19th Annual Report English

1
Kumari Bank Limited

Annual Report 2018/19
Photo Courtesy: Udyog Suwal
2
3
Kumari Bank Limited
VISION
Our vision is to be the preferred
financial partner for our customers,
a centre of career growth for our
employees, and to maximize our
shareholders’ value, while contributing
to our nation’s financial sector and its
economic welfare.
4
MISSION
Our mission is to deliver innovative products
and services to our customers, use these
products/services to achieve financial
inclusion by exemplifying good corporate
governance, proactive risk management
practices, and superior corporate social
responsibility.
5
Kumari Bank Limited
1
Overview
1. About Kumari Bank 10
2. Kumari At a Glance 12
3. KBL Network 14
4. Major Indicators 16
5. Redefining the Kumari Culture 18
6. Message from the Chairman 20
7. BOD Portfolio 26
8. Message from the CEO 28
9. Executive Management Team 32
10. Management Team 34
11. Future Economic Outlook 46
2 Financial Review

1.
2.
Performance Review FY 2075-76
Financial Position Indicators
51
53
3. Financial Performance Indicators 57
4. Horizontal and Vertical Analysis 66
5. Market Capitalization 69
6. Market Price Sensitivity Analysis 70
7. Value Added Statement 71
8. Contribution to Nepalese Economy 72
9. Future Projections and Prospects 74
3 Products and Services

1. Deposit Products & Mix
2. Loan Products & Mix
80
86
3. Treasury Services 90
4. Remittance Service 94
5. Digital Products & Services 97
6
4 Manangement Practices & Governance

1.
2.
Corporate Governance
Capital Management
101
108
3. Risk Management 110
4. SWOT Analysis 116
5. Human Resource Management 118
6. Combating Financial Threats 124
7. IT Security 126
5
8. Internal Audit Controls 129
Management Leadership & CSR

1. Management Leadership 131
2. Leadership Conference Glimpses 132
3. Our Commitment to CSR 136
4. Sustainability Approach 146
5. Kumari Foundation 150
6 Financials

1. Annual Report of the BOD
2. SEBON Declaration
3. Audit Report
154
166
168
4. Financials 170
7 KBL Subsidiaries

1.
2.
3.
4.
About KBL Subsidiaries
Audit Report of Kumari Capital
Financials of Kumari Capital
Major Upcoming Plans of
254
255
256
Kumari Capital Limited 262
8 Award Certification

1. Moving Forward
2. Awards & Milestones
265
266
9 KBL Networks
1. Branches
2. ATM locations
271
274
7
Kumari Bank Limited
1
Overview
1. About Kumari Bank 10

2. Kumari At a Glance 12
3. KBL Network 14
4. Major Indicators 16
5. Redefining the Kumari Culture 18
6. Message from the Chairman 20
7. BOD Portfolio 26
8. Message from the CEO 28
9. Executive Management Team 32
10. Management Team 34
11. Future Economic Outlook 46
8
9
Kumari Bank Limited
About Kumari Bank

Kumari Bank Limited, came into existence as the 15th commercial Bank of
Nepal by starting its Banking operations from Chaitra 21, 2057 B.S (April 03, 2001)
with the objective of providing competitive and modern Banking services in the
Nepalese financial market. The Bank now has a robust paid-up capital of NPR
9.55 billion of which 51% is contributed from its promoters and remaining from
the public.
The Bank has been providing a wide-range of modern Banking services through
its 141 points of representation located in various urban, semi-urban and rural
parts of the country, compromising of 87 outside valley branches, 29 inside
valley branches, 5 extension counters and 20 Branchless Banking Units.
The Bank has pioneered in introducing modern Banking services like Internet
Banking, Mobile Banking and the concept of mobile-wallet in the country. With
rapid implementation of Core Banking Software, FINACLE (version 10) in the
shortest record-time of 4.5 months, the Bank is confident that it will be able to
provide a robust, ultra-modern Banking platform for all customers throughout
the country.
The Bank has been offering both Domestic and International Visa Debit Card
and Credit Card, accessible in all VISA linked ATMs across Nepal and India,
providing additional services to the customers through its 110 ATMs throughout
the country and several POS terminals. Along with this, the Bank has also been
offering the latest Mobile Banking, Internet Banking and Viber Banking services.
The Bank has earned a reputation as an innovative and fast-growing financial
institution, continually striving to enhance customer value and satisfaction
backed by transparent business practices, professional management, corporate
governance, and Total Quality Management as the organizational mission.
10
The Bank had acquired four BFIs:Kasthamandap Development Bank Ltd.,
Paschimanchal Finance Co. Ltd., Mahakali Bikash Bank Ltd. and Kankrebihar Bikash
Bank Ltd. by the end of Asadh 2074 to attain the NRB-prescribed paid-up capital of
NPR 8 billion. The key focus of the Bank is always centered on fulfilling the Banking
needs of all customers by offering prompt, technology-driven Banking products and
services, thereby rendering its impression as a financial institution truly committed
to enhancing customer satisfaction, convenience and value.
11
Kumari Bank Limited
Kumari Bank
At a Glance
2001
Kumari Bank starts its
operations as an 'A' class
Banking institution
2002
Kumari Bank introduces
Internet Banking for the
first-time in Nepal
2005
Kumari Bank
introduces Mobile Bill
Payment Services of
schools/colleges
2011
Kumari Bank introduces
Receives the coveted international recognition - Mobile Cash for
mBillionth Award South Asia 2011 for its Kumari Mobile the first time in Nepal
Cash product. It is a platform that recognizes some of the
key innovative applications and services and honored
excellence in the arena of mobile communications across
South Asia.
The first of its kind, Kumari Mobile Cash pioneered the

“mobile wallet” concept in Nepal, which allows users to
store cash balances in their mobile phones. Users are
then able to deposit and withdraw cash from their Introduced "Kumari Secure Mind
mobile phones, and use the stored cash value for Home Loan" scheme, an
various purposes such as remittance, bill payments, innovative insurance scheme for
and airtime recharge, with the push of a few buttons. Home Loans.
For this, Kumari Bank Won the Manthan Award South
Asia 2011 for the concept and introduction of Kumari
Mobile Cash in Nepal, out of 481 participants across 30
categories.
12
2017
Acquired four different
BFIs : Paschimanchal Finance
Co. Ltd., Kasthamandap
Development Bank, Mahakali
Bikash Bank & Kankrebihar
Bikas Bank.
2018
Awarded with Accelerated
Transformation Award for
the shortest record-time
for successful migration of
its core-banking software.
Commenced its first Branchless

Banking (BLB) at Musikot, Rukum
with 3 BLB locations to start with.
Kumari Bank introduces its ATM

at the point of 4,410 metres above
level at Dinboche in the Everest
region.
Kumari Bank Limited
BRANCHES
20
BRANCHLESS
116
BANKING UNITS
5
EXTENSION
COUNTERS ATM
110 KBL
NETWORK
Total
Customer
Base
531,855
SUBSIDIARY COMPANIES
Kumari Capital Limited KBL Securities Limited
(Merchant-Banking) (Brokerage Company)
14
Card
Customers
79,676
Mobile Banking
Customers
222,366
POS
Terminals
740
Internet
Banking
QR Customers
(Quick Response)
System
23,321
Terminals
1,386
15
Kumari Bank Limited
16
Kumari Bank Limited
Redefining the
Kumari Culture
Kumari Bank Limited has earned a place amongst the finest financial
institutions in the country with two decades of rich history and a
reputation for excellence in customer service. Our vision, values and
practices have developed a culture that positively affects the
organization’s ability to innovate, compete, and engage employees and
customers alike.
Culture is society's way of creating social connectivity among a group of

people through a shared belief system and rituals that actualize said
beliefs. At Kumari Bank, our culture stems from the individuals who make
up the organization and our collective effort to make the bank a great place
to work for all employees and provide the best experiences for our
customers. We strive for continuous improvement in our internal and
external processes to make it easier for our employees to work with a
positive outlook so they can serve our clients and customers to the best of
their abilities. Our culture motivates us to work towards providing our
customers with the best client care in the industry.
The fact that our bank shares the name with the living Goddess: Kumari, is
inescapable to current and future customers and clients. The institution of
the living goddess is deeply embedded in the culture of the Kathmandu
Valley. The goddess is believed to be incredibly powerful; capable of
bringing good fortune to those who have faith in her. Kumari is a symbol of
transformation, power and protection. Kumari Bank, like its namesake
goddess, stands to transform lives and cities by providing financial literacy
and contribute to the economic growth of the country.
We want to empower our customers, clients and shareholders via

innovative, dynamic, quick and convenient financial services. The power of
Kumari, embedded in our name stands for our prime-motto of
enlightenment and a powerhouse of financial outreach and inclusivity.
Kumari Culture can be best understood with the following points:
Culture of Service: Our customers are King!!! Our sophisticated

technology and services are as important as the convenience they render
to our customers. We believe in creating value through quality services and
constantly changing our ways, depending on our customers’ changing
preferences.
18
Culture of Innovation: We recognize that the hallmark of our services lies
in our commitment to recognizing and taking prompt actions to meet the
changing needs and preferences of our customers. The advent of science
and technology has brought about rapid changes in the ways we bank with
rapid developments in information technology, cyber-security and digital
contactless payment mechanisms and so on. Our bank has a trusted
method of fund and asset transfer to meet the diverse range of individual
needs and preferences.
Culture of Retention: Culture can be preserved and given continuity

through active participation/implementation. We believe in sustainable
operations, that is in line with the regulatory requirements as well as the
national, international and natural laws. With proper measures of
governance, internal and external control, and a dynamic workforce in
place, the return on the funds invested in the organization, is sure to give
bountiful, long-term returns.
Culture of Performance: At Kumari Bank, we believe that we can do well

for us by doing well for others. Our culture of performance is meant to give
you a sense of reliability and satisfaction. We believe in rendering optimum
returns on your trust and investments and when you come to us, it is
because you value our approach to your grievances and problem-solving,
just as much as we value your trust in us. More than anything, we believe in
giving back to the community, we operate in through our CSR
contributions. We seek to create maximum impact out of the endeavours
we have undertaken and to render the highest-possible value to all our
stakeholders.
As a financial institution, sharing its name with the only living Goddess in
the world, we seek to establish ourselves as a slayer of all invincible forces
such as lack of financial awareness, lack of access and reach, and cultural
erasure. We will continue to enhance financial inclusivity and outreach.
This is the Kumari Culture: the culture of enlightenment; a culture of
equitable transformation across diverse communities across Nepal.
19
Kumari Bank Limited
20
MESSAGE FROM THE
CHAIRMAN
On technological innovation and transformation
The Banking sector is becoming technologically advanced with great
emphasis on innovations, data-driven solutions, advanced analytics,
digital technologies and new delivery platforms. Embracing innovation
is imperative to transforming businesses. The best way to successfully
resonate ideas and products with the public is by developing the ability to
find what the public wants; create something that is unique and caters to
their demand, while focusing on consistent delivery.
On the workforce
My vision for Kumari Bank, this year, is to increase positivity among
employees so that it permeates into service delivery. I envision higher
motivation among employees so that their talents are fully utilized through
dedication and a positive outlook towards work. Employees should strive
towards better communication, timely and hassle-free service delivery
To increase and do their best to be consistent. Good leadership, effective performance
management, empowering your team members and great communication
positivity among are key to developing a good team.
employees so On qualities that make a leader

A good leader is one who's decisive; approachable; aware of issues arising
that it permeates in the organization; spots trends and opportunities early and helps avoid
dogmatism. A good leader observes and gathers information, and opinions
into service then compares it their own vision. This leads them to be more open and
empathetic towards others in light of new information. It makes one more
delivery. considerate and prepared for alternative situations while choosing the
best course of action for the present.
On Kumari Culture
All employees must be motivated by passion for great customer service.
Kumari Culture is what the Bank is trying to achieve and deliver. Clear vision
that has been efficiently communicated to all areas within an organization,
that all team members understand and are motivated towards reaching
the company goal is crucial for realizing the transformation that KBL is
striving for.
On 2020
My vision for 2020 is for Kumari Bank to be able to distribute 20% dividends
to its shareholders. In order to be able to achieve this, it is imperative that
everybody in Kumari Bank work very hard, be positive, remain passionate,
and deliver excellent customer service. We need to be inspired by the fact
that we are improving lives and helping our customers grow financially.
As a service-oriented financial institution, we have to be continuously
improving our output, setting higher benchmarks every day with a focus
on better performance and profits. With excellent teamwork, I believe that
we will be able to realize this 2020 vision.
Sincerely yours,
Amir Pratap JB Rana
Chairman
21
Kumari Bank Limited
A good leader observes, gathers

information and opinions, then
compares with it their own vision.
This leads them to be more open
and empathetic towards others in
light of new information.
22
23
Kumari Bank Limited
BOARD OF
DIRECTORS
24
25
Kumari Bank Limited
BOD PORTFOLIO
Mr. Amir Pratap JB Rana Mr. Krishna Prasad Gyawali

Chairman Director (Promoter Group)
• Profession: Entrepreneur, • Profession: Businessperson

Businessperson • Professional Experience: More than 25
• Professional Experience: More than years of experience in Travel & Tours
25 years of experience in industry and and remittance sector
busines • Business Associations:
• Business Associations: i) Chairman – Advance Money
i) Chairman – Universal Group Transfer P. Ltd.
ii) Chairman – Thoppal Khola ii) Managing Director– Union
Hydropower Nepal (P.) Ltd. International Tours and Travels P.
Ltd.
iii) Director – Manang Air P. Ltd.
iv) Director – Thamel Hotel and Suite P.
Ltd.
26
Mr. Mahesh Prasad Pokharel Dr. Prof. Ganesh Prasad Pathak Mrs. Anuradha Chaudhari
Director (Public Group) Independent Director Director (Public Group)
• Profession: Investor • Profession: Lecturer • Profession: Lecturer

• Professional Experience: More • Professional Experience: More • Professional Experience: More
than 20 years of experience in than 30 years of experience in the than 13 years of experience in the
investment sector Educational sector Educational sector
• Business Associations: • Professional Associations: • Professional Associations:
i) Chairman – Utkarshak i) Associate Professor – i) Lecturer – NSCS Higher
Investment P. Ltd. Tribhuwan University Secondary School
ii) Director – Nasha Hydropower ii) Chairman – Sectoral
P. Ltd. Management Subject
Committee
ii) Member - Campus Executive
Committee, Nepal Commerce
Campus
27
Kumari Bank Limited
28
MESSAGE FROM THE
CEO
Ladies and Gentlemen,
Kumari Bank Limited has entered a new era of innovation,

proactive approaches, novelty in service presentation, and neo-
generational advances through digital Banking offerings – which,
as a combined effort is being presented as Kumari Culture.
Kumari Culture is a brand promise – we will always be on our toes

to provide best of Banking services from all branch networks,
online or offline, be it the most rural branch or through our
corporate office. Kumari Culture is a brand promise – we will keep
our customers at the center of our service and listen to each
and every query that has to be put up, resolve any issue for the
provision of smooth Banking activity, and take up suggestions
from our clientele so that operation becomes better and more
horizontal in the days to come.
Kumari Culture is a brand promise – which entails that we will not

leave anyone behind. With hundreds of branches and thousands of
staff members working in cohesion from East to West and North
A crucial aspect of Kumari to South, we will ensure that everyone works as a single unit, an
oiled machine functioning to make this organization thrive.
Culture is its dynamic Likewise, Kumari Culture is a brand promise – which attempts
workforce that’s positive, to keep track of rapidly changing world, and hence introduce all
and every Banking idea and financial innovations that have been
willing to change, develop proven across the globe.
and grow with the Our future is spread out to encompass all Nepalese into this
culture. Banking practices begin when we understand that saving
organization. for the future is imminent. We want to help all Nepalese start young
towards bringing this habit into cultural practice. Kumari Bank
, thus works more towards the younger masses, whilst bringing
in products that can prove lucrative even to those who have had
experience with Banking one way or the other. In this document,
you can see some of the progresses achieved by Kumari Bank in
the past and the running year. This attempt towards novelty will
continue in the days to come. I vouch for that.
Future days for Kumari Bank are more open, more proactive,
and more aggressive from the marketing front also. We realize
that with changing times, the young generation accepts only
the existent and the adaptable. Kumari Bank wants to become
more adaptive – whether through its digital advents or through its
interpersonal services, whether through its customer service or
through its corporate culture.
I welcome you all to the new era of Kumari Culture. Hope that the
days ahead are as bright as it is today.
Thank You.
Sincerely yours,
Surender Bhandari
Chief Executive Officer
29
Kumari Bank Limited
ON TECHNOLOGY ON DAILY
VS TEAM RITUALS
Every day is a challenge for me. In my opinion, people thrive
The market is very competitive at this point in in a challenging environment. Without challenges, life will
time, therefore, it is critical for Banks, today, to be monotonous. I personally enjoy a high-pressure working
have a very capable workforce. It needs a vibrant environment because it brings out the best in me. Change is
workforce that knows how to transform the a constant and a dynamic process, where people are on their
Bank from a traditional setup to a digital-friendly toes, lead to progress.
environment. As it goes, “An organization can be
as good as its people are”. Therefore, a capable I’m a morning person. I love spending time with my family and
workforce that is open to technological innovation am a proponent of quality rather than quantity. As I begin my
is the best-case scenario in the Banking industry. day, I surround myself with people that I enjoy working with.
I like being around people who, like myself, enjoy sharing
diverse ideas and experiences. Otherwise, I don’t have a
concrete schedule on how to go about my day. I like surprises
so I don’t plan meticulously. I take things as they come, and
that’s how I prefer things in life. I do, however, have long and
short-term goals.
30
ON LEADERSHIP ON TECHNOLOGY MEETING
To the best of my knowledge and understanding, there are
three types of leaders: one who makes all the decisions for
PEOPLE
their team to follow; a leader who always follows the team’s When we have a vibrant workforce with a strong and positive
decisions; a leader who makes a collective decision with their attitude, that workforce will be capable enough to deliver the
team to achieve the best results. I’m an advocate of the third. objectives of the organization while serving the customers.
As a team, members should be on the same page about their Sadly enough, this area (customer care system/framework) in
comprehensive mission and vision. today’s extent, has suffered to a large extent. With technology
playing such an integral part of our lives, it has permeated to
For me, a competent leader is someone who can inspire customer interfaces, as well. However, we have not been able to
others to perform, excel and deliver. I try to empower people strike a balance in integrating it, in a way that they and human-
around me and give them a chance to do their personal best, aspect of customer-handling go hand-in-hand to enhance the
instead of doing everything by myself. As a leader, I ensure overall customer convenience and experience. I am yet to see,
that the people on my team have a positive attitude and such instances of excellent customer care in practice. What we
inclination to bring out their talent and capabilities. I work need now is to learn to how to integrate modern technology into
with my team to ensure how I can drive them to achieve the the traditional customer-service setup.
best results.
ON KUMARI CULTURE
ON ORGANIZATIONAL For me, Kumari Culture is a culture of a strong workforce that
STRENGTH respects everyone, regardless of their ranking, position or
background. A crucial aspect of Kumari Culture is its dynamic
The strength of a Bank lies in its robust structure, strong workforce that’s positive, willing to change, develop and grow
foundations, efficient delivery system and a driven workforce. with the organization.
On top of these, a strong risk-measurement dynamic is
necessary too. Once these are in place, the Bank can
gradually earn the status of one of the finer institutes and ON DIGITAL TRANSFORMATION
move towards market-leadership. This is what I’ve been
advocating throughout: we need to be strong on all fronts, Banks are going to be very competitive and crucial to the
so that tomorrow, we can stand, on our own, as a leading economy in the days to come. So, one important move for
financial institution. Kumari Bank is to rapidly transform itself into a digital Bank
for which the blueprint of costs is already in place. These days,
people want information as a service at their fingertips and
that can only happen when robust digital mechanisms and
frameworks are in place. Nepal’s current demographic has 40%
of people under the age of 40 who belong to the digital age.
Thus, catering to them is something we look forward to in the
days to come.
ON EQ VS IQ
Keeping emotions in check basically comes down to choosing
between the matters of head vs heart. You must first distinguish
if it’s the emotions of the head or the heart. Your head might
lead you to have false or misleading conceptions, sometimes
but if you can recognize your inner voice, i.e. the voice of your
heart, it will seldom let you down. Your inner voice is the divinity
within you and will always be going to prompt you to do the right
thing. So, work on your conscience and the rest will just follow.
MOVING FORWARD
As I’ve said before, we have a very vibrant and dynamic
workforce at this point in time. We’re all engaged in transferring
the Bank to a new sphere altogether. Our goals are that we want
to make our Bank one of the most digitally advanced Banks in
Nepal, in the years to come. Our growth volumes in the past few
years have been remarkable and I’m sure, all the stakeholders
are looking into that very closely. At the same time, the risk
perception or risk-management framework is also paramount
to our business philosophy. Good governance and transparency
are going to be very critical to us, so whatever we do is going
to be in full compliance with it. It’s just a matter of time until
we will see Kumari Bank standing robust as one of the leading
financial institutes in the country.
31
Kumari Bank Limited
Executive
Management Team
Mr. Angir Man Singh Mr. Ram Chandra Khanal Mr. Anuj Mani Timilsina Mr. Surender Bhandari
Chief Risk Officer Chief - Operations & Deposit Chief Business & Operating Officer Chief Executive Officer
Marketing
32
Mr. Rajib Giri Mr. Umesh Singh Bhandari Mr. Manish Timilsina
Chief Marketing & Strategy Officer Chief Business Support Officer Chief - Credit
33
Kumari Bank Limited
Management Team
Mr. Rajib Giri Mr. Ram Chandra Khanal

Chief Marketing & Strategy Officer Chief - Operations & Deposit Marketing
34
Ms. Sipa Regmi Ms. Rena Rijal
Head - Corporate Head - Deposit Marketing
Communication & CSR &
Institutional Banking
35
Kumari Bank Limited
Management Team
Mr. Bikas Khanal

Head - Credit Risk Mangement
Mr. Angir Man Singh

Mr. Nirmal Kumar Khatiwada Chief Risk Officer
Head - Operations Risk Management & Compliance
36
Mr. Narendra Prasad
Chhatkuli Mr. Rajesh Shrestha
Chief - Legal, Shares & CEO - Kumari Capital
Company Secretary
Mr. Ganesh Kumar KC

Head - Internal Audit
Mr. Ishwor Gurung
Deputy Manager - Internal Audit
37
Kumari Bank Limited
Management Team
Mr. Prabin Kumar Jha

Head - SME Credit & Deprived Sector Lending
Mr. Rohit Singh Mr. Milan Kuinkel

Head - Human Resources Deputy Manager - Infrastructure &
& Central Logistics Project Financing
38
Mr. Bishwa Mani Regmi
Head – Retail Credit and BM –
Putalisadak
Mr. Nabin Raj Poudel Mr. Manish Timilsina

Regional Head - Gandaki Province Chief - Credit
39
Kumari Bank Limited
Management Team
Mr. Umesh Singh Bhandari

Chief Business Support Officer
Mr. Narayan Prasad Ghimire

Head - Information Technology
Ms. Rosita Shah

Branch Manager - Thamel
40
Mr. Anish Tamrakar
Chief - Digital Banking
Mr. Binod Narasinha

Shrestha
Head- Research, Product
Development and Special
Projects
Ms. Smriti Joshi

Branch Manager - Chabahil
41
Kumari Bank Limited
Management Team
Mr. Anuj Mani Timilsina

Chief Business & Operating Officer
Mr. Sanjeeb Sainju Mr. Manish Shrestha

Head - Recovery, NPA & Debt Service Management Branch Manager - Newroad
42
Mr. Bhusan Tandukar Ms. Namita Shakya Mr. Deepak Khanal
Head - Corporate Credit Head- Central Operations Regional Head
and Sudurpashchim Province
Infrastructure & Project Financing
43
Kumari Bank Limited
Management Team
Mr. Sudarshan Rana

Branch Manager - Pokhara Mr. Pankaj Rana
Head - Card Department
Mr. Biswas Raj Aryal

Deputy Manager - Corporate Credit
Mr. Siddhartha Singh

Head - Province No. 2
44
Good management is the
art of making problems
so interesting and their
solutions so constructive
that everyone wants to get
to work and deal with them.
- Paul Hawken
45
Kumari Bank Limited
Future
Economic
Outlook
Current and Future Economic Outlook-World
As per the World Economic Outlook Report 2019 global growth is forecasted to be 3% in 2019,
escalating to 3.5 percent in 2020. Similarly, Banking and Capital Markets Outlook Report state
that the global Banking system is not only bigger and profitable, but also more resilient
than at any time in the last 10 years. According to The Banker’s Top 1000 World Banks
Ranking for 2018, total assets reached $124 trillion, while Return on assets (ROA) stood
at 0.90% only. Similarly, Tier 1 capital ratio as a proportion of assets rose to 6.7%,
significantly higher than in 2008.
Recovery since the financial crisis has not been uniform across regions. US Banks,
compared to their European counterparts, are ahead on multiple measures.
Aggressive policy interventions and forceful regulations helped propel US
Banks to health more quickly. And more recently, favorable GDP growth, tax
cuts, and rising rates have further bolstered the state. Total Assets, Capital
Levels, ROE, and other metrics including NPL, US Banking seem robust.
For Banking industry in European on the other side is going through the
Structural deficiencies, overcapacity, low/negative interest rates. Also, the
absence of a pan-Banking regulatory agency has contributed to European
Banks experiencing persistent profitability challenges. Despite the
challenges, ROE for the Western European Banks in the top 1,000 Banks
globally grew to 8.6%in 2017, compared to 5.5% in 2016 thereby showing
some improvement. In the Asia Pacific (APAC) region, the growth of
Chinese Banks shows stunning development achieved in the last 10 years,
which has surpassed that of the European Union (EU) in terms of size and
profitability. However, the concern with economic growth and the tariff
war with the United States are affecting prospects. Meanwhile, Japanese
Banks, which escaped the financial crisis, have long suffered the effects of
slow domestic growth and low/negative interest rates.
Despite an overall optimistic picture for the global Banking industry,

uncertainties loom on the horizon. Real GDP growth forecasts from the IMF point
to a deceleration in all regions, including China and Emerging Asia. In the latest
forecast, Deloitte economists are predicting a 25 % probability of a recession in the
United States in 2019. In this scenario, tariffs and dilution of the stimulus effect could
weaken the US economic growth in late 2019 or early 2020.
GROWTH PROJECTIONS
3.6 3.3 3.6
2.2 1.8 1.7
2018 2019 2020 2018 2019 2020 2018 2019 2020

Global Advanced Economies Emerging Markets &
Economy Developing Economies
World Economic Outlook Report-IMF 2019, July 2019
46
GLOBAL Real GDP growth rate (Regionwise)
6.8
5.1 5 5
3.6 4.2
3.2
2.1 2.1 2.2
1.6
1.1 1.2
nd 0.3
n)
c
n
ica
sia
a
ica
ica
sia
sia
pe
e
e
ifi
ric
io
op
io
ala
ro
tA
ro
er
hA
A
er
er
g
ac
Af
ur
Re
Eu
Re
st
m
Eu
m
m
Ze
dP
as
nE
ut
th
Ea
lA
hA
A
a
rn
he
w
So
ric
an
st
th
er
ra
No
Ne
te
ut
ut
Ea
r
st
Af
nt
ia
No
es
So
So
nd
Ea
As
Ce
le
W
dd
aa
Mi
li
ra
World Economic Outlook Report-IMF 2019, July 2019

st
Au
Current and Future Economic Outlook-South Asia

Global growth rate has been projected by the World Bank to be moderate
from a downwardly revised 3% in 2018 to 2.9% in 2019 and 2.8% in
2020-2021. Against this noticeable slowdown in the global economy,
the South Asian Region remained one of the fastest growing
economies in the world. Growth rate in the South Asian region has
been projected by the Asian Development Bank to edge up by 0.1
percentage point, from 6.7% in FY 2018 to 6.8% in 2019 and 6.9%
in 2020.
According to the ADB, Nepali economy has remained solid with

6.3 percent growth in FY 2017-18, despite unfavorable climate
which adversely affected the agricultural sector. The boost in
Nepalese economy was due to regular remittances and a robust
industrial sector, owing to the increase in manufacturing
activities. Despite the global downfall of economic growth,
improvements were seen among most of the least developed
nations, and Nepal is no exception to this. External economic
conditions have left the growth of the least developed countries
largely untouched. According to the World Bank, growth among
the least developed countries was expected to increase slightly
in FY 2018 to 5.6%, and is expected to reach 5.9% in FY 2019,
averaging nearly 6.3%.
47
Kumari Bank Limited
Current Economic Outlook -Nepal

Nepal has made some notable socioeconomic progress in recent years. Literacy rates have increased, poverty rates
have declined, gender disparities have narrowed, and social inclusion has improved. Nepal now strives to achieve the
Sustainable Development Goals and to graduate from the least-developed country status-Asian Development Bank
Macro Economics of Nepal (2018/19)

According to the macroeconomic situation report by NRB, GDP is
estimated to have grown by 7.1% during 2018/19 compared to growth
of 6.7% during previous year. Consumer price inflation has increased
from 4.2% to 4.6% this year. Total trade deficit has widened by 13.5%
to a value of NPR 1,321.43 billion. The export-import ratio declined
from 6.5% to 6.8%. BOP deficit escalated from NPR 0.96 billion to
NPR 67.4 billion this year. The remittance inflows increased by 17.5%
to reach a value of NPR 879.27 billion, the growth of which was 8.6
% during the previous year. The gross foreign exchange reserves
decreased to NPR 902.44 billion, which was NPR 989.4 billion a year
ago.
48
Monetary Situation of Nepal (2018/19)
• Deposit Collection : Deposits at Banks and Financial Institutions (BFIs)
increased by 18% compared to an increase of 19.2% in the previous year.
• Credit Disbursement : Credit to the private sector from BFIs increased
by 19.4% in FY 2018/19, compared to a growth of 22.5% during the
previous year. The Banking sector of Nepal since last couple of years has
witnessed a continuous growth of deposit and credit in an unbalanced
way. This has resulted in the recurrence of credit crunch in the Banking
industry which was reflected in this fiscal year as well.
• Liquidity Management : During FY 2018/19, NRB mopped up NPR 100.35
billion liquidity through open market operations. Of which, NPR 79.65
billion was mopped up through deposit collection auction and NPR 20.70
billion through reverse repo auction on a cumulative basis. NRB injected
NPR 360.91 billion liquidity through open market operation in the review
period. BFIs utilized SLF of NPR 146.28 billion during this year.
• Interest Rates : The weighted average 91-day Treasury bills rate
increased to 4.97% in 2018/19 from 3.74% a year ago. The weighted
average inter-Bank transaction rate among commercial Banks increased
to 4.52% in mid-July 2019 from 2.96% a year ago.The average base rate
of commercial Bank s decreased to 9.57% in 2019 from 10.47% a year ago.
Weighted average deposit rate and lending rate of commercial Banks
stood at 6.60% and 12.13% respectively in mid-July 2019.
• The total number of BFIs licensed by NRB increased to 171 in 2018/19 from
151 in 2017/18. 2018/19, 28 commercial Banks, 32 development Banks,
24 finance companies, 90 microfinance financial institutions and 1
infrastructure development Bank are in operation. The number of BFIs
branches reached 8,686 in 2018/19 from 6651 in 2017/18.
Future Economic Outlook-Nepal
Real Sector
Under the baseline scenario (i.e. without policy interventions and shocks), Real
GDP growth in FY 2020 is forecasted to be 6.02%and is expected to decline to
5.77% in FY 2021. Similarly, consumer price inflation is forecasted to be 4.76%
in FY 2020 and 4.74% in FY 2021.
Inflation Forecast
Consumer price inflation is forecasted to remain at 4.76% in FY 2020 and
4.74% in FY 2021. The inflation forecast is slightly higher than the average
inflation of 4.2% in the first eight months of FY 2018/19.
(Based on NRB Macroeconomic Situation 2019 and Nepal Economic Outlook

Report 2019)
49
Kumari Bank Limited
2
Financial
Review
1. Performance Review FY 2075-76 51

2. Financial Position Indicators 53
3. Financial Performance Indicators 57
4. Horizontal and Vertical Analysis 66
5. Market Capitalization 69
6. Market Price Sensitivity Analysis 70
7. Value Added Statement 71
8. Contribution to Nepalese Economy 72
9. Future Projections and Prospects 74
50
Performance
Review
FY 2075-76
Figures in Million
Deposit
Targeted Actual
Particulars Variance Variance %
FY 2075-76 FY 2075-76
Term 34,920 45,565 10,645 23%
Saving 22,945 18,137 (4,808) -27%
Call 19,624 14,613 (5,011) -34%
Current 3,234 6,088 2,854 47%
Total 80,722 84,403 3,681 4%
FY 2075-76 remained a year with a robust growth in terms of business volume. Targeted deposit of total of NPR 80.72 billion
crossed and reached NPR 84.40 billion which comes to be around NPR 3.6 billion in excess than was targeted. We were able to
collect additional NPR 14.75 billion in deposits this year. The uptrend was supported by increased Term Deposits, followed by
current deposits. The resulted increase is due to the attractive interest rates offered, effective marketing and promotional
strategies, other facilities extended, unique blend of deposit schemes, and other succesful promotional campaigns.
However, the savings deposit varied than expected; as Nepalese deposit market is highly interest sensitive; due to which in
the given period, most of the saving deposits turned to term-deposits with short-term maturities. Although, we were able
to grow the number of saving accounts by 54,065 active customers in net; the total saving deposit showed negative variance.
Figures in Million
Loans and Advances
Targeted Actual
FY 2075-76 FY 2075-76
Corporate 26,929 39,065 12,136 45%
SME 18,360 14,696 (3,664) -20%
Retail 21,246 18,947 (2,299) -11%
Deprived 3,687 3,875 188 5%
Total Loan 70,222 76,583 6,361 9%
Figures in Million
Investment
Targeted Actual
FY 2075-76 FY 2075-76
Investment 14,530 14,435 (95) -1%
We were able to extend total loans of NPR 76.58 billion this year which is NPR 6.3 billion, higher than targeted. During this fiscal
year, we extended an additional NPR 13.84 billion to different loan clients. The surge in loan volume is due to the effective business,
marketing and promotional strategies, attractive interest rates and other services offered, loyal customer base, and so on. Likewise,
we almost even managed to reach the targeted-investment volume with a slight variation of NPR 95 million only from the budget.
51
Kumari Bank Limited
Figures in million
Particulars Targeted Actual Variance Variance in %

FY 2075-76 FY 2075-76
Interest income 8,597 9,099 501 6%
Interest expense 5,642 6,229 586 10%
Net interest income 2,955 2,870 (85) -3%
Net Fee and Commission Income 606 434 (172) -28%
Other Operating and trading income 241 344 103 43%
Total Operating Income 3,802 3,648 (154) -4%
Human Resource Expense 929 782 (148) -16%
Operating Expense 636 675 38 6%
Operating profit before LLP 2,236 2,192 (45) -2%
Loan Loss Provision (LLP) 92 229 137 149%
Non operating income 50 11 (39) -78%
Profit before bonus 2,194 1,973 (221) -10%
Provision for staff bonus 199 197 (2) -1%
Provision for tax 598 546 (53) -9%
Net profit 1,396 1,230 (166) -12%
With an increased loan-volume than budgeted during the year in review, the resultant increase in volume contributed towards an
excess interest income than budgeted (with an increase of NPR 501 million, 6% variance than budgeted). Similarly, the higher interest
expense was due to the surge in deposit volume than targeted (with an increase of NPR 586 million, 10% variance than budgeted).
As for the growth target relating to non-fund based business (LC, guarantees, etc), we were not able to reach the target, during
the year in review, which shall be taken care of in the years ahead. With appropriate investment strategies in place, we were able
to achieve high forex-related income growth during the year. The changes pertaining to actual costs, in comparison to the HR-
related costs varied; as the assumption during planning of budget was derived based on opening of branch network relatively at
the beginning of the fiscal year, but due to unavoidable factors the new setup were completed on mid or later part of the fiscal
year, which resulted in lower HR-related cost than budgeted. On the other hand, operating expenses were in slight deviation than
budgeted-expenses. Impairment cost relating to loans and advances increased significantly than projected which is due to growth
in the volume of business along with liquidity scenario in the market. Also, for good representation of risk-management in disbursed
loans; Bank had provided additional provision charges under watchlist based on qualitative asset as per NRB guidelines. Such
cushion provision will provide more control over risk-factors associated with Bank lending. To conclude with, the bottom line, i.e.
profit, remained lower than targeted i.e. by 12%, due to increased costs and low fee-based income than targeted.
52
Financial
Position
Indicators
Equity
Equity is the value of the business left to owners paying off the liabilities. Total equity is the residual interest of the owners towards
the asset after subtracting the value of all the liabilities. The amount accumulated in equity can be from the money originally
invested and all the other investments that are made in the company after the initial payment and through the earnings that Bank
had retained over a period of time through its operations.
With the part of time & growth of business, need of capital is further assessed. Bank has been able to increase equity through
issue of shares (bonus or right) and on the other hand, also retained the amount for further investment. As prescribed by Nepal
Rastra Bank , Banks are required to maintain mandatory as well as other reserves. In addition to capital contributed by the equity
holders, the amount set aside from the profit or surpluses to reserve belongs to the owners that helps in further strengthening
the financial position of the Bank. Therefore, accumulated profit every year is transferred to such reserves which further increase
the equity of the Bank .
Equity 11.72
Billion
Million
12,000
11,500
11,000
2,095
10,500
10,000
1,795
9,500
884
9,000
55
8,500
8,000 1,527
1,139
7,500
55
7,000
6,500 1,149
6,000 -
5,500 8,686
5,000
4,500 7,163
4,000 5,969
747
3,500
3,000 367
713
-
2,500 281
- 2,699
2,432
2,000
071/72 072/73 073/74 074/75 075/76
Reserves 367 747 1,139 1,795 2,095
Retained earnings 281 713 1,149 1,527 884
Share premium - - - 55 55
Share capital 2,432 2,699 5,969 7,163 8,686
Looking five years back at its equity history; the Bank has gradually increased its equity size. From NPR 3.08 billion in FY 2071/72, the
equity base is NPR 11.72 billion in FY 2075/76, i.e. increase in equity-base is aiding the Bank's business expansion ( 2.81% of growth
within a five-year period).
53
Kumari Bank Limited
Paid up capital
Paid up capital of bank was NPR 8.68 billion on

FY 2075-76 which shall reach NPR 9.55 billion Paid Up Capital 8.68
Billion
after capitalization of 10% bonus shares upon
approval by the 19th AGM of the bank held on Million
11th Ashwin 2076. Paid up capital of the Bank, 10,000 8,686

7,163
also considered as measure of financial 8,000 5,969
strength and stability has been increasing over 6,000
the years with the growth of the business. Over 2,432 2,699
4,000
the years, Bank has been issuing bonus and
right shares and has also been able to meet the 2,000
minimum paid-up capital threshold prescribed -
by Nepal Rastra Bank. 71/72 072/73 073/74 074/75 075/76
Total Shares
86.86
Million
Total Shares
Million
100.00 86.86 Total number of shares remained 86.86 million as

71.63
on FY 2075-76, which is subject to increase after
80.00 59.69 issuance of bonus shares of 10%. The total
60.00 number of shares will then reach 95.54 million
24.32 26.99
40.00 after capitalization of bonus shares.
20.00
-
71/72 072/73 073/74 074/75 075/76
Public and Promoter Shares
As on Asadh end 2075/76, Bank has a total share capital of NPR 8.68 billion, ownership of which rests with Promoter and Public
shareholders. Ownership of NPR 4.24 billion rests with the public shareholders and NPR 4.42 billion with the promoters.
Shareholding Pattern
Promoters General Public in '000

Particulars No. of Shares Amount (NRs.)
49% General Public

Promoters
42,594
44,261
4,259,463
4,426,109
Total 8,685,573
54
Reserve and Surplus
They are the appropriation of profit or other

Reserve and Surplus 2.09
Billion
surplus to further financially strengthen the
financial position of the Bank for any
Million unforeseen losses/claims that may arise in
2,095 future. Bank has reserve and surplus of NPR
2,500
1,795 2.09 billion as on FY 2075/76. The Reserves,
2,000 except reserves as per regulatory requirement
1,139
1,500 can be utilized for distribution of dividend.
1,000 747
367
500
-
071/72 072/73 073/74 074/75 075/76
Deposit
Bank has managed to maintain a deposit of 84.4

NPR 84.4 billion in FY 2075-76 with a growth of Billion
21.18%, compared to NPR 69.65 billion in FY

Deposit
Million
2074-75. Deposit mix as of FY 2075-76 100,000
constituted NPR 45.56 billion (53.98%) as fixed 84,403
deposit, NPR 18.13billion (21.49%) as saving, 80,000 69,651
NPR 14.61 billion (17.31%) as call deposit and
NPR 6.08 billion (7.21%) as current deposits. It 60,000 52,037
is on an increasing trend over the years with 33,422 37,951
40,000
increasing business volume. Deposit alone
contributes to the highest portion of the 20,000
Bank’s liability i.e. 90.18% of total liability of the
Bank comprises of deposit liability as on FY -
2075-76. 071/72 072/73 073/74 074/75 075/76
Loan and Advance 76.58

