KATHMAMDU, Sept. 19 (Xinhua) -- Amid increased economic engagement between Nepal and China, a lot of opportunity have been opened for Nepali banks to facilitate trade and investment between the two countries, a top official of Nepal's leading commercial bank said.
In an interview with Xinhua last week, Sunil K.C., chief executive officer of NMB Bank Limited which leads a consortium of five local commercial banks to finance the Hongshi Shivam Cement Private Limited, a Nepal-China joint venture company, said that growing involvement of Chinese companies as investors, contractors and suppliers of goods and services in Nepal has opened more business opportunities for Nepali banks.
In the last fiscal year 2017-18 that concluded in mid-July, Chinese investors committed a total of 404 million U.S. dollar to Nepal, which represents 84 percent of total foreign direct investment (FDI) pledged to Nepal. China pledged the highest FDI to Nepal three years in a row as since fiscal 2015-16, according to the Department of Industry which registers industries.
On the other hand, China is the second largest trading partner of Nepal with bilateral trading volume reaching 1.38 billion U.S. dollar in the last fiscal 2017-18. Chinese companies are involved in a large number of development projects awarded contracts by the Nepali government. Likewise, China has emerged as the second largest source market for Nepal's tourism, sending as many as 104,664 visitors to Nepal in 2017.
"We see a lot of opportunities for Nepali banks to finance or provide bank guarantee to the Chinese companies as they are involved in various infrastructure projects including roads, electricity transmission line, hydropower projects, construction of airports and supply of telecommunication equipments to Nepali telecom operators," K.C. said. "There is also the opportunities for Nepali banks to offer payment solution to Chinese tourists visiting Nepal."
According to K.C., Chinese companies can benefit from receiving loans from Nepali banks in local currency which will help them to avoid foreign currency risks. After increasing their capacity by four fold since last fiscal year, Nepali banks have also increased their capacity to large scale projects.
While Nepali banks have stepping up to finance Chinese companies operating in Nepal, the Nepali government and private sector have long been seeking a establishment of a branch of a Chinese bank or a Chinese joint venture bank in Nepal to facilitate trade and investment.
K.C. also said that the presence of a Chinese bank in Nepal would be welcomed as it not only facilitates trade and investment between the two countries, but also helps domestic banks to learn international best practices.