Kathmandu, April 8

Foreign employment savings bonds floated by Nepal Rastra Bank (NRB) remained undersubscribed this time as well, as lack of promotional activities to generate awareness about the debt instrument failed to raise their demand.

NRB, the central bank, had floated five-year foreign employment bonds worth Rs 250 million on March 20. The sales of these debt instruments, which guaranteed flat annual return of nine per cent, were open till April 6.

But till the last day, NRB was able to sell foreign employment bonds worth around Rs 81.70 million, meaning the securities were undersubscribed by Rs 168.30 million.

“This shows that we have not been able to generate adequate awareness about these instruments among Nepalis working abroad,” Min Bahadur Shrestha, head of the Public Debt Management Department at NRB, told The Himalayan Times.

NRB, on behalf of the government, has been floating foreign employment savings bonds exclusively for overseas migrant workers, non-resident Nepalis or those who returned home from foreign employment destinations less than four months ago, since July 2010.

One of the purposes of issuing these bonds is to inculcate savings culture among Nepalis working abroad and pool their resources for country’s development. In return for buying these bonds, the government guarantees a fixed return which can be collected every six months till the time of the maturity of the securities. Also, these securities carry zero risk because they are issued by the state and they can be used as collateral to obtain loans.

Despite this, these bonds have never been fully subscribed since their launch almost six years ago.

“Diaspora bond has been quite successful in many countries. But that has not been the case here,” said Shrestha. “We are now thinking of launching awareness campaigns not only abroad where Nepalis work but here in Nepal where families of these overseas migrant workers reside so that they could encourage their kin to invest in these securities.”

Currently, NRB has appointed agents in eight different foreign employment destinations, ranging from Malaysia and Gulf countries to Australia, to promote sales of these bonds. But one of the queries these agents face is whether any mechanism has been created to absorb the loss generated by continuous weakening of Nepali rupee, according to Shrestha.

Those working abroad convert currency of the country where they are employed into Nepali rupee to buy these bonds. Since Nepali rupee has been depreciating by 3.35 per cent per year for last one decade, those who invest in these bonds incur certain losses.

“Since we have not been able to find a practical solution for this problem, we are thinking of allowing Nepalis living abroad to purchase the bonds in their names and settle the payment here through their family members,” said Shrestha, adding, “But we need support of the government to promote sales of bonds as well.”

NRB is floating foreign employment savings bonds worth another Rs 250 million within a few weeks.