Billion Loan
100,000 Million
Bank holds a total loan portfolio of NPR 76.58
76,584
80,000 billion on FY 2075-76 with a 22% growth
62,741 achievement, compared to NPR 62.74 billion in
60,000 the previous year. Segmentwise loan and
45,195
advance as of Ashad end 2076 constitute NPR
40,000 27,070 30,111 39.06 billion (51.01%) towards corporate loan, NPR
18.95 billion (24.74%) as retail loan, NPR 14.7
20,000
billion (19.19%) as SME loan and NPR 3.87 billion
- (5.06%) as deprived loan.
071/72 072/73 073/74 074/75 075/76
55
Kumari Bank Limited
Investment
9.3
Billion
Investment
Another important business segment of Million
banking is the treasury. Investment of bank in 10,000 9,022 9,341
FY 2075-76 totaled NPR 9.3 billion, out of which 7,743 8,032
NPR 8.94 billion add up to the investment in 8,000
bonds and treasury bills and NPR 173 million in
6,000 5,299
treasury stocks. There has been a growth of
4% compared to the previous year of
investment of NPR 9.02 billion. 4,000
2,000
-
071/72 072/73 073/74 074/75 075/76
Total Assets
105.3
Billion
Total Assets Total Assets includes every current and
Million non-current asset having an economic value,
120,000 105,311 which provides economic benefits to the
Bank. Total Assets has increased from NPR
100,000
82,723 82.72 billion to NPR 105.311 billion in FY 2075-76
80,000 depicting the total increase in size of 27%. The
60,993
major proportion of total assets is constituted
60,000
42,417 by loan and advance worth NPR 76 billion (72%
- 37,375
40,000 of total assets).
20,000
071/72 072/73 073/74 074/75 075/76
56
Financial Performance Indicators
Net Interest Income (NII) 2.86
Billion
Net interest income is a financial performance
Net Interest Income
Million
measure that reflects the difference between the 3,500
revenue generated from a bank's interest-bearing 2,869
3,000
assets and expenses associated with paying off
its interest-bearing liabilities. During FY 2075-76, 2,500
2,006
NII amounted to NPR 2.86 billion, which was 2.06 2,000
billion during previous year with a growth of 43%. 1,500 1,175 1,297
NII alone contributes to approx. 47% of profit of 926
the Bank. 1,000
500
-
071/72 072/73 073/74 074/75 075/76
Other Operating Income
809 Other operating income of the Bank reached a

Other Operating Income Million total of NPR 809 million with a growth of 27%,
compared to NPR 637 million in the previous year.
1,000 Million
809 It includes fee and commission income of 465
800 million (58%), trading income of 258 million (32%)
637 and other operating income of 84.9 million (10%).
600 Out of fee and commission income, loan
389 administration fee alone covers 40% of the
400 298 339 fee-based income. Similarly, trading gain and loss
on foreign exchange transaction is included under
200 the trading gain. Likewise, other operating income
constitutes majorly of the foreign exchange
-
revaluation gain (26%), dividend (11%), gold and
071/72 072/73 073/74 074/75 075/76 silver related income (13%) and other operating
income of the Bank.
Net Profit
1.23
Net Profit Billion
Bank has managed to earn a net profit of NPR 1.23 Million
billion during FY 2075-76. In the previous year, 1,400
1,230
Bank’s net profit was NPR 1.04 billion with a
1,200
growth achievement of 18%. Business growth 1,046
and expansion has resulted in the profit growth of 1,000
the Bank.
800 716
660
600
395
400
200
-
071/72 072/73 073/74 074/75 075/76
57
Kumari Bank Limited
Operating expense
1.65
Billion
Operating expense has reached NPR 1.65 billion in Operating Expenses
FY 2075-76 with a growth of 35%, compared to the 2,000 Million
previous year. With the increased number of 1,653
branches and provincial offices, and relocation of
branches, the overall operational expenses have 1,500
1,228
also increased. Total operating expenses of NPR
1.65 billion constitutes the personnel expense of 1,000
NPR 978 million (59%), other operating expense of 581 659
538
NPR 554 million (34%) and NPR 120 million (7%) of 500
depreciation and amortization expense.
-
071/72 072/73 073/74 074/75 075/76
Earning Per Share (EPS)
EPS depicts per rupee earning that can be made

Basic EPS
NPR 14.81 from each of its stock. An important financial
measure that indicates the profitability of the
Bank, it is obtained by dividing the company’s net
26.53 income by the total number of outstanding shares.
30.00 EPS of the bank since the last three years hovers
16.24 14.54 14.81 around 15% on average. Slight fluctuations in EPS
20.00 13.29
were noticed due to increment in the stock raised
10.00 to meet the minimum capital requirement.
0.00
071/72 072/73 073/74 074/75 075/76
Market Value per Share

Market Value Per Share (MPS)
NPR 220
380
Market Value Per Share denotes the price that a 400
327.00
stock can be readily bought for or sold in the
current market place. Often denoted by “going 300
199.00 220.00
price”, it reached NPR 220 during the end of FY
200
2075/76, which was NPR 199 at the end of FY
2074-75, depicting a 16% growth in the share price
100
on year to year closing price basis. Contrary to the
-
rise in price during FY 2075-76 of our Bank, the 0
overall share market has been experiencing a
071/72 072/73 073/74 074/75 075/76
rough time and the price has been in a declining
trend over the years. Overall market has been
demonstrating its volatile nature to the utmost. The “bullish” (appreciating) trend share market in Nepal has become
“bearish” (depreciating) these days. Reaching over 1800 points at its peak, it has now plummeted to around 1140 points.
One of the reasons could be the inability to meet the desired developmental works by government (slow spending),
increasing imports, and stringent monetary policy with regards to Margin Lending.
58
Price Earning Ratio (P/E Ratio)
Price Earning Ratio 14.85
The P/E ratio helps investors determine the
market value of a stock as compared to the
company's earnings. A high P/E could mean that a
stock' is priced high relative to its earnings and is 30.00 23.41 24.61
possibly overvalued. Conversely, a low P/E might 20.00 14.85
13.68
indicate that the current stock is priced low
relative to its earnings. Bank has the P/E ratio of 10.00
14.85 as on FY 2075-76 with 13.68 on FY 2074-75, 0.00
0.00
which is low compared to market average
indicating the stock price is undervalued to some 071/72 072/73 073/74 074/75 075/76
extent.
Dividend (bonus) on share capital 10% Dividend (bonus share)
With the increased number of shares through the

issuance of right and bonus shares, the
outstanding share capital tends to change, due to
25.00% which the dividend pattern of the Bank also
21.00%
20.00% changes. The timing and effect of capitalization of
such bonus and right shares tend to affect the
15.00% 12.75% dividend distributed, due to which we have
11.00% 10.00%
8.50% expereinced a fluctuating trend on dividend.
10.00% Dividend for FY 2075/76 is 10% which is 18% higher
5.00% than 8.5% dividend in the previous year.
0.00%
071/72 072/73 073/74 074/75 075/76
Interest Income/ Loans and advances Interest Income/Loans & Advances 11.96%
The ratio depicts yield on loans and advances i.e. 15.00%
interest income earning on loan and advances. 11.96%
10.91%
The ratio is in an increasing trend and has reached
8.81% 8.56% 8.36%
11.96 % in FY 2075/76, which was 10.91% during 10.00%
previous year with a growth of 10%. The possible
increase is due to the increase in the interest
rates along with growth of the Bank’s business 5.00%
volume.
0.00%
071/72 072/73 073/74 074/75 075/76
59
Kumari Bank Limited
Employee expense/ Total operating expense Employee Expenses/Total 47.26%

Operating Expenses
The ratio indicates the employees cost contribution to
the total operating expense. There is a decremental 60.00%
trend in the ratio due to increments in other operating 54.48%
55.00% 52.83%
costs at a higher rate than that of employee expense 51.29% 51.37%
increment. The ratio is 47.26% in FY 2075/76, which 47.26%
was 51.37% during previous year with a decline of 8%. 50.00%
With the increased number of branches and provincial 45.00%
offices, and relocation of branches, the overall
operational expenses is in an increasing trend with 40.00%
comparatively lower increments in personnel 071/72 072/73 073/74 074/75 075/76
expenses.
Interest Expense on Interest Expense/Total Deposit and Borrowings

Total Deposit and Borrowings
7.30%
The ratio indicates the total interest expense
incurred by the Bank for obtaining funds through
6.85% 7.30%
8.00% deposits and borrowings. Higher rate indicates
higher interest offered to the accountholders and
6.00% 4.47% 4.51% borrowers for collection of fund. Due to the liquidity
4.00%
crisis faced during the year, higher interest rates
4.00%
(upto 13%) were offered to customers, due to which
2.00% Cost of Fund increased during the year. The Interest
Expense to Total Deposit and Borrowings reached
0.00% 7.3% during FY 2075-76 which was 6.85% in the
071/72 072/73 073/74 074/75 075/76 previous year.
Exchange Fluctuation Gain/Total Income Exchange Fluctuation Gain/Total 7.81%

Income
This ratio indicates the contribution of exchange
income on total income of the Bank. With the
increase in investment (treasury business), the 10.00% 7.81%
7.79% 7.20%
trading and revaluation gain has been increasing. 8.00%
5.71% 6.21%
During FY 2075/76, such exchange gain
contribution to total income amounted to 7.81 % 6.00%
with 6.2% percent contribution during FY 2074-75, 4.00%
signalling a 26% growth compared to the previous
2.00%
year.
0.00%
071/72 072/73 073/74 074/75 075/76
60
Staff Bonus/ Total Employee Expenses
Staff Bonus/ Total Employee 25.25%
The ratio explains the percentage of employee Expenses
expense that is provided as bonus to employees.
The percentage is tentatively around an average
of 24%, no such highs and lows, compared to the 30.00% 24.91% 24.41% 23.68% 25.25%
last few years, signalling a proportionate bonus 16.60%
expense in comparison to the total employee 20.00%
expense through the years.
10.00%
0.00%
071/72 072/73 073/74 074/75 075/76
Net Profit/Loans & Advances 1.62% Net Profit/Loans & Advances

2.38%
2.50% The ratio depicts the net profit earned on loans
1.77% 1.67% 1.62%
2.00% 1.46% and advances granted. The ratio is almost same
1.50% over the years with 1.78% on an average with slight
fluctuations. The slight fluctuation is due to
1.00%
improportional changes in net profit in response
0.50% to change in loans and advances.
0.00%
071/72 072/73 073/74 074/75 075/76
Net Profit/ Total Assets

Net Profit/ Total Assets 1.17%
The ratio depicts the net profit earned on total
assets. The ratio is around 1.3% on average over a
2.000% 1.69%
5 year-period with only slight fluctuations. The
fluctuation is due to improportional changes in 1.29% 1.26% 1.17%
1.500% 1.06%
profit in response to change in total assets.
1.000%
0.500%
0.000%
071/72 072/73 073/74 074/75 075/76
61
Kumari Bank Limited
Capital Adequacy Ratio
Capital adequacy ratio (CAR) is a measurement of

Capital Adequacy Ratio 11.75%
a Bank's available capital expressed as a
percentage of a Bank's risk-weighted credit 20.00%
14.50% 13.36%
exposures. Adequate capital fund protects 11.75%
depositors and promotes stability and efficiency
15.00% 10.84% 11.69%
of financial systems. The Tier 1 capital can absorb 10.00%
losses without a Bank being required to cease
5.00%
trading, and Tier 2 Capital can absorb losses in the
event of a wind-up. Bank has maintained the CAR 0.00%
as prescribed by Nepal Rastra Bank. As on FY 071/72 072/73 073/74 074/75 075/76
2075/76, bank has total CAR of 11.75%. The ratio is
in a fluctuating trend due to change in the Capital
fund compared to the change in RWE (major on
loan and advance).
Non Performing Loans/Total Loans 1.01% Non Performing Loans/Total Loans
A Non-Performing Asset (NPA) includes the

portfolio in respect of which the interest and/or
3.00% 2.49%
installment of principal has remained due for a
1.86% specified period of time and considered NPA as
2.00% prescribed by the regulatory authority. Bank has
1.15% 1.05% 1.01% streamlined its NPL ratio through continuous
1.00% monitoring and several recovery options in place,
as per the Recovery Guideline.
0.00%
71/72 072/73 073/74 074/75 075/76
Base Rate
Non
BasePerforming Loanall
(NPL)
costof
ofthe Bank
rate constitutes funds, cost of Base Rate 10.82%
liquidity (CRR and SLR) and operating costs. It is FY 2075-76
FY 2074-75
the minimum rate Banks have to charge their
customers seeking loanableAmount
fund.Outstanding
Banks add Percent
a Amount Outstanding
Particulars 15.000%
Particulars 11.6% 10.82% Percent
(Million)
premium to the base rate to derive the total rate of 11.31%
(Million)
interest on a&particular
Restructured type of loan facility.46.58
Rescheduled Restructured8.66%
During 7.09% 10.000% & Rescheduled 5.11 0.66%
7.15%
FY 2075-76,
Substandard base rate was reduced from 11.6% to
119.69 18.21% Substandard 140.05 18.08%
10.82%. One of the possible reasons 70.91
Doubtful is the10.79% Doubtful 185.88 23.99%
5.000%
non-consideration of ROA (Return on Assets) of
Bad 420.00 63.91% Bad 443.76 57.27%
0.75% that used to be loaded on the rate during
Grand Total 657.18 100.00% 0.000%
Grand Total 774.80 100.00%
prior years, as per the changes advised by the
NPL percentage
regulatory bodies. Also during the year, Bank1.05%has 071/72 072/73 073/74 074/75
NPL percentage 075/76
1.01%
been able to achieve a certain degree of efficiency
in cost of fund which impacted in decline in the
base rate.
62
event of a wind-up. Bank has maintained the CAR 0.00%
as prescribed by Nepal Rastra Bank. As on FY 071/72 072/73 073/74 074/75 075/76
2075/76, bank has total CAR of 11.75%. The ratio is
in a fluctuating trend due to change in the Capital
fund compared to the change in RWE (major on Restructured &
Restructured &
loan and advance). Rescheduled Rescheduled
7% 1%
Substandard
Substandard
18%
18%
Doubtful
Bad 11%
Non64%
Performing Loans/Total Loans 1.01% Bad
Non Performing
57%
Loans/TotalDoubtful
Loans
24%
A Non-Performing Asset (NPA) includes the
portfolio in respect of which the interest and/or
3.00% 2.49%
installment of principal has remained due for a
FY 2074/75 1.86% specified period of time and considered NPA as
2.00% NPL = 1.05% prescribed byFY the regulatory authority. Bank has
1.15% 1.05% 1.01% 2075/76
streamlined NPL
its NPL ratio through continuous
= 1.01%
1.00% monitoring and several recovery options in place,
as per the Recovery Guideline.
Total Non-Performing loans declined from 1.05% to 1.01% during FY 2075/76. Showing our stringent attitude towards
0.00%
reducing NPLs, we have managed to reduce it to a some extent (reduction of 0.04%). With a proper recovery plan, we shall
71/72
further reduce 072/73
the NPL level of073/74
the Bank.074/75
Although 075/76
the volume of lending has increased by 9%, the Bank is able to control
the extent of NPL. In the FY 2074/75, the proportion of total bad loans in the total NPL of bank was 64%; which the Bank has
been able to substantially reduce to 57% in FY 2075/76.
Base Rate
Base rate constitutes all cost of funds, cost of Base Rate 10.82%
liquidity (CRR and SLR) and operating costs. It is
the minimum rate Banks have to charge their
customers seeking loanable fund. Banks add a 15.000%
11.31% 11.6% 10.82%
premium to the base rate to derive the total rate of
interest on a particular type of loan facility. During 8.66%
10.000% 7.15%
FY 2075-76, base rate was reduced from 11.6% to
10.82%. One of the possible reasons is the
5.000%
non-consideration of ROA (Return on Assets) of
0.75% that used to be loaded on the rate during
prior years, as per the changes advised by the 0.000%
regulatory bodies. Also during the year, Bank has 071/72 072/73 073/74 074/75 075/76
been able to achieve a certain degree of efficiency
in cost of fund which impacted in decline in the
base rate.
Return on Assets
1.17% Return on Assets (ROA)
2.00%
1.72% Return on assets (ROA) is a financial ratio that
shows the percentage of profit a company earns in
1.50% 1.27% relation to its overall resources that is commonly
1.12% 1.17%
0.99% defined as net income divided by total assets.
1.00% Bank has the ROA ratio of 1.17% as on FY 2075-76,
compared to 1.27% in FY 2074-75 with slight
0.50% decline of 8% during the year. It is due to high
degree of Bank’s asset-size increment, despite
0.00% increases in the return values.
071/72 072/73 073/74 074/75 075/76
63
Kumari Bank Limited
Return on Equity
10.5% Return on Equity (ROE)
20.00% 18.11%
Return on Equity (ROE) signifies how good the
15.00% company is in generating returns on the
11.12% 10.50% investment it has received from its
9.93%
10.00% 8.67% shareholders. Bank has the ROE of 10.5% as on
FY 2075-76 end, compared to 9.93% in FY
2074-75 with a growth of 6% achieved during the
5.00% year.
0.00%
071/72 072/73 073/74 074/75 075/76
Credit To Deposit Ratio
Credit to Deposit Ratio

90.11%
This ratio is about how much a bank lends out of
the deposits it has maintained. Higher ratio 95.00%
indicates effective utilization of core funds on 90.11%
89.55%
lending, however, it could also indicate a higher 90.00% 87.60%
reliance on deposits for lending and vice-versa.
The ratio is in an increasing trend, with it reaching 85.00%
90.11 % in FY 2075-76 with increment of 0.62% as 81.00%
79.34%
compared to 89.55% in FY 2074-75 . This signifies 80.00%
utmost utilization of the collected deposits.
75.00%
70.00%
071/72 072/73 073/74 074/75 075/76
Spread Rate
Weighted Average Interest rate spread is what the bank charges on a

3.54%
Interest Rate Spread loan compared to its cost of fund. As on FY
2075/76, interest spread remained 3.54%, which is
13% higher than that of FY 2074/75 of 3.12%. The
3.80% 3.59% 3.54% reasons for higher rate is due to the increase in
3.60% interest rates charged and increment on business
3.26% volume of the Bank.
3.40% 3.17% 3.12%
3.20%
3.00%
2.80%
071/72 072/73 073/74 074/75 075/76
64
Number of Branches 106
120
106 Number of branches
100 89
With the business growth and expansion, Bank has
80 74
expanded its branch-network to 106 as on FY
2075/76. A further expansion has led the
60
branch-network count to reach 116 till the
40 36 36 reporting period.
20
0
071/72 072/73 073/74 074/75 075/76
Total employees 1043

Total Employees
With the increased number of branches and 1500
provincial offices, total human strength of bank 1043
increased from 796 last year to 1043 this year. 1000 755 796
392 385
500
0
071/72 072/73 073/74 074/75 075/76
Operating profit to Paid up capital 23%
29%
Operating Profit to Paid up Capital Ratio:
30%
25%
25% 23% Operating profit to Paid-up Capital ratio,
20% commonly known as, Return on Capital Employed,
20% signifies how good the company is in generating
15% returns on the investment it received from its
15%
shareholders as capital. On an average 23% of
10% return is being generated through deployment of
capital fund.
5%
0%
71/72 072/73 073/74 074/75 075/76
65
Kumari Bank Limited
Horizontal and
Vertical
Analysis
Statement of Financial Position Horizontal and Vertical Analysis
Horizontal Analysis Vertical Analysis

Particulars Ashad end 2076 Ashad end 2075 Variance Variance 2075/76
Assets
Cash and cash equivalent 8,821,135,632 3,780,643,820 133% 8.38%
Due from Nepal Rastra Bank 3,580,514,349 5,582,760,819 -36% 3.40%
Placement with Banks and Financial Institutions 384,382,797 714,095,685 -46% 0.36%
Derivative financial instruments 5,858,648,394 - 100% 5.56%
Other trading assets - - - -
Loan and advances to B/FIs 3,035,403,974 71% 2.88%
Loans and advances to customers 73,017,913,052 60,596,575,817 20% 69.34%
Investment securities 9,121,568,177 8,802,903,890 4% 8.66%
Current tax assets 61,227,298 113,783,100 -46% 0.06%
Investment in susidiaries 200,000,000 200,000,000 - 0.19%
Investment in associates 20,000,000 20,000,000 - 0.02%
Investment property 88,422,015 134,171,003 -34% 0.08%
Property and equipment 662,104,656 434,304,421 52% 0.63%
Goodwill and Intangible assets 97,393,609 110,453,429 -12% 0.09%
Deferred tax assets 77,789,908 - 100% 0.07%
Other assets 284,981,292 454,924,100 -37% 0.27%
Total Assets 105,311,485,153 82,723,550,667 27% 100.00%
Liabilities
Due to Banks and Financial Instituions 12,168,482,092 10,104,187,331 20% 11.55%
Due to Nepal Rastra Bank 1,433,248,037 539,557,578 166% 1.36%
Derivative financial instruments 5,715,359,938 6,111,249 93422% 5.43%
Deposits from customers 73,201,143,766 59,546,335,519 23% 69.51%
Borrowing - - - -
Current Tax Liabilities - - - -
Provisions 2,231,750 2,231,750 - -
Deferred tax liabilities - 20,361,526 -100% -
Other liabilities 1,071,934,043 1,964,985,865 -45% 1.02%
Debt securities issued - - - -
Subordinated Liabilities - - - -
Total liabilities 93,592,399,626 72,183,770,819 30% 88.87%
Equity
Share capital 8,685,573,112 7,163,394,973 21% 8.25%
Share premium 54,803,159 54,803,159 - 0.05%
Retained earnings 883,698,633 1,526,720,614 -42% 0.84%
Reserves 2,095,010,622 1,794,861,101 17% 1.99%
Total equity attributable to equity holders 11,719,085,527 10,539,779,848 11% 11.13%
Non-controlling interest - - - -
Total equity 11,719,085,527 10,539,779,848 11% 11.13%
Total liabilities and equity 105,311,485,153 82,723,550,667 27% 100.00%
66
Horizontal Analysis: Vertical Analysis:
A reasonable growth rate of 21% was achieved with regard Almost 72% of total assets has been composed by loan and
to loan and advance (to customers and BFIs) during FY 2075- advances, followed by investment securities and cash & cash
76. Placement made during the year were normally less than equivalent contributing 8% each on total assets of bank.
3 months and therefore categorized under cash and cash Derivative Financial Assets (not netted off) comprises of 5% of
equivalents; resulting increment in cash and cash equivalent total assets, with due from Nepal Rastra Bank comprising 3%of
by 133% and decline in placement. Current tax asset this year total assets of bank. Current tax assets, deferred tax assets,
impacted from higher provision for tax with increase in profit. PPE, goodwill, othe assets in total comprise almost 2% of total
Decline in investment property is due to trasfer of such assets assets of bank.
to Land and building under Property, Plant and Equipment.
Decrease of Intangible Asset is due to the depreciation charged
on existing asset, with no such significant procurement on
software and other intangible assets this year. Deferred
Tax Asset increased with the increase in various deductible
temporary differences under tax and accounting; the deductible
being on higher side than taxable temporary differences
resulted increase in deferred tax asset significantly. Deposit
in total have increased by 21% during this year is bifurcated
under Deposit from Customers, due to BFI, due to Nepal Rastra
Bank. Increase in share capital is due to capitalisation of bonus
shares for FY 2074-75. Reserve has increased with the increase
in different reserves; general reserve, exchange equalisation
reserve, regulatory and other reserves. With the distribution
of dividends, retained earnings declined to some extent. The
substantial difference under Derivative liabilities is due to
netting off the derivative asset and liability previous year which
has been grossed up this year.
67
Kumari Bank Limited
Statement of Financial Performance Horizontal and Vertical Analysis
Vertical
Horizontal
Particulars FY 2075-76 FY 2074-75 Analysis
Analysis Variance
Variance 2075/76
Interest income 9,098,573,839 6,804,011,381 34% 100.00%
Interest expense 6,228,619,912 4,797,987,363 30% 68.46%
Net interest income 2,869,953,928 2,006,024,017 43% 31.54%
Fee and commission income 465,986,518 396,815,439 17.43% 5.12%
Fee and commission expense 31,866,063 27,322,461 16.63% 0.35%
Net fee and commission 434,120,455 369,492,978 17% 4.77%
income
Net interest, fee and 3,304,074,383 2,375,516,995 39% 36.31%
commission income
Net trading income 258,904,627 148,951,414 74% 2.85%
Other operating income 84,919,398 92,120,818 -8% 0.93%
Total operating income 3,647,898,408 2,616,589,227 39% 40.09%
Impairment charge/(reversal) 229,030,770 31,946,183 617% 2.52%
for loans and other losses
Net operating income 3,418,867,638 2,584,643,043 32% 37.58%
Operating expense
Personnel expenses 978,860,368 775,186,599 26% 10.76%
Other operating expenses 554,656,220 374,352,088 48% 6.10%
Depreciation & Amortisation 120,126,238 79,214,269 52% 1.32%
Operating Profit 1,765,224,812 1,355,890,087 30% 19.40%
Non operating income 11,842,001 32,572,057 -64% 0.13%
Non operating expense 1,029,811 - 100% 0.01%
Profit before income tax 1,776,037,002 1,388,462,144 28% 19.52%
Income tax expense 545,658,742 341,973,741 60% 6.00%
Current Tax 621,921,927 411,550,374 51% 6.84%
Deferred Tax (76,263,185) (69,576,633) 10% -0.84%
Profit for the year 1,230,378,260 1,046,488,403 18% 13.52%
Horizontal Analysis: Vertical Analysis:

With the increase in loan and advance and deposits, Interest Assuming the principal revenue for banks, interest income has
income and expense increased by 34% and 30% respectively been considered a base value for vertical analysis of income
during FY 2075-76. Fee and Commission income and expense and expenses part. Fee and commission income comprise
increased proportionately with 17%. With proper investment 5%, net trading income 3%, operating and non-operating
strategy, forex income increased to a greater extent with a income comprising 1% of total interest income. Observing on
growth of 74% reflected under trading income. The increase the expense part, highest contributor is the interest expense
in the number of employees during the period justified for the covering 68% of the total interest income, followed by 10%
increase in personnel cost by 26% ; also with the expansion of of personnel expense, 7.5% of operating expense, 6% of tax
business volume and number of branches, operation cost grew expense and nominal contribution i.e. 0.36% of non operating
over by 48% during the year. With the addition of Property and and fee and commission expense .
Equipment, depreciation charge increased by 52% during the
year. To sum up, profit increased by 18% during the year from
1.04 billion to 1.23 billion.
68
Market
Capitalization
With the expansion of business, as a part of capital requirement and equity maintenance, we have been issuing bonus and right
shares in addition to the inital share capital issue through IPO (Initial Public Offering) at the time of establishment of bank. Depending
on the share price and number of shares, market capitalisation of bank shows an increasing trend. As on FY 2075-76, total market
value reached NPR 19.10 billion. Market price has been fluctuating its with ups and downs trend depending on the market scenario.
Market Capitalisation
Year No. of Listed Shares Closing Price
(in Million)
2075/76 86,856,160 220 19,108
2074/75 71,633,949 199 14,255
2073/74 46,134,984 327 15,086
2072/73 26,979,523 385 10,387
2071/72 24,304,628 395 9,600

450 25,000
400 395 385

19,108 20,000
350
327
300 15,086
14,255 15,000
250
10,387 220
200 9,600 199
10,000
150
100 5,000
50
0 -
2071/72 2072/73 2073/74 2074/75 2075/76
Market Capitalisation
9,600 10,387 15,086 14,255 19,108
(in Million)
Closing Price 395 385 327 199 220
Market Capitalisation Closing Price

(in Million)
Market Price reached NPR 220 on end of FY 2075/76 which was NPR 199 on end of FY 2074-75 which depicts 16% growth in the share
price. As per the regulatory requirement, Bank was able to attain the paid-up capital of NPR 8 billion; through acquisitions; issuance
of right-shares and bonus shares. This increase in number of shares along with positive perception of the people towards the Bank
in the market; the market capitalization increased by NPR 4,853 million, which is a growth of 34% than that of FY 2074/75.
69
Kumari Bank Limited
Market Price
Sensitivity
Analysis
Using the constant growth model, market price sensitivity has
been analysed with assumptions used as under: Current Year Dividend (Per Share in NPR) 10
Gordon Growth Formula Expected Growth rate 5%
Value of Stock= Do (1+g) (ke-g) Expected Return (ke) 10%
where, Closing Market Price 220
Do= Value of dividend received this year

g = Growth rate
ke = Discount rate

Expected Return Expected price of stock
6% 1,349
7% 591
8% 378
9% 278
10% 220
11% 182
12% 155
13% 135
14% 120
15% 108
1,600 25%
1,349
1,400
20%
1,200
15%
1,000 14% 15%
13%
12%
800 11%
10%
591 9%
600 8% 10%
7%
6% 378
400 278
220 182 5%
155 135 120
200 108
0 0%
1 2 3 4 5 6 7 8 9 10
Expected price of stock 1,349 591 378 278 220 182 155 135 120 108
Expected Return 6% 7% 8% 9% 10% 11% 12% 13% 14% 15%
Expected price of stock Expected Return

From the chart above, with the higher expected return (discount rate used), the intrinsic market price tends to fall. Assuming the
constant growth rate of 5% every year, the share price tends to fall. By comparing the intrinsic market price with the actual market
price (that depends on market demand and supply), we can determine if the share price is undervalued or overvalued. If the intrinsic
price is greater than the actual market price, the share price is overvalued and vice versa. From the chart above, it is known that
when the expected return reaches 15%, with a constant growth assumption of 5%, the share prices falls to NPR 108.

70
Value Added
Statement
Value Added Statement is a financial statement that depicts wealth created by an organization and how
the wealth is distributed among various stakeholders. Various stakeholders comprise of the employee,
shareholders, government, creditors and the wealth retained in the business. It is the profit then generated
by the collective efforts of management, employees, capital and the ultilization of its capacity that is
distributed amongst its various stakeholders. Organisation can survive without earning profits, but cannot
survive without adding value. Therefore, the optimized profit is less important than the optimized added
value of an organization. This value added is the reward for employees and as well as the creditors (providers
of capital) of an organization.
Figures in million Market Value Added Figures in million

Particulars Amount Total number of shares 87
Interest income 9,099 Market Price per share (Ashad end closing price) 220
Non-interest income 789 Total Market Value 19,108
Cost of services 6,783 Total Book Value 8,686
Total value Added 3,104 Market Value Added 10,423
Less: Provision and Allowance 349
Net Value Added 2,755
Personnel expense to employees/staff 979
Tax and other expense paid to government 546
Dividend to shareholders 855
Retained earning by Bank 375
Number of shares 87
Value Added Per share 31.72 14%
Number of Employees (in actual
1,043
figures)
Value added per Employee 2.64 35%
Number of branches (in actual figure) 106
Value added per branch 25.99
Net Value addition creation during the year amounted to 31%

NPR 2,755 billion. 35% of the value was applied towards the
employees, followed by dividend to shareholders which stands
to 31% of value creation. Furthermore, 20% of value creation has
been paid as tax and other charges and 14% has been retained by
Bank for reinvestment
20%
Economic Value Added Figures in million
Net Profit 1,230
Total Shareholder Fund 8,686
Cost of Equity 10.00%
Cost of Capital 869
Economic Value Added 362 Personnel expense to employees/staff
Cost of equity assumed to be 10% which is higher than the
Tax and other expense paid to government
return on government bonds.
Dividend to shareholders
Retained earning by Bank s
71
Kumari Bank Limited
Contribution towards
Nepalese Economy
Contribution of Banking to Economy
Banking and related financial activities make a significant contribution to the overall economy of a country. Banks play pivotal role
in creation of deposit funds by enhancing saving habit and ease in the transaction of business. Thus created deposit fund are used
for credit disbursement for growth of the economy. It facilitates new investments, which contribute to further economic growth.
Banking sector one of the major contributor in the entire GDP of the nation. Not only deposit creation and mobilization; banks have
a large stake in society as they play important role in employment market, infrastructure development; social as well as economic
growth of the people. Various banking services through expanded reach of banks and financial institutions in every nooks and
corners have made financial access to people from different regions easily accessible. Also, in addition to such services, banking
sector plays a major role in providing employment opportunities.
Towards Towards
Employment GDP
Generation
CONTRIBUTION
CONTRIBUTION BYBY
BANKS AND
BANKS AND
FINANCIAL Towards
FINANCIAL
INSTITUTIONS Government
Through INSTITUTIONS Revenue
Financial
Access
Through
Banking
Services
Contribution of Kumari Bank to Economy

Contribution to national GDP
Apart from service contribution to the national economy; the banking sector one of the major contributor in the entire GDP of
the nation. In the fiscal year 2075/76, Commercial banks earned a total of Rs. 65 Arba (as per unaudited interim reports published
by commercial banks). The profit earned by 28 commercial banks is 18% of the entire GDP of Nepal. 2% of the total profit of the
commercial banks of Nepal is earned by Kumari Bank; thereby Kumari Bank contributes through profit by almost 0.5% in the entire
GDP of Nepal, which is a significant contribution to the national economy.
18%
Commercial Bank’s Contribution
17.5%
Other Commercial Banks
18%
0.5%
KBL
Commercial Bank’s Contribution
82%
Contribution from other sectors
72
Contribution towards Government Revenue Contribution through Employment-Generation
The Profit of the bank is derived after deduction of income Kumari Bank, since its inception in 2001, has generated ample
tax, at present the tax rate is at 30%. Taxation, being one of working opportunitites to qualified and dedicated Nepalese
the major source of government revenue, banks contribute citizens. At present, the Bank has employed 1,043 employees
to the revenue through direct taxation on income source. in its various service points.Apart from direct employment
Advance tax is paid on installment basis by banks as prescribed generation, the Bank has been creating employment
by Income Tax Act. During the fiscal year 2075/76 alone, the opportunities indirectly through requisition of required goods
Bank contributed Rs. 56 crores as income tax payment to the and services, to the extent possible, with first priority to the
Government of Nepal. Apart from income tax from profit, the domestic vendors, thereby enhancing the economic growth of
bank also abides by taxation rules and regulation of the nation, the society at large.
whereby in the fiscal year 2075/76 alone, Bank deposited Rs. 63
crores as its tax-liability through Tax Deduction at Source (TDS),
reverse VAT and other taxes to the central government. Apart Contribution via Banking and financial services
from central level taxes, the Bank has also paid Rs. 46 lacs to
local level government of Nepal through various registration Kumari Bank, which has been in service since 2001, is the first
and taxes. bank to provide electronic Banking solution in the domestic
banking sector. It gave rise to the beginning of a new era in the
Nepalese Banking industry. It has been rendering innovative,
Figures in Million modern Banking services to its customers via its extensive
branch and ATM locations throughout the country in the form of
Fiscal Year Income Tax Tax deduction at sources
mobile Banking, Viber Banking, Missed Call Service, ABBS, etc.
and reverse VAT
2075/76 560 629 Besides these direct contributions, we have also been
rigorously involved in Corporate Social Responsibility. Such
2074/75 440 456 contributions generally include philanthropy, volunteer efforts
2073/74 300 251 and contributions to projects and activities that benefit certain
2072/73 355 181 section of the society; especially the underprivileged and
marginalized sections of our society, with the prime intent to
2071/72 173 123
enhance the overall economic, social or environmental standing
of the society/community, we operate in.
Contribution through Financial Access

Kumari Bank, since its inception in 2001, has generated ample working opportunitites to qualified and dedicated Nepalese citizens.
At present, the Bank has employed 1,043 employees in its various service points.Apart from direct employment generation, the
Bank has been creating employment opportunities indirectly through requisition of required goods and services, to the extent
possible, with first priority to the domestic vendors, thereby enhancing the economic growth of the society at large.
(based on NRB monthly statistical data of Mid July 2019)

Commercial Kumari Bank Coverage Coverage
Particulars Total BFIs
Banks Limited Commercial Banks (Total BFIs)
No. of Branches 3,585 5,057 116 3.2% 2.3%
No. of Deposit Accounts 22,927,898 27,866,505 502,408 2.2% 1.8%
No. of Loan Accounts 1,047,537 1,439,648 20,109 1.9% 1.4%
No. of Branch Less Banking 1,529 1,530 20 1.3% 1.3%
No. of Mobile Banking 7,406,802 8,347,187 222,366 3.0% 2.7%
No. of Internet Banking 888,268 917,344 23,321 2.6% 2.5%
No. of ATMs 2,951 3,316 110 3.7% 3.3%
No. of Debit, Credit Cards 6,644,817 6,899,053 79,676 1.2% 1.2%
73
Kumari Bank Limited
Future
Projection &
Prospects
Nepalese Banking
Nepalese Banking sector growth during past 10-12 years has been characterized by increase in number of
players and concomitant increase in the asset base of Banking industry. However, barring marginal growth
in penetration, the industry has remained mostly concentrated in the urban centers; in line with limited
economic and political decentralization of the country. Sizeable addition to the number of industry players
without commensurate increase in penetration and borrower/depositor base has led to intense competition
among the players for limited business opportunity. (Nepalese Banking Sector: Performance Update and
Outlook-ICRA Nepal)
Nepalese Banking sector has seemingly come to a crossroads. From issues related to liquidity management,
financial inclusion, productive sector lending, CSR obligations and sustainable business practices to
incorporating tech-driven aspects such as digitization of services and cashless transactions, without
compromising on profitability and the financial health of institutions, Nepalese Bankers find themselves
surrounded by a number of questions at the moment. Finding answers to these crucial questions will prove
how Nepalese Banks will be able to remove the hurdles in front of them and face the 21st century challenges.
Banks are compelled to operate within structural deficiencies in the macro system of the country and have
not improvised them mechanically and organically within this period with the rapid growth. The addition in
the number of Banks and volume of the revenue and profit of the sector cannot be the only two causes to
be hopeful about the sector. With ever intensifying regulation, deregulation dilemma, volatile regulatory
framework, dissatisfying stock market, lack of scientific, evolutionary management styles and skills should
be the matter of concern in near future. Undoubtedly, the facts and figures suggest a positive sign towards
the good future of Banking, provided the uncertainties, and volatility in macro and micro environment gets
corrected.
Future Prospect: Kumari Bank

Being a part of a Banking industry, we shall always look up for the opportunities and overcome the challenges
of all the scenarios we come across keeping in mind that, there is an opportunity in every challenge. We shall
address every challenge coupling it with future prospect rather than considering it as an obstruction to
our future goal. We shall always endeavor for achieving vision, mission that we have set since ages and will
exercise foremost effort for broader financial inclusion through pervasive financial access.
Currently operating with 116 branches (till the report date), we are planning to expand furthermore in the days
to come. We shall always be focused on meeting the international benchmarks in rendering the services
through use of modern digital technology and models along with the innovative ideas and transparency in the
Banking business. In addition, Bank shall always look on to improve its business and operational efficiency
for value creation to shareholders, employees, government and other stakeholders. Bank shall continually
work to deliver excellent-services.
a) Financial Position Growth Projection: Figures in million
Particulars Actual Asadh 2076 Projected Ashad 2077 Growth Target

Deposit 84,403 110,135 30%
Loan 76,585 101,000 32%
Investment 14,436 15,309 6%
74
Financial Position Growth
Projection
110,135
30% Figures in million
101,000
84,403 32%
76,585
6%
15,309
14,436
Deposit Loan Investment
Actual Asadh Projected Actual Asadh Projected Actual Asadh Projected

2076 Ashad 2077 2076 Ashad 2077 2076 Ashad 2077
Deposit Figures in million

Deposit 84,403 110,135 30%
We are planning to increase deposit by 30% reaching to NPR 110 billion till next year. To achieve this, Bank shall mobilize its deposit
through improvement in Deposit mix and solicit low cost deposit-CASA and other non-interest bearing deposits. With an enhanced
branch network, we shall employ a mix of staff incentive-schemes for soliciting saving deposits that shall include reward schemes
among others, online account opening, facilitating privileged services for pregnant, differently-able and old-age customers.
Customer Relationship Management (CRM) Module and placement of Help Desk at major branches with online customer support
portal and consistent branding shall also help us increase our customer-base and subsequently enhance deposit volumes. The
Bank shall promote its products like UNO cards, Fifty-Plus Savings, Mero Share Khata & Kumari Swastha Jeevan Khata and other
product offerings through jingles in radios and FMs, print advertisements, cinema halls and outdoor advertisements. Bank shall
reduce its call deposits gradually, post review of the volatility of the accounts which includes the public sector undertakings and
SME and midsized private entitites. Likewise, the Bank shall introduce, revise and roll out the new products/services as well as
revision in its existant product/service features.
Loan and Advances Figures in million

Loan 76,584 100,999 32%
Envisaging an ambitious growth on loan and advances i.e. 32% by serving the total customer base of NPR 100.99 billion while
maintaing consistent quality, Bank shall adopt strategies for healthy growth of the assets extended in a diversified way. At the
same time, yield maximization will not be compromised. Bank has segregated the loan portfolio mix as corporate, SME, Retail,
and Deprived Sector Lending. Currently categorized by huge chunks of portfolio under corporate lending, which comes to around
50 percent of the total lending portfolio, and in anticipation of growth of Hydro sector and large scale tourism industry, we shall
target the priority-sector lending through investments in the national hydro and tourism sector. Similarly, we also anticipate that
SMEs shall emerge as a highly vibrant sector of the national economy – creating a large scale of employment opportunities. In our
experience, this is a sector where we can go to a large group of people with relatively high returns. We shall offer a comprehensive
suite of Banking products and solutions to SMEs to help them meet their business and growth requirements. A big chunk of our
resources shall be mobilized to this sector for a healthy growth of SME portfolio. This is another high yield producing loan segment.
75
Kumari Bank Limited
Our effort is to be at the forefront of innovations and gradually be the market-leader in the retail Banking industry. Easy and hassle
free loan processing mechanism is the key to success in this sector. The sectoris also expected to contribute largely to increasing
fee-based income too. We shall offer customized financial products & services to meet the requirement of a range of customers
including farmers, traders, processors and rural entrepreneurs. Lending to this area is mostly qualified under deprived sector as per
the Central Bank's mandatory requirement. Also, we shall be stringent on reducing on NPLs with a proper Recovery Plan.
Investment Figures in million

