eleventh annual report (english)

HERITAGE

CULTUREOUR

OUR

ANNUAL REPORT 2010/2011

ContentsIntroduction 01Vision And Mission 02Chairman’s Message 04Board of Directors 06Director’s Report 08CEO’s Message 15Management Team 16Kumari Bank And Our Proud Heritage 17Corporate Social Responsibilty 21Product Review 25Auditor’s Report 29Schedules 30Significant Accounting Policies 63Notes to Accounts 65Disclosure As Per Basel II Requirement 74ATM Network 80Branch Network 82

IntroductionKumari Bank Limited, came into existence as the fi fteenth commercial bank of Nepal by starting its banking operations from Chaitra 21, 2057 B.S (April 03, 2001) with an objective of providing competitive and modern banking services in the Nepalese fi nancial market. The bank has paid up capital of Rs. 1,603,800,000 of which 70% is contributed from promoters and remaining from public.

Kumari Bank Ltd has been providing wide - range of modern banking services through 28 points of representations located in various urban and semi urban part of the country, 19 outside and 9 inside the valley. The bank is pioneer in providing some of the latest / lucrative banking services like E-Banking and SMS Banking services in Nepal. The bank always focuses on building sound technology driven internal system to cater the changing needs of the customers that enhances high comfort and value. The adoption of modern Globus (T24) Software, developed by Temenos NV, Switzerland and arrangement of centralized data base system enables customer to make highly secured transactions in any branch regardless of having account with particular branch. Similarly the bank has been providing 365 days banking facilities, extended banking hours till 7 PM in the evening, utility Bill Payment Services, Inward and Outward Remittance services, Online remit Services and various other banking services.

The bank has been able to get recognition as an innovative and fast growing institution striving to enhance customer value and satisfaction by backing transparent business practice, professional management, corporate governance and total quality management as the organizational mission. The key focus of the bank is always centered on serving unfulfi lled needs of all classes of customers located in various parts of the country by offering modern and competitive banking products and services in their door step. The bank always prioritizes the priorities of the valued customers.

KuMARI BANK Annual Report2010/2011

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VisionOur vision is to be the preferred fi nancial partner to our customers, a center of career growth to our employees, and to maximize our shareholders’ value, while contributing to our nation’s fi nancial sector and to its economic welfare.

Mission Our mission is to deliver innovative products and services to our customers, use these innovative products to achieve fi nancial inclusion, and do so by exemplifying good corporate governance, proactive risk management practices, and superior corporate social responsibility.

KuMARI BANK Annual Report 2010/2011

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Kumari Ghar is a palace in the center of Kathmandu city, next to the Durbar Square (Basantpur) in which a royal kumari selected amongst several kumaris from various places resides. Kumari puja is the tradition of worshipping young girls as manifestations of the divine female energy or Devi, believed to be the bodily incarnation of goddess Taleju (the Nepalese name for goddess Durga).


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I am happy to announce that your bank has successfully completed 11 years of dedicated service, for which the credit goes to our valued shareholders for their constant advices, support and encouragement.

cHairMan’SMeSSaGe

Dear Shareholders,I feel privileged to shoulder the chairmanship of the bank and look ahead with guarded optimism. This Annual Report takes you through the odyssey of your bank during the given fi nancial year and presents before you the results achieved over the same period.

I am happy to announce that your bank has successfully completed 11 years of dedicated service, for which the credit goes to our valued shareholders for their constant advices, support and encouragement.

As a publicly traded fi rm, one of our prime responsibilities is delivering returns to our shareholders. As a result of this commitment, we declared 8.00% bonus share to be issued to you at the 11th Annual General Meeting, in spite of the precarious business climate infl uencing the banking sector.

We will continue to elevate the bank’s stature by adopting best international practices, through the knowledge, expertise and dedication of our employees, which in return will help us remain committed to further enhance shareholders value.

Trends in technology, demographics, consumer behavior, market and ever growing competition provide new opportunities for us to create benefi cial products and services leading us to growth and profi t in coming days. I am confi dent that we will continue to grow revenues, expand margins and increase our profi t, cash, EPS and return to shareholders.

The success of Kumari depends on the persistence and vision of its shareholders and I, along with the directors, the management team, and the employees of the bank are deeply grateful for your support.

With best wishes to each one of you and your family members!

Thank you,Min Bahadur GurungChairman


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The festival of Indra Jatra is an annual event which continues for eight days with much rejoicing, singing, dancing and feasting. People from all over Nepal, mostly those who live within the Kathmandu Valley, gather at the Hanuman Dhoka in Kathmandu. It is on this very day when one is able to observe numerous varieties of traditional dances. The festival is named after Lord Indra who is known as the god of rain and also as the king of heaven. On the third day of the festival of Indra Jatra, the living goddess Kumari is taken out in a procession in a chariot. Kumari Bank has been supporting for the successful completion of the event every year as we in Kumari bank believe in preserving our heritage and culture.


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Mr. Min Bahadur GurungChairman

Mr. Shiva Ratan ShardaDirector

Mr. Noor Pratap J.B.RanaDirector

Dr. Rajan Bahadur PaudelDirector

Board of Directors


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Dr. Shova Kant DhakalDirector

Mr. Amir Pratap JB RanaDirector

Mr. Rishi AgrawalDirector

Mr. Rashindra B. MallaDirector


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side and the growth in deposit interest rates on the other side had a negative impact on the Bank’s profi ts.

1.Review of the Bank’s operations in FY 2067/68A summary of the Bank’s fi nancial progress in the reported period is as follows:

A. Deposit Mobilization In comparison to the last Financial Year, in this reported

period, deposits declined by 2.56 % to remain at Rs. 16.99 billion. Deposit growth of commercial banks was very challenging due to the economic and political instability seen in the country since the last two years added to the increasing competition. Due to various reasons like the growing liquidity crisis, the increasing number of banks and fi nancial institutions as well as customers’ tendency to deposit funds in cooperatives because of higher interest rates, there was a steep rise in deposit interest rates. It was felt that customers were becoming more inclined towards higher interest rates rather than safe deposits. In such a situation, our priority was to secure deposits of a fi xed nature. As a result of this, the saving deposits which were about 29 % of total deposits in FY 2066/67 became 38 % in FY 2067/68. Because of the growth in deposits of fi xed nature, the Bank could easily manage fi nancial liquidity.

Respected Shareholders,On behalf of the Board of Directors, we heartily welcome all respected shareholders to the 11th Annual General Meeting of Kumari Bank Limited, a Bank that has been steadily expanding its services through the full confi dence and cooperation of all its customers. On this occasion, we are very happy to be able to present the Bank’s Annual Report for Fiscal Year 2067/68. That this Bank has, since its establishment, been showing consistently all round progress through the medium of modern banking methods, is clear to you all. In the past 11 (eleven) year period, your Bank has become popular among all those concerned and gained a reputation for reliability and high standards because of the positive steps taken to enhance its services.

By moving ahead implementing your opinions, suggestions and advice in our working methods, your Bank has already become well-known as a reputed institution. With these thoughts in mind, we request your permission to present the Bank’s detailed report of FY 2067/68 on behalf of the Bank’s Board of Directors.

In the reported year too, economic development was not that trouble-free both from the national and international viewpoints. Like in the past few years, the country’s economic activities could not gain as positive a momentum as wished for. Due to the political instability in the country, the energy crisis, slowdown in housing and real estate business and liquidity crisis, etc., the entire banking sector’s progress was not that satisfactory. Additionally, even a progressive bank like ours could not remain totally untouched from the effects of the problems seen in some banks from time to time and the circulation of extremely exaggerated rumors in the market.

While on the one hand, the Bank could not grow as planned for in its main area of business—that of loan investment—due to various factors such as the lack of secure areas for investment, minimal progress of the productive sector, energy crisis, etc., on the other hand, liquidity crisis in the market and some other problems seen in the banking sector, decline in customers’ confi dence towards this sector and the increasing numbers of banks and fi nancial institutions, the situation arose wherein deposits had to be secured by offering high interest rates. In this way, the sharp decline in new loan investments on the one

In the past 11 (eleven) year period, your Bank has become popular among all those concerned and gained a reputation for reliability and high standards because of the positive steps taken to enhance its services.

DirecTor’SreporT

Section-1: Financial Year’s Highlights

Description FY FY Increase/(Decrease) 2067/68 2066/67 Rs %Total Assets 20,492 20,486 6 0.03Deposit Liabilities 16,986 17,432 (446) (2.56)Loans and Advances 14,926 14,966 (40) (0.27)Investments 3,534 2,298 1,235 53.75Interest Income 2,252 1,871 381 20.35Interest Expense 1,567 1,189 378 31.76Net Interest Income 685 682 3 0.45Other Operating Income 191 165 26 15.54Other Operating Expense 382 346 36 10.39OperatingProfit/(Loss) 494 501 (7) (1.42)NetProfit/(Loss) 251 317 (65) (20.63)

Rs. in million


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In this period, the Bank was successful in reducing call deposits of unstable nature from 25 % to about 17 %.

B. LendinganditsManagement In Financial Year 2067/68, the Bank’s total loans decreased

by 0.27 % to remain at Rs. 14.93 billion. Because of the liquidity crisis seen in the economy, the sluggishness in housing and real estate business and rising interest rates, growth in loans became difficult and risky. Due to the energy crisis and labor strikes, the country’s industrial sector could not flourish. Because of the lack of a secure and productive sector for investment, the slowdown in the share market, sluggishness in the real estate business, the increase in loan interest rates due to rise in deposit interest rates, unstable political and economical situation and other reasons, the Bank could not make loan investments as expected. In such a scenario, our priority was focused towards minimizing risks on current loans. As a result of this, the real estate loans that were about 30 % in FY 2066/67 was brought down to about 20 % by the FY 2067/68. In such a challenging situation, we focused more on ensuring the quality of loans and managing risks rather than widespread increase in loans.

Our Bank too could not remain untouched by the effects of the sluggishness in housing and real estate business and the liquidity crisis. In the review period, while loan management overall was satisfactory, but due to the abovementioned reasons, there was certainly some reduction in quality of loans because of which a situation arose where additional loan-loss arrangements had to be made for some loans disbursed in previous years.

C. Investment In accordance with the Bank’s objective of getting returns

from the overall resources by maintaining balanced liquidity, the Bank has given continuity to its policy of investing in Nepal Government and Nepal Rastra Bank’s risk free securities (treasury bills, development bonds). This Bank, to stabilize its liquidity situation, has invested amounts equalling Rs. 2.57 billion on government bonds and Rs. 228.9

Section 2: Comparative State of Deposits:

Deposit FY 2067/68 % of total FY 2066/67 % of total deposits depositsCurrent 797 5 683 4Margin 132 1 138 1Savings 6,551 38 5,132 29Call 2,852 17 4,273 25Fixed 6,655 39 7,206 41Total 16,987 100 17,432 100

Rs. in million

million on saving bonds from which, in addition to getting the best returns, it will help in fulfilling liquidity shortage immediately when the need arises. Additionally, the Bank has diversified its investments by investing amounts equalling Rs. 727.5 million on other sectors. Besides this, the Bank has with utmost caution, also been investing in local and international money markets and on shares and bonds of various organizations. Till the end of Financial Year 067/068, the total amount of investment funds has grown by 53.75 % in comparison to the previous FY to Rs. 3.53 billion from Rs. 2.29 billion earlier.

D. Profit In Financial Year 067/068, the Bank’s Total Operating Profit

(Total of net interest income and other operating income) has increased by 3.40 % to Rs. 875.3 million while total operating expenses has increased by 10.40 % to reach Rs. 381.2 million. Because of the high growth in deposit interest rates due to the country’s economical and political instability, inflation and the liquidity shortage seen in the market, there has been a contraction in the Bank’s profits. The cash flow shortage seen in the market led to decline in liquidity resulting in very high increase in deposit interest rates due to which net interest income only grew by 0.45 % in comparison to the previous year. Because of the high growth in interest expenses due to the country’s grave situation and the abovementioned reasons, there could not be an increase in loan investments, however, a growth of 3.40 % in operating profits could be achieved, but because of inflation in operating expenses of fixed nature and rise in staff and management costs, even when loan-loss arrangement decreased by 1.42 % in comparison to last year’s operating profit, net profit decreased by 20.63 % in comparison to the previous year. The main reason for this was the 770 % growth in loan-loss provision due to the decline in quality of loans disbursed over the previous years.

Because of the decline in quality of loans, this year the Bank had to make loan-loss provision amounting to an additional Rs. 113.8 million which in the previous year was only 13 million.

E. Capital Management In the review period, the Bank’s capital management has

been encouraging. Till Ashadh-end of FY 2067/68, the Bank’s total capital reached Rs. 2.46 billion taking into account its core capital of Rs. 2.25 billion and supplementary capital of Rs. 251.5 million. Regarding the minimum 10% capital adequacy requirement set by Nepal Rastra Bank, in the reviewed year, this Bank was successful in maintaining its capital adequacy ratio at 13.76% up from 12.34 % at the end of FY 2066/067.

F. Contribution in Government Revenue The Bank has already paid Rs. 120 million as corporate tax to

the government during the reported period in comparison to Rs. 143.72 million in Financial Year 2066/067.


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G. Products and Services This Bank has consistently made efforts to make its products

and services easily available to all its customers. From this, customers will benefit in the present competitive market and services as necessary are being provided. It is clear to all that ever since its establishment, this Bank has been providing various types of new and modern products and services and the mobile cash technology introduced recently can be taken as one example of the same. With this technology, people all over the country can send and receive funds from one place to another by using the mobile phone. By using Kumari Mobile Cash (Mobile Cash) money does not have to be carried physically thereby ensuring safety from normal risks such as loss and theft. By bringing into operation such a novel and excellent service like Kumari Mobile Cash, the Bank has been successful in reaching its services to remote areas of the country where there is no banking presence and in addition, it has also been successful in gaining a special place in the financial market because of its use of modern technology in its services. In this way, while on the one side, Mobile Cash is a customer oriented product, on the other side, it is a supportive vehicle to widen remittance. Since this remittance, in a large form, enters through the banking system, the importance of technology like Mobile Cash has become still more significant. In addition to this, products that we introduced like Visa Electronic Debit Card, Internet Banking and SMS Banking have become extremely popular.

Our Visa Electronic dollar debit cards are available for use in Nepal, India and all over the world through the VISA network. In addition, to make its remittance service fast and simple as required by customers, the Bank has brought into operation its software named Kumari Remit besides also providing effective services by having agreements with various other remittance service providing companies. In the course of providing additional services to its customers, the Kumari Salary Saving Account has been brought into operation. Since Nepal is a predominantly agricultural country and since a major part of production is dependent on agriculture, the development of this sector is essential. Keeping this in mind, Kumari Bank, in collaboration with an international organization like Oxfam, has made loans available to farmers for purchasing seeds used in farming. In the coming days too, the Bank will continue to move ahead bringing into use newer and newer technology-based products and services.

H. Branch and Network Expansion In the course of expanding its market to be part of the

country’s economy, the Bank has been giving continuity to its work of branch expansion. While doing this, the Bank has reached its total number of branches to 28 and if the country’s situation and the environment become more favorable, then in the current year too, will move ahead ready to bring into operation additional branches. Beside such personnel-run branches, services are also being

provided upto now through the medium of 33 Automatic Teller Machines (ATMs) in different parts of the country and in the coming days too, such services will also be expanded as and when the need arises.

I. Corporate Governance Banks and financial institutions are public organizations not

only operated with shareholders’ funds but also through institutional and public deposits. This means that moral character and good corporate governance are two extremely sensitive issues that are like two sides of the same coin. This, we have taken to heart in a most sincere manner and have been conducting our activities by remaining committed to the same. Being aware that good corporate governance is the guiding path of the Bank’s operations, the Board of Directors is consistently giving effort to conduct its activities according to the same, and to develop strong and transparent good corporate governance also in other activities of the Bank.

J. Risk Management A separate risk management division has been established

and related committees and sub-committees have been formed to regularly monitor and protect the Bank from potential risks associated with different activities of the Bank. Policies and regulations have also been formed and implemented to manage the numerous risks associated with banking activities as well as other potential risks.

LoanRisksBecause of the decrease in economic activities in the non-agricultural sector, labor strikes/problems, energy crisis, liquidity crisis and failure to implement the government budget in time, there has been a decline in the country’s economic growth. These problems had a direct effect on the Bank’s loans. Due to the sluggishness in the real estate sector, the stagnancy in share market business and the decline in progress of the productive sector, loans of the entire banking sector were at risk. In this situation, our attention was focused on better management of current loans and we set up risk management systems according to Nepal Rastra Bank’s instructions. We have always remained extremely attentive to minimize the loan risks. While doing this, the Bank has recently been increasing its investments in consumer loans, small and medium enterprise loans and other productive sector loans to keep loan risks under control. Likewise, special attention is being given to control risks due to loan concentration by restructuring its credit portfolio.

Operating Risks ManagementAll activities related to Bank operations are based on given policies and guidelines and clearly stated work ethics and implementation. Because of this, we are confident that operating risks are being managed well.

LiquidityRiskManagementWe are continuously effortful towards good management to ensure effective liquidity management and in this regard, have always followed Nepal Rastra Bank’s directives. While,


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according to Nepal Rastra Bank’s standards, banks have to maintain a minimum of 20 % in net liquid assets, this Bank’s net liquid assets in the reported period remained at 27.94 %.

Market Risk ManagementThe Bank has made policies and devised working methods to monitor the foreign exchange situation to minimize risks associated with fluctuations in foreign currency exchange rates. Similarly, arrangements have also been made for formulating the necessary policies and regulations by regularly monitoring market interest rates.

K. Non-Financial Successes/Achievements in FY 67/68 The non- financial achievements and successes of Kumari

Bank in this reported period are as follows:

This Bank received the FNCCI’s (Federation of Chambers of Commerce and Industry) “FNCCI Peoples Development Award” from the Prime Minister because of its excellent role in developing the work efficiency of its employees. Kumari Bank introduced a most modern technology like Kumari Mobile Cash for the first time in Nepal. With this, arrangements have been made for receiving and sending cash through the help of the mobile phone even in areas where banking services have not yet reached so far. It cannot be denied that achieving success in a service like Mobile Cash is challenging and a test for change in a developing country like ours that is undergoing rapid development in the technology sector. Because of the success of this technology, Kumari Bank has made Nepal proud by “The mBillionth Award” and “The manthan Award” in South Asia itself. The Bank received this award in the “m Business and Commerce, Banking” and in the “E-business and Enterprise” category respectively.

L. CorporateSocialResponsibility This Bank has been taking part in various kinds of economic

and social activities ever since its establishment. There can be no two views on the fact that Kumari Bank, being aware of its responsibility, has been playing its role in not only the country’s economy but also in the social sector. In this regard, this year too, on the occasion of its anniversary, a blood donation program has been conducted in association with Nepal Red Cross Society. In this Financial Year, the Bank has presented 5 computers to Shri Jan Bikas Secondary School, Balkhu. A free health camp was organized in cooperation with Chirayu Clinic in the Pashupati area on the occasion of Teez, the great festival of women. Similarly, the Bank, as part of its social responsibility, supported victims of the recent great earthquake in Japan through the Nepal Red Cross Society by opening an account named the Japanese Relief Fund. Likewise, the Bank, like in the previous years, presented T-shirts and Rs. 50,000 in cash to the Sinwa:Suwa Youth Club on the occasion of Indra Jatra. In the future too, the Bank has the objective of being involved in such socially responsible activities.

M. CommitteesandSub-CommitteesappointedbyBoardofDirectors

In the reported year, the following committees and sub-committees are in place to put into practice the applicable laws and the policies adopted by the Bank:

1. Audit Committee: In accordance with Section 164 of the Company Act, an Audit Committee was in place comprising of Directors Shri Shiv Ratan Sharda and Shri Rashindra Bahadur Malla under the convenorship of Non-Executive Director Prof. Dr. Rajan Bahadur Paudel. The Bank’s internal audit division reports directly to this committee.

2. Human Resource Sub-Committee: To guide management in selection of able employees, recruitment, appointments, skill development and related services/facilities, and other such matters, a Human Resource Sub-Committee comprising of Directors Shri Rishi Agrawal and Shri Rashindra Bahadur Malla was in place under the convenorship of Dr. Shobhakant Dhakal.

