank is exposed to marketrisk arising principally rom customer driventransactions. The objective o the Bank’smarket risk policies and processes is toobtain the best balance o risk and returnwhile meeting our customers’ requirements.Market risk is managed by Asset and LiabilityCommittee (ALCO) which agrees policies andlevels o risk appetite.

Liquidity RiskLiquidity risk is dened as the risk that theBank either does not have sucient nancialresources available to meet all its obligationsand commitments as they all due, or canaccess them only at excessive costs. It isthe policy o the Bank to maintain adequateliquidity at all times and or all relevantcurrencies, and hence, to be in a positionto meet all obligations as they all due. Theliquidity risk is managed both on a shortterm and a medium terms basis. In the shortterm, the ocus is on ensuring that the cashfow demands can be met through assetmaturities supported by customer deposits

and wholesale borrowings where required. The Asset/Liability Management Committee(ALCO) under the chairmanship o CEO

meets at regular intervals to review theDeposit/Investment strategy o the Companyand regulatory compliance. The ALCO isresponsible or both statutory and prudentialliquidity.

Operational RiskOperational Risk is the risk o direct orindirect loss due to an event or actionresulting rom the ailure o internalprocesses, people and systems, or romexternal events. To ensure that the keyoperational risks are managed in a timely andeective manner, a ramework o policies,procedures and tools has been establishedwithin the Bank to identiy, assess, monitor,control and report such risks.

A robust Operational Risk Management and Assurance Framework (ORMAF) has beenestablished as per SCB Group guidelines tosupervise and manage the operational risk inthe Bank. A Country Operational Risk Group(CORG) under the chairmanship o CEO is inplace to supervise and direct the managemento operational risk at country level whilst

Business and Functional Operational RiskGroups are responsible or managing businessand unctional level operational risks in theBank. Similarly, each unit in the Bank has aUnit Operational Risk Manager responsible ormanaging the operational risk at the unit level.

Bank’s existing operational risk managementsystem has been urther strengthened bycreating a new role titled ‘Country OperationalRisk Ocer’ with responsibility to ensure endto end operational risk management acrossbusinesses and unctions in the country and todrive the governance process.

Regulatory RiskRegulatory risk includes the risk o non-compliance with the regulatory requirements. The Bank has implemented appropriatecompliance ramework, policies and proceduresand has eectively managed the regulatoryrisk. While compliance team is responsible orestablishing and maintaining the compliance risk,compliance o such policies and procedures isthe responsibility o each employee.

Legal RiskLegal risk is the risk o unexpected loss,including reputational loss arising romdeective transactions or contracts, claims

being made or some other event resultingin liabilities or other loss or the Bank, ailureto protect the title to and ability to control

The eectiveness o the Company’s internalcontrol system is reviewed regularly by theBoard, its Committees, Management andInternal Audit. The Audit Committee hasreviewed the eectiveness o the Bank’s systemo internal control during the year and providedeedback to the Board as appropriate.

The Internal Audit monitors compliance withpolicies/standards and the eectiveness o internal control structures across the Companythrough its program o business/unit audits. The Internal Audit unction is ocused on theareas o greatest risk as determined by arisk-based assessment methodology. Internal Audit reports are periodically orwarded to the Audit Committee. The ndings o all auditsare reported to the Chie Executive Ocerand Business Heads or initiating immediatecorrective measures.

Risk Governance Through its risk management rameworkthe Bank seeks to eciently manage credit,market and liquidity risks which arise directlythrough the Bank’s commercial activities as

well as operational, regulatory and reputationalrisks which arise as a normal consequence o any business undertaking.

As part o this ramework, the Bank uses a seto principles that describe its r isk managementculture. The principles o risk managementollowed include:

Balancing risk and reward. Disciplined and ocused risk taking to

generate a return. Taking risk with appropriate authorities and

where there is appropriate inrastructureand resource to manage them.

Anticipating uture risks and ensuringawareness o all risks.

Ecient and eective risk managementand control to gain competitive advantage.

Ultimate responsibility o the eectivemanagement o risks rests with the Board. The Audit Committee, within an authoritydelegated by the Board, reviews risk areasand monitors the activities o ManagementCommittee (Manco), Country OperationalRisk Group (CORG), Asset and LiabilityCommittee (ALCO), and Risk ManagementCommittee (RMC).

The committee governance structure seeks

to ensure that risk management standardsand policies are cascaded down through theorganization rom the Board to business and

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the rights to assets o the Bank (includingintellectual property rights), changes in the law,or jurisdictional risk. The Bank has appropriatelegal ramework, policies and procedures toeectively manage the legal risk. Legal risk ismanaged by the Legal Team.

Reputational RiskReputational Risk is the risk o ailure to meetthe standards o perormance or behaviors,expected by stakeholders in the way in whichbusiness is conducted. It is the Bank policythat, at all times, the protection o the Bank’sreputation should take priority over all otheractivities, including revenue generation.Reputational risk is not a primary risk, butmay arise rom the ailure to eectivelymitigate one or more o credit, liquidity,market, legal and regulatory and operationalrisks. It also arises rom the ailure to complywith social, environmental and ethicalstandards. A Reputational Risk Committeewithin the Bank has been establishedwhich meets at regular intervals to reviewand monitor this risk. All employees areresponsible or day to day identication and

management o reputational risk.

Capital Management The Bank’s capital management approachis driven by its desire to maintain a strongcapital base to support the development o itsbusiness and to meet the regulatory capitalrequirements at all times.

As Capital is the centerpiece o the Bank’sperormance matrix, a sound capitalmanagement orms the very core o the overallperormance landscape to ensure that theBank delivers on its objective o maximizing theshareholder’s value. The senior management

o the company is engaged and responsible orprudent capital management at all times.

In compliance with the regulatory requiremento increasing the capital base as prescribed bythe Central Bank, the Bank has a capital planin place. The Bank is comortable in meetingthe minimum capital requirements and is verystrongly positioned to meet the perormancebenchmarks as outlined in the plan.

The capital plan takes the ollowing intoaccount:

Regulatory Capital requirements

Increase in the capital required dueto projected business growth, marketuncertainties and stresses.

Available sources o capital and capitalraising options

Crisis Management The Bank has in place a Crisis ManagementPlan and a Country Crisis Management Teamto manage and resolve eectively serious crisisthat may aect the operations o the Bank.In addition to this, the Bank has a detailedBusiness Continuity Plan (BCP) to managedisruptions o operations and a DisasterRecovery Plan (DRP) to manage Technologicaldisruptions.

Health, Saety and SecurityWe consider the health and saety o ourpeople and the integrity o our business asmost important aspect o our operations. Weregularly conduct audits o Health & Saetyand Environment Management and conductinspections o buildings and departmentsto provide assurance to all stakeholdersthat risks are being managed eectively andthat there is a healthy and saety embeddedworking environment or both our sta andour customers. As part o Health & Saety

corrective action plans, the Bank duringthe year has completed redesigning andrenovating work areas in many parts o Headoce building and other branches as well.

We believe these actions will help our brandstand out rom our competitors. Ultimatelythey underpin our business and will help us togrow stronger.

Group Code o Conduct – Summary Comply with laws, regulations and

Group standards: Sta are individuallyresponsible or complying with the spirit,not just the letter, o laws, regulations and

Group standards. Reject bribery and corruption: Sta

must not give or accept bribes nor engagein any orm o corruption.

Avoid being compromised by gits and

entertainment: Sta must not oer, giveor accept inappropriate gits or benets toor rom third parties. Denitive guidelinescan be ound in the Group Gits andEntertainment Policy.

Speak up: Sta must Speak Up i theysuspect, or know o, any actual, plannedor potential behaviour that breaks, or maybreak, any laws, regulations or Groupstandards. Details are contained in the

Speaking Up Guide. Combatting nancial crime: Sta must

comply with laws, regulations and Group

standards on money laundering, terroristnancing and raud prevention.

Avoid conficts o interest: Sta areresponsible or identiying conficts o interest. Once these have been identiedsta must take immediate steps to resolvethe problem. Denitive guidelines can beound in the Group and Business Confictso Interest Policies and Procedures.

Do not deal in shares when in

possession o inside inormation: Sta must comply with the Group’s Personal Account Dealing Policy to eliminate the risko insider dealing.

Treat customers airly (TCF): Sta mustollow the Group’s seven TCF standards.

Respect customer condentiality: Sta should not disclose customer or Groupdata unless authorised to do so.

Treat people airly and with respect:

All employees are entitled to a saeworking environment that is ree romdiscrimination, bullying and harassment.

Responsibilities to our communities

and regulators: Sta must be responsiveto their communities and demonstrate

exemplary governance at all times.

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Leading the way by

enhancing industries

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Dabur Nepal Pvt. Ltd.

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Achievements o the current year as o

the date o preparation o the report,

and opinion o the Board o Directors on

uture actions

Un-audited rst month result o the currentnancial year is as ollows:

(Rs.)

Risk Assets: 16.70 billionDeposits: 33.95 billion

Operating prot: 916 millionProt beore bonus and taxes: 1013 millionNet prot or the period: 645 million

The bank will continue to invest in buildingthe ranchise and expand its ootprintscautiously. It will continue to strike a inebalance between growth and revenue.Similarly strong vigilance will be maintainedover the quality o assets. More innovativeproducts will be introduced to add valueto our customers by adhering to theirneeds. We shall be customer centric ratherthan product centric and will continueto improve the way we work to delight

our customers and other stakeholders.We will continue to invest in our peoplethrough cross border placements,trainings and knowledge enhancementand other measures in order to promotea meritocratic work perormance cultureand with the objective o increasing overallproductivity and grooming managers orthe uture.

A review o the business during the

previous year:

Please reer the sections ‘Wholesale Banking’& ‘Consumer Banking’ under CEO andDirector’s Report.

Industrial or Proessional Relations o the

Company

The Company maintains a good proessionalrelationship with its customers, people andregulators. Senior managers o the Companyrepresent in number o councils, committeesand sub-committees o regulators’, proessionalorganizations, associations, and orums.

The Company is a member o Nepal Bankers Association, Federation o Nepalese Chambero Commerce & Industry, Nepal BritainChamber o Commerce & Industry, NepalIndia Chamber o Commerce & Industry,Management Association o Nepal and NepalInstitute o Company Secretary.

Changes made in the Board o Directors,

and reasons thereore

Please reer the section ‘CorporateGovernance’ under Chairman’s Statement.

Main actors aecting the business

Please reer the sections ‘A ChallengingEnvironment’ and ‘Conclusion’ underChairman’s Statement and ‘Credit

Environment’ under CEO & Director’s Report.

Board o Directors’ Reaction to Remarks

made, i any, in the Audit Report

Please reer the sections ‘A ChallengingEnvironment’ and ‘Conclusion’ underChairman’s Statement and ‘CreditEnvironment’ under CEO & Director’s Report.

The amount recommended or

distribution as dividend

The Board has recommended paying Rs.209,772,540 by way o bonus shares andRs. 769,165,980 by way o dividend to the

shareholders.

Additional Inormation as

required by section 109o the Companies Act 2006

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Foreited Shares

There are no shares oreited during the scal year.

Transaction between the Bank and its

Subsidiary Company and the Progress

made in the Business

The Bank does not have a subsidiary company.

Main transactions carried out by the

company and its subsidiary company dur-

ing the nancial year and any important

change in the business o the company

during the period

The Bank does not have a subsidiary companyand there is no signicant change in thebusiness o the company during the period.

Inormation urnished to the company by

its basic shareholders during the previous

nancial year

There are no basic shareholders in the bankas no shareholder, except the SCB Group,holds more than 1% o the paid up capital o the Company. There has been no inormationreceived rom the SCB Group in this regard.

Particulars o the ownership o shares

taken up by the Directors and oce-bear-

ers o the company during the previous

nancial year, and inormation received

by the company rom them about their

involvement, i any, in the transactions o

the shares o the company

NIL. Directors and oce bearer have notinvolved in the shares transactions o the bankin FY 2066/67 as per the declaration providedby them to the Company.

Particulars o inormation urnished by

any Director or any o his close relatives

about his personal interest in any

agreement connected with the company

signed during the previous nancial year

There are no such inormation urnished by thedirectors and any o their close relatives.

Purchase o own Shares

The bank has not purchased its own shares inthe year under review.

Whether or not there is an internal control

system, and i there is any such system,

details there o

Please reer section ‘Our approach to CorporateGovernance’ under CEO & Director’s Report.

Particulars o the total management ex-

penses o the previous nancial year

The management expenses o the nancialyear is Rs. 60,82,68,808.00 million (total o Sta Expenses and Other Operating Expensesas per Schedule 4.23 & 4.24 o the FinancialStatements.)

A list o members o the Audit Committee,

remunerations, allowances and acilities

being received by them, particulars o

unctions discharged by the Committee,

and particulars o suggestions, i any, o-

ered by the Committee.

Please reer section ‘Our approach to CorporateGovernance’ under CEO & Director’s Report.

Remunerations, allowances and acilities:

The Committee members and the Chairmanhave been paid meeting allowance o NPR

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5000 and NPR 6000 per meeting respectively,except to the members representing the SCBGroup and employees o SCB, Nepal. Noremuneration and other acilities were providedto them. The total amount o Audit Committeemeeting allowance paid during the scal yearwas NPR 24,000; this was paid to Mr. RamBahadur Aryal, the only member/chairmaneligible to get meeting allowance, or attendingthe Audit Committee meetings as Chairmanand member o the Committee.

Functions discharged by the Committee:

Please reer section ‘Our approach toCorporate Governance’ under CEO &Director’s Report.

Payments due, i any, to the company

rom any Director, Managing Director, Ex-

ecutive Chie or basic shareholder o the

company or any o their close relatives,

or rom any rm, company or corporate

body in which he is involved

Nil

Remunerations, Allowances and Facilities

to the Directors, the Managing Director, the

Executive Chie and other Oce-bearers

Directors have not been paid any remunerationand no acilities have been provided to them.Meeting allowance is paid at Rs.11,000 to

the Chairman and Rs. 10,000 to Directors.However directors representing SCB Groupare not entitled to meeting allowance as perthe Company’s policy. Meeting allowancespaid to the Directors are as ollows:

Ram Bahadur Aryal 140,000.00 Arjun Bandhu Regmi 100,000.00

Remunerations, allowances and bonus paidto the CEO in FY 066/067, who also was aDirector o the Board, is Rs. 2,28,27,810.00

Dividends yet to Be Collected By

Shareholders

Total dividends yet to be collected by theshareholder amounts to Rs. 1,20,92,155.40.

Detail o property’s buy or sell as per

Clause 141

Nil.

Detail o the transactions held between

Associated Companies as per Clause 175

Nil.

Any other matter to be mentioned in the

Board o Directors’ report under

Companies Act, 2063

Nil

Schedule- 13

(Related to Sub Rule (1) o Rule 22 o

Securities Registration and Issuance

Regulation, 2065

Details to be incorporated in Annual

Report Functions

1. Report o Board o Directors

Covered in the previous texts o this annualreport

2. Report o Auditor

Included in the annual report

3. Audited Financial Detail

Balance Sheet, Prot & Loss, cash fow detailand related schedules Included.

4. Detail relating to Legal Actions

(a) I any case fled by Organized Institution

in the quarter, On 2066.05.30 a case o Mandamus or any other required Orderand on 2066.06.01 a case o Mandamuswere led against the Bank

(b) I any case relating to commission o

disobedience or criminal oence fled

by or against the Promoter or Director

o Organized Institution.

No Such inormation has been received.(c) I any case relating to commission

o fnancial crime fled against any

Promoter or Director.

No Such inormation has been received.

5.Analysis o share transaction and

progress o Organized Institution

(a) Management view on share transaction

o the Organized Institution happened

at Securities Market.

Since price and transactions o the Bank’sshares are being determined by the openshare market operations through a dulyestablished Stock Exchange, management

view on this is neutral.(b) Maximum, minimum and last share

price o Organized Institution including

total transacted number o shares and

transacted day during each quarter o

last year.

Ashwin end:

Maximum- Rs. 6,500, Minimum- Rs. 3,479,Last- 3,680, and total transacted number o shares- 1,21,138 respectively.

Poush end:

Maximum- Rs. 3,770, Minimum- Rs. 3,251,Last- Rs. 3,305, and total transacted number

o shares- 69,170 respectively.

Chaitra end:Maximum- Rs. 3,333, Minimum- Rs. 2,799,Last- Rs. 2,895, total transacted numbero shares- 76689 and transacted days-56respectively.

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Aashadh end:

Maximum- Rs. 3,470, Minimum- Rs. 2,403, Last-Rs. 3,279, total transacted number o shares-60,386 and transacted days-59 respectively.

6.Problem and Challenge

The infationary pressure has been a majorinternal challenge as it continues to pushthe cost o operations. Furthermore, theretention o talent and sta engagement insuch a competitive market is also attractingmuch attention rom the management.

The major external problems pertain to theunstable socio-political situation o the countryand the deteriorating risk environment. Therequent strikes are a huge impediment tothe smooth unctioning o the economy asa whole. Alongside the repercussion o the

fuid local business milieu, the contagion o the global nancial crisis is also impacting theoverall nancial environment.