Investment 14,436 15,309 6%
Another yield generating segment is the treasury/ investment income. Bank shall increase its current investment by 6% to NPR
15 billion. Our major strategies would be deputation of Staff for opening accounts in overseas, life insurance coverage for account
opened from overseas, delivery of debit card with welcome letter and some token of love for account holders.
b) Financial Performance Growth Projection Figures in million
Incomes and Expenses Actual Asadh 2076 Projected Ashad 2077 Growth Target
Interest income 9,099 11,503 26%
Interest expense 6,229 7,469 20%
Net Interest income 2,870 4,033 41%
Fee & commission income 434 738 70%
Other Operating and non operating income 365 341 -7%
Total operating income 3,670 5,112 39%
Operating expenses 1,467 2,311 58%
Personnel 782 1,274 63%
Other Operating expense 686 1,037 51%
Operating profit before Loan loss Provision 2,202 2,801 27%
Loan Loss Provision 229 22 -90%
Profit before tax and staff-loan 1,973 2,778 41%
Provision for staff bonus 197 278 41%
Provision for tax 546 750 37%
Net profit 1,230 1,750 42%
Financial Performance Growth

Projection
Figures in million
Actual Asadh 2076 Projected Asadh 2077
%
6000 39
.29
5%
5112
5000 40.
4033
4000 3670 %
20
27.
2870 .49
%
55 2801 %
3000 2311 42
.28
2202
1750
2000 1487 1230
1000
0
Net Interest Income Total Operating Operating Expenses Operating Profit Net Profit
Income Before Impairment
76
Bank shall always thrive in rendering excellent customer-service focus on the brand-promotion and incite loyalty through local-
and always opt for a rational, sustainable and achievable growth level reach and promotional activities, during occasions of
in coming years. Total interest income from loan and investment cultural significance and religious festivals.
is projected to grow by around 25% to NPR 11.5 billion in next year
which is in line with the growth in the loans and advances and
investments giving due consideration to the possible impact on
d) Operational Strategy
return on investment and yield on loan. Overall, interest expense 1) Organizational Development
is projected to grow by around 23% to Rs. 7 billion, somehow
not corresponding to its increase in deposit by 30% since Bank The present organizational structure will be reviewed in
is planning to collect the deposit by focusing on managing the the changed context and shall be amended/ implemented
lower cost of fund and stable source of funding i.e. on saving accordingly.
deposits .Fee- based and other income is projected at total Rs.
738 million, a growth of 69% which with major focus on loan 2) Branch Network Expansion
related fees, Bancassurance income, mobile Banking and card
A total of 56 branches are expected to be opened in the coming
related Income. In line with the Bank’s objective to enhance
fiscal year. Along with 20 extension counters the branches of
the business portfolio by establishment of new branches at
the Bank will reach 160 in the coming fiscal year end.Besides
possible locations, the Bank requires additional manpower to
this, the Bank is also planning to open 7 provincial offices and
effectively mobilize its operations. In the coming year, effect of
relocate/ renovate 9 branches.
increment salary and benefits to the staffs and additional staffs
and increment in salary from regular performance appraisal as
well, total staff cost would be Rs. 1.2 billion which is 63% higher 3) Operational Efficiency & Risk Management
than the current personnel costs. Bank will, at the same time focus on enhancing operational
efficiency and adopt appropriate cost control measures along
The major expense that we shall incur for operation is rent, with optimum utilization of logistics and other resources.
utility, janitorial expenses, other general administration
expenses. With an increased number of branches and provincial 4) Human Resources
offices, and relocation of branches, the overall operational
expenses is projected to grow by around 86% to Rs. 262 million Detailed training calendar will be prepared and implemented. We
during this FY 2076/77. shall endeavor to enhance its operational efficiency and employee
capacity enhancement by conducting various in-house trainings
and trainings through local Institutions. International trainings
Operating and Net Profit to enhance HR and leadership competencies of its officials will
With the above projection, the Bank shall earn the operating be priotized. To enhance the productivity and overall efficiency,
profit of NPR 2.8 billion before providing for impairment loss on we shall periodically review the organizational structure and
loans and advances which comes is a 23% growth compared to restructure HRD to make the department efficient and prudent
FY 2075-76. Net profit of the Bank is projected to increase by in its delivery and performance. Also, we shall seek to hire young,
35% to NPR 1.75 billion. energetic and experienced manpower to meet the HR needs for
new branches and divisions as well as to cope up with HR gap for
the existing setups. Likewise, efficient staff shall be recognized
c) Business Promotion and Branding through timely promotion and performance increments and
In FY 2076/77, we are planning for massive business promotional ensure right placement of right staff through transfer and job
activities. Branding shall be given utmost importance to help rotations. Various performance enhancement programs and
differentiate our services, goodwill with focus on increasing the schemes shall be implemented to encourage higher levels of
overall business. With the support of creative agency & digital productivity from the staff members.
marketing agencies and promotional activities through 360
degree channels, we will always seek for ways to imcrease our 5) Corporate Social Responsibility
public -outreach, as a way of Bank's brand-image enhancement,
which in return shall promote the products and services of the We have always abided by corporate social responsibility towards
Bank . the society. As per our social responsibility towards provision of
quality education and good health of the living goddess Kumari,
The things that Bankhas been doing for the past few years we will provide financial support in the education of the Kumari,
and shall continue to do in the future : the Bank is and shall be which is already being provided annually over the years by the
continuously involved in sponsoring various events and activities Bank. Financial Literacy programs from various branches will be
with the intention to further enhance brand recognition and brand launched to extend knowledge to the general public about the
visibility of the Bank as well as to properly capitalize appropriate proper use of financial producst/services, as a tool for social,
business generation opportunities. In the coming year, we will economic and financial upliftment of the country's rural denizens
emphasize on increasing the participation in different events and providing Banking reach to those at remote geographies of
and activities conducted by various local/national/international the country.
organizations. Branding and Promotional reach through Mobile
ATM Van, reaching ultimate far end customers of the Bank shall 6) Risk Management
not only enhance image of the Bank but also result in retail We shall conduct specialized External IS Audit and resolve
customer-base enhancement. Promotional Animated Videos majority of the Audit comment in order to mitigate risk identified
of different electronic Banking products will be prepared and through IS Audit. Standard Operation Procedure(SOPs) for various
promoted through social network which, thereby educating the functions will be reviewed by incorporating recommendations
rural and illiterate end of our customer-spectrum on dilligently made through different risk reports identified by Operational
availing and utilizing Banking products and services. Various Risk Unit and will be implemented to enhance the operational
promotional and branding events shall be organized as done in efficiency and minimize risks. Trainings to staffs on specific
the prior years such as khutruke box promotion to attract retail functions and awareness workshops on Risk and KYC & AML/
deposits, gift to the female customers through our service- CFT include preparation of Syllabus and Training Calendar.
points during Teej Festivals. In the coming year, we shall also Implementation and regular process of online training program
in coordination with HRD.
77
t
Kumari Bank Limited
3
Products
and
Services
1. Deposit Products & Mix 80

2. Loan Products & Mix 86
3. Treasury Services 90
4. Remittance Service 94
5. Digital Products & Services 97
78
BeT
Ch
BeThe
Change
79
Kumari Bank Limited
Deposit
Products & Mix
21.
49
SAV
%
ING
D
%
EP
53.99
OS
S
SIT
ITS
TERM DEPO
DEPOSIT
MIX
ITS
POS
31%
DE
LL
17.
CA
CU
RRE ITS
N T DEPOS
7.2 1 %
Figures as of Ashad end 2076
TYPE DEPOSIT(MILLION)
TERM DEPOSITS 45,565
SAVING 18,137
CALL 14,613
CURRENT 6,088
_____________________________________
TOTAL 84,403
_____________________________________
80
Twinkle Star Account
Gone are the days when children are kept in the dark over
personal finance. These days, children make the association
very early on between money and the ability to buy things with
it. They know that money is valuable but the concept of it can
be rather abstract since we equate stability, security and even
success with it. If kids are not taught early about money, they
can arrive at their own conclusions regarding how it works,
based on what they see.
What better way to engage children with the concept of

budgeting than by head-starting their finances with a Twinkle
Star account: a hands-on way to teach them budgeting while
simultaneously securing their future! It demystifies the
ambiguity of the concept of money by showing them just how
easy it is to save money. While we’re encouraging children to
work towards a meaningful and successful future, why not
impart financial literacy by opening a Twinkle Star account for
them?
It is a great way to begin a difficult yet important conversation

regarding concepts such as savings, budgeting, and setting
financial goals with young children. It allows children to see
how their savings are adding up and think about how they’re
spending their money. A Twinkle Star account is a great way to
familiarize children with money and Banking, both of which play
an increasingly important role in their life as they grow older!
Attractive Features:
• Exclusively to manage finances of children upto 18 years
of age.
• Ideal to instill saving-habit from a very young age, by
providing an attractive Khutruke (piggybank), which is
provided post account-opening.
• Special consideration in Education Loan processing
fees after the children reach 18 years of age.
• Atttractive and competitive Interest Rate.
Meet Roshami Shrestha, mother of two young girls who has

been maintaining Twinkle Star accounts of her daughters.
Twinkle-Star
"Twinkle-Star account has helped teach my girls about account has
the value of money. They can see their money growing,
thanks to Compound Interest via their statements.
helped teach my
Likewise, the cute piggybank the girls have got, gets girls about the
them excited about depositing their funds, ultimately to value of money.
transfer to their respective accounts. Having a Twinkle
Star account has instilled in them the habit to save up
for things they want, until they can afford it. I highly
recommend that parents start teaching their young
ones about money with a savings account to help them
mature and become financially responsible!"
81
Kumari Bank Limited
Youth Savings Account

Kumari Youth Saving Account includes benefits like free internet
and mobile Banking, free cash top facility, and others, that
make young lives better, easier and efficient. It’s a rewarding
experience overall; especially the FREE 100 rupee balance top-
up on first opening the Kumari Youth Saving Account.
• Atttractive and competitive Interest Rate.
• Ideal to instill saving-habit among the youth with instant
NPR 100 account-balance credit by the Bank post
account-opening.
• Minimal balance requirement.
• Free Internet Banking and cash-top up facility.
• Free Mobile Banking for the first year.
Meet Tara Khadka, a young girl of 22 who started her journey of

financial-prosperity with Youth Savings Account at Kumari Bank
.
Khadka says, " I have been supporting myself, with

little help from my family who live outside the
Kathmandu Valley. I didn't have much in terms of
financial resources to fall back on, in case I fell sick
and had to take a long absence from work. So, it
was imperative that I track every bit of my income
and expenses. But with peer-pressure and poor
spending habits, despite my decent earnings each
month, I was left with little to no savings.
When representatives from Kumari Bank

approached me with their youth-savings scheme,
I was hooked! The customer-care and grievance
handling unit is prompt and impeccable and so are
the benefits of Kumari Youth Savings! Opening
a Kumari Youth Savings account has helped
keep track of my income and expenses and has
massively boosted my savings. I would recommend
my peers to kickstart their journey of healthy
financial-habits with Kumari Bank . "
82
Kumari Premium Salary Account
Kumari Premium Salary Accounts allow employers to keep track
of payrolls, pay employees timely and accurately. Paydays are
now more joyous, thanks to Kumari Premium Salary Account’s
special benefits and privileges. Kumari Bank offers a benefit-
rich salary account full of useful features like free internet
Banking, mobile Banking, and cost-free VISA debit card for a
year. Account-holders also get free access to a locker for a year!
• Attractive Interest Rates
• Free ATM cash withdrawal from all ATMs within Nepal
• Free Internet Banking
• Nil minimum balance requirement
• Free Locker facility for 1st year
• Insurance Coverage:
- Accidental death and permanent disability insurance
coverage upto Rs. 700,000.00
- In case of hospitalization for more than 24 hours,
insurance coverage upto Rs. 100,000.00
- Accountholder can make multiple claims upto Rs.
100,000.00
- Insurance Coverage against 10 critical illnesses upto
Rs. 200,000.00
Padma Lama is an accountant at Kathmandu Columbus I benefited greatly from

school: a leading primary educational institute in the
Kathmandu valley with over 50 staff members. She shares
the Kumari Premium
her delightful experience of being a Kumari Premium Salary account which
Salary accountholder.
made manual cash
Lama says, "As an accountant, my job is easier now due to handling over staff
Kumari Premium Salary account, which has made manual
cash handling of staff remuneration a thing of the past. On
remuneration a thing of
salary day, all salaries are timely credited in the respective the past.
staff accounts and immediately notification is also sent.
This is the first Bank account with no minimum balance

requirement, yet has several benefits such as: free cash
withdrawal from all ATMs across Nepal, free internet and
mobile Banking for the first year! Ever since opening
this account, we have been delighted with Kumari Bank’s
prompt customer care and the hassle-free grievance
system. "
83
Kumari Bank Limited
Deposit Products
Kumari Pariwar Surakshya Bachat Khata (PSBK)
Since its inception, insurance has been about transferring risk

by avoiding the anxiety of potential loss. With health issues and
critical illnesses on the rise, insurance has become a necessity
that people can count on for financial coverage in case of
emergencies.
Kumari's Pariwar Surakshya Bachat Khata can help you avoid

being stuck with large medical bills and avoid debt. It alleviates
the risk of having to face a drastic change in quality and standard
of life in case of critical illness or unexpected death.
Through PSBK one can avoid, in advance, feelings of deep

remorse and regret on not financially protecting their family
against premature disability or death. It provides the security
of knowing that through PSBK, they’re setting an example of
responsibility and caring towards the entire family.
I find it astonishing that

one saving account
provides insurance
coverage for the whole
family.
In September of 2018, Ishwor Upreti, a small business

owner in Kalimati, rushed his wife to the emergency
room. She had a severe case of dengue. Mr Upreti had
previously opened a Pariwar Surakshya Bachat Khata at
Kumari Bank after reading an interview of our chairman,
Mr. Amir Pratap JB Rana, in a piece of reputable news
daily. “I find it astonishing that one account can cover all
family members,” he added, “usually, other Bank s only
over the account holder.”
Kumari's Pariwar Surakshya Bachat Khata Mr Upreti, who

Attractive Features: has a family of five, avoid being stuck with large medical
bills and debt, by reimbursing him his expenses. Through
• Minimum Balance: NPR 10,000.00 PSBK one can avoid, in advance, feelings of deep remorse
• Attractive Interest Rate and regret on not financially protecting their family
• Free Internet Banking : FREE against premature disability or death. It provides the
• Free Mobile Banking facility for 1st year. security of knowing that through PSBK, they’re setting an
• Free VISA Debit Card (Domestic) facility for 1st year example of responsibility and caring towards the entire
• Free Locker Facility for 1 year* family.
• Free Cash Withdrawal from any ATMs within Nepal.
• Insurance Coverage: “I’m happy with how things turned out. I will recommend
i) Accidental Death Coverage and Permanent Total this account to everybody I know. I will be doing all my
Disability upto 20 lakhs (for the couple) financial transactions through Kumari Bank ,” said Upreti.
ii) Medical Insurance ( In case of hospitalization only) :
Upto NPR 100,000.00 for the family or 5 times of the
last 3 months' average balance (for a family including the
couple and 2 children, with both children not exceeding 21
years of age).
iii) Insurance Coverage of 10 critical illnesses upto NPR 5
lakhs or 5 times of the last 3 months' average balance,
(for a family including the couple and 2 children, with both
children not exceeding 21 years of age).
84
Other Deposit Products
85
Kumari Bank Limited
Loan
Products & Mix
24
.74
%
RE
T
%
AI
L
51.01
E
AT
CORPOR
LOAN
MIX
19 %
E
SM
19.
D E P RIVED
5 .0 6 %
TYPE LOAN(MILLION)
CORPORATE 39,065
RETAIL 18,947
SME 14,696
DEPRIVED 3,875
_____________________________________
TOTAL 76,584
____________________________________
86
• Quick and transparent loan-processing
Retail Loans: • Simplified documentation
• Personal counselling throughout the process
1. Kumari Home Loans • Loan processing from a broad branch network
A decent and affordable

place to live helps 3. Personal Overdraft Loan
families by safeguarding
them from physical We provide overdraft
(barriers from adverse
climate and the threat Home Loan Auto Loan
facility to finance the
recurring working capital Pe
Personal Overd
of wild animals, burglary requirement of our
Home Loan
and theft) and mental Auto Loan clients. It is a product
hardships and placing them on a path of new opportunity
and increased confidence and self-reliance.Housing
to meet your immediate
and contingent fund Overdraft Loan
instability — including frequent moves and the threat of needs. Whether you are
eviction or foreclosure — creates stress, depression and salaried, self-employed or a high net-worth individual
hopelessness for far too many families. or professional, Kumari Overdraft schemes is there in
place to protect you and your family from unexpected
In response to the ever-growing need for shelter in our cash shortfalls with minimal processing charges, expert
communities throughout Nepal, Kumari Bank works in counselling, competitive interest rates and a hassle-free
many ways via funding for new construction, repairs experience.
to existing homes, small loans for incremental building
and home improvements and help establishing title and Attractive Features:
Loan Against
ownership to land via its Home Loan schemes to help
secure people’s fundamental human right to housing.
Loan
• Attractive and competitive Interest Rate Against

Loan Against Marketable Securities
We ensure access to a safe, secure, habitable, and
Loan
• Simplified Against Fixed Deposit
documentation
• Personal counselling throughout the process
Marketable
affordable home with Securities
freedom and stress-free
environment. With our flexible home-loan schemes, we
Fixed
• Loan processingDeposit
from a broad branch network
make your housing dreams a reality! For your unexpected, short-term cashflow needs, you can
count on Kumari’s convenient overdraft repayment plans.
• Attractive and competitive Interest Rate 4. Home Loan
Loan Against Marketable Securities Auto
• Simplified documentation We provide short-term financing by pledging the listed
• Personal counselling throughout the process marketable securities (share certificates, government
• Loan processing from a broad branch network bonds, etc) at a pre-determined rate of interest. The
Bank extends the credit facility after obtaining required
2. Kumari Auto loans documents with the reasonable valuation of the share/s to
be pledged. This facility will be revolving in nature.
Owning a dream vehicle,
whether new or pre-
owned doesn’t have
to burn a hole in your
pockets or be a pipe-
Home Loan dream anymore! Whether Auto Loan Personal
it’s a car that you seek for
family commutes or a Overdraft Loan Against
Loan
commercial vehicle to enhance your professional capacity, Marketable Securities
Kumari Auto Loans has it all covered. Now, you don’t need
Home Loan
to have a substantial amount of savings that you can pay for Auto Loan Personal
a car at once, you can borrow funds and choose affordable
and flexible payment-options to make monthly payments 5. Loan Against FD Overdraft Lo
on your vehicle.
We also provide short-term financing against the FD
With wise-borrowings and proper auto-finance schemes receipt of our Bank or other 'A' class financial institutions
like ours, you will have an upper hand in two ways: in the country.
• You will spend less on your vehicle (based on quick
processing, minimal processing charges and flexible
Loan Againstpayment schemes)

Loan Against
• You will also have the flexibility to change vehicles
Marketable Securities
within a short period of time.
Fixed Deposit
With Kumari Auto loans, your dream-vehicle is just a few
Loan Against
counselling, assessment and documents away!
Loan Against

Marketable Securities
• Attractive and competitive Interest Rate
Fixed Deposit
87
Kumari Bank Limited
Earthquake-Victim Loan SME Loans

The devastating earthquakes of 2014 left Bhimsen Thapa, Small and Medium enterprises (SMEs) are considered the
resident of Kathmandu city, and his family emotionally backbone of a country’s economy and the engine for its
distressed. The earthquake disrupted the normality of their accelerated development. They are critical for the economic
daily life and they were at risk of losing their ancestral home. To and social development of emerging markets like Nepal. SME
save his home, Mr. Thapa applied for Kumari Bank’s Earthquake- loans basically refer to the funding of small and medium-
Victim Loan in August of 2018. sized business enterprises. The SME Loan provides a single
line of credit for meeting the borrowing needs of SME.
“I didn’t understand the technical aspects of the loan-application
and disbursement mechanism,” said Mr. Thapa who, like most The effective management of lending to SMEs can contribute
people in the affected area was preoccupied with worries that significantly to the overall growth and profitability of Bank s.
included the safety of his family. “The loan-officer assigned to There has been considerable research and analysis into the
me constantly provided updates on progress and chased down methods by which we assess and monitor business loans,
relevant parties and documentation,” Mr. Thapa said. manage business financing risks, and price our products
– and how these methods might be further developed and
At the time, the goal of the team working on the Earthquake- improved.
Victim Loans at Kumari Bank was to support clients in their
personal resiliency, healing and helping them achieve a sense Generally, such loans can be used as a working capital as
of normality. Mr. Thapa’s concern for his family and his ancestral well as for long-term requirements. It is approved after
home: their place of history, security and comfort was restored, considering the nature of business, cyclical trends, cash
as was his faith in the Bank . “I vouch for their excellent system flow projections, and peak time requirements. Kumari Bank
of customer-care and willingness to go beyond their prescribed offers offer a diverse range of customized loan facilities like
roles to make their customers feel at ease,” Mr. Thapa confirmed. the working capital loan, term-loan, letter of credit, import
and export loan, Bank Guarantees and auto-finance, to cater
to our customer's needs.
Kumari Bank 's SME lending includes a diverse range of

customers from farmers engaged in commercial agriculture
such as: livestock, animal farming, dairy-business, bee-
keeping, cold storage, etc to micro-entreprises and
individuals with little to no access to funds and engaged in
cottage industries, alternative energy, health sector, etc.
• Simple to process and easy to repay.
• Competitive Interest Rates, fees and charges.
• Ease of operations and collections via our extensive
branch-network.
• Flexible Documentation
One of our prime SME loan clients is Tilicho Trading Pvt. Ltd,
importer and distributor of various veterinary medicines
and food supplements. It is the main distributor of reputed
companies like Livisto – Spain, Vemedim Corporation –
I vouch for their excellent Vietnam, Reckitt Benckiser – India, Mamy Poko – India,
system of customer-care Hansaplast – India for Nepal.
and willingness to go
beyond their prescribed Over the years, their business has been in an increasing
roles to make their trend. The client has been Banking with us since 2007. With
customers feel at ease. the support of Bank regarding financials and the dedicated
promoter group they are now well established name for
veterinary medicines and food supplements in the domestic
market.
88
Hydropower has been recognized as a clean and renewable
Corporate Loans source of energy, as a right-solution for our country, with its
topographical advantage and the availability of more than
We also provide financing services to cater to the needs of 6,000 rivers and rivulets. In addition to local demand, there
large-sized corporate houses to finance working capital and/ is ample scope for export of electricity to India. Against
or capital expenditure requirement as well as non-funded this background, there is an urgent need for the country to
facilities such as letters of credit and guarantees. Likewise, develop a sustainable path for the generation of energy. With
loans with credit limit of NPR 50 million and above, entities this in view, the financial sector along with the government
with annual sales turnover of NPR 100 million and above has identified hydropower development as a lucrative
are categorized under corporate loans. Such loan facilities financing opportunity. Against this background, the central
are generally disbursed to capital-intensive projects and Bank has identified 'Hydropower' and 'Tourism' sector has
activities of infrastructural development. been recognized as one of the most productive-sectors for
the country.
We extend credit-facility to a diverse range of projects
ranging from agriculture, tourism, service-sector, healthcare The recovery in tourism sector post the mega-earthquake
and infrastructure. In agriculture, we have financed the of April, 2015 A.D. has led to a rise in demand for loans in
activties of Golyan Agro Pvt. Limited, an organic vegetable tourism industry. Nepal welcomed 940,218 tourists - a record
farming-unit in Jhapa and Birtamode. Likewise, we have high arrival- in 2017. Pursuant to this, NRB's expansion of the
provided extensive financing in the Educational sector via definition of 'tourism' for lending encouraging growth has
major educational institutes in the country, namely Rosebud made tourism entrepreneurs upbeat about the prospects
School, Little Angels' School, Nobel Medical College and of tourism sector in the coming years. The buoyancy in the
Teaching Hospital, Kundalini Dynasty Hospital. service industries, particularly tourism and hospitality, has
also led to expansion of businesses.
We have also been long-term financiers of the nation's
largest spinning mills, Reliance Spinning Mills Ltd. The said- Against the aforementioned backdrop, BFIs are strictly
business unit is a high-tech spinning plant, manufacturing instructed to finance such capital-intensive and national
international quality textile fabric. Similarly, some of our other priority-projects. Capital-Intensive projects refer to business
clients include MM Polymers Pvt ltd, Raman Construction processes or projects that require a massive capital-
Pvt. Limited, (Dharahara Financing), Hilltake Industries Pvt. investment and often for long periods of time. National-
Limited, Mediciti Hospital, etc. priority projects such as hydropower projects, construction
of domestic and international airports, construction of
highways, bridges, irrigation projects, drinking-water
Consortium Financing projects, tourism-sector projects, etc are some of the most
Energy is a basic requirement for economic development. capital-intensive projects in today's context.
Every sector of the national economy needs energy, be it
agriculture, industry, trade, transport, tourism, health, or Kumari Bank has fulfilled such regulatory lending instructions
service sectors. Planned economic development that is in by acting as major financiers of various projects to Yeti Airlines
implementation also demands increasing energy inputs. As Group, Adventure Quest Nepal Private Limited, Mustang
a result, the consumption of energy in all forms has been Mountain Home Private Limited, Nepal Wildlife Development
steadily rising all over the country. The growing consumption Company Pvt. Ltd, etc. Kumari Bank , post adequate technical
of energy has resulted in increasing dependency on fossil consultation, project feasibility and risk-assessment acts as
fuels such as coal, oil and gas. Rising prices of these fuels primary or consortium-financiers in various national-priority
along with their short supply are, together, causing concerns and infrastructural development sectors. Such decisions are
about the continuation of energy supply for sustainable undertaken under the supervision and assessment of the
economic growth. Likewise, environmental hazards due to Infrastructure & Project Financing unit of the Bank , in co-
the increased use of fossil fuels have also attracted major ordination with the Bank 's Risk department.
public scrutiny and concern, both on a local as well as global
scale. Ambe Steels P. Ltd., Hulas Wire, Raj Brewery, etc are some
of the consortium-financed units by the Bank . Over the
period of the time, with our financing and their stern internal
controls, their financial position and performance is in an
increasing trend. Their business and account performance
so far is also robust.
89
Kumari Bank Limited
Treasury
Services
The treasury function of the Bank is combination of three independent but interrelated departments,
viz. financial market, Treasury Mid Office and Treasury Back Office. The Financial Market department
is the window of the Bank s’ treasury which directly deals with counterparties and customers
for treasury deals, where the treasury back office involves in the execution of the treasury
deals and creates check and balance mechanism in the operation of treasury functions.
The Treasury Mid-Office is a risk unit which is placed in such a way to ensure proper
adherence of risk control mechanism in the treasury deal and execution.
Apart from Bank’s central units of the Bank , all the outlets of the Bank offers
complete solution for foreign currency transactions requirement of its
customers. Large network of correspondent Banking arrangements in
place both in the national and international arena to support client's
requirement of transaction with the foreign currencies with national as
well as foreign counterparties. With well equipped human capital along
with technological resources Bank is transacting in real time window Front Office
AS U RY
for global financial market transactions.
Bank professionally undertakes all the forex transaction as permitted

by the regulations. The requirement may be of individual, trade
transactions or for treasury operations of multi or bi-lateral foreign Mid Office
agencies; for the Bank is delivering ultimate treasury solutions. Apart
TRE
from normal forex transactions, Bank has setup for competitive spot
as well as forward currency transactions, currency swap and non
deliverable forward contracts for licensed financial institutions. Back Office
Liquidity management and fund management of the Bank is governed
through treasury functioning; which is largely performed through
placements in various currencies both local and foreign. Along with
regular treasury deals, bullion transactions (gold and silver transactions) are
performed directly with the customers.
Bank has its investments in government securities (bonds, treasury bills) along
with equity investments made in various sectors of the economy. Strategically Bank
has placed its investment in Nepal Electronic Payment System (NEPS) for the promotion
and development of digital payment system in Nepal. For the growth of microfinance sector
Bank has made initiative investments in National Microfinance and Abhiyan Laghubitta Bittiya
Sanstha Limited. Apart from this for the development of insurance sector, Bank had promoted
Lumbini General Insurance Co Limited.
90
91
Kumari Bank Limited
INVEST
NPR 14.4
Development
Bonds
NPR 7.1 Billion
Income Treasury
NPR 259 Million Bills
NPR 2.2 Billion
Income
NPR 107 Million
422
431 140
377
92
TMENT
42 Billion
Other
Sources
NPR 418 Million
Interbank Income
Lending NPR 965 Thousand
NPR 4.7 Billion
Income
NPR 76 Million
Data of Treasury related functions:
Particulars Local Foreign Total No. of

(Number) (Number) Transaction
Bullion Transaction 422 - 422
Placement 140 140 254
Borrowing 337 - 337
Forward Deal 431 - 431
NDF Deal - 71 71
93
Kumari Bank Limited
Remittance
Services
Remittance has emerged as a strong and pivotal component of the Nepalese

economy. As of date, it has contributed to about 32% of the nation's GDP and is
ranked 4th in the list of countries with the highest ratio towards GDP contribution.
Nepal has received an estimated remittance of NPR 699 billion in the year 2017/18
alone.
According to the data from the Nepalese Labor Statistics, each year 300,000 to
350,000 new Nepalese enter the foreign labor market. There is now an estimated
1.2 million Nepalese population working in 40 countries, excluding India. In the
gulf-region alone, 0.7 Nepalese are working in the Bahrain, Kuwait, Saudi Arabia,
Qatar and the United Arab Emirates (UAE). The size of Nepal's total remittance
volume is around USD 231.73 billion per year. In this context, Kumari Bank Limited
began its remittance service named as "Kumari Remit" in the year 2007.
Kumari Remit, an online cutomer-focused and a state-of-art based web

technology oriented to money transfer product is brought to you by Kumari Bank
Limited and is capable of paying through more than 8,000 locations across Nepal.
Our more than 8,000 payout locations across the country helps us meet the
diverse remittance needs of our extensive customer-base and the number is still
in the growing trend, supporting and enhancing our anywhere payout service.
Our major remit-alliances include (Domestic- IME Limited, I-Pay Remit Pvt.
Limited, City Express Money Transfer Pvt. Ltd, Japan Money Express) and Belhasa
Global Exchange of UAE and Xpress Money Services, Small World Financial Group
Services Ltd and Paysend PLC of UK, etc to name a few, as international payment
alliances.
94
95
Kumari Bank Limited
Remittance as
A Currency for Care
Remittance not only refers to the money that a migrant sends to their place of origin, but they reinforce
social ties, trust and bonds across distances. They are products of love which indicate how love moves
across transnational boundaries and shows strength and bonds shared between loved ones. When
emigrants leave their families behind they’re gone geographically, not emotionally. Remittances are a
means to express care for family, friends and communities.
Kumari Remit Customer Care Unit - UAE
It’s not easy to be away from home. It’s not easy to lead a life of normalcy with one or more loved ones
away. With remittance: a currency for care, families can send love and affection across the globe.
Through remittance, people can be there for their family through good and bad times. Festivals can be
made more joyful; stressful situations can be alleviated. At Kumari Bank, remittance is a currency for
care.
For Shreya Lamichhane, a young girl pursuing her advanced

studies in Finland, Kumari Remit became the connecting-link
between her and her family in Nepal, as she lent a helping-hand to
Kumari Remit her parents from across the world via regular remittances
through Kumari Remit. She adds, “In times of need, Kumari Remit
helped me stay helped me stay connected with my loved ones, irrespective of the
physical boundaries. It was secure, relatively easy and quick.”
connected with
my loved ones
96
Digital Products
Kumari 3D-Secure Cards
Kumari Bank offers a secured internet payment solution for
VISA and MasterCard cardholders (debit and credit) for secure
& Services online transactions. 3D Secure is a new service from Kumari

Bank Limited in association with Visa that lets you shop online
securely with your existing Bank Credit & Debit Card which may
be used on merchant websites that subscribe to services of
Internet Banking
"Verified By Visa" (VbV). With the view of customer-data and fund
Kumari Bank Limited is the first Bank to introduce Internet security on the forefront, we have enabled online purchases
Banking in Nepal. Internet Banking, basically is an outgrowth only for merchants who have subscribed to Verified By Visa.
of traditional PC Banking. It uses the internet as the delivery This is so that our customers can authenticate themselves at
channel by which to conduct Banking activites such as fund the time of any purchase/s by entering their password and no
transfers, utility-bill payments, viewing current and saving one else can misuse your card.
account balances, payment of mortgages, etc. An internet
Banking customer accesses his or her accounts from a browser We believe this KBL 3D secure mechanism will enable
software that runs internet Banking programs resident on the cardholders to purchase from online stores without being
Bank’s World Wide Web server. worried for their cards' data being stolen or being used by
anyone other than themselves.
It basically provides accounts balances and some transactional
capabilities to customers, from across the globe via Internet Kumari Smart (Mobile Banking)
connection. Basically, intra and inter-Bank transactions, mobile
Kumari Smart is the latest mobile-Banking app of Kumari
top-up facillity and third-party merchant-bill payments such as
Bank Limited. It offers a plethora of digital payment options
restaurants, schools, colleges, etc. We employ a OTP-secured
along with a dashboard view of the customer's Bank account.
or 2 factor verification via SMS/email to miantain the integrity of
With a secure and user-friendly interface, it provides a quick,
customer-data as well as safeguard privacy of such electronic
secure and convenient fund transfer facility within and between
transactions.
different Banks. Likewise, it can be accessed anytime and
anywhere within Nepal, however the mobile must have internet/
Cards
data connectivity. Its fast and real time transactions provide a
We are one of the associate members of VISA Worldwide Inc.
hassle-free Banking facility.
We offer a range of services in cards which includes issuance of
VISA Domestic Debit and Credit Cards and the VISA International
Credit card, whereas on the acquiring end, we process all
VISA and MasterCards. We were the pioneers to introduce the
concept of electronic Banking in Nepal. Kumari has employed
‘state-of-the-art’ technology to provide online Banking services,
mobile Banking services, credit, debit and prepaid cards under
VISA brand to the account holders and non-account holders.
The various range of payment services supported by Kumari

Smart include utility bill payments: NEA bill-payment, TV bill-
payment, all major Internet Service Providers’ bill payment,
telephone and drinking-water payments, etc. Similarly,
We issue EMV chip-based debit and credit cards, which is
Insurance payments of various life and non-life companies can
accepted in all ATM terminals accepting Chip+PIN verification
be made via Kumari Smart. Likewise, movie-tickets of all major
methods. Kumari has a network of 113 EMV upgraded ATMs
halls in the Kathmandu Valley can be paid for through Kumari
across the country. These EMV ATMs are one of the most-secure
Smart via Fonepay or E-sewa. Kumari provides fund-loading
and capable means of processing EMV ATM card transactions
facility for E-sewa, as well.
and serve customers 365 days a year. Further extension of ATMs
in various locations inside and outside the Kathmandu Valley is
still under Kumari’s immediate business-plan.
97
Kumari Bank Limited
Store and App Store. Multiple Banking functions are delivered

through the Bank 's Public Account. This enterprise service
allows customers to interact with the Bank via Public Chats in
a direct, personalized and spontaneous manner. Customers
can easily search for and subscribe to this Bank's Public
Account within Viber app to enjoy various features like account
information, balance enquiry, mini statements, forex rates,
interest rates, ATM and branch locations, Banking hours, FAQs
and products & services, etc. Accountholders need to register
their Bank accounts through the registration menu in order to
access their account information.
Kumari Missed Call Service

Kumari Missed Call Banking is a free service from the Bank
wherein customers can get their account balance, mini
statement and more just by giving a Missed Call or sending an
SMS with pre-defined keywords to pre-defined mobile numbers
from their registered mobile number.
With the objective to provide more tech-friendly services to

Customers ranging from individuals, NGOs/INGOs, development its rural customer base, Kumari Bank started its Missed Call
agencies and corporate houses can enjoy a plethora of Banking services. Pursuatnt to this, customers’ Banking details
services like fund transfer, account-balance view, printing and are only a missed call away from our Banking support unit,
downloading account statements, payment of credit-card bills, which they can easily avail by giving a missed call to the Bank’s
NTC prepaid and postpaid bills, NTC/Ncell/SmartCell topup provided numbers.
and loading e-sewa wallets. Kumari Smart is an ultra-secure
transcation platform with the implementation of its two-factor
authentication (2FA) process called M-token. In M-token, the
first factor is the conventional User ID and password. Whereas,
the second factor is the system-generated One Time Password
(OTP), which is unique for every transaction. OTP are sent to
the customer's registered mobile number via SMS or through
regsitered e-mail address. Customers are required to enter both
the factors for transactions via Kumari m-token.
Kumari Viber Banking

Viber is a free, internet based cross-platform for instant
messaging and voice-over IP (VoIP) application that offers
cheap and efficient way to communicate for millions of users
worldwide. Kumari Bank 's Viber Banking facility ia available to all
users through Viber application which is available at Google Play
Kumari Viber Banking

QR Based tie-ups with Nepal Gas and Industries
Furthermore, we have also deployed Quick Response (QR)

codes for merchants who facilitate contactless and cardless
transactions using a machine-readable optical label bar-
Interest code. QR payments are becoming rapidly popular, owing to the
Balance Rates
portability of mobile-phones across the globe. Our cab-ride
Inquiry
t
Accounion
at payment tieups with one of the leading taxi-service providers in
ement Inform
-
Mini Stat
TOTAL
Rs.
the country, Sarathi Pvt. Limited, has helped kickstart the usage
of QR-scanning based, cashless payment methods. We had even
W
=
BALANCE
X introduced several incentive schemes to incite customers to
ACTUA
Rs.DEPOSIT
WIDR
-
=
BALANCE
TOTAL
BALANCE
adopt cashless payment modes, while making Sarathi cab-ride

X
ACTUA TOTAL
-
Rs.DEPOSIT
WIDR W
DEPOSIT payments.
- Rs.
W
=
WIDRAW
X
BALANCE TOTAL Likewise, Kumari Bank Limited has also collaborated with
ACTUA
=
X
ACTUA
Nepal's largest LPG importer and distributor, Nepal Gas

DEPOSIT
WIDR
Industries, wherein all customers can make gas-cylinder

payments by simply scanning a unique-merchant code, peresnet
at all authorised NGI dealers, thereby enabling cashless mode of
payment.
In order to accelerate the adoption of such innovative financial
98
technology, we had also introduced cashback as well as other In order to accdelerate the adoption of such innovative financial
incentive-schemes, wherein customers could avail a cashback technology, we had also introduced cashback as well as other
of upto NPR 50 on every QR-based gas cylinder payment incentive-schemes, wherein customers could avail a cashback
transaction, whereas, authorized NGI dealers would also get of upto NPR 50 on every QR-based gas cylinder payment
upto NPR 15 cash reward on every such transaction. transaction, whereas, authorized NGI dealers would also get
upto NPR 15 cash reward on every such transaction.
The rapid rate of adoption of new commercialized technologies
by consumers means that organizations should also be among The rate at which newly commercialized technologies get
the early adopters of new technology, relevant to their business, adopted by consumers is getting faster, which means that
so as to gain market-leadership, better business outcomes, organizations should also be among the early adopters of new
including revenue growth and greater profit margins. technology, relevant to their business, so as to gain market-
leadership, better business outcomes, including revenue
Early adoption of such innovations helps Kumari Bank stay growth and greater profit margins.
ahead of the curve. Likewise, its customers get early exposure
to new technology and various perks of early adoption Early adoption of such innovations helps Kumari Bank stay
including thought/technology-leadership, early investment ahead of the curve. Likewise, its customers get early exposure
oppportunities and creative freedom to experiment and to new technology and various perks of early adoption
revolutionize. including thought/technology-leadership, early investment
oppportunities and creative freedom to experiment and
revolutionize.
Furthermore, we have also deployed Quick Response (QR)
codes for merchants who facilitate contactless and cardless
transactions using a machine-readable optical label bar- Kumari UNO Card
code. QR payments are becoming rapidly popular, owing to the
portability of mobile-phones across the globe.
Our cab-ride payment tieups with one of the leading taxi-

service providers in the country, Sarathi Pvt. Limited, has helped
kickstart the usage of QR-scanning based, cashless payment
methods. We had even introduced several incentive schemes
to incite customers to adopt cashless payment modes, while
making Sarathi cab-ride payments.
We offer our prime customers with Kumari UNO Card, which

is a privilege card with multiple benefits. Kumari UNO card is
an exclusive customer benefit card offering unbeatable and
exclusive discounts at most sought after shopping outlets,
restaurants, night clubs, health and beauty clubs, entertainment
centres, etc. It is a unique offering for our prime-clientele as
part of Kumari Bank 's loyalty-scheme.
Likewise, Kumari Bank Limited has also collaborated with

Nepal's largest LPG importer and distributor, Nepal Gas
Industries, wherein all customers can make gas-cylinder
payments by simply scanning a unique-merchant code,
peresnet at all authorised NGI dealers, thereby enabling
cashless mode of payment.
99
Kumari Bank Limited
4
Manangement
Practices &
Governance
1. Corporate Governance 101

2. Capital Management 108
3. Risk Management 110
4. SWOT Analysis 116
5. Human Resource Management 118
6. Combating Financial Threats 124
7. IT Security 126
8. Internal Audit Controls 129
100
Corporate
Governance
Kumari Bank, as a public limited company and a financial institution, has always given utmost importance to highest standards of
corporate governance and moral conduct. The Bank is committed to absolute compliance with the ethics prescribed by Company’s
Act, Bank and Financial Institutions Act, Unified Directives issued by Nepal Rastra Bank, and the Bank’s corporate governance
policy. We believe that a strong corporate governance framework and culture translates to a strong company that delivers the most
value for the investments of its shareholders.
The Bank gives utmost importance to corporate governance at all levels. The Board carries out active oversight, supervises and
controls the Bank , however, it doesn’t interfere in the Bank’s day-to-day management. We are committed to more than just meeting
the regulatory and legal requirements, but also towards adoption of best business and proactive risk management practices,
transparency, and disclosure to all the stakeholders. The entire Kumari Bank family abides by its principles of corporate governance
including fulfilment of assigned responsibilities in the best interests of the Bank , secrecy-maintenance of the material information,
avoidance of conflict-of-interest, clarity in delegation of authority, professionalism, team spirit, and exceptional customer-service.
Good corporate governance is one of the key prerequisites to a successful organization, and we understand it well. All our activities
are in line with the said-understanding and commitment. Our corporate governance philosophy is heavily-guided by our own internal
need to set the highest standards as a good corporate citizen.
The Bank has established a culture of best practices in corporate governance. Good corporate governance has been an integral
part of the Bank’s policy in order to safeguard the interest of its shareholders and stakeholders, and for providing the highest level
of service to its customers. Well-defined and enforced corporate governance provides a structure that is beneficial to everyone
concerned via ensuring that the enterprise adheres to accepted ethical standards and best practices as well as to formal laws.
Given the importance of financial intermediation in an economy, the public and the market have a high degree of sensitivity to any
difficulties potentially arising from any corporate governance shortcomings in Bank s. The Bank is committed to be governed by
the highest standards of corporate governance. Compliance with the applicable rules and regulations of the country, and with the
directives/circulars/guidelines issued by various regulatory authorities, shall be the utmost priority of the Bank , and the Bank shall
ensure robust compliance thereto, in word as well as in spirit.
Defined
Corporate Statutory
Culture & Compliance
COMPOSITION OF BOARD OF
Values
DIRECTORS
1. Amir Pratap JB Rana - Chairman
2. Krishna Prasad Gyawali – Director,
Dynamic Indicators of
Disclosure and Promoter Group
System of Risk Corporate
Management Transparency 3. Mahesh Prasad Pokharel – Director,
Governance
Public Group
4. Anuradha Chaudhari – Director,
Public Group
Clearly 5. Ganesh Prasad Pathak –
Performance defined Board Professional/Independent Director
Management & Responsibilites
Internal Controls and codes of
conduct
101
Kumari Bank Limited
BOARD COMMITTEES
1. Audit Committee
The audit committee provides oversight of the financial reporting process, the audit process, the Bank’s system of internal
controls and compliance with laws and regulations. It also co-ordinates with the finance department to verify the Bank’s financial
status and position. The committee is composed of the following:
S.N. Name Status in the Organization Status in the Committee

1 Anuradha Chaudhari Director- Public Group Co-ordinator
2 Ganesh Prasad Pathak Professional Director Member
3 Ganesh Kumar KC Head- Internal Audit Member Secretary
2. Employee Service & Benefit Committee

Employee Service & Benefit Committee/ HR Committee is committed towards proper plan and execution of human resources
functioning. Policies and procedures and oversight of the action taken/ to be taken in relation to the employees of the Bank , rests
on this committee. The committee is composed of the following:

1 Mahesh Prasad Pokharel Director-Public Group Co-ordinator
2 Surender Bhandari Chief Executive Officer Member
3 Anuj Mani Timilsina Chief Business and Operating Officer Member
4 Rohit Singh Head – Human Resources Member Secretary
3. Risk Management Committee

Risk Management Committee is an independent functioning committee which ensures balance in the risk-taking appetite of Bank
with oversight of the overall risk profile and mitigation measures put in place. The committee consists of following members:

1 Krishna Prasad Gyawali Director- Promoter Group Co-ordinator
2 Anuradha Chaudhari Director-Public Group Member
3 Angir Man Singh Chief Risk Officer Member Secretary
4 Ram Chandra Khanal Chief Operations Member
5 Bikas Khanal Head - Credit Risk Management Secretary
4. AML/CFT Sub-Committee
AML/ CFT Committee is formed in compliance with the requirement of NRB Guidelines and with a specific objective to abide by the
requirements of AML/CFT and to define procedures regarding the same. The committee is composed of following members:

1 Ganesh Prasad Pathak Professional Director Co-ordinator
2 Angir Man Singh Chief Risk Officer Member
3 Ram Chandra Khanal Chief Operations Member
4 Nirmal Kumar Khatiwada Head- Operations Risk Management & Compliance Member
5 Kiran Kumar Shah Head- AML/CFT Member Secretary
5. Other Committees
Other Committees and Sub-committees are formed as per the requirement and for completion of specific task/s of the Bank.
Apart from the committees as stated, currently two committees formed for a specific requirement of the Bank are:
Merger Committee
S.N Name Status in Organisation Status in Committee
1 Krishna Prasad Gyawali Director-Promoter Member
2 Mahesh Prasad Pokharel Director-Public Member
Building Construction Committee

1 Mahesh Prasad Pokharel Director-Public Coordinator
2 Krishna Prasad Gyawali Director-Promoter Member
3 Surender Bhandari Chief Executive Officer Member Secretary
102
MANAGEMENT COMMITTEE
1. Management Committee (MANCO)
Senior Executive level of the Bank are the members of the Management Committee. Committee is formed for implementation
and update of the progress of the activities of Bank . Mainly the strategy formulation and making channel flow of implementation
performed by the committee. Members of the committee are:

1 Surender Bhandari Chief Executive Officer Coordinator
3 Rajib Giri Chief Marketing and Strategy Officer Member
4 Umesh Singh Bhandari Chief Business Support Officer Member
6 Manish Timilsina Chief - Credit Member
7 Ram Chandra Khanal Chief – Operations Member Secretary
2. Assets-Liabilities Committee/Pricing (ALCO)

The Asset Liability Committee/ Pricing Committee of the Bank ensures proper liquidity management, fund management which
ensures proper pricing is placed in line with market scenario and meeting regulatory framework.