Such committees and sub-committees appointed by the Board of Directors have been conducting their activities within the premises as set by the Board regarding their work, duties and authority and the conveners and members of the stated committees and sub-committees have not been provided with any additional reimbursements and facilities except for meeting allowances.

N. OtherManagementLevelCommittees Besides the above mentioned committees and sub-

committees appointed by the Board of Directors, the following have also been conducting their activities under the convenorship of the Chief Executive Officer in order to implement the Bank’s activities more effectively: Management Committee, Asset and Liability Management Committee, Labor Relations Committee, Discipline and Performance Review Committee, Risk Management Committee and Bad Loans Recovery Committee.

O. Human Resource Development and Management At the present time, there is a widespread need of skilled

manpower. In the banking profession, this necessity is still all the more important. In a country like ours with its ever increasing number of financial institutions and migration of skilled manpower to foreign lands, it is extremely difficult to retain the available manpower in such a competitive environment. The Bank’s principle concerning the Bank’s staff is to provide training to its human resource and to appoint personnel having good qualifications and professional skills when recruiting. The Bank has been organizing training programs nationally and abroad from time to time in order to upgrade expertise of existing manpower and to make them still more proficient by teaching them newer skills.


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presented the following details of our achievements of 3 months of the current Financial Year.

A. Programs in the Current Fiscal Year

I. LoanRestructuring This Bank’s objective and aim is to mobilize deposits as

much as possible and to increase loan investment in productive sectors that enhance the country’s GDP growth such as large projects like hydroelectricity, education, agriculture and small and medium industries as well as other large projects that help in infrastructure development. In addition, plans have been made to increase efforts to regulate the prevalent loans in housing and real estate and reduce such loans gradually.

II. Increase in Services and Network The Bank’s plan is to provide banking services to as

many customers as possible by making its modern Kumari Mobile Cash service more customer-oriented.

III. DepositGrowthandStability Plans are to increase deposits by bringing as many of

the population as possible into the banking system by expanding banking services to different parts of the country and providing customer-needed facilities. In addition, focus will be now more on growth in saving and fixed deposits rather than unstable deposits like call deposits to ensure stable growth of deposits.

IV. ManagementofHousingandRealEstateLoans Because of the sluggishness in housing and real estate

business, there has been great increase in risks of loans in the housing and real estate sector. Keeping this in view, special attention will be given to minimizing risks associated with the housing and real estate related loans.

V. Branch and Network Expansion Like the reported year, this year too, keeping the

country’s circumstances in view, programs are in

For the development of its staff, adjustment of salaries and facilities are being done as per the need of the time while staff transfers and work evaluations are being done on a regular basis. The Bank is making timely adjustments and improvements to the Employee Service Regulations, 2064, to make staff administration more effective. Similarly, work has been done to make staff administration more effective by bringing into operation a new structure of the Staff Association after making timely readjustments to the structure of the existing Staff Association.

2. ReviewofNationalandInternationalEconomy Like some of the previous years, in Financial Year 2067/68

also, it is assumed that the economic growth in the world economy remained negligible. Challenges remained in the global economy due to reasons such as the weakness in economic growth of developed nations, growing inflation which raises doubts about continuation of economic growth of developed countries, and the very high government budgetary deficits of European countries. In addition, the earthquake in Japan, the tsunami and the floods in Thailand also had negative impact on the global economy.

Like some of the previous years, in FY 2067/68 too, Nepal’s economic growth remained to be minimal. In Financial Year 2067/68, the Central Statistics Bureau of the Nepal Government states that the Gross Domestic Product based on essential prices remained at only 3.5 %.

In the reported year, problems in the liquidity situation was seen because of reasons like lack of expected improvement in balance of payments situation, stagnancy in expansion of capital expenses and cash deposits with the Nepal Government for most of the time.

In fiscal Year 2067/68, due to the shortfall in liquidity, short-term and long-term interests remained relatively high in comparison to the previous year. Because of the sluggishness in the housing and real estate business and the share market, there has been an increase in the ratio of bad loans in financial institutions.

3. AShortGlimpseoftheCurrentFiscalYear’sBusiness:According to Nepal Rastra Bank, till Ashoj of the current Fiscal Year, there are 222 banks and financial institutions conducting their activities in the country comprising of 31, 90, 79, and 22 “A”, “B”, “C” Class banks and financial institutions respectively. On the basis of these number of banks and financial institutions itself, it cannot be denied that in a small landlocked country like ours with its limited financial opportunities, the banking and financial business is extremely competitive and challenging. In spite of such competitive and challenging circumstances, we have

Section 3: Short Glimpse of Current Year’s Business:

Description FY2068/69 FY2067/68 Growth First3Months First3Months %Deposits 1,80,06,627 1,67,84,422 7.28Loans and Advances 1,58,81,955 1,50,87,855 5.26Interest Income 5,57,249 4,95,643 12.43Other Income 47,723 53,241 (10.36)Interest Expense 3,90,412 3,97,438 (1.77)Other Expense 95,396 89,824 6.20OperatingProfit/(Loss) 1,19,105 61,526 93.58

Rs. in thousand


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place to continue expansion of additional branches and to make available banking services through Kumari Mobile Cash to all where telephone/mobile services have reached but where there is no presence of the Bank.

VI. Capital Growth Bonus shares have been proposed at the Bank’s 11th

Annual General Meeting to increase capital. In case permission is given for these bonus shares, the Bank will be successful in reaching the total Paid-up capital as required within 2069/70 as per Nepal Rastra Bank’s directive in FY 2067/68 itself.

VII. Human Resource Development and Management In the coming days, along with business, it can be

easily conjectured that there will be stiff competition in manpower management as well. On the one side, it can be observed that there will be higher demand than supply of skilled manpower while it can be assumed that it will be equally challenging to retain trained staff within the organization. For this, the Bank will implement necessary programs for human resource development and management.

4. Bank’s Industrial and Business Relations: The Bank has been maintaining cordial relationships with all concerned industrial and professional bodies and is committed to continue doing so in the future as well, in the process, making use of the same in the Bank’s favor.

5. ChangesintheBoardofDirectors:None

6. Major Issues Affecting Business: unstable government, stagnant economical condition, declining peace and security and the creation of competition as a result of increase in number of providers of the same services, etc.

7. Board of Directors’ Responses to the Auditor’s Report: Except for normal comments concerning the Bank’s regular business, no especially negative comments have been observed in the Audit Report. Instructions have also been given to the management to implement the suggestions and advice of the Audit Report. (Because the financial details of FY 067/68 were accepted by Nepal Rastra Bank on 2068/09/19, the received comments and instructions have been included in the Annual Report.).

8. Dividend Declaration: The Bank will distribute bonus shares equalling to an amount of Rs. 118.8 million from the reserve profits of FY 2067/68 and the net profits of FY 2067/68 which is 8 % of the share capital with the Bank itself bearing the deductible advance tax on the said amount of Rs. 6.58 million, the total amount of Rs. 125.38 million being proposed as the total dividend.

9. ForfeitedShares: In the reported year, no shares have been forfeited.

10. Progress of the Bank and its Subsidiary Companies: The progress of the Bank has been presented under various headings in this report. The Bank does not have any subsidiary companies.

11.MajorbusinessesconductedbytheBankanditssubsidiarycompanies in Financial Year 2067/68andany importantchanges in business activities: The Bank does not have any subsidiary companies.

12. Important Information Provided by Valued Shareholder:None.

13. Details of share holdings by the company’s Directorsand office-bearers in the previous Financial Year andinformationprovidedby themabout their involvement inthetradingofcompanysharesifany: Except for changes in share holdings due to distribution of bonus shares, no other trading has been done.

14. Information about any agreements concerning the Bankthatservetheself-interestofanyDirectororpeoplecloseto them: None.

15.Detailsaboutre-purchaseofshares: No such activities were recorded.

16.DetailsaboutInternalControlSystems: There is a separate department to maintain the Bank’s internal control systems. This department is always active to minimize risks associated with the Bank’s loans, operations and market risks. Monitoring of the effectiveness of the internal control systems is done on a regular basis by the Audit Department while conducting its regular audit.

17. Details of the Bank’s total Operating Costs: The Bank’s operating costs in FY 067/68 were as follows:

Staff Expenses: Rs. 16,83,51,843 Other operating costs: Rs. 21,29,38,673

Detailed description of the Bank’s total operating costs have been stated in Annexure 4. 23 and 4.24 of the Annual Report.

18. Information about Audit Committee: The Audit Committee is comprised of Directors Shri Shivratna Sarda and Shri Rashindra Bahadur Malla under the convenorship of Non-Executive Director Prof. Dr. Rajan Bahadur Paudel. This committee had 16 sittings in FY 2067/68. Members of this committee have been provided with meeting allowance at par with other Board Members. This committee’s activities are conducted in accordance with Nepal Rastra Bank’s directives and Company Act regulations. No serious remarks on the Bank’s operations have been observed in the internal audit report. The Audit Committee has been conducting regular monitoring of the internal control systems and regularly providing suggestions concerning


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implementation to the management besides also providing information on the same to the Board of Directors. The Bank’s internal audit department reports directly to the Audit Committee.

19. InformationaboutanycashbalancetobepaidtotheBankby Director, Managing Director, Chief Executive Officer,Bank’s Promoters or their Close Relatives or Firm associated withthem,CompanyorOrganization:None

20. Details about Salaries, Allowances and Facilities provided toDirectors,ManagingDirector,ChiefExecutiveOfficerandOther Executives:

a. Directors: This Bank’s Directors are paid meeting allowances for taking part in meetings of committees and sub-committees as set up according to applicable rules at the rate of Rs. 10,000 to the chairman and Rs. 8,000 to the members. The Bank has not provided the Directors with any other facilities than the above. In FY 067/68, Rs. 21,80,800 (in words Rs. 2.18 million) has been paid as meeting allowance to the Directors.

Beside the above mentioned salaries, allowances and facilities, the following facilities have been provided to the Chief Executive Officer and other Managers:

b. Annual Salaries, Allowances and Facilities to Chief ExecutiveOfficerandOtherExecutives/Managers:

1. Vehicle along with driver, fuel, and repair and maintenance to the Chief Executive Officer; vehicle loan, driver, fuel, and repair and maintenance to Deputy General Manager and Assistant General Manager and vehicle loan, fuel and repair expenses according to the Bank’s policy on transportation vehicles to other management office bearers.

2. Home and real estate loans/personal loans to all permanent office bearers as per the Bank’s staff service regulations.

S.N. Description CEO Other Executives/Managers1. Salary 72,00,000 2,15,00,1122. Allowances 52,80,000 61,11,5263. Provident Fund 7,20,000 21,50,0114. Vehicle Maintenance --- 5,31,9175. Medical Treatment 100,000 14,24,5446. Dashain Allowances 600,000 23,83,4707. Annual Leave 600,000 36,91,9148. Insurance --- 9,73,0799. Bonus and Welfare 50,00,500 1,06,38,529 Total 1,95,00,500 5,42,60,943

Amount in NPR

3. Journals and telephone facilities as per the Bank’s human resource policy.

21. Dividend yet to be taken by shareholders: Rs. 1,14,90,972

22. DetailsofassetsalesandpurchasesasperSection141oftheCompanyAct,2063:

No such thing happened.

23. Details of business with associated companies as perSection175oftheCompanyAct,2063:

No such thing happened.

24. Any other information necessary to be revealed in theDirectors Report as per the Company Act, 2063, andapplicable laws: None.

25. Otherinformation: None.

Vote of ThanksWe offer our heartfelt thanks to our respected shareholders, customers, Nepal Rastra Bank’s regulatory, supervisory and related departments, Company Registrar’s Office, Nepal Securities Board, Nepal Stock Exchange Ltd. as well as the general public and others concerned who have directly or indirectly helped to keep the Bank’s morale high through their continuous support, encouragement and guidance. We also wish to thank Shri G. P. Rajbahak and Company, our statutory auditors, for concluding the audit in time and providing the Bank with realistic professional advice. In addition, we wish to especially thank the Bank’s management and staff for considering the Bank’s progress to be their own and giving their valuable labor and time to provide continuous and dedicated service. Finally, by incorporating as its main principle the fact that the Bank and its customers are two sides of the same coin, and that it is due to our customers’ affection and trust that the Bank has succeeded in reaching its present position, we offer our heartfelt gratitude to them with the promise to be still more committed to increase our strong relationship with our customers in the future as well.

Thank you.

On behalf of the Board of Directors

Shri Min Bahadur Gurung (Chairman)

Dr. Shobhakant Dhakal (Director)Date: 2068/09/22


15

I assure you that with momentum on our side, we are in a very strong position to take advantage of new opportunities for sustainable, long-term growth.

ceo’SMeSSaGe

Dear Shareholders,I feel privileged to take the reins of leadership to lead Kumari Bank at this juncture on your behalf. In the most challenging times, I am fully aware of the responsibilities you have bestowed upon me and I can assure you that we are committed to delivering our best.

Our objective is to achieve excellence through people empowerment, embracing high technologies and providing a comprehensive suite of products and services for our customers, ultimately contributing to the society and nation.

At the end of the Fiscal Year 2067/68, the total deposits stood at NPR 16.99 Billion and total loans & advances stood at NPR 14.93 Billion. During the fi scal year 2067/68, the bank was able to earn total operating profi t of NPR 494.00 Million, which we believe is a praiseworthy achievement.

A year, which can be categorized as unprecedented, provided relentless pressure on the viability of commercial banks with a total of eight institutions achieving negative growth in profi tability compared to the year before. With banks struggling to reduce their exposure to the real estate sector, the diffi cult scenario is expected to continue this year as well.

While challenges and uncertainties persist, with the issue of bonus shares at 8%, the bank’s total paid-up capital has reached NPR 1.6 Billion, which I believe is a robust capital position that will help us grow our business further. Your bank’s investments in risk free instruments, i.e. government securities and bonds saw a signifi cant increase of 54% in the given year,

growing from Rs. 2.3 Billion to Rs. 3.5 Billion. These results clearly demonstrate that we’re a resilient bank that fi nds alternate ways to strengthen its balance sheet in the face of systemic adversity engulfi ng the banking sector.

I assure you that with momentum on our side, we are in a very strong position to take advantage of new opportunities for sustainable, long-term growth.

During the year, the bank received several international awards that I would like to intimate you about. The bank won the coveted mBillionth Award South Asia 2011 and The Manthan Award South Asia 2011, held in New Delhi, India for its innovative product Kumari Mobile Cash. Through this service, the bank is committed to providing beyond branch banking services with the help of mobile phones to customers that otherwise would not be within the purview of formal fi nancial services. Providing access to formal fi nancial services to those in the rural regions has been an inherently burning issue in the banking sector, and we are in the forefront trying to do something about it.

The bank also connects with all its customers through 28 branches and 33 ATMs represented throughout the country.

Your bank has witnessed 11 successful years and I would like to thank our valued shareholders, employees and customers ,who are the essence of what we do, for their continuous support.

Sincerely,uday K. upadhyayActing CEO


16

Mr. Uday K. UpadhyayActing Chief Executive Officer

Mr. Geha N. DhunganaChief Credit Officer

Sitting from left

Standing from left

Mr. Tika Ram ChapagainChief Marketing Officer

Mr. Sanjay PoudyalChief Financial Officer

Mr. Binod N. ShresthaBranch Manager (Main Branch)

Mr. Narayan P. BhujuHead- Information Technology

Mr. Suresh K. KarnaChief Process Re-engineering Officer

Management Team

Ajit BhattaraiHead- Operations and Central Logistics

Ashish BhattaraiHead - Human Resources

Anuradha ChoudharyBranch Manager- Nepalgunj

Bikas KhanalHead - Corporate Credit

Bishwa Mani RegmiBranch Manager- Kumaripati

Mridul MainaliHead - Credit Risk Management

Narendra Prasad ChhatkuliHead - Legal & Compliance /Company Secretary

Pankaj S.J.B. RanaHead - Card

Parmeshwar PantHead - Treasury & Correspondent Banking

Prabin JhaRelationship Manager- Corporate Credit

Prajwal JoshyRelationship Manager- Corporate Credit

Rajesh ShresthaHead - Retail Credit/ Branch Manager- New Road

Rena RijalHead - Institutional Banking & Remittance

Sanjeeb SainjuBranch Manager- Birgunj

Shreeyukta T. PandeyRelationship Manager- Corporate Credit

Sipa RegmiHead - Marketing & Corporate Communications

Yemi KarkiRelationship Manager- Corporate Credit


17

Kumari Bank and our Proud HeritageKumari Bank has acquired the name ‘Kumari’ after the living goddess Kumari who is worshipped by all Hindus and some Nepalese Buddhists. This tradition of worshipping a living goddess is unique in its own way and there is an interesting history behind worshipping a young girl from the Shakya clan. The worship of the Goddess in a young girl represents the worship of divine consciousness spread all over creation. As the supreme goddess is thought to have manifested this entire cosmos out of her womb, she exists equally in animate as well as inanimate objects. While worship of an idol represents the worship and recognition of the supreme through inanimate materials, worship of a human represents veneration and recognition of the same supreme in consciousness.

We at Kumari bank believe that we have been blessed by the shakti of the goddess Durga in the form of Kumari and work towards the wellbeing of all human kind. Her divine energy empowers us to carry on our daily work and deliver our best to our valued customers. We believe in preserving our rich culture and heritage and work towards it. Likewise, we contribute wholeheartedly in the successful completion of Indra Jatra, an annual festival where Goddess Kumari tours the city on a temple chariot.

A N D O U R

Kumari Bank and our Proud Heritage

PROUD HERITAGEA N D O U R A N D O U R A N D O U R

KUMARI BANK


18


19

Bungamati is a classic Newari village dating back to the 16th century. It sits atop a spur above the Bagmati river. In the centre of the lively village square is the large Rato Machhendranath temple, built in the shikhara style rather than the more common pagoda style seen elsewhere in the Kathmandu valley.


20

The eight-day-long Indra Jatra Festival begins with a long wooden pole (carefully selected and cut in the Nala forest of Kavre District) being erected in front of the Hanuman Dhoka Palace in Durbar Square. A fl ag of Lord Indra is tied at the top. On the third day, the procession of Kumari, the Living Goddess, is taken on a tour of the city on a chariot. Other deities like Ganesha (the elephant headed God) and Bhairav are also paraded. The state head pays homage to the Goddess and get empowered to rule the country for a year.


21

corporaTe Social reSponSiBilTy

Blood Donation program: Kumari Bank has been conducting

Blood Donation Program every year organized by Kumari Bank’s

Labour union.

Health Camp - TEEJ:Kumari Bank had organized Health Camp at Pashupati Area on the occasion of Teej under the supervision of Dr. Komal Thapa, Chirayu Reasearch and Diagnostic Center. During the health camp, medical services and counseling to patients were provided.


22

Donation Kumari Bank providing donation to Nisahaya Sewa Sadan Briddaashram, Shantinagar, Kathmandu.

Health Camp- KavreKumari Bank has also been organizing Health Camps to provide

medical services to underprivileged people of remote areas. Such Health Camps at remote area is very fruitful to people of remote areas who do not have access to hospital and better medical services. So, last year on the supervision of Dr. Komal

Thapa, Chirayu Reasearch and Diagnostic Center and with the support from Indrawati Community Service Center, Kunchowk village of Sindhupalchok district, it successfully conducted the

Health Camp.

Sponsorship Kumari Bank has been

supporting for the education of two orphan children who

are studying in Eris Academy, Sovahity, Lalitpur. HOPAD, a social organization is looking

after them.


23

Ranipokhari, meaning Queen’s pond, is an artificial square-shaped pond with the temple of Lord Shiva in the middle. It lies in the heart of Kathmandu city. The pond was constructed during the reign of King Pratap Malla as a token of consolation for his grieving queen who was drowned in sorrow at her son’s death. At the south-end is a statue of Pratap Malla and his family on a white elephant. The pond is fenced with iron bars and opened once a year during Bhai Tika, the fifth and final day of Tihar, the festival of lights.

Chhath Puja, a festival dedicated to the Sun God, is mainly observed by those residing in the Terai belt of Nepal. It takes place during the months of October and November immediately following the six-day celebration of lights known as Tihar/Diwali. During the festival, people gather on the banks of rivers and ponds to bathe, pray and make ritual offerings to the Sun God. The event is noted for its impressive display of colorful costumes, music, singing and extravagant rituals.