Your bank is well placed to monitor andproactively deal with the challenges posed byinternal as well as external actors. We intendto continue being the pioneer in introducingnew products and services to better servethe market and deal with the competition.Our portolio is being managed well byemphasizing more on quality rather thanquantity. The employees are engaged intovarious trainings and programs to continuouslyupgrade their perormance and enhance their

motivation level. A crisis management plan isin place to deal with exigencies.

7.Corporate Governance

Incorporated in detail under the same chapterpreviously in this annual report.

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Board

o Directors

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Sujit Mundul,

(Chie Executive Ocer)Sujit Mundul, the Director &

CEO o SCB Nepal holds the

degree o M. Sc., BA (Hons)

in Economics & English,LLB, CAIIB and AIB. He has

also served as a Lecturer in

Kolkata and possesses more

than 35 years o banking

experience in SCB.

Neeraj Swaroop,

(Chairman)Neeraj Swaroop, the Chairman

o SCB Nepal is an MBA and

BE with more than 26 years o

experience in the banking sectoro which 18 years in Indian

Banking industry including Bank

o America and HDFC bank.

He is currently serving as the

Regional Chie Executive, India

and South Asia.

Anurag Adlakha,

(Director) Anurag Adlakha, Director

o the Bank, is a Chartered

Accountant by proession.

He has over 23 years o proessional career o which

18 years in nancial services

industry including HSBC

India. He is presently working

as the Chie Financial Ocer,

India and South Asia.

Ram Bahadur Aryal,

(Independent Director)Ram Bahadur Aryal,

Independent/ Proessional

Director is an MA in Economics

with more than 38 yearsexperience in Nepal Rastra

Bank (Central Bank o Nepal)

holding senior positions in

banking operation, planning,

training, oreign exchange and

Human Resources.

Sushen Jhingan, (Director)Sushen Jhingan, Director

o this Bank, is an MBA

with 13 years o banking

experience in StrategicSourcing and Corporate Real

Estate Services, government

and regulatory relations. He

is presently working as a

Resident Director - Public

Aairs, India.

left to right

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Management Team

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Anju ShArmA

Head - Consumer Banking

Sujit mundul

Chie Executive Ofcer

BinA rAnA

Head – Human Resources

rAkhi Singh

Chie Financial Ofcer

gopi BhAndAri

Senior Manager – Credit

ShoBhA BAhAdur rAnA

Head Legal and Compliance &

Assurance

SudeSh khAling

Chie Inormation Ofcer

sitting left to right standing left to right

diwAkAr poudel

Head – Corporate Aairs

AnurAg miShrA

Head – Wholesale Banking

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SCB Nepal Head Oce, New Baneshwor

New Road Branch

Lalitpur BranchLazimpat Branch

Branches

ATM sites

BhairahawaPO Box 14, Budha Chowk ColonyBurmeli Tole, Bhairahawa, Siddhartha Nagar977-71-524029, 524429977-71-524039

Biratnagar

PO Box 201, Hanumandas RoadBiratnagar - 8, Nepal

Tel. 977-21-528983Fax. 977-21-528982

Birgunj Adarsha Nagar-13,Birgunj, Nepal

Tel. 977-51-529499, 529494Fax. 977-51-529677

ButwalMilan Chowk,Butwal, Municipality - 11Rupandehi, Nepal

Tel. 977-71-546832, 549832Fax. 977-71-546882

DharanPanna Kamala ComplexWard No 7/100Ka, Buddha MargaDharan - 7 Sunsari, Nepal

Tel. 977-25-520505, 530980Fax. 977-25-530981

Head OceP.O.Box 3990Naya Baneshwar, Kathmandu, Nepal

Tel. 977-1-4782333, 4783753Fax. 977-1- 4780762

HetaudaBank Road, Hetauda - 4Makwanpur, Nepal

Tel. 977-57-523019, 524972Fax. 977-57-525695

LalitpurPO Box 3990Jawalakhel , Lali tpur, Nepal

Tel. 977-1-5540544, 5540566

Fax. 977-1-5523266

LazimpatPO Box 3990Lazimpat, Kathmandu, Nepal

Tel. 977-1-4418456Fax. 977-1- 4417428

NepalgunjSurkhet Raod, Ward No 13Nepalgunj Banke, Nepal

Tel. 977-81-525514, 520022Fax. 977-81-525515

Pokhara, LakesidePO Box 08Lakeside BaidamPokhara, Nepal

Tel. 977-61-462102, 462805, 461746

Fax. 977-61-462318

Pokhara, New RoadP.O.Box 08New Road, Pokhara, Nepal

Tel. 977-61-523875, 536230, 523876, 524297Fax. 977-61- 531676

NarayangarhLion's Chowk, Ward-4Narayangarh,Bharatpur

Tel. 977-56-571277, 571278Fax. 977-56-571279

New RoadP.O.Box 3990People’s Plaza (Pako Wing), PakoNewroad, Kathmandu, Nepal

Tel. 977-1-4157527,4157528Fax. 977-1-415730

Bhairahawa

Siddhartha Nagar, Hotel Pawan Building

Boudha, Kathmandu

Boudha, Near Boudhanath stupa

Dharan

BP Koirala Institute o Health Sciences

Itahari Chowk, Sunsari

Bhu Pu Gorkha Departmental Store,

Jawalakhel, Lalitpur

Standard Chartered Bank Nepal Ltd

Lakeside, Pokhara

Hotel Snowland, Lakeside

Lakeside, Pokhara

Standard Chartered Bank Nepal Ltd

Lazimpat, Kathmandu

Standard Chartered Bank Nepal Limited

Maharajgunj ATM

Shubham Departmental Store

Mangal Bazar, Patan

Patan, Mangal Bazar

Narayangarh, Bharatpur


Naya Baneshwor, Kathmandu


New Road, Pokhara

New Road, Pokhara

New Road, Kathmandu

Bishal Bazar, New Road

Pulchowk, Lalitpur

Near UNDP Complex

Pulchowk, Lalitpur

UNDP Complex

Thamel, Kathmandu

Arcadia Building, Near Yin Yang Restaurant

Thamel, Kathmandu

Kathmandu Guest House

World Trade Center, Tripureshwor

World Trade Center, Tripureshwor

New Road, KhichapokhariPeople's Plaza (Pako Wing)

Durbar Marg

Hotel De'l Annapurna

Extension CountersUN Counter – LalitpurBP Koirala Institute o HealthSciences – Dharan

British Gurkhas PPO – PokharaManipal Counter - Pokhara

8/3/2019 ar-2009-2010


Report of the Independent AuditorsTo the Shareholders of Standard Chartered Bank Nepal Limited

We have audited the accompanying nancial statements o Standard Chartered Bank Nepal Limited, which comprise the Balance Sheet as at

Ashad 32, 2067 (July 16, 2010), and the prot and loss account, Statement o Changes in Equity, Cash Flow Statement and Notes to the Annual

Account or the year then ended, Summary o signicant Accounting Policies and other explanatory notes.

Management's Responsibility or the fnancial StatementsManagement is responsible or the preparation and air presentation o these nancial Statements in accordance with Nepal Accounting Standards.

This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and presentation o nancial

statements that are ree rom material misstatement, whether due to raud or error; selecting and applying appropriate accounting policies; and

making accounting estimates that are reasonable in the circumstances.

Auditor's responsibilityOur responsibility is to express an opinion on these nancial statements based on our audit. We conducted our audit in accordance with Nepal

Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perorm the audit to obtain reasonable

assurance about whether the nancial statements are ree o material misstatement.

An audit involves perorming procedures to obtain audit evidence about the amounts and disclosures in the nancial statements. The procedures

selected depended on our proessional judgment, including the assessment o the risks o material misstatement o the nancial statements,

whether due to raud or error. In making those risk assessments, we considered the internal control relevant to the Bank's preparation and air

presentation o the nancial statements in order to design audit procedures that were appropriate in the circumstances, but not or the purpose o

expressing an opinion on the Bank's internal control. An audit also includes evaluating the appropriateness o the accounting policies used and the

reasonableness o accounting estimates made by the management, as well as evaluating the overall presentation o the nancial statements.

We believe that our audit evidence we obtained is sucient and appropriate to provide a basis or our opinion.

OpinionOn the basis o our examination, we would like to report that:

I. We have obtained all the inormation and explanations, which were considered necessary or the purpose or our audit.

Ii. In our opinion proper books o accounts as required by the law have been kept by the Bank.

III. The Bank has accounted Interest Income rom Loans & Advances on cash basis as per Nepal Rastra Bank's Directives which is not in line with

Nepal Accounting Standard 7- Revenue Recognition that prescribes accrual basis o accounting.

iv. The Balance Sheet, Prot and Loss Account, Cash Flow Statement and attached Schedules dealt with by this report are prepared as per

Directives o Nepal Rastra Bank and are in agreement with the books o account maintained by the Bank.

v. During our examination o the books o account o the Bank, we have not come across the cases where the Board o Directors or any member

thereo or any representative or any oce holder or any employee o the Bank has acted contrary to the provisions o law or caused loss or

damage to the Bank.

vi. The returns received rom branches o the Bank were adequate or the purpose o our audit.

vii. In our opinion, so ar as appeared rom our examination o the book, the Bank has maintained adequate capital unds and adequate provisions

or possible impairment o assets in accordance with the directives o Nepal Rastra Bank;

viii. The Bank has written-o loans as per the policy approved by Nepal Rastra Bank

ix. The Bank has been unctioning as per the directives o Nepal Rastra Bank.

x. The Bank has not acted in a manner to jeopardise the interest and security o the depositors and shareholders

xi. The operations o the Bank were within its jurisdiction, and

xii. We have not come across any raudulence in the accounts.

In our opinion, except or matter reerred to in para 4(iii) above, the accompanying nancial statements give a true and air view, in all material

respects the nancial position o Standard Chartered Bank Nepal Limited as at Ashad 32, 2067 (16 July, 2010) and o the results o its nancial

perormance and its cash fows or the year then ended in accordance with Nepal Accounting Standards and comply with Company Act 2063,

Banks and Financial Institutions Act, 2063 and Directives o Nepal Rastra Bank.

Bhakti Thapa Sadak, Bijulibazar

Tel.: 4491187, 4462367

P.O. Box No. 2343

Fax : 977-1-4462408

Kathmandu, Nepal

E-mail : [email protected]

S. R. PANDEY & Co.Chartered Accountants

Place: Kathmandu

Date: September 2, 2010

S. R. Pandey & Co.

Chartered Accountants

Sudarshan Raj Pandey, FCA

Partner

8/3/2019 ar-2009-2010



Balance Sheet

As at 16 July, 2010 (32 Ashad 2067)

Rs. Rs.

Capital & Liabilities Schedule This Year Previous Year

1. Share Capital 4.1 1,608,256,140 1,397,949,600

2. Reserves and Funds 4.2 1,761,453,304 1,654,520,131

3. Debentures and Bonds 4.3 - -

4. Loans and Borrowings 4.4 - 300,000,000

5. Deposit Liability 4.5 35,182,721,454 35,350,823,711

6. Bills Payables 4.6 89,219,655 72,941,748

7. Proposed Dividend 769,165,980 465,983,200

8. Income Tax Liability - 4,262,601

9. Other Liabilities 4.7 802,503,393 820,089,602

Total Liabilities 40,213,319,926 40,066,570,593

Rs. Rs.

Assets Schedule This Year Previous Year

1. Cash Balance 4.8 509,031,174 463,345,996

2. Balance with Nepal Rastra Bank 4.9 819,508,706 1,851,132,637

3. Balance with Banks/Financial Institutions 4.10 600,766,640 822,684,902

4. Money at Call and Short Notice 4.11 1,669,460,000 2,055,549,000

5. Investments 4.12 19,847,511,025 20,236,121,082

6. Loans, Advances and Bills Purchased 4.13 15,956,955,268 13,679,756,990

7. Fixed Assets 4.14 118,539,974 137,292,540

8. Non-Banking Assets 4.15 - -

9. Other Assets 4.16 691,547,139 820,687,446

Total Assets 40,213,319,926 40,066,570,593

Contingent Liabilities Schedule 4.17

Declaration o Directors Schedule 4.29

Capital Adequacy Table Schedule 4.30 (Ka 1)

Statement o Credit Risk Schedule 4.30 (Kha)

Statement o Eligible Credit Risk Mitigation Schedule 4.30 (Ga)

Statement o Operational Risk Schedule 4.30 (Gha)

Statement o Market Risk Schedule 4.30 (Nga)

Key Indicators Schedule 4.31

Signicant Accounting Policies Schedule 4.32

Notes to Accounts Schedule 4.33

Statement o Loan Availed by Promoter Shareholders rom Other

Bank and FIs by Pledging Their Shares Schedule 4.34

Comparision o Unaudited and Audited Financial Statements Schedule 4.35

Schedules 4.1 to 4.17 orm integral part o the Balance Sheet

Rakhi Singh Sujit Mundul Sushen Jhingan

Chie Financial Ocer CEO & Director Director Sudarshan Raj Pandey

Partner

or and on behal o S.R. Pandey & Co.


Ram Bahadur Aryal

Director

Kathmandu

Date :2nd September, 2010

As per our report o even date

8/3/2019 ar-2009-2010


Financial Statements and Notes




Partner



Ram Bahadur Aryal

Director

Kathmandu

Date :2

nd

September, 2010


Schedules 4.18 to 4.28 orm integral part o this Prot and Loss Account

Proft and Loss Account

or the period 16 July 2009 to 16 July 2010 (1 Shrawan 2066 to 32 Ashadh 2067)

Rs. Rs.

Particulars Schedule This Year Previous Year

1. Interest Income 4.18 2,042,109,322 1,887,221,257

2. Interest Expenses 4.19 575,740,660 543,786,600

Net Interest Income 1,466,368,662 1,343,434,657

3. Commission and Discount 4.20 338,298,109 288,031,446

4. Other Operating Incomes 4.21 34,479,473 33,191,251

5. Exchange Fluctuation Income 4.22 458,564,032 427,468,313

Total Operating Income 2,297,710,276 2,092,125,667

6. Sta Expenses 4.23 312,964,286 253,055,504

7. Other Operating Expenses 4.24 295,304,522 276,326,674

8. Exchange Fluctuation Loss 4.22 - -

Operating Prot Beore Provision or Possible Loss 1,689,441,468 1,562,743,489

9. Provision or Possible Losses 4.25 76,974,254 56,634,631

Operating Prot 1,612,467,214 1,506,108,858

10. Non-Operating Income/ (Loss) 4.26 36,268,280 22,098,317

11. Provision or Possible Loss Written Back 4.27 58,292,849 101,075,167

Prot rom Ordinary Activities 1,707,028,343 1,629,282,342

12. Income/(Expenses) rom Extra Ordinary Activities 4.28 (17,024,392) (15,356,059)

Net Prot ater considering all Activities 1,690,003,951 1,613,926,283

13. Provision or Sta Bonus 153,636,723 146,720,571

14. Provision or Income Tax 450,495,534 442,091,176

Current Year's Tax Provision 465,685,661 443,119,138

Upto Previous Year's Tax Provision 22,675 -

Current Year's Deerred Tax Income/Expenses (15,212,802) (1,027,962)

Net Prot/Loss 1,085,871,694 1,025,114,536

8/3/2019 ar-2009-2010



Prot and Loss Appropriation Account

or the period 16 July 2009 to 16 July 2010 (1 Shrawan 2066 to 32 Ashadh 2067)

Rs. Rs.

Particulars Schedule This Year Previous Year

Income

1. Accumulated Prot up to Previous Year 239,494,642 383,287,577

2. This Year's Prot 1,085,871,694 1,025,114,536

3. Exchange Fluctuation Fund - -

Total 1,325,366,336 1,408,402,113

Expenses

1. Accumulated Loss up to Previous Year - -

2. Current Year's Loss - -

3. General Reserve Fund 217,174,339 205,022,907

4. Contingent Reserve - -5. Institutional Development Fund - -

6. Dividend Equalisation Fund - -

7. Employees Related Reserves - -

8. Proposed Dividend 769,165,980 465,983,200

9. Proposed Issue o Bonus Shares 209,772,540 465,983,200

10. Special Reserve Fund - -

11. Exchange Fluctuation Fund 21,381,278 31,918,164

12. Capital Redemption Reserve Fund - -

13. Capital Adjustment Fund - -

14. Deerred Tax Reserve 76,281,207 -

15. Investment Adjustment Reserve 1,626,300 -

Total 1,295,401,644 1,168,907,471

Accumulated Prot/(Loss) 29,964,692 239,494,642



Partner



Ram Bahadur Aryal

Director

Kathmandu

Date :2nd September, 2010


8/3/2019 ar-2009-2010




S t a t e m

e n t o C h a n g e s i n E q u i t y

F i n a n c i a l

Y e a r 2 0 6 6 / 6 7 ( F Y 2 0 0 9 / 1 0 )

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2 1 7 , 1 7 4 , 3 3

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P r o p o s e d D i v i d e n d

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( 7 6 9 , 1 6 5 , 9 8 0 )

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I s s u e o B o n u s S h a r e

4 6 6 , 5

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4 6 6 , 5 1 7 , 2 0 0

P r o p o s e d I s s u e o B o n u s S h a r e s

2 0 9 , 7

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-

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I s s u e o S h a r e C a p i t a l

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E x c h a n g e F l u c t u a t i o n F u n d

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1 , 4 1 2 , 4 9 1 , 0 4

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2 4 1 , 0 9 0 , 0 5

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7 6 , 2 8 1 , 2 0 7

1 , 6 2 6 , 3 0 0

3 , 3 6 9 , 7 0 9 , 4 4 4

8/3/2019 ar-2009-2010



Cash Flow Statement

or the period 16 July 2009 to 16 July 2010 (1 Shrawan 2066 to 32 Ashadh 2067) Rs. Rs.