1 Surender Bhandari Chief Executive Officer Coordinator
3 Rajib Giri Chief Marketing & Strategy Officer Member
4 Umesh Singh Bhandari Chief Business Support Officer Member
6 Manish Timilsina Chief - Credit Member
7 Ram Chandra Khanal Chief – Operations Member
8 Rena Rijal Head - Deposit Marketing and Institutional Banking Member
9 Aswin Babu Shrestha Head – Finance and MIS Member
10 Nirmita Hada Incharge – Financial Markets Member-Secretary
The committee members are subject to change, depending on the presence of other invitees- as deemed appropriate by the Chief
Executive Officer.
3. Procurement Committee
This committee has been put in place to ensure all of Bank’s procurement activities are conducted in line with accepted professional
purchasing practices and appropriate rules and regulations. Its purpose has been to establish thresholds and classifications of
procurement actions, establish the necessary controls, including those for delegations of authority, and shall issue administrative
instructions for purposes necessary to protect the integrity of the procurement process and the interest of the Bank . The
committee consists of the following members:

1 Umesh Singh Bhandari Chief Business Support Officer Co-ordinator
2 Ram Chandra Khanal Chief – Operations Member
3 Rohit Singh Head – Central Logistics Member Secretary
4 Aswin Babu Shrestha Head – Finance and MIS Member
4. The MIS committee

MIS stands for Management Information System. Managers at all levels of an organization rely on reports generated from these
systems. This system helps them evaluate an organization’s day-to-day transactions, business activities or problem-solving,
decision-making, and track progress. MIS reporting is used by businesses of all sizes and in every industry. The corporate
environment is dynamic and involves uncertainties and risks. These uncertainties and risks drive business organizations to take
complicated decisions to survive in the market. The primary goal of any organization is to improve its profitability and ensure its
sustenance in the long run. The MIS committee is responsible for consolidation review and changes if any required for any type of
MIS requirements of the Bank .
103
Kumari Bank Limited
For the smooth work procedure of the MIS functions the committee is further divided into two committees as:
MIS Committee Credit

S.N Name Status in Organization Status in Committee
1 Narayan Prasad Ghimire Head-Information Technology Member
2 Bikas Khanal Head-Credit Risk Management Member
3 Aswin Babu Shrestha Head-Finance & MIS Member Secretary
MIS Committee-Operation
1 Narayan Prasad Ghimire Head-Information Technology Member
2 Nirmal Kumar Khatiwada Head- Operations Risk Management & Compliance Member
3 Namita Shakya Head-Branch Operations Member
4 Aswin Babu Shrestha Head-Finance & MIS Member Secretary
The committee members are subject to change, depending on the presence of other invitees- as deemed appropriate by the Chief
Executive Officer.
MONITORING AND REVIEW OF CORPORATE GOVERNANCE

Our Corporate Governance Framework includes an engaged Board of Directors with a diverse range of skills and experience
supported by an effective Board Committee structure. It involves a system of clear and transparent communication with our
shareholders. Similarly, a strong risk management and assurance processes and culture exist, within the organization. Our core
values and behaviors and supporting policies underpin the way we behave and meet our strategic objectives. Kumari Bank is
committed to conducting its business in an ethical, fair and transparent manner, in accordance with high standards of corporate
governance.
The Board, together with the management team, leads by example. We have a robust corporate governance framework in place and
we are committed to fostering a culture of compliance that values personal and corporate integrity, accountability and continuous
improvement.
ROLES AND RESPONSIBILITIES OF THE BOARD

• Decision on the long-term objectives of the Bank
• Decision on the credit and investment policies of the Bank
• Approval of the strategies necessary to achieve these objectives, bearing in mind the activities of competitors and potential
competitors and the risks inherent in these strategies.
• Approval of authorities and powers delegated to the Chairman, Board of Directors, Board Committees, and Chief Executive
Officer
• Approval of the Bank’s annual budget.
• Review and approval of material-related party transactions that are not in the ordinary course of business.
• Approval of the establishment of any subsidiary company.
• Ensuring that the Bank manages risk effectively by:
»» Determining and approving the Bank’s risk appetite (the extent and categories of risk which the Board regards as acceptable
for the Bank to bear)
»» Approving the Bank’s risk management framework (embracing principles, policies, methodologies, systems, and internal
controls and structure of responsible unit)
»» Monitoring the Bank’s aggregate risk exposures and return on risk taken
• Ensuring executive management of the Bank :
»» Establishes and maintains appropriate systems to plan and control Bank operations and risks and to comply with relevant
legislation and regulations
»» Provides regular and sufficient information to the Board to enable it to discharge its monitoring duties in relation to these
matters
»» Implements disclosure policies and procedures that comply with regulatory requirements
• Recommendation of final dividend payments
• Approval of the adoption of any significant change in accounting policies or practice
• Approval of the applicable policies of the Bank
• Appointment of the Independent Director
• Ensuring that the Board has the appropriate number and quality of directors to fulfill its responsibilities
• Constitution of committees of the Board with terms of reference as necessary
• Ensuring the forward planning of the main executive appointments within the organization
• Approval of the appointment, dismissal, and remuneration of the executives of the Bank one level below the Board
• Approval of the appointment and removal of the Head of lnternal Audit Department and the Company Secretary
• Approval and review of the corporate governance policy/framework of the Bank policy/framework of the Bank
104
BeThe
Change
105
Kumari Bank Limited
ORGANIZATIONAL STRUCTURE
BOARD OF DIRECTORS
RISK MANAGEMENT AML/CFT COMMITTEE CHIEF EXECUTIVE OFFICER

COMMITTEE
__________________
CHIEF MARKETING &

STRATEGY OFFICER
CHIEF RISK
OFFICER
CREDIT RISK
DEPOSIT DIGITAL BANKING FOREIGN TRADE
MANAGEMENT
MARKETING
OPERATION
RISK & COMPLIANCE
MARKET RISK &

TREASURY MID OFFICE
REGIONAL REGIONAL
HEAD - 1 HEAD - 2
BRANCH MANAGERS BRANCH MANAGERS

REGION 1 REGION 2
106
COMPANY SECRETARY
HUMAN RESOURCES COMMITTEE AUDIT COMMITTEE
CHIEF BUSINESS & CHIEF BUSINESS

OPERATING OFFICER SUPPORT OFFICER
INFORMATION INTERNAL
TECHNOLOGY AUDIT
HUMAN OPERATIONS CREDIT
RESOURCES
LOGISTICS
BRANCH
EXPANSION &
RELOCATION
RECOVERY,
NPA & DEBT SERVICE
MANAGEMENT
REGIONAL REGIONAL REGIONAL REGIONAL REGIONAL

HEAD - 3 HEAD - 4 HEAD - 5 HEAD - 6 HEAD - 7
BRANCH MANAGERS BRANCH MANAGERS BRANCH MANAGERS BRANCH MANAGERS BRANCH MANAGERS
REGION 3 REGION 4 REGION 5 REGION 6 REGION 7
107
Kumari Bank Limited
Capital
Management
Capital Management
Realizing the significance of capital for ensuring the safety and soundness of the Banks and the Banking system, at
large, Nepal Rastra Bank (NRB) has developed and enforced capital adequacy requirement based on international
practices with an appropriate level of customization based on domestic state of market developments. With a view
of adopting the international best practices, NRB has already issued the Basel III implementation action plan and
expressed its intention to adopt the Basel III framework, albeit in a simplified form.
"International Convergence for Capital Measurements and Capital Standards: Revised Framework" alias Basel II
under Pillar 1, provides three distinct approaches for computing capital requirements for credit risk and three other
approaches for computing capital requirements for operational risk. These approaches for credit and operational
risk are based on increasing risk sensitivity and allow Banks to select an approach that is most appropriate to the
stage of development of Bank's operations. The product and services offered by the Nepalese Bank s are still largely
conventional, in comparison with other economies. This coupled with the various inherent limitations of our system
like the limitation of credit rating practices makes the advanced approaches like Internal Ratings Based Approach or
even Standardized Approach impractical and unfeasible. Thus, at this juncture, this framework prescribes Simplified
Standardized Approach (SSA) to measure credit risk while Basic Indicator Approach and an indigenous Net Open
Position Approach for measurement of Operational Risk and Market Risk respectively.
The Bank manages its capital position so its capital is more than adequate to support its business activities and to
maintain capital, risk and risk appetite commensurate with one another. Additionally, we seek to maintain safety and
soundness at all times, even under adverse scenarios, take advantage of organic growth opportunities, meet obligations
to creditors and counterparties, maintain ready access to financial markets, continue to serve as a credit intermediary,
remain a source of strength for our subsidiaries, and satisfy current and future regulatory capital requirements. Capital
management is integrated into our risk and governance processes, as capital is a key consideration in the development
of our strategic plan, risk appetite and risk limits.
We conduct an Internal Capital Adequacy Assessment Process (ICAAP) on a periodic basis. The ICAAP is a forward-
looking assessment of our projected capital needs and resources, incorporating earnings, balance sheet and risk
forecasts under baseline and adverse economic and market conditions. We utilize periodic stress tests to assess the
potential impacts to our balance sheet, earnings, regulatory capital and liquidity under a variety of stress scenarios. We
perform qualitative risk assessments to identify and assess material risks not fully captured in our forecasts or stress
tests. We assess the potential capital impacts of proposed changes to regulatory capital requirements. Management
assesses ICAAP results and provides documented quarterly assessments of the adequacy of our capital guidelines and
capital position to the Board or its committees. We periodically review capital allocated to our businesses and allocate
capital annually during the strategic and capital planning processes.
Basel III reforms are the response of the Basel Committee on Banking Supervision (BCBS) to improve the Banking
sector’s ability to absorb shocks arising from financial and economic stress, whatever the source, thus reducing the
risk of spill over from the financial sector to the real economy. Basel III reforms strengthen the Bank -level i.e. micro
prudential regulation, with the intention to raise the resilience of individual Banking institutions in periods of stress.
The macro prudential aspects of Basel III are largely enshrined in the capital buffers. Both the buffers i.e. the capital
conservation buffer and the countercyclical buffer are intended to protect the Banking sector from periods of excess
credit growth.
Capital Conservation Buffer

The capital conservation buffer (CCB) is designed to ensure that Bank s build up capital buffers during normal times (i.e.
outside periods of stress) which can be drawn down as losses are incurred during a stressed period. The requirement is
based on simple capital conservation rules designed to avoid breaches of minimum capital requirements. Outside the
period of stress, Bank s should hold buffers of capital above the regulatory minimum.
108
Counter Cyclical Buffer
During the period of downturn preceded by excess credit growth, losses
incurred in the Banking sector can be extremely large which can destabilize
the Banking sector and spark a vicious circle, whereby problems in the
financial system that can contribute to a downturn in the real economy that
then feeds back on to the Banking sector. These interactions highlight the
particular importance of the Banking sector building up additional capital
defenses in periods where the risks of system-wide stress are growing
markedly. The countercyclical buffer aims to ensure that Banking sector
capital requirements take account of the macro-financial environment in
which Bank s operate. Therefore, excess aggregate credit growth is judged
to be associated with a build-up of system-wide risk to ensure the Banking
system has a buffer of capital to protect it against future potential losses.
Implementation of Buffer
Every commercial Bank s are required to adhere to the Capital Adequacy
Framework 2015. Bank s are required to maintain a capital conservation
buffer of 2.5%, comprised of Common Equity Tier 1 capital, above the
regulatory minimum capital requirement of 8.50%. Capital conservation
buffer of 2% is required to be maintained and required to maintain at least
2% of RWE, comprising of Common Equity Tier 1 Capital, as Countercyclical
buffer by the end of FY 2076/77.
Kumari Bank Debenture

Bank is planning to raise the fund by issuing 10.25 % Kumari Bank debenture
with a term of 10 years. Subordinated term debt fully paid up with a
maturity of 5 years or above is eligible for inclusion in the capital adequacy
calculations, thereby further strengthening the Capital Adequacy of Bank .
109
Kumari Bank Limited
Risk
Management Credit Risk
Risk is a probability or threat of damage, injury, liability, loss

or any other negative occurrence that is caused by external Market Risk
or internal vulnerabilities, and that may be avoided through
preemptive action. Risk
Operation Risk
The Bank has identified various risk categories which has Information, Communication
impact on the performance of the Bank . The risk is well defined & Technology
as the appetite of the Bank to address risks attached to Banking
business and areas affecting the business of the Bank as credit, Other Risks Human Resource
operation, market and other risks.
The three line of defense are in place whereby, the risk Anti Money Laundering
management of the Bank is placed with high degree of control
over possible threats to the system and Banking mechanism.
a) Credit Risk
The business units, apart from serving needs of customer
have developed a mechanism to mitigate risk factors. Over the There is a separate department, Credit Risk Management (CRM)
business units, Bank has Risk units’ viz. Credit Risk Department, which is responsible for assessing the risks associated with
Bank’s funded and non-funded credit exposure. The Bank has
introduced the system of providing risk code to each exposure
at the level of relationship officer which is rechecked at CRM
desk. The Bank has implemented Credit Policy Guideline with
clearly defined authority limits in place. Credit related circulars
guided by the Credit Policy Guidelines, based on changes in
Internal Audit regulatory provisions, emerging market scenario, internal and
external observations are issued in a timely manner to promote
uniformity of understanding and working across all levels.
In addition to classification of sectors as per NRB definition,

Bank has also separately maintained an Internal classification
Risk Unit of sectors in accordance with risk perspective (based on inputs
received from business units) primarily to cap lending in a
particular sector of the economy.
The limits for investment and credit exposures to domestic

and international financial institutions are reviewed annually.
Different parameters like CD ratio, Liquid assets, NPL, ROA
and CAR are taken into account and ranked accordingly. The
Business Deprived Sector Lending (DSL) stood at a 5.47% of the total loan,
Units which is well above the NRB 5% threshold.
The lending concentration on top 50 borrowers as a % of total

loan is accounted at 29.37% for the FY 2075/76 as against 27.42%
in the FY 2074/75, 27.38% in the F/Y 2073/74, 37.15% in the F/Y
2072/73 and 39.20% in the year before that. This shows that the
exposure is gradually shifting towards Retail/SME from being
Operation Risk Department, Market Risk & Treasury Mid Office overly tilted towards the top corporate borrowers a few years
Department, AML/ CFT Department, ISO, Governance Unit; back, although in current year the concentration increased.
which serves good shield for risk mitigation and prevention. The sudden increase in capital had prompted the Bank to go for
Finally, Bank has its own in-house internal audit department, sudden increase in portfolio but the management seems to be
which functions independently to assess risk. Currently, Bank committed for more SMEs and Retails in the days to come. More
has already started audit process with perspective of risk, as than 50% of the total Bank’s portfolios fall under the funded limit
Risk Based Audit is the prime focus area of internal audit of the of NPR. 50 million, more than 30% fall under the bracket of NPR
Bank . 0-10 million. The NPL level is at 1.01% as on Ashadh End 2076
which was at 1.05% as on previous year, this showed better signs
The Bank has defined credit, market and operation risks are in terms of recovery of the loan portfolio.
the important factors which may give impact to the capital
adequacy of the Bank .
110
Credit Administration & Control Department, Head Office prepares the following Exception/Irregularity reports which are reviewed
by the Head Office on a monthly basis.
• Periodic working capital statement not obtained within approved time frame
• Accounts with drawing power deficit
• Inspection report of borrowers
• Insurance expired/ insufficient coverage
• Financial statements not submitted status
• CFR expiry status
Sector Wise/ Concentration Exposure
17%
21.2%
0.7%
2.4%
3.6%
4.6% 14.1%
4.8%
5.1%
10.8%
6.6%
9%
Non Food Production Related - 21.2% Electricity,Gas and Water - 4.8%
Wholesaler & Retailer related loan - 14.1% Transport, Communication and Public Utilities - 4.6%
Construction related - 10.8% Hotel or Restaurant - 3.6%
Agriculture, Forestry & Bevarage Metal Products, Machinary & Electronic

Production Related - 9% Equipment & Assemblage - 2.4%
Finance, Insurance and Real Estate - 6.6%
Mining, Fishery Related - 0.7%
Consumption Loans - 5.1%
Others - 17.0%
111
Kumari Bank Limited
Sectorwise Loan Exposure

Figures in Million
Total Loan Percentage of Loan
Particulars
Outstanding Outstanding
Non Food Production Related 16,205 21.2%
Wholesaler & Retailer related loan 10,819 14.1%
Construction related 8,296 10.8%
Agriculture, Forestry & Beverage Production Related 6,918 9.03%
Finance, Insurance and Real Estate 5,067 6.6%
Consumption Loans 3,907 5.1%
Electricity, Gas and Water 3,678 4.8%
Transport, Communication and Public Utilities 3,538 4.6%
Hotel or Restaurant 2,733 3.6%
Metal Products, Machinery & Electronic Equipment & Assemblage 1,865 2.4%
Mining, Fishery Related 508 0.7%
Others 13,051 17.0%
Total 76,585 100%
Considering concentration-risk Banks are prone to, we have effectively distributed our portfolio to various sectors. As depicted
in the chart above, highest share is that of Non-Food Production related lending comprising almost 21.2% of total exposure of the
Bank, followed by wholesaler and retail loans contributing to 14.1%. Lending to the construction sector, the third highest share, we
have provided 10% of our lending to such sector, with 9.03% in agricuture, forestry and beverage. Finance Insurance and Real estate
comprises 6.6% of total portfolio. Consumption loans, not contributing much to economy,have been only lent 5.1% of total lending
by bank. Electricity, Gas and water sector, hotels, transportation contribute almost 5% on average. Metal products, equipments,
agriculture, forestry, fisheries, mining in total contribute approx. 8.7% while the other sectors not specifically mentioned cover 17%
of the entire exposure. This categorization does not govern priority-sector lending classification, as defined by NRB.
Meeting the Priority Sector Lending of 25% by the end of Ashadh 2076 as stipulated by NRB remains a tough challenge ahead
not just for us but also for the Banking industry as a whole. As per the requirement, it (under the name-Priority Sector) was 10%
for Agriculture, 15% altogether for Hydropower/ Energy and Tourism sector. Previous requirement of 5% under Small & Cottage
Industry is pulled out. NRB had given separate target for each of the sectors. In this backdrop, the Bank is left with no choice but to
increase its lending in the priority sector to meet the NRB prescribed ceiling, which the Bank had met. The achievement of the Bank
in terms of priority limit was 10.03% and 23.59% respectively in terms of the limit revised.
Still the challenge is in the sector of Agriculture. Considering the compulsion on these sectors there is always a possibility that the
concentration risks associated with it will hit but the adequate mitigates can always be imposed to secure our lending.
b) Market Risk
The market risks (interest rate, liquidity and foreign exchange) has targeted the top 20 institutional deposit mark at 25% of
are reviewed by the various committees of the Bank . The ALCO/ total deposit portfolio by the FY 2076/77, which was 27.82% in
pricing committee represented by key units of the Bank regularly previous year. The Bank has been launching deposit products
discusses monitors and reviews the Bank’s specific and overall bundled with various schemes and is expected to introduce new
market situation of liquidity, interest rates, pricing, products deposit products with added measures to increase the retail
and other matters pertaining to Market Risks. Likewise Foreign deposit portfolio in the days to come. The importance of Branch
exchange risk is monitored and managed on a daily basis guided expansion cannot be undermined and the Bank is going to and
by the Treasury manuals and circulars (internal and regulatory is on process to add some new branches, which is expected to
both) that has adequately set the FCY limits to each individual. improve the Bank’s deposit mix/base.
Similarly, the Bank computes and analyzes the weighted
average interest rate spread periodically in the manner and The Bank has comfortable liquidity ratio and no immediate
form prescribed by NRB. Besides, ALCO/pricing committee is negative liquidity risks are observed. Our Liquidity ratio as at FY
vigilant towards any adverse market movements and incidents 2075/76 stood at 23.17%. The structural liquidity gap analysis
and takes appropriate and timely actions in the Bank , wherever shows the positive overall cumulative liquidity gap, and such
required. negative gap starts from the bucket of 181-270 days and 271-
365 days. As 60% of the Bank’s FD is maturing within 270 days,
The Bank is exposed to high funding risk or concentration risk generally such maturing FDs are replaced with new FDs. The Bank
as 20 large institutional deposits hold 29.62% of our deposit is very much conscious about unpredictable nature of liquidity
portfolio. To gradually manage the concentration risk, the Bank situation of Nepalese economy. As a part of its risk mitigating
112
strategy, liquidity scenario is closely monitored by all related framework, DR drill, policies review and requirement are put to
units, formally/informally discussed and market information RMC and the management for their attention.
timely disseminated at all appropriate levels. Further, adequate
investments are made on most liquid form of assets. d) Other risks
The Bank has always taken a cautious approach in relation i. ICT (Information and Communication Technology) & Card
to mitigating exchange risk arising from currency rate
fluctuations. While NRB permits net open position within 30% The Bank has its own IT Policy. IT functions have been
of the Core capital, we have confined ourselves to within 5% of segregated into IT operation, IT development and IT
the Core capital as on Asadh End 2076. As much as possible, infrastructure, wherein IT operation focuses more on
the Bank desires not to remain in open position, however in core Banking and other applications of the Bank , IT
situations when Bank’s books are closed at open position, development focuses on new solutions development in
adequate authorization from different hierarchy levels are IT and IT infrastructure focuses on hardware, network
required as defined in the delegation of treasury limits and and other IT technologies. The Bank has strong security
authorities manual. system of data and related software, hardware and
network peripherals of the Bank hosted in the Data
Interest rate risk is perceived to be high as it is directly linked Centre (DC) and Disaster Recovery Site (DRS). In view
with managing the liquidity portfolio of the Bank and also of the unforeseen risk in the ICT sector and in line
assumes high significance as far as overall profitability of the with NRB IT Guideline, the Bank has appointed an
Bank is concerned. Since we have high proportion of fixed Information Security Officer (ISO) for management of
deposits, in the situation when interest rates in market falls IT risks. From DR site selection perspective, Primary
our lending rates would not be competitive with the market and DR sites should be preferably in different seismic
rate. In this situation, our interest rate spread reduces which zone for CBS and other software to help curb issues
ultimately impacts on overall profitability and/or we could not arising from various disasters should there be a need
lend in the market as our lending rates would be higher due to to switch operations to DR site. Currently the Bank has
already committed high cost deposit mainly caused by high successfully migrated into the new CBS Finacle. The
proportion of fixed deposits. As interest income accounts for Bank has now DR site in different seismic zone
approximately 90 % of the total income of our Bank , we are
sensitive to interest rate risk due to the high proportion of fixed The Bank has already implemented OTP mechanism
deposits. in existing Internet Banking System. Privilege Access
Management (PAM) System with OTP also has been
The Bank has been cautiously making investments in secondary implemented to manage login credentials of ICT and
market. Last year, the Bank has made significant gain on share card systems. Web Application Firewall (WAF) and SIEM
trading. Investments are made as per Bank’s Investment Policy. (Security Information and Event Management) system
should be implemented soon along with industry
c) Operation Risk standard data center network structure. The Bank has
implemented host based and network based security
The Bank has formulated operation guidelines and procedures systems. To ensure data leakage prevention, the Bank
covering the various areas of operation. This year the Bank should deploy Data Leakage Prevention System.
set the target to review all the policies and guidelines by the
end of the year. A country circular was issued from CEO office The Bank has implemented Ticketing System to give
instructing all the units to forward all the policies and guidelines user support and Link Monitoring System to monitor ISP
to Risk unit and get it reviewed by the unit before approval and connectivity. The Bank has other monitoring system as
implementation. Several policies and guidelines were reviewed well to check health of the servers.
by respective department and were finalized after further
review by Risk unit. Some of the policies and guidelines are in Debit Card System needs to be regularly updated/
process of review. Various operations related circulars based upgraded (both hardware and software) to cater to the
on changes in regulatory provisions, emerging incidents in the increasing transaction volume and prevent business
Banking industry, technological developments, internal and disruptions and system failures. The Bank is upgrading
external observations are issued in a timely manner to promote the existing magnetic stripe based card to chip based
uniformity of understanding and working across all levels. card to prevent the risks associated with skimming
and cloning and for added security. Credit Card of the
The Bank has formulated an Operations Risk Framework and Bank is chip based card with magnetic stripe, which
Key Risk Indicators are already in place. Operation related is provided to the customers since start of the Credit
deficiencies are regularly raised and put to RMC and to the Card Service by the Bank . This has ensured proper and
management. Meeting of different functions within risk unit is secured transactions in Credit Card.
conducted on a regular basis to discuss on various operation,
credit, IT, market and reconciliation related issues and risks. In line with digitization of the Banking business, the
Major deficiencies observed in password handling, CCTV, IT Bank has started Mobile application based QR payment
setup, security and networking, contingency management mechanism and Viber Banking system to disseminate
information to customers in digitized module.
113
Kumari Bank Limited
ii. Human Resource
The Bank has Personnel Policy Guideline and considered in the Risk rating process.
other policies and circulars to streamline human The Bank 's internal risk assessment of its customer
resource activities in the Bank . There has been base in terms four significant business risk categories
regular monitoring of transactions in staffs’ account. viz. business or profession, Geographical location
Adequate information of all the staffs is taken at (countries we do business with), customer including
the time of recruitment and maintained in Bank’s PEP's, product and services, transactions or delivery
HR related software. This information is periodically channel are suggestive of the following:
updated whenever there is change. HR Committee of
the Bank is functional as per its own TOR which is in
accordance with the guideline issued by NRB. The Bank
has Disciplinary and Corporate Governance Committee
that meets on a regular basis to discuss on various HR
related issues.
HR is making progressive effort on the growth and

development of its manpower. The Bank is strictly
following the NRB’s regulation on requirement of
training; so the staffs at various levels have attained
training both inland and foreign. Bank has a practice
of conducting exit interview to the outgoing staffs to
receive feedback on the areas that needs improvement.
Efforts have always remained on training people as per
organization need. The manpower need is on the rise
coupled with the growth in Bank 's size. Hiring of trainee
level staffs (both at assistant level as well as officer level)
at regular intervals should enable the Bank to build
foundation for strong lower level base as well as middle
level management. Succession planning and filling in
key vacant positions has always remained a challenge
as staffs with the required technical skills always seem
to have higher bargaining power. However, the Bank is
concerned about the career planning/growth of staffs
at every level.
iii. AML (Anti Money Laundering)
As per the Bank 's policy, since we are dealing in simpler

business profile, we have assigned “Low”, “Medium”
& “High Risk” to our account relationships based on
our assessment. For this a ML/TF Risk Rating Matrix
guideline for Customer Risk Assessment is in place.
Each relationship is assessed for their perceived risk
using the Customer Due Diligence/ Risk Rating Form
that has been specifically designed for this purpose.
The Risk rating score is further reviewed by the
Branch Compliance Officer. We have recently put live,
customer sanction screening system to automate
name screening for purpose of identifying customer
who are PEPs or in the Sanction list. All accounts are
screened against Politically Exposed persons (PEP)
and sanctions/negative list database at the time of • Nepalese residents account for nearly 99.6% of the
Customer On boarding as well as these accounts are customer base who collectively hold around 99.8%
monitored daily in database. The Bank has also installed of the total deposit portfolio.
AML Solution “CPFDS” for transaction monitoring
and alert generation. With this our AML defenses has • The High Risk customers account for less than 1%
enhanced further. of the total customers which represents a minimal
segment of the population. PEP, NGO's, NPO’s, high
PEP status, negative list notifications and High Risk risk business etc. are included in this segment. High
Customers & Industries carry dominant Risk factor and Risk customers hold nearly 1 % of the total deposit
are thus accorded High Risk classification by default portfolio.
regardless of other risk factors that would have been
114
• There are 189 identified PEPs with us as at FYE
• Of the total customer base, 4% of the customers
2075/76, who hold a meager NPR 332 million of
are availing E-Banking / Internet Banking services.
the total deposits portfolios. The Bank has not
This is indicative of slow but steady shift of
maintained any account for foreign PEPs.
customer preference for cash less and paper less
Banking transaction. The main Money Laundering
• The Bank has not maintained any account for
concern in E-Banking is the difficulty in identifying
non-resident customers belonging to "monitored
the faceless customer doing the transaction. While
jurisdictions" as per FATF Public Statement. The
these services clearly have practical advantages
for clients in terms of convenience, they make
it more difficult to detect laundering activities
because some of the traditional methods of
supervision cannot be applied. On the other hand,
new technology and change in customer Banking
habits warrants robust security measures to thwart
cyber-attacks. Adequate transaction thresholds
are in place for electronic Banking transactions.
• The Bank has implemented SWIFT Sanction filter

for its Sanctions Compliance. With this our AML/
CFT defenses have enhanced considerably.
Besides, the Bank does not provide any Private Banking

services and also prohibits payable through account
and nested account services, which are prone to Money
laundering.
Bank has now maintained a list of prohibited

jurisdictions including list of high risk jurisdictions
in terms of corruption/ bribery, crime and poor AML
controls.
• As far as geographic risk is concerned, nearly 68%

of the deposit is concentrated in the Kathmandu
valley. The remaining deposit is held at Urban and
Rural Branches.
115
Kumari Bank Limited
SWOT
Analysis STRENGTH
• Clearly Defined Organizational Structure.
• Public trust.
• Extensive Branch Network.
• Diversified Products and Services.
• Strong Internal Control Framework and Code of Conduct.
• Adequate physical assets.
• Increasing trend in profitability.
• Good mix of young, energetic employees with guidance
from experienced employees.
• Emphasis on culture of innovation and creativity.
• Innovative streak in financial technology adoption.
WEAKNESS
• Implementation of sustainable branding practices.
• Enhanced management and human capital
development required for Bank's continued growth.
• Inadequate women-force at the Bank's Executive level.
• Need to have its own office premises for conduction of
its Banking activities.
116
THREAT
• Economic and Political Dynamics.
• Tough Competition in the Banking industry.
• Challenges in implementing different
compliance issues.
• Increasing threats in cyber security and
increasing cost in IT management.
• Rapid changes in technology, financial as well as
economic scenario.
• High operational risk in the Banking realm due
to increasing dependency on technology and
complexity of transactions.
OPPORTUNITY
• Possibility of an enhanced financial access
among the untapped population through its
extensive Banking network.
• Possibility of the business expansion in
agriculture, tourism and infrastructure sector .
• Opportunity for rapid-adoption of Information
Communication Technology (ICT) along with
Digitization.
• Opportunity of investing in high yield segments
for high value creation.
• Value Creation and enhancement by automation
and digitization.
• Implementaion of Mobile Tellers.
117
Kumari Bank Limited
Human
Resources
Being a service industry, management of people and management of risk are two key challenges for Bank s. Banking has been and
will always be a "People Business". Business needs along with efficient risk management is not possible without efficient and skilled
manpower. In todays world, the very survival of the Bank s would depend on customer satisfaction whose survival is questioned in
case of being unable to meet the customer expectations. Therefore, we articulate and emphasize the core values to attract and
retain customer segments which is nevertheless not possible without human resource. Sound, reliable, innovative values needs to
be emphasized through concrete actions and it would be the Bank’s human resource that would deliver this.
Total No.
Keeping in mind the immense support from one of the most valuable organizational resources i.e. the human resource, we
always try to distinguish ourself by creating our own niches or images, especially in transparent situations with a highOf Staff
level of
competitiveness. We have continued to lay great emphasis on acquiring the right people, retaining/ developing the right people,
managing people and correctly handling the exit of people to attain global standards in productivity, thereby maximizing value
+ - =
creation for our stakeholders. Banking industry is expected to take a quantum leap forward and therefore, the growth shall require
large number of people. We are always ready to hire the bunch of people of different caliber and potentiality and place them in such
a way so as to get maximum output through the efficiency they show while delivering service.
FY 074/75 Joined Left FY 075/76
Particulars 796 071/72 072/73
315 073/7468 074/75 075/76 AVERAGE1043
Number of employees 392 385 755 796 1043 674
Number of employees per branch (on an average) 11 11 10 9 10 10
Male Female
Per employee business (million) 66.95 77.54 59.20 78.36 72.92 70.99
Per employee income (million) 3.12 3.93 2.06 3.38 9.51 4.4
Per employee cost in million 0.73 0.81 0.48 0.81 0.75 0.72
Per employee Net Profit in million 1.01 1.86 0.88 1.31 1.17 1.18
660 383
loyee b
emp us
er
P
ine
ss (million)
72.92
mployee i
re n
Pe
co
me
9.51
(million)
r employee c
Pe
os
t in
0.75
million
y
mplo ee Net
re
Pe
Pr
ofit
1.17
in millio
n
Human Resources Department (HRD) plays an essential role in handling the employee-centered activities of an organization.
Human Resources Department of the Bank monitors and ensures that Bank’s HR policies are interpreted consistently across the
organization . We create a cordial environment to achieve our vision where employees can thrive and are enabled to deliver sustainable
organizational performance. People with different backgrounds, education, skills and experiences are given opportunities to serve
our organization and create a sustainable value for organization. We have the principles of transparency in recruitment, ethical work
culture, open communication, objective career development and unbiased remuneration and pay performance within the Bank .
We are committed to gender diversity and have been providing equal employment opportunity to aspiring candidates through fair
recruitment practices.
118
In order to enhance the skills, capabilities and knowledge of employees for doing a particular job. Training process moulds the
thinking of employees and leads to quality performance of employees. We have conducted approximately 758 trainings (including
in-house trainings) to employees for their motivation, skill-enhancement and development. Also, most importantly for motivating
and retaining the valued employees we have performance appraisal schemes based on which employee gets promoted. During the
FY 2075/76, 146 staffs have been promoted.
Opening employees 796

Joined during FY 2075/76 315
Retired during FY 2075/76 68
Total number of employees FY 2075/76 1043
Total No.
Of Staff
FY 074/75
+ - Left
= FY 075/76
Joined
796 315 68 1043
Male Female
660 383
loyee b
emp us
er
P
KBL Medical Fund: KBL Gratuity Fund:

ine
ss (million)
72.92
Every employee under permanent-enrollment at the Bank We have a separate gratuity-fund management unit, called the
receives an annual medical allowance, equivalent to one month Kumari Bank Employee Retirement Fund, which is managed
of their basic-remuneration upto a fixed-sum. The said-sum is and overseen collectively by the Management Committee,
credited into the respective medical-staff accounts. Staffs Labor Relations Committee and the KBL Employee Union. The
have to present relevant medical-bills alongwith doctor's mploye
contribution and benefits are awarded as per the KBL employee
presecriptions for re-imbursement of medical-expenses, r e at e iguidelines.
n
Pe
co
the time of medical claim. The staff-medical accounts are

me
9.51
only operated by the Human Resources department and all Staff Loan Facilities:
(million)
the unutilized medical balance are credited to their respective We have some staff-loan schemes in place to help our employees
accounts post retirement. meet their personal/social/financial obligations because our
employees are one of the crucial factors of business-success.
KBL Retirement Fund: Therefore, their well-being is of prime priority to us. Basically,
A retirement fund refers to the monetary contribution to the following loan-schemes are made available to the staffs:
a retirement-pna of an individual or a group of individuals. r employee c
Pe
A regulalrly contributed retirement planm/scheme can aid • Staff Home Loan Scheme
os
employees to lead a relatively comfortable life, with adequate • Staff Overdraft Scheme
t in
funds to meet their necessary expenses, post retirement. •