25

proDucT reviewKumari Mobile CashKumari Bank introduces an innovative mobile phone based payment system - Kumari Mobile Cash. The service is available to all mobile phone users, and customers registering for the service, even those not having an account in Kumari Bank.

This service efficiently and conveniently allows the users to do the following from their mobile phones:

• Deposit cash• Transfer (Remit) money to family and friends in any part of

Nepal• Transfer funds from a Kumari bank account to a mobile

phone and vice versa• Transfer funds from one Kumari bank account to another• Withdraw cash• Pay bills at restaurants, shops and departmental stores

(Bhatbhateni Supermarket)• Pay utility bills (NTC Landline, NTC Post paid, NCELL

Postpaid, World link recharge, NTC ADSL)• Other payment services• Recharge Pre-paid airtime minutes • Post Paid mobile bill payment

SMS BankingMobile Banking is a new and a unique service, which enables you to make inquiries about your account balance through your mobile phone by using the SMS messaging facility with total confidentiality and security.

Mobile Banking is basically about convenience, so if you:• Want instant and regular access to your account.• Are constantly on the move.• Are in a hurry / cannot visit the bank or an ATM.

Internet BankingAt Kumari Bank, we facilitate banking with a click of a mouse and where you can keep track of your account from anywhere in the world.

KBL has a robust, instant, secure and reliable banking solution for its clients.

Services we offer :• Current balance in your account on real time basis• Transaction search• Checking daily transaction in account• Cheque book replenishment request• Transfer within own accounts or within group accounts• Future dated payment instructions within own accounts

or within group accounts

kumari bank receiving mBillionth Award South Asia 2011

Kumari bank receiving The Manthan Award South Asia 2011

Internet Banking


26

• Demand Draft pay order request• Statement download• Limit facility request• Stop payment instructions• Standing order instructions• Loan informations

KumariMeroLaghuMuddatiKhataKumari Bank Ltd launched “Mero Laghu Muddati Khata” on 17th October 2011 thus breaking the trend of FD meant only for huge deposit. Now, one can earn desired interest on amount as small as NPR. 1,000.00 and its multiples. Multiple FDs can be opened for various denomination of NPR. 1,000.00, NPR 5,000.00 & NPR 10,000.00. We wish to reach out to the mass by creating easy access to open fixed deposit and collecting small deposits from number of individuals.

Features:• Higher return on small amount• Multiple options to choose from the variety of interest

payment mode to suit one’s need and one can easily pre-liquidate the FD amount

Kumari RemitKumari Remit, an online customer focused and state of art web-based technology oriented to Money Transfer product is brought to you by Kumari Bank Limited, a leading bank of Nepal. KBL is becoming pioneer in the field of money transfer business with few years of customized service delivery experience in the

field. Kumari Bank has the largest network covering all major cities, towns and villages of the country and is capable of paying at more than 400 locations across Nepal.

“Kumari Remit” is secured by electronic digital certificate through our main web domain https://www.kumariremit.com. After installation of electronic digital certificate, one can access for ensuring prompt execution of the remittance. The product is serviced by our Central Remittance Department dedicated to deliver fast and reliable services to the Customers.

The remitting agency can transfer funds either to the beneficiary against the identification document or can credit the Customer’s Account maintained either with Kumari Bank or other local banks of Nepal. The money transferred through this product will be on real time basis. The system will automatically generate KRCN (“Kumari Remit Control Number”). The KRCN number is the number generated by the system for each transaction and is unique and this becomes the main basis for payment at the receivers’ end. The KRCN number is alfa-numeric which consists of ten digits and start with the alphabet “K”.


27

Pashupatinath Temple is one of the most famous of all Hindu temples dedicated to Lord Shiva. It is located on the banks of the Bagmati River in the eastern part of Kathmandu. Thousands of devotees from inside and outside Nepal visit the temple to pay homage and some great festivals like Teej and Shivaratri are celebrated here. Hundreds of sadhus (sages) from different parts of Nepal and India coverge here on the occasion of Maha Shivaratri. There are several beliefs associated with the temple’s establishment.


28

Teej is the fasting festival of women in Nepal. It falls in the month of August or early September. Married women observe a fast to honor Lord Shiva and to seek his blessings for their husband’s long and healthy life. unmarried girls also observe fast on this day hoping to be blessed with a good husband. Teej celebrations last for three days. Traditional dances and songs form an important feature of the celebrations. The color red is considered auspicious for women observing the Teej fast.

Kumari BanK annual report 2010/2011

30

Contingent Liabilities Schedule 4.17Directors’ Declaration Schedule 4.29Table of Capital Fund Schedule 4.30 (A)Statement of credit Risk Schedule 4.30 (B)Principal Indicators Schedule 4.31Significant Accounting Policies Schedule 4.32Notes to Accounts Schedule 4.33

Schedules 4.1 to 4.17 and 4.32-4.35 form an integral part of the Balance Sheet.

Amount in NPR

Capital & liabilities sChedule Current Year previous Year1. Share Capital 4.1 1,603,800,000 1,306,015,920 2. Reserves and Funds 4.2 610,036,668 479,743,128 3. Debentures & Bonds 4.3 400,000,000 400,000,000 4. Borrowing Outstanding 4.4 660,925,000 429,739,536 5. Deposit Liabilities 4.5 16,986,279,457 17,432,253,032 6. Bills Payable 4.6 8,118,121 42,312,957 7. Proposed Dividend Payable - 6,581,717 156,816,002 8. Income Tax Liabilities - - -9. Other Liabilities 4.7 216,044,346 238,698,167

total Capital and liabilities 20,491,785,309 20,485,578,742

Kumari banK ltdbalance sheet

As at Ashad end 2068 ( 16 July 2011)

Amount in NPR

assets sChedule Current Year previous Year1. Cash Balance 4.8 524,780,914 574,065,903 2. Balance with Nepal Rastra Bank 4.9 526,948,923 1,663,997,917 3. Balance with Banks/Financial Institution 4.10 116,794,497 485,765,479 4. Money at Call and Short Notice 4.11 451,520,000 120,000,000 5. Investment 4.12 3,533,622,908 2,298,345,764 6. Loans, Advances and Bills Purchase 4.13 14,626,073,558 14,765,912,480 7. Fixed Assets 4.14 306,276,829 285,637,988 8. Non Banking Assets 4.15 - - 9. Other Assets 4.16 405,767,680 291,853,211

total assets 20,491,785,309 20,485,578,742

Uday K Upadhyay Min Bahadur Gurung Noor Pratap JB Rana Acting Chief Executive Officer Chairman Director Sanjay Poudyal Chief Financial Officer

Nirmal K Khatiwada Head – Finance, Planning and MIS

Date - 22 Dec, 2011 Place - Kathmandu

Gopal P. Rajbahak, FCAG.P. Rajbahak & Co.Chartered Accountants

Amir Pratap JB RanaDirector

Prof. Dr. Rajan B. PaudelDirector

Shiv Ratan ShardaDirector

Rishi Agrawal Director

Dr. Shobha Kant DhakalDirector

Rashindra Bahadur MallaDirector


31

Kumari banK ltdProfit and Loss Account

From 1st Shrawan 2067 to 32 Asadh 2068 (From 17 July 2010 to 16 July 2011)

Amount in NPR

partiCulars sChedule Current Year previous Year 1. Interest Income 4.18 2,251,791,724 1,871,066,3572. Interest Expenses 4.19 1,566,551,598 1,188,918,173 Net Interest Income 685,240,127 682,148,1853. Commission and Discount 4.20 99,707,633 97,652,5054. Other Operating Income 4.21 53,635,577 28,770,7845. Exchange Fluctation Income 4.22 36,719,340 37,924,853 Total Operating Income 875,302,677 846,496,3266. Staff Expenses 4.23 168,351,843 143,277,7707. Other Operating Expenses 4.24 212,938,673 202,078,8308. Exchange Fluctation Loss 4.22 - - Operating Profit before Provision for Possible losses 494,012,161 501,139,7269. Provision for Possible Losses 4.25 113,779,647 13,078,046 Operating Profit 380,232,514 488,061,68010. Non Operating Income /(Expense) 4.26 632,371 699,18011. Loan Loss Provision Written Back 4.27 13,787,709 14,824,913 Profit from Regular Activities 394,652,594 503,585,77412. Profit/Loss from extra-ordinary activities 4.28 (342,296) (352,000) Net profit after considering all activities 394,310,298 503,233,77413. Provision for Staff Bonus 35,846,391 45,748,52514. Provision for Income Tax 107,226,938 140,942,907 * Current Year’s 100,032,524 140,371,638 * Upto Previous year 3,023,417 1,521,507 * Deferred Tax 4,170,997 (950,239)

Net Profit/Loss 251,236,970 316,542,342

Schedule 4.18 to 4.28 and 4.32-4.35 form an integral part of Profit and Loss Account












32

Amount in NPR

partiCulars sChedule Current Year previous Year Income

1. Accumulated Profit up to Last Year 20,674,649 20,727,278 2. This Year’s Profit 251,236,970 316,542,342 3. Exchange Fluctuation Fund - - Total 271,911,619 337,269,620 Expenses 1. Accumulated Loss up to Last Year - - 2. Current Year’s Loss - - 3. General Reserve Fund 50,247,394 63,308,468 4. Contingent Reserve - - 5. Institution Development Fund - - 6. Dividend Equalization Fund - - 7. Staff Related Reserves - - 8. Proposed Dividend 6,581,717 156,816,002 9. Issue of Proposed Bonus Shares 118,800,000 - 10. Special Reserve Fund - - 11. Exchange Fluctuation Fund 2,520,334 520,261 12. Bond Redemption Reserve Fund 95,000,000 95,000,000 13. Capital Adjustment Fund - - 14. Previous Year’s Tax Adjustment - - 15. Deferred Tax Fund (4,170,997) 950,239 16. Investment Adjustment Reserve 30,000 -

Total 269,008,449 316,594,970

17. Accumulated Profit/(Loss) 2,903,170 20,674,649

Kumari banK ltdProfit and Loss Appropriation Account

From 1st Shrawan 2067 to 32 Asadh 2068 (From 17 July 2010 to 16 July 2011)












33

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ctor


34

partiCulars Current Year previous Year (A). Cash Flow from Operating Activities (1,612,873,550) 566,414,3761. Cash Received 2,364,030,115 2,049,698,755 1.1 Interest Income 2,172,440,798 1,869,123,840 1.2 Commission and Discount Income 100,608,275 100,336,992 1.3 Income from Foreign Exchange transaction 36,719,340 37,924,853 1.4 Recovery of loan written off - - 1.5 Other Income 54,261,703 42,313,069 2. Cash Payment (1,999,601,261) (1,864,969,767) 2.1 Interest Expenses (1,525,812,231) (1,178,550,104) 2.2 Staff Expenses (168,351,843) (143,277,770) 2.3 Office Overhead Expenses (182,936,244) (402,198,987) 2.4 Income Tax Paid (122,500,944) (140,942,907) 2.5 Other Expenses - -Cash Flow before changes in Working Capital (1,977,302,404) 381,685,388 Increase/( Decrease) of Current Assets (1,543,309,624) (854,133,780) 1 (Increase)/Decrease in Money at Call and Short Notice (331,520,000) (90,000,000) 2. (Increase)/Decrease in short term Investment (1,213,911,647) (782,469,431) 3. (Increase)/Decrease in Loans, Advances and Bills Purchase 39,846,984 (172,565,650) 4. (Increase)/Decrease in Other Assets (37,724,962) 190,901,302Increase /( Decrease) of Current Liabilities (433,992,780) 1,235,819,168 1. Increase/(Decrease) in Deposits (445,973,576) 1,721,857,189 2. Increase/(Decrease) in Certificates of Deposits - - 3. Increase/(Decrease) in Short Term Borrowings 267,285,464 (283,780,464) 4. Increase/(Decrease) in Other Liabilities (255,304,668) (202,257,556)(B) Cash Flow from Investment Activities (89,753,783) (40,063,878) 1. (Increase)/Decrease in Long-term Investment (21,365,498) (3,575,000) 2. (Increase)/Decrease in Fixed Assets (86,823,710) (37,805,215) 3. Interest income from Long term Investment 18,435,425 1,316,338 4. Dividend Income - - 5. Others - -(C) Cash Flow from Financing Activities 147,322,369 421,180,000 1. Increase/(Decrease) in Long term Borrowings (Bonds,Debentures etc) - - 2. Increase/(Decrease) in Share Capital 183,422,369 1,080,000 3. Increase/(Decrease) in Other Liabilities - - 4. Increase/(Decrease) in Refinance/facilities received from NRB (36,100,000) 420,100,000(D) Income/Loss from change in exchange rate in Cash & Bank balances - -(E) This Year’s Cash Flow from All Activities (1,555,304,964) 947,530,498(F) Opening Balance of Cash and Bank Balances 2,723,829,298 1,776,298,800(G) Closing Balance of Cash and Bank Balances 1,168,524,334 2,723,829,298

Amount in NPR

Kumari banK ltdCash flow statement

From 1st Shrawan 2067 to 32 Ashad 2068 (from 17 July 2010 to 16 July 2011)












35

Kumari banK ltdshare ownership

End of Ashad 2068 (16 July 2011)

partiCulars Current Year previous Year

1. Share Capital 1.1 Authorized Capital 1,600,000,000 1,600,000,000

a) 16,000,000 Ordinary Shares of Rs. 100 each 1,600,000,000 1,600,000,000 b) ………...Non-redeemable Preference Shares of Rs……….. each - - c) …………Redeemable Preference Shares of Rs……….. each - - 1.2 Issued Capital 1,485,000,000 1,306,015,920 a) 14,850,000 Ordinary Shares of Rs. 100 each 1,485,000,000 1,306,015,920 b) ………..Non-redeemable Preference Shares of Rs……….. each - - c) …………Redeemable Preference Shares of Rs……….. each - - 1.3 Paid Up Capital 1,485,000,000 1,306,015,920 a) 14,850,000 Ordinary Shares of Rs.100 each 1,485,000,000 1,306,015,920 b) ……….Non-redeemable Preference Shares of Rs……….. each - - c) …………Redeemable Preference Shares of Rs……….. each - - 1.4 Proposed Bonus Share 118,800,000 - 1.5 Calls in Advance - -

1.6 Total (1.3 + 1.4 + 1.5) 1,603,800,000 1,306,015,920

Schedule 4.1Amount in NPR

partiCulars Current Year previous Year % Amount % AmountA. Local Promoters 1.1 Government of Nepal - - - - 1.2 “A” Class Licensed Institution - - - - 1.3 Other Licensed Institutions - - - - 1.4 Other Institutions 2.06 30,568,800 0.12 1,569,731 1.5 General Public 97.94 1,454,431,200 99.88 1,304,446,189 1.6 Others - - - -B. Foreign Promoters - - - -

Total 100 1,485,000,000 100 1,306,015,920

Amount in NPR

Kumari banK ltdshare Capital and ownership



36

Kumari banK ltdlist of shareholders holding share capital of 0.5% or more

s.n name of the shareholder Current Year last Year % share Capital % share Capital 1 Noor Pratap J. B. Rana 6.50 96,525,000 6.50 84,942,000 2 Laxman Shrestha 5.60 83,220,000 6.00 78,408,000 3 Amir Pratap J. B. Rana 5.06 75,140,900 5.06 66,124,000 4 Sabitri Gurung 4.00 59,400,000 4.00 52,272,000 5 Gaurab Agrawal 3.53 52,378,300 3.11 40,559,200 6 Rishi Agrawal 2.40 35,640,000 2.40 31,363,200 7 Rajendra Prasad Shretha 2.10 31,125,000 1.96 25,636,000 8 Bidhya Krishna Shrestha 1.83 27,225,000 1.83 23,958,000 9 Govinda Das Shrestha 1.50 22,275,000 1.50 19,602,000 10 Mahabir Prasad Goel 1.32 19,601,900 1.32 17,249,700 11 Yagya Pratap Rana 1.31 19,498,000 1.32 17,179,200 12 Santosh Kumar Lama 1.23 18,216,900 0.22 2,874,90013 Manju Taparia 1.01 14,987,300 1.01 13,188,800 14 Bhim Krishna Udas 1.00 14,850,000 1.00 13,068,000 15 Phurba Bangdle Lama 1.00 14,850,000 1.00 13,068,000 16 Anil Das Shrestha 1.00 14,850,000 1.00 13,068,000 17 Santoo Shrestha 1.00 14,850,000 1.00 13,068,000 18 Januki Kumari J. B. Rana 1.00 14,850,000 1.00 13,068,000 19 Sanjay Lama 0.99 14,750,000 2.00 26,136,00020 Antoo Shrestha 0.97 14,474,000 0.78 10,193,00021 Anupam Rathi 0.90 13,365,000 0.90 11,761,200 22 Shiva Shanker Agrawal 0.88 13,008,500 0.88 11,447,500 23 Kumud Kumar Dugad 0.85 12,663,800 0.85 11,144,10024 Nirmal Pradhan 0.84 12,418,200 0.85 11,099,800 25 Shree Niwas Sharada 0.78 11,583,000 0.88 11,499,800 26 CIT Citizen Unit Scheme 0.75 11,137,500 0.75 9,801,000 27 Atmaram Murarka 0.70 10,395,000 0.70 9,147,600 28 Pradeep Kumar Murarka 0.70 10,395,000 0.70 9,147,60029 Pashupati Murarka 0.70 10,395,000 0.70 9,147,600 30 Naresh Dugad 0.70 10,395,000 0.70 9,147,600 31 Bikash Dugad 0.70 10,395,000 0.70 9,147,600 32 Jagadesh Prasad Chaudhary 0.60 8,910,000 0.60 7,840,80033 Sharmila Aryal 0.60 8,910,000 0.60 7,840,800 34 Dev Kishan Mudanda 0.60 8,910,000 0.60 7,840,800 35 Prava Laxmi Rana 0.59 8,712,000 0.67 8,712,000 36 Vidushi Rana 0.58 8,613,000 0.58 7,579,400 37 Jamuna Maheswori Rathi 0.55 8,180,400 0.55 7,198,70038 Gauri Shrestha 0.54 8,049,400 0.60 7,845,200 39 Rita K.C. 0.52 7,792,400 0.60 7,792,400 40 Sandeep Lama 0.50 7,425,000 0.50 6,534,000 41 Uttam Prasad Bhattrai 0.50 7,425,000 0.50 6,534,00042 Rakshya Pahadi 0.50 7,425,000 0.50 6,534,000 43 Surendra Bhandari 0.50 7,425,000 0.50 6,534,000 44 Ganga Amatya 0.50 7,425,000 0.50 6,534,000

Annexure 1(A) Amount in NPR


37

Kumari banK ltdreserves and funds


partiCulars Current Year previous Year1. General/Statutory Reserve Fund 285,691,881 235,444,4872. Capital Reserve Fund - -3. Capital Redemption Fund - -4. Capital Adjustment Fund - -5. Other Reserve & Funds 308,101,576 217,242,573 a. Contingent Reserve - - b. Institution Development Fund - - c. Dividend Equalization Fund - - d. Special Reserve Fund - - e. Assets Revaluation Fund - - f. Deferred Tax Reserve 3,071,576 7,242,573 g. Other Free Fund - - h. Other Reserve Fund - - i. Investment Adjustment Reserve 30,000 - j. Bond Redemption Reserve 305,000,000 210,000,0006. Accumulated Profit/Loss 2,903,170 20,674,6497. Exchange Fluctuation Fund 8,901,752 6,381,4188. Share Premium 4,438,289 -

Total 610,036,668 479,743,128


Kumari banK ltdDebenture and Bond


partiCulars Current Year previous Year1. 8% “KBL Bonds 2070” of Rs 1000 each issued on June 6, 08 and to be Matured on june 8, 2013 (Outstanding Balance of redemption reserve Rs 305, 000,000) 400,000,000 400,000,000 2. ……….% Bond/Debentures of Rs……..…each - - Issued on …………… and to be matured on ………. (Outstanding Balance of Redemption Reserve Rs…….)3. ………. - -

Total (1+2+3) 400,000,000 400,000,000

Note - Bank has not pledged any of its assets while raising fund through KBL Bond 2070.