Particulars This Year Previous Year

(A) Cash Flow rom Operating Activities (2,249,622,421) 6,948,938,465

1. Cash Receipts 2,359,799,519 2,128,177,260

1.1 Interest Income 1,605,148,047 1,480,241,128

1.2 Commission and Discount Income 338,094,639 238,616,592

1.3 Income rom Foreign Exchange Transaction 373,038,919 352,358,259

1.4 Recovery o Loan Written o 9,038,441 23,770,030

1.5 Other Income 34,479,473 33,191,251

2. Cash Payments 2,076,472,587 1,963,910,721

2.1 Interest Expenses 535,333,144 521,840,234

2.2 Sta Expenses 306,659,170 254,218,116

2.3 Oce Operating Expenses 286,794,401 250,890,193

2.4 Income tax Payment 481,702,672 440,908,086

2.5 Other Expenses 465,983,200 496,054,092

Cash Flow beore Changes in Working Capital 283,326,932 164,266,539

Decrease/ (Increase) o Current Assets (1,896,058,135) 754,573,650

1. Decrease / (Increase) in Money at Call and Short Notice 386,089,000 141,988,600

2. Decrease / (Increase) in Short-term Investment - -

3. Decrease / (Increase) in Loan and Bills Purchase (2,321,942,516) 44,154,587

4. Decrease / (Increase) in Other Assets 39,795,381 568,430,463

(Decrease) /Increase o Current Liabilities (636,891,218) 6,030,098,276

1. (Decrease) / Increase in Deposits (168,102,257) 5,606,824,917

2. (Decrease) / Increase in Certicate o Deposits - -

3. (Decrease) / Increase in Short Term Borrowings (283,722,093) 285,544,727

4. (Decrease) / Increase in Other Liabilities (185,066,868) 137,728,632

(B) Cash Flow rom Investment Activities 955,706,293 (5,990,481,198)

1. Decrease/ (Increase) in Long term Investment 388,610,057 (6,333,302,071)

2. Decrease/ (Increase) in Fixed assets 19,845,714 (24,719,699)

3. Interest Income rom Long Term Investment 541,722,472 365,061,547

4. Dividend Income 5,528,050 2,479,025

5. Others - -

(C) Cash Flow rom Financing Activities 534,000 790,400

1. Increase/ (Decrease) in Long term Borrowings (Bond, Debenture etc) - -

2. Increase / (Decrease) in Share Capital 534,000 790,400

3. Increase / (Decrease) in Other Liability - -

4. Increase / (Decrease) in Renance /Facilities received rom Nepal Rastra Bank - -

(D) Income/Expense rom change in exchange rate in 85,525,113 127,672,654

Cash and Bank Balance

(E) Current year's cash fow rom all activities (1,207,857,015) 1,086,920,321

(F) Opening Cash and Bank Balance 3,137,163,535 2,050,243,214

(G) Closing Cash and Bank Balance 1,929,306,520 3,137,163,535

Rakhi Singh Sujit Mundul Sushen Jhingan Sudarshan Raj Pandey

Chie Financial Ocer CEO & Director Director Partner



Ram Bahadur Aryal

Director

Kathmandu Date :2nd September, 2010


8/3/2019 ar-2009-2010




Rs.

Share Ownership Details This Year Previous Year

% Share Capital % Share Capital

1. Domestic Ownership 25.00 349,620,900 25.00 232,991,600

1.1 Government o Nepal - - - -

1.2 "Ka" Class Licensed Institutions - - - -

1.3 Other Licensed Institutions - - - -

1.4 Other Entities 1.12 15,645,600 0.84 7,816,100

1.5 Individuals 23.79 332,711,700 24.07 224,343,700

1.6 Others 0.09 1,263,600 0.09 831,800

2. Foreign Ownership 75.00 1,048,862,700 75.00 698,974,800

Total 100.00 1,398,483,600 100.00 931,966,400

Details o the Shareholders holding 0.5 % or more o the Total SharesRs.

Sn Name o the Shareholders Number o Shares Held % o Total Shares Amount

1 Standard Chartered Grindlays Ltd, Sydney, Australia 6,992,418 50.00 699,241,800

2 Standard Chartered Bank, London, UK 3,496,209 25.00 349,620,900

3 Priyanka Agrawal 74,250 0.53 7,425,000

4 Avinash Agrawal 74,250 0.53 7,425,000

5 Komal Agrawal 74,250 0.53 7,425,000

6 Sashi Agrawal 74,250 0.53 7,425,000

7 Shankar Lal Agrawal 74,250 0.53 7,425,000

8 Pasupati Soap Industries 74,250 0.53 7,425,000

9 Arjun Bandhu Regmi 71,063 0.51 7,106,300

Schedule 4.1: Share Capital and Ownership

As at 16 July, 2010 (32 Ashad 2067)

Rs. Rs.


1. Share Capital

1.1 Authorised Capital 2,000,000,000 1,000,000,000

A) 20,000,000 Ordinary Shares o Rs. 100 each 2,000,000,000 1,000,000,000

B) Non-Redeemable Preerence Shares o Rs. ........ each - -

C) Redeemable Preerence Shares o Rs. ......... each - -

1.2 Issued Capital 1,398,483,600 1,000,000,000

A) 13,984,836 Ordinary Shares o Rs. 100 each 1,398,483,600 1,000,000,000

B) Non-Redeemable Preerence Shares o Rs. ...... each - -

C) Redeemable Preerence Shares o Rs. ......... each - -

1.3 Paid Up Capital 1,398,483,600 931,966,400

A) 13,984,836 Ordinary Shares o Rs. 100 each 1,398,483,600 931,966,400B) Non-Redeemable Preerence Shares o Rs. ........ each - -

C) Redeemable Preerence Shares o Rs. ........ each - -

1.4 Proposed Bonus Share 209,772,540 465,983,200

1.5 Calls in Advance - -

8/3/2019 ar-2009-2010



Schedule 4.2: Reserves and Funds

As at 16 July, 2010 (32 Ashad 2067)

Rs. Rs.


1. General Reserve Fund 1,412,491,048 1,195,316,709

2. Capital Reserve Fund - -

3. Capital Redemption Reserve - -

4. Capital Adjustment Fund - -

5. Other Reserves and Funds 77,907,507 -

5.1. Contingent Reserve - -

5.2. Institutional Development und - -

5.3. Dividend Equalisation Fund - -

5.4. Special Reserve Fund - -

5.5. Assets Revaluation Reserve - -

5.6. Deerred Tax Reserve 76,281,207 -

5.7. Other Free Reserves - -

5.8. Other Reserves 1,626,300 -

6. Accumulated Prot/ (Loss) 29,964,692 239,494,6427. Exchange Fluctuation Fund 241,090,057 219,708,780

Total 1,761,453,304 1,654,520,131

Schedule 4.3: Debentures and Bonds

As at 16 July, 2010 (32 Ashad 2067)

Rs. Rs.


1...… Percent Bond/Debentures o Rs………each issued on

……………….and Matured on……

……... (Outstanding balance o Redemption Reserves Rs…….. - -

2. ...… Percent Bond/Debentures o Rs………each issued on……………….and Matured on…………...

(Outstanding balance o Redemption Reserves Rs…….. - -

Total ( 1+2 ) - -

Financial Statements and Notes to Accounts continued

Schedule 4.4 : Loans and Borrowings

As at 16 July, 2010 (32 Ashad 2067)

Rs. Rs.


A. Local

1. Government o Nepal - -2. Nepal Rastra Bank - -

3. Repo Liabilities - -

4. Inter Bank and Financial Institution - 300,000,000

5. Other Institutions - -

6. Others - -

Total A - 300,000,000

B. Foreign

1. Banks - -

2. Others - -

Total B - -

Total (A+B) - 300,000,000

8/3/2019 ar-2009-2010




Schedule 4.5 : Deposit Accounts

As at 16 July, 2010 (32 Ashad 2067)

Rs. Rs.


1. Non-Interest Bearing Accounts

A. CURRENT DEPOSITS 9,763,154,975 5,752,096,762

1. Local Currency 4,942,469,903 3,361,549,217

1.1 Government o Nepal 80,263,353 92,299,158

1.2 "Ka" Class Licensed Institutions 57,493,642 137,475,948

1.3 Other Licensed Institutions 6,025,650 21,349,191

1.4 Other Organised Institutions 4,315,182,370 2,678,423,732

1.5 Individuals 376,773,123 385,743,314

1.6 Others 106,731,765 46,257,874

2 Foreign Currency 4,820,685,072 2,390,547,545

2.1 Government o Nepal - -

2.2 "Ka" Class Licensed Institutions 37,030,564 25,501,017

2.3 Other Licensed Institutions - -


2.5 Individuals 217,557,235 219,974,380

2.6 Others 152,804,200 45,453,653

B. MARGIN DEPOSITS 251,242,284 377,959,072

1. Employees Guarantee

2. Guarantee Margin 85,440,813 114,647,316

3. Letter o Credit Margin 73,810,553 118,436,904

4. Others 91,990,918 144,874,852

C. OTHERS - -

1. Local Currency - -1.1 Financial Institutions - -

1.2 Other Organised Institutions - -

1.3 Individuals - -

2. Foreign Currency - -

2.1 Financial Institutions - -

2.2 Other Organised Institutions

2.3 Individuals - -

Total o Non-Interest Bearing Accounts 10,014,397,259 6,130,055,834

8/3/2019 ar-2009-2010



Schedule 4.5: Deposit Accounts (Continued)

As at 16 July, 2010 (32 Ashad 2067)

Rs. Rs.


2. Interest Bearing Accounts

A. SAVING DEPOSITS 12,430,009,193 19,146,003,630

1. Local Currency 10,561,340,752 15,347,532,227

1.1 Organised Institutions 12,458,709 1,978,635,144

1.2 Individuals 10,548,556,916 13,266,664,995

1.3 Others 325,127 102,232,088

2. Foreign Currency 1,868,668,441 3,798,471,403

2.1 Organised Institutions 10,561,441 1,953,787,903

2.2 Individuals 1,851,694,718 1,809,147,447

2.3 Others 6,412,282 35,536,053

B. FIXED DEPOSITS 9,175,070,477 7,101,697,629

1. Local Currency 3,603,054,870 791,923,115

1.1 Organised Institutions 1,808,480,190 27,340,793

1.2 Individuals 1,793,174,680 105,071,746

1.3 Others 1,400,000 659,510,576


2.1 Organised Institutions 5,471,811,962 5,990,331,061

2.2 Individuals 100,203,645 319,443,453

2.3 Others - -

C. CALL DEPOSITS 3,563,244,525 2,973,066,618

1. Local Currency 3,552,366,688 2,884,066,877

1.1 "Ka" Class Licensed Institutions - -

1.2 Other Licensed Institutions 200,379,894 257,491


1.4 Individuals 1,012,677,736 431,859,044

1.5 Others 1,163,390 -

2. Foreign Currency 10,877,837 88,999,741

2.1 "Ka" Class Licensed Institutions - -

2.2 Other Licensed Institutions - -

2.3 Other Organised Institutions 10,877,837 88,999,741

2.4 Individuals - -

2.5 Others - -

D. CERTIFICATE OF DEPOSITS - -1. Organised Institutions - -

2. Individuals - -

3. Others - -

Total o Interest Bearing Accounts 25,168,324,195 29,220,767,877

Total Deposits (1+2) 35,182,721,454 35,350,823,711


8/3/2019 ar-2009-2010




Rs. Rs.


1. Pension/Gratuity Fund 67,911,639 61,606,5232. Employees Provident Fund - -

3. Employees Welare Fund - -

4. Provision or Sta Bonus 153,636,723 146,720,571

5. Interest Payable on Deposits 94,906,385 54,442,157

6. Interest Payable on Borrowings - 56,712

7. Unearned Discount and Commission 20,464,057 30,718,324

8. Sundry Creditors 235,630,737 277,233,810

9. Branch Adjustment Account - -

10. Deerred Tax Liabili ty

11. Dividend Payable 12,092,156 10,312,848

12. Others 217,861,696 238,998,657

a) Audit Fees Payable 557,500 446,000

b) Others 217,304,196 238,552,657

Total 802,503,393 820,089,602

Schedule 4.7 : Other Liabilities

As at 16 July, 2010 (32 Ashad 2067)

Rs. Rs.


1. Local Currency 36,606,241 60,773,754


Total 89,219,655 72,941,748

Schedule 4.6: Bills Payable

As at 16 July, 2010 (32 Ashad 2067)

Rs. Rs.


1. Local Currency (including coins) 471,554,724 416,767,782


Total 509,031,174 463,345,996

Schedule 4.8: Cash Balance

As at 16 July, 2010 (32 Ashad 2067)

8/3/2019 ar-2009-2010




Foreign Currency Rs.Local Currency Convertible Grand Total Previous Year

Particulars Rs. INR Foreign Currency Total Rs. Rs.

1. Nepal Rastra Bank 677,607,151 - 141,901,555 141,901,555 819,508,706 1,851,132,637

a) Current A/C 677,607,151 - 141,901,555 141,901,555 819,508,706 1,851,132,637

b) Other A/C - - - - - -

Schedule 4.9: Balance with Nepal Rastra Bank

As at 16 July, 2010 (32 Ashad 2067)

Local Currency Foreign Currency (Rs.) Grand Total Previous Year

Particulars Rs. INR Convertible Total Rs. Rs.

Foreign Currency

1. Local Licensed 28,647,994 - - - 28,647,994 51,292,893

Institutions

a. Current Account 28,647,994 - - - 28,647,994 51,292,893

b. Other Account - - - - - -

2. Foreign Banks - 161,577,798 410,540,848 572,118,646 572,118,646 771,392,009

a. Current Account - 161,577,798 410,540,848 572,118,646 572,118,646 771,392,009

b. Other Account - - - - - -

Total 28,647,994 161,577,798 410,540,848 572,118,646 600,766,640 822,684,902

Schedule 4.10: Balance with Banks / Financial Institutions

As at 16 July, 2010 (32 Ashad 2067)

Note: Balance as per the conrmation and statement received rom respective banks is NPR 948,671,072 and the dierences have been reconciled.

8/3/2019 ar-2009-2010




Rs. Rs.


1. Local Currency - -


Total 1,669,460,000 2,055,549,000

Schedule 4.11: Money at Call and Short Notice

As at 16 July, 2010 (32 Ashad 2067)

Schedule 4.12: Investments

As at 16 July, 2010 (32 Ashad 2067)

Particulars Purpose This Year Previous Year

Trading Other Rs. Rs.

1. Government o Nepal Treasury Bills - 7,878,573,686 7,878,573,686 9,050,988,434

2. Government o Nepal Saving Bonds - 648,150,000 648,150,000 917,150,000

3. Government o Nepal - 4,795,839 4,795,839 30,615,124

Others Securities (Special Bond)

4. Nepal Rastra Bank Bonds - - - -

5. Foreign Securities - - - -

6. Local Licensed Institutions - 380,000,000 380,000,000 250,613,524

7. Foreign Banks - 10,844,948,000 10,844,948,000 9,895,710,500

8. Corporate Shares - 106,925,500 106,925,500 106,925,500

9. Corporate Debenture and Bonds - 8,493,000 8,493,000 8,493,00010. Other Investments - - - -

Total Investments - 19,871,886,025 19,871,886,025 20,260,496,082

Provision 24,375,000 24,375,000 24,375,000

Net Investments - 19,847,511,025 19,847,511,025 20,236,121,082

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Schedule 4.12(A): Investment in Shares, Debentures and Bonds

As at 16 July, 2010 (32 Ashad 2067)

Particulars Cost Price As per Market Provision This Year Previous YearRs. Price Rs. Amount Rs. Rs. Rs.