0.75
Staff Personal Loan Scheme
million
Therefore, The Bank does not have a separate retirement fund • Staff Motorbike Loan Scheme
unit, wherein 10% from the employee and 10% match from
the employer equates to a 20% contribution on the monthly Other than these listed-loan facilities, various allowances such
ployee Ne
em is made.
paycheck to Employee Provident Fund r(EPF) t EPF is as relocation/outstation allowance, evening and holiday counter
an autonomous provident-fund management organization allowance, Teller-risk, Inchargeship, Leave fare allowance,
Pe
Pr
ofit
on behalf of the Government of Nepal for all the government, Bonus, Insurance and a few other allowances and incentives
1.17
in millio
public and private sector employees. are awarded to eligible staffs, as per the employee-welfare
schemes and the approval of the Board and the management, in
line with the labour-laws of the country.
n
119
Kumari Bank Limited
On the Culture of Voicing Concerns
We have a responsibility to our clients, investors, communities and

employees. Earning and maintaining the trust of these stakeholders
is fundamental. We can only do this by always acting with integrity and
holding ourselves to high standards.
Acting in accordance with our codes of conduct is vital for us to be a

Bank that achieves sustainable growth and success. The Code sets out
our standards of behavior and conduct to which we expect our people to
adhere. Our Codes of Conduct are at the heart of everything we do. Its
success depends on all employees using their judgment to navigate what
is sometimes a complex regulatory environment and seeking advice as
appropriate. It also highlights that critical matters should be escalated
promptly and appropriately. The Code is designed to ensure that we
conduct ourselves ethically – with integrity, and in accordance with
Kumari Bank’s policies and procedures as well as the laws and regulations
that apply to us across the country. It is not meant to be referred to
simply, as a set of rules for specific situations, but as a general guide,
underpinning a simple but basic principle – that we ought to do well by
doing GOOD and what is right. It articulates what our Bank stands for and
what we want our comprehensive culture to be.
120
We want to foster an environment that is open and inclusive, where opinions and
“speaking up” are valued and our employees’ and our organization’s success is built
on respect, collaboration and teamwork in serving our clients, stakeholders and the
communities, we operate in. We are committed to advocating a “speak up” culture,
an environment where all employees feel comfortable in voicing their concerns
about discrepancies felt, misbehavior or any issues that they may come across in
their daily work.
“Speak up” is all about supporting an open and honest dialogue throughout the
organization. Our senior management including the CEO advocates an open-door
policy, wherein employees are encouraged to approach them with any issues,
concerns and seek out acceptable and practical suggestions or solutions. This
includes providing feedback when things are going well and alerting the management
to potential problems and scope for improvements.
Employees and managers are highly encouraged to exchange feedback in their

regular conversations as part of the Bank’s total performance approach. The
Bank also provides a range of other channels to report suspected misconduct,
such as violations of laws, rules and regulations, or internal policies, pertaining
to even Compliance and Legal teams through HR department, which is handled
anonymously.
In August of 2019, Kumari Bank conducted a 3-day leadership conference, with the
Bank’s BMs, OIs and representatives from across the nation in attendance, carrying
the theme – “Transforming the Mindset- Be the Change”. The conference addressed
a diverse-mix of ideas and concerns and the urgent need to realize and act on the
potential within and how we, as a team, can pave the way for aggressive growth
and market-leadership once we learn to integrate modern technology into our core-
operations and with the right-mix of talent, creativity and drive.
Following that, we have also conducted several in-house and external training
initiatives to develop awareness, enhance soft-skills such as : clear communication,
time-management and planning and execution to aid employee-empowerment to
help them feel confident, and to challenge behavior that could represent conduct
risk, raise concerns of ethical dilemmas and “speak up” on how we can do things
better. The culture is centered on imbibing the values, beliefs and principles
embodied in the policies laid down in our Codes of Conduct and more importantly,
fostering an environment that is open and inclusive, where opinions, ideas and
observations regarding the short-comings, drawbacks, hindrances and “speaking
up” is highly encouraged and sought-after.
121
Kumari Bank Limited
On the Culture of Retention

The KBL culture is all about creating a culture of
retention and sustainability. As such, we treat our new • Compensation and Rewards – Pay levels and
and old-recruits as one of our fundamental assets. Our satisfaction are, but modest predictors of an
investments in each employee from recruitment to final employee's decision to leave the organization;
placement are based on that guiding-principle. One however organizations can lead the market with
way to achieve that is by having a clear definition of the a strong compensation and reward package as
organizational culture, and identifying the type of talent employees often look elsewhere because of poor
that would thrive in such environments. Attracting compensation and benefits. Organizations can
and recruiting top talent requires time, resources and explicitly link rewards to retention. Research shows
capital. However, these are all wasted if employees are strong correlations between defined compensation
not positioned to stay and succeed within the company. & rewards and longer tenure. Additionally,
So, the period of initial adjustment and acclimatization organizations can also look to intrinsic rewards such
plays a crucial role in value-creation, employer-branding, as enhanced decision-making autonomy.
thereby fostering grounds for retention.
• Effective Leadership and Succession – An
We exercise great control and utmost vigilance in our HR employee's relationship with his/her immediate
operations, as outlined below, to ensure the said-culture ranking supervisor or manager is equally important
of sustainable investments. to making an employee feel valued within the
organization. Supervisors need to motivate their
• Recruitment – Presenting applicants with realistic employees while building loyalty in their key-people.
job previews during the recruitment process has a Managers need to reinforce employee productivity
positive effect on retaining new hires. Employers and open communication, to coach them and provide
that are transparent about the positive and negative meaningful feedback and inspire employees to work
aspects of the job, as well as the challenges and as an effective team. For this, we have systems
expectations are positioning themselves to recruit to prepare managers and supervisors to better
and retain stronger candidates. At Kumari Bank , we lead and develop effective relationships with their
have and always will emulate such practice. subordinates.
• Selection – There are plethora of selection tools that In this regard, a culture of succession needs to
can help predict job performance and subsequent- be in place so that organizational re-shuffling and
retention. These include both subjective (interviews, restructuring doesn’t hinder everyday workflow,
application and resume evaluations) and objective at any given time. Likewise, this presents existing
methods (For example, utilizing biographical data human-capital with opportunities for diversification
during selection). Biodata empirically identifies life and career-growth, as well. To ensure we develop
experiences that differentiate among ones looking future leaders for the Bank , we provide a number
for long-term stability within an organization and of programs to foster management and leadership
those who aren’t as committed. Life experiences skills. The purpose is to equip our people with the
associated with employees may include tenure necessary capabilities to lead the organization
in previous jobs, education experiences, and through change, develop their teams, manage
involvement and leadership in related work- performance and ensure business success in line
experiences. with the Bank’s strategy and our values and beliefs.
We have regular executive and management trainings
• Socialization – Socialization practices delivered via to facilitate said-growth. Such working-environment
a strategic on boarding and assimilation program is conducive to an individual's effectiveness as a
can help new employees become embedded in the leader and helps boast a climate of learning, trust
company and thus more likely to stay. Research and teamwork in an organization. Likewise, we
shows that socialization practices can help new have incorporated retention benchmark into our
hires better assimilate into a company-culture. performance-evaluation models, to encourage and
These practices include shared and individualized retain capable and experienced human-capital.
learning experiences, activities that allow people to
get to know one another. Such practices may include • Employee Engagement – Employees, who are
providing employees with a role model, mentor or satisfied with their jobs, enjoy their work and the
trainer or providing timely and adequate feedback. organization. They take pride in the company and
At Kumari Bank , we are gradually embracing such feel their contributions are impactful and are less
approaches to internal socialization and employee- likely to quit than their non-engaged peers. Engaged
bonding. employees bear crucial competitive advantages,
122
including higher productivity and lower employee Overdraft facility, vehicle and home loans , Retirement
turnover. This is where our job-rotation and schemes, etc.
individual opportunities and training schemes come
into play. Providing ample training and development Similarly, diversity and inclusion is vital to business
opportunities can discourage turnover by keeping success and is integral to practices and culture. In 2018,
employees satisfied and well-positioned for future we made further progress in our integrated, multi-
growth opportunities. By creating a dynamic dimensional approach, which has been recognized
learning environment, we are constantly enhancing internally and externally. As the Bank continued to
the engagement level and promoting a sense of implement well-devised strategies in 2018, these HR
belongingness and retention. In fact, dissatisfaction functions helped manage significant organizational
with potential career development is one of the top changes such as the integration of the four newly-
three reasons employees (Source: Wikipedia) often acquired BFIs, including the restructuring of the overall
feel inclined to look elsewhere. management-team and injection of fresh human-
capital into the talent-pool. Furthermore, the HR team
Understanding and responding to the trends shaping provided support via management-training programs and
the future of work enables us to create the best possible workshops to prepare them for the foundational changes
environment for our workforce. In 2018, Kumari Bank built our Bank was going through.
a number of initiatives to improve existing HR systems and
processes as well as develop new tools to enhance the
employee experience. At the same time, in line with our
focus on internal mobility, we have continued our efforts
to retain expertise and experience by providing attractive
and diverse range of career opportunities. Internal
mobility also helps us turn necessary restructuring into
an opportunity. As we adopt digital tools and new ways
of working, we also need to ensure our employees are
equipped with the right skills to ensure they perform to
the best of their capabilities. To support this objective,
we provide access to various trainings and make learning
available via our shared drive access and online learning
platform. This covers the entire range of mandatory
training/s and any other additional skills, required to
perform well on the job available learning at Kumari Bank .
Furthermore, it is crucial for us to understand what

motivates and engages our employees and how they
perceive their work environment. Therefore, we
encourage open and regular dialogue between managers
and their team members, conduct surveys and offer
a framework which ensures they feel comfortable to
speak up, raise concerns and feel empowered to initiate
improvements. Reflecting the ambitions and needs of
our employees, we have adopted a holistic approach to
performance management, which includes providing
regular meaningful feedback and recognition, while
holding people accountable and promoting continuous
development. This approach is directly linked to our
compensation framework and promotion process. In
addition, to ensure our employees’ financial, social,
mental and physical wellbeing throughout all stages of
their lives while employed at Kumari Bank , we offer a wide
range of benefits such as life and medical insurance, Staff
123
Kumari Bank Limited
Combating
which are often difficult to detect and catch. Both of these
crimes are often international, as money launderers and terrorist
financiers rely on trans-border movement of such funds to
Financial facilitate their plans. Moreover, it is very common for these
criminals to make use of corrupt connections in government
Threats and businesses, etc. these could include financial institution

employees, accountants, government officials, and other service
providers.
Financial crime is defined as crime that is specifically committed
against property. It often involves an unlawful conversion of the In order to mitigate these unlawful and detrimental practices,
ownership of property for one’s own personal use and benefit. the Bank employs a strict framework to screen and mitigate the
These crimes are almost always committed for the personal incorporation of such dirty-money (illegitimate and undisclosed
benefit of the criminal, and they involve an illegal conversion of sources of fund) through proper KYC procedures and transaction
ownership of the property that is involved. Financial crimes can monitoring. The co-ordinated approach of the Bank’s Operations
occur in many different forms and takes place across the globe. and Compliance unit along with other departments renders it
Some of the most common crimes faced in the financial sector possible. At the initial phase of account-opening, post collection
are money laundering, terrorist financing, fraud, tax evasion, of an individual’s data, the individual/potential customer details
embezzlement, forgery, counterfeiting, and identity theft. These goes through a Sanction and PEP (Politically Exposed Person)
crimes are committed every single day, and governments across search in an international database through a screening-software
the globe are constantly prosecuting financial criminals while called Accuity Web.
searching for ways to mitigate the prevalence of such heinous
crimes. “Name Screening refers to the process of determining whether
any of the Bank’s existing or potential customers are part of
Such crimes involve activities like identity-theft, credit and debit
any blacklists or regulatory lists.” Once
card frauds, tax-evasion, forgery, embezzlement, etc and extend
the name gets through the initial
to computer crime, elder abuse, burglary, armed robbery, and even
searches, the risk-profiling
violent crimes such as robbery or murder. Financial crimes may be
of the customers is done.
carried out by individuals, corporations, governments, and even
This ensures that PEP and
entire economies.
high-risk customers can be
We need to keep money laundering and financial crimes in check vigilantly monitored at all
because of its detrimental effects to our community. As an times, once they’ve entered
industry built on the proceeds of corruption and crime, it bears the mainstream financial
detrimental effects to the integrity and foundation of a law- system. This ensures that the
governed, righteous society. It has been a pivotal issue in the identity of the customer does
global arena for several decades now, with authorities constantly not match with any person with
looking for new ways to track down and prevent financial crime, known criminal-background or
and criminals continuously developing innovative tactics in order with banned entities such as
to stay ahead. As a responsible and aware citizen, it is critical to terrorist individuals or terrorist
understand what financial crime is and how it works. organizations.
The two most prevalent types of financial crime faced today are Under the Bank’s risk-mitigation
money laundering and terrorist financing. While the term “money framework, various policies,
laundering” is fairly straightforward, terrorist financing is bit more procedures and framework
complicated. In essence, though, money laundering is simply for identification of
the act of disguising funds/proceeds, obtained from predicate particularly high-risk
offence. Cartels and mafia groups are some of the most prominent customers from
money launderers in popular news media, but money laundering Money Laundering
can also extend beyond organized crime-groups to inconspicuous and Reputation Risk
money-mules and instant payment mechanisms. Perspective (e.g.
Politically Exposed
We need to keep anti-money laundering endeavors in check
Persons (PEPs),
because it injures the basic foundations of the comprehensive
persons, entities
financial industry. Unchecked money laundering changes the
located in high risk
demand for money, poses risks to Bank soundness, contamination
locations, etc.) as
effects on legal financial transactions, and increased volatility of
well as conduction
international capital flows and exchange rates due to unanticipated
of enhanced due
cross-border asset transfers. Also, as it rewards corruption and
diligence in dealings
crime, successful money laundering damages the integrity of the
with customers
entire society and undermines democracy and the rule of the law.
under the listed
As a safe-keeper and mobilizer of public funds, Bank s need to categories.
maintain high-standards of integrity, transparency and good faith
to ensure public-faith and sustainability of the entire Banking Name screening is
realm. Hence, Bank s and financial institutions have exercised used to identify such
prompt implementation of anti-money laundering and financial individuals and profile their
terrorism combat mechanisms. It is imperative that Banks adhere risks in the Bank’s records
to principles of accountability, transparency and compliance through the use of CPFDS
with all regulatory requirements and disclosures. It is of utmost (Customer Profiling and Fraud
importance to gain public trust as well as the confidence of the Detection System) software. Upon
government and all regulatory bodies. completion of the name-screening,
risk-profiling takes place and an enhanced
Criminals involved in money-laundering also provide financing to customer due-diligence (ECDD) is done. Besides the KYC details
terrorist-activities generally use very sophisticated techniques, of the direct customer, additional documents are collected,
124
analyzed and input into the system. Further documents for ECDD • Employees are screened as a part of their pre-recruitment
include: process, besides routine-screening of the existing employees.
• Counter parties to the cross-border transactions (i.e. remitters,
1. Details of immediate family members (Parents, Spouse and beneficiaries, intermediary Bank s, other intermediaries,etc.) in
children) remittance or trade transactions are screened.
2. Evidence of Income-Source • High-risk customers or suspicious transactions reviews are
3. Proof of Verified Address subject to enhanced due diligence and vigilant monitoring.
We implement the Three Lines of Defense model wherein International operating guidelines dictate that less than 5% of our
screening, risk-assessment and control through the Bank’s customers can fall under the high-risk category. If the rate exceeds
branches, relationship officers and the customer care and the prescribed rate, chances of business ties with international
grievance-handling unit is the first line of defense. Similarly, the alliances and Nostro Banks being severed arises, resulting in
various risk controls and compliance oversight unit put in place reputational as well as business-risk. As of date, less than 1% of
by the management are the second line of defense. This line-of- our total customers are profiled as high-risk customers.
defense provides policies, frameworks, tools, techniques and
support to enable risk and compliance to be managed in the first Nostro dealings are sensitive-cases because foreign alliances
line, conducts effective monitoring, and helps ensure consistency are strict about deviations from prescribed regulations and
in parameters of risk-measurement. Likewise, within this even minute deviations can result in massive business losses.
framework, independent assurance via internal audit acts as the The details of the BOD members and select-members with
third line of defense. considerable authority/influence over the organizational activities
are updated annually in the records sent to existing and new
Audit controls, which lie outside the risk management Nostro alliances. The documents include details such as:
processes of the first two lines of defense, ensure
that the first two lines operate effectively and • Academic/Educational Qualifications
advise on how they could be enhanced. Tasked • Details of business/es (if any)
by and in direct reporting line to the Board/Audit • KYC Documents
committee, they provide an evaluation, through • Details of immediate family members
a risk-based approach, on the effectiveness of • Evidence of Income-Source
governance, risk management, and internal control • Proof of Verified Address
to the organization’s governing body and senior
management. It can also give assurance to sector CUSTOMER SCREENING
regulators and external auditors that appropriate
controls and processes are in place and are operating
effectively. Customer
Detailed
Co-ordinated Approach Screening
The key-methods being currently used to combat such Screening
financial crimes is extensive monitoring and reporting Of The Bank’s Operations, Software Accuity,
Customer-service And Database-Go AML
of suspicious cases through use of sophisticated- Compliance Unit PEP (Politically
technologies. The use of sophisticated technology Exposed People)
and global databases have made it easier to PEP search
catch criminals in the act as it allows financial
professionals to quickly gather, organize, and
view data regarding accounts and dubious
transactions. RISK PROFILING
GoAML basically refers to a software/ Enhanced Customer Due Diligence for
screening portal devised by our regulatory high risk, PEP and similar other
body, Nepal Rastra Bank , which helps
us input, report and record all relevant
data and information related to a MONITORING TRANSACTIONS
suspicious transaction or a customer,
including the details of depositor,
Besides, regular disclosures to our correspondent Bank and
beneficiary or third-party involved in a
the regulatory bodies, we also obtain updated information and
financial transaction. Procedures like
relevant disclosures from our alliances, before venturing into any
sifting through lists of Politically Exposed
business collaborations. We recognize that proper disclosures
Persons and other individuals who are at
of the company’s culture, governance, organizational structure,
high-risk of committing financial crimes,
executive management team and management policies is a dual-
and compilation of such information in an
concern, if proper risk-assessment and internal controls are to be
organized and comprehensive manner help us
maintained and adhered to. The Risk and Compliance unit oversees
prevent easy-integration of such proceeds-of-
these procedures, in coordination with other departments
crime into the legitimate financial system.
of the Bank . We are committed to ensure financial integrity,
transparency and rigorous adoption of AML/CFT guidelines and
Extreme vigilance and care is taken, during each
frameworks to help retain the integrity of our financial systems.
phase of every transaction to prevent or disrupt the
mechanism-listed above. Proper frameworks regarding
Furthermore, our clearly defined roles and responsibilities across
timely and regular updation and disclosure of our KYC
the organization helps keep conflict of interest in check. This
details to the NRB are in place along with some listed preventive
is crucial, because such circumstances lead to compromised
measures:
professional judgements or actions and impacts the integrity of
decision-making. By containing conflicts of interest via clearly
• New customers are screened at the time of account-opening.
defined organizational roles and framework risk-governance, we
• Screening of legacy customers, i.e. screening of the Bank’s
at Kumari Bank strengthen compliance and ethics and induce a
existing customers is done at regular intervals.
culture of accountability throughout the organization.
125
Kumari Bank Limited
avenue for cyber fraud and the modus operandi of fraud from
IT
both internal staffs and external parties have been changing.
Frauds related to debit and credit card, ATM, internet Banking
and mobile Banking are some of the emerging chalolenges
Security faced by the BFIs across the globe. In this scenario, NRB has
felt necessary to regulate and guide IT related activities in
commercial Bank s with the objectives of strengthening Bank s
for tackling with emerging cyber frauds, managing information
Maintaining appropriate Information technologyprudently and mitigating risk aroused from
Technology monitoring in Banking implementation of information technology.
The advent of Information technology in the financial sector
has changed the way we do business. Contrary to the past, IT In line with the NRB guidelines on information technology and
has become an integral part of the business-force, as opposed payment-systems governance, following measures are in place
to just a support-unit. The growing competition, growing to mitigate the aforementioned risks of IT-incorporation in
expectations led to increased awareness amongst Bank s on the business sector in terms of branch-automation as well as
the role and importance of technology in Banking. The arrival of alternative delivery channels:
foreign Bank s with their superior state-of-the-art technology-
based services has pushed Nepalese Bank s also to follow suit • Presence of a board approved IT related strategy and
by going in for the latest technologies so as to meet the threat policy, which is reviewed at least annually. There must be a
of competition and retain their customer base. detailed operational procedures and guidelines to manage
all IT operations.
The fierce competition in the Nepalese Banking realm today
has led to a paradigm shift in the ways Banking is done in • Organizational structure for IT should be commensurate
Nepal. The Nepalese Banking industry, today is in the midst of with the size, scale and nature of business activities
an IT revolution. A combination of regulatory and competitive carried out by the Bank .
reasons, have led to increasing importance of total Banking
automation in the Nepali Banking Industry. • Banks should assess the requirement of expertise to
successfully complete required IT functions. A periodic IT
Information Technology has basically been used under training requirement for IT personnel according to the IT
two different avenues in Banking. The first is in terms functions of the Bank should be assessed.
of Communication and Connectivity and the second is
business process re-engineering. Information technology • Banks should have performance monitoring and measuring
enables sophisticated product development, better market system of IT functions and it should be reported to
infrastructure, implementation of reliable techniques for appropriate level of management periodically.
control of risks and helps the financial intermediaries to reach
geographically distant and diversified markets. • IT related risk should be considered in the risk management
policy or operational risk policy of the Bank and it should
In view of this, technology has changed the contours of three cover all e-Banking activities. Periodic update of IT-risk
major functions performed by Bank s, i.e., access to liquidity, management framework is essential.
transformation of assets and monitoring of risks. Furthermore,
information technology and the communication networking • Banks are encouraged to implement international IT
systems have a crucial bearing on the efficiency of money, control framework such as COBITiias applicable to their IT
capital and foreign exchange markets. environment.
Internet has significantly influenced delivery channels of the

Bank s. It has emerged as an important medium for delivery of
Banking products & services. Detailed guidelines of the Nepal
Rastra Bank for Internet Banking has prepared the necessary
ground for growth of all electronic mediums such as: Internet
Banking, Mobile-Banking, Eloctronic fund transfer, etc in Nepal.
Alongwith the endless possibilities and avenues of Banking,

such advancements also invite a plethora of new challenges of
governance and management. Issues of tackling with changes
in technology, system-migration, maintaining an adequate
internal control system, limiting access to system and data
from unauthorized access, securing electronic transactions,
meeting legal requirements, managing outsourcing services,
and managing other IT related risks have emerged in the
Nepalese Banking industry.
Modern and sophisticated delivery channels such as ATM,

internet Banking, mobile Banking is not only associated with an
increased risk of financial loss and electronic frauds but also
contributes to operational risk of the Bank as well as some other
Banking risks like credit risk, reputation risk, compliance risk,
market risk, strategic risk. Similarly, emerging concepts such
as virtualization, data centre and disaster recovery site hosting,
security outsourcing etc. have also increased the challenges
of dealing with these issues.Technology has also given new
126
• The board should be adequately aware of the IT resources environment via our online and offline communication portals.
of the Bank and ensure that it is sufficient to meet the Precise information about the responsibilities, obligations and
business requirement. rights of customers and Bank regarding electronic transaction
is also delivered to customers. We regularly disseminate
• Bank should designate a senior official of the Bank as information relevant to dispute or problem resolution process
Information Security Officer (ISO) who will be responsible in case of any security breaches and fraudulent access to
for enforcing information security policy of the Bank . ISO customer's account. The condition on which loss will be
will also be responsible for coordinating and communicating attributable to the Bank or their customers should be clearly
security related issues within the organization or with explained, at the time of service sign-ups.
relevant external organization.
Robust information is crucial to achieve business goals and
• Bank needs to carry out a thorough risk-analysis prior to for managing risk prudently in Bank s. Accuracy, integrity,
adopting new technology/system since it can potentially consistency, completeness, validity, timeliness, accessibility,
introduce new risk exposure.The new technology/system usability and auditability are the requirements of information
should be assessed as a part of product approval process processed and stored electronically. To achieve these data
which incorporates security related issues and regulatory qualities, we employ and maintain comprehensive information
requirements. The new technology/system should fulfil security programs.
among other things, security related aspect, regulatory
and legal aspects, employed industry standard controls
With a board approved Information Security Policy addressing
or compensating controls and should be tested to ensure
all electronic delivery channels and payment systems, which
security issues of the technology. is well-communicated to employees, contractors/suppliers,
consultant and officials, we conduct Risk Assessment
• Banks should have process in place to identify and periodically (at least annually) for each asset that has possibility
adequately address the legal risk arising from cyber law of impacting the CIA (Confidentiality, Integrity and Availability).
and electronic transaction related laws and acts of Nepal. We take necessary measures to ensure that all our employees,
consultants and contractors are aware of information security
Other than these, several guidelines for information disclosure policy of the Bank and comply with it through clear job
and grievance-handling are in place to ensure little to no IT description, employee agreements, policy awareness and its
risks. We provide clear information about the services, cost, acknowledgements.
security features, risk and benefits of the electronic-Banking
Likewise, in terms of access authorization for Bank 's
information, we disclose necessary information on a "need to
know" basis, with least privilege and for a required time only.
We also closely supervise individuals with privileged access to
the system and information, so that data-misuse doesn't take
place. With all system activities logged, access to system by
privileged users is tracked and monitored with strong controls
and security practices in place. We implement appropriate
physical and environment controls taking into consideration
of threats, and based on the entity's unique geographical
location, building configuration, neighboring entities, etc to
secure critical hardware, system and information.
In the same vein, we recognize that information security

is not a one-time activity and is not completed with one-
time purchase and installation of suitable hardware
or software. In order to makie it successful, we
need to institutionalize processes to regularly
assess the security health of the organization
and detect and fix the vulnerabilities, as and
when detected. It is recommended to conduct
penetration testing of the system periodically.
We ensure system-hardening i.e. network and
data configuration with the highest level of
security setting in operating system, firewall
and system software. The default password/s
are changed immediately after
installation. The updates, patches and
enhancements for security should
be installed as recommended by
the vendors. We also implement
comprehensive computer virus
protection mechanisms and have
deployed strong cryptography and
end-to-end encryption to protect
customer PINs, user passwords and
other sensitive data in networks and in storage.
Additonally, we have installed firewalls between

internal and external networks as well as between
geographically separate sites,
according to our network security
policy. We hold ourselves accountable
127
Kumari Bank Limited
for the operation and maintainenance of adequate and effective security of information, stored in mobile devices and encryption
authentication, validation and related security measures to of transaction information and PIN/Password from mobile
ensure accurate customer-verification before granting access devices to the Bank 's system while providing Banking services
to customer accounts and before any transaction is executed. using mobile devices. Moreover, additional controls like daily
We also make sure a thorough audit trail with transaction ID, transaction limit, per transaction limit etc. have also be defined
date, time, originator ID, authorizer ID, action taken etc. is in cases of online/SMS based fund transfers.
available for each application handling sensitive information.
The said-audit trail is also in compliant with with regulatory, As the risk and trends of cyber attack is becoming more
legal and other requirements and also ensures integrity of sophisticated and widely-prevalent, implementation of two-
information. Such records are stored to be made available even factor authentication and instant alerts have aided secure fund
after system-migration and updatation. transfers through internet Banking facility. The authentication
methodology also commensurates with the risk of internet
We ensure that all applications used by the Bank maintains Banking. To sum up, we have implemented a diverse range
data-integrity and is free of malware and any hidden channels of phyiscal as well as non-physical mechanisms to ensure a
of data processing. We have adopted procedures to ensure the comprehensive protection from traditional and emerging cyber
integrity and consistency of all critical data stored in electronic threats and attacks.
form, such as databases, data warehouses and data archives.
updating database by accessing back-end directly. But if it has
to be done due to genuine business need, it should be done
under close supervision and after due authorization. In the
event of data pertaining to Nepalese operations being stored
and/or processed abroad, there needs to be suitable controls
like segregationof data and strict access controls based on
principle of "need to know" and "least privilege" and robust
control process.
Information and inventory assets in Bank should be recorded

and classified according to information-criticality. Security
requirement and corresponding access control mechanism
for each class and is commensurate with the level of criticality.
Likewise, employees with privileged-access such as system
administrator, security officer or officer of other critical
system are scrutinized via additional screening process such as
background check,credit check etc before assigning respective
jobs.
We have a stern data-security policy and procedures in place

to ensure security of data stored or transmitted electronically.
This covers, among other things appropriate data disposal
procedures, data storage in portable devices, media-security
while in transit or in storage, physical and environmental control
of storage media, encryption of customer's critical information
being transmitted, transported or delivered to other locations.
Appropriate security risks are assessed and appropriate
additional controls are applied in cases of wireless network. In
view of keeping our policies and risk-assesment and mitigation
framework relevant, we make sure to periodically update
security policies, guidelines and education program, in line with
the latest threats and changes in modus operandiof electronic
attacks.
Alongwith these listed precautions, physical security

mechanisms such as CCTV-installations at each ATM location
with adequate lighting inside ATM centre so as to capture clear
picture of person doing ATM operation. However, CCTV should
also not capture the cutomer's PIN, so as to not cause breach
of privacy. Additonally, secure transmission of message using
appropriate encryptions from ATM, controls relating to ATM key
generation, loading, destruction, firewall, antivirus, secure PIN
generation, adequate segregation of duty while creating PIN
and card is also employed. For that, we ensure that electronic
card and its PIN is not under control of single person from the
point of production to the point-of delivery to the customer. PIN
and card are always kept separate at any point of time until it
reaches the customer.
Likewise, for debit / credit card transactions at POS terminals,

the existing signature based system has been replaced, to
a greater extent, with PIN based authorization system and
non-PIN based POS terminals are in the process of being
removed/replaced. We have already replaced the old magnetic
stripe cards with chip-based cards, which are more secure.
Furthermore, online payments via cards are now operated via
two-factor authentication and instant alert/s is provided to
customers via email/SMS/automated voice call. We ensure
128
Bank s commonly undertake a wide range of activities. However, Bank
s continue to have in common the basic activities of deposit taking,
borrowing, lending, settlement, trading and treasury operations.
They have custody of large amounts of monetary items, including
cash and negotiable instruments, whose physical security has to be
safeguarded during transfer and while being stored. They also have
custody and control of negotiable instruments and other assets that are
readily transferable in electronic form. The liquidity characteristics of
these items make Bank s vulnerable to misappropriation and fraud. Bank s
therefore need to establish formal operating procedures, well-defined limits
for individual discretion and rigorous systems of internal control.
They operate with very high leverage (that is, the ratio of capital to total assets is low),
which increases Bank s’ vulnerability to adverse economic events. Likewise, they have assets that can
rapidly change in value and whose value is often difficult to determine. Consequentially a relatively small
decrease in asset values may have a significant effect on their capital and potentially on their regulatory
solvency.
Similarly, they generally derive a significant amount of their funding from short-term deposits (either
insured or uninsured). A loss of confidence by depositors in a Bank’s solvency may quickly result in
a liquidity crisis. Bank s have fiduciary duties in respect of the assets they hold that belong to other
persons. This may give rise to liabilities for breach of trust. They, therefore, need to establish operating
procedures and internal controls designed to ensure that they deal with such assets only in accordance
with the terms on which the assets were transferred to the Bank . They engage in a large volume and
variety of transactions whose value may be significant. This ordinarily requires complex accounting and
internal control systems and widespread use of Information Technology (IT).
Last but not the least, they ordinarily operate through networks of branches and departments that
are geographically dispersed. This necessarily involves a greater decentralization of authority and
dispersal of accounting and control functions, with consequential difficulties in maintaining uniform
operating practices and accounting systems, particularly when the branch network transcends national
boundaries. This is where the need of adequate system of inspection, monitoring and financial controls
come in. The audit committee, management, and the independent auditor all have distinct roles.
The audit committee is familiar with the processes and controls management has put in place and
understand whether those processes and controls are designed and operating effectively. The audit
committee works with management, the internal auditors, and the independent auditor to gain the
knowledge needed to provide appropriate oversight of various Banking operations. Likewise, the
audit committee is also responsible for overseeing the entire financial reporting process. It is familiar
with the processes and controls that management has established and determine whether they were
designed effectively. The audits of financial statements and consolidated financial statements as well
as any assertions made in respect to its Banking activities in its financial statements are taken into
consideration throughout the auditing process.
In a nutshell, audit function of Bank to assess to, highlight and mitigate the risks that are unique to the
Banking operations.
Internal Audit function of Bank provides assurance to the board that the organization risk management
process are managing risks effectively in relation to the appetite. The approach followed is not about
auditing risks but about auditing the management of risk and therefore focus is on the processes
applied by the management team which includes identifying the assurance and prioritizing the area
on which the board requires the objective assurance. Audit department categorizes and prioritizes
and links risk to different assignments and draws up a periodic plan accordingly and reports to the
management and audit committee. Audit committee gives assurance to the board if management has
identified, assessed and responded to risks above and below the risk appetite or not.
129
Kumari Bank Limited
5
Management
Leadership
& CSR
1. Management Leadership 131

2. Leadership Conference Glimpses 132
3. Our Commitment to CSR 136
4. Sustainability Approach 146
5. Kumari Foundation 150
130
Management
Leadership
About the Annual Management Leadership Conference
In August of 2019, Kumari Bank conducted a 3-day long fierce-competition faced by the Banks, today. Similarly,
leadership conference, with the Bank’s Branch Managers, to achieve remarkable growth and market-leadership, the
Operation Incharges, departmental heads, and other keynote speakers discussed the need to have adequate
officials from across the nation in attendance. The event technical knowhow on integrating modern technology
revolved around the theme “Transforming the Mindset- into our core-operations, with the right-mix of talent,
Be the Change”. creativity and drive.
The key-note speakers at the conference addressed a Likewise, the conference also shed light on the
diverse-mix of ideas and concerns and the immediate widely-accepted management principle of employing
need to realize and act on the potential within us all, constructive-criticism and conflict-resolution, as a means
as leaders. One of the pressing issues discussed was to find ways to tackle burning issues within the realm of
how through unified approcah, we can substantially Banking. The conference ended on a positive note, urging
enhance our customer-care and grievance-handling the attendees to recognize the importance of innovation
methods to retain our customer-base, against the in an environment marked by greater competition, fewer
resources and ever-increasing constraints, than ever
before.
131
Kumari Bank Limited
Some Glimpse of Manangement

Leadership Conference 2018
132
133
Kumari Bank Limited
134
135
Kumari Bank Limited
Our Commitment to CSR

Since its establishment in 2001, Kumari Bank has adapted itself
to help serve the dynamic needs of its people, community and
the economy. We have financed economic growth, fostered
domestic agriculture & trade and helped our community re-
integrate and return to normalcy in instances of economic
crises and other natural disasters. We, as a corporate citizen,
are driven to be a part of customer-centric solutions, while
addressing burning issues of our society and help overcome/
mitigate them for a simultaneous advancement and growth. We
strive on rendering lasting benefits to the communities we work
in, by supporting sustainable initiatives to develop their social,
economic, and institutional fabric. We recognize that every
community is unique and we work with our community partners
to ensure that our support matches their needs/priorities.
Education
Environment
CSR
Pillars
Heritage
Health
We recognize our responsibilities towards the communities in

which we operate and understand that economic growth must our year-round
also be sustainable. Today our sustainability approach under active participation in
CSR recognizes four main pillars of societal growth: Education, conducting cleanliness and
Health, Heritage and Environment. Most of our CSR endeavors aforestation campaigns across
revolve around, but are not limited to, these communal the country alludes to our
scaffoldings. resolute commitment towards
environmental preservation
In each of these areas, we have begun to take genuine strides and conservation. Similarly, our
forward. We exercise utmost vigilance in protecting the support to several entrepreneurial projects
environment and seek ways to minimize our environmental of the SAARC Chamber Women Entrepreneur’s
footprint wherever we operate. We aim to meet, and where Council (SCWEC) like the biodegradable sanitary-
possible exceed, regulatory requirements in our environmental napkin manufacturing unit in Bardiya demonstrates our
performance. Our Environment conscious choices include, but resolute-devotion to the environment as well as fostering local–
aren’t limited to, our transition to a DMS (Document Management trade and women-empowerment.
System), whereby credit-document workflow is managed and
approved electronically. This has facilitated in mitigating our We have pledged long-term support in the Educational sector,
environmental-burden via our business operations. Moreover, by facilitating access to quality education and training to the
Nepalese children and youth with meager means/resources, to
136
help them acquire the skills, imperative to succeeding in today’s We recognize Culture and Heritage as the lifeblood of a vibrant
workplace. We have achieved this through direct involvement society, expressed in the uniquely, diverse ways we tell our
and trainings as well as our partnerships with several NGOS, stories, celebrate and remember the past, and imagine the
INGOs and other organizations committed to bringing about future. Preservation of our Heritages not only preserves our
social changes. Our partnerships with the likes of Teach For distinct identity but will also, instill a better understanding of
history and civilization. Keeping this in view, we have extended
a helping-hand to various cultural and theatrical demonstration
Nepal (TFN), SAATH, ASMAN, FINLIT Nepal, units across the country, in terms of encouraging cultural
financial literacy unit of NBI (National Banking involvement and participation. We were among the prime-
Institute), HOPAD and direct support to other supporters of the Visit-2020 warm-up walkathon, in
public schools in the rural-regions, as well collaboration with the Lalitpur Chamber of Commerce. We are
as educational scholarships to diligent but proud to assert that we were successful in raising significant
underprivileged students of some public funds via the walkathon for the re-construction of the local
schools are some of our undertakings in the Bhimsen Temple, which was in ruins post the mega-earthquake
realm of making quality-education possible of 2072 B.S. Our recurring support to Lalitpur Bouddha Bihar
for children from all social and economic- Association in its persistent efforts of cultural and religious
backgrounds. awareness and stability shows our commitment in genuinely
solidifying our native, cultural grasp. We believe in doing well by
Our contributions in the Health sector include doing GOOD and are committed to making a sustainable impact,
our direct-support to various free and/or beyond the regulatory guidelines.
discounted health and medical camps in
different locations, inside as well as outside the We have always held and will continue to hold ourselves
Kathmandu Valley. We have organized various responsible for the satisfaction of our stakeholders and shall
blood-donation campaigns in collaboration maintain the highest standards of corporate governance,
with Nepal Red Cross Society and local blood- transparency, ethics and honesty in all our dealings. We
Banks and health institutions. Our health and will continue to engage with our stakeholders including
medical insurance tie-ups have helped us governments, policymakers, businesses, other Banks and
facilitate discounted medical and wellness- financial institutions, charities, non-governmental organizations
packages at our medical alliances. Moreover, and community groups – as well as our own employees to operate
our medical insurance coverage schemes to in compliance with the local and national laws, adjust and set
our Swastha Jeevan Bachat Khata (SJBK) policies that change in line with contemporary technological
and Pariwar Surakshya Bachat Khata (PSBK) developments, demands and the expectations of the society.
accountholders have helped our customers
avail a range of medical treatments. Such There’s a deep connection between a company and the way it
endeavors have eased the burden of medical treats its stakeholders. Our philanthropic contributions and CSR
costs and brought on relief to the affected endeavors help us forge deeper, meaningful relationships with
individuals and families, in cases of critical our customers and the community. This shall, in turn, help us
illnesses and accidents. establish solid foundations for the comprehensive growth of our
organization and the economy, at large.
CSR
APPROACH
EMPLOYEES SOCIETY
SHAREHOLDERS NATION
137
Kumari Bank Limited
CSR & Other Activities
At the Press Meet of the Visit Nepal 2020 warm-up Visit 2020 Warmup Walkathon
walkathon
The Warm-up Walkathon commences with the release A happy customer at the Account-activation campaign
of neon-filled ballooons organized by Aamachhodingbo branch
Welcome-entrance to the Corporate Dinner at

Account-activation campaign organized by
Soaltee 2075
Aamachhodingbo branch
A few glimpses of the corporate dinner at Soaltee 2075