38

Kumari banK ltdoutstanding Loan (Borrowings)



partiCulars Current Year previous YearA. Domestic

1. Government of Nepal - - 2. Nepal Rastra Bank 384,000,000 420,100,000 3. Repo Obligations - - 4. Inter Bank and Financial Institutions 276,925,000 9,639,536 5. Other Organized Institutions - - 6. Others - -

Total (A) 660,925,000 429,739,536B. Foreign 1. Banks - - 2. Others - -

total (b) - -Total (A+B) 660,925,000 429,739,536

Kumari banK ltddeposit liabilities


partiCulars Current Year previous Year1. Non-Interest Bearing Accounts A. Current Deposit 792,369,508 680,053,195 1. Local Currency 733,140,044 646,964,520 1.1 Government of Nepal - - 1.2 “A” Class Licensed Institutions 51,703,000 2,069,593 1.3 Other Licensed Financial Institutions 25,546,000 12,782,659 1.4 Other Organized Institutions 528,762,199 431,950,901 1.5 Individuals 127,128,845 200,161,367 1.6 Others - - 2. Foreign Currency 59,229,464 33,088,675 2.1 Government of Nepal - - 2.2 “A” Class Licensed Institutions - - 2.3 Other Licensed Financial Institutions 1,080,000 674,559 2.4 Other Organized Institutions - - 2.5 Individuals 58,149,464 32,414,116 2.6 Others - - B. Margin Deposits 131,629,394 137,997,542 1. Employees Guarantee (Locker Margin) - - 2. Guarantee Margin 55,606,995 41,898,931 3. Margin on Letter of Credit 76,022,399 96,098,610 C. Others 4,588,650 3,315,950 1. Local Currency 4,588,650 3,315,950 1.1 Financial Institutions - - 1.2 Other Organized Institutions - - 1.3 Individuals 4,588,650 3,315,950 2. Foreign Currency - - 2.1 Financial Institutions - - 2.2 Other Organized Institutions - - 2.3 Individuals - -

Total of Non-interest Bearing Accounts (1) 928,587,552 821,366,687



39

Continue......

partiCulars Current Year previous Year2. Interest Bearing Accounts A. Saving Deposits 6,551,422,131 5,132,140,501 1. Local Currency 6,441,550,960 5,030,459,515 1.1 Organized Institutions 34,630,000 22,984 1.2 Individuals 6,406,920,960 5,030,436,531 1.3 Others - - 2. Foreign Currency 109,871,172 101,680,986 2.1 Organized Institutions 82,000 84,719 2.2 Individuals 109,789,172 101,596,267 2.3 Others - - B. Fixed Deposits 6,654,664,032 7,206,201,702 1. Local Currency 6,005,868,272 6,877,458,042 1.1 Organized Institutions 4,890,522,000 5,495,298,081 1.2 Individuals 1,115,346,272 1,382,159,961 1.3 Others - - 2. Foreign Currency 648,795,760 328,743,660 2.1 Organized Institutions 356,000,000 - 2.2 Individuals 292,795,760 328,743,660 2.3 Others - - C. Call Deposits 2,851,605,742 4,272,544,142 1. Local Currency 2,823,906,365 4,211,188,687 1.1 “A” Class Licensed Institutions 51,758 338,939,774 1.2 Other Licensed Financial Institutions 907,567,242 902,332,178 1.3 Other Organized Institutions 1,843,708,807 2,626,058,848 1.4 Individuals 72,578,558 343,857,888 1.5 Others - - 2. Foreign Currency 27,699,377 61,355,455 2.1 “A” Class Licensed Institutions - - 2.2 Other Licensed Financial Institutions 202,000 37,388,311 2.3 Other Organized Institutions - - 2.4 Individuals 27,497,377 23,967,144 2.5 Others - - D. Certificate of Deposit - - 1. Organized Institutions - - 2. Individuals - - 3. Others - -

Total of interest Bearing Accounts (2) 16,057,691,905 16,610,886,346 Total Deposits (1+2) 16,986,279,457 17,432,253,032

Amount in NPR

Kumari banK ltddeposit liabilities



40

Kumari banK ltdBills Payable


partiCulars Current Year previous Year 1. Local Currency 5,365,271 22,250,103 2. Foreign Currency 2,752,849 20,062,854

total 8,118,121 42,312,957


Kumari banK ltdother liabilities


partiCulars Current Year previous Year 1. Pension/Gratuity Fund - -2. Employees Provident Fund - - 3. Employees Welfare Fund 73,351 29,9034. Provision for Staff Bonus 35,846,391 45,748,5255. Interest Payable on Deposits 39,249,267 45,054,9256. Interest Payable on Borrowings 1,490,100 1,728,3247. Unearned Discount and Commission 900,642 155,4008. Sundry Creditors 31,775,023 39,891,1749. Branch Reconciliation Account - 43610. Deferred Tax Liability - - 11. Dividend Payable 11,490,972 - 12. Others 95,218,602 106,089,480 a. Audit Fees - 377,533 b. Others 95,218,602 105,711,947

Total 216,044,346 238,698,167

Schedule 4.7 Amount in NPR

Kumari banK ltdCash balance


partiCulars Current Year previous Year 1. Local Currency (Including Coins) 505,897,160 567,612,0352. Foreign Currency 18,883,754 6,453,868

Total 524,780,914 574,065,903



41

Kumari banK ltdbalance with nepal rastra bank

End of Ashad 2068 (16 July 2011)Schedule 4.9

Amount in NPR

partiCulars loCal foreiGn CurrenCY in Current previous CurrenCY rupee equivalent Year Year

inr. Convertible fCY total1. Nepal Rastra Bank - - - - - 1,663,997,917

a. Current Account 526,622,126 - 326,797 326,797 526,948,923 1,663,997,917

b. Other Account - - - - - -

Kumari banK ltdmoney at call and short Notice

End of Ashad 2068 (16 July 2011)Schedule 4.11Amount in NPR

partiCulars Current Year previous Year 1. Local Currency 451,520,000 120,000,000 2. Foreign Currency - -

total 451,520,000 120,000,000

Kumari banK ltdBalance with Banks/financial institution


partiCulars loCal foreiGn CurrenCY in Current previous CurrenCY rupee equivalent Year Year inr. Convertible fCY total 1. Local Licensed Institutions 25,331,519 - 75,064 75,064 25,406,583 161,463,570 a. Current Account 25,331,519 - 75,064 75,064 25,406,583 161,463,570 b. Other Account - - - - - -2. Foreign Banks - 79,100,620 12,287,293 91,387,913 91,387,913 324,301,908 a. Current Account - 79,100,620 12,287,293 91,387,913 91,387,913 324,301,908 b. Other Account - - - - - -

Total 25,331,519 79,100,620 12,362,357 91,462,977 116,794,497 485,765,479


Note: Total balance for which the confirmations are received from respective Banks is NPR 184,862,017.45


42

Kumari banK ltdinvestment


partiCulars purpose Current Year previous Year tradinG other1. Treasury Bills of Nepal Government - 2,577,192,260 2,577,192,260 1,522,341,6332. Saving Certificate of Nepal Government - - - -3. Other Bonds of Nepal Government - 228,913,348 228,913,348 209,047,8514. Nepal Rastra Bank Bonds - - - -5. Foreign Bonds - - - -6. Local Licensed Institutions - 433,536,800 433,536,800 245,000,0007. Foreign Banks - 270,560,000 270,560,000 300,035,7818. Shares of Organized Institutions - 6,435,500 6,435,500 4,935,500 9. Bonds and Debentures in Organized Institutions - 16,985,000 16,985,000 16,985,00010. Other Investment - - - -

Total investment - 3,533,622,908 3,533,622,908 2,298,345,764provision - - - -Net investment - 3,533,622,908 3,533,622,908 2,298,345,764


Kumari banK ltdinvestment in shares, Debentures and Bonds


partiCulars par marKet provision Current previous value value value Year Year

1. Investment in Shares 6,435,500 - - 6,435,500 4,935,500

1.1 Credit Information Centre Limited 1,235,500 - - 1,235,500 1,235,500 25,416 Ordinary Shares of Rs. 100 each, fully paid Primary Shares 3530 Kitta of Rs. 100 each Right Shares 8825 Kitta of Rs. 100 each Bonus Shares 13,061 Kitta of Rs. 100 each 1.2 Nepal Clearing House Limited 2,500,000 - - 2,500,000 2,500,000 100% of committed equity of Rs. 2,500,000 1.3 National Banking Training Institute 1,200,000 - - 1,200,000 1,200,000 100% of committed equity 1.4 National Micro Finance Bank Limited 1,500,000 - - 1,500,000 - 10% committed equity2. Investment in Debentures and Bonds 16,985,000 - - 16,985,000 16,985,000 2.1 Nepal Electricity Authority, Electricity Bond 16,985,000 - - 16,985,000 6,985,000 7.75 Percent 16,985 Bonds of Rs. 1,000 each maturity on 14 Chaitra 2069Total Investment 23,420,500 - - 23,420,500 21,920,500 3. Provision for Loss 3.1 Up to previous year - - - - - 3.2 Change in current year - - - - -

total provision - - - - -net investment 23,420,500 - - 23,420,500 21,920,500

Schedule 4.12 (A)Amount in NPR

Note : Credit Information Center Ltd & Nepal Clearing House Ltd. have not provided any dividend for past 4 years.


43

Kumari banK ltdinvestment held for trading


partiCulars par last Current this Year previous remarKs vALue mArkeT mArkeT GAiN / YeAr GAiN / priCe (a) priCe (b) loss (b-C) loss (b-C)1. Treasury Bill of Nepal Government - - - - -2. Saving Bond of Nepal Government - - - - -3. Other Bond of Nepal Government - - - - -4. NRB Bond - - - - -5. Foreign Bond - - - - -6. Shares of Domestic Licensed Institutions - - - - -7. Debenture & Bonds of Domestic Licensed Institutions - - - - -8. Shares, Debentures & Bonds of Domestic Institutions - - - - -9. Placement in Foreign Banks - - - - - 10. Interbank Lending - - - - -11. Other Investments - - - - -

total investment - - - - -

Schedule 4.12.1Amount in NPR

Kumari banK ltdinvestment Held to maturity


partiCulars par Cumulative Current this previous remarKs value (a) loss (b) Year Year Year Loss (c) GAiN/ GAiN/Loss loss (a-b-C) 1. Treasury Bill of Nepal Government 2,577,192,260 - - - -

2. Saving Bond of Nepal Government - - - - -3. Other Bond of Nepal Government 228,913,348 - - - -4. NRB Bond - - - - -5. Foreign Bond - - - - -6. Shares of Local Licensed Institutions - - - - -7. Debenture & Bonds of Local Licensed Institutions - - - - - 8. Shares, Debentures & Bonds of Local Organised Bodies 16,985,000 - - - - NEA Bond9. Placement in Foreign Banks 270,560,000 - - - - 10. Other Investments 433,536,800 - - - - Local Placements

total investment 3,527,187,408 - - - -



44

Kumari banK ltdinvestment available for sale

End of Asadh 2068 (16 July 2011)

partiCulars par ClosinG prevailinG Current Year previous remarKs vALue (A) mArkeT mArkeT ADJusTmeNT YeAr GAiN/ priCe (a) priCe (b) reserve (b - a) loss1. Treasury Bill of Nepal Government - - - - -2. Saving Bond of Nepal Government - - - - -3. Other Bond of Nepal Government - - - - -4. NRB Bond - - - - -5. Foreign Bond - - - - -6. Shares of Domestic Licensed Institutions - - - - -7. Debenture & Bonds of Domestic Licensed Institutions - - - - -8. Shares, Debentures & Bonds of Domestic Shares Corporate Bodies 6,435,500 - - - - Not listed9. Placement in Foreign Banks - - - - -10. Other Investments - - - - -

Total investment 6,435,500 - - - -



45

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30,9

21,6

97

4.5

Loss

-

- 31

,183

,279

-

31,1

83,2

79

- -

- 31

,183

,279

19

,724

,451

C.

Tota

l pro

visi

on ti

ll la

st y

ear

- 4,

696,

410

194,

511,

038

- 19

9,20

7,44

8 63

8,00

7 32

2,08

9 96

0,09

6 20

0,16

7,54

4 20

1,91

4,41

1 D

. W

ritt

en B

ack

from

last

yea

r pr

ovis

ion

- -

- -

- -

- -

(13,

787,

709)

(1

4,82

4,91

3)E.

A

dditi

onal

Pro

visi

on in

this

yea

r

- -

- -

- -

- -

113

,779

,647

13

,078

,046

Chan

ge in

this

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r -

- -

- -

- -

- 9

9,99

1,93

8 (1

,746

,867

)

Net

Loa

n (A

-B)

- 46

0,84

8,74

5 14

,137

,507

,708

-

14,5

98,3

56,4

53

10,5

88,0

50 1

7,12

9,05

5 27

,717

,105

14

,626

,073

,558

14

,765

,912

,480

pa

rti

Cu

lar

s

lo

an

s &

ad

va

nC

es

d

om

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p

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re

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the

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or

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do

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or

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n t

ota

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ur

re

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ar

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dule

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3A

mou

nt in

NP

R


46

Kumari banK ltdsecurity for Loan Advances and Bills Purchased


partiCulars Current Year previous Year

A. Secured 14,926,233,040 15,019,338,683

1. Against Security of Movable/Immovable Assets 14,043,760,659 14,152,769,084 2. Against Guarantee of Local Licensed Institutions - - 3. Against Government Guarantee - - 4. Against Guarantee of Internationally Rated Bank - - 5. Against Security of Export Documents - 2,323,625 6. Against Security of Fixed Deposit Receipts 103,199,278 53,258,658 a. Own FDR 103,199,278 53,258,658 b. FDR of Other Licensed Institutions - - 7. Against Security of Government Bonds - 6,805,423 8. Against Counter Guarantee - - 9. Against Personal Guarantee - - 10. Against Other Securities 779,273,103 750,923,233 B. Unsecured - -

Total (A+B) 14,926,233,040 14,966,080,024

Schedule 4.13 (A)Amount in NPR


47

Kumari banK ltdfixed assets


partiCulars assets Current previous buildinG vehiCles maChinerY offiCe equipment others Year Year1. Cost Price a. Previous Year’s Balance 4,814,041 77,850,321 - 229,287,973 30,868,157 342,820,492 267,168,938 b. Addition This Year - 20,128,945 - 41,100,892 3,503,000 64,732,837 87,853,234 c. Revaluation/Write Back This Year - - - - - - - d. This Year Sold - 8,850,000 - 554,026 9,404,026 12,201,680 e. This Year Writte Off - - - - - - - Total Cost (a+b+c-d-e) 4,814,041 89,129,266 - 269,834,838 34,371,157 398,149,303 342,820,492 2. Depreciation a. Up to previous year 824,184 27,779,631 126,335,447 16,894,090 171,833,352 129,466,487 b. For this year 199,493 12,345,330 34,854,852 4,460,992 51,860,667 47,608,675 c. Depreciation on Revaluation/Write off - (2,834,213) - (499,859) - (3,334,072) (5,241,811) d. Depreciation Adjusment/Add back - - - - - - -Total Depreciation (a+b+c+d) 1,023,677 37,290,748 - 160,690,441 21,355,082 220,359,948 171,833,3513. Book Value (WDV*) (1-2) 3,790,364 51,838,518 - 109,144,398 13,016,075 177,789,355 170,987,140 4. Land - - - - - 85,593,635 85,593,6355. Capital Work In Progress (pending Capitalization) - - - - - 523,543 261,3696. Leasehold Assets - - - - - 42,370,296 28,795,844

Total (3+4+5+6) - - - - - 306,276,829 285,637,988


Kumari banK ltdnon banking assets


name & address aCquired total amount provision for loss net previousof borrower date of of non non banKinG Year or partY non banKinG banKinG asset asset asset perCent amount (rs.) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Grand total - - - - -


Lease hold assets details Current Year amount Opening value - gross 64,477,478Accumulated depreciation up to last year 35,681,634Net opening value 28,795,844Addition during the year 27,874,106Depreciation during the year 14,299,654Balance at the end of the year 42,370,296

WDv* -Written Down value


48

Kumari banK ltdother assets


partiCulars Current Year previous Year 1. Stock of Stationery 3,627,537 3,040,302

2. Income Receivable on Investment 31,657,940 17,640,573

3. Accrued Interest Receivable on Loan 29,257,561 - Accrued Interest Receivable on Loan 113,335,907 - 95,116,753 Less: Interest Suspense Account (84,078,346) - (95,116,753)4. Commission Receivable - -5. Sundry Debtors 29,172,342 40,124,6056. Staff Loan & Advances 143,692,955 103,708,4217. Pre Payments 14,034,410 11,859,8138. Cash in Transit - -9. Other Transit items (including Cheques) - -10. Drafts Payment Without Notice - -11. Expenses Not Written Off - -12. Branch Reconciliation Account -13. Deferred Tax Assets 3,071,576 7,242,573 14. Others 151,253,359 108,236,924 a. Advance Tax 32,674,426 - 13,012,956 b. Others 118,578,933 - 95,223,968

Total 405,767,680 291,853,211


Kumari banK ltdother assets (additional information)


partiCulars Current Year up to 1 Year 1 to 3 Year above 3 Years total previous Year1. Accrued Interest Receivable on Loan 89,754,900 23,581,007 - 113,335,907 95,116,7532. Drafts Payment Without Notice - - - - -3. Branch Reconciliation Account - - - - -4. Domestic/Foreign Agency Account - - - - -

Schedule 4.16(A)Amount in NPR


49

Kumari banK ltdContingent liabilities


Amount in NPR

partiCulars Current Year previous Year1. Claims Lodged but not Accepted by the Institution - -2. Letter of Credit (Full Amount) 573,152,717 971,324,025 a. Maturity Period up to 6 months 404,249,712 698,244,030 b. Maturity Period more than 6 months 168,903,005 273,079,9963. Rediscounted Bills - -4. Unmatured Guarantees/Bonds 557,267,477 769,610,382 a. Bid Bonds 14,359,619 24,940,500 b. Performance Bonds 542,907,858 744,669,882 c. Other Guarantee/Bonds - -5. Unpaid Shares Investment 13,500,000 -6. Outstanding of Forward Exchange Contract Liabilities 404,874,906 115,645,0637. Bills under Collection - -8. Acceptance & Endorsement 505,664,899 238,720,6979. Underwriting Commitment - -10. Irrevocable Loan Commitment 828,105,327 1,022,547,94711. Guarantees against Counter Guarantee of Internationally Rated Banks - -12. Advance Payment Guarantee 117,364,614 101,328,98013. Financial Guarantee for loan disbursement - -14. Contingent Liabilities on Income Tax - -15. Others - -

Schedule 4.17

Kumari banK ltdinterest income

From 1st Shrawan 2067 to 32 Ashad 2068 (From 17 July 2010 to 16 July 2011)

partiCulars Current Year previous Year A. On Loans, Advances and Overdraft 2,052,375,446 1,732,953,729 1. Loans & Advances 1,046,617,733 753,804,161 2. Overdraft 1,005,757,713 979,149,568B. On Investment 153,426,902 81,378,981 1. Government Securities 152,110,565 80,062,644 a. Treasury Bills 134,991,477 66,166,471 b. Development Bonds 17,119,088 13,896,172 c. National Saving Certificates - - 2. Foreign Debt Papers - - a. ……… - - b. ……… - - 3. Nepal Rastra Bank Bonds - - 4. Debenture & Bonds 1,316,338 1,316,338 5. Interest on Interbank Investment - - a. Bank/Financial Institutions - - b. Other Institutions - -C. On Agency Balances 183,725 636,813 1. Domestic Banks/Financial Institutions 52,243 - 2. Foreign Banks 131,482 636,813D. On Money at Call and Short Notice 45,805,651 56,096,834 1. Domestic Banks/Financial Institutions 40,027,779 52,341,943 2. Foreign Banks 5,777,872 3,754,892E. On Others - - 1. Certificate of Deposits - - 2. Inter-Bank/Financial Institution Loan - - 3. Others - -

Total 2,251,791,724 1,871,066,357



50

Kumari banK ltdinterest expenses


Kumari banK ltdcommission and Discount income


partiCulars Current Year previous Year A. On Deposit Liabilities 1,469,833,667 1,088,328,380 1. Fixed Deposits 718,295,152 514,190,449 1.1 Local Currency 702,367,287 509,830,550 1.2 Foreign Currency 15,927,864 4,359,899 2. Saving Deposits 523,122,431 204,354,922 2.1 Local Currency 521,138,209 202,270,725 2.2 Foreign Currency 1,984,223 2,084,197 3. Call Deposits 228,416,084 369,783,009 3.1 Local Currency 227,770,436 369,305,904 3.2 Foreign Currency 645,648 477,105 4. Certificate of Deposits - -B. On Borrowings 96,717,931 100,589,792 1. Debentures & Bonds 32,000,000 32,087,671 2. Loan from Nepal Rastra Bank - - 3. Inter Bank /Financial Institutions Borrowing 64,717,931 68,502,121 4. Other Organized Institution - - 5. Other Loans - -C. On Others - - .............. - - .............. - -

Total 1,566,551,598 1,188,918,173


partiCulars Current Year previous Year A. Bills Purchase & Discount 1,241,617 1,349,278 1. Local 1,241,617 1,349,278 2. Foreign - -B. Commission 32,367,095 30,198,999 1. Letters of Credit 12,413,790 14,529,360 2. Guarantees 12,194,329 9,355,219 3. Collection Fees 1,165,798 487,368 4. Remittance Fees 6,593,178 5,827,052 5. Credit Card - - 6. Share Underwriting/Issue - - 7. Government Transactions - - 8. E. Pra. Commission - - 9. Exchange Fee - -C. Others 66,098,922 66,104,228

Total 99,707,633 97,652,505



51

Kumari banK ltdexpenses relating to employees


Kumari banK ltdother operating income


Amount in NPRSchedule 4.21

partiCulars Current Year previous Year 1. Safe Deposit Lockers Rental 1,397,013 834,888 2. Issue & Renewals of Credit Cards - - 3. Issue & Renewals of ATM Cards 32,931,728 20,811,830 4. Telex / T. T./ SWIFT 2,731,368 2,393,287 5. Service Charges 9,806,390 2,924,396 6. Renewal Fees - -7. Others 6,769,079 1,806,383

Total 53,635,577 28,770,784

Kumari banK ltdexchange fluctuation Gain/Loss


partiCulars Current Year previous Year a. From Revaluation 10,081,337 2,081,044b. From Trading (except Exchange Fees) 26,638,003 35,843,808

Total Gain (Loss) 36,719,340 37,924,853


partiCulars Current Year previous Year 1. Salary 76,490,726 68,236,6062. Allowances 48,892,682 44,516,508 a. Normal Allowance 26,902,502 23,926,391 b. Inchargeship Allowance 143,800 81,000 c. Relocation Allowance 247,160 176,600 d. Outstation Allowance 2,380,947 920,173 e. Dashain Allowance 7,763,919 5,722,234 f. Vehicle Maintenance Allowance 531,917 387,243 g. Leave Fare Allowance 10,922,438 13,302,868 3. Contribution to Provident Fund 7,280,646 6,428,686 4. Training Expenses 1,342,184 1,088,736 5. Uniform 2,537,515 - 6. Medical 4,898,770 3,711,230 7. Insurance 3,516,682 3,499,080 8. Pension and Gratuity Provision 9,759,385 5,033,960 9. Others 13,633,253 10,762,963 a. Wages 5,818,415 2,185,455 b. Teller Risk Fund 1,023,120 421,736 c. Other Staff Benefits 2,600,285 5,916,725 d. Overtime 4,191,432 2,239,047

Total 168,351,843 143,277,770



52

Kumari banK ltdother operating expenses

From 1st Shrawan 2067 to 32 Ashad 2068, (From 17 July 2010 to 16 July 2011)

partiCulars Current Year previous Year 1. House Rent 38,189,187 34,015,104 2. Electricity & Water 13,266,231 10,101,323 3. Repair & Maintenance 1,403,369 1,991,629 a. Building 427,075 928,598 b. Vehicles 976,294 1,063,031 c. Others - -4. Insurance 3,485,427 3,234,085 5. Postage, Telex, Telephone & Fax 17,141,421 15,114,063 6. Office Equipment, Furniture and Repair 3,208,272 1,828,993 7. Travelling Allowances & Expenses 2,062,242 3,331,590 8. Stationery & Printing 5,903,846 5,825,702 9. Periodicals & Books 404,601 290,897 10. Advertisements 11,492,276 9,239,520 11. Legal Expenses 963,059 794,692 12. Donations 40,795 31,501 13. Expenses relating to Board of Directors 2,199,849 1,916,840 a. Meeting Fees 2,180,800 1,660,000 b. Other Expenses 19049 256,840 14. Annual General Meeting Expenses 824,997 1,614,370 15. Expenses relating to Audit 424,264 702,286 a. Audit Fees 377,533 377,533 b. Other Expenses 46,731 324,753 16. Commission on Fund Transfer - - 17. Depreciation on Fixed Assets 66,160,321 57,267,482 18. Amortization of Pre-operating Expenses - - 19. Share Issue expenses - 6,441 20. Technical Services Reimbursment - - 21. Entertainment Expenses 587,152 397,490 22. Written Off Expenses - -23. Security Expenses 16,780,955 13,683,26824. Credit Guarantee Premium - - 25. Commission & Discount - - 26. Others 28,400,410 40,691,555 a. Transport 6,974,352 6,118,462 b. Professional Fees 508,500 719,803 c. Public Relation Expenses 360,625 2,172,705 d. Banking and Corporate Expenses 593,782 9,161,720 e. Correspondent Banking Charges 787,702 711,713 f. Fees and Taxes 16,206,384 18,968,408 g. Visa Fees and Charges - i. Miscellaneous 732,851 749,594 j. Prior Period Expenses 15,128 37,927 k. Error, Fine and Losses 347,740 43,705 l. Janitorial 1,873,345 2,007,518

Total 212,938,673 202,078,830



53

Kumari banK ltdincome/(expenses) from extra ordinary Transactions



partiCulars Current Year previous Year 1. Recovery of Written Off Loan - -2. Voluntary Retirement Expenses - - 3. Irrecoverable Loan Write Off {4.28 (A)} 342,296 352,0004. Other Expenses/Income - -5. ……………………………………………… - -

Total 342,296 352,000

Kumari banK ltdprovision for possible losses



partiCulars Current Year previous Year 1. Increase in Provision for Loan Loss 113,779,647 13,078,046 2. Increase in Provision for Loss on Investment - - 3. Provision for Loss on Non-Banking Assets - - 4. Provision for Other Assets - -

Total 113,779,647 13,078,046

Kumari banK ltdNon-operating income/Loss



partiCulars Current Year previous Year 1. Profit/(Loss) on Sale of Investments - -2. Profit/(Loss) on Sale of Assets 6,247 147,6453. Dividend - -4. Subsidies received from Nepal Rastra Bank - - a. Compensation for losses of specified branches - - b. Interest Compensation - - c. Exchange Counter - -5. Others 626,123 551,536

Net Non-operating income (Loss) 632,371 699,180

Kumari banK ltdwrite back from provision for possible losses

(Fiscal Year 2010/11)


partiCulars Current Year previous Year 1. Provision for Loan Loss Written Back 13,787,709 14,824,913 2. Provision against Non Banking Assets Written Back - - 3. Provision for Investment Written Back - - 4. Provision for other Assets Written Back - -

total 13,787,709 14,824,913


54

Kumari banK ltdstatement of loan written-off

Fiscal Year 2067/68 (2010/11)

s.n. tYpes of loan

written off amount

tYpe of seCuritY

basis of valuation of Collateral

loan approvinG AuTHoriTY/ LeveL

initiations made for reCoverY

remarKs

Schedule 4.28 (A) Amount in NPR

1

2 Hire Purchase Loan

248,959

total 342,296

Mitsubishi Micro-Bus

“Price Quotation submitted by Authorized Vehicle Distributor”

AGM

Hire Purchase Loan

93,337 Mahindra Voyager Micro-Bus

“Price Quotation submitted by Authorized Vehicle Distributor”

AGM Several verbal and written reminders were served to the borrower. Vehicles sold through the Auction process are barred from operating within Kathmandu valley and very few bidders would have expressed interest to operate it outside the valley and at the same time offer decent price for it. Hence after series of discussions with micro-bus and other transport operators, the vehicle was disposed through mutual consensus.

Several verbal and written reminders were served to the borrower. Vehicles sold through the Auction process are barred from operating within Kathman-du valley and very few bidders would have expressed interest to operate it outside the valley and at the same time offer decent price for it. Hence after series of discussions with micro-bus and other transport operators, the vehicle was disposed through mutual consensus.

Customer Name - Bina Thapa/Bam Bahadur Thapa

Customer Name - Krishna Maya/Bas Narayan Maharjan


55

Kumari banK ltdstatement of loans and advances extended to

Directors/chief executive /Promoters/employees and shareholders32 Ashad 2068 (16 July 2011)


The Statement of amount,included under total amount of Bills Purchased and Discounted, Loans, Advances and Overdraft, provided to the Directors, Chief Executive, Promoters, Employees, Shareholders and the individual members of ‘ their undivided family’ or against the guarantee of such person or to the organisation or, companies in which such individual are ‘managing agent’ are as follows:

name of PromoTer/DirecTor/ Chief exeCutive prinCipal interest prinCipal interest prinCipal interest

outstandinG up to last Year

reCovered in Current Year

additional lendinG in this Year

outstandinG as of AsHAD eND 2067

A. Directors 1. …………………………………… - - - - - - - 2. ……….……………………...… - - - - - - - 3. …………………………………… - - - - - - -B. Chief Executive 1. ……………………………….. - - - - - - - 2. ……………………………….. - - - - - - -C. Promoters’ GroupD. Employee ( Family Members’ Company)E. Shareholder’s Company

total - - - - - - -


56

1.1. risK weiGhted exposures Current Year previous Year a Risk Weighted Exposure for Credit Risk 16,145,568 16,257,299 b Risk Weighted Exposure for Operational Risk 1,099,005 909,510 c Risk Weighted Exposure for Market Risk 92,294 53,876

Adjustments under Pillar II 17,336,867 17,220,685 Add: 3% of the total RWE due to non compliance to Disclosure Requirement - - Addition to RWE as per supervisiory review (3%) 520,106 - Add: ...% of Total Deposit due to Insufficient Liquid Assets - -

Total risk Weighted exposure (After Bank’s adjustment of Pillar ii) 17,856,973 17,220,685

1.2. Capital Current period previous period Core Capital (Tier I) 2,204,905 1,779,378a Paid Up Equity Share Capital 1,485,000 1,306,016b Irredeemable Non- cumulative Preference Share - -c Share Premium 4,438 d Proposed Bonus Equity Share 118,800 e Statutory General Reserves 285,692 235,444f Retained Earnings/Loss till Previous Year 2,903 20,675g Un-audited current period profit/(loss) ( after all provision including tax) - -h Bond Redemption Reserve 305,000 210,000i Capital Adjustment Reserve - -j Dividend Equalization Reserves - -k Capital Redemption Reserve - -l Other free Reserve (Deffered Tax Fund) 3,072 7,243m Less: Goodwill - -n Less: Miscellaneous Expenditure not written off - -o Less: Investment in equity in licensed Financial Institutions - -o Less: Investment in equity of institutions with financial interests - -p Less: Investment in equity of institutions in excess of limits - -q Less: Investments arising out of underwriting commitments - -r Less: Reciprocal crossholdings - -s Less: Other Deduction - - Adjustments under Pillar II - - Less: Shortfall in Provision - - Less: Loans & Facilities Extended to Related Parties & Restricted Lending - - Supplementary Capital (Tier II) 251,515 345,248a Cumulative and/or Redemable Preference Share - -b Subordinated term debt 95,000 190,000c Hybrid Capital Instruments - -d General Loan Loss provision 147,583 148,866e Exchange Equalization Reserve 8,902 6,381f Investment Adjustment Reserve 30 -g Assets Revaluation Reserve - -h Other Reserve - -

Total capital fund (Tier i and Tier ii) 2,456,420 2,124,625

Kumari banK ltdTable of capital fund

End of Ashad 2068 (16 July 2011) Schedule 4.30(A1)

Amount in NPR

1.3 Capital adequaCY ratios Current period previous period

Tier I Capital to Total Risk Weighted Exposure (After Bank’s adjustment of Pillar II) 12.35% 10.33 %

Tier I and Tier II Capital to Total Risk Weighted Exposure

(After Bank’s adjustment of Pillar II) 13.76% 12.34%

Rs. In ‘000


57

Kumari banK ltdcredit risk exposures

End of Ashad 2068 (16 July 2011) Schedule 4.30 (B)

on balanCe sheet exposures (a) Gross booK

value (a)

spe-CifiC

provi-sion (b)

eli-Gible

Crm (C)

net value

d=a-b-C

previous Year

Cash Balance 524,781 - 524,781 0% - 574,066 -

Balance With Nepal Rastra Bank 526,949 - 526,949 0% - 1,663,998 -

Investment in Nepalese Government Securities 2,806,106 - 2,806,106 0% - 1,744,532 -

All Other Claims on Government of Nepal 247,931 - 247,931 0% - 145,933 -

Investment in Nepal Rastra Bank Securities - - - 0% - - -

All Other Claims on Nepal Rastra Bank - - - 0% - - -

Claims in Foreign Government Securities (ECA rating 0-1) - - - 0% - - -

Cliams in Foreign Government Securities (ECA rating 2) - - - 20% - - -

Claims in Foreign Government Securities (ECA rating 3) - - - 50% - - -

Claims in Foreign Government Securities (ECA rating 4-6) - - - 100% - - -

Claims in Foreign Government Securities (ECA rating 7) - - - 150% - - -

Claims On BIS, IMF, ECB, EC and Claims On Multilateral Development Banks(MDB's) Recognised By Standard Framework

- - - 0% - - -

Claims on Other MDB's - - - 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) 16,985 - 16,985 150% 25,478 59,958 89,936

"Claims on Domestic Banks that meet Capital Adequacy requirements"

685,807 - 685,807 20% 137,161 522,081 104,416

"Claims on Domestic Banks that do not meet Capital Adequacy Requirements"

3,936 - 3,936 100% 3,936 4,383 4,383

Claims on Foreign Bank (ECA Rating 0- 1) 530,393 - 530,393 20% 106,079 592,801 118,560

Claims on Foreign Bank (ECA Rating - 2) - - - 50% - - -

Claims on Foreign Bank (ECA Rating 3-6) 28,797 - 28,797 100% 28,797 30,932 30,932

Claims on Foreign Bank (ECA Rating - 7) - - - 150% - - -

Claims on foreign bank incorporated in SAARC region operating with a buffer of 1 %above their respective regulatory capital requirement

23,478 - 23,478 20% 4,696 604 121

Claims on Domestic Corporates 7,668,632 - 7,668,632 100% 7,668,632 7,036,562 7,036,562

Claims on Foreign Corporates (ECA 0 - 1) - - - 20% - - -

Claims on Foreign Corporates (ECA 2) - - - 50% - - -

Claims on Foreign Corporates (ECA 3-6) - - - 100% - - -

Claims on Foreign Corporates (ECA - 7) - - - 150% - - -

Regulatory Retail Portfolio (Not Overdue) 2,073,215 - 103,968 1,969,246 75% 1,476,935 1,713,482 1,285,111

Claims fulfilling all creterion of regulatory retail except granularity - - - 100% - 96,693 96,693

Claims secured by residential properties 1,286,431 - 1,286,431 60% 771,858 1,149,129 689,477

Claims not fully secured by residential properties - - - 150% - - -

Claims secured by residential properties (Overdue) 8,791 4,514 4,277 100% 4,277 900 900

Claims secured by Commercial real estate 2,614,677 - 2,614,677 100% 2,614,677 3,636,375 3,636,375

Past due claims (except for claims secured by residential properties)

374,323 148,063 -

226,260 150% 339,390 59,812 89,718

High Risk claims 754,232 - 754,232 150% 1,131,349 985,322 1,477,983

"Investment in equity and other capital instruments of institutions listed in the stock exchange"

- - - 100% - - -

"Investment in equity and other capital instruments of institutions not listed in the stock exchange"

6,436 - 6,436 150% 9,653 4,936 7,403

Other Assets (as per attachment) 1,207,216 597,170 610,047 100% 610,047 570,846 570,846

total 21,389,115 749,746 103,968 20,535,400 14,932,964 20,593,346 15,239,419

Amount in NPR

risK weiGht

(e)

risK weiGhted

expo-sures

(f)=(d)*(e)

net value (d)=(a)-(b)-

(C)

risK weiGhted

exposures (f)=(d)*(e)

Rs. In ‘000

Current Year


58

Kumari banK ltdcredit risk exposures

End of Ashad 2068 (16 July 2011) Schedule 4.30 (B)

Amount in NPR

off balanCe sheet exposures (b) Gross booK

value (a)

spe-CifiC

provi-sion (b)

eligible Crm

(c)

net value

d=a-b-C

risK weiGht

(e)

risK weiGhted

expo-sures (f=d*e)

net value d=a-b-C

risK weiGhted

exposures (f=d*e)

Revocable Commitments - - - - 0% - - -

Bills Collection - - - - 0% - - -

Forward Exchange Contract Liabilities 404,875 - - 404,875 10% 40,487 115,645 11,565

LC Commitments With Original Maturity Up to 6 months domestic counterparty

404,250 - 34,966 369,284 20% 73,857 619,679 123,936

ECA Rating 0-1 - - - - 20% - - -

ECA Rating 2 - - - - 50% - - -

ECA Rating 3-6 - - - - 100% - - -

ECA Rating 7 - - - - 150% - - -

L C Commitments With Original Maturity over 6 months domestic counterparty

168,903 - 4,931 163,972 50% 81,986 258,820 129,410

ECA Rating 0-1 - - - - 20% - - -

ECA Rating 2 - - - - 50% - - -

ECA Rating 3-6 - - - - 100% - - -

ECA Rating 7 - - - - 150% - - -

"Bid Bond, Performance Bond and Counter Guarantee Domestic Counterparty"

557,267 - 69,499 487,769 50% 243,884 432,975 216,488

ECA Rating 0-1 - - - - 20% - - -

ECA Rating 2 - - - - 50% - - -

ECA Rating 3-6 - - - - 100% - - -

ECA Rating 7 - - - - 150% - - -

Underwriting commitments - - - - 50% - - -

Lending of Bank's Securities or Posting of Securities as collateral

- - - - 100% - - -

Repurchase Agreements, Assets sale with recourse

- - - - 100% - - -

Advance Payment Guarantee 117,365 - 3,656 113,709 100% 113,709 96,525 96,525

Financial Guarantee - - - - 100% - - -

Acceptence and Endrosements 505,665 - 26,106 479,559 100% 479,559 235,447 235,447

Unpaid portion of Partly paid shares and securities

13,500 - - 13,500 100% 13,500 -

Irrevocable Credit Commitments (short term) 828,105 - - 828,105 20% 165,621 1,022,548 204,510

Irrevocable Credit Commitments (long term) - - - - 50% - - -

Other Contingent Liabilities - - - - 100% - - -

Unpaid Guarantee Claims - - - - - -total 2,999,930 - 139,156 2,860,773 - 1,212,604 2,781,640 1,017,880 total rwe for Credit risk before Adjustment (A + B)

24,389,045 749,746 243,125 23,396,174 - 16,145,568 23,374,985 16,257,299

Adjustment under Pillar II - - - - - - - -Add:10% of the loan & facilities in excess of Single Obligor Limits

- - - - - - - -

Add:1% of the contract (sale) value in case of the sale of credit with recourse

- - - - - - - -

total rwe for Credit risk 24,389,045 749,746 243,125 23,396,174 - 16,145,568 23,374,985 16,257,299

Continue......

Rs. In ‘000


59

Kumari banK ltdeligible Amount for credit risk mitigation (crm)


Schedule 4.30 C Rs. In ‘000

creDiT exPosures DePosiT DePosiTs GoLD GovT. G’Tee of sec/G’Tee G’Tee of G’Tees sec/ ToTAL WiTH WiTH &NrB GovT.of of oTHer DomesTic of G’Tee of banK other seCur- nepal sover- banKs mdbs foreiGn BANks/fi iTies eiGNs BANks (a) (b) ( C ) (d) (e) (f) (G) (h) (i)On Balance Sheet Credit exposures - - - - - - - - - -Claims on Foreign government and Central Bank (ECA-2) - - - - - - - - - - Claims on Foreign government and Central Bank (ECA-3) - - - - - - - - - - Claims on Foreign government and Central Bank (ECA-4-6) - - - - - - - - - - Claims on Foreign government and Central Bank (ECA-7) - - - - - - - - - - Claim on Other Multilateral Development Banks - - - - - - - - - - Claims on Public Sector Entity(ECA-0-1) - - - - - - - - - - Claims on Public Sector Entity(ECA-2) - - - - - - - - - - Claims on Public Sector Entity(ECA-3-6) - - - - - - - - - - Claims on Public Sector Entity(ECA -7) - - - - - - - - - - Claims on domestic banks that meet capital adequacy requiremaent - - - - - - - - - - Claims on domestic banks that do not meet capital adequacy requiremaent - - - - - - - - - - Claims to a Foreign bank (ECA Rating 0-1) - - - - - - - - - - Claims to a Foreign bank(ECA Rating 2) - - - - - - - - - - Claims to a Foreign bank(ECA Rating 3-6) - - - - - - - - - - Claims to a Foreign bank(ECA Rating 7) - - - - - - - - - - Claims on foreign bank incorporated in SAARC region operating with a buffer of 1 %above their respective regulatory capital requiremente - - - - - - - - - - Claims on Domestic Corporates - - - - - - - - - - Claims on Foreign Corporates (ECA 0-1) - - - - - - - - - - Claims on Foreign Corporates (ECA 2) - - - - - - - - - - Claims on Foreign Corporates (ECA 3-6) - - - - - - - - - - Claims on Foreign Corporates (ECA 7) - - - - - - - - - - Regulatory Retail Portfolio (Not Overdue) 103,199 - - - 769 - - - - 103,968 Claims fulfilling all creterion of regulatory retail except granularity - - - - - - - - - - Claims secured by residential properties - - - - - - - - - - Claims not fully secured by residential properties - - - - - - - - - - Claims secured by residential properties (Overdue) - - - - - - - - - - Claims secured by commercial real estate - - - - - - - - - - Past due claims(except for claim secured by residential properties) - - - - - - - - - -


60

Kumari banK ltdeligible Amount for credit risk mitigation (crm)


Schedule 4.30 C Rs. In ‘000

creDiT exPosures DePosiT DePosiTs GoLD GovT. G’Tee of sec/G’Tee G’Tee of G’Tees sec/ ToTAL WiTH WiTH &NrB GovT.of of oTHer DomesTic of G’Tee of banK other seCur- nepal sover- banKs mdbs foreiGn BANks/fi iTies eiGNs BANks (a) (b) ( C ) (d) (e) (f) (G) (h) (i)High Risk Claims - - - - - - - - - - “Investment in equity and other capital instruments of institutions listed in the stock exchange” - - - - - - - - - - “Investment in equity and other capital instruments of institutions not listed in the stock exchange” - - - - - - - - - - Other Assets (as per attachment) - - - - - - - - - - Off Balance Sheet Exposures Forward Exchange Contract Liabilities - - - - - - - - - - LC Commitments With Original Maturity Up to 6 months domestic counterparty 34,966 34,966 foreign counterparty (ECA Rating 0-1) - - - - - - - - - - foreign counterparty (ECA Rating 2) - foreign counterparty (ECA Rating 3-6) - - - - - - - - - - foreign counterparty (ECA Rating 7) - - - - - - - - - - L C Commitments With Original Maturity Over 6 months domestic counterparty 4,931 - - - - - - - - 4,931 foreign counterparty (ECA Rating 0-1) - - - - - - - - - - foreign counterparty (ECA Rating 2) - - - - - - - - - - foreign counterparty (ECA Rating 3-6) - - - - - - - - - - foreign counterparty (ECA Rating 7) - - - - - - - - - - Bid Bond and Performance Bond(Domestic) 69,499 - - - - - - - - 69,499 foreign counterparty (ECA Rating 0-1) - foreign counterparty (ECA Rating 2) - - - - - - - - - - foreign counterparty (ECA Rating 3-6) - - - - - - - - - - foreign counterparty (ECA Rating 7) - - - - - - - - - - Underwriting commitments - - - - - - - - - - Lending of Bank’s Securities or Posting of Securities as collateral - - - - - - - - - - Repurchase Agreements,Assets salewith resourse - - - - - - - - - - Advance Payment Guarantee 3,656 - - - - - - - - 3,656 Financial Guarantee - - - - - - - - - - Acceptances and Endorsements 26,106 - - - - - - - - 26,106 Unpaid portion of partly paid shares - - - - - - - - - and securitiesIrrevocable Credit Commitments - - - - - - - - - Claims on foreign bank incorporated in SAARC region operating with a buffer of 1 %above their respective regulatory capital requirement - - - - - - - - - -Other Contingent Liabilities - - - - - - - - - -

Continue......


61

Kumari banK ltdrisk Weight exposure for operational risk


Kumari banK ltdrisk Weight exposure for market risk


partiCular Year 1 Year 2 Year 3 previous (2007/08) (2008/09) (2009/10) YeAr Net Interest Income 458,512 558,520 682,148 -

Commission and Discount income 48,495 79,104 100,337 -Other Operating Income 17,805 19,747 41,614 -Exchange Fluctuation Income 41,808 59,002 37,925 -Addititonal Interest Suspense during the Period 17,185 15,777 20,034 -Total Gross Income (a) 583,804 732,149 882,058 -Alfa (b) 15% 15% 15% 15%Fixed Percentage of Gross Income {C= (axb)} 87,571 109,822 132,309 -Capital Requirement for Operational Risk (d) ( average of c) 109,901 - - 90,951 Risk Weight ( Reciprocal of Capital Requirement of 10 %) in times (e) 10 - - 10 Equivalent Risk Weight Exposure {f=(dxe)} 1,099,005 - - 909,510

Schedule 4.30 (D)Amount in NPR

s.no CurrenCY open open relevant previous position (fCY) position (npr) open position Year 1 INR 50,028 80,083 80,083 75,073

2 USD 546 38,865 38,865 4,620 3 EUR 152 15,326 15,326 3,982 4 GBP 230 26,336 26,336 16,980 5 CHF 1 105 105 - 6 AUD 96 7,238 7,238 71 7 CAD 1 104 104 9 8 SGD 6 364 364 139 9 JPY 11,379 10,213 10,213 2,684 10 SEK 1 11 11 11 11 DKK 112 1,504 1,504 1,610 12 HKD 17 159 159 3 13 SAR 92 1,748 1,748 1,375 14 QAR 44 853 853 704 15 CNY 3 36 36 5 16 MYR 33 781 781 266 17 THB 21 50 50 6 18 AED 40 770 770 215 19 KRW 650 43 43 -

total open position (a) 184,589 107,753 fixed pecentage (b) 5% 5%Capital Charge for market risk [c=(axb)] 9,229 5,388 risk weight (reciprocal of capital requiremnet of 10%) in times (d) 10 10 equivalent risk Weight exposure {e=(cxd)} 92,294 53,876

Schedule 4.30 (E)Amount in NPR

Rs. In ‘000

Rs. In ‘000


62

partiCulars indiCators f. Y. f. Y. f. Y. f. Y. f. Y. f. Y. f. Y. 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 1. Net Profit/Gross Income % 16.26% 15.52% 19.61% 16.18% 16.54% 15.32% 10.23% 2. Earnings Per Share Rs. 17.58 16.59 22.70 16.35 22.04 24.24 15.67 3. Market Value per Share Rs. 369.00 443 830 1,005 700 468 266 4. Price Earning Ratio Ratio 20.99 26.71 36.56 61.47 31.76 19.31 16.98 5. Dividend (including bonus) on share capital % - 21.05% 21.05% 10.53% 10.58% 12.00% 8.44% 6. Cash Dividend on share Capital % - 1.05% 1.05% 0.53 0.55 12.00% 0.44% 7. Interest Income/Loans & Advances % 8.33% 5.89% 7.63% 7.61% 8.34% 11.58% 13.75% 8. Employee Expenses/Total Operating Expenses % 11.96% 12.32% 17.22% 15.66% 10.37% 9.24% 8.64% 9. Interest Expenses on Total Deposit and Borrowings % 4.48% 4.20% 3.69% 3.87% 5.10% 6.51% 8.14% 10. Exchange Fluctuation Gain/Gross Income % 2.77% 3.95% 2.34% 3.87% 3.73% 1.84% 1.49% 11. Staff Bonus/ Total Employee Expenses % 34.24% 24.59% 25.08% 22.32% 24.04% 31.93% 21.29% 12. Net Profit/Loans & Advances % 1.55% 1.48% 1.88% 1.52% 1.77% 2.12% 1.68% 13. Net Profit/ Total Assets % 1.13% 1.15% 1.43% 1.16% 1.41% 1.59% 1.23% 14. Total Credit/Deposit % 90.62% 90.20% 85.84% 90.20% 94.17% 79.45% 87.87% 15. Total Operating Expenses/Total Assets % 4.76% 5.39% 4.83% 4.90% 6.03% 7.55% 9.51% 16. Adequacy of Capital Fund on Risk Weightage Assets a. Core Capital % 10.20% 11.28% 10.26% 10.40% 9.08% 10.29% 12.35% b. Supplementary Capital % 1.01% 1.08% 0.96% 4.01% 2.47% 2.05% 1.41% c. Total Capital Fund % 11.21% 12.36% 11.22% 14.41% 11.56 12.34% 13.76% 17. Liquidity (CRR) Ratio 3.44% 2.71% 3.65% 1.91% 7.13% 8.02% 5.74% 18. Non Performing Loans/Total Loans % 0.95% 0.92% 0.73% 1.32% 0.44% 0.50% 1.12% 19. Weighted Average Interest Rate Spread % 3.85% 4.58% 4.67% 4.30% 4.17% 3.28% 3.92% 20. Book Net worth Per Share Rs. 141 149 137 128 137 137 138 21. Total Shares Number 5,000,000 6,250,000 7,500,000 10,700,000 11,860,992 13,060,159 16,038,000 22. Total Employees Number 143 177 212 256 260 364 347 23. Others - - - - - - - -

Schedule 4.31

Kumari banK ltdprincipal indicators

(For Previous 7 years)


63

Schedule 4.32

Kumari banK ltdsignificant Accounting Policies

Financial Year 17 July 2010 to 16 July 2011 (1 Shrawan 2067 to 32 Ashad 2068)

1. General informationKumari Bank Limited (the “Bank”) is a limited liability company domiciled in Nepal. The address of its registered office is Durbarmarg, Kathmandu, Nepal. The Bank is listed with Nepal Stock Exchange Limited.

The Bank carries out commercial banking activities in Nepal under license from Nepal Rastra Bank (the central bank of Nepal) as Class “A” licensed institution. 2. summary of significant Accounting PoliciesThe Significant accounting policies applied in the preparation of the financial statements of the bank are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Statement of ComplianceThe financial statements have been prepared in accordance with Nepal Accounting Standards (NAS) issued by the Nepal Accounting Standards Board (NASB) except for exceptions as mentioned below, generally accepted accounting principles, and the provisions of Bank and Financial Institution Act, 2063, directives issued by Nepal Rastra Bank (Central Bank) and the Company Act, 2063.

2.2 Basis of PreparationThe financial statements have been prepared under the historical cost convention. The preparation of the financial statements in conformity with NAS and generally accepted accounting principles requires the use of certain critical accounting estimates. It also requires the management to exercise judgement in the process of applying the Bank’s accounting policies.

2.3 Interest IncomeInterest income on loans and advances is recognised on cash basis as per the directive issued by Nepal Rasta Bank, which is not in accordance with Nepal Accounting Standards.

Interest income on Investments is recognised on accrual basis.

2.4 Commission Income Commission income exceeding Rs. 100,000 earned on guarantees covering more than a year is accounted for on accrual basis over the period of the guarantee. Other commission incomes are accounted on cash basis.

2.5 Dividend IncomeDividend is recognised as income when the right to receive the payment is established.

2.6 Foreign Exchange Transactions i. Foreign currency assets and liabilities as at the Balance Sheet date have been translated at the mid rate (average of buying and selling rate) of exchange prevalent as on the Balance Sheet date.

ii. Gain/Loss realised in the foreign currency transactions is accounted for on the date of transaction and shown as "Trading Gain/Loss" under the head "Exchange Fluctuation Gain/Loss"

iii. Revaluation gain arising due to fluctuation in exchange rate of foreign currencies is accounted for and shown as "Revaluation Gain/Loss". Amount equivalent to 25% of revaluation gain of the current year is transferred to Exchange Fluctuation Reserve by way of appropriation as per directive issued by Nepal Rastra Bank.

2.7 Interest Expense Interest on deposit liabilities and borrowing from other banks are accounted for on accrual basis.

2.8 Loans and Advances, Overdraft and Bills Purchased Loans and advances, overdrafts and bills purchased include direct finance provided to the customers as per the Bank’s policy such as bank overdrafts, personal loans, term loans, hire purchase finance and loans to deprived sectors. All loans are subject to regular review and are graded according to the level of credit risk and classified as per Nepal Rastra Bank’s Directives. Loans and advances, overdraft and bills purchased are stated net of loan loss provisions in the Balance Sheet.

2.9 Staff Loans Staff loan has been provided as per the bank’s policy and shown under the head ‘Other Assets’.

2.10 Loan Loss Provision Provision is made for possible losses on loans and advances, overdraft and bills purchased at 1% to 100% on the basis of classification of loans and advances, overdraft and bills purchased in accordance with the directives of Nepal Rastra Bank.

2.11 Loans & Advances Write offUnrecoverable loans and advances are written off in accordance with the bye-laws of the Bank approved by Nepal Rasta Bank.

Amounts recovered against loans written off in earlier years are recognized as income in the profit and loss account in the year of recovery.

2.12 Investments Investments in Government Securities are valued at cost. Placements with maturity period more than 7 days are classified as Investment and valued at cost. Investment in shares, debenture and bonds are valued at cost or market value, whichever is lower.

All investments are subject to regular review according to the directives of Nepal Rasta Bank.


64

2.13 Fixed Assets and Depreciationa) Fixed assets are stated at historical cost. Historical cost includes

expenditures that are directly attributable to the acquisition of the assets.

b) Fixed assets are depreciated in accordance with Income Tax Act 2058 except for machinery, and further, gain / loss on disposal of assets are recognised as gain / loss rather than adjusting at related asset block.

c) Assets are depreciated only after their full capitalisation.d) Computer software cost is amortised over the period of five years in

equal instalments.e) Asset under construction for which final settlement has not been made

is booked as Asset in Process.f) Lease hold development costs are amortised over a period of 5 years.g) Machinery is depreciated applying the rate of 25% on written down

value.

Depreciation on fixed assets is not charged as per Nepal Accounting Standard 06 ‘Property, Plant & Equipment’, neither has it been charged completely in accordance with Nepalese Income Tax 2058.

2.14 Lease RentalThe lease agreements entered into by the Bank for office buildings are operating lease agreements. The total payments made under operating leases are charged to Rent Expenses in the profit and loss account on a monthly basis.

2.15 Retirement Benefits The Bank has schemes of retirement benefits namely Gratuity and Provident Fund. Provision for expenses on account of Gratuity and Provident Fund is made on accrual basis with the amount of liabilities computed by the bank in accordance with its applicable schemes. Contributions to approved retirement fund are made on a regular basis as per the Retirement Fund rules and regulations.

2.16 Income Taxa. Current Income TaxProvision for current income tax is made in accordance with the provisions of the prevailing Income Tax Act, 2058 and Rules as amended.

b. Deferred Income TaxDeferred income tax is provided on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted at the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised where it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred taxes related to temporary differences of the year will be recognised after receiving a letter from tax office on the issue of depreciation on leasehold assets.

2.17 StationeryStationery purchased for consumption is expended at the time of consumption.

2.18 Non Banking AssetsNon Banking Assets is booked at lower of market price or principle outstanding on the day before booking and provision for the asset has been made as per NRB directive.

2.19 Provisions, Contingent Liabilities and Contingent AssetsThe Bank creates a provision when there is a present obligation as a result of past events that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

2.20 Staff BonusProvision for staff bonus is made as per the NRB Directive.


65

Schedule 4.33

Kumari banK ltdNotes to Accounts

Financial Year 17 July 2010 to 16 July 2011 (1 Shrawan 2067 to 32 Ashad 2068)

1. Provision for staff bonusProvision for staff bonus has been provided at 10% of net profit after deducting loan loss provision and bonus. This provision has been made as per NRB directive.

2. staff Housing fund Staff Home Loan is provided as per the bank's policy. A separate housing fund has not been created in accordance with Labour Act, 2048.

3. General reserveAs per the requirement of Nepal Rastra Bank, 20% of the current year’s profit has been transferred to General Reserve.

4. Tax settlement outstanding / contingent LiabilitySelf assessment returns filed by the bank for the fiscal year 2063/64, 2064/65 & 2065/66, are pending for assessment at the Inland Revenue Of-fice. Bank has filed a case in Revenue Tribunal against tax assessment order of Large Tax Payers’ Office for the FY 2063/64.

5. Provision for Gratuity During the year, the Bank has provided Rs. 9,759,385 (Previous Year Rs. 5,033,960) on account of gratuity. Gratuity is treated as Approved Retire-ment Fund for the purpose of tax assessment of individual staff.

6. Dividend and BonusThe Board has proposed 8% bonus share in the FY 2067/68. Tax on bonus share so proposed has been shown under cash dividend payable by the bank.

7. unpaid dividendOut of total cash dividend proposed in FY 2066/67 and distributed in FY 2067/68, cash dividend of Rs. 11,490,972 is still payable because sharehold-ers have not yet intimated to collect the dividend.

fisCal Year Cumulative remarKs paid up Capital2057/58 350,000,000 2058/59 350,000,000 2059/60 350,000,000 2060/61 500,000,000 Initial Public Offering of Rs. 150 million2061/62 625,000,000 (4:1) Right share issue of Rs. 125 million 2062/63 750,000,000 Issue of Bonus share of Rs. 125 million 2063/64 900,000,000 Issue of Bonus Share of Rs. 150 million2064/65 1,007,000,000 In fiscal year 2063/64, the Bank had issued right share of Rs. 180 million. Out of total issue, Rs.170 million had been capitalized as on Balance Sheet date. Further Rs. 8.272 million had been capitalized as on signing date of Financial Statements.2065/66 1,186,099,200 In the fiscal year 2064/65, the Bank had issued 10 % bonus share and 15 % right share. 10 % bonus share had been capitalized on Share Capital while right share is not yet issued. 2066/67 1,306,015,920 In the FY 2065/66, the Bank had issued 10% bonus share including to those who were released from black list during the year. Further, right share of Rs. 1,080,000 issued on FY 2063/64 and relating to blacklisted shareholders are included in current year’s capital subsequent to their release from black list. 2067/68 1,603,800,000 In the FY 2067/68, the bank capitalized Rs. 178,200,000 share capital which was approved for issuance in fiscal year 2064-65. Further, the Bank auctioned 7841 numbers of shares that include right and bonus shares of subsequent years relating to right share approved in FY 2064- 65 but issued only in FY 2067-68. Bonus share at the rate of 8% (Rs. 118,800,000) has been proposed in the FY 2067/68.

8. Paid up share capitalPaid up share capital of the Bank has moved over the years as follows:


66

9. sale of Land and Building Bank has not sold its land or building during the year.

10. Kbl bond 2070Bank has issued KBL Bond 2070 worth Rs. 400 million in fiscal year 2064/65. For the redemption of the bond, Capital Redemption Fund has been creat-ed on which Rs. 95 million is transferred in this year as per NRB instruction.

Deferred tax is determined at the rate of 30% on the temporary differences between the accounting value of assets and liabilities as shown in the Financial Statement and their value for tax purpose.

11. deferred tax

12. reconciliation status

partiCulars balanCe on movement durinG balanCe on 17 JuLY 2010 THe YeAr 16 JuLY 2011Deferred income tax assets 7,242,572 (4,170,997) 3,071,576

Total 7,242,572 (4,170,997) 3,071,576Deferred income tax liabilities - - -Total - - -Net deferred tax assets (liabilities) 7,242,572 (4,170,997) 3,071,576

partiCulars total amount upto 1 Year 1 Year to 3 Years more than 3 YearsAgency Accounts 68.07 68.07 - -

openinG balanCe total disbursed total settled outstandinG14,966 3,985 4,025 14,926

Rs. in million

Rs. in million

Rs. in million

13. Loan Disbursed, recovered, written off and outstanding during the year.The loan disbursed, recovered and outstanding during the year is given below:

14. summary of changes in deposit during the yearThe financial growth of the deposits during the year is given below:

previous Year (rs) partiCulars this Year (rs) ChanGes 683 1) Current Deposit 797 114 650 a) Local Currency 738 87 33 b) Foreign Currency 59 26 5,132 2) Saving Deposit 6,551 1,419 5,030 a) Local Currency 6,442 1,411 102 b) Foreign Currency 110 8 7,206 3) Fixed Deposit 6,655 (552) 6,877 a) Local Currency 6,006 (872) 329 b) Foreign Currency 649 320 4,273 4) Call Deposit 2,852 (1,421) 4,211 a) Local Currency 2,824 (1,387) 61 b) Foreign Currency 28 (34) 138 5) Margin Deposit 132 (6) 138 a) Local Currency 132 (6) - b) Foreign Currency - -

17,432 ToTAL DePosiT 16,986 (446)


67

partiCulars perCentaGeThe weighted average yield on Interest bearing assets for the year (%) 12.66The weighted average cost on Interest bearing liability for the year (%) 8.74The weighted average Interest Rate Spread (%) 3.92

15. weighted average interest rate spread

16.summary of amortizable expenses yet to be written off No such item.

17. classification of Assets and Liabilities based on maturity

PArTicuLArs 1-90 91 - 180 181 - 270 271 - 365 more THAN ToTAL daYs daYs daYs daYs 1 Year Assets Cash 5,248 - - - - 5,248 Bank Balance 6,437 - - - - 6,437 Investment in Foreign Banks 3,489 356 356 712 - 4,913 Call Money - - - - - - HMG Debt Paper 2,346 3,801 915 18,710 2,276 28,048 NRB Debt Paper - - - - - - Interbank Loan 6,643 6,643 Loan 42,502 27,670 24,679 18,658 35,753 149,262 Interest Receivables 1,313 50 29 58 - 1,450 Reverse Repo - - - - - - Commitment / Other Receivables - - - - - - Receiable related to S.No. 20,21 &22 5,590 855 - - - 6,445 Others 1,304 448 435 435 3,297 5,918 Total Assets 74,873 33,180 26,414 38,572 41,326 214,365 Liabilities Current Account 4,178 1,393 1,393 1,393 929 9,286 Savings Account 23,494 4,702 4,702 4,702 56,429 94,030 Time Deposit 17,483 11,942 13,859 18,064 5,199 66,547 Debt Papers - - - - 4,000 4,000 Borrowings 2,413 4,196 - - - 6,609 On Demand / Temporary Notice - - - - - - Inter Bank/ Financial Institution 2,413 356 - - - 2,769 Refinancing - 3,840 - - - 3,840 Other Liabilities: 664 151 86 86 - 987 Sundry Creditors 159 53 53 53 - 318 Bills Payable 41 14 14 14 - 81 Interest Payable 407 - - - - 407 Provision - - - - - Others 57 85 19 19 - 181 Commitment Other Payable 3,835 1,222 - - - 5,057 Other Facility not received after Authority 1,242 1,760 1,760 1,760 1,760 8,281 LC/Guarante(Net) 6,590 1,821 1,137 1,133 481 11,161 Repo - - - - - - Payment related to S.No. 11 - - - - - - Others 881 159 159 159 - 1,357 Total Liabilities 60,781 27,346 23,095 27,296 68,797 207,315 Net Financial Assets 14,092 5,834 3,319 11,276 (27,471) 7,050 Cumulative Net Financial Assets 14,092 19,926 23,245 34,521 7,050 -

Rs. in lakhs

123456789

10111213

1415161718

18.118.218.3

1919.119.219.319.419.5

202122232425

s n


68

18. Borrowing by the bank against the collateral of own assetsThe bank has no such borrowing.

19. summary of concentration of exposureNo balance sheet and off balance sheet transaction have been concentrated to a single person, firm, organization or to a particular sector. Detail of highest exposure to a single person or organization is as follows:

20. details of software application

partiCulars total maximum perC entaGe exposure ConCentration to a sinGle CustomerLoans & Advances 14,926 341 2.29Deposits 16,986 1,370 8.06Off Balance Sheet Items 2,977 161 5.42

Rs. in million

Rs. in million

openinG balanCe additions amortization ClosinG durinG durinG balanCe the Year the Year13,974,067 3,503,000 4,460,990 13,016,075

21. related partieskey management PersonnelKey Management Personnel of the Bank include Chief Executive Officer and members of the Board of Directors of the Bank, as follows:

Mr. Min Bahadur Gurung - Chairman (Promoter)Mr. Noor Pratap JB Rana - Director (Promoter)Mr. Shiv Ratan Sharda - Director (Promoter)Prof. Dr. Rajan B. Paudel - Director (Professional)Dr. Shobha Kant Dhakal - Director (Public)Mr. Amir Pratap JB Rana - Director (Promoter) Mr. Rishi Agrawal - Director (Promoter) Mr. Rashindra Bahadur Malla - Director (Public)Mr. Uday K Upadhyay - Acting Chief Executive Officer

• compensation to key management Personnel of the Bank

CateGories Current YearShort-term employee benefits 19,500,500Signing bonus -Post-employment benefits -Other long-term benefits -Termination benefits -Share-based benefits -

total 19,500,500


69

In addition to the above, reimbursement of telephone bills and utilities of his residence, mobile bills and fuel for the vehicle has been made by the Bank.

• Transaction with key management Personnel of the BankThe following provides transactions between the Bank and Key Management Personnel of the Bank during the year.

nature of transaCtion Current YearMeeting Allowances 2,180,800

total 2,180,800

22. Detail of interest accrual stoppedFollowing table exhibits list of customers whose interest accrual has been stopped –

name of Customer interest aCCrual interest durinG stopped date aCCrual stopped periodMC Borg Nepal Pvt. Ltd 01 July 2010 515,838Rodden Enterprise Pvt. Ltd. 08 April 2011 39,606Nepe Unesco Pvt. Ltd. 17 July 2010 56,493

23. current year tax provision In profit and loss account, under the head “Current Year Tax Provision”, total tax provision for the FY 2067/68 is reduced by Rs. 7,989,916.45. This amount, as mentioned in below table, relates with depreciation on leasehold assets. From its inception, the bank has been charging 20% depreciation on its leasehold assets on straight line method (SLM) which was allowed only 5% by tax authorities on written down value method (WDM) during the course of tax reassessment which normally occurs after 4 years of filing tax return. After knowing that tax office allows only 5% depreciation on leasehold assets, the Bank stopped claiming 20% and started claiming at 5% on WDM. However, tax office has now started to allow depreciation on such assets on straight line basis based on lease period (with retrospective effect**). So, the Bank had filed a claim against tax office to allow entire such amount of depreciation in the FY 2067/68 in lump sum which was previously disallowed, which tax office has now accepted. After allowing such amount of differential depreciation, tax provision for FY 2067/68 has been reduced by Rs. 7,989,916.45. The impact relates with only FYs 2060/61, 2061/62, 2062/63, 2065/66 and 2066/67 as follows –


70

25. interest inCome reCoGnised on deferred Cash basisAs allowed by NRB via its circular dated 2068/04/03, the bank has included in its interest income Rs. 29,257,561 on deferred cash basis which was rea-lised in cash during Shrawan 2068.

26. sTAff LeAve eNcAsHmeNTBank has not made any provision for unpaid leave encashment. As per the ‘Personnel Policy Guideline’ of the Bank, staffs are entitled to encash ac-cumulated unpaid leave on retirement. As per NAS 14, ‘Employee Benefits’ bank is required to account for such liability on accrual basis which has not been provisioned by the bank.

27. roundinG off and Comparative fiGuresFigures are rounded to nearest rupees. Previous year's figure has been regrouped or rearranged where necessary.

For the FYs 2063/64 and 2064/65, the bank has charged depreciation at the rate of 20%. So, there will be no tax benefit in that year and is not included above. ** it seems in their practice, no formal circular has been announced in this regard.

24. interest CapitalisationDuring the year the bank has recognised as interest income following amount of interest by capitalising it into loan. These loans are the project loans interest on which were capitalised for moratorium period. Detail of such loans and interest recognised in FY 2067/68 by its capitalisation is as follows –

Customer name loan tYpe interest CapitalizedGhorahi Cement Pvt Ltd Term Loan 3,006,071Sonapur Cement Term loan I 7,433,864Sonapur Cement Term loan II 35,971Nobel medical college Term Loan I 2,099,731Nobel medical college Term Loan III 121,441

fY2060/612061/622062/63FY2065/662066/67TOTAL

Claimed (20%)2,498,2665,252,0225,956,121

Claimed (5%)1,510,8832,079,933

17,297,225

allowed (5%)124,914970,247

1,097,204Allowed (20%)

Tax reassessment not yet done Do

2,192,365

disallowed2,373,3524,281,7754,858,917

DisallowedTax reassessment not yet done

Do 11,514,044

as per finanCial2,498,2665,252,0225,956,121

As per financial9,051,0239,658,804

18,709,827

to be allowed2,373,3524,281,7754,858,917

to be allowed7,540,1407,578,871

26,633,055

Tax provision reduced @30% 7,989,916


71

Kumari banK ltdstatement of loan availed by bank’s promoter/promoters’ group from other bank

and financial institutions by pledging their shares. as on 32 Ashad 2068 (16 July 2011)

1 Sandeep Lama 74,250 0.50 Siddhartha Bank Limited - 74,2502 Sanjay Lama 147,500 0.99 Siddhartha Bank Limited 8,621,314 65,3603 Misu Shrestha 49,895 0.34 Guheshwori Merchant Finance Co. Limited 5,335,945 30,240 International Leasing & Finance Company Limited - 3,628 Subhalaxmi Finance Ltd 3,000,000 6,0484 Rajendra Das Shrestha 29,700 0.20 Central Finance Limited 282,540 3,000 Global Bank Limited 3,459,000 15,976 Machhapuchhre Bank Limited 1,001,749 7,1605 Bhim Krishna Udas 148,500 1.00 Sanima Bikash Bank Limited 5,048,000 55,5006 Janak Raj Wagle 5,835 0.04 Birgunj Finance Limited (now merged with Himchuli Bikas Bank so H and B Development Bank) 62,325 2,0007 Santosh Kumar Lama 182,169 1.23 Siddhartha Bank Limited - 113,7938 Phurba Bangdel Lama 148,500 1.00 Nabil Bank Limited 1,921,000 20,000 Siddhartha Bank Limited 9,482,883 128,5009 Govinda Das Shrestha 222,750 1.50 Lumbini Bank Limited 49,440,377 152,82010 Bidhya Krishna Shrestha 272,250 1.86 Lumbini Bank Limited 49,440,377 68,000 Prime Commercial Bank Limited 15,977,700 101,78011 Anil Das Shrestha 148,500 1.00 Lumbini Bank Limited 49,440,377 97,380 30,000,000 12 Laxman Shrestha 832,200 5.60 Gurkha Development Bank Nepal Limited 15,802,000 90,000 International Leasing & Finance Company Limited 13,331,245 105,000 Prudential Finance Limited 4,772,000 75,000 Siddhartha Bank Limited 61,500,000 175,000 Suryadarshan Finance Limited 15,000,000 130,000 Global Bank Limited 2,500,000 25,000 Union Finance Limited 1,500,000 13,12013 Antoo Shrestha 144,740 0.97 Prudential Finance Limited 5,600,000 39,000 Gurkha Development Bank Nepal Limited 2,800,000 19,500 International Leasing & Finance Company Limited - 8,424 Suryadarshan Finance Limited 3,000,000 20,000 Guheshwori Merchant Finance Co. Limited 1,500,000 32,86814 Santoo Shrestha 148,500 1.00 Social Development Bank Limited 2,600,000 25,00015 Sunil Nand Singh Pradhan 14,850 0.10 Prudential Finance Limited 325,000 2,880 Subhalaxmi Finance Limited 3,000,000 9,00016 Madhav Kumar Basnet 14,850 0.10 Subhalaxmi Finance Limited 3,000,000 9,00017 Shiva Shankar Agrawal 130,085 0.88 NMB Bank Limited - 25,51818 Sophie Upadhaya 71,280 0.48 Lumbini Finance Limited 3,300,000 25,000 Century Commercial Bank Limited 11,026,558 8,20019 Tara Rana 14,850 0.10 Siddhartha Bank Limited 1,193,577 14,85020 Kamal Bikram Singh 5,940 0.04 Nepal Housing and Merchant Finance Limited 968,376 4,75221 Pegi Pandey 18,016 0.12 Manakamana Development Bank Limited 897,262 10,00022 Surendra Bhandari 74,250 0.50 Clean Energy Development Bank Limited 6,985,696 65,35023 Sita Gurung 44,550 0.30 Himalayan Bank Limited 2,092,492 19,890 Sanima Bikash Bank Limited 1,275,000 15,75024 Rajendra Prasad Shrestha 311,250 2.10 Sanima Bikash Bank Limited 16,922,662 197,60025 Atmaram Murarka 103,950 0.70 Machhapuchhre Bank Limited - 63,00026 Pradeep Kumar Murarka 103,950 0.70 Machhapuchhre Bank Limited - 63,00027 Pashupati Murarka 103,950 0.70 Machhapuchhre Bank Limited 14,998,662 63,00028 Naresh Dugad 103,950 0.70 International Development Bank Limited 27,978,605 91,47629 Kumud Kumar Dugad 126,638 0.85 International Development Bank Limited - 94,94130 Bikash Dugad 103,950 0.70 International Development Bank Limited - 91,47631 Bachha Raj Tated 59,400 0.40 NIC Bank Limited 3,183,840 47,52032 Ananda Kumar Ringata 44,550 0.30 Nepal SBI Bank Limited 48,500,000 22,50033 Jeevan Kumar Agrawal 29,700 0.20 Sanima Bikash Bank Limited 2,238,313 26,13634 Ashok Kumar Baidhya 29,700 0.20 Sanima Bikash Bank Limited 2,238,313 26,13635 Jeevan Nepal 29,700 0.20 Bank of Asia Nepal Limited 1,899,371 21,790 Nepal Credit and Commerce Bank Limited 377,000 5,75036 Nabin Agrawal 44,550 0.30 NMB Bank Limited 6,031,318 27,90037 Devaki Nandan Agrawal 47,519 0.32 NMB Bank Limited 34,56038 Balram Neupane 29,700 0.20 Prime Commercial Bank Limited 2,130,576 16,600 Siddhartha Bank Limited 600,000 5,00039 Ganga Amatya 74,250 5.00 Prime Commercial Bank Limited 4,569,819 38,09040 Nura Amatya 14,850 0.10 Suryadarshan Finance Company Limited - 10,31841 Bijaya Bahadur Manandhar 14,834 0.10 Union Finance Limited 4,600,000 5,76042 Bhubaneshwori Pant 59,400 0.40 ICFC Finance Limited 6,941,240 47,25043 Babi Bikram Singh 11,880 0.08 International Leasing & Finance Company Limited 9,50444 Satya Narayan Manandhar 14,866 0.10 NMB Bank Limited 6,448,601 13,678

name of PromoTer/shareholders under promoters’ GrouP

total no. of

shares

perCentaGe of paid up

Capital

NAme of oTHer BANk/finanCial institution from whiCh loan has been taKen

loan amount

(rs.)

no. of shares

pledGed

remarKs

shares under the ownership of

promoters.n.


desCription of loan


72

Kumari banK ltdcomparison of unaudited and Audited financial statement

as of FY 2067/68

S.N. Particulars As per As per Unaudited Audited Financial Financial Reasons for Variance Statement Statement In Amount % 1 Total Capital and Liabilities (1.1 to 1.7) 20,601,262 20,491,785 (109,477) -0.53% Reasons mentioned below

1.1 Paid Up Capital 1,485,000 1,603,800 118,800 8.00% 1.2 Reserve and Surplus 757,975 610,037 (147,938) -19.52% Change in profit as men tioned below and proposed bonus share 1.3 Debenture and Bond 400,000 400,000 - 0.00% 1.4 Borrowings 660,925 660,925 - 0.00% 1.5 Deposits (a+b) 16,986,279 16,986,279 - 0.00% a. Domestic Currency 16,140,683 16,140,683 - 0.00% b. Foreign Currency 845,596 845,596 - 0.00% 1.6 Income Tax Liability - - - 1.7 Other Liabilities 311,084 230,744 (80,340) -25.83% AIR and Interest Suspense 2 Total Assets (2.1 to 2.7) 20,601,262 20,491,785 (109,477) -0.53% Reasons mentioned below 2.1 Cash & Bank Balance 1,168,524 1,168,524 - 0.00% 2.2 Money at Call and Short Notice 451,520 451,520 - 0.00% 2.3 Investments 3,532,285 3,533,623 1,338 0.04% Booking of bond premium 2.4 Loans and Advances (a+b+c+d+e) 14,666,309 14,626,074 (40,236) -0.27% Additional provision a. Real Estate Loan 2,954,712 2,914,476 (40,236) -1.36% Additional provision 1. Residential Real Estate Loan 227,540 227,540 - 0.00% 2. Business Complex & Residential Apartment Construction Loan 557,298 557,298 - 0.00% 3. Income Generating Commercial Complex Loan - - - 4. Other Real Estate loan 2,169,873 2,129,637 (40,236) -1.85% Additional provision b. Personal Home Loan of Rs. 80 Lacs or Less 1,064,957 1,064,957 - 0.00% c. Margin Type Loan 257,204 257,204 - 0.00% d. Term Loan 2,189,220 2,189,220 - 0.00% e. Overdraft Loan/TR Loan/WC Loan 7,424,229 7,424,229 - 0.00% f. Others 775,987 775,987 - 0.00% 2.5 Fixed Assets 305,755 306,277 522 0.17% Booking of assets in process 2.6 Non Banking Assets - - - 0.00% 2.7 Other Assets 476,870 405,768 (71,102) -14.91% AIR on loan,assets in process & bond premium3 Profit and Loss Acccount Upto This Quarter As per Audited In Amount In % Financial Statement 3.1 Interest Income 2,251,469 2,251,792 323 0.01% Interest income on nostro accounts and investments 3.2 Interest Expenses 1,566,552 1,566,552 - 0.00% A. Net Interest Income (3.1-3.2) 684,917 685,240 323 0.05% Reason mentioned above 3.3 Fees, Commission and Discount 100,035 99,708 (327) -0.33% Reclassification of account heads 3.4 Other Operating Income 53,312 53,636 324 0.61% Reclassification and adjust ment of commission incomes 3.5 Foreign Exchange Gain/ Loss (Net) 36,719 36,719 - 0.00% B. Total Operating Income (A.+3.3+3.4+3.5) 874,983 875,303 320 0.04% Reason mentioned above 3.6 Staff Expenses 168,352 168,352 (0.00) 0.00% 3.7 Other Operating Expenses 212,032 212,939 907 0.43% Adjustment of provision for expenses C. Operating Profit Before Provision (B.- 3.6-3.7) 494,599 494,012 (587) -0.12% Reasons mentioned above 3.8 Provision for Possible Losses 61,133 113,780 52,647 86.12% Additional provision D. Operating Profit (C-3.8) 433,467 380,233 (53,234) -12.28% Reasons mentioned above 3.9 Non Operating Income/Expenses (Net) 497 632 136 27.31% 3.1 Write Back of Provision for Possible Loss 1,376 13,788 12,412 901.87% Provision adjustment E. Profit from Regular Activities (D+3.9+3.10) 435,340 394,653 (40,687) -9.35% Reasons mentioned above 3.11 Extraordinary Income/Expenses (Net) (342) (342) - 0.00% F. Profit before Bonus and Taxes ( E. + 3.11) 434,997 394,310 (40,687) -9.35% Reasons mentioned above 3.12 Provision for Staff Bonus 39,545 35,846 (3,698) -9.35% Change in profit 3.13 Provision for Tax 118,636 107,227 (11,408) -9.62% Adjustment of tax of previous year

G. NetProfit/Loss(F.-3.12-3.13) 276,817 251,237 (25,580) -9.24% Allofabovereasons


(in thousand)

Variance


73

Kumari banK ltdunaudited financial results (Quarterly)

As at Fourth Quarter (16/July/2011) of the Fiscal Year 2010/2011

s.N. PArTicuLArs 32.03.2068/16 07. 30.12.2067/13.04. 32.03.2067/16 .07. 2010 2011 this 2011 previous CorrespondinG quarter endinG quarter endinG previous Year quarter endinG 1 Total Capital and Liabilities (1.1 to 1.7) 20,601,262 20,317,119 20,522,475 1.1 Paid Up Capital 1,485,000 1,485,000 1,306,016 1.2 Reserve and Surplus 757,975 662,588 479,743 1.3 Debenture and Bond 400,000 400,000 400,000 1.4 Borrowings 660,925 748,985 429,740 1.5 Deposits (a+b) 16,986,279 16,636,573 17,432,253 a. Domestic Currency 16,140,683 15,701,495 16,907,384 b. Foreign Currency 845,596 935,078 524,869 1.6 Income Tax Liability - - - 1.7 Other Liabilities 311,084 383,974 474,723 2 Total Assets (2.1 to 2.7) 20,601,262 20,317,119 20,522,475 2.1 Cash & Bank Balance 1,168,524 1,825,159 2,723,829 2.2 Money at Call and Short Notice 451,520 328,000 120,000 2.3 Investments 3,532,285 2,273,938 2,296,873 2.4 Loans and Advances (a+b+c+d+e) 14,666,309 15,113,710 14,765,912 a. Real Estate Loan 2,954,712 3,199,563 3,783,661 1. Residential Real Estate Loan 227,540 222,132 183,649 2. Business Complex & Residential Apartment Construction Loan 557,298 478,629 507,561 3. Income Generating Commercial Complex Loan - - - 4. Other Real Estate loan 2,169,873 2,498,801 3,092,450 b. Personal Home Loan of Rs. 80 Lacs or Less 1,064,957 1,065,200 953,748 c. Margin Type Loan 257,204 288,893 369,177 d. Term Loan 2,189,220 2,227,466 2,271,846 e. Overdraft Loan/TR Loan/WC Loan 7,424,229 7,535,592 6,860,335 f. Others 775,987 796,996 527,145 2.5 Fixed Assets 305,755 317,201 285,638 2.6 Non Banking Assets - - - 2.7 Other Assets 476,870 459,111 330,222 3 Profit and Loss Acccount Upto This Quarter Upto Previous Quarter Upto Corresponding Previous Year Quarter 3.1 Interest Income 2,251,469 1,615,967 1,871,066 3.2 Interest Expenses 1,566,552 1,159,497 1,188,918 A. Net Interest Income (3.1-3.2) 684,917 456,470 682,148 3.3 Fees, Commission and Discount 100,035 75,444 100,337 3.4 Other Operating Income 53,312 40,291 28,771 3.5 Foreign Exchange Gain/ Loss (Net) 36,719 30,017 37,925 B. Total Operating Income (A.+3.3+3.4+3.5) 874,983 602,221 849,181 3.6 Staff Expenses 168,352 120,446 143,278 3.7 Other Operating Expenses 212,032 152,805 204,763 C. Operating Profit Before Provision (B.- 3.6-3.7) 494,599 328,971 501,140 3.8 Provision for Possible Losses 61,133 68,331 13,078 D. Operating Profit (C-3.8) 433,467 260,640 488,062 3.9 Non Operating Income/Expenses (Net) 497 371 699 3.10 Write Back of Provision for Possible Loss 1,376 24,436 14,825 E. Profit from Regular Activities (D+3.9+3.10) 435,340 285,447 503,586 3.11 Extraordinary Income/Expenses (Net) (342) (342) (352) F. Profit before Bonus and Taxes ( E. + 3.11) 434,997 285,104 503,234 3.12 Provision for Staff Bonus 39,545 25,919 45,749 3.13 Provision for Tax 118,636 77,756 140,943 G. Net Profit/Loss (F.-3.12-3.13) 276,817 181,430 316,542 4 Ratios At the End of At the End of At the End of This Quarter Previous Quarter Corresponding Previous Year Quarter 4.1 Capital Fund To RWA 14.45% 13.73% 12.34% 4.2 Non Performing Loan (NPL) to Total Loan 1.12% 1.08% 0.53% 4.3 Total Loan Loss Provision to Total NPL 154.81% 147.05% 251.96% 4.4 Cost of Funds (annualized - LCY) 9.56% 9.46% 7.50% 4.5 Credit to Deposit Ratio (as per NRB directives) 81.22% 86.11% 80.12%

Schedule 4 AAmount in NPR


74

Kumari banK ltd“Disclosure under Basel ii as at 16 July 2011

(Fourth Quarter for F/Y 2010/11)”`

a. tier i Capital and a breakdown of its components1. capital structure and capital Adequacy

s.n partiCular Current Year a Paid Up Equity Share Capital 1,485,000,000 b Irredeemable Non- cumulative preferenece share - c Share premium 4,438,289 d Proposed Bonus Equity Share 118,800,000 e Statutory General Reserves 285,691,881 f Retained Earnings 2,903,170 g Un-audited current period profit ( after all provision including tax) - h Bond Redemption Reserve 305,000,000 i Capital Adjustment Reserve - j Dividend Equalization Reserves - k Other free Reserve 3,071,576

Total Tier i capital 2,204,904,916

Amount in NPR

b. tier 2 Capital and a breakdown of its components

s.n partiCular Current Year a Cumulative and/or Reedemable Preference Share - b Subordinated term debt 95,000,000 c Hybrid Capital Instuments - d General Loan Loss provision 147,583,371 e Exchange Equalisation Reserve 8,901,752 f Investment Adjustment Reserve 30,000 g Assets Revaluation Reserve - h Other Reserve (Deferred Tax Reserve) -

total of tier 2 Capital 251,515,124

Amount in NPR

c. Details of subordinate Term DebtBond Name KBL Bond 2070Face Value Rs. 400 millionIssued at ParNumbers of Bonds 400,000Par Value per Bond Rs.1,000Coupon Rate of Interest 8% per annumInterest Payment Semiannual basisPeriod 5 yearsIssued Date 06 June 2008 (FY 2007-08)Maturity Date 08 June 2013 (FY 2012-13)Amount Eligible for Tier I Capital Rs. 305 millionAmount Eligible for Tier II Capital Rs. 95millionRedemption reserve created till the FY 2010/11 Rs. 305 million

The bank does not hold any amount as stipulated in the Capital Adequacy Framework that qualifies for deduction from Capital

d. Deductions from capital


75

e. Total Qualifying capital

s.n. parti Cular Current Year (%)

a Tier 1 Capital to total RWA 12.35

b Total Capital Fund (Tier 1 + Tier 2) to Total RWA 13.76

f. capital Adequacy ratios

s.n partiCular Current Year

a Tier I Capital 2,204,904,916

b Tier II Capital 251,515,124

Total capital fund 2,456,420,039

Amount in NPR

h. main features of subordinated Term Debt

g. Bank’s internal Approach to Access capital Adequacy

Bond Name KBL Bond 2070 Face Value Rs. 400 million Issued at Par Numbers of Bonds 400,000 Par Value per Bond Rs.1,000 Coupon Rate of Interest 8% per annum Interest Payment Semiannual basis Period 5 years Issued Date 06 June 2008 (FY 2007-08) Maturity Date 08 June 2013 (FY 2012-13) Holding Pattern 20% General Public 80% Private Placement Listed/Unlisted Listed Calim in case of Liquidation After depositors Security Unsecured Conversion Features No Bond Trustee Nepal Merchant Banking & Finance Limited Issue Manager Nepal Merchant Banking & Finance Limited

Bank’s mangement regularly review’s Bank’s Capital Adequacy. Plans and budgets are prepared on the basis of current and projected capital adequacy. Bank’s plan and investment decision is based on at what level of capital adequacy it wants to remain at.

a. risk weighted exposures for credit risk, market risk and operational risk

s.n. partiCular Current Year 1 Risk Weighted Exposure for Credit Risk 16,145,567,509 2 Risk Weighted Exposure for Operational Risk 1,099,005,494 3 Risk Weighted Exposure for Market Risk 92,294,346

Amount in NPR

2. risk exposures


76

b. risk weighted exposures under each of 11 categories of credit risk

s.n. partiCular Current Year

1 Claims on government and central bank -

2 Claims on other official entities 25,477,5003 Claims on banks 280,668,6594 Claims on corporate and securities firms 7,668,631,6095 Claims on regulatory retail portfolio 1,476,934,8556 Claims secured by residential properties 776,135,8207 Claims secured by commercial real estate 2,614,676,6348 Past due claims 339,390,0489 High risk claims 1,131,348,55910 Other Assets 619,699,85911 Off balance sheet items 1,212,603,965

Total 16,145,567,509

Amount in NPR

e. npa ratioss.n. partiCulars Current Year (%) 1 Gross NPA to gross advances 1.12% 2 Net NPA to net advances 0.10%

d. Amount of NPAs (Non Performing Assets) both Gross and Net

s.n. non performinG assets Gross amount net amount 1 Restructured/Rescheduled 3,671,229 3,212,325 2 Substandard 9,906,418 7,429,813 3 Doubtful 9,355,352 4,677,676 4 Loss 144,962,926 -

Total 167,895,925 15,319,815

Amount in NPR

c. Total risk weighted exposure calculation table

s.n. partiCular Current Year 1 Risk Weighted Exposure for Credit Risk 16,145,567,5092 Risk Weighted Exposure for Operational Risk 1,099,005,494 3 Risk Weighted Exposure for Market Risk 92,294,346 Total Risk Weighted Exposure 17,336,867,350 Add: 3% of the total RWE due to non compliance to Disclosure Requirement Addition to RWE as per supervisiory review (3%) 520,106,020 Add: ...% of Total Deposit due to Insufficient Liquid Assets

Total risk Weighted exposure (After Bank’s adjustment of Pillar ii) 17,856,973,370

Amount in NPR


77

h.movement of Loan Loss Provision and interest suspense

s.n partiCular previous Year ChanGe Current Year 1 Loan Loss Provision 200,167,544 99,991,938 300,159,481 2 Interest Suspense 95,116,753 (11,038,407) 84,078,346

Amount in NPR

i. details of additional loan loss provision

s.n. loan ClassifiCation additional provision 1 Good (1,283,002) 2 Restructured / Rescheduled (32,669) 3 Substandard (60,524) 4 Doubtful (12,411,515) 5 Loss 113,779,647

total 99,991,938

Amount in NPR

j. segregation of investment Portfolio

s.n. investment CateGorY Current Year 1 Held for trading - 2 Held to maturity 3,527,187,408 3 Available for sale 6,435,500

Total 3,533,622,908

Amount in NPR

f. movement of non performing assets

s.n. non performinG assets previous Year ChanGe Current Year 1 Restructured/Rescheduled 3,932,578 (261,350) 3,671,229 2 Substandard 10,148,514 (242,096) 9,906,418 3 Doubtful 34,178,383 (24,823,030) 9,355,352 4 Loss 31,183,279 113,779,647 144,962,926 Total 79,442,754 88,453,171 167,895,925

Amount in NPR

g. Write off of Loan and interest suspense

s.n. partiCular Current Year 1 Loan Write Off 342,296 2 Interest Suspense Write Off -

Amount in NPR


78

3. risK manaGement funCtionRisk Assessment/Mitigation Practices at Kumari Bank LimitedConsidering the need to establish effective Risk Management and Risk Mitigation practices at Kumari Bank Ltd, we have developed a system of continuous improvement of processes wherein each member of the Bank works towards balancing profi tability with prudence. The system encompasses all banking functions from client interface, to back office operation, to the strategic decision formulated by the management committees and the Board of Directors. Each area has its own check and balance procedure to assess and mitigate risks involved. The practices thus observed are as follows:

KBL Organization StructureThe bank’s lending approval authority is divided into two distinct units, namely Business and Risk Management. While the Business Unit concentrates more on optimum utility of assets, every lending decision of this Unit is re-assessed and revaluated by the Risk Management Unit for final approval. The Risk Management Unit applies its objective judgment on risk variables deemed appropriate in each instance of lending decision. For this purpose, the Risk Management Unit has two distinct subunits, the Risk Approval Department, which facilities final lending decision after duly adjusting risks as mitigated to an acceptable level, and the Credit Administration and Control Department , which evaluates the endorsed paperwork prior to actual sanction, and also after it.

Depending upon the volume of loans and the nature of risk associated, lending decision are subject to validation and approval by various levels of

Types of eligible credit risk mitigants used and the benefi ts availed under CRM - Particular EligibleCRM Deposit with Bank & Cash Margin 243,124,732

total 243,124,732

the hierarchy, in which some lending decision are to be approved by the General Manager, and other by even the Board of Directors as each case may require.

Risk Measurement Criteria and Mitigation ProcessCredit risks are evaluated from the initial customer interface on an array of risk variables by the Credit Policy Guidelines of the Bank, as well as on the individual intuition of experienced officers. As proposals are escalated for approval, judgmental and analytical criteria become broader and more conceptual.

Kumari Bank Ltd. uses the best practices in banking, to make its operation secure through a system of procedural crosschecking mechanism in each operational transaction. An Internal Audit Department, which also doubles as the Concurrent Audit Department system, continuously functionsto alert bank personnel to the meticulousness required in handling operations in every functional department. A credit monitoring system is well established in the Bank, which periodically checks on credit quality, compliance, and level of risk exposure. This practice has created a continuous learning and improvement environment, and the Bank’s effi ciency goal has been to move towards the most prudent practices in the industry.


79

note:-


80

ATM Locations

INSIDE KATHMANDU VALLEYPutalisadak ATM IKumari Bank Limited, main Entrance Gate, Putalisadak, Kathmandu

New Road ATMKumari Bank Limited, new road,Kathmandu

Putalisadak ATM IIKumari Bank Limited, main Entrance Gate, Putalisadak, Kathmandu

New Baneshwore ATMnew Baneshwore, nava Durga Department Store, Kathmandu

Ratna Park ATMnepal Electricity authority Building, ratna Park, Kathmandu

Thamel ATMFire Club Building, Thamel, Kathmandu

Kantipur Mall ATMKumari Bank Limited, Kantipur mall, Gongabu

Koteshwor ATMKumari Bank Limited, Koteshwor, Kathmandu

Durbarmarg ATMKumari Bank Limited, Durbarmarg, Kathmandu

Chuchepati ATMKumari Bank Limited, Chuchepati, Chabahil

Buddhanilkantha ATMKumari Bank Limited, Buddhanilkantha, Kathmandu

Old Baneshwor ATMKumari Bank Limited, Old Baneshwor, Kathmandu

Kumaripati ATMKumari Bank Limited, Kumaripati, Lalitpur

Naxal ATMOpposite Police Head Quarter, naxal, Kathmandu

OUTSIDE KATHMANDU VALLEYBhairahawa ATMKumari Bank Limited, Bhairahawa Branch, narayan Path, Bhairahawa

Pokhara ATMChiple Dhunga, Pokhara, Kaski

Jhapa ATMKumari Bank Limited, Birtamode, Jhapa

Baglung ATMKumari Bank Limited, mahendra Path, Baglung

Narayanghat ATMKumari Bank Limited, narayanghat Branch, Pulchowk, narayanghat

Biratnagar ATMKumari Bank Limited, Goshwara road, morang Byapaar Sangh Building, Biratnagar, morang

Birgunj ATM IKumari Bank Limited, adarsha nagar, Birgunj, Parsa

Birgunj ATM IInational medical College, Extension Counter at Birgunj, Parsa

Itahari ATMKumari Bank Limited, Pathivara market, Dharan road, itahari , Sunsari

Urlabari ATMKumari Bank Limited, urlabari, morang


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Butwal ATMKumari Bank Limited, ram mandir Line, Butwal

Nepalgunj ATMKumari Bank Limited, Surkhet road, Dhambhoji, nepalgunj

Dhangadi ATM Kumari Bank Limited,ratopul, Dhangadi, Kailali

Surkhet ATM Kumari Bank Limited,Birendra nagar, Surkhet

Damauli ATMKumari Bank Limited, Damauli-2

Sauraha ATM Kumari Bank Limited,Bacchauli-2, Sauraha, Chitwan

Salyan ATMKumari Bank Limited, Khalanga, Salyan

Tulsipur ATM Kumari Bank Limited,B.P. Chowk, Tulsipur, Dang

Kawasoti ATMKumari Bank Limited, Sabhapati Chowk, Kawasoti

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BRANCHES

INSIDE THEKATHMANDU VALLEY

OUTSIDE THEKATHMANDU VALLEYBiratnagar BranchBiratnagar, Goshwara roadmorang Byapaar Sangh BuildingMr. Ambar BhattacharyaPhone 021-537101 021-537102Fax 021-537105 Birgunj Branchadarsha nagar, BirgunjMr. Sanjeeb SainjuPhone 051-524812 051-524813Fax 051-521641

Pokhara Branchnewroad, PokharaMr. Bhupendra KhadkaPhone 061-540266 061-540267Fax 061-541717

Itahari BranchPathivaraa marketDharan road, itahariMr. Dev Raj NepalPhone 025-586661 025-586659Fax 025-586658

Dryport BranchBirgunjMr. Bipallaw Kumar KarnPhone 051-590022Fax 051-590023

Narayangadh BranchPulchowk, narayangadh, ChitwanMr. Purushottam PoudelPhone 056-571092 056-572091Fax 056-571090

Birtamode Branchanarmani-3, Birtamode, JhapaMr. Abhishek AdhikariPhone 023-541028Fax 023-543822

Damauli BranchDamauli - 2, TanahunMr. Ram Mani AdhikariPhone 065-561787Fax 065-561788

Baglung BranchBaglung muncipality -2,BaglungMr. Deepak MahatPhone 068-522472 068-522473Fax 068-522474

Bhairahawa BranchSiddharthanagar - 8BhairahawarupandehiMr. Badri Kedar ShresthaPhone 071-521008 071-521009Fax 071-521000

Butwal BranchButwal - 6, Shreeram Towerrammandir LineMr. Deepak Kumar ShresthaPhone 071-551546 071-551547Fax 071-551545

Urlabari Branchurlabari,itahari roadMr. Akash DahalPhone 021-541901Fax 021-541902

Kawasoti BranchKawasoti Bazzar, nawalparasiMr. Nirmal ShahiPhone 078-540524 078-540525Fax 078-540526

Nepalgunj BranchSurkhet road, DhambhojinepalgunjMs. Anuradha ChoudharyPhone 081-528062 081-528063Fax 081-528061

Salyan BranchKhalanga, SalyanMr. Deepak AdhikariPhone 088-520317 088-520318Fax 088-520319

Putali Sadak BranchGovinda Bhawan, Putali Sadak, KathmanduMr. Binod N. ShresthaPhone 01-4232112 01-4232113Fax 01-4231960

New Road BranchPratap Bhawannew road, KathmanduMr. Rajesh ShresthaPhone 01-4238388 01-4238385Fax 01-4238365

Kumaripati BranchKumaripati, LalitpurMr. Bishwa Mani RegmiPhone 01-5556025 01-5556026Fax 01-5556027

Gongabu Branchnaya Bus parkGongabu, KathmanduMr. Suvash ShresthaPhone 01-4385807 01-4385809Fax 01-4385644

Baneshwor BranchOld Baneshwor, KathmanduMs. Kanchan SharmaPhone 01-4499322Fax 01-4497120

Chabahil BranchChuchepatiChabahil, KathmanduMs. Tripti SilwalPhone 01-4484434Fax 01-4490978

Koteshwor BranchKoteshwor, KathmanduMs. Renu KoiralaPhone 01-4492921 01-4499316Fax 01-4497325

Budhanilkantha Branchnarayanthan milan ChowkBudhanilkantha, KathmanduMs. Samjhana RanaPhone 01-4377718Fax 01-4372278

Surkhet BranchTallo Bazzar, Birendra nagarSurkhetMr. Sharad UpadhayaPhone 083-521256 083-522256Fax 083-521109

Tulsipur BranchTulsipur, DangMr. Birendra KunwarPhone 082-521775 082-521776Fax 082-521778

Dhangadi Branchratopul-2, DhangadiMr. Jeet Bahadur RokayaPhone 091-526036 091-526037Fax 091-526038

Sauraha BranchBacchauli, Ward no. 2Sauraha, ChitwanMr. Ana Narayan ShresthaPhone 056-580491Fax 056-580490

National Medical CollegeBirgunj (Extension Counter)Phone 051-621890

Corporate Offi ceDurbarmarg, KathmanduMr. Bikas KhanalPhone 01-4221311 01-4221314Fax 01-4226644

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