1. Investment in Shares 106,925,500 - 24,375,000 106,925,500 106,925,500

1.1 Purwanchal Grameen 3,000,000 NA (Note - 3) - 3,000,000 3,000,000

Bikash Bank Ltd. 30,000 Ordinary

Shares o Rs.100 each ully paid up

1.2 Sudur Paschimanchal Grameen 3,000,000 NA (Note - 3) 3,000,000 3,000,000 3,000,000

Bikash Bank Ltd. 30,000 Ordinary

Shares o Rs.100 each ully paid up

1.3 Rural Micro Finance 52,190,000 NA (Note - 3) - 52,190,000 52,190,000

Development Centre Ltd. 521,900

Ordinary Shares o Rs.100

each ully paid up

1.4 Credit Inormation Centre Ltd. 1,235,500 NA (Note - 3) - 1,235,500 1,235,500

14,120 Ordinary Shares o Rs.100

each ully paid up (including 1,765

bonus shares ully paid up)

1.5 Taragaon Regency Hotels Ltd. 47,500,000 (Note - 4) 21,375,000 47,500,000 47,500,000

475,000 Ordinary Shares o Rs.

100 each ully paid up

2. Investment in Debentures 8,493,000 - - 8,493,000 8,493,000

and Bonds

2.1 Nepal Electricity Authority 8,493,000 NA (Note - 3) - 8,493,000 8,493,000

7.75%; 8,493 bonds o Rs. 1,000

each ully paid up, interest payablesemiannually, maturity on 27th

March 2013

Total Investment 115,418,500 - 24,375,000 115,418,500 115,418,500

3. Provision or Loss

3.1 Upto Previous year 24,375,000 24,375,000

3.2 Increase/Decrease this Year - -

Total Provision 24,375,000 24,375,000

Net Investments 91,043,500 91,043,500

NOTE:

1. The ollowing companies have not distributed dividends in the last three years :

1.1 Sudur Paschimanchal Grameen Bikash Bank Ltd.

1.2 Taragaon Regency Hotels Ltd.

2. Out o the total investment above, Nepal Electricity Authority Bond and shares o Purwanchal Grameen Bikash Bank

Ltd. and Taragaon Regency Hotels Ltd. are listed at the Nepal Stock Exchange Ltd (NEPSE).

3. NA - In the absence o sucient inormation and/or listing in NEPSE , the market value o the investments have not

been shown.

4. Last trading price o Taragaon Regency Hotels Ltd. was Rs.78/share, but due to lack o sucient volume and

requency, provision as per previous year is being maintained.


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Schedule 4.12.1 : Business Investment (Held For Trading)

As at 16 July, 2010 (32 Ashad 2067)

Particulars Cost Price Previous Market Current Market This Year Previous Year) Remarks

Price (a) Price (b) Prot/(Loss) Prot/(Loss

Rs. Rs. Rs (b-a) Rs. Rs.

1. Nepal Government's Treasury Bills

2. Nepal Government's Saving Bonds

3. Nepal Government's Other Securities

4. Nepal Rastra Bank Bond

5. Foreign Securites

6. Shares o Domestic Licensed Institution

7. Debenture and Bond Domestic Licensed Institution

8. Shares, Debentures and Bond o Domestic Entity

9. Foreign Bank Investment (Placement)

10. Interbank Lending11. Other Investments

Total Investment - - - - -

Schedule 4.12.2 :Investment Held To Maturity

As at 16 July, 2010 (32 Ashad 2067)

Particulars Cost Price Impairment Impairment This Year Previous Year Remarks

(a) till Date (b) this year (c) Prot/(Loss) Prot/(Loss)

Rs. Rs. Rs. (a-b-c) Rs. Rs.

1. Nepal Government's Treasury Bills 7,878,573,686 - - 7,878,573,686 9,050,988,434

2. Nepal Government's Saving Bonds 648,150,000 - - 648,150,000 917,150,000

3. Nepal Government's Other Securities 4,795,839 - - 4,795,839 30,615,124

4. Nepal Rastra Bank Bond - - - - -5. Foreign Securites - - - - -

6. Shares o Domestic Licensed Institution - - - - -

7. Debenture and Bond Domestic Licensed Institution - - - - -

8. Shares, Debentures and Bond o Domestic Entity 8,493,000 - - 8,493,000 8,493,000

9. Foreign Bank Investment (Placement) 10,844,948,000 - - 10,844,948,000 9,895,710,500

10. Other Investments 380,000,000 - - 380,000,000 250,613,524

Total 19,764,960,525 - - 19,764,960,525 20,153,570,582

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Particulars Cost Price Previous Current This Year Previous Year Remarks

Market Market und adj Prot/(Loss)

Price (a) Price (b) (b-a)

Rs. Rs. Rs. Rs. Rs.

1. Nepal Government's Treasury Bills

2. Nepal Government's Saving Bonds

3. Nepal Government's Other Securities

4. Nepal Rastra Bank Bond

5. Foreign Securites

6. Shares o Domestic Licensed Institution 58,190,000 - - - -

7. Debenture and Bond Domestic Licensed Institution

8. Shares, Debentures and Bond o Domestic Entity 48,735,500 - - - -

9. Foreign Bank Investment (Placement)10. Other Investments

Total 106,925,500 - - - -

Schedule 4.12.3: Business Investment (Available For Sale)

As at 16 July, 2010 (32 Ashad 2067)

In the absence o sucient inormation and/or listing in NEPSE , the market value o the investments have not been shown.

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Schedule 4.13(A) :Securities Against Loan, Advance and Bills Purchased

As at 16 July, 2010 (32 Ashad 2067)


Schedule 4.14: Fixed Assets

As at 16 July, 2010 (32 Ashad 2067)

Rs. Rs.


(A) Secured 16,176,582,758 13,880,703,075

1. Movable / Immovable Assets 12,178,299,840 9,159,793,509

2. Guarantee o Local Licensed Institutions - -

3. Government Guarantee - -

4. Guarantee o Internationally Rated Banks 102,566,996 299,204,033

5. Export Documents - -

6. Fixed Deposit Receipts 443,393,935 594,275,211

(a) Own FDR 38,771,038 193,655,080

(b) FDR o Other Licensed Institutions 404,622,897 400,620,131

7. Government Securities/ Bonds 263,466,765 301,314,808

8. Counter Guarantee - -

9. Personal Guarantee - -

10. Other Securities 3,188,855,222 3,526,115,514

(B) Unsecured - -

Total 16,176,582,758 13,880,703,075

Particulars AssetsFreehold Vehicles Machinery Oce Others This Year Previous Year

and Buildings Equipment Leasehold

Rs. Rs. Rs. Rs. Assets Rs. Rs. Rs.

1. At Costa. Balance upto Previous Year 21,718,550 46,647,828 - 304,959,086 75,778,473 449,103,937 414,271,532

b. Addition this year - 1,123,589 - 12,354,156 8,915,772 22,393,517 57,372,262

c. Revaluation/Written-back this year - - -

d. Sold this year - - - (2,068,986) - (2,068,986) (22,539,857)

e. Written-o this year - - -

Total Cost (a+b+c+d+e) 21,718,550 47,771,417 - 315,244,256 84,694,245 469,428,468 449,103,937

2. Depreciation

a. Upto Previous Year 5,353,771 38,457,385 255,747,816 34,681,981 334,240,953 323,231,887b. For this Year 432,016 5,464,842 18,690,274 5,059,950 29,647,082 24,318,709

c. Depreciation on Revaluation /

Written-back

d. Depreciation adjustment/ write back - - (2,068,985) - (2,068,985) (13,309,643)

Total Depreciation (a+b+c+d) 5,785,787 43,922,227 - 272,369,105 39,741,931 361,819,050 334,240,953

3. Book Value (WDV)* (1-2) 15,932,763 3,849,190 - 42,875,151 44,952,314 107,609,418 114,862,984

4. Land 10,930,556 10,930,556 15,034,556

5. Capital Work in Progess - - - - - 7,395,000

(To be Capitalised)

6. Leasehold Assets - - - - - - -

Total (3+4+5+6) 26,863,319 3,849,190 - 42,875,151 44,952,314 118,539,974 137,292,540

* Written Down Value.

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Schedule 4.15: Non-Banking Assets

As at 16 July, 2010 (32 Ashad 2067)

Name and Date o Total Amount o Provision or Loss

Address o assuming Non Banking Net Non- Previous

Borrower or Non Banking Assets Banking Assets Year

Party Assets Rs. % Amount Rs. Rs. Rs.

- - - - - - -

- - - - - - -

Total - - - - - -

Schedule 4.16: Other Assets

As at 16 July, 2010 (32 Ashad 2067)

Rs. Rs.


1. Stock o Stationary 6,090,784 5,232,888

2. Income Receivable on Investments 115,153,351 219,914,548

3. Accrued Interest on Loan 136,165,591 - 117,646,865

Less: Interest Suspense Amount (136,165,591) - (117,646,865)

4. Commission Receivable 2,519,986 2,316,5165. Sundry Debtors 93,563,395 80,381,635

6. Sta Loan and Advances 185,343,913 182,487,582

7. Prepayments 15,763,967 38,871,378

8. Cash in Transit - -

9. Other Transit Items (Including Cheques) 126,413 15,169,292

10. Drats Paid without Notice - -

11. Expenses Not Written-o 31,519,974 36,402,914

12. Branch Adjustment Account - -

13. Deerred Tax Assets 76,281,207 61,068,405

14. Others 165,184,149 178,842,288

a) Advance Income Tax (net o Provision) 11,731,735

b) Others 153,452,414

Total 691,547,139 820,687,446


Schedule 4.16(A) : Other Assets (Additional Statement)

As at 16 July, 2010 (32 Ashad 2067)

Particulars This Year (Rs.)

Up to 1 1 to 3 Above 3 Total Previous Year

Year Years Years Rs.

1. Accrued Interest on Loans and Advances 88,094,118 219,745 47,851,728 136,165,591 117,646,865

2. Drats Paid without Notice - - - - -

3. Branch Adjustment Account - - - - -

4. Local/Foreign Agency Account - - - - -

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Schedule 4.17: Contingent Liabilities

As at 16 July, 2010 (32 Ashad 2067)Rs. Rs.


1. Claims on Bank but not Acknowledged as Liabilities by the Bank - -

2. Letters o Credit (Full amount) 2,627,211,864 3,120,878,804(a) Maturity period o less than 6 months 2,212,780,495 2,867,156,012

(b) Maturity period o more than 6 months 414,431,369 253,722,792

3. Rediscounted Bills - -

4. Unmatured Guarantees/Bonds 772,222,330 1,484,857,424

(a) Bid Bonds 30,734,175 358,686,280

(b) Perormance Bonds 310,893,127 716,145,390

(c) Other Guarantee/Bonds 430,595,028 410,025,754

5. Unpaid amount on Investment in Shares - -

6. Outstanding Liabilities o Forward Exchange Contracts 1,223,147,045 1,332,125,612

7. Bills or Collection 223,011,774 672,008,031

8. Acceptance and Endorsements 426,181,956 1,016,660,739

9. Underwriting Commitment - -

10. Irrevocable Loan Commitments 1,406,267,137 1,215,235,221

11. Guarantee against Counter Guarantee o Internationally Rated Banks 2,357,068,525 2,098,631,210

12. Advance Payment Guarantee 15,200,000 97,500

13. Financial Guarantee 104,338,336 103,786,602

14. Contingent Liabilities on Income Tax 2,605,277 3,901,166

15. Others 530,070,650 123,808,727

Total 9,687,324,894 11,171,991,036

Rs. Rs.


A. On Loan, Advances and Overdrat 1,379,283,993 1,104,047,249

1. Loan and Advances 1,265,219,217 1,027,707,274

2. Overdrats 114,064,776 76,339,975

B. On Investment 436,961,275 406,980,129

1. Government o Nepal Securities 436,304,870 406,325,553

a. Treasury Bills 381,899,432 348,126,573

b. Development Bonds 53,296,288 53,955,991

c. National Savings Certicates - -

d. Special Bonds 1,109,150 4,242,989

2. Foreign Securities - -

3. Nepal Rastra Bank Bonds - -

4. Debenture and Bonds 656,405 654,576

5. Interest on Inter bank Investment - -a. Financial Institutions - -

b. Other Organisations

C. On Agency Balances 480,823 1,867,2391. Local Banks / Financial Institutions - -

2. Foreign Banks 480,823 1,867,239

D. On Money at Call and Short Notice 4,818,114 39,051,5651. Local Banks / Financial Institutions - -

2. Foreign Banks 4,818,114 39,051,565

E. On Others 220,565,117 335,275,0751. Certicate o Deposits - -

2. Inter-Bank / Financial Institution Loan 72,813,103 39,322,576

3. Placement with Foreign Banks 117,606,811 286,022,751

4. Others 30,145,203 9,929,748

Total 2,042,109,322 1,887,221,257

Schedule 4.18: Interest Income

or the period 16 July 2009 to 16 July 2010

(1 Shrawan 2066 to 32 Ashad 2067)

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Rs. Rs.Particulars This Year Previous Year

A. On Deposit Liabilities 561,725,321 520,761,481

1. Fixed Deposits 138,001,956 134,404,092

1.1. Local Currency 39,402,978 11,953,974

1.2. Foreign Currency 98,598,978 122,450,118

2. Savings Deposits 291,801,113 296,105,028

2.1.Local Currency 276,233,310 260,030,008

2.2.Foreign Currency 15,567,803 36,075,020

3. Call Deposits 131,922,252 90,252,361

3.1. Local Currency 125,124,699 84,999,297

3.2. Foreign Currency 6,797,553 5,253,064

4. Certicate o Deposits - -

B. On Borrowings 9,555,199 18,531,766

1. Debentures and Bonds - -

2. Loans rom Nepal Rastra Bank 4,093,401 1,584,935

3. Inter Bank /Financial Institutions Borrowings 5,461,798 16,946,831

4. Other Institutions - -

5. Other Loans - -

C. On Others 4,460,140 4,493,353

1. Premium on Development Bonds 4,460,140 4,493,353

2. Others - -

Total 575,740,660 543,786,600

Schedule 4.19: Interest Expenses



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A. Bills Purchased and Discounted 17,823,134 19,413,9651. Domestic 388,883 907,464

2. Foreign 17,434,251 18,506,501

B. Commission 111,378,883 113,016,168

1. Letters o Credit 7,959,235 7,280,626

2. Guarantees 41,865,371 33,122,424

3. Collection Fees 3,109,664 3,994,042

4. Remittance Fees 38,541,783 37,049,477

5. Credit Cards 19,832,330 31,469,999

6. Share Underwriting/Issues - -

7. Government Transactions - -

8. E. Pra. Commission - -

9. Exchange Fees ( Batta Income) 70,500 99,600

C. Others 209,096,092 155,601,313

1. Management Fees 6,441,106 6,852,025

2. Loan Processing Fees 51,096,973 29,987,959

3. Ledger and Activity Fees 28,767,206 27,899,001

4. Commission on Travellers Cheque 7,176,576 6,683,472

5. Others (including income rom Gold & Derivatives) 115,614,231 84,178,856

Total 338,298,109 288,031,446

Schedule 4.20: Commisssion and Discount



Rs. Rs.


1. Rental on Sae Deposit Locker 4,019,427 3,773,301

2. Issue and Renewals o Credit Cards 10,326,016 8,602,065

3. Issue and Renewals o ATM Cards 9,291,006 8,777,397

4. Telex /T.T. 7,975,830 7,921,513

5. Service Charges - -

6. Renewal Fees 505,415 456,973

7. Others 2,361,779 3,660,002

Total 34,479,473 33,191,251

Schedule 4.21: Other Operating Income



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A. Revaluation Gain 85,525,113 127,672,653

B. Trading Gain (except Batta) 373,038,919 299,795,660

Total Income (Loss) 458,564,032 427,468,313

Schedule 4.22: Exchange Fluctuation Gain/Loss



Rs. Rs.


1. Salary 185,843,691 165,352,156

2. Allowances 1,132,786 743,710

3. Contribution to Provident Fund 9,126,093 8,115,518

4. Training Expenses 6,554,738 4,800,913

5. Uniorm 219,685 161,355

6. Medical 4,082,920 3,009,449

7. Insurance - -

8. Pension and Gratuity Provision 32,628,645 12,738,534

9. Others 73,375,728 58,133,869

a) Sta Incentive 59,901,710 50,005,200

b) Others 13,474,018 8,128,669

Total 312,964,286 253,055,504

Schedule 4.23: Sta Expenses



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1. House Rent 44,589,574 39,725,664

2. Light, Electricity and Water 16,082,080 15,394,850

3. Repair and Maintenance 9,270,563 14,582,754

(a) Building 2,832,224 8,889,511

(b) Vehicles 1,466,807 923,782

(c) Others 4,971,532 4,769,461

4. Insurance 5,212,446 5,585,155

5. Postage, Telex, Telephone, Fax 41,866,562 43,913,129

6. Oce Equipment, Furniture and Repair 35,872,647 32,978,690

(a) Oce Equipment and Furniture (non capitalised item) 27,630,107 24,518,268

(b) Repairs 8,242,540 8,460,422

7. Travelling Allowances and Expenses 14,914,492 10,489,786

8. Stationery and Printing 13,442,417 11,868,1879. Periodicals and Books 879,553 751,770

10. Advertisement 13,217,846 12,671,068

11. Legal Expenses 411,878 1,141,641

12. Donations 20,001 200,000

13. Expenses Relating to Board o Directors 487,451 524,927

(a) Meeting Allowance 264,000 284,000

(b) Others Expenses 223,451 240,927

14. General Meeting Expenses 1,113,456 1,753,078

15. Expenses Relating to Audit 849,921 731,826

(a) Audit Fees 565,000 452,000

(b) Other Expenses 284,921 279,826

16. Commission on Remittances - -

17. Depreciation on Fixed Assets 29,647,082 24,318,709

18. Amortization o Pre Operating Expenses - -

19. Share Issue Expenses - -

20. Technology Support Cost (Technical Services Fees ) 15,849,770 14,100,09821. Entertainment 1,842,046 1,837,866

22. Written O Expenses 22,685 179

23. Security Expenses 20,089,072 16,184,618

24. Credit Guarantee Premium - -

25. Commission and Discount 8,998,063 8,555,094

26. Others 20,444,917 19,017,585

(a) Sotware Expenses Charged O 4,872,374 10,391,206

(b) Cleaning, Pest Control and Waste Management 5,098,629 2,550,013

(c) Others 10,473,914 6,076,366

Total 295,304,522 276,326,674

Schedule 4.24: Other Operating Expenses



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Schedule 4.25 Provision or Possible Losses




1. Increase in Loan Loss Provision 76,974,254 56,634,631

2. Increase in Provision or Loss on Investments - -

3. Provision or Non-Banking Assets - -

4. Provision or Other Assets - -

Schedule 4.26: Non Operating Income/ (Loss)



Rs. Rs.


1. Prot (Loss) on Sale o Investment - -

2. Prot (Loss) on Sale o Assets 30,740,230 19,619,292

3. Dividend (Net) 5,528,050 2,479,025

4. Subsidies Received rom Nepal Rastra Bank - -

a. Compensation against Losses o Specied Branches - -

b. Interest Indemnity - -

c. Exchange Counter - -

5. Others - -

Net Non Operating Income/ (Loss) 36,268,280 22,098,317

Rs. Rs.


1. Loan Loss Provision Written Back 58,292,849 101,075,167

2. Provision against Non-Banking Assets Written Back - -

3 Investment Provision Written Back - -

4. Provision against Other Assets Written Back - -

Total 58,292,849 101,075,167

Schedule 4.27: Provision or Possible Loss Written Back



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1. Recovery o Loans Written O 9,038,441 23,770,030

2. Voluntary Retirement Scheme Expenses - -

3. Unrecoverable Loan Write O (Schedule 4.28A) (26,062,833) (39,126,089)

4. Other Expenses/Income - -

Total (17,024,392) (15,356,059)

Schedule 4.28: Income / (Expenses) rom Extra-Ordinary Activities



Schedule 4.28 A: Statement o Loans Written O



S.N Types o Written o Type o Security Basis o Valuation Loan Approving Initiations made Remarks

Loan Amount Rs. and Amount Rs. o Security Authority / or Recovery

Designation

1 Working Capital Loan -

2 Project Loan -

3 Fixed Capital Loan -

4 Personal Loan 6,641,816 None NA Manager Credit/ Follow up through Recoveries rom

5 Other Loan 19,421,017 Head Consumer phone calls Current year write

Bank & letters o is Rs. 230,600a) Credit Cards 1,981,377 None NA Manager Credit/ Phone calls Recoveries rom

Head Consumer & letters Current year write

Bank o is Rs. 343,540

b) Gramin Prathamik 1,612,949 None NA Manager Credit/ Phone calls Recoveries rom

Karja Head Consumer & letters Current year write

Bank o is Rs. 443,487

c) Home Loan - - - - - -

d) Auto Loan 15,826,691 Vehicle Valuation Report Manager Credit/ Phone calls/ Recoveries rom

rom Approved Head Consumer Letters/Visits, Current year write

Valuators & cost Bank Vehicle Repossession, o is Rs. 1,483,750

price at the time Auction Notice.

o disbursement Securities sold by

o Loan Negotiation/

Auction sale.

Total Loan 26,062,833

During the year, Bank has recovered the amount against the current year written o loans as shown under Remarks column. In respect o Auto

Loan, the value o a vehicle in posession o the Bank is Rs. 1,990 thousand ( as per the valuation o approved valuators).

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Schedule 4.29:Statement o Loans & Advances Extended to Directors/ Chie Executive Ocer/

Promoters/Sta and Shareholders

As at 16 July, 2010 (32 Ashad 2067)

Rs. Rs.

Name o Promoter/ Balance upto Previous Year Recovery made This Year Additions during Balance as at Ashad end

Director/Chie Principal Interest Principal Interest the year Principal Interest

Executive Ocer Rs. Rs. Rs. Rs. Rs. Rs Rs.

( A) Directors -

(B) Chie Executive Ocer - - - - - - -

(C) Promoters - - - - - - -

(D) Sta - - - - - - -

(E) Shareholders - - - - - - -

Total - - - - - - -

The Statement o amount, included under total amount o Bills Purchased and Discounted, Loans, Advances and Overdrat, provided to the

Directors, Chie Excecutive Ocer, Promoters, Sta, Shareholders and to the individual members o their undivided amily or against the guarantee

o such persons or to the organisations or companies in which such individuals are managing agent, are as ollows:

Note :

As per clause 3 o the Nepal Rastra Bank (The Central Bank o Nepal ) Directive No. 6, loans given to executive ocers and employees are as per

Bank sta rules and hence not disclosed above.

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Schedule 4.30 (Ka 1): Capital Adequacy Table

as at 16 July, 2010 (32 Ashad 2067)

1.1 RISK WEIGHTED EXPOSURES This Year Previous Year

A Risk Weighted Exposure or Credit Risk 20,779,883 18,758,432

B Risk Weighted Exposure or Operational Risk 3,058,847 2,690,615

C Risk Weighted Exposure or Market Risk 345,855 254,117

Adjustments Under Pillar-II

Add: 3% o the total RWE due to non Compliance to Disclosure (6.4 a 10) - -

Add: ...% o the total deposits due to insucient liquid assets (6.4 a 6 ) - -

Total Risk Weighted Exposures (A+B+C) 24,184,585 21,703,164

1.2 CAPITAL FUND This Year Previous Year

Core Capital (Tier 1) 3,050,712 2,832,761

a Paid up Equity Share Capital 1,398,484 931,966

b Irredeemable Non-cumulative preerence shares - -

c Share Premium - -

d Proposed Bonus equity Shares 209,772 465,983

e Statutory General Reserves 1,412,491 1,195,317

Retained Earnings 29,965 239,495

g Current year prot/loss -

h Capital Redemption Reserve - -

i Capital Adjustment Reserve - -

j Dividend Equalization Reserves - -

k Other Free Reserve - -

l Less: Goodwill

m Less : Fictitious Assets

n Less: Investment in equity in licensed Financial Institutions - -

o Less: Investment in equity o institutions with nancial interests - -p Less: Investment in equity o institutions in excess o limits - -

q Less: Investments arising out o underwriting commitments - -

r Less: Reciprocal crossholdings - -

s Less: Other Deductions - -

- -

Adjustments Under Pillar-II

Less: Shortall in provisions (6.4 a 1) - -

Less: Loans and Facilities extended to related parties and restricted lending (6.4 a 2) - -

- -

Supplementary Capital (Tier 2) 479,781 357,606

a Cumulative and/or Redeemable Preerence Share - -b Subordinated Term Debt - -

c Hybrid Capital Instruments - -

d General loan loss provision 160,784 137,897

e Exchange Equilization Reserve 241,090 219,709

Investment Adjustment Reserve 1,626 -

g Assets revaluation reserve - -

h Other Reserves (Deerred Tax Reserve) 76,281 -

Total Capital Fund (Tier 1 and Tier 2) 3,530,493 3,190,367

1.3 Capital Adequacy Ratios Current Period Previous Period

Tier 1 Capital to Total Risk Weighted Exposures (Ater Bank's adjustments o Pillar II) 12.61% 13.05%

Tier 1 and Tier 2 Capital to Total Risk Weighted Exposures (Ater Bank's Adjustments o Pillar II) 14.60 % 14.70%

Rs. in ‘000

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Schedule 4.30 (Kha): Credit Risk As at 16 July, 2010 (32 Ashad 2067)

Assets 16th July, 2010 (32 Asadh 2067) Previous YearBalance Sheet Exposure Book Value Specic Eligible Net Value Risk Risk Weighted Net Value Risk

a Provision b CRM c d=a-b-c Weight Exposures Weighted

e =d*e Exposures

Cash Balance 509,031 - - 509,031 0% - 463,346 -

Balance With Nepal Rastra Bank 819,509 - - 819,509 0% - 1,851,133 -

Gold 144,118 - - 144,118 0% - 178,349 -

Investment in Nepalese Government Securities 8,531,520 - - 8,531,520 0% - 9,998,754 -

All claims on Government o Nepal 207,807 - - 207,807 0% - 154,044 -

Investment in Nepal Rastra Bank securities - - - - 0% - - -

All claims on Nepal Rastra Bank - - - - 0% - - -

Claims on Foreign Government and

Central Bank (ECA Rating 0-1) - - - - 0% - - -

Claims on Foreign Government

and Central Bank (ECA Rating 2) - - - - 20% - - -


Central Bank (ECA Rating 3) - - - - 50% - - -Claims on Foreign Government and

Central Bank (ECA Rating 4-6) - - - - 100% - - -


Central Bank (ECA Rating 7) - - - - 150% - - -

Claims on BIS, IMF, ECB, EC & on Multilateral

Development Banks (MDBs) recognised by

the rame work - - - - 0% - - -

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) 101,093 - - 101,093 150% 151,640 83,793 125,690

Claims on domestic banks that meet 385,056 - 317,352 67,704 20% 13,541 35,554 7,111

capital adequacy requirements

Claims on domestic banks that do 23,592 - - 23,592 100% 23,592 32,177 32,177

not meet capital adequacy requirements

Claims on oreign bank (ECA Rating 0-1) 6,073,058 - - 6,073,058 20% 1,214,612 11,695,334 2,339,067

Claims on oreign bank (ECA Rating 2) - - - - 50% - 389,350 194,675Claims on oreign bank (ECA Rating 3-6) 1,420,571 - - 1,420,571 100% 1,420,571 637,967 637,967

Claims on oreign bank (ECA Rating 7) - - - - 150% - - -

Claims on Foreign bank incorporated in 5,592,897 - - 5,592,897 20% 1,118,579 - -

SAARC Region operating with a buer o 1%

capital requirement above their

respective regulatory Capital requirements

Claims on Domestic Corporates 3,160,808 533 726,525 2,433,750 100% 2,433,750 2,743,934 2,743,934

Claims on Foreign Corporates (ECA rating 0-1) - - - - 20% - - -

Claims on Foreign Corporates (ECA rating 2) - - - - 50% - - -

Claims on Foreign Corporates (ECA rating 3-6) - - - - 100% - - -

Claims on Foreign Corporates (ECA rating 7) - - - - 150% - - -

Regulatory Retail Portolio (Not Overdue) 5,569,522 1,735 - 5,567,787 75% 4,175,840 4,147,828 3,110,871

Claims ullling all criterion o regulatory 247,837 - - 247,837 100% 247,837 - -

retail except granularity

Claims secured by residential properties 3,149,494 - - 3,149,494 60% 1,889,696 2,513,718 1,508,231

Claims not ully secured by residential properties - - - - 150% - - -

Claims secured by residential properties (Overdue) 25,759 4,138 - 21,621 100% 21,621 17,957 17,957

Claims secured by Commercial real estate 2,601,433 33,250 - 2,568,183 100% 2,568,183 2,068,506 2,068,506

Past due claims (except or claim secured 194,729 19,187 - 175,542 150% 263,313 152,263 228,395

by residential properties)

High Risk claims 995,594 - 58,761 936,833 150% 1,405,250 908,124 1,362,186

Investment in equity and other capital instruments 50,500 21,375 - 29,125 100% 29,125 3,000 3,000

o institutions listed in the stock exchange

Investment in equity and other capital instruments 56,426 3,000 - 53,426 150% 80,138 79,551 119,326

o institutions not listed in the stock exchange

Other Assets

1,094,953 498,086 - 596,867 100% 596,867 786,391 786,391

Total 40,955,307 581,304 1,102,638 39,271,365 17,654,155 38,941,073 15,285,484

Rs. in ‘000

8/3/2019 ar-2009-2010



16th July, 2010 (32 Asadh 2067) Previous Year

O Balance Sheet Exposures Book Value Specic Eligible Net Value Risk Risk Weighted Net Value Riska Provision b CRM c d=a-b-c Weight e Exposures Weighted

=d*e Exposures

Revocable Commitments - - - - 0% - - -

Bills Under Collection 223,012 - 223,012 0% - 672,008 -

Forward Exchange Contract 1,223,147 - - 1,223,147 10% 122,315 1,332,126 133,213

LC Commitments With Original 2,212,780 - 428,876 1,783,904 20% 356,781 1,851,796 370,359

Maturity Up to 6 months

(domestic counterparty)

Foreign Counterparty ECA Rating 0-1 - - - - 20% - - -

Foreign Counterparty ECA Rating 2 - - - - 50% - - -



L C Commitments With Original 414,431 - 142,233 272,198 50% 136,099 - -

Maturity Over 6 months

(domestic counterparty)Foreign Counterparty ECA Rating 0-1 - - - - 20% - - -




Bid Bond, Perormance Bond and 299,668 - 35,823 263,845 50% 131,923 603,233 301,616

Counter Guarantee (domestic counterparty)

Foreign Counterparty ECA Rating 0-1 747,885 - 598,308 149,577 20% 29,915 102,398 20,480

Foreign Counterparty ECA Rating 2 301,237 - 150,618 150,619 50% 75,309 498,281 249,141

Foreign Counterparty ECA Rating 3-6 593,496 - - 593,496 100% 593,496 337,252 337,252


Underwriting commitments - - - - 50% - - -

Lending o Bank's Securities or - - - - 100% - - -

Posting o Securities as collateral

Repurchase Agreements, Assets - - - - 100% - - -

sale with recourse

Advance Payment Guarantee 702,239 - 384,165 318,074 100% 318,074 257,481 257,48

Financial Guarantee 115,561 - 23,624 91,937 100% 91,937 87,249 87,249

Acceptances and Endorsements 426,182 - 10,885 415,297 100% 415,297 999,440 999,440

Unpaid Portion o Partly paid - - - - 100% - - -

shares and Securities

Irrevocable credit commitments (short term) 1,406,268 - 166,364 1,239,904 20% 247,980 1,098,520 219,704

Irrevocable Credit commitments (Long Term) - - - - 50% - - -

Other Contingent Liabilities 1,021,419 - 414,817 606,602 100% 606,602 493,090 493,090

Unpaid Guarantee Claims - - - - 200% - 1,961 3,923

Total 9,687,325 - 2,355,713 7,331,612 3,125,728 8,334,835 3,472,948

Total RWE or Credit Risk (A) +(B) 50,642,632 581,304 3,458,351 46,602,977 20,779,883 47,275,908 18,758,432

Adjustments under Pillar-II

Add: 10% o the loan and acilities - - - - - - -

in excess o Single Obligor Limits (6.4 a 3)

Add: 1% o the contract (sale) value in - - - - - - - -case o the sale o credit with recourse (6.4 a 4)

Total RWE or Credit Risk (Ater 50,642,632 581,304 3,458,351 46,602,977 - 20,779,883 47,275,908 18,758,432

Bank's adjustments o Pillar II)

Rs. in ‘000

Schedule 4.30 (Kha):Credit Risk

8/3/2019 ar-2009-2010




Schedule 4.30 (Ga): Eligible Credit Risk Mitigants As at 16 July, 2010 (32 Ashad 2067)

Credit exposures Deposits Deposits Gold Govt. G'tee o Sec/G'tee o G'tee o G'tee o Sec/ Total

with Bank with other & NRB Govt. o Other domestic MDBs G'tee obanks/FI Securities Nepal Sovereigns banks Foreign

Banks

Balance Sheet Exposures

Cash Balance - - - - - - - - - -

Balance With Nepal Rastra Bank - - - - - - - - - -

Gold - - - - - - - - - -

Investment in Nepal - - - - - - - - - -

Government Securities

All claims on Government o Nepal - - - - - - - - - -

Investment in Nepal - - - - - - - - - -

Rastra Bank securities

All claims on Nepal Rastra Bank - - - - - - - - - -

Claims on Foreign Government - - - - - - - - - -

and Central Bank (ECA Rating 0-1)

Claims on Foreign Government and - - - - - - - - - -

Central Bank (ECA Rating 2)

Claims on Foreign Government - - - - - - - - - -

and Central Bank (ECA Rating 3)


Central Bank (ECA Rating 4-6)


Central Bank (ECA Rating 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 100,000 217,352 - - - - - - - 317,352

capital adequacy requirementsClaims on domestic banks that do not - - - - - - - - - -

meet capital adequacy requirements

Claims on oreign bank (ECA Rating 0-1) - - - - - - - - - -

Claims on oreign bank (ECA Rating 2) - - - - - - - - - -

Claims on oreign bank (ECA Rating 3-6) - - - - - - - - - -

Claims on oreign bank (ECA Rating 7) - - - - - - - - - -

Claims on Foreign bank incorporated in - - - - - - - - - -

SAARC Region operating with a buer o

1% above their respective regulatory

capital requirement

Claims on Domestic Corporates 61,328 310,580 - 229,242 - - - - 125,375 726,525

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 Portolio (Not Overdue) - - - - - - - - - -

Claims ullling all criterion o regulatory - - - - - - - - - -

retail except granularity

Claims secured by residential properties - - - - - - - - - -

Claims not ully secured by - - - - - - - - - -

residential properties

Claims secured by residential - - - - - - - - - -

properties (Overdue)

Claims secured by commercial real estate - - - - - - - - - -

Past due claims (except or claim - - - - - - - - - -

secured by residential properties)

High Risk claims 22,553 - - - - - - - 36,208 58,761

Investment in equity and other capital - - - - - - - - - -

instruments o institutions

listed in the stock exchange

Investment in equity and other - - - - - - - - - -capital instruments o institutions

not listed in the stock exchange

Other Assets - - - - - - - - - -

Rs. in ‘000

8/3/2019 ar-2009-2010



Deposits Deposits Gold Govt. G'tee o Sec/G'tee o G'tee o G'tee o Sec/G'tee o Totalwith Bank with other & NRB Govt. o Other domestic MDBs Foreign

banks/FI Securities Nepal Sovereigns banks Banks

O Balance Sheet ExposuresForward Exchange Contract Liabilities - - - - - - - - - -

LC Commitments With Original 347,670 - - 81,206 - - - - - 428,876

Maturity Up to 6 months


Foreign Counterparty ECA Rating 0-1 - - - - - - - - - -

Foreign Counterparty ECA Rating 2 - - - - - - - - - -



L C Commitments With Original 142,233 - - - - - - - - 142,233

Maturity Over 6 months


Foreign Counterparty ECA Rating 0-1 - - - - - - - - - -Foreign Counterparty ECA Rating 2 - - - - - - - - - -



Bid Bond, Perormance Bond and 32,449 - - - - - 3,374 - - 35,823

Counter Guarantee


Foreign Counterparty ECA Rating 0-1 - - - - - - - - 598,308 598,308

Foreign Counterparty ECA Rating 2 - - - - - - - - 150,618 150,618



Underwriting commitments - - - - - - - - - -

Lending o Bank's Securities or - - - - - - - - - -

Posting o Securities as collateral

Repurchase agreements, - - - - - - - - - -

Assets sale with recourse

Advance Payment Guarantee - - - - - - - - 384,165 384,165

Financial Guarantee 15,768 - - - - - - - 7,856 23,624

Acceptance and Endorsements 10,885 - - - - - - - - 10,885Unpaid Portion o Partly - - - - - - - - - -

paid shares and Securities

Irrevocable Credit Commitments 86,984 8,014 - 49,866 - - - - 21,500 166,364

Other Contingent Liabilities 368,299 - - - - - - - 46,518 414,817

Total Eligible CRM 1,188,169 535,946 - 360,314 - - 3,374 - 1,370,548 3,458,351

Rs. in ‘000

Schedule 4.30 (Ga):Continue...

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Schedule 4.30 (Gha): Operational Risk

As at 16 July, 2010 (32 Ashad 2067)

SN Particulars 16.07.2010 15.07.2009 15.07.2008 15.07.2009

1 Net Interest Income 1,466,369 1,343,435 1,119,466

2 Commission and Discount Income 338,298 288,031 276,432

3 Other Operating Income 34,479 33,191 32,594

4 Exchange Fluctutation Income 458,564 427,468 345,653

5 Additional/ Deduction Interest 18,519 2,166 (66,972)

Suspense during the period

Gross Income (a) 2,316,229 2,094,291 1,707,173

Fixed Percentage (b) 15% 15% 15%

Gross Income as per Fixed 347,434 314,144 256,076

Percentage[ c=(a*b)]

Capital Requirement or Operational 305,885 269,061Risk(d) (average o c)

Risk Weight (reciprocal o capital 10 10

requirement o 10%) in times (e)

Equivalent Risk Weight Exposure or 3,058,847 2,690,615

Operational Risk[=(d*e)]

Pillar-II Adjustments

I Gross Income or all the last three

years is negative (6.4 a 8)

Total Credit and investments - -

(net o Specic Provision)

Capital Requirement or - -operational risk (5%)

Risk Weight (reciprocal o capital - -

requirement o 10%) in time

Equivalent Risk Weight Exposure (g) - -

Equivalent Risk Weight 3,058,847 2,690,615

Exposure [(h=+g)]

Rs. in ‘000

8/3/2019 ar-2009-2010



As on 16 July, 2010

Previous Year

S. No. Currency Open Position Open Position Relevant Open Relevant Open Position

(FCY) (NPR) Position (NPR) (NPR) as on 15.07.2009

1 INR 362,486 580,249 580,249 476,573

2 USD (1,199) (89,708) 89,708 10,617

3 GBP (19) (2,235) 2,235 5,744

4 EUR (44) (4,273) 4,273 2,185

5 CAD 56 4,029 4,029 4,703

6 DKK 134 1,743 1,743 2,517

7 CNY 11 116 116 80

8 SEK 62 635 635 538

9 CHF (13) (914) 914 100

10 JPY 813 698 698 333

11 HKD 101 968 968 1,677

12 SGD 34 1,848 1,848 79313 SAR 60 1,195 1,195 240

14 THB 42 97 97 136

15 MYR 6 135 135 54

16 AED 16 322 322 272

17 AUD 36 2,359 2,359 1,489

18 QAR 9 187 187 184

Total Open Position (a) 691,711 508,235

Fixed Percentage (b) 5% 5%

Capital Charge or Market Risk [c=(a*b)] 34,586 25,412

Risk Weight (reciprocal o capital requirement o 10%) in times (d) 10 10

Equivalent Risk Weight Exposures or Market Risk [e=(c*d)] 345,855 254,117

Rs. in ‘000

Schedule 4.30 (Nga): Market Risk

As at 16 July, 2010 (32 Ashad 2067)

8/3/2019 ar-2009-2010




Schedule 4.31: Key Indicators

Particulars Indicators FY FY FY FY FY

2005/2006 2006/2007 2007/2008 2008/2009 2009/2010

1. Net Prot/Gross Income Percent 37.06 34.55 34.94 36.84 36.47

2. Earning Per Share Rs. 175.84 167.37 131.92 109.99 77.65

3. Market Value Per Share Rs. 3,775 5,900 6,830 6,010 3,279

4. Price Earning Ratio Ratio 21.47 35.25 51.77 54.64 42.23

5. Dividend (including bonus) on Share Capital Percent 140 130 130 100 70

6. Cash Dividend on Share Capital Percent 130 80 80 50 55

7. Interest Income/Loan & Advances Percent 6.19 7.11 6.65 8.54 8.78

8 Sta Expenses/Total Operating Expenses Percent 24.29 23.75 24.28 23.58 26.43

9. Interest Expenses on Total Deposit and Borrowings Percent 1.31 1.65 1.59 1.53 1.64

10. Exchange Fluctuation Income/Total Income Percent 15.95 15.44 14.75 15.36 15.40

11. Sta (statutory) Bonus/Total Sta Expenses Percent 35.83 33.71 34.63 36.70 32.93

12. Net Prot/Loan and Advances Percent 7.63 6.75 6.24 7.93 6.91

13. Net Prot/Total Assets Percent 2.56 2.42 2.46 2.56 2.70

14. Total Credit/Deposit Percent 39.92 43.78 46.95 39.27 45.98

15. Total Operating Expenses/Total Assets Percent 2.69 2.94 2.78 2.68 2.94

16. Adequacy o Capital Fund on Risk Weighted Assets

a. Core Capital Percent 12.99 13.77 11.52 13.05 12.61

b. Supplementary Capital Percent 1.94 1.94 1.63 1.65 1.99

c. Total Capital Fund Percent 14.93 15.71 13.15 14.70 14.60

17. Liquidity (CRR) Ratio 6.86 5.46 5.84 8.18 6.74

18. Non-perorming Credit/Total Credit Percent 2.13 1.83 0.92 0.66 0.61

19. Weighted Average Interest Rate Spread Percent 4.10 3.95 4.01 3.98 3.44

20. Book Net-worth Rs'000 1,754,139 2,116,353 2,492,548 3,052,470 3,369,709

21. Total Shares No. 3,746,404 4,132,548 6,207,840 9,319,664 13,984,836

22. Total Sta No. 345 351 377 392 429

23. Networth Per Share Rs. 468.22 512.12 401.52 327.53 240.95

Note : Adequacy o Capital Fund on RWA or FY 2007-08 onwards is as per Basel II Capital Accord o Nepal Rastra Bank.

8/3/2019 ar-2009-2010



Schedule 4.32: Signicant Accounting Policies

Financial Year 16 July 2009 to 16 July 2010


1. General InormationStandard Chartered Bank Nepal Ltd (the “Bank”)

is a limited liability company domiciled in Nepal.

The address o its registered oce is G.P.O.

Box 3990, Naya Baneshwor, Kathmandu,

Nepal. The Bank has a primary listing on the

Nepal Stock Exchange Limited. The Bank is

a subsidiary company o Standard Chartered

Bank PLC, London.

The Bank carries out commercial banking

activities in Nepal under license rom Nepal

Rastra Bank (the Central Bank o Nepal) as

Class “Ka” licensed institution.

2. Summary o Signifcant Accounting Policies The principal accounting policies applied in

the preparation o the nancial statements o

the Bank are set out below. These policies

have been consistently applied to all the years

presented, unless otherwise stated.

2.1 Statement o Compliance The nancial statements have been prepared in

accordance with Nepal Accounting Standards

(NAS) issued by the Accounting Standards

Board o Nepal (ASB) except or exceptions

as mentioned below, generally accepted

accounting principles, the provisions o Bank

and Financial Institution Act, 2063, directives

issued by Nepal Rastra Bank (Central Bank)

and the Company Act, 2063.

Recognition o interest income on Loans and

advances is on Cash basis, proposed dividend

and extraordinary items (i any) are accounted

or as per the directives issued by Nepal Rastra

Bank.

2.2 Basis o Preparation The nancial statements have been prepared

under the historical cost convention. The

preparation o the nancial statements in

conormity with NAS and generally accepted

accounting principles require the use o certain

critical accounting estimates. It also requires

the management to exercise judgement in the

process o applying the Bank’s accounting

policies.

2.3 Interest IncomeInterest income on Loans and advances is

treated as per Para 2.1.

Interest income on Investments is recognised

on accrual basis.

2.4 Commission IncomeIncome rom usance export bills is accounted

or on accrual basis whereas earning rom sight

bills is accounted upront.

Commission income exceeding Rs. 100,000

earned on guarantees covering more than a

year is accounted or on accrual basis over the

period o the guarantee.

2.5 Dividend IncomeDividend is recognised as income when the

right to receive the payment is established.

2.6 Foreign Exchange Transactions Assets and liabilities denominated in oreign

currencies at the Balance Sheet date are

translated at mid-point exchange rates o

the Nepal Rastra Bank ater adjustment or

eective trading rate.Net dierence arising

rom the conversion o oreign currency assets

and liabilities is accounted or as revaluation

gain. In conormity with the Directives o Nepal

Rastra Bank, 25% o the total revaluation gain

is transerred to Exchange Fluctuation Fund

by charging to Prot and Loss Appropriation

Account.

Income realised rom the dierence between

buying and selling rates o oreign currencies is

accounted or as trading gains.

2.7 Interest ExpenseInterest on deposit liabilities and borrowing

rom other banks are accounted or on accrual

basis.

2.8 Loans and Advances including Bills

Purchased Loans and advances including bills purchased

include direct nance provided to the customers

such as bank overdrats, credit card, personal

loans, term loans, hire purchase nance and

loans to deprived sectors. All loans are subject

to regular review and are graded according to

the level o credit risk and classied as per Nepal

Rastra Bank’s Directives. Loans and advances

including bills purchased are disclosed net o

loan loss provisions.

2.9 Sta Loans Loans and advances granted to sta in

accordance with the sta loan scheme are

refected under Other Assets.

2.10 Loan Loss ProvisionProvision is made or possible losses on loans

and advances, overdrat and bills purchased

at 1% to 100% on the basis o classication

o loans and advances, overdrat and bills

purchased in accordance with the directives o

Nepal Rastra Bank.

2.11 Loans & Advances Write oUnrecoverable loans and advances are written

o in accordance with the Loan Write-o Bye

Law 2062 o the Bank approved by the NepalRastra Bank.

Amounts recovered against loans written o in

earlier as well as current year is recognized as

income in the year o recovery.

2.12 InvestmentsInvestment in Treasury Bills, Government o

Nepal Development Bonds and Special Bonds

are those, which the Bank has purchased

with the positive intent and ability to hold until

maturity. Such securities are recorded at cost

or at cost adjusted or amortisation o premiums

or discounts.

Investments in shares held or strategic purpose

are stated at lower o cost or market value with

additional provisions or possible diminution

in value as estimated by the management on

prudence basis. Investments in shares have

been classied as Available or Sale due to their

undened maturity. Accordingly 2% o the net

value o the portolio has been created towards

8/3/2019 ar-2009-2010




Investment Adjustment Reserve rom prot

and loss appropriation account and has been

included as part o supplementary capital.

All investments are subject to regular reviewaccording to the directives o Nepal Rastra

Bank.

2.13 Fixed Assets and Depreciationa. Fixed assets are stated at historical cost

less depreciation. Historical cost includes

expenditures that are directly attributable to the

acquisition o the assets.

b. Vehicles, equipment, urniture and xtures

with a unit value o Rs. 400,000 or less are

expensed o in the year o purchase.

c. Land is not depreciated. Depreciation o

other assets is calculated using the straight-linemethod to allocate their cost to their residual

values over their estimated useul lives, as

ollows:

d. Costs on improvements and renovation o

leasehold premises are depreciated over the

remaining period o that lease.

e. For additions during the year, depreciation

is charged rom the month the assets is put

to use and or disposed assets, depreciation

is charged up to the month immediately

preceding the month o disposal.

2.14 Intangible Assets

Sotware applications purchased by the Bank,costing greater than Rs. 40,000,000 are

amortised over a period o thirty-six months

rom the month o purchase. Sotware costs

with a unit value o Rs. 40,000,000 or less are

expensed o in the year o purchase.

Licence ees paid by the Bank are amortised

over the period o the licence.

S.N. Assets Types Lie o an Asset

1. Equipment 36 months

2. Furniture & Fittings/Fixtures 36 months

3. Vehicle 36 months

4. Computers – PC, Printer, Laptop etc. 36 months

5. Computers – Server 60 months

6. Computer – ATM 84 months

7. Premises Freehold 600 months

2.15 Lease RentalPremises are taken as operating leases which

are cancellable in nature. The total payments

made under operating leases are charged to

Other Operating Expenses in the prot and lossaccount on a monthly basis.

2.16 Retirement Benefts The Bank has schemes o retirement benets

namely Gratuity and Provident Fund. Provision

or expenses on account o Gratuity and

Provident Fund is made on accrual basis with

the amount o gratuity computed by the Bank

in accordance with its applicable scheme.

Contributions to approved retirement und are

made on a regular basis as per the Retirement

Fund rules and regulations.

2.17 Income Taxa. Current Income Tax

Provision or current income tax is made in

accordance with the provisions o the prevailing

Income Tax Act, 2058 and Rules as amended.

b. Deerred Tax

Deerred tax is provided on temporary

dierences arising between the tax bases o

assets and liabilities and their carrying amounts

in the nancial statements. Deerred tax is

determined using tax rates (and laws) that

have been enacted by the balance sheet date

and are expected to apply when the related

deerred tax asset is realised or the deerred

tax liability is settled.

The principal temporary dierences arise rom

depreciation o xed assets, provision ordiminution in the value o investment in shares,

provisions or gratuity, perormance bonus and

premium on development bonds.

Deerred tax assets are recognised where

it is probable that uture taxable prot will

be available against which the temporary

dierences can be utilised.

2.18 Stationery

Stationery purchased is accounted or on costand expended as and when it is issued or

consumption on a weighted average basis.

2.19 Non Banking AssetsNon Banking Assets are accounted or as per

the directives o Nepal Rastra Bank.

2.20 Provisions, Contingent Liabilities andContingent Assets

The Bank creates a provision when there is a

present obligation as a result o past events

that probably requires an outfow o resources

and a reliable estimate can be made o the

amount o the obligation. A disclosure or

a contingent liability is made when there is a

possible obligation or a present obligation that

may, but probably will not, require an outfow o

resources. When there is a possible obligation

or a present obligation in respect o which the

likelihood o outfow o resources is remote, no

provision or disclosure is made.

Contingent assets are not recognised in the

nancial statements. However, contingent

assets are assessed continually and i it is

virtually certain that an economic benet

will arise, the asset and related income are

recognised in the period in which the change

occurs.

Liabilities on account o derivative contracts

are reported under Contingent liabilities

under subheading Outstanding Liabilities or

Forward Exchange Contract. These include

notional principal on outstanding orward rate

agreements and currency swap transactions.

3. Rounding o and Comparative Figures The nancial statements are presented in

Nepalese Rupees, rounded o to the nearest

rupee. Previous year amounts have been

reclassied to acilitate comparison; detail o

which is provided in the Notes to Accounts.

8/3/2019 ar-2009-2010



1. Provision or BonusProvision or bonus has been calculated and

provided or at 10% o net prot, ater making

adjustments or loan loss provision and bonus.

2. Sta Housing Fund As the terms o service o the sta has a

provision or extending housing loans to the

eligible sta, a separate housing und has notbeen created in accordance with Labour Act,

2048.

3.Tax Settlement OutstandingSel assessment return led by the Bank or

the nancial year 2005-06 (2062-63 BS) has

been opened by the Large Tax Payer Oce

(LTPO) and an assessment order has been

issued or Rs. 2,605,277 as additional tax.

The Bank had contested the assessment

order and had applied or an Administrative

Review at the Oce o the Director General o

Inland Revenue Department, who upheld the

decision o the LTPO. Bank has now led an

Appeal at Revenue Tribunal or the settlement

o the case. Pending resolution o the matter,

a contingent liability has been raised or the

additional tax amount. Sel assessment returns

or the nancial years 2006-07 (2063-64 BS),

2007-08 (2064-65 BS) and 2008-09 (2065-66

BS) are pending or assessment at the Large

Tax Payer Oce.

4. Provision or Gratuity During the year, the Bank has provided Rs.

32,628,645 (Previous Year Rs. 12,738,534) on

account o gratuity. Out o the amount provided,

Rs 21,166,384 has been unded (previous year

Rs 10,472,391) and Rs. 5,157,145 (previous

year Rs. 3,428,755) has been paid to the sta

at the time o separation.

5. Perormance Bonus The Bank’s reward programmes recognize

world-class perormance and behaviour in

support o the Bank’s values across all job levels.

The Bank’s total reward consists o xed and

variable compensation. Perormance Bonus

is a variable component based on the Bank’s

overall perormance and individual employee’s

annual perormance. It is provisioned on the

basis o the individual targets set and paid

in line with the actual achievements. A totalo Rs. 47,569,046 has been provided or the

perormance bonus in this year.

6. Dividend and Bonus

The Board has recommended 55%

cash dividend and 15% bonus shares as

appropriation or the reported year. This

proposal o the Board has been shown under

Proposed Dividend or the cash portion and

under Share Capital or the Proposed Bonus

Shares issue respectively.

7. Unpaid Dividend As on the balance sheet date, unpaid dividend

over ve years amounts to Rs. 2,411,021.

8. Paid up Share CapitalPaid up share capital o the Bank has moved

over the years as ollows:

9. Sale o Land and Building The Bank has sold its land at Birgunj, Parsa

during the year or Rs. 34,844,230 at a prot o

Rs. 30,740,230.

10. Deerred TaxDeerred tax is calculated on temporary

dierences using an eective tax rate o

30.00%.

The items attributable to deerred tax assets

and liabilities and their movement are as

ollows:

Schedule 4.33: Notes to Accounts

Financial Year 16 July 2009 to 16 July 2010


Financial Year Cumulative Paid up Remarks

Capital Rs.

1987-88 (2044-45 BS) 30,000,000 Opening Share Capital at Rs. 60 paid up

1990-91 (2047-48 BS) 50,000,000 Capitalisation o Reserve Rs. 100 paid up

1992-93 (2049-50 BS) 100,000,000 Issuance o 100% Bonus Shares1994-95 (2051-52 BS) 150,000,000 Issuance o 50% Bonus Shares

1996-97 (2053-54 BS) 225,571,800 Issuance o 50% Bonus Shares






2008-09 (2065-66 BS) 1,398,483,600 Issuance o 50% Bonus Shares

8/3/2019 ar-2009-2010




Additional inormation:a) Key Management Personnel includes 2 expatriate sta.

b) Key Management Personnel are also provided with the ollowing benets:

i) Benets as per Sta Service Bye-laws,

ii) Bonus to local sta as per Bonus Act,

iii) Perormance Bonus depending on perormance o the individual,iv) Car Allowance as per Bank's Car Scheme.

Apart rom above Rs. 264,000 was paid as meeting ees to the Public and

Proessional Directors in the nancial year.

The Bank being a subsidiary o an International Bank avails o support

services rom its global support unctions governed by approved

agreements. Foreign currency unds have mainly been placed with Standard

Chartered Bank (SCB) network points. These unds are all under the

management o Standard Chartered Group with high governance levels and

acceptable country risks and returns. As on the balance sheet date, the

amount placed with SCB Group is NPR 7.5 Billion.

Total o Key Management Personnel Compensation Rs. 38,739,828

A) Short Term Employee Benets Rs. 33,989,235 (Salary, Allowance, PF)

B) Post Employment Benets NIL

C) Other Long Term Benets NIL

D) Termination Benets Rs. 4,750,593 (Gratuity)

E) Share Based Payment NIL

Balance Movement Balance

Deerred Tax Assets 15 Jul 2009 during the year 16 Jul 2010

Fixed Assets 29,084,203 3,628,959 32,713,162

Gratuity Provision 18,481,957 1,891,535 20,373,492

Provision or Perormance bonus 6,189,745 422,738 6,612,483

Provision or investment impairment 7,312,500 - 7,312,500

Premium on Development Bond - 9,269,570 9,269,570

Total Deerred Tax Assets 61,068,405 15,212,802 76,281,207

Deerred Tax Liabilities - - -

Net – Deerred Tax Asset 61,068,405 15,212,802 76,281,207

The net deerred tax movement during the year is debited /

credited to the prot and loss account.

11. Related Party Disclosures

Compensation Details or Key Management Personnel

12. Operating Lease Commitment The uture minimum lease payment under non-cancellable operating leases, where the bank is

lessee is NIL.

13.Restatement o Prior Period Balances

Schedule Reerence Reported in FY Restatement Restated Balance Remarks

2008-09 in 2009-10

4.5 Deposit Liability 35,871,721,127 (520,897,416) 35,350,823,711 To acilitate comparison

Proposed and Unpaid Dividend 476,296,048 (10,312,848) 465,983,200 Regulatory requirement

4.7 Other Liabilities 809,776,754 10,312,848 820,089,602 Regulatory requirement

4.16 Other Assets 1,341,584,862 (520,897,416) 820,687,446 To acilitate comparison

4.20 Commission & Discount 235,468,846 52,562,600 288,031,446 To acilitate comparison

4.22 Exchange Fluctuation Income 480,030,913 (52,562,600) 427,468,313 To acilitate comparison

8/3/2019 ar-2009-2010



Rs. in '000

Particulars Amount

Loans Disbursed 9,317,390

Loans Recovered 7,020,647

Loans Written-o 26,063

Interest Written-o 2,070

15 Summary o Loans and Advances Disbursed, Recovered and Principal and Interest Written-o

during the year:

Rs. in '000

Particulars Balance as at Received/ Balance as at

15/07/2009 Withdrawn) 16/07/2010

Current and Margin Accounts 6,130,056 3,884,341 10,014,397

Saving Account 19,146,004 (6,715,995) 12,430,009

Call Deposits 2,973,066 590,179 3,563,245

Fixed Deposits 7,101,698 2,073,372 9,175,070

Total 35,350,824 (168,103) 35,182,721

16 Summary o Changes in Deposit Liabilities :

Particulars Rate %

a. Weighted average yield on loans and investments & Cash balance 5.56

b. Average Cost o local currency deposits plus borrowing ater actoring CRR 2.12

c. Spread (Yield -cost) ie. C=b-a 3.44

17 Weighted Average Interest Spread:

Rs. in '000

Particulars Amount

Sotware Costs -Licence Fees 621

Premium on Development Bonds 30,899

Total 31,520

18 Particulars o Amortised Expenses yet to be Expensed O:

19 Summary o Concentration o Exposure:

Rs. in '000

Particulars Loans & Advances Deposits & Contingent

and Bills Borrowings

Total Amount as on 16 July 2010 16,176,583 35,182,721 9,687,325

Highest Exposure to Single unit 608,236 4,482,728 937,293

Highest % o Exposure to Single unit 3.76 12.74 9.68

The reasons or dierences are ully identied and are being addressed in regular course o business.

Rs. in '000

Particulars Total Amount < 3 Months >3<9 Months > 9 Months

Branch Adjustments Accounts - - - - Agency Accounts 373,615 369,228 4,387 -

14 Reconciliation Status:

8/3/2019 ar-2009-2010




Rs. in '000

Particulars Total Amount Upto 1 year 1 to 3 years Above 3 years

Agency Accounts - - - -

20 Classication o Assets and Liabilities based on Maturity:

Rs. in '000

Particulars 1-90 Days 91-180 Days 181-270 Days 271 Days - 1 Year Over 1 Year Total

Assets

Cash Balance 509 509

Balance with Banks 1,420 1,420

Investment in Foreign Banks 4,486 4,657 1,243 1,530 599 12,515

Government Securities 4,362 2,376 - 1,145 648 8,531

Nepal Rastra Bank Bonds -

Inter Bank Lending 380 380

Loans, Advances & Bills Purchased 3,961 873 861 721 9,541 15,957

Other Assets 57 31 12 8 793 901

Total Assets 15,175 7,937 2,116 3,404 11,581 40,213

Liabilities

Loans and Borrowings - -

Current Deposits 2,930 7,084 10,014Saving Deposits 7,160 5,270 12,430

Fixed Deposits 5,943 3,006 288 1,758 1,743 12,738

Debentures -

Other Liabilities, Capital & Reserves 1,661 3,370 5,031

Total Liabilities 17,694 3,006 288 1,758 17,467 40,213

Net Financial Assets (2,519) 4,931 1,828 1,646 (5,886) -

Cumulative Net Financial Assets (2,519) 2,412 4,240 5,886 -

21 Statement o age-wise agency account reconciliation pending items

22 Borrowing by Bank against the collateral o own assets is Nil.

Shares under the ownership Description o Loan o Promoter

S.No. Name o

Promoter/ Name o otherbank/

Shareholders nancial institution

under Promoters' Total no. Percentage o rom which loan Loan amount No. o shares

Group o shares paid up capital has been taken Rs. pledged Remarks

1

2

3

4

5

Schedule 4.34: Statement o loan availed by bank's promoter/

promoters' group rom other bank and nancial institutions by

pledging their shares.

as on 16th July 2010 (32 Ashad 2067)

8/3/2019 ar-2009-2010



Schedule 4.35 : Comparison o Unaudited and Audited Financial Statement as o FY 2066/67

Rs. in'000

S. No. Particulars As per Unaudited As per Audited Variance Reasons or Variance

Financial Statement Financial Statement In Amount In %

1 Total Capital and Liabilities (1.1 to 1.7) 40,213,320 40,213,320 - 0.00%

1.1 Paid up Capital 1,398,484 1,608,256 (209,773) (15.00%) As per the proposed

appropriation

1.2 Reserve and Surplus 2,740,392 1,761,453 978,939 35.72% As per the proposed

appropriation

1.3 Debenture and Bond - - - 0.00%

1.4 Borrowings - - - 0.00%

1.5 Deposits (a+b) 35,182,722 35,182,722 - 0.00%

a. Domestic Currency 22,846,284 22,846,284 - 0.00%

b. Foreign Currency 12,336,438 12,336,438 - 0.00%

1.6 Income Tax Liability - - - 0.00%

1.7 Other Liabilities 891,722 1,660,889 (769,166) (86.26%) As per the proposed

appropriation

2 Total Assets (2.1 to 2.7) 40,213,320 40,213,320 - 0.00%

2.1 Cash and Bank Balance 1,929,307 1,929,307 - 0.00%

2.2 Money at Call and Short Notice 1,669,460 1,669,460 - 0.00%

2.3 Investments 19,847,511 19,847,511 - 0.00%

2.4 Loans and Advances* 15,956,955 15,956,955 - 0.00%

2.5 Fixed Assets 118,540 118,540 - 0.00%

2.6 Non Banking Assets - - - 0.00%

2.7 Other Assets 691,547 691,547 - 0.00%

3 Prot and Loss Account

3.1 Interest Income 2,042,110 2,042,110 - 0.00%

3.2 Interest Expense 575,741 575,741 - 0.00%

A. Net Interest Income (3.1 - 3.2) 1,466,369 1,466,369 - 0.00%

3.3 Fees, Commission and Discount 338,299 338,299 - 0.00%

3.4 Other Operating Income 34,479 34,479 - 0.00%

3.5 Foreign Exchange Gain/Loss (Net) 458,564 458,564 - 0.00%

B. Total Operating Income (A+3.3+3.4+3.5) 2,297,711 2,297,711 - 0.00%

3.6 Sta Expenses 312,964 312,964 - 0.00%

3.7 Other Operating Expenses 295,305 295,305 - 0.00%

C. Operating Prot Beore Provision (B -3.6 - 3.7) 1,689,442 1,689,442 - 0.00%

3.8 Provision or Possible Losses 76,974 76,974 - 0.00%

D. Operating Prot (C -3.8) 1,612,468 1,612,468 - 0.00%

3.9 Non Operating Income/Expenses (Net) 36,268 36,268 - 0.00%

3.10 Write Back o Provision or Possible Loss 58,293 58,293 - 0.00%

E. Prot rom Regular Activities (D+3.9+3.10) 1,707,029 1,707,029 - 0.00%

3.11 Extraordinary Income/Expenses (Net) (17,024) (17,024) - 0.00%

F. Prot beore Bonus and Taxes (E +3.11) 1,690,005 1,690,005 - 0.00%

3.12 Provision or Sta Bonus 153,637 153,637 - 0.00%

3.13 Provision or Tax 450,496 450,496 - 0.00%

G. Net Prot/Loss (F - 3.12 - 3.13) 1,085,872 1,085,872 - 0.00%

* Loans and advances are shown net o provision

8/3/2019 ar-2009-2010




1. Capital structure and capital adequacy

a. Tier 1 capital and a breakdown o its

components;

As on 16.07.2010

Core Capital (Tier 1) 3,050,711,879

a Paid up Equity Share Capital 1,398,483,600

b Proposed Bonus Equity Share 209,772,540

c Statutory General Reserves 1,412,491,047

d Retained Earnings 29,964,692

b.Tier 2 capital and a breakdown o its com-

ponents;

As on 16.07.2010

Supplementary Capital (Tier 2) 479,782,034

a General loan loss provision 160,784,471

b Exchange Equalization 241,090,057

Reserve

c Investment Adjustment 1,626,300

Reserved Other Reserve (Deerred 76,281,207

Tax Reserve)

c. Detailed inormation about the Subordi-

nated Term Debts with inormation on the

outstanding amount, maturity, and amount

raised during the year and amount eligible to

be reckoned as capital unds.

• Not applicable.

d. Deductions rom capital;

• NIL.

e. Total qualiying capital;

• NRs 3,530,493,915

. Capital adequacy ratio;

• 14.60%.

g. Summary o the bank’s internal approach to

assess the adequacy o its capital to support

current and uture activities, i applicable; and

Board and Senior Management Oversight

Bank management is responsible or

understanding the nature and level o risk

taken by the bank and relating the risk to

the capital adequacy level. The Credit Risk

Committee reviews the Credit Risk, analyzes

the trend, assesses the exposure impact on

capital and provides a summary report to

the Management Committee.

In respect o operational risk, the Consumer

Banking, Wholesale Banking and each

Support Function Business Operational

Risk Manager provide operational loss data

to Country Operational Risk Assurance

Manager who in turn analyzes the trend and

provides a summary report to the CORG

& the Management Committee. Finance &Strategic Planning checks the capital charge

on operational risk.

With regard to market risk, the Financial

Markets Operation maintains net open

position o all currencies on a daily basis and

provides data to Head WB who reviews and

analyzes the trend, assesses the exposure

impact on capital and provides a summary

report to the Management Committee. The

net open position report is also discussed at

the ALCO.

Management Committee reviews the

summary reports received rom CRC,CORAM and the HWB and provides a

synopsis to the Board along with its view

on the risks exposure and the adequacy o

capital, or review and noting.

Sound Capital AssessmentIn order to ensure a sound capital

assessment process, all three risks that have

direct impact on the capital adequacy level

are managed in a structured manner with

clear roles and responsibilities. For managing

the Credit Risk the Country Underwriting

Standards, Country Credit Policy, Credit

Policy Manual, and Product Development

Documents have been prepared and

implemented. Any exception to the

standards get escalated and approved bythe appropriate authorities as stipulated in

the standards, policy manual and the PDD,

with audit trail.

Operational Risk Management & Assurance

Framework (ORMAF) has been implemented

or managing operational risks. In line with

ORMAF, the 3 lines o assurance ensure

eective management o all operational

risks. In the 3 lines o assurance, business

is the rst line which is primarily responsible

or managing the risk whilst compliance

& assurance and Group Audit occupy the

second and the third lines respectively to

ensure an independent assurance to the

Board and Senior Management on the

eectiveness o the risk management.

The market risks are managed in line with

the Bank’s market risk and other related

policies, giving due consideration to the

prevalent market conditions.

Comprehensive assessment o risks

Credit risk

The credit risk o individual borrowers or

counterparties as well as at the portolio level

is assessed. The credit review assessment

cover risk rating systems, portolio analysis,large exposures and the risk concentrations.

All Corporate and Institutional borrowers

including SME borrowers, at individual and

group level, are assigned internal credit rating

that supports identication and measurement

o risk and integrated into overall credit risk

analysis.

Operational Risk

Operational Risk Management and

Assurance Framework (ORMAF) adopted

by the bank provides comprehensive

Disclosure as per Bank’s disclosure policy under theCapital Adequacy Framework o Nepal Rastra Bank

8/3/2019 ar-2009-2010



reputational damage, ensure compliance with

applicable laws and regulations and enhance

resilience to external events.

The eectiveness o the Company’s internal

control system is reviewed regularly by the

Board, its committees, Management and

Internal Audit. The Audit Committee has

reviewed the eectiveness o the internal

control system during the FY 2066/67 and

reported on its review to the Board. The

Internal Audit monitors compliance with

policies and standards and the eectiveness

o internal control structures across the

Company through its program o business/

unit audits. The Internal Audit unction is

ocused on the areas o greatest risk as

determined by a risk-based assessment

methodology. Internal Audit reports regularly

to the Audit Committee. The ndings o all

adverse audits are reported to the Chie

Executive Ocer and Business Heads or

immediate corrective actions.

h. Summary o the terms, conditions and main

eatures o all capital instruments, especially

in case o subordinated term debts including

hybrid capital instruments.

• Bank has fully paid equity shares as

qualiying capital..

2. Risk exposures

a. Risk weighted exposures or Credit Risk,

Market Risk and Operational Risk

risk management tools or managing

operational risk. The Operational

Risk Management and Assurance

Framework (ORMAF) denes how risks

are managed, how Operational Risk

policies and controls are assured, how

eective governance is exercised as well

as the key roles required to manage the

underlying processes.

The governance structure o OR is as ollows:

• Operational Risk governance ensuresconsistent oversight across all levels

regarding the execution and eectiveness

o ORMAF.

• Operational risks are identied and graded

at the unit level. Mitigating controls are

put in place and mitigation progress is

monitored. These risks are reported to the

Business Operational Risk Group (BORG).

• BORG (as a committee) assign

ownership, require actions to be taken

and monitor progress o risks identied,

in addition to conrming the risk

grading provided at the unit level. Riskscategorized as High or Medium are

reported to the Country Operational Risk

Group (CORG) and escalated to Business

Operational Risk Committees (ORCs) at

the Regional level.

• CORG determines nal risk grading

and ensures appropriateness o risk

ownership, required actions and progress

to date. Risks graded high, are escalated

to Group Operational Risk Committee

(GORC) through Group Operational Risk

Assurance (GORA) team.

• The Business / Function OperationalRisk Committees (ORCs) at Regional

level oversee operational risks within

businesses and unctions across the

Region.

• The GORC oversees operational risks at

Group level with the support o the GORA

team. The team assesses risks escalated

by CORGs and Business / Function

ORCs

Market Risk

Risks arising out o adverse movements

in exchange rates, interest rates, liquidity

and equity are covered under market risk

management. In line with capital ramework

prescribed by NRB, the bank ocuses on

exchange risk management or managing/

computing the capital charge on market

risk. In addition the interest rate risk, liquidity

risk and equity risk are assessed at a

regular interval to strengthen market risk

management. The market risk is managed

within the tolerance limit set by the Board.

Other risks

In addition to the credit, operational and

market risk, the bank identies, assesses

and monitors strategic and reputationalrisks at a regular interval. While strategic risk

is managed by the CEO, the Reputational

Risk Committee is responsible or the

management o reputational risk.

Monitoring and Reporting

All risks, including credit, operational and

market risks are identied, escalated,

monitored and mitigated to the satisaction

o the risk type owner. The risk type owner

is responsible or ensuring that risks are

adequately identied, escalated monitored

and mitigated. The bank has adequate

system or monitoring and reporting risk

exposures and assessing how the changingrisk prole aects the need or capital.

The Credit Risk Committee reviews and

assesses the credit risk and provides a

report to the Management Committee.

Similarly, the CORG provides Country

Operational Risk prole and the Reputational

Risk Committee provides the Reputational

Risk prole to the Management Committee.

All other risks are identied and reported by

the respective risk type owner.

Internal Control Review

manner which enables it to maximize

protable business opportunities, avoid

or reduce risks which can cause loss or

RISK WEIGHTED As on

EXPOSURES 16.07.2010

A Risk Weighted Exposure 20,779,882,793

or Credit Risk

B Risk Weighted Exposure 3,058,846,861

or Operational Risk

C Risk Weighted Exposure 345,855,288

or Market RiskTotal Risk Weighted

Exposures (a+b+c) 24,184,584,943

b. Risk Weighted Exposures under each o 11 categories o Credit Risk

No. Particulars Claim as on RWE as on 16.07.2010

16.07.2010 Rs.

1 Claims on govt. and central Bank 9,558,835,525 -

2 Claims on other ocial entities 101,093,000 151,639,500

3 Claims on Banks 13,495,174,640 3,790,895,316

4 Claims on corporate and securities rm 3,160,808,086 2,433,750,130

5 Claims on regulatory retail portolio 5,817,358,443 4,175,840,295

6 Claim secured by residential properties 3,175,253,114 2,159,154,066

7 Claims secured by commercial real state 2,601,433,032 2,568,183,031

8 Past due Claims 194,728,878 263,312,055

9 High risk claims 1,102,519,673 1,514,512,57210 Other Assets 1,094,953,360 596,867,589

11 O Balance sheet Items 9,687,324,894 3,125,728,239

Total 49,989,482,644 20,779,882,793

8/3/2019 ar-2009-2010




c. Total risk weighted exposure calculation

table;

Please reer Schedule 4.30 (Kha), 4.30 (Ga),

4.30 (Gha) and 4.30 (Nga) o the nancial

statements or details.

d. Amount o NPAs (both Gross and Net)

• Restructure/Reschedule Loan

NIL

• Substandard Loan

Gross value Rs. 50,940,153, Net values

Rs. 38,205,115

• Doubtful Loan Gross value Rs. 2,175,186 Net value

Rs 1,087,593

• Loss Loan

Gross value Rs. 45,020,388 Net value:

NIL

e. NPA ratios

• Gross NPA to gross advances

0.61 %

• Net NPA to net advances

0.25 %

. Movement o Non Perorming Assets Year on year upward movement o Rs.

7,094,071.

g. Write o o Loans and Interest Suspense

Loans Write o during the year is Rs.

26,062,833 and interest suspense balance

as on year end is Rs 136,165,591.

h. Movements in Loan Loss Provisions and

Interest Suspense

Year on year upward movement in Loan

Loss Provisions o Rs. 18,681,405.

Year on year upward movement in Interest

suspense o Rs. 18,518,726.

i. Details o additional Loan Loss Provisions

Provisions due to growth in the volume have

been added. No major additional provisions

have been made.

j. Details o additional Loan Loss Provisions

3. Risk Management Functiona. For each separate risk area (Credit,

Market and Operational risk), banks must

describe their risk management objectives

and policies, including:

• Strategies and processes;

• The structure and organization of the

relevant risk management unction;

• The scope and nature of risk reporting

and/or measurement systems; and

• Policies for hedging and/or mitigating

risk and strategies, and processes or

monitoring the continuing eectiveness

o hedges/mitigants.

Credit Risk Management strategies

include eectively managing the risk

o nancial loss arising out o booking

an exposure on counterparty and also

ensuring independence o the Credit Risk

Management unction rom the origination

and sales unction.

Credit risk under both Consumer Banking

and Wholesale Banking is managed through

a dened ramework which sets out policies

and procedures covering the measurement

and management o credit risk. There is

a clear segregation o duties between

transaction originators in the businesses

and the approvers in the risk unctions. All

credit exposure limits are approved within a

dened credit approval authority ramework.

A standard alphanumeric credit risk

grade system is used or quantiying the

risk associated with the counterparty or

corporate and institutional clients (including

SME). The grading is based on a probability

o deault methodology, with customers

analyzed against a range o quantitative and

qualitative measures. In addition to nominal

aggregate exposure, Loss Given Deault

is used in the delegation o credit approval

authority and must be calculated or every

transaction to determine the appropriate

level o approval. Signicant exposures

beyond the authority o Credit Ocers in

both WB and CB are approved by CEO onbehal o Risk Committee ater support rom

the respective credit risk unction at the

group level. The SCB Nepal Board delegates

its authority to approve credit, market and

other risks exposures (“Risk Authorities”)

to the Management Committee or onward

delegation o these Risk Authorities to the

Risk Committee.

Credit unction in consumer banking

uses standard application orms which

are processed in central units and credit

approval process is guided by product

development document (PDD) and credit

operating manual. The probability o deaultis calculated using portolio delinquency fow

rates and judgement, where applicable.

There are risk ocers or both Consumer

Banking and Wholesale Banking businesses.

They have their primary reporting line into

the group unctional level and CEO Nepal.

Credit approval authorities are delegated by

Risk Committee to individual risk ocer in

WB and CB. We have a manual approval

process in CB (other than SME) and on-line

approval process in WB and SME, CB.

The scope and nature o risk reporting and/

or measurement procedures are covered in

the Country Portolio Standards approved by

the board, PDD and credit operating manual

and other group level policies & procedures

adopted ater the board approval. The

Risk Management Committee chaired by

the CEO, reviews the portolio exposure,

portolio quality, country level risk triggers,

etc at least on a quarterly basis.

Country Portolio standards and PDD /

credit operating manual outlines the Bank’s

policies and processes or hedging and/or

mitigating and monitoring risk. Collaterals

which are eligible or risk mitigation and

valuation o the same are reviewed every

year, Portolio Standards also prescribe therequency o valuation or dierent collateral

types. Collateral held against impaired loans

is maintained at air value.

The Risk Committee which ormed by and

received authority rom the Management

Committee is responsible or ensuring the

eective risk governance and management

o credit, market and operational risk

throughout the bank.

b. Types o eligible credit risk mitigants used

and the benets availed under CRM.

No. Credit Risk Mitigant As on 16.07.2010

1 Deposits with Bank 1,188,169,863

2 Deposits with other banks/FI* 535,946,100

3 Govt. & NRB Securities 360,313,582

4 G'tee o Domestic Banks* 3,374,092

5 Sec/G'tee o Foreign Banks* 1,370,548,684

Total 3,458,352,322

* net o supervisory haircut

Investment Portolio Net Amount (NPR)

Held For Trading NIL

Held To Maturity 19,764,960,525

Available For Sale 82,550,500

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Nepal Rastra Bank’s Approval and Directions

Nepal Rastra Bank has granted permission to the Bank to publish the Financial Statements

along with Balance Sheet; Prot & Loss Account and the related schedules or the Fiscal Year

2066/67 along with the ollowing direction vide Letter no. Bai. Su.Bi /Osite/AGM 10/067/68dated 2067/05/28 (13th September 10) and to distribute as proposed by Board, the Cash

Dividend o 55% and 15% o Bonus Shares on the basis o approval o the Annual General

Meeting:

To rectiy the comments raised by Statutory Auditor and to ensure that the comments

are not repeated.

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Five years Financial Summary

Balance Sheet

Particulars 2062-63 2063-64 2064-65 2065-66 2066-67

2005-06 2006-07 2007-08 2008-09 2009-10

Assets

Cash and Bank Balance 1,276,241 2,021,021 2,050,243 3,137,164 1,929,307

Money at Call and Short Notice 1,977,271 1,761,152 2,197,538 2,055,549 1,669,460

Investments 12,838,555 13,553,233 13,902,819 20,236,121 19,847,511

Loans and Advances 8,935,418 10,502,637 13,718,597 13,679,757 15,956,955

Fixed Assets 101,302 125,591 117,272 137,293 118,540

Other Assets 638,565 633,055 1,349,319 820,687 691,547

Total Assets 25,767,352 28,596,689 33,335,788 40,066,570 40,213,320

Liabilities

Borrowings - 400,000 - 300,000 -

Deposits 23,061,032 24,647,021 29,743,999 35,350,824 35,182,721Other Liabilities 952,181 1,433,315 1,099,242 1,363,277 1,660,889

Total Liabilities 24,013,213 26,480,336 30,843,241 37,014,101 36,843,610

Shareholders Fund

Paid Up Capital 374,640 413,255 620,784 931,966 1,398,484

Proposed Bonus Shares 112,392 206,627 310,392 465,983 209,773

Reserve (including Exchange Reserve) 896,522 991,746 1,178,084 1,415,025 1,731,489

Undistributed Prot 370,585 504,725 383,287 239,495 29,965

Total Shareholders Fund 1,754,139 2,116,353 2,492,547 3,052,470 3,369,710

Contingent Liabilities

Letter o Credit 1,837,398 1,861,944 1,857,994 3,120,879 2,627,212

Guarantees 2,046,063 2,389,969 2,800,467 3,687,373 3,248,829

Forward Exchange Contracts 362,646 1,121,870 193,985 1,332,126 1,223,147

Other Contingent Liabilties 938,720 1,480,339 1,287,338 3,031,614 2,588,137

Total Contingent Liabilties 5,184,827 6,854,122 6,139,784 11,171,991 9,687,325

(gures in Rs. thousands)

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Five years Financial Summary

Prot & Loss Account

Particulars 2062-63 2063-64 2064-65 2065-66 2066-67

2005-06 2006-07 2007-08 2008-09 2009-10

Interest Income 1,189,603 1,411,982 1,591,196 1,887,221 2,042,109

Interest Expenses 303,198 413,055 471,730 543,787 575,741

Net Interest Income 886,405 998,927 1,119,466 1,343,435 1,466,368

Commission and Discount 222,929 221,207 276,432 288,031 338,298

Other Operating Incomes 25,442 28,785 32,594 33,191 34,479

Exchange Fluctuation Income 283,472 309,087 345,653 427,468 458,564

Total Operating Income 1,418,247 1,558,006 1,774,145 2,092,125 2,297,709

Sta Expenses 168,231 199,778 225,256 253,056 312,964

Other Operating Expenses 221,087 228,451 230,571 276,327 295,305

Exchange Fluctuation Loss - - -

Operating Prot Beore Provision or Possible Loss 1,028,930 1,129,776 1,318,318 1,562,743 1,689,440

Provision or Possible Losses 47,730 36,809 69,885 56,635 76,974

Operating Prot 981,200 1,092,968 1,248,432 1,506,108 1,612,466

Non-Operating Income/ (Loss) 1,433 9,492 1,683 22,098 36,268

Provision or Possible Loss Written Back 53,090 20,160 90,635 101,075 58,293

Prot rom Ordinary Activities 1,035,723 1,122,620 1,340,750 1,629,282 1,707,027

Income/(Expenses) rom Extra Ordinary Activities (2,411) (4,915) (28,039) (15,356) (17,024)

Net Prot ater considering all Activities 1,033,312 1,117,705 1,312,710 1,613,926 1,690,003

Provision or Sta Bonus 93,937 101,610 119,337 146,721 153,637

Provision or Income Tax 280,619 324,427 374,452 442,091 450,496

Net Prot/Loss 658,756 691,668 818,921 1,025,114 1,085,872

Accumulated Prot up to Previous Year 251,336 370,585 557,724 383,288 239,495

This Year's Prot 658,756 691,668 818,921 1,025,115 1,085,872

Capital Adjustment Fund upto Previous Year - 74,928

Total 910,092 1,062,253 1,376,645 1,408,402 1,325,367

General Reserve Fund - 77,229 163,784 205,023 217,174

Proposed Dividend 487,033 330,604 496,627 465,983 769,166

Proposed Issue o Bonus Shares 37,464 206,627 310,392 465,983 209,773

Exchange Fluctuation Fund 15,011 17,996 22,554 31,918 21,381

Capital Adjustment Fund - - -

Other Appropriations 77,908

Accumulated Prot/(Loss) 370,585 429,797 383,288 239,495 29,965

(gures in Rs. thousands)

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Disclaimer

Standard Chartered Bank Nepal Limited is an Equal Employment Opportunity/ Affirmative Action employers. Standard Chartered Bank Nepal Limited is committed

to providing equal employment opportunities to every employee and every applicant for employment, regardless of, but not limited to, such factors as race, color,

religion, sex, age, familial or marital status, ancestry, sexual orientation, veteran status or being a qualified individual with a disability; within the legal framework

of the country.

Standard Chartered Bank Nepal Limited undertakes no obligation to update any statement in this Annual Report 2009-2010 to reflect events or circumstances

after the date on which such statement is made. Information in this Annual Report is as of July 16, 2010.

Designed & Processed by: PowerComm, 5552987, Printed in Nepal

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