138
A few glimpses of the corporate dinner at Soaltee 2075
At the Annual Mother Benigna Award ceremony at Mary- KBL staff at the Naxal Bhagwati temple-premise
ward school in Lubhu with members of ASMAN cleanliness campaign
At the local-premise cleanliness program of the Bank Dustbin-handover to the local committee by lakeside
branch
139
Kumari Bank Limited
Few glimpses of the tree-plantation program under NRB's "One Employee, One Fruit Tree"
instruction for observance of World Environment Day 2075.
140
Few glimpses of the Bank 's walkathon and cycle-rally events.
141
Kumari Bank Limited
Glimpses of the Annual Blood donation program 2075 , organized by the KBL Employee Union
Financial Literacy program conducted at Apex College
Handing QR-scan device to authorized Nepal Gas dealers
Scholarship-handover ceremony to underprivileged students at Shree Kamal Aadharbhut School
142
Financial Support extended to Teach For Nepal Branchless Banking services commenced at Lho, Gorkha
BLB service commenced at Musikot, Rukum Press-meet of Kumari Bank and Chitwan Tigers'
collaboration
Few glimpses of the press-meet of Kumari Bank and Chitwan Tigers' collaboration
Rudri Puja at the Bank's corporate Tangal premises
143
Kumari Bank Limited
Glimpses of the Special AGM of the Bank
Glimpses of the AGM of the Bank
Shrawan Mehendi event at the Bank's various branches
144
Shrawan Mehendi event at the Bank's various branches
Kumari Bank commences its Mobile ATM services
First KBL Mobile ATM transaction Felicitating the national Karate team pre-departure to an
international competition
Marketing-Stall at the 13th ECAN International Educational Fair
145
Kumari Bank Limited
Sustainability
Approach
Employee Health & Safety
Sustainability is based on a simple and long-recognized factual walks of life, as it stems from the basic understanding that an
premise: Everything that humans require for their survival individual, organization, or the planet doesn't exist in isolation
and well-being depends, directly or indirectly, on the natural from its surroundings. In many organizations, the responsibility
environment. The environment provides the air we breathe, of ensuring employees' health and safety falls upon the Human
the water we drink, and the food we eat. With this in mind, the Resources department. Human resources professionals,
concept of 'sustainability' has garnered considerable attention thus, play an important role in ensuring employee health and
from business leaders, corporate houses and the government safety, as they know the workplace, the employees and their
alike and has been embraced by policy-makers as a crucial job demands. While human resources professionals are not
factor in business-strategies and policy-formulation. expected to know the technical aspects of workplace health
and safety, they are aware of when and how to use existing
Recognizing the importance of sustainability, the global resources to respond to employee concerns. In order to fulfill
community is working to create practical applications in these responsibilities, the human resources unit at Kumari
a variety of areas to better incorporate sustainability into Bank works to ensure the health, safety and welfare of their
decision-making throughout a diverse range of organizations, employees and effectively manage the health and safety risks
across geographies. To further strengthen the scientific- associated with the Banking operations. In order to do so, the
basis for sustainability as it applies to human health and Bank has integrated a robust health and safety management
environmental protection, Kumari Bank has whole-heartedly system, implemented risk-control strategies and demonstrated
adopted a sustainability approach that both incorporates and top-management commitment with effective in-house safety
goes beyond an approach based on assessing and managing and health precautions that support the employees' well-being.
the risks such as pollution-management, reduction of carbon-
footprint, etc to name a few. Although the existing risk-based We understand that we, as a corporation, have a statutory
methods have led to many successes and remain important responsibility to protect our workforce against occupational
tools to curb sustainability-concerns, we equally recognize that injuries and ill-health. It is needless to say that the Banking
they fall short in addressing many of the complex problems that industry seeks to build up capital gains and eliminate losses
put current and future generations at risk, such as depletion of as much as possible. Since employees are one of the most
natural resources, climate change, and loss of biodiversity to valuable assets, injury at work and ill-health of an employee
name a few. leads to loss of working days, or business opportunity. As far
as human-resources is concerned, we take into consideration
Many organizations across the world have formally adopted various factors such as employees’ turnover, high-illness rate,
a sustainability paradigm- the widely used "three pillars" suicide, stress, violence and aggression, bullying, fire, poor
approach, which means considering the environmental, social, housekeeping etc.
and economic impacts of an action or decision. Whenever
sustainability is mentioned, we generally make associations In relative terms, our employees work in a stable environment.
to energy conservation, recycling, environmental impacts. Nevertheless, there's no doubt that, despite stern precautions,
It is at this juncture organisations concern themselves with they are also exposed to some significant risks of bodily injury
not only the motive of making profits, as their primary goal and ill-health. Workers within the Banking realm are exposed to
but simultaneously, improve people’s lives and the planet varying occupational health and safety issues such as workplace
(environment). To sum up, in an organizational context, instead violence (from aggressive customers), bullying, psychological-
of one bottom line, companies should be working at the same- stress from struggling to meet marketing targets, unresolved
time on these three bottom lines: profit, people, and the planet bad loans, attending to crowd of customers, physical exertion
in order to support their sustainability or “green” goals. from prolonged work hours and of course ergonomic issues etc.
However, safety is often given but little attention, whenever From customer-induced stress to burdens of tall targets
a sustainability strategy is being worked out. In most cases, and poor work-relations, Bank's HR unit is vigilantly on the
organisations' sustainability programmes focus on only lookout for symptoms of bullying at work which may include
environmental and financial concerns. Nonetheless, to achieve anxiety, high blood pressure, loss of confidence, inconsistent
true sustainability, Employee health and safety should be one of performances, etc. Similarly, the Bank has a strictly defined
the core considerations, as it pertains to conservation of human policy on 'Anti-Bullying Behaviour' and ensures this is enforced
resources. across all lines of management. Similarly, aggression and
violence are one of the hazards associated with working in the
For general understanding, the sustainability approach focuses banking or financial sector. Violence at work stems in the form
on resource-conservation, primarily the Environment. In the of verbal abuse, threats or physical attacks from fellow workers,
business/organizational context, however, it also measures managers or customers of the bank. For example, bankers who
how socially responsible an organization has been throughout close at unsocial hours are vulnerable to attack and violence
its operations including its ability to protect employees (human by miscreants while tellers who handle money may be a target
resources) from injury and ill-health. So, we can safely assert to criminals and customer care workers may be subjected to
that sustainability and safety are in fact about the same idea: aggression by an unsatisfied customer. To address such issues,
resource-conservation. So, sustainability should not be we provide adequate training and information to help employees
discussed without a strong emphasis on the “S” and “H” part of identify the early signs of aggression so as to enable them avoid
SHE (Safety, Health, and Environment). it or deal with it.
The sustainability approach has been so well-received and Likewise, a system for reporting, investigating and monitoring
easily embraced by professionals of diverse streams and any instances of violence has been set up and clearly
146
communicated to staff members to help deal with symptoms of Furthermore, we conduct adequate training and fire drills for
aggression and violence like irritability, anxiety, stress, loss of staff members so that they become familiar with the evacuation
confidence, and thought of self-harm etc. Especially the front- procedures in case of a fire and well-aware of the location of
line staff, who are in direct hit with customers are trained to all the exits and the emergency procedures. The fire evacuation
watch out for such symptoms and immediately report cases of plans will soon be displayed at prominent locations on each floor
such behavioural issues. within the Banking premise together with illuminated exit signs
to ensure safe evacuation in emergency situations, once the
The Banking industry is fiercely competitive, at this point building construction is completed. Likewise, sufficient fire-
in time due to technological advances, ever-increasing fighting equipment such as fire extinguishers, hose reels, etc.
operational costs and customer-concentration and periods will also be provided on each floor.
of economic boom and liquidity-crises. In such cases, stress,
due to increased pressure at work, is a common hazard that Another important consideration is poor housekeeping. It can
must also be controlled and effectively managed. Stress is an arise from wandering cables, folded or loose carpet, littered
individual’s reaction to excessive pressure and other demands papers and folders, poorly arranged materials around working
placed on them. Stress has adverse psychological, emotional areas etc and result in slips and trips. With good housekeeping
and behavioral effects on workers leading to depression, policy and its implementation such tripping hazards can be
frustration, aggression, high blood pressure, loss of confidence eliminated. Similarly, poor ergonomically designed workstation
etc. Hence, the KBL management has recognized this hazard is bound to pose a risk to workers. Teller workstations should
and established a policy for managing the same. Periodic be ergonomically designed to enable them to work comfortably
HR interventions through conferences, training, seminars and efficiently. We have arrangements for rest breaks and job-
and workshops are being employed as tools to measure and rotation and well-designed counter, so as to prevent fatigue,
contain work-related stress and alleviate the symptoms of poor strain to arm and shoulder, improper working postures which
stress-management. We partner with various health and safety may arise from stretching to receive items from customers.
advisors/consultants to work out practical solutions to help Risks from other equipment like computers used at the counter
our employees identify potential problem areas and sources of are also adequately controlled.
stress in connection with their job and report them. In the same
vein, Bank management employs competent health and safety Since, a large number of staff in the banking and finance industry
advisors to help address the six key areas of demands, control, use computers for long periods everyday, poorly designed
support, relationship, role and change, associated with work workstations, repetitive keying motion and static working
design. postures can cause eye strain, muscle aches and general fatigue.
Similarly, Banking staff engaged in programming and data
In addressing the wellbeing of the workers, we also hold regular input may be exposed to potential health problems caused by
health talks, which we believe helps improve workers' confidence prolonged computer operations, at a time. Hence, assessment
in management and freedom to express occupational health of the health-risks to employees with such working-conditions
concerns. Likewise, we have been maintaining a system of are to be timely-contained and mitigated via proper workstation
mandatory periodic health and medical check-ups for our set-up and proper positioning of the device and avoidance of
internal records and monitoring, in hopes of ensuring consistent sunlight-reflection via use of blinds.
well-being of our employees.
In addition to this, ultraviolet lamps also pose a risk to workers,
Nextly, mechanical hazards resulting from the use of the vault, who often use such lamps to check signatures or identify
shredder, file compacta etc are some of our key-considerations, counterfeit notes. Prolonged exposure to ultraviolet light
in terms of ensuring employee well-being. The vault is where should be avoided. As good practice, ultraviolet lamps should
customers’ valuables are kept and it offers tight security but be suitably shielded and placed far from the hand position. In
at the same time, poses a possible lock-in hazard to the bank checking signatures or notes, tellers should keep their hands
employees. Setting up a strict entry/exit accounting system or at least 50 - 75 millimetres away from the center of the lamp.
making use of biometric check technology such as infra-red, These small-steps and precautionary measures help drastically
heat detection systems are some feasible and effective means reduce the incidences of occupational hazards at work.
to prevent the lock-in hazard. In addition, file compacta poses Consideration should also be given to avoidance of manual
trapping hazards to employees standing in between the moving handling operations, and where impossible, the risk should
cabinets of the compacta. Therefore, implementation of a good be reduced. Mechanical aids or team lifting should be used to
engineering control as well as administrative control such as minimize risk and staff should be properly trained on Manual
installation of suitable locking system for moving cabinets or Handling of heavy documents and equipment.
the use of drop bars and posting of warning tags at each cabinet
so as to inform the workers outside the aisle of the possible In a nutshell, the well-being of employees is vital to an
presence of others. organizational well-being, to prevent work related injuries
and illnesses and to foster a workplace safety-culture; and to
Similarly, one of the common hazards bankers are exposed to is develop appropriate hiring, training and performance appraisal
fire. The common causes of fire in the banking and finance sector practices. This, will, without a doubt, result in reduction of costs
are smoking, overheating of electrical appliances and bad wiring. associated with losses due to absenteeism injuries, workers'
Combustible materials such as carpets and curtains commonly compensation, disability, and health care. To conclude with,
used in a bank can be easily ignited by burning cigarette ends or having sustainability at the core of all that we do means that
overheated electrical appliances and wiring. Thus, it is necessary the effects trickle down into our fundamental activities and the
to ensure proper connection and use of electrical appliances composition as a Bank. Our fundings, projects, initiatives, as
of sufficient capacity and correct rating to prevent electrical well as our collaborations with the regulatory authorities, NGOs/
fires. Also, a sound policy of ‘No-Smoking in the Workplace’ has INGOs, clients and civil society are all underpinned with focus on
been implemented to prevent fire and health hazards and have capacity-building, innovation, growth and safeguarding one of
created a separate ‘Smoking Zone’ for those who do. Overloading the most vital organizational resources, i.e. human capital.
of electrical appliances is also discouraged. Hence, connection
of many plugs to one socket outlet must be prohibited to prevent
overloading which is a potential cause of electrical fire.
147
Kumari Bank Limited
148
149
Kumari Bank Limited
Kumari
Foundation
Kumari Foundation, under the initiation of Kumari

Bank Limited, is a non-profit charity which is in
the process of being registered in the Company
Registrar’s Office with an objective to channelize
Bank’s Corporate Social Responsibilities (CSR)
towards communities and the society, it operates
in. The said-foundation shall give a formal
structure to facilitate the coverage of social
welfare activities in the practical realm and areas
as outlined by Nepal Rastra Bank’s directive while
keeping its key-focus on below listed areas of
social services.
The foundation is a non-profit making structure,

in pursuit of rendering a positive impact on
the society through philanthropy, awareness-
enhancement on burning social-issues, and
identification of underlying causes/catalysts of
such problems and bringing into implementation
possible solutions through equity or direct grant
and technical support.
150
The said-organization shall be aimed at delivering
physical, financial and technical resource/
assistance to a range of diverse sectors namely :
Education, Environment, Health and Heritage in
the communities, we serve in as well as other NRB-
prescribed areas of societal infrastructures like
financial literacy, social impact, poverty alleviation
and entrepreneurship development, etc. We
seek to establish this fund, as a way of creating
maximum impact out of the resources the Bank
dedicates under its Corporate Social Responsibility
to help uplift the underfunded and underprivileged
segments of the society.
151
Kumari Bank Limited
6
Financials
1. Annual Report of the BOD 154

2. SEBON Declaration 166
3. Audit Report 168
4. Financials 170
152
153
Kumari Bank Limited
ANNUAL REPORT OF BOARD OF DIRECTORS

NINETEENTH ANNUAL GENERAL MEETING
Dear Shareholders,
We would like to cordially welcome all shareholders, invited representatives, auditor, journalists and support staffs on behalf of the
Board of Directors, present here today in the 19th Annual General Meeting (AGM) of Kumari Bank Ltd.
In this 19th Annual General Meeting (AGM) of the Bank , we would like to present you with the financial statement of the fiscal year
2075/76 BS. Together with the annual report, we shall make here a brief presentation on the achievements of this Bank in the
current fiscal year and the plans in future. Upon learning the mixed experiences of the past, we have completed 19 years of our
inception by employing the challenges and opportunities in the Bank’s favor as the time demands. We always nurture the objectives
to render quality services to our customers, to give optimum returns to the investors, to maintain good governance and moral
conduct within the institution, and to fully comply with the laws and rules put in place by the nation. We extend our sincerest thanks
to those who have helped and wished our best, directly or indirectly, in the successful realization of these goals. This Bank has
succeeded in becoming a successful and strong institution from the invaluable support and partnership of people like you. We
express our trust that even in the days to come; you shall be equally contributing towards the progress of the Bank .
The major financial indicators till the date of preparation of balance sheet are as follows:
1. Review of the Financial Indicators of previous years

Table 1, Financial Synopsis of the Bank in the past 5 years (Amount in NPR millions)
Particulars 2071/72 072/73 073/74 074/75 075/76

Paid up capital 2,432 2,699 5,969 7,163 8,685
Deposits 33,421 37,950 52,037 69,651 84,403
Loans and Advances 27,070 30,111 45,195 62,740 76,584
Investment 5,299 7,742 8,039 9,022 9,341
Fixed Assets (Net) 259 265 358 544 759
Total Assets 37,374 42,416 60,993 82,723 105,311
Net Interest Income 925 1,175 1,297 2,006 2,869
Other Income 297 338 389 637 809
Operating Expenses 538 581 659 1,228 1,653
Operating Profit/(Loss) before Loan Loss Provision 685 932 1,027 1,420 1,994
Net Profit 394 716 660 1,046 1,230
Non-Performing Loan Ratio (%) 2.49 1.15 1.86 1.05 1.01
Paid Up Capital Reserves and funds

2,095
8,685 1,795
5,969 7,163 1,139
747
2,699 367
2,432
71/72 072/73 073/74 074/75 075/76

71/72 072/73 073/74 074/75 075/76
Deposits Loans and Advances
84,403 76,584
69,651 62,741
52,037 45,195
33,422 37,951 27,070 30,111
71/72 072/73 073/74 074/75 075/76 71/72 072/73 073/74 074/75 075/76
154
Investment Total Assets
71/72 072/73 073/74 074/75 075/76 71/72 072/73 073/74 074/75 075/76
Investment Total Assets
9,022 9,341
7,743 8,032
105,311
5,299 82,723
60,993
37,375 42,417
71/72 072/73 073/74 074/75 075/76 71/72 072/73 073/74 074/75 075/76
Net Interest Income Other Operating Income
809
2,869 637
2,006
339 389
1,175 1,297 298
926
71/72 072/73 073/74 074/75 075/76 71/72 072/73 073/74 074/75 075/76
Operating Expenses Operating Profit before

Loan Loss Provision
1653
1228 1994
1420
538 581 659 933 1027
685
71/72 072/73 073/74 074/75 075/76 71/72 072/73 073/74 074/75 075/76
Net Profit Capital Adequacy Ratio (%)
1230
1046 14.5 13.36 11.75
10 .84 11 .69
716 660
395
71/72 072/73 073/74 074/75 075/76

71/72 072/73 073/74 074/75 075/76
Non - Performing Loan Ratio

(%)
2.49 155
1 .86
Kumari Bank Limited
Annual Report 2018/19 71/72 072/73 073/74 074/75
71/72 072/73 073/74 074/75 075/76
Non - Performing Loan Ratio

(%)
2.49
1 .86
1.15 1.05 1 .01
71/72 072/73 073/74 074/75 075/76
The Bank’s financial indicators for the past years have been positive, systematic and progress-oriented. In recent years, the inactive
assets have been vastly managed, and the risks associated with Bank’s business have been properly assessed. As Nepal’s fiscal
market, political milieu and industrial sectors are prone to frequent upheavals, we have made up our mind that we should always be
balanced and sustainable the growth of our businesses and ventures.
As compared to the fiscal year (FY) of 2074/75, in the FY of 2075/76 BS, Credit, Deposit and Investment have risen to 22.06 %, 21.18%
and 3.54% respectively, reaching NPR 76.58 billion, 84.40 billion and 9.34 billion. Similarly, the Net interest Income has recorded
an increase of 43.02% reaching NPR 2.86 billion and total Operating Expenses increased by 34.61% reaching NPR 1.65 billion. The
Operating Profit before Loan Loss Provision in the FY of 2075/76 has marked a surge of 40.42% reaching NPR 1.99 billion. Thus, the
Net Profit of NPR 1.04 billion in the FY 2074/75 has risen to NPR 1.23 billion in the FY 2075/76, registering a growth of 17.59%.
2. A Review of International and National Economies

In the review year, the economic growth has been constant since last year. It has cast a positive impact in least-developed
countries like Nepal. International Monetary Fund has predicted that the growth rate of world economy will be 3.2% in the year
2019, as compared to 3.80% in the year 2018. The Fund holds that though the economies of developed nations constricted in
the period, those of the developing nations are still upbeat. The Fund has predicted the growth rate of developed economies
by 1.9% in the year 2019, as compared to 2.2% in the year 2018. Similarly, it has forecasted that the growth rate of developing
economies by 4.1% in the year 2019, as compared to 4.5% in the year 2018. The inflation rate of developed nations stood at
2.0% in the year 2018, whereas it will hover around 1.6% in the year 2019. The Fund projects that inflated rates of developing
nations shall remain 4.8% in the year 2019, which is consistent as the year 2018. The Chinese economy grew by 6.6% in 2018
and is expected to grow by 6.2% in 2019. The Fund predicts that the Indian Economy will register a growth of 7% in 2019, from
6.8% in 2018.
The Nepali economy took an upward trend since the FY 2073/74. The macro-economic indicators were within control in the
FY 2074/75 and the overall economic activities remained positive. The economic growth rate in 2074/75 stood at 6.7% and
is predicted to be 7.1% in 2075/76. In line with the national economic growth, Nepali economy has become worth NPR 1.136
trillion. The macro economic growth rate of the country in 2075/76 is found to be dynamic.
Gross Domestic Product

As per the Central Bureau of Statistics (CBS), the growth in Gross Domestic Product (GDP) in FY 2074/75 was 6.3% in base-
price. The growth rate is predicted to be 7.1% for FY 2075/76. Gross DomesticProductis estimated to have grown7.1 % in 2018/19.
Agriculture, industry and service sectors estimated to grow 5.0 %, 8.2% and 7.3% respectively. Share of agriculture, industry
and service sectors in GDP stands 27percent, 15.2percentand 57.8percentrespectivelyin 2018/19. Gross domesticsaving to
GDPstands20.5percentin 2018/19.Ratioof gross capital formation,gross fixed capital formationand gross national savingtoGDP
stands62.3percent, 36.9percentand 52.4percent respectively.
Inflation
The annual average consumer inflation stood at 4.6% compared to 4.2% a year ago. Inflation is well within control due to
favorable climate, low international inflation and improvements in supply management.
Foreign Trade
Total Trade Deficit in the FY 2075/76 increased to 13.5% and reached NPR 1.321 trillion.. In other words, the size of imports is
bigger than the size of exports thereby contributing to increase in total trade deficit.
Remittance Flow
The remittance sent by Nepali migrant workers increased by 16.5% in the review period, thereby reaching NPR 879.27 billion.
This flow had increased by 8.6% in the previous year. The number of workers migrating for foreign employment, having a direct
156
effect in remittance flow has swelled in the review year, leading to a surge in this income.
Current Account and Balance of Payments

The loss in current account stands at NPR 265.37 billion in the review year. The balance of payments stood at NPR 67.4 billion.
The balance was surplus of NPR 0.96 billion surplus in the previous year.
Foreign Exchange Reserves

Gross foreign exchange reserves decreased to Rs.1038.92 billion as on mid-July 2019 from Rs.1102.59 billion in the previous
year. In the US Dollar terms, the gross foreign exchange reserves remained 9.50 billion as on mid-July 2019 from 10.08 billion
in the previous year.
Government Revenue
Revenue of Government of Nepal rose by 19.10% in FY 2075/76 to reach NPR 865.55 billion. Total revenue was NPR 726.72 billion
in the previous year. That accounts to 118.56% of the annual revenue target of NPR 730.05 billion..
Government Expenditure
Total government expenditure based on the Banking transactions stood at NPR 1,067.67 billion. The government expenditure
in the previous year had reached NPR 1066.18 billion.
Deposit Collection
In the review year, the deposits of Bank s and financial institutions (BFIs) have risen by 18.22%. The growth rate was 17.6% in
the previous year. The deposits of Commercial Bank s, Development Bank s and Finance companies have increased by 16.53%,
31.96 % and 19.57% respectively in the review year. While, in the previous year, the Commercial Bank s, Development Bank s
and Finance companies had posted deposit growth of 18.07%, 26.08% and 21.92, respectively.
Credit Flow
During the FY 2075/76, the credit flow in private sectors by the Bank s and Financial institutions had risen by 19.4%, compared
to 22.5% in the previous year.
The year in review demonstrated credit disbursement rate of 17.5%, 35.7% and 17.9% from the Commercial Bank s,
Development Bank s and Finance companies, respectively.. In the FY 2075/76, the share of agriculture, energy, tourism in total
credit disbursal rate stood at 8.6% as of Jestha end.
Liquidity Management
Nepal Rastra Bank has absorbed liquidity worth NPR 100.35 billion in the FY 2075/76, while it injected liquidity worth NPR
322.49 billion. Similarly, the Bank has injected liquidity worth NPR 154.33 billion in the same period via standing liquidity facility
and has absorbed liquidity worth NPR 20.70 billion via reverse repo and NPR 79.65 billion through standing liquidity facility.
InterBank Transactions and Use of Permanent Liquidity Benefit

In the FY 2076/75, the commercial Bank s and other financial institutions have conducted interBank transactions worth NPR
1,775.11 billion and NPR 209.55 billion respectively, making a total of NPR 1,984.66 billion. During the same period of last fiscal
year, the Commercial Bank s and other financial institutions had conducted interBank transactions worth NPR 1,161.31.50
billion and NPR 49.43 billion respectively, totaling NPR 1,210.74 billion.
Interest Rate
The weighted interest rate average of 91 day treasury bills in Asadh, 2075 was 3.74% which reached 4.97% in Asadh, 2076.
Similarly, the weighted interest rate average of interBank transactions among commercial Bank s was 2.96% in Asadh, 2075
which reached 4.52% in Asadh, 2076.
The weighted interest rate average of Commercial Bank s inAshad, 2076 stood at 6.6%. This margin in interest rate was 6.49%
last year. Likewise, the average base rate of commercial Bank s has surged to 10.47% in Asadh, 2075 from 9.57% in Asadh,
2076.
Merger/Acquisition
After the Bank s and Financial Institutions Merger By-Rules came into force, a total of 162 Bank s and financial institutions
came down to 43 post mergers and acquisitions as of Asadh, 2076.
Presence of Bank s and Financial Institutions

As a consequence of NRB’s permission for BFI’s mergers and acquisitions, the total number of BFIs, licensed by Nepal Rastra
Bank has reached 170, as of Asadh end, 2076. The number of commercial Bank s has reached 28, development Bank s have
reached 29, finance companies have reached 23 and microfinance companies have reached 90, as on Ashadh end, 2076.
Despite the number of BFIs being reduced, the branch-network has been expanding rapidly. As of Ashadh end, 2076 the
157
Kumari Bank Limited
branch-networks of these BFIs has reached 8,686 across the nation. Out of the 753 local bodies under the current federal
system of governance, 732 have financial reach/access, whereas there’s presence of commercial Bank s in 631 bodies.
Capital Market
By the last date of Asadh, 2076 the NEPSE index reached 1259.00 pointsthat reached 1212.36 during the same period, last year.
The year in review saw no fluctuations in the share market. The total transaction amount in FY 2075/76 has surged by 9.22%,
thereby reaching NPR 1,567.5 billion compared to previous year.
(Source: Nepal Rastra Bank , Monetary Policy of the FY 2076/77)
3. Performance Review of Bank in the FY 2075/76 and the way forward:

Upon reviewing the financial statements of review period, it is evident that the Bank’s transactions have consistently increased
in a robust-manner. Due to the increase in its transactions, the balance-sheet size of the Bank has also surged by 27.31% from
the previous fiscal year to reach 105.311 billion in the current fiscal year.
a) Capital Management: The current paid-up capital of Bank is at NPR 8.685 billion. The current capital of the Bank shall
reach NPR 9.5541 billion, including NPR 868.5 million on behalf of the proposed 10% share dividends for the FY 2075/76.
b) Deposits: As compared to the previous fiscal year, the deposits in Bank have increased by 21.18% to reach a total of NPR
84.403 billion by Asadh end, 2076.
Table 2
Comparative Deposit Status of the Bank (Amount in NPR millions)
Percent of Total Percent of Total Increased Increase in

Deposit FY 2075/76 FY 2074/75
Deposits (%) Deposits (%) Amount Percent
Current 6,088 7.21 3,432 4.93 2,656 77.39

Savings 18,137 21.49 16,383 23.52 1,754 10.71
Call 14,613 17.32 17,285 24.82 (2,672) (15.46)
Fixed 45,565 53.98 32,551 46.73 13,014 39.98
Total 84,403 100 69,651 100 14,752 21.18
c) Loans and Advances: By the end of FY 2074/75, the total credit issued by this Bank was NPR 62.74 billion, which rose
by 22.06% until the end of review year to reach NPR 76.584 billion. The Bank has diversified its credit portfolio by
facilitating lending in sectors like personal loans, education loans, small and medium enterprise loans, agriculture and
productive loans, deprived sector lending, institutional loans and development project loans. During the review period,
the ratio of inactive loans stood at a 1.01%. A significant volume of bad debts were recovered during the review year,
despite increase in credit-disbursement. This has led to a drastic reduction in the ratio of inactive loans in the year, as
compared to previous years. We would like to announce herein that the Bank has been proactive in regularizing more
of its inactive loans.
d) Investment: In line with the Bank’s objective of gaining returns from overall resources by maintaining robust liquidity,
Bank’s policy of investing in riskless assets issued by Nepal Rastra Bank such as treasury bills, development bonds, etc
has been given continuity. The Bank has also been cautiously investing in the local and international currency market
as well as in the shares and debentures of various institutions. It has invested a sum of NPR 2.240 billion in the treasury
bills of Government of Nepal and NPR 7.1 billion in the development bonds. With this, the total investment of the Bank
has been at NPR 9.34 billion, as of Asadh end, 2076. The Bank has also invested in shares of some other institutions.
e) Profits: Along with overall business portfolio, a welcome growth has been seen in various revenue streams of the Bank
in the review year. Likewise, the Bank has succeeded in limiting the growth rate of its Operating Expenses at 34.61%.
A significant chunk of the inactive loans has also been recovered. As compared to FY 2074/75, the interest revenue
from credit and investments in FY 2075/76 has also risen by 33.72%, thereby reaching NPR 9.09 billion. The interest
expenses have also increased by 29.82% thereby reaching NPR 6.22 billion. As compared to FY 2074/75, the net interest
income of the Bank also rose by 43.02% in the FY 2075/75, reaching NPR 2.88 billion. Similarly, the Bank’s income from
fees and commissions arising from lending, deposits and other Banking facilities and services has risen by 17.43%
to reach NPR 460 million in FY 2075/76. The foreign exchange income has touched NPR 310 million after posting a
growth of 82.35%. Thus, the total Operating Income of the Bank has reached NPR 3.64 billion in the FY 2075/76, which
marks a growth of 39.41%, from the previous fiscal year. Similarly, when looking at the expenses, the personnel and
other operating expenses have risen by 26.27% and 48.77% to reach NPR 970 million and NPR 670 million, respectively.
Similarly, the Operating Profit before Loan Loss Provision in FY 2075/76 has surged by 41.12% from the previous fiscal
year and stands at 1.99 billion. The net profit of the Bank has also surged by 17.57%, to reach 1.23 billion from 1.046
billion of the previous year.
f) Contribution in the Government Revenue: The Bank had paid NPR 440 million as institutional tax in the FY 2074/75, it
158
has already made an advance payment of NPR 560 million control system. Various policies, rules, circulars have
as the corporation’s tax-liability for the FY 2075/76. been framed and implemented to counter the issues
pertaining to proper customer identification, credit
g) Products and Services: Kumari Bank has been management, stress-test and other matters of daily
introducing and enhancing its deposit/loan products functioning.
and services into the market, keeping abreast focus
on the dynamic needs of its customers and the rapid a) Credit Risk Management: A separate credit-risk
technological innovation and adoption in the market. management committee has been formed in the
The diverse savings/deposit schemes of the Bank such Bank , so as to detect credit-related risks in time.
as: Pariwar Surkashya Bachat Khata, Kumari Premium Prior to sanctioning loans, this department makes
Salary Savings Account, Youth Savings Account, a thorough study of all the risks associated with
Swastha Jeevan Bachat Khata, Big Savings Khata, loans, standards set by the regulatory bodies,
Nagarik Bachat Khata, Twinkle Star savings are among compliance with internal rules and policies and
some of the most lucrative and widely-preferred savings other risks pertaining to the sector and the debtor.
products. Likewise, a wide array of other services such This unit shall examine the contemporary affairs,
as: Kumari Smart (Bank’s mobile Banking system), predict the risks that may arise in the future and
Internet Banking, Debit, credit and prepaid cards are make recommendations for the revision of internal
some of the most popular services of the Bank . With policies and guidelines in the matter. Moreover, it
partnership with 39 companies and more than 8,000 will reorganize the credit portfolio and re-assess
payment agent alliances to its name, the Bank extends grades of credit, credit-sector, debtors, etc, based
quick, convenient and modern remittance services on their risk-potential.
across the globe. The Bank continuously strives to deliver
modern, innovative Banking services to its customers b) Operations Risk Management: The Basel
with continuous efforts in research and development to committee on Banking Supervision defines
grasp a better understanding of the dynamic needs and Operational Risk as the “risk of loss resulting
preference of the general population. It is clearly evident from inadequate or failed internal processes,
that the Bank has been able to cater to the modern people and systems or from external events,
needs of its customers, citing the significant increase including legal risk, but excluding strategic and
in its customer-base and via adoption of contemporary reputational risk.” Every Banking transaction
Banking and digital technologies. We have been able to involves a number of steps. There are complex
carve a niche market for our financial products/services, set of steps that goes into every seemingly simple
namely through embodiment of latest digital products transaction. This is because the transactions,
and services, namely the 3D-secure VISA debit/credit on the surface are completed instantaneously.
cards, QR payment systems, mobile-Banking and However, a lot goes on behind the scenes to make
mobile wallets and other forms of contactless payment our Banking transactions easy and quick. There
methods. Our VISA dollar debit cards are accessible are several causes of operational risk, hence it’s
across Nepal, India and the whole world through the not possible to create an exhaustive list. However,
VISA network. 3 major elements contribute to operational risk,
namely: people risk, Information technology risk
h) Branch Expansion: The Bank , has been able to extend and procedure-related risk. Since all Banking
its Banking reach via addition of 11 new branches, 104 transactions rely on these three factors, i.e.
ATMs, 2 extension counter and 17 BLB units. As of date, human, technology and defined-procedures,
our Banking reach has touched 28 inside and 86 outside- there’s always possibility of one or more factors
valley branches, 104 ATMs, 20 BLBs and 5 extension deviating from the desired, optimum result.
counters across the nation. Hence, operations risk shall always lurk in Banking
transactions. With the advent of new technology,
i) Corporate Governance: The Bank has always given implementation of new procedures and the
utmost importance to good corporate governance human factor, such risks can never be completely
and moral conduct. As a public limited company and a eliminated. In order to manage such risks,
financial institution, good governance and moral conduct continual revision and upgradation of internal and
are one of the crucial factors to ensure public faith and external control system is needed. The Bank has a
transparent dealings within the organization. The Board robust and proactive Operations Risk Management
of directors is proactive in developing transparent to look into the said-matters. The department
and fair business practices and a strong corporate is entrusted to identify beforehand the potential
governance culture in the Bank’s overall activities, whilst risks associated with the internal control system,
staying in line with the organization’s core functioning process and human capital of the Bank and has
and long-term goals and objectives. been offering needful advice, suggestions and
solutions on mitigation of such risks. All the
j) Risk Management: A separate risk-management sub- Banking operations have a clear-defined working
committee is in place with an underlying view to identify, system and workflow as well as determinants that
assess, mitigate and manage the risks and uncertainties must be adhered to. This leads us to believe that
that may appear in the future, in a timely manner. the operations risks are adequately kept in check.
Dynamic and robust set of policies and guidelines
have been put in place for timely-management of the c) Liquidity Risk Management: Liquidity, basically
innumerable risks that arise or may arise within the refers to the ability of a firm, company, or even
organization. The Bank has been properly managing an individual to meet its short-term obligations,
the risks associated with credit, operations, market and without suffering catastrophic losses. Liquidity
other areas in its daily business and has pursued a policy is crucial to the sustainability of any financial
of frequently adapting and revising the internal control institution. Investors, managers, and creditors
system to ensure the robustness and relevance of the alike rely on liquidity measurement ratios when
159
Kumari Bank Limited
deciding on the level of risk within an organization. We, at Kumari Bank , are fully aware of how important
Financial institutions depend upon borrowed it is to give back to the community we operate in. We
money to a considerable extent, so they're recognize the significance of CSR, in line with our
commonly scrutinized to determine whether they understanding that involvement in CSR activities is
can meet their debt obligations without realizing symbolic of our accountability to our stakeholders.
great losses, which could be catastrophic. Our CSR policy, which has recognized four pillars of
Institutions, therefore, face strict compliance contributions, namely: Health, Education, Heritage and
requirements and stress tests to measure their Environment, we pledge day in and out to do our bit to
financial stability. As demonstrated by the frequent make the community a better and fairer place.
upheavals in liquidity-levels of the Bank and the
resulting impact on the net interest income of the 1) Education:
Bank , a thorough research and analysis of current • The Bank has created a Kumari Education fund
and future liquidity has been made and strategies as a gesture of support in the higher education of
on deposit collection, interest rate fixation and living Goddess, Kumari residing at Kumari Ghar,
both short and long-term investments have been Basantapur, and has been providing an annual sum
set, accordingly. At present, the ALCO/pricing of NPR 100,000.00 in the account.
committee actively oversees these types of risk • The Bank has rendered financial-assistance to
within the Bank . several schools in the rural areas for the school’s
infrastructural enhancement and construction
d) Market Risk Management: Market risk is the • The Bank has extended a financial support of NPR
possibility of losses in a business organization 12 million to Teach For Nepal, which is a non-profit
due to factors that affect the overall performance organization, working diligently to provide access to
of the financial markets. Market risk, also called quality education among the public-school children
"systematic risk," cannot be eliminated through from underprivileged and rural areas.
diversification, though it can be hedged against • The Bank has been offering scholarships to the
in other ways. Sources of market risk include, but deserving students of meager means through an
is not limited to recessions, political turmoil, and NGO called the HOPAD Child and Women Promotion
fluctuations in foreign-exchange rates, natural Society.
disasters and terrorist attacks. Systematic, or • The Bank extended financial support via provision of
market risk tends to influence the entire market laptop and projector to “Balkalyan Secondary School”,
at the same time. Thus, Bank s should develop as support towards the school’s infrastructure/
a framework that addresses such risks, so as to resources.
mitigate its adverse-impacts by performing regular • The Bank extended support via provision of school-
stress-tests to ensure capital adequacy, in relation uniform to the children under the care of “Sahara
to its own liquidity profile and the liquidity of Orphan Children’s Home” of Birtamod.
markets, in which they operate.
2) Health
In view of this, the Bank has been vigilant on the • The Bank organized an extensive health-camp for
risk-factors associated with market-uncertainties its customers and staffs at Putalisadak branch, in
and fluctuations. The risk-management collaboration with Norvic Hospital.
committee, thus, regularly review these factors • The Bank organized a 1-day blood donation
and devises strategies accordingly to hedge the campaign in its central office, Putalisadak as well
burden of these risks. In order to mitigate the as other branches, in collaboration with Nepal Red
risks emanating from such factors, and especially Cross Society.
the fluctuations in foreign exchange rates, the
Bank has pursued relevant policy and procedures 3) Heritages
to regularly watch the same. The needful policies
and guidelines are framed, to enable regular review • In view of fostering the traditional customs, norms
of the market interest rates. The ALCO/Pricing and values, Bank renders frequent financial-
committee currently active in the Bank review this assistance to various jatras, festivals and pujas
type of risk. organized by the local community and other local
bodies.
k) Corporate Social Responsibility : • The Bank placed a drinking-water and juice-stall in
the premises of the local Shiva temple, at the grand
Corporate Social Responsibility is a broad concept Shrawani Mela, 2076.
that can take many forms, depending on the company
and the industry. Generally, philanthropy, volunteer 4) Environment
efforts and contributions to projects and activities that
benefit a particular section of the society, especially the • The Bank conducted a cleanliness-campaign around
underprivileged and marginalized sections or enhance the premises of its central office at Tangal and the
the overall economic, social or environmental standing local community, in proximity to its various branches,
of a society are included under CSR contributions. on the occasion of World Environment Day.
• The Bank extended support for placement of
As important as CSR is for the community, it is equally dustbins in the public places through its various
valuable for a company by CSR activities helping to forge branches, in collaboration with the local bodies.
a stronger bond between employees and corporations;
boost morale; and help both employees and employers 5) Others
feel more connected with the world around them.
• Bank’s support to ZONTA, which runs several
campaigns and programs for livelihood-support
160
of underprivileged denizens with special-focus on Merger Committee : A merger committee
women-empowerment. comprising of the Bank's director-duo, Mr. Krishna
• Bank’s support to SAARC Women Entrepreneur’s Prasad Gyawali and Mr. Mahesh Prasad Pokharel is
Council in their fundraiser endeavors via theatrical- in place for decision-making pertaining to merger/
demonstration to establish a bio-degradable acquisition of/by the Bank.
sanitary napkin manufacturing unit in Bardiya.
Building Construction Committee: A building-
I) Committees formed by the Board of Directors: construction committee led by the Bank's director,
Mr. Mahesh Prasad Pokharel, with director, Mr.
As part of our corporate culture and good-governance Krishna Prasad Gyawali, as the member and the
and to ensure timely realization of the Bank’s goals and Bank's CEO as its member secretary is in place.
objectives, staying compliant to the prevailing laws and
policies the following committees and sub-committees
m) Management Level Committees :
have been formed:
Several committees such as the Management
i) Audit Committee:
Committee, ALCO/Pricing Committee, etc. led by the
Pursuant to Section 164 of the Companies Act, an Chief Executive Officer are also in place to facilitate
audit committee led by the non-executive director effective discharge of the Bank’s functions. Similarly, the
Anuradha Chaudhari, comprising of director MIS Committee, Credit & Operations Risk Committees,
Professor Dr. Ganesh Prasad Pathak and the Bank’s Discipline and Performance Appraisal Committee and
Head of Internal Audit, Ganesh KC as the member- Procurement Committee are functioning in the Bank .
secretary, is in place. The Internal Audit department The officials of the said-committees are not provided
of the Bank directly reports to this committee. with any additional allowances, remuneration or other
perks.
ii) Employee Service & Benefit Committee:
n) Human Resources:
In order to formulate plans, policies and guidelines
in the functions of human resource selection, The human resources of an organization play a crucial
recruitment, appointment, career growth, training, role in an organization’s progress. It is through a
services and pension of employees and to present dedicated, skilled and driven pool of human resources
them for approval from the Board of Directors, a that all organizational goals and objectives are met,
Human Resource Sub-committee led by director via utilization of technological and other resources.
Mahesh Prasad Pokharel, comprising of the Chief The Human Resource policy of the Bank reflects on
Executive Officer, Surender Bhandari, Chief and decides the need to provide trainings to staffs
Business and Operating Officer, Anuj Mani Timilsina throughout the country and abroad to enhance
and Head- Human Resources, Rohit Singh as its their technical knowhow, professional capacity,
members, is in place. managerial skills, competency and productivity in
their assigned fields as well as to identify, recruit and
iii) Risk Management Committee: appoint technically-equipped, knowledgeable and
professionally-capable, high-caliber individuals. The
In order to correctly identify the risks inherent in Bank is focused on capacity-building and enhancement
the Bank and to formulate needful policies and through regular on-the-job trainings and through
rules, a Risk Management Sub-Committee, led by imparting new skills, relevant to their assigned scope
director Krishna Prasad Gyawali, comprising of of responsibilities. At the end of the review period, the
director Anuradha Chaudhary, Chief- Operations Bank employed a total of 1,043 staff on a permanent
Ram Chandra Khanal and Head- Credit Risk and contractual basis. During the review period, there
Management, Bikas Khanal, as its members is in was significant participation of the staffs in various
place. sporting, leadership and competitive events, as well.
iv) AML/CFT Committee:

In order to frame needful policies and framework
on responsibilities and work-division of the Bank ,
regarding system of risk-assessment, identification
of risk-bearing customers and framing the polices
on updating risk monitoring systems and systems,
an AML/CFT Committee led by director, Dr. Ganesh
Prasad Pathak, comprising of Chief Risk Officer,
Chief Operations Officer and Head - Operations
Risk Management & Compliance as its members
and Head oAML/CFT as its member secretary, in its
place.
v) Other board-level committees:
Other committees and sub-committees are formed

as per the requirement and for completion of
specific task/s of the Bank.
161
Kumari Bank Limited
o) Achievements of the Current Year

The financial status of the Bank by the last day of Ashoj, 2076 is as follows:
By last day of Ashoj Variation

Head By last Day Ashoj 2076 Variation in NPR
2075 Percentage
Share Capital 9,554,130,439 8,685,573,112 868,557,327 10.00
Deposits from Customer 78,302,898,866 73,201,143,766 5,101,755,099 6.97
Loans and Advances to BFI and Customers 80,567,642,257 76,053,317,026 4,514,325,231 5.94
Investment Securities 9,113,757,685 9,121,568,177 (7,810,491) (0.09)
Interest Income 2,633,603,099 2,247,788,162 385,814,937 17.16
Interest Expense 1,715,053,859 1,430,096,676 284,957,182 19.93
Net Interest Income 918,549,240 817,691,486 100,857,754 12.33
Other Operating Income 260,589,667 177,319,595 83,270,071 46.96
Operating Expenses 543,287,801 356,695,492 186,592,308 52.31
Operating Profit Before Loan Loss Provision 635,851,107 638,315,589 (2,464,482) (0.39)
Net-Profit 401,988,789 351,803,121 50,185,667 14.27
Non- Performing Loan Ratio 1.05 1.14 (0.09) (7.89)
Capital Adequacy Ratio 11.57 12.98 (1.41) (10.86)
Base Rate 10.68 11.09 (0.41) (3.70)
Interest Spread (as prescribed by the Nepal
3.75 3.37 0.38 11.28
Rastra Bank )
p) Goals and Programs of the Current Year to formal channels of financial access and Banking.
As for remote areas of the country, deprived of proper
The financial plans of the Bank for the current year are infrastructure for establishment of branch networks,
as follows: the Bank is relying on modern technology, namely
The goal is to increase the credit and investment of the its Mobile-Banking service and BLB units to offer
Bank by 32% and 35% reaching a total of NPR 100.00 competitive Banking services, to the extent possible.
billion and NPR 15.30 billion, respectively. Similarly, the
Bank is also planning to enhance its deposit base by
q) Industrial and Professional Relations of the
37% to attain a figure of NPR 110.13 billion. It is predicted
that the net interest income shall rise by 40%, other Company
operating income by 74% and other operating expenses The Bank has been maintaining cordial relations with all
by 56% to reach NPR 4.3 billion, 1.07 billion and 2.58 industrial and professional parties within the industry
billion, respectively. and expresses our commitment to strive for maintaining
such relationship in the days to come, and to use it
Likewise, it has been estimated that the Operating transparently in the interests of the Bank .
Profit before Loan Loss Provision shall surge by 40% to
reach NPR 2.80 billion. In the review year, that we were 4. Changes in the Board of Directors and the
successful in bringing down Non-Performing Loan Ratio
to 1.01% from 1.05% in the prior year. It is worth noting
Reasons thereof:
that deliberate, strenuous efforts are being made in the In the review period, a post of a director was vacant
current year for inactive loan-recovery. In view of this, following the resignation tendered by Mr. Naresh Duggad,
the Bank is projected to attain a surge of 40.00% in its which was approved by the meeting of Board of Directors
net profits to attain the figure of NPR 175.04 million. on 5th September, 2018. In his place, the meeting of Board
of Directors on 5th September, 2018, appointed Mr. Rishi
The Bank is driven to achieve peak-productivity of Agarwal for the remainder of the term. Similarly, the
its employees, enhancement of its asset-quality and meeting of Board of Directors on 28th December, 2018
overall profitability, whilst rendering excellent Banking appointed Dr. Ganesh Prasad Pathak as an independent,
products/services to its customers. The Bank seeks professional director of the Bank . Similarly, the resignation
to introduce innovative financial products/services to of then director, Dr. Shobhakanta Dhakal, representing the
render convenient, hassle-free and effective Banking public shareholders’ group was approved by the meeting
experience to its customers. of Board of Directors on 19th April, 2019. The special AGM,
convened on 14th June, 2019 appointed a team of BOD
Furthermore, the Bank is dedicated to contribute to consisting of Mr. Amir Pratap JB Rana and Mr. Krishna
financial access and inclusivity via its expanding network Prasad Gyawali from the Promoters’ Group, Mr. Mahesh
of branches, ATMs, extension counters and Branchless Prasad Pokharel and Ms. Anuradha Chaudhary from the
Banking Units, across the country. In a similar manner, public group with Professor Dr. Ganesh Prasad Pathak,
the Bank has also been extending credit-facilities to retaining his role as an independent director.
various small and medium-sized enterprises and also
deprived and productive sectors of the nation, i.e. 5. Major Factors Affecting the Business
agriculture, animal husbandry, floriculture, etc to uplift
the comprehensive reach of the general population During the review year, negative impact was cast on
162
the Bank’s activities, owing to the prevalent liquidity previous fiscal years and if they are involved
crunch at the time. In the same vein, political instability, in share transactions of the company,
unpredictable liquidity fluctuations in the market, lack of
timely government expenditures, dearth of skilled workers, information gleaned by the company from
etc still persist as hurdles in smooth business operations. them:
No information available.
The Banking industry is heavily reliant on the development
of industrial and commercial sectors of the nation, which,
despite demonstrating slight improvements, wasn’t 13. Information on any individual interest of any
adequate to bring about radical changes or contribute to director or his/her relatives in agreements
considerable growth. The nation is still reeling under political made with the Bank
uncertainty and volatile legal and business environment.
No information available.
The acute shortage of investable funds still persists in the
market and such factors act as hindrances to cast a direct,
negative impact on the Bank’s smooth operations. 14. Details of share bought back
None.
6. Response of Board of Directors on the Audit
Report 15. Information on Internal Control System
With the exception of some standard comments on the A separate, independent department exists in the Bank
Bank’s regular operations, no adverse comments were for maintaining robust internal control system. The
raised in the Annual Report. The Bank’s management Department’s has proactive involvement in mitigation of
has already been clearly instructed to implement the the Bank’s credit, operations and market risks. The Internal
suggestions and inputs put forth by the Auditor. The Audit Unit of the Bank reviews the efficacy of the internal
comments and directives issued by the Nepal Rastra Bank control mechanisms, during the audit process.
, during approval of the Bank’s financial statements for the
FY 2075/76 have been attached in the annual report booklet. 16. Details of the total management expenses of
The Bank’s management has already been instructed for
appropriate enforcement of such suggestions.
the Bank
The details of the Bank’s management expenses for the FY
7. Amount Recommended for Distribution of 2075/76 have been as follows:
Dividends Staff/Personnel Expenses: NPR 978,860,368.00
The Bank has proposed a bonus dividend for the FY Other Expenses: NPR 674,782,458.00
2075/76, equivalent to NPR 868.557 million at the rate of The detailed statement of the Bank’s total management
10% of the total paid-up capital. Likewise, 0.526% cash- expenses have been quoted in Appendices 4.36, 4.37 and
dividend to offset the levied tax on the issued bonus- 4.38 of its Annual Report.
dividend has also been proposed for the FY 2075/76 on its
total paid-up capital, in favor of its shareholders.
17. Information on the Audit Committee Review
8. Details of Forfeited Shares Pursuant to Section 164 of the Companies Act, an audit
committee led by non-executive director Anuradha
No shares have been forfeited during the reporting period. Chaudhary and comprising of director Dr. Ganesh Prasad
Pathak as member and Head of the Bank’s Internal Audit
9. Progresses made by the Bank and its sister- department, Ganesh Kumar KC, as its member secretary,
company is in place. The Internal Audit department of the Bank
directly reports to this committee. A total of 16 committee
The Bank has a sister-concern under its 100 percent
meetings took place in the FY 2075/76. Meeting allowance
ownership named Kumari Capital Ltd, at the Office of
on par with the members of the Board of Directors, has
Company Registrar on October 17, 2017. The progress
been provided to the members of this committee, save for
made by Bank and its sister company have been included
the member secretary.
in various clauses of this annual report.

The proceedings of this Committee are in conformity with
10. Major transactions accomplished by the Bank the guidelines of Nepal Rastra Bank and the provisions laid
and its sister-company in the FY 2075/76 and out in the Company Act. The report of internal audit points
any significant changes seen in the company’s out no serious remarks of any kind about the Bank’s actions
or decisions. The Audit Committee regularly reviews
business in that period.
the Bank’s internal control system and offers frequent
No significant changes are seen in any of its sister suggestions and recommendations on its compliance to
companies and no other changes are witnessed in the the management and the Board of Directors. Pursuant to
Bank’s business, other than included in this report. the inputs received from the Audit committee, the Bank
has been enhancing its proceedings in regular manner.
11. Information provided by basic shareholders of
the Bank 18. In case any dues are payable to the Bank by
a director, managing director, executive
None.
head, basic shareholders of the Bank or their
12. Details of the share ownership acquired by
the directors and officials of the Bank in the
163
Kumari Bank Limited
relatives by a firm, company or body corporate, in which they are involved, then the details thereof:
None.
19. Remuneration, Allowance and Perks paid to the directors, managing director, executive head and
officials:
Directors: The Bank’s directors are provided with meeting allowances for having participated in the meetings of Board and
sub-committees formed by it, as provided in the Rules, at the rate of NPR 12,000.00 for the Chairman and NPR 10,000.00
for members thereof. Moreover, the Chairman and Members of the Board are paid a sum of NPR 12,000.00 per month as
communications and magazine benefits. The Bank has awarded no other perks to the directors. A sum of NPR 3,662,516.00
has been paid to the directors in the FY 2075/76, on behalf of meeting allowances and communications and magazine benefits.
Annual Salaries, Allowances and Perks for Chief Executive Officer and other officials/managers in the FY 2075/76:
Table 4
(Amount in NPR)
Remuneration and Perks Chief Executive Officer Managers
Salary 9,596,160 25,378,332
Allowances 4,428,992 6,678,900
Provident Fund - 2,537,833
Vehicle Repair - 306,000
Medical Treatment (Annual +Cumulative) - 535,616
Dashain Allowance 1,168,762 2,617,186
Leave (Annual + Cumulative) 799,680 3,163,067
Gratuity - 1,605,510
Others 5,469,881 12,273,616
Total 21,463,477 55,096,062
The above salaries and allowances are for the officials from the Assistant General Manager to the Chief Executive Officer level.
It is inclusive of the salaries and allowances received by the staffs, who have resigned from the Bank in FY 2075/76 as well as
the newly-recruited staffs, during their tenures.
Other than the above stated salaries and allowances, some fringe benefits are also provided as follows:
• The Chief Executive Officer and the Assistant General Managers are given auto-loan together with driver and fuel and
vehicle repair allowance. Other managerial officials are also granted auto loan, fuel and vehicle repair allowance, as per the
Vehicle Policy of the Bank .
• All the permanent staffs are granted loans for purchase of vehicles, real estate as well as personal loan as per the Bank’s
Human Resource Policy.
• Magazines and phone/mobile facilities as per the Bank’s Human Resource policy.
• Group accident insurance of the staffs is also made available as per the Bank’s policy.
20. Dividends due to be received by the shareholders

Out of the 12.00% cash-dividends of FY 2066/67 and 7.00% of the FY 2068/69, the dividends to be received by the shareholders
until the last date of Asadh, 2076 amounts to NPR 603,549.00 After acquisition, a sum of NPR 24,53,529.00 in additional
cash dividends is still to be received by the shareholders till the last date of Asadh, 2076. Besides that, the uncollected cash
dividends from last year amounting NPR 6,054,754.33 has been deposited in the Investor’s Protection Fund.
21. Details of Purchase or Sale of Assets as per section 141 of the Companies Act, 2007:
None.
22. Details of Transactions between related companies as per section 175 of the Companies Act, 2007:
None.
23. Other matters to be revealed in the report of Board of Directors as per the Companies Act, 2007 and
the prevailing laws:
None.
24. Other Matters:

None.
25. Vote of Thanks

We would like to extend our heartfelt thanks to our respected shareholders, customers, officials at various departments in the
Nepal Rastra Bank , Office of the Company Registrar, Securities Board of Nepal, Nepal Stock Exchange Ltd, CDS & Clearing Ltd.
164
and all other parties rendering direct and indirect support and also the general public for aiding to boost the morale of
this Bank .
We also express our utmost gratitude to our statutory auditor SR Pandey and Co. for having completed the audit in
time and for presenting the Bank with appropriate, professional suggestions. Moreover, we would also like to thank
the Bank’s entire management and staff for having served the Bank with their invaluable efforts and time and doing
beyond what is asked of them.
In our concluding remarks, we would like to state an adage within the Banking industry that the Bank and its
customers are the two sides of the same coin. They are interdependent, inter-connected and we accept that the
present heights that the Bank has been able to reach is through the utmost faith, trust placed in us by our valued
customers. We would like to restate our commitment to make this Bank , one of the finest financial institutions in the
country, not only in terms of balance-sheet size but also in areas of fiscal discipline, good governance, robust control,
risk-management framework and excellent customer-care.
Thank you!
From the Board of Directors

Krishna Prasad Gyawali Amir Pratap JB Rana
(Director) (Chairman)
Date: Bhadra 20th, 2076
165
Kumari Bank Limited
ANNUAL REPORT CONCERNING RULE 26 (2)

OF THE SECURITIES REGISTRATION
AND ISSUANCE RULES, 2016
1. Report of the Board of Directors : Attached with the Annual Report
2. Auditor’s Report : Attached with the Annual Report
3. Audited Financial Statements: Attached with the Annual Report
4. Details on Legal Action:
a) In case of any lawsuits filed by or against the Bank :
Except for some cases filed by the Bank relating to the flow of loans in course of the Bank’s daily functioning, no cases are
active that might inflict financial burden on the Bank .
b) In case of lawsuits filed by or against any promoter or Director of the Bank on a criminal offence or defiance of the Prevailing
Rules : The Bank has no knowledge to this effect.
c) In case of lawsuits filed against any promoter or Director of the Bank on financial crimes: The Bank has no knowledge to this
effect.
5. Analysis of Share Transactions and Progress of the Body Corporate

a) Opinion of Bank Management as to the Bank’s share transactions in the securities market : The Bank elicits no special
opinion in this connection as the price and transaction of shares are determined by open market.
b) The highest, lowest and final price of the Bank’s shares in the fiscal year of 2075/76 together with the number of shares
traded and transaction days:
Highest Lowest Total

Final Price
Price of Price of Total Total no. of transaction
Trimester of Shares in
Shares in Shares in Transaction shares traded days in each
NPR
NPR NPR trimester
First Trimester (Last Day of Ashoj Month, 2075) 268 191 254 6,043 26,51,633 50
Second Trimester (Last Day of Poush Month, 2075) 261 237 253 3,811 15,31,515 60
Third Trimester (Last Day of Chaitra Month, 2075) 265 225 259 4,101 12,68,268 60
Fourth Trimester (Last Day of Ashadh Month, 2075) 269 208 220 7,502 27,53,374 64
6. Problems and Challenges 7. Corporate Good Governance

A) Problems and Challenges The Board of directors is liable and accountable for
a) Internal: enforcement of corporate good governance in the Bank ,
• Retention of competent, talent pool at the highest level. The Bank recognizes it as one of the
• Rising Operation Costs guiding principles for all its administrative proceedings.
• Increasing Operational Capacity via reduction of The Board of Directors is continually active in developing
inherent risks a transparent and robust system of corporate governance
b) External: throughout the organization, to make sure it is implemented
• Financial and political condition of the country across all levels in the organization’s activities.
• Lack of investment-friendly climate
• Competitive Banking market Various committees and sub-committees are in place
• Maximum dearth of Banking liquidity for timely identification, diversification, prevention and
• mitigation of various risks, associated with the internal as
B) Strategies adopted by the management to mitigate well as external factors and to materialize the prevailing
those problems and challenges: policies, guidelines and laws of the Bank . The scope of
operations of various departments such as: Credit, Risk
• Correct Identification of capabilities of
Management which run the risk of inter-departmental
Bank staff and help enhance their skills and
conflict of interests are well-bifurcated. With a view to
competency.
enforce a robust system of good-governance at the highest-
• Expenditures to be made in an economic manner
level at the Bank , the circulars and directives issued by the
after a thorough analysis and identification of
Nepal Rastra Bank are properly adhered to.
needs.
• To develop innovative products and services,
as per the changing customer needs and 8. Details on the variation of 20 or more percent
preferences and market-fluctuations. in the statements projected in the prospectus
• Price-determination of interest-sensitive and in the audited statements:
assets and liabilities, as per the market-liquidity
scenario. Though there are some variations in the statements
• Loan-diversification and proper, timely projected in the prospectus and in the audited statements
management of inactive debts. for the fiscal year of 2075/76 B.S., they do not equal or
exceed 20 percent. The audited statements for the fiscal
year of 2075/76 comply with the Nepal Financial Reporting
166
Standards (NFRS) and some variation appeared, as a result
of changes witnessed in that reporting system.
9. Details on the Special Incidents or

Circumstances concerning Rule 22(5):
• Pursuant to the decision of Board of Directors of the
Bank on August 19, 2018 regarding acceptance of
resignation by Mr. Naresh Duggad from the post of the
Bank’s director, Mr. Rishi Agarwal has been appointed in
his place, for the remainder of his term on September
5th, 2019. Similarly, the meeting of Board of Directors
on 28th December, 2018 appointed Dr. Ganesh Prasad
Pathak as an independent, professional director of
the Bank . Similarly, the resignation of then director,
Dr. Shobhakanta Dhakal, representing the public
shareholders’ group was approved by the meeting of
Board of Directors on 19th April, 2019.
• The special AGM, convened on 14th June, 2019 appointed

a compact team of BOD consisting of Mr. Amir Pratap
JB Rana and Mr. Krishna Prasad Gyawali from the
Promoters’ Group, Mr. Mahesh Prasad Pokharel and
Ms. Anuradha Chaudhary from the public group with
Professor Dr. Ganesh Prasad Pathak, retaining his role
as an independent director.
• The Bank’s paid-up capital was enhanced by a figure

of NPR 1,522,178,139.00 following the capitalization
of endorsed bonus-shares post completion of the
combined 17th and 18th Annual General Meeting (AGM).
167
Kumari Bank Limited
168
169
Kumari Bank Limited
Kumari Bank Limited

Statement of Financial Position
As on 31st Ashad 2076
Group Bank
Particulars Note
Ashad end 2076 Ashad end 2075 Ashad end 2076 Ashad end 2075
Assets
Cash and cash equivalent 4.1 8,823,890,014 3,780,643,820 8,821,135,632 3,780,643,820
Due from Nepal Rastra Bank 4.2 3,580,514,349 5,582,760,819 3,580,514,349 5,582,760,819
Placement with Bank and Financial Institutions 4.3 384,382,797 714,095,685 384,382,797 714,095,685
Derivative financial instruments 4.4 5,858,648,394 - 5,858,648,394 -
Other trading assets 4.5 - - - -
Loan and advances to B/FIs 4.6 3,035,403,974 1,778,934,583 3,035,403,974 1,778,934,583
Loans and advances to customers 4.7 73,017,913,052 60,596,575,817 73,017,913,052 60,596,575,817
Investment securities 4.8 9,301,568,177 8,802,903,890 9,121,568,177 8,802,903,890
Current tax assets 4.9 61,227,298 113,783,100 61,227,298 113,783,100
Investment in susidiaries 4.10 - - 200,000,000 200,000,000
Investment in associates 4.11 65,198,592 44,567,797 20,000,000 20,000,000
Investment property 4.12 88,422,015 134,171,003 88,422,015 134,171,003
Property and equipment 4.13 662,104,656 434,304,421 662,104,656 434,304,421
Goodwill and Intangible assets 4.14 97,393,609 110,453,429 97,393,609 110,453,429
Deferred tax assets 4.15 77,789,908 - 77,789,908 -
Other assets 4.16 286,947,574 454,639,100 284,981,292 454,924,100
Total Assets - 105,341,404,409 82,547,833,464 105,311,485,153 82,723,550,667
Particulars Note Ashad end 2076 Ashad end 2075 Ashad end 2076 Ashad end 2075
Liabilities
Due to Bank and Financial Instituions 4.17 12,146,455,539 9,904,187,331 12,168,482,092 10,104,187,331
Due to Nepal Rastra Bank 4.18 1,433,248,037 539,557,578 1,433,248,037 539,557,578
Derivative financial instruments 4.19 5,715,359,938 6,111,249 5,715,359,938 6,111,249
Deposits from customers 4.20 73,201,143,766 59,546,335,519 73,201,143,766 59,546,335,519
Borrowing 4.21 - - - -
Current Tax Liabilities 4.9 - - - -
Provisions 4.22 2,231,750 2,231,750 2,231,750 2,231,750
Deferred tax liabilities 4.15 - 20,361,526 - 20,361,526
Other liabilities 4.23 1,073,982,000 1,965,014,116 1,071,934,043 1,964,985,865
Debt securities issued 4.24 - - - -
Subordinated Liabilities 4.25 - - - -
Total liabilities - 93,572,421,032 71,983,799,069 93,592,399,626 72,183,770,819
Equity -
Share capital 4.26 8,685,573,112 7,163,394,973 8,685,573,112 7,163,394,973
Share premium 54,803,159 54,803,159 54,803,159 54,803,159
Retained earnings 933,596,484 1,550,975,161 883,698,633 1,526,720,614
Reserves 4.27 2,095,010,622 1,794,861,101 2,095,010,622 1,794,861,101
Total equity attributable to equity holders - 11,768,983,378 10,564,034,395 11,719,085,527 10,539,779,848
Non-controlling interest - - - - -
Total equity - 11,768,983,378 10,564,034,395 11,719,085,527 10,539,779,848
Total liabilities and equity - 105,341,404,409 82,547,833,464 105,311,485,153 82,723,550,667
Contingent liabilities and commitment 4.28 28,918,971,029 28,659,217,390 28,918,971,029 28,659,217,390
Net assets value per share 135.50 147.63 134.93 147.13
Surender Bhandari Amir Pratap J.B. Rana Krishna Prasad Gyawali

Chief Executive Officer Chairman Director
Anuj Mani Timilsina Dr. Mahesh Prasad Pokharel Anuradha Chaudhari

Senior Deputy Chief Executive Officer Director Director
Ram Chandra Khanal

Chief Operations Ganesh Prasad Pathak
Director
As per our report of even date
Aswin Babu Shrestha
Head- Finance & MIS, NRB and Audit Coordination
CA. Sudarshan Raj Pandey
Senior Partner
Date: 28 August 2019 S.R. Pandey & Co.
Place: Tangal, Kathmandu Chartered Accountants
170
Kumari Bank Limited
Statement of Profit or Loss
For the year ended 31st Ashad 2076

Group Bank
Particulars Note
FY 2075-76 FY 2074-75 FY 2075-76 FY 2074-75
Interest income 4.29 9,103,394,715 6,804,011,381 9,098,573,839 6,804,011,381
Interest expense 4.30 6,225,027,655 4,797,987,363 6,228,619,912 4,797,987,363
Net interest income - 2,878,367,060 2,006,024,017 2,869,953,928 2,006,024,017
Fee and commission income 4.31 465,986,518 396,815,439 465,986,518 396,815,439
Fee and commission expense 4.32 31,866,063 27,322,461 31,866,063 27,322,461
Net fee and commission income - 434,120,455 369,492,978 434,120,455 369,492,978
Net interest, fee and commission income - 3,312,487,515 2,375,516,995 3,304,074,383 2,375,516,995
Net trading income 4.33 258,904,627 148,951,414 258,904,627 148,951,414
Other operating income 4.34 84,930,111 92,120,818 84,919,398 92,120,818
Total operating income - 3,656,322,252 2,616,589,227 3,647,898,408 2,616,589,227
Impairment charge/(reversal) for loans and other losses 4.35 229,030,770 31,946,183 229,030,770 31,946,183
Net operating income - 3,427,291,483 2,584,643,043 3,418,867,638 2,584,643,043
Operating expense
Personnel expenses 4.36 978,885,790 775,186,599 978,860,368 775,186,599
Other operating expenses 4.37 556,028,165 374,665,338 554,656,220 374,352,088
Depreciation & Amortisation 4.38 120,126,238 79,214,269 120,126,238 79,214,269
Operating Profit - 1,772,251,289 1,355,576,837 1,765,224,812 1,355,890,087
Non operating income 4.39 11,842,001 67,228,853 11,842,001 32,572,057
Non operating expense 4.40 1,029,811 - 1,029,811 -
Profit before income tax - 1,783,063,479 1,422,805,690 1,776,037,002 1,388,462,144
Income tax expense 4.41 547,672,710 341,973,741 545,658,742 341,973,741
Current Tax 623,935,895 411,550,374 621,921,927 411,550,374
Deferred Tax (76,263,185) (69,576,633) (76,263,185) (69,576,633)
Profit for the year - 1,235,390,769 1,080,831,949 1,230,378,260 1,046,488,403
Profit attributable to:
Equity holders of the Bank 1,235,390,769 1,080,831,949 1,230,378,260 1,046,488,403
Non-controlling interest - -
Profit for the year - 1,235,390,769 1,080,831,949 1,230,378,260 1,046,488,403
Earnings per share
Basic earnings per share 14.18 15.02 14.13 14.54
Diluted earnings per share 14.18 15.02 14.13 14.54

Anuj Mani Timilsina Mahesh Prasad Pokharel Anuradha Chaudhari

Ram Chandra Khanal

Chief Operations Dr. Ganesh Prasad Pathak
Director

Aswin Babu Shrestha
Senior Partner
171
Kumari Bank Limited
Kumari Bank Limited

Statement of Comprehensive Income
Group Group Bank

Particulars
Note FY 2075-76 FY 2074-75 FY 2075-76 FY 2074-75
Profit for the year 1,235,390,769 1,080,831,949 1,230,378,260 1,046,488,403
Other comprehensive income, net of income tax
a) Items that will not be reclassified to profit or loss
Gain /(losses) from investments in equity instruments measured at fair (10,287,089) (31,455,886) (10,287,089) (31,455,886)
value
Gain /(losses) on revaluation - - - -
Actuarial gains/(loss) on defined benefit plans (62,673,742) 18,771,860 (62,673,742) 18,771,860
Income tax relating to above items 21,888,249 3,805,208 21,888,249 3,805,208
Net other comprehsive income that will not be reclassified to profit - (51,072,582) (8,878,818) (51,072,582) (8,878,818)
or loss
b) Items that are or may be classified to profit or loss -
Gain /(losses) on cash flow hedge - - -
Exchange gain/ (losses) (arising from translating financial assets of - - -
foreign operation)
Income tax relating to above items - - -
Reclassify to profit or loss - - -
Net other comprehsive income that are or may be reclassified to - - - - -
profit or loss
c) Share of other comprehensive income of associate accounted as per
equity method
Other comprehensive income for the period, net of income tax (51,072,582) (8,878,818) (51,072,582) (8,878,818)
Total comprehensive income for the year 1,184,318,187 1,071,953,131 1,179,305,679 1,037,609,585
Total comprehensive income attributable to:
Equity holders of the Bank 1,184,318,187 1,071,953,131 1,179,305,679 1,037,609,585
Total comprehensive income for the year - 1,184,318,187 1,071,953,131 1,179,305,679 1,037,609,585


Ram Chandra Khanal

Director

Aswin Babu Shrestha
Senior Partner
172
Kumari Bank Limited
Statement of changes in equity
Bank
Attributable to equity holders of the Bank
Exchange
Share General Regulatory Fair value Revaluation Retained Non-controlling
Share Capital Equalisation Other Reserve Total Total equity
Premium Reserve Reserve Reserve Reserve Earning interest
Reserve
Balance at Shrawn 1, 2074 5,969,495,823 - 1,076,611,243 35,308,742 - 12,708,237 - 1,154,599,291 14,646,442 8,263,369,778 - 8,263,369,778
Adjustment/Restatement - - - - - - - (5,514,146) - - - -
Adjusted/Restated balance at Shrawn 1, 2074 5,969,495,823 - 1,076,611,243 35,308,742 - 12,708,237 - 1,149,085,145 14,646,442 8,263,369,778 - 8,263,369,778
Comprehensive income for the year - - - - - - - - - - - -
Profit for the year - - - - - - - 1,046,488,403 - 1,046,488,402 - 1,046,488,403
Other comprehensive income, net of tax - - - - - - - - - - - -
Gain/ (losses) from investments in equity instruments - - - - - (22,019,119) - - - (22,019,119) - (22,019,120)
measured at fair value
Gain /(losses) on revaluation - - - - - - - - - - - -
Actuarial gain /(losses) on defined benefit plans - - - - - - - - 13,140,302 13,140,302 - 13,140,302
Gain /(losses) on cash flow hedge - - - - - - - - - - - -
Exchange gain/ (losses) (arising from translating financial - - - - - - - - - - - -
assets of foreign operation)
Total comprehensive income for the year - - - - - (22,019,119) - 1,046,488,403 13,140,302 1,037,609,584 - 1,037,609,585
Transfer to reserve during the year - - 208,378,540 4,376,843 477,170,416 - - (668,852,934) (25,460,544) (4,387,678) - (4,387,678)
Transfer from reserve during the year - - - - - - - - - -
Transactions with owners, directly recognised in equity - - - - - - - - - - - -
Share issued 1,193,899,150 - - - - - - - - 1,193,899,150 - 1,193,899,150
Share based payments - - - - - - - - - - - -
Dividends to equity holders - - - - - - - - - - - -
Bonus shares issued - - - - - - - - - - - -
Cash dividend paid - - - - - - - - - - - -
Ohers - 54,803,159 - - - - - - - 54,803,159 - 54,803,159
Total contributions by and distributions 1,193,899,150 54,803,159 - - - - - - - 1,248,702,309 - 1,248,702,309
Balance at Ashad end 2075 7,163,394,973 54,803,159 1,284,989,784 39,685,586 477,170,416 (9,310,883) - 1,526,720,613 2,326,199 10,545,293,994 - 10,545,293,994
- - - - - - - - - - - -
Balance at 1 Sawan 2075 7,163,394,973 54,803,159 1,284,989,784 39,685,586 477,170,416 (9,310,883) - 1,526,720,613 2,326,199 10,545,293,994 - 10,545,293,994
Adjustment/Restatement - - - - - - - - - - - -
Adjusted/Restated balance at 1 Shrawn 2075 7,163,394,973 54,803,159 1,284,989,784 39,685,586 477,170,416 (9,310,883) - 1,526,720,613 2,326,199 10,539,779,848 - 10,539,779,848
Gain/ (losses) from investments in equity instruments - - - - - - - (7,200,962) - (7,200,962) - (7,200,962)
measured at fair value
Actuarial gain /(losses) on defined benefit plans - - - - - - - (43,871,619) - (43,871,619) - (43,871,619)
Exchange gain/ (losses) (arising from translating financial - - - - - - - - - - - -
assets of foreign operation)
Total comprehensive income for the year - - - - - - - 1,179,305,679 - 1,179,305,679 - 1,179,305,679
Transfer to reserve during the year - - 246,075,652 5,498,558 107,232,061 (7,200,962) - (300,149,520) (51,455,789) - - -
Transfer from reserve during the year - - - - - - - - - - - -
Transactions with owners, directly recognised in equity - -
Share issued - - - - - - - - - - - -
Dividends to equity holders - - - - - - - - - - -
Bonus shares issued 1,522,178,139 - - - - - - (1,522,178,139) - - - -
Ohers - - - - - - - - - - - -
Total contributions by and distributions 1,522,178,139 - - - - - - (1,522,178,139) - - - -
Balance at Ashad end 2076 8,685,573,112 54,803,159 1,531,065,436 45,184,144 584,402,477 (16,511,845) - 883,698,633 (49,129,590) 11,719,085,526 - 11,719,085,526
173
Kumari Bank Limited
174
Statement of changes in equity
Group
Attributable to equity holders of the Bank Non-
Kumari Bank Limited
Share Capital Share General Reserve Exchange Regulatory Fair value Revaluation Retained Earning Other Reserve Total controlling Total equity
Premium Equalisation Reserve Reserve Reserve interest
Reserve
Balance at Shrawn 1, 2074 5,969,495,823 - 1,076,611,243 35,308,742 - 12,708,237 - 1,154,599,291 14,646,442 8,263,369,778 - 8,263,369,778
Adjustment/Restatement - - - - - - - (5,514,146) - (5,514,146) - (5,514,146)
Adjusted/Restated balance at Shrawn 1, 2074 5,969,495,823 - 1,076,611,243 35,308,742 - 12,708,237 - 1,149,085,145 14,646,442 8,257,855,632 - 8,257,855,632
Other comprehensive income, net of tax - - - - - - - - - - -
Gain/ (losses) from investments in equity - - - - - (22,019,120) - - - (22,019,120) - (22,019,120)
instruments measured at fair value
Actuarial gain /(losses) on defined benefit plans - - - - - - - - 13,140,302 13,140,302 - 13,140,302
Exchange gain/ (losses) (arising from translating - - - - - - - - - - - -
financial assets of foreign operation)
Total comprehensive income for the year - - - - - (22,019,120) - 1,080,831,950 13,140,302 1,071,953,132 - 1,071,953,132
Transfer to reserve during the year - - 208,378,541 4,376,844 477,170,416 - - (668,852,934) (25,460,545) (4,387,678) - (4,387,678)
Transactions with owners, directly recognised in - - - - - - - - - - - -
equity
Share issued 1,193,899,150 - - - - - - - - 1,193,899,150 - 1,193,899,150
Bonus shares issued - - - - - - - - - - - -
Ohers - 54,803,159 - - - - - - - 54,803,159 - 54,803,159
Total contributions by and distributions 1,193,899,150 54,803,159 - - - - - - - 1,248,702,309 - 1,248,702,309
Balance at Ashad end 2075 7,163,394,973 54,803,159 1,284,989,784 39,685,586 477,170,416 (9,310,883) - 1,561,064,160 2,326,199 10,574,123,395 - 10,574,123,395
- - - - - - - - - - - -
Balance at 1 Sawan 2075 7,163,394,973 54,803,159 1,284,989,784 39,685,586 477,170,416 (9,310,883) - 1,561,064,160 2,326,199 10,574,123,395 - 10,574,123,395
Adjustment/Restatement - - - - - - - (10,089,000) - (10,089,000) - (10,089,000)
Adjusted/Restated balance at 1 Shrawn 2075 7,163,394,973 54,803,159 1,284,989,784 39,685,586 477,170,416 (9,310,883) - 1,550,975,160 2,326,199 10,564,034,394 - 10,564,034,394
Gain/ (losses) from investments in equity - - - - - - - (7,200,962) - (7,200,962) - (7,200,962)
instruments measured at fair value
Actuarial gain /(losses) on defined benefit plans - - - - - - - (43,871,619) - (43,871,619) - (43,871,619)
Exchange gain/ (losses) (arising from translating - - - - - - - - - - - -
financial assets of foreign operation)
Total comprehensive income for the year - - - - - - - 1,204,948,983 - 1,204,948,983 - 1,204,948,983
Transfer to reserve during the year - - 246,075,652 5,498,558 107,232,061 (7,200,962) - (300,149,520) (51,455,789) 0 - 0
Transactions with owners, directly recognised in - - - - - - - - - - - -
equity
Share issued - - - - - - - - - - - -
Bonus shares issued 1,522,178,139 - - - - - - (1,522,178,139) - - - -
Ohers - - - - - - - - - - - -
Total contributions by and distributions 1,522,178,139 - - - - - - (1,522,178,139) - - - -
Balance at Ashad end 2076 8,685,573,112 54,803,159 1,531,065,436 45,184,144 584,402,477 (16,511,845) - 933,596,484 (49,129,590) 11,768,983,377 - 11,768,983,377
Kumari Bank Limited
Statement of Cash Flows
Group Bank
Particulars
FY 2075-76 FY 2074-75 FY 2075-76 FY 2074-75
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received 8,819,608,618 6,670,723,170 8,814,787,742 6,670,723,170
Fees and other income received 465,986,518 396,815,439 465,986,518 396,815,439
Divided received - - -
Receipts from other operating activities 345,641,080 237,339,502 345,630,367 237,339,502
Interest paid (6,211,445,975) (4,771,333,239) (6,215,038,231) (4,771,333,239)
Commission and fees paid (31,866,063) (27,322,461) (31,866,063) (27,322,461)
Cash payment to employees (926,366,301) (711,578,278) (926,340,878) (711,578,278)
Other expense paid (874,478,993) (380,917,372) (872,793,798) (380,917,372)
Operating cash flows before changes in operating assets and liabilities 1,587,078,884 1,413,726,760 1,580,365,657 1,413,726,760
(Increase)/Decrease in operating assets
Due from Nepal Rastra Bank 2,002,246,470 (671,959,791) 2,002,246,470 (671,959,791)
Placement with Bank and financial institutions 329,712,888 770,011,571 329,712,888 770,011,571
Other trading assets - - - -
Loan and advances to Bank and financial institutions (1,256,469,391) (646,226,589) (1,256,469,391) (646,226,589)
Loans and advances to customers (12,231,328,755) (16,959,434,523) (12,231,328,755) (16,959,434,523)
Other assets (5,596,894,250) (176,920,413) (5,594,927,968) (176,920,413)
Increase/(Decrease) in operating liabilities
Due to Bank and financial institutions 2,242,268,208 6,770,639,956 2,064,294,760 6,770,639,956
Due to Nepal Rastra Bank 893,690,459 (479,729,422) 893,690,459 (479,729,422)
Deposit from customers 13,654,808,247 11,854,565,588 13,654,808,247 11,854,565,588
Borrowings - - - -
Other liabilities 4,689,469,914 897,339,434 4,687,421,956 897,339,434
Net cash flow from operating activities before tax paid 6,314,582,674 2,772,012,572 6,129,814,324 2,772,012,572
Income taxes paid (571,380,094) (483,892,096) (569,366,126) (483,892,096)
Net cash flow from operating activities 5,743,202,580 2,288,120,475 5,560,448,198 2,288,120,475
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investment securities (510,761,174) (4,274,079,391) (330,761,174) (4,274,079,391)
Receipts from sale of investment securities 12,096,887 15,213,178 12,096,887 15,213,178
Purchase of property and equipment (316,224,012) (159,011,609) (316,224,012) (159,011,609)
Receipt from the sale of property and equipment 14,046,526 5,843,136 14,046,526 5,843,136
Purchase of intangible assets 13,059,820 (106,893,052) 13,059,820 (106,893,052)
Receipt from the sale of intangible assets - - - -
Purchase of investment properties - 26,012,591 - 26,012,591
Receipt from the sale of investment properties - 10,024,429 - 10,024,429
Interest received - - - -
Dividend received 10,035,659 5,224,044 10,035,659 5,224,044
Net cash used in investing activities (777,746,294) (4,477,666,675) (597,746,294) (4,477,666,675)
CASH FLOWS FROM FINANCING ACTIVITIES
Receipt from issue of debt securities - - -
Repayment of debt securities - - -
Receipt from issue of subordinated liabilities - - -
Repayment of subordinated liabilities - - -
Receipt from issue of shares - 1,235,435,814 - 1,235,435,814
Dividends paid - - -
Interest paid - - -
Other receipt/payment 77,789,908 77,789,908 -
Net cash from financing activities 77,789,908 1,235,435,814 77,789,908 1,235,435,814
Net increase (decrease) in cash and cash equivalents 5,043,246,194 (954,110,386) 5,040,491,812 (954,110,386)
Cash and cash equivalents at Shrawan 1, 2075 3,780,643,820 4,734,754,206 3,780,643,820 4,734,754,206
Effect of exchange rate fluctuations on cash and cash equivalents held
Cash and cash equivalents at Ashad end 2076 8,823,890,014 3,780,643,820 8,821,135,632 3,780,643,820


Ram Chandra Khanal

Director As per our report of even date
Aswin Babu Shrestha
Senior Partner
175
Kumari Bank Limited
Notes to the Financial Statements

Year ended 16th July 2019
1. Bank
1.1 General
Kumari Bank Limited (hereinafter referred to as “The Bank ”) is a public limited company, incorporated on 10th
December 1999 and domiciled in Nepal. The registered office of the Bank is located atDurbarmarga, Kathmandu,
Nepal. The Bank carries out commercial Banking activities and other financial services in Nepal under the license
from Nepal Rastra Bank (NRB), the Central Bank of Nepal, as “Ka Class” (Class A) licensed financial institution. The
Bank is listed in Nepal Stock Exchange Limited for public trading of stocks.
1.2 Financial Statements

The Financial Statement of Bank for the year ended 16 July, 2019 comprises Statement of Financial Position,
Statement of Profit or Loss, Statement of Other Comprehensive Income, Statement of Changes in Equity, Statement
of Cash Flows, Notes to the Financial Statements, Significant Accounting Policies of the Company.
1.3 Principal Activities and Operations
Bank
The principal activities of the Bank are to provide full-fledged wide range of commercial Banking services including,
agency services, trade finance services, card services, e-commerce products and services, remittance and bullion
trading services to its customers, provided through wide branch networks, extension counters, ATMs with latest
technological Banking support services.
Subsidiary and Associates
Ownership as on:
Subsidiary Principal Activities
16th July 2019 16th July 2018
The Subsidiary is opened to Provide merchant/investment Banking
services such as Management of public offerings, portfolio management,
Kumari
underwriting of securities, management of mutual fund schemes,
Capital 100% 100%
depository participant's service under Central Depository Service (CDS)
Limited
and other merchant Banking services. The final approval from Securities
Board of Nepal is under process.
Ownership as on:
Associate Principal Activities
16 July 2019 16th July 2018
th
The Associate is of the Bank is microfinance Banking institute with

National
license to operate as a D class financial institution from Nepal Rastra
Microfinance
Bank . The Principal Activity of the associate is to provide one window
Bittiya 20% 20%
financial solutions to the customers with wide range of Banking product
Sanstha
and services customized to the requirement of remote area customer
Limited
needs.
2. BASIS OF PREPARATION
2.1 Statement of Compliance
The Financial Statements of Bank for the year ended 16th July, 2019comprising Statement of Financial Position,
Statement of Profit or loss and Other Comprehensive Income, Statement of Changes in Equity, Statement of Cash
Flows and Notes to the Financial Statements (including Significant Accounting Policies), have been prepared in
accordance with Nepal Financial Reporting Standards (hereafter referred as NFRS), laid down by the Institute of
Chartered Accountants of Nepal and in compliance with the requirements of all applicable laws and regulations.
The Bank has applied certain carve-outs which are as described in Notes to Accounts.
2.2 Reporting Period and Approval of Financial Statements

a) Reporting Period
The Bank has prepared the financial statements in accordance with NFRS depicting financial performance for FY
2018/19and financial position of 16th July 2019 and the comparatives of FY 2017/18.
b) Responsibility for Financial Statements

The preparation and presentation of Financial Statements including consolidated financial statements is the
responsibility of the Board of Directors as per the governing provisions.
c) Approval of Financial Statements by Directors

The accompanied Financial Statements have been authorized to issue by the Board of Directors vide its resolution
176
dated 28th August 2019 and recommended for its recognition of financial instruments and it
approval by the Annual General Meeting of the lowers the threshold for recognition of full
shareholders. life time expected losses by aligning financial
accounting treatment with risk management
2.3 Functional and Presentation Currency activities.
The Financial Statements of Bank and Group are IFRS 9 has become effective from 1 January
presented in Nepalese Rupees (Rs.), which is the 2018 and has an effect on classification and
currency of the primary economic environment in measurement of the Bank’s financial assets.
which the Bank operates. There was no change in IFRS 9, as issued reflects the first phase of
Bank’s presentation and functional currency during work on replacement of IAS 39 and applies to
the year under review. classification and measurement of financial
assets and liabilities.
2.4 Use of Estimates, Assumptions and II) Other Standards
Judgments IFRS 15 replaces IAS 18 Revenue and IAS 11
Construction Contracts. insurance contracts
The preparation of Financial Statements in conformity are out of scope and so this Standard is not
with Nepal Financial Reporting Standards requires expected to have a significant impact on the
the management to make judgments, estimates and Bank .
assumptions that affect the application of accounting
policies and the reported amounts of assets, IFRS 9, IFRS 15 and IFRS 16 is expected to have
liabilities, income and expenses. Actual results may some impact on the financial statement of the
differ due to these estimates. Bank however the impact is not yet assessed
due to uncertain cost and effort involved.
Estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the 2.6 Discounting
estimate is revised and in any future periods affected. When the realization of assets and settlement
of obligation is for more than one year, the Bank
The most significant areas of estimation, uncertainty considers the discounting of such assets and
and critical judgments in applying accounting policies liabilities where the impact is material. Various
that have most significant effect in the Financial internal and external factors have been considered
Statements are as follows: for determining the discount rate to be applied to the
cash flows of company.
2.4.1 Going Concern
The Service fee charged by the Bank on loans
The Directors have made an assessment of
and advances are is considered immaterial and
Bank’s ability to continue as a going concern
otherwise impracticable to determine reliably over
and satisfied that it has the resources to
the period of the loan, same has not been considered
continue in business for the foreseeable
in computation of effective interest rateas per Carve-
future. Furthermore, the Board is not aware
out (optional) pronounced on 20th September 2018.
of any material uncertainties that may
provide significant doubt upon Bank’s ability
Defined Benefit Plan and Long term Employee benefits
to continue as a going concern and they do
has been determined by considering discount rate as
not intend either to liquidate or to cease
the average yield on government bonds issued during
operations of it. Therefore, the Financial
the period having maturity of five years or more.
Statements continue to be prepared on the
going concern basis.
2.7 Materiality and Aggregation
2.5 New Standards in issue but not yet effective In compliance with Nepal Accounting Standard -
NAS 01 (Presentation of Financial Statements), each
There have been amendment to the Standards issued
material class of similar items is presented separately
by IASB and applicability of the new Standards has
in the Financial Statements. Items of dissimilar nature
been notified for IFRS. But, the amendments and
or functions too are presented separately unless
new standards become applicable only when ASB-
they are immaterial. Financial Assets and Financial
Nepal pronounces them. The new Standards issued
Liabilities are offset and the net amount reported in
but not yet effective up to the date of issuance of the
the Statement of Financial Position only when there
financial statements are set out below. The Bank will
is a legally enforceable right to offset the recognized
adopt these standards when they become effective.
amounts and there is an intention to settle on a net
basis, or to realize the assets and settle the liability
I) IFRS 9- Financial Instruments simultaneously. Income and expenses are not offset
IFRS 9 states a logical principle base to classify in the Statement of Profit or Loss unless required or
financial assets and financial liabilities which permitted by an Accounting Standard.
is driven by cash flow characteristics and the
business model in which an assets or liability 2.8 Comparative Information
is held. Further this standard recommends
the assessment of impairment based on The Financial Statement of the Bank provides
more timely recognition of expected credit comparative information in respect of previous periods.
losses and entities are required to account The accounting policies have been consistently applied
for expected credit losses from the initial by Bank with those of the previous financial year in
177
Kumari Bank Limited
accordance with NAS 01 Presentation of Financial

Statements, except those which had to be changed For each business combination, the Group elects
as a result of application of the new NFRS or expiry of to measure any non-controlling interest in the
the carve out period. Further, comparative information acquiree at fair value.
is reclassified wherever necessary to comply with the Changes in group interest in subsidiary that do
current presentation. The changes in comparative have not result in the loss of control are accounted for
been duly disclosed in 5.33 of notes. transactions of owners in the capacity of owners.
Adjustments to non-controlling interest are
3. SIGNIFICANT ACCOUNTING POLICIES based on proportionate amount of net assets of
subsidiary.
The accounting policies set out below have been applied
consistently to all periods presented in these Financial Since, the subsidiary is 100% owned, there is no
Statements, and deviations if any have been disclosed case of NCI for the Bank .
accordingly.
c. Subsidiaries
3.1 Basis of Measurement
Subsidiaries are entities that are controlled by the
The Financial Statements of Bank have been prepared Bank . The Bank is presumed to control an investee
on the historical cost basis, except for the following when it is exposed or has rights to variable returns
material items in the Statement of Financial Position: from its involvement with the investee and has the
• Available for sale investments (quoted) are ability to affect those returns through its power
measured at fair value. over the investee. At each reporting date the Bank
• Liabilities for defined benefit obligations are reassesses whether it controls an investee if facts
recognized at the present value of the defined and circumstances indicate that there are changes
benefit obligation less the fair value of the plan to one or more elements of control mentioned
assets. above.
• Financial assets and financial liabilities held at
amortized cost are measured using a rate that is The Financial Statements of Subsidiaries are
a close approximation of effective interest rate fully consolidated from the date on which control
opting the available Carve Out pronounced by is transferred to the Bank and continue to be
Institute of Chartered Accountants of Nepal. consolidated until the date when such control
ceases. The Financial Statements of the Bank’s
3.2 Basis of consolidation Subsidiaries are prepared for the same reporting
period as per the Bank , using consistent
a. Business Combinations and Goodwill accounting policies.
Business combinations are accounted for using
the acquisition method as per the requirements of The cost of acquisition of a Subsidiary is measured
Nepal Accounting Standard - NFRS 03 (Business as the fair value of the consideration, including
Combinations). The Bank measures goodwill as contingent consideration, given on the date of
the fair value of the consideration transferred transfer of title. The acquired identifiable assets,
including the recognized amount of any non- liabilities are measured at their fair values at
controlling interest in the acquiree, less the the date of acquisition. Subsequent to the initial
net recognized amount (generally fair value) of measurement, the Bank continues to recognize
the identifiable assets acquired and liabilities the investments in Subsidiaries at cost.
assumed, all measured as of the acquisition date.
When the excess is negative, a bargain purchase When a Subsidiary is acquired or sold during
gain is immediately recognized in the profit or loss. the year, operating results of such Subsidiary is
included from the date of acquisition or to the
The Bank elects on a transaction-by-transaction date of disposal.
basis whether to measure non-controlling interest
at its fair value, or at its proportionate share of This Subsidiary of the Bank has been incorporated
the recognized amount of the identifiable net in Nepal.
assets, at the acquisition date. The consideration
transferred does not include amounts related to d. Associates
the settlement of pre-existing relationships. Such An associate is an entity over which the investor
amounts are generally recognized in profit or loss. has significant influence. Significant influence
Transactions costs, other than those associated is the power to participate in the financial and
with the issue of debt or equity securities, that operating policy decisions of the investee without
the Bank incurs in connection with a business the power to control or jointly control those
combination are expensed as incurred. policies.
b. Non-controlling interest (NCI) An associate company, in its broadest sense, is a

Non-controlling interest (NCI), also known as corporation in which a parent company possesses
minority interest, is an ownership position a stake. Usually, the parent company owns only a
whereby a shareholder owns less than 50% minority stake of the corporation, as opposed to
of outstanding shares and has no control a subsidiary company, where a majority stake is
over decisions. Non-controlling interests are owned.
measured at the net asset value of entities and do
not account for potential voting rights. The accounting treatment for consolidation
178
of associates is as per Equity method. Equity b. Classification and Measurement
method accounting is usually applied where an
investor entity holds 20–50% of the voting stock Financial Assets
of the associate company. Accounting treatment
of associate is prepared using uniform accounting All financial instruments are measured initially
policies for like transactions and events in similar at their fair value plus transaction costs that are
circumstances unless, in case of an associate, it is directly attributable to acquisition or issue of such
impracticable to do so as allowed by the carve out financial instruments except in the case of such
pronounced by ICAN. financial assets and liabilities at fair value through
profit or loss, as per the Nepal Accounting Standard
e. Loss of Control - NAS 39 (Financial Instruments: Recognition and
Measurement). Transaction cost in relation to
When the Bank loses control over a Subsidiary, financial assets and financial liabilities at fair value
it derecognizes the assets and liabilities of the through profit or loss are dealt with the Statement
former subsidiary from the consolidated statement of Profit or Loss.
of financial position. The Bank recognizes any
investment retained in the former subsidiary at its Classification and Subsequent Measurement
fair value when control is lost and subsequently
of Financial Instruments
accounts for it and for any amounts owed by
or to the former subsidiary in accordance with
Classification and Subsequent Measurement of
relevant NFRSs. That fair value shall be regarded
Financial Assets
as the fair value on initial recognition of a financial
asset in accordance with relevant NFRS or, when
At the inception, a financial asset is classified
appropriate, the cost on initial recognition of an
into one of the following:
investment in an associate or joint venture. The
a. Financial assets at fair value through profit or
Bank recognizes the gain or loss associated with the
loss
loss of control attributable to the former controlling
i. Financial assets held for trading
interest.
ii. Financial assets designated at fair value
through profit or loss
f. Transaction elimination on consolidation b. Held to Maturity Financial Assets
Intra group balances and transactions, any c. Loans and Receivables
unrealized income and expenses arising from intra d. Financial Assets available for Sale
group transactions, are eliminating in preparing
the consolidated financial statements. Unrealized The subsequent measurement of financial
gains/losses arising from transactions with equity assets depends on their classification.
accounted investees are eliminated against the
investments to the extent of group interest of
investee. Financial Assets at Fair Value through Profit or
Loss
3.3 Cash and cash equivalent
A financial asset is classified as fair value
Cash and Cash Equivalents include cash in hand, through profit or loss if it is held for trading or is
balances with Bank s, placements with Bank s and money designated at fair value through profit or loss.
at call and at short notice with original maturity less than
three months from the date of acquisition date that are I. Financial Assets Held for Trading
subject to an insignificant risk of changes in their fair
value, and are used for short term commitments. Financial assets are classified as held for trading
if they are acquired principally for the purpose of
Details of the Cash and Cash Equivalents are given in selling or repurchasing in the near term or holds as
Note 4.1 to the Financial Statements. a part of a portfolio that is managed together for
short-term profit or position taking. This category
also includes derivative financial instruments
3.4 Financial Assets and financial liabilities entered into by Bank that are not designated
a. Recognition as hedging instruments in hedge relationships
as defined by Nepal Accounting Standards NAS
All financial assets and liabilities are initially 39 (Financial Instruments: Recognition and
recognized on the trade date, i.e. the date that Bank Measurement).
becomes a party to the contractual provisions of
the instrument. This includes ‘regular way trades’. Financial assets held for trading are recorded in
Regular way trade means purchases or sales of the Statement of Financial Position at fair value.
financial assets that required delivery of assets Changes in fair value are recognized in ‘Other
within the time frame generally established by Operating income’. Dividend income is recorded in
regulation or convention in the market place. ‘Net trading income’ when the right to receive the
payment has been established.
The classification of financial instruments at the
initial recognition depends on their purpose and Bank evaluates its held for trading asset portfolio,
characteristics and the management’s intention in other than derivatives, to determine whether
acquiring them. the intention to sell them in the near future is
still appropriate. When Bank is unable to trade
these financial assets due to inactive markets
and management’s intention to sell them in the
179
Kumari Bank Limited
foreseeable future significantly changes, Bank investments are subsequently measured at fair
may elect to reclassify these financial assets. value. Unrealized gains and losses are recognized
directly in equity through ‘Other comprehensive
Financial assets held for trading include income / expense’ in the ‘Available for sale reserve’.
instruments such as government securities and Where Bank holds more than one investment
equity instruments that have been acquired in the same security, they are deemed to be
principally for the purpose of selling or repurchasing disposed of on weighted average basis. Interest
in the near term. earned whilst holding ‘Available for sale financial
investments’ is reported as ‘Interest income’ using
II. Financial Assets Designated at Fair Value the effective interest rate. Dividend earned whilst
through Profit or Loss holding ‘Available for sale financial investments’ are
recognized in the Statement of Profit or Loss as
Bank designates financial assets at fair ‘other operating income’ when the right to receive
value through profit or loss in the following the payment has been established. The losses
circumstances: arising from impairment of such investments are
• Such designation eliminates or significantly recognized in the Statement of Profit or Loss under
reduces measurement or recognition ‘Impairment charge for loans and other losses’ and
inconsistency that would otherwise arise from removed from the ‘Available for sale reserve’.
measuring the assets
• The assets are part of a group of Financial In the normal course of business, the fair value
assets, financial liabilities or both, which are of a financial instrument on initial recognition is
managed and their performance evaluated the transaction price (that is, the fair value of the
on a fair value basis, in accordance with a consideration given or received).
documented risk management or investment
strategy Loans and Receivables from Customers
• The asset contains one or more embedded
Loans and receivables include non-derivative financial
derivatives that significantly modify the cash
assets with fixed or determinable payments that are
flows that would otherwise have been required
not quoted in an active market, other than:
under the contract.
• Those that the Bank intends to sell immediately
or in the near term and those that the Bank ,
Financial assets designated at fair value through
upon initial recognition, designates as fair value
profit or loss is recorded in the Statement of Financial
Position at fair value. Changes in fair value are
• Those that the Bank , upon initial recognition,
recorded in ‘Net gain or loss on financial instruments
designates as available for sale
designated at fair value through profit or losses’ in the
• Those for which the Bank may not recover
Statement of Profit or Loss. Interest earned is accrued
substantially all of its initial investment through
under ‘Interest income’, using the effective interest
contractual cash flows, other than because of
rate method, while dividend income is recorded under
credit deterioration.
‘Other operating income’ when the right to receive the
payment has been established.
Loans and Advances mainly represent loans and
advances to customers, Banking and Financial
The Bank has not designated any financial assets
Institutions. After initial measurement, loans and
upon initial recognition as designated at fair value
receivables are subsequently measured at amortized
through profit or loss.
cost using a rate that closely approximates effective
interest rate, less allowance for impairment. Within
Held to Maturity Financial Assets this category, loans and advances to the customers
Held to Maturity Financial Assets are non-derivative have been recognized at amortized cost using the
financial assets with fixed or determinable payments method that very closely approximates effective
and fixed maturities which the Bank has the intention interest rate methodopting the available Carve Out
and ability to hold to maturity. After the initial pronounced by Institute of Chartered Accountants of
measurement, held to maturity financial investments Nepal. The amortization is included in ‘Interest Income’
are subsequently measured at amortized cost using in the Statement of Profit or Loss. The losses arising
the effective interest rate, less impairment. The from impairment are recognized in ‘Impairment charge
amortization is included in ‘Interest income’ in the / reversal for loans and other losses’ in the Statement
Statement of Profit or Loss. The losses arising from of Profit or Loss.
impairment of such investments are recognized in the
Statement of Profit or Loss. Financial Liabilities
Classification and Subsequent Measurement of
Financial Assets Available for Sale Financial Liabilities
Available for sale financial assets include equity
At the inception, Bank determines the classification of
and debt securities. Equity Investments classified
its financial liabilities. Accordingly financial liabilities
as ‘Available for Sale’ are those which are neither
are classified as:
classified as ‘Held for Trading’ nor ‘Held till Maturity’.
a. Financial liabilities at fair value through profit or
Debt securities in this category are intended to be
loss
held for an indefinite period of time and may be sold
in response to needs for liquidity or in response to i. Financial liabilities held for trading
changes in the market conditions. ii. Financial liabilities designated at fair value
After initial measurement, available for sale financial b. Financial liabilities at amortized cost
180
Financial Liabilities at Fair Value through Profit or
Loss Reclassification
Financial Liabilities at fair value through profit or
loss include financial liabilities held for trading and (i) Reclassification of Financial Instruments
financial liabilities designated upon initial recognition
‘At fair value through profit or loss’,
as fair value through profit or loss. Subsequent to
initial recognition, financial liabilities at fair value Bank does not reclassify derivative financial
through profit or loss are measured at fair value and instruments out of the fair value through profit
changes therein are recognized in profit or loss. or loss category when it is held or issued.
(i) Financial Liabilities Held for Trading Non-derivative financial instruments

designated at fair value through profit or loss
Financial liabilities are classified as held for upon initial recognition is not reclassified
trading if they are acquired principally for subsequently out of fair value through profit or
the purpose of selling or repurchasing in the loss category.
near term or holds as a part of a portfolio that
is managed together for short-term profit
(ii) Reclassification of ‘Available for sale’
or position taking. This category includes
derivative financial instrument entered into
Financial Instruments
by Bank that are not designated as hedging Bank may reclassify financial assets out of
instruments in hedge relationships as defined available for sale category as a result of change
by Nepal Accounting Standard - NAS 39 in intention or ability or in rare circumstances
(Financial Instruments: Recognition and that a reliable measure of fair value is no longer
Measurement). available.
(ii) Financial Liabilities Designated at Fair (iii) Reclassification of ‘Held to Maturity’

Value through Profit or Loss Financial Instruments
Bank designates financial liabilities at fair As a result of a change in intention or ability,
value through profit or loss at following if it is no longer appropriate to classify an
circumstances: investment as amortized at cost, Bank may
• Such designation eliminates or significantly reclassify such financial assets as at fair value
reduces measurement or recognition through OCI and re- measured at fair value.
inconsistency that would otherwise arise Any difference between the carrying value of
from measuring the liabilities. the financial asset before reclassification and
• The liabilities are part of a group of Financial fair value is recognized in equity through other
assets, financial liabilities or both, which are comprehensive income.
managed and their performance evaluated
on a fair value basis, in accordance with c. De-recognition
a documented risk management or
investment strategy
De-recognition of Financial Assets
• The liability contains one or more embedded
derivatives that significantly modify the Bank derecognizes a financial asset (or where
cash flows that would otherwise have been applicable a part of financial asset or part of a
required under the contract. group of similar financial assets) when:
• The rights to receive cash flows from the
Financial Liabilities at Amortized Cost asset have expired; or
• Bank has transferred its rights to receive
Financial instruments issued by Bank that are not cash flows from the asset or
classified as fair value through profit or loss are • Bank has assumed an obligation to pay
classified as financial liabilities at amortized cost, the received cash flows in full without
where the substance of the contractual arrangement material delay to a third party under a ‘pass-
results in Bank having an obligation either to deliver through’ arrangement and either Bank
cash or another financial asset to another Bank , or to has transferred substantially all the risks
exchange financial assets or financial liabilities with and rewards of the asset or it has neither
another Bank under conditions that are potentially transferred nor retained substantially all
unfavorable to the Bank or settling the obligation the risks and rewards of the asset, but has
by delivering variable number of Bank’s own equity transferred control of the asset.
instruments.
De-recognition of Financial Liabilities
After initial recognition, such financial liabilities are
subsequently measured at amortized cost using A financial liability is derecognized when the
the effective interest rate method. Amortization is obligation under the liability is discharged
included in ‘Interest Expenses’ in the Statement of or cancelled or expired. Where an existing
Profit or Loss. Gains and losses are recognized in the financial liability is replaced by another from
Statement of Profit or Loss when the liabilities are the same lender on substantially different
derecognized. terms or the terms of an existing liability are
substantially modified, such an exchange or
modification is treated as de-recognition of
the original liability and the recognition of a
new liability.
181
Kumari Bank Limited
The difference between the carrying value of the Level 1

original financial liability and the consideration
When available, the Bank measures the fair
paid is recognized in profit or loss.
value of an instrument using quoted prices in
an active market for that instrument or dealer
Offsetting of Financial Instruments price quotations, without any deduction for
Financial assets and financial liabilities are transaction costs.
offset and the net amount presented in the
Statement of Financial Position when and A market is regarded as active if quoted
only when Bank has a legal right to set off prices are readily and regularly available and
the recognized amounts and it intends either represent actual and regularly occurring
to settle on a net basis or to realize the asset market transactions on an arm’s length basis.
and settle the liability simultaneously. Income
and expenses are presented on a net basis Level 2
only when permitted under NFRSs or for gains If a market for a financial instrument is
and losses arising from a group of similar not active, then the Bank establishes fair
transaction such as in trading activity. value using a valuation technique. Valuation
techniques include using recent arm’s length
Amortized Cost Measurement transactions between knowledgeable, willing
The Amortized cost of a financial asset or parties (if available), reference to the current
liability is the amount at which the financial fair value of other instruments that are
asset or liability is measured at initial substantially the same, discounted cash flow
recognition, minus principal repayments, plus analysis and option pricingmodels.
or minus the cumulative amortization using
the effective interest method of any difference The chosen valuation technique makes
between the initial amount recognized and maximum use of market inputs, relies as
the maturity amount, minus any reduction for little as possible on estimates specific to
impairment. the Group, incorporates all factors that
market participants would consider in setting
Fair Value Measurement a price, and is consistent with accepted
economic methodologies for pricing financial
‘Fair value’ is the price that would be received instruments.
to sell an asset or paid to transfer a liability
(exit price) in an orderly transaction between Level 3
market participants at the measurement date.
The fair value measurement is based on the Certain financial instruments are recorded at
presumption that the transaction to sell the fair value using valuation techniques in which
asset or transfer the liability takes place either: current market transactions or observable
• In the principal market for the asset or market data are not available. Their fair value
liability or is determined using a valuation model that has
• In the absence of principal market, in the been tested against prices or inputs to actual
most advantageous market for asset or market transactions and using the Bank’s
liability. best estimate of the most appropriate model
assumptions.
All assets and liabilities for which fair value
is measured or disclosed in the financial The fair value of a demand deposit is not
statements are categorized within the fair less than the amount payable on demand,
value hierarchy, described as follows, based on discounted from the first date on which the
the lowest level input that is significant to the amount could be required to be paid.
fair value measurement as a whole:
A fair value measurement of a non-financial
Level 1 - Valuation technique using quoted asset takes into account a market participant’s
market price: financial instruments with ability to generate economic benefits by using
quoted prices for identical instruments in the asset in its highest best use or by selling it
active markets. to another market participant that would use
the asset in its highest and best use.
Level 2 - Valuation technique using observable
inputs: financial instruments with quoted The Bank recognizes transfers between levels
prices for similar instruments in active markets of the fair value hierarchy as of the end of the
or quoted prices for identical or similar reporting period during which the change has
instruments in inactive markets and financial occurred.
instruments valued using models where all
significant inputs are observable. d. Impairment
At each reporting date, Bank assesses whether
Level 3 – Valuation technique with significant there is any objective evidence that a financial
unobservable inputs: financial instruments asset or group of financial assets not carried
valued using valuation techniques where one at fair value through profit or loss is impaired.
or more significant inputs are unobservable. A financial asset or group of financial assets
182
is deemed to be impaired if and only if there is obtaining and selling the collateral, whether or
objective evidence of impairment as a result of not foreclosure is probable.
one or more events, that have occurred after
the initial recognition of the asset (an ‘incurred Impairment of Financial Assets – Loans
loss event’) and that loss event (or events) has and Advances
an impact on the estimated future cash flows
of the financial asset or group of financial The Bank review it’s individually significant
loans and advances at each statement of
assets that can be reliably estimated.
financial position date to assess whether an
impairment loss should be recorded in the
Objective evidence of impairment may include: income statement. The Bank has conducted
indications that the borrower or a group of objective evidence test for individual
borrowers is experiencing significant financial impairment through different parameters like
difficulty; the probability that they will enter inability to meet loan agreements, substantial
Bank ruptcy or other financial reorganization; drop in profits/ turnover, significant adverse
default or delinquency in interest or principal cash flows, significant adverse net worth
payments; and where observable data situation, problematic borrower financial
position, etc. Mainly, management judgment is
indicates that there is a measurable decrease
required in the estimation of the amount and
in the estimated future cash flows, such as timing of the expected future cash flows for
changes in arrears or economic conditions that determination of the impairment loss.
correlate with defaults.
These estimates are based on assumptions
Impairment of Financial Assets carried at about a number of factors and actual results
Amortized Cost may differ, resulting in future changes to the
impairment allowance.
For financial assets carried at amortized cost,
such as amounts due from Bank s, held to Loans and advances that have been assessed
maturity investments etc., Bank first assesses individually and found to be not impaired and
individually whether objective evidence of all individually insignificant loans and advances
impairment exists for financial assets that are then assessed collectively, in groups of
are individually significant or collectively assets with similar risk characteristics, to
for financial assets that are not individually determine whether provision should be made
significant. In the event, Bank determines that due to incurred loss events for which there is
no objective evidence of impairment exists objective evidence, but the effects of which
for an individually assessed financial asset, are not yet evident. The collective assessment
financial assets in a group with similar credit takes in to account data from the loan portfolio
risk characteristics are collectively assesses such as levels of arrears, credit quality,
for impairment. However, assets that are portfolio size etc. and judgments based on
individually assessed for impairment and for current economic conditions.
which an impairment loss is or continues to
be recognized are not included in a collective Loans and advances have been impaired
assessment of impairment. as the higher of amount derived as per the
norms prescribed by Nepal Rastra Bank for
If there is an objective evidence that an loan loss provision and amount determined
impairment loss has been incurred, the amount as per paragraph 63 of NAS 39, as per Carve-
of the loss is measured as the difference out pronounced by Institute of Chartered
between the assets’ carrying amount and the Accountants of Nepal on 20th September 2018.
present value of estimated future cash flows
(excluding future expected credit losses that The impairment loss on loans and advances is
have not yet been incurred). The carrying disclosed in Note 4.6 and 4.7 to the financial
amount of the asset is reduced through the use statements.
of an allowance account and the amount of the
loss is recognized in the income statement.
Individually Assessed Financial Assets
Interest income continues to be accrued on the
reduced carrying amount and is accrued using The criteria used to determine whether there is
the rate of interest used to discount the future objective evidence of impairment include and
cash flows for the purpose of measuring the not limited to:
impairment loss. • Known Cash Flow difficulties experienced
by the borrowers:
If a loan has a variable interest rate, the discount • Past due contractual payments of either
rate for measuring any impairment loss is the principal or interest;
current rate closely approximates effective • Breach of loan covenants or conditions;
interest rate. If the Bank has reclassified • The probability that the borrower will
trading assets to loans and advances, the enter Bank ruptcy or other financial
discount rate for measuring any impairment reorganization; and
loss is the new closely approximates effective • A significant downgrading in credit rating by
interest rate determined at the reclassification an external credit rating agency.
date. The calculation of the present value of the If there is objective evidence that an
estimated future cash flows of collateralized impairment loss on financial assets measured
financial assets reflects the cash flows that at amortized cost has been incurred, the
may result from foreclosure less costs for amount of the loss is measured by discounting
183
Kumari Bank Limited
the expected future cash flows of a financial reporting date, which the Bank is not able to
asset at its original effective interest rate and identify on an individual loan basis and that can
comparing the resultant present value with be reliably estimated.
the financial asset’s current carrying amount.
The impairment allowances on individually These losses will only be individually identified
significant accounts are reviewed more in the future. As soon as information becomes
regularly when circumstances require. This available which identifies losses on individual
normally encompasses re-assessment of the financial assets within the group, those
enforceability of any collateral held and the financial assets are removed from the group
timing and amount of actual and anticipated and assessed on an individual basis for
receipts. Individually assessed impairment impairment.
allowances are only released when there is
reasonable and objective evidence of reduction The collective impairment allowance is
in the established loss estimate. Interest on determined after taking into account:
impaired assets continues to be recognized • Historical Loss Experience in portfolios of
through the unwinding of the discount. similar credit risk; and
• Management’s experienced judgment as
Loans together with the associated allowance to whether current economic and credit
are written off when there is no realistic conditions are such that the actual level of
prospect of future recovery and all collateral inherent losses at the reporting date is like
has been realized or has been transferred to to be greater or less than that suggested by
the Bank . If, in a subsequent year, the amount historical experience.
of the estimated impairment loss increases or
decreases because of an event occurring after Homogeneous groups of Financials
the impairment was recognized, the previously Assets
recognized impairment loss is increased or
reduced by adjusting the allowance account. Statistical methods are used to determine
If a future write off is later recovered, the impairment losses on a collective basis for
recovery is credited to the impairment charges homogenous groups of financial assets.
for loans and other losses. Losses in these groups of financial assets are
recorded on an individual basis when individual
When impairment losses are determined financial assets are written off, at which point
for those financial assets where objective they are removed from the group.
evidence of impairment exists, the following
common factors are considered: Bank uses the following method to calculate
• Bank’s aggregate exposure to the historical loss experience on collective basis:
customer;
• The viability of the customer’s business After grouping of loans on the basis of
model and their capacity to trade homogeneous risks, the Bank uses net
successfully out of financial difficulties flow rate method. Under this methodology
and generate sufficient cash flows to the movement in the outstanding balance
service debt obligations; of customers into default categories over
• The amount and timing of expected the periods is used to estimate the amount
receipts and recoveries; of financial assets that will eventually be
• The extent of other creditors ‘commitments irrecoverable, as a result of the events
ranking ahead of, or pari-pasu with the occurring before the reporting date which the
Bank and the likelihood of other creditors Bank is not able to identify on an individual
continuing to support the company; loan basis.
• The realizable value of security and
likelihood of successful repossession; Under this methodology, loans are grouped
into ranges according to the number of days
Collectively Assessed Financial Assets in arrears and statistical analysis is used to
estimate the likelihood that loans in each
Impairment is assessed on a collective basis in range will progress through the various
two circumstances: stages of delinquency and ultimately prove
• To cover losses which have been incurred irrecoverable.
but have not yet been identified on loans
subject to individual assessment; and Current economic conditions and portfolio risk
• For homogeneous groups of loans that is factors are also evaluated when calculating
not considered individually significant. the appropriate level of allowance required
covering inherent loss. These additional
Incurred but not yet identified impairment macro and portfolio risk factors may include:
• Recent loan portfolio growth and product
Individually assessed financial assets for
mix
which no evidence of loss has been specifically
• Unemployment rates
identified on an individual basis are grouped
• Gross Domestic Production (GDP)Growth
together according to their credit risk
• Inflation
characteristics for the purpose of calculating
• Interest rates
an estimated collective loss. This reflects
• Changes in government laws and
impairment losses that the Bank has incurred
regulations
as a result of events occurring before the
184
• Property prices Collateral Repossessed or Where
• Payment status Properties have Devolved to the Bank
But, the amount of provision to be created Legally Repossessed Collateral represents
against Loans and Advances shall be higher of Non-Financial Assets acquired by the Bank in
the following two amounts: settlement of the overdue loans. The assets
i) Impairment calculated as per Impairment are initially recognized at fair value when
Assessment Methodology as described acquired. The Bank’s policy is to determine
above or, whether a repossessed asset is best used
ii) Loan Loss Provision calculated as per the for its internal operations or should be sold.
provisions of Unified Directives issued by The proceeds are used to reduce or repay the
Nepal Rastra Bank . outstanding claim. The immovable property
acquired by foreclosure of collateral from
Reversal of Impairment defaulting customers, or which has devolved
on the Bank as part settlement of debt, has not
If the amount of an impairment loss decreases been occupied for business use.
in a subsequent period and the decrease can be These assets are shown as Legally Repossessed
related objectively to an event occurring after Collateral under “Investment Property.”
the impairment was recognized, the excess is
written back by reducing the financial asset Impairment of Financial Assets – Available
impairment allowance account accordingly. for Sale
The write-back is recognized in the Statement
of Profit or Loss. For financial investments measured at fair
value through OCI, Bank assesses at each
Write-off of Financial Assets measured reporting date whether there is objective
at Amortized Cost evidence that an investment is impaired.
Financial assets (and the related impairment In the case of debt instruments, Bank assesses
allowance accounts) are normally written individually whether there is objective evidence
off either partially or in full, when there is no of impairment based on the same criteria as
realistic prospect of recovery. Where financial financial assets carried at amortized cost.
assets are secured, this is generally after However, the amount recorded for impairment
receipt of any proceeds from the realization of is the cumulative loss measured as the
security. difference between the amortized cost and the
current fair value, less any impairment loss on
Impairment of Rescheduled Loans and that investment previously recognized in the
Advances Income Statement. Future interest income
is based on the reduced carrying amount and
Where possible, the Bank seeks to restructure is accrued using the rate of interest used
loans rather than to take possession of to discount the future cash flows for the
collateral. This may involve extending the purpose of measuring the impairment loss. If,
payment arrangements and the agreement of in a subsequent period, the fair value of a debt
new loan conditions. Once the terms have been instrument increases and the increase can be
renegotiated, any impairment is measured objectively related to a credit event occurring
using the original EIR as calculated before the after the impairment loss was recognized,
modification of terms and the loan is no longer the impairment loss is reversed through the
considered past due. Management continually Income Statement.
reviews renegotiated loans to ensure that all
criteria are met and that future payments are In the case of equity investments classified
likely to occur. The loans continue to be subject as fair value through OCI, the impairment is
to an individual impairment assessment, adjustment through fair value movement.
calculated using the loan’s original effective
interest rate (EIR). Bank writes-off certain financial investments
when they are determined to be uncollectible.
Collateral Valuation
The Bank seeks to use collateral, where 3.5 Trading Assets
possible, to mitigate its risks on financial assets.
Financial assets such as government securities, equity etc.
The collateral comes in various forms such as
held for short term with an intention to trade have been
cash, securities, letters of credit/guarantees,
classified as trading assets. Trading assets are measured
real estate, receivables, inventories, other
at fair value with any changes in fair value being recognized
non-financial assets and credit enhancements
in Profit or Loss.
such as netting agreements. The fair value of
collateral is generally assessed, at a minimum,
at inception and based on the guidelines issued 3.6 Derivative assets and derivative liabilities
by the central Bank (Nepal Rastra Bank ). Derivative financial instruments such as forward foreign
Non-financial collateral, such as real estate, is exchange contracts are valued using a valuation technique
valued based on data provided by third parties with market observable inputs. The most frequently
such as independent valuator and audited applied valuation technique is forward pricing model which
financial statements. incorporates various inputs including foreign exchange
spot and forward premiums.
185
Kumari Bank Limited
the costs of day–to–day servicing, less accumulated

depreciation and accumulated impairment in value. Such
Forward contracts are the contracts to purchase or sell a cost includes the cost of replacing part of the equipment
specific quantity of a financial instrument, a commodity, or when that cost is incurred, if the recognition criteria are
a foreign currency at a specified price determined at the met.
outset, with delivery or settlement at a specified future
date. Settlement is at maturity by actual delivery of the
Revaluation Model
item specified in the contract, or by a net cash settlement.
The Bank has not applied the revaluation model to the any
All freestanding contracts that are considered derivatives class of freehold land and buildings or other assets. Such
for accounting purposes are carried at fair value on the properties are carried at a previously recognized GAAP
statement of financial position regardless of whether they Amount.
are held for trading or non-trading purposes. Changes in
fair value on derivatives held for trading are included in Subsequent Cost
net gains/ (losses) from financial instruments in fair value
through profit or loss on financial assets/ liabilities at fair The subsequent cost of replacing a component of an item
value through profit or loss. of property, plant and equipment is recognized in the
carrying amount of the item, if it is probable that the future
economic benefits embodied within that part will flow
3.7 Property and Equipment to the Bank and it can be reliably measured. The cost of
Recognition day to day servicing of property, plant and equipment are
charged to the Statement of Profit or Loss as incurred.
Property, plant and equipment are tangible items that are
held for use in the production or supply of services, for rental De-recognition
to others or for administrative purposes and are expected
to be used during more than one period. The Bank applies The carrying amount of an item of property, plant and
the requirements of the Nepal Accounting Standard - NAS equipment is derecognized on disposal or when no future
16 (Property, Plant and Equipment) in accounting for these economic benefits are expected from its use. The gain or
assets. Property, plant and equipment are recognized if it loss arising from de-recognition of an item of property,
is probable that future economic benefits associated with plant and equipment is included in the Statement of
the asset will flow to the entity and the cost of the asset Profit or Loss when the item is derecognized. When
can be measured reliably measured. replacement costs are recognized in the carrying amount
The freehold land and buildings of the Bank are measured of an item of property, plant and equipment, the remaining
at cost and not reflected at fair value and no revaluation carrying amount of the replaced part is derecognized.
has been carried at the reporting date. Major inspection costs are capitalized. At each such
capitalization, the remaining carrying amount of the
Fixed assets except land are stated at acquisition previous cost of inspections is derecognized. The gain or
cost less accumulated depreciation. Acquisition cost losses arising from de-recognition of an item of property,
includes expenditures that are directly attributable to the plant and equipment is included in profit or loss when the
acquisition of the assets. item is derecognized.
Measurement Depreciation
An item of property, plant and equipment that qualifies Depreciation is calculated by on the basis of useful life of
for recognition as an asset is initially measured at its cost. the asset on cost or carrying value of property, plant &
Cost includes expenditure that is directly attributable to equipment other than freehold land.
the acquisition of the asset and cost incurred subsequently
to add to, replace part of an item of property, plant & The depreciable amount of an item of property, plant and
equipment. The cost of self-constructed assets includes equipment is allocated on systematic basis over its useful
the cost of materials and direct labor, any other costs life, under written down value method of depreciation except
directly attributable to bringing the asset to a working for Leasehold properties and is depreciated as follows:
condition for its intended use and the costs of dismantling
and removing the items and restoring the site on which Estimated Useful Life of Asset
they are located. Purchased software that is integral to Asset Category
(Years)
the functionality of the related equipment is capitalized
Buildings 40 Years
as part of computer equipment. When parts of an item of
property or equipment have different useful lives, they are Vehicles 10 Years
accounted for as separate items (major components) of Office Equipment 8 Years
property, plant and equipment.
Furniture & Fixtures 8 Years
Assets with a value less than Rs. 10,000 are charged off as (Metal & Wooden)
a revenue expense irrespective of its useful life in the year Computer Hardware 8 Years
of purchase. Battery 6 Years
Leasehold improvements are capitalized at cost and Leasehold Properties 5 Years

amortized over the period of five years. The amount of
amortization is charged as revenue expenses. Salvage Value is assumed to be 10% of the cost of the asset
in case of asset depreciated on Diminishing Value Method.
Cost Model
Depreciation on newly acquired property and equipments
Property and equipment is stated at cost excluding are charged from the next month of booking. Depreciation
186
of property and equipment ceases when it is derecognized the best of its useful economic life based on a pattern in
at the time of its disposal.For the expenses allowance for which the asset’s economic benefits are consumed by the
tax purpose; depreciation is provided as per Income Tax Bank . Amortization methods, useful lives, residual values
Act. The differences in the calculation of depreciation are reviewed at each financial year end and adjusted if
as per financial and as per Income tax act is taken up for appropriate. The Bank assumes that there is no residual
calculation of deferred tax. value for its intangible assets.
Changes in Estimates For the year ended For the year

Asset Category
The asset’s residual values, useful lives and methods of 16 July 2019 ended 16 July 2018
depreciation are reviewed, and adjusted if appropriate, at Computer Software 5 years 5 years
each financial year end.
De-recognition of Intangible Assets
Capital Work in Progress
The carrying amount of an item of intangible asset is
These are expenses of capital nature directly incurred in derecognized on disposal or when no future economic
the construction of buildings, major plant and machinery benefits are expected from its use. The gain or loss
and system development, awaiting capitalization. Capital arising on de recognition of an item of intangible assets is
work-in-progress would be transferred to the relevant included in the Statement of Profit or Loss when the item
asset when it is available for use, i.e. when it is in the is derecognized.
location and condition necessary for it to be capable of
operating in the manner intended by management. Capital 3.9 Investment Property
work-in-progress is stated at cost less any accumulated
impairment losses. Investment property is property (land or a building or part of
a building or both) held (by the owner or by the lessee under
a finance lease) to earn rentals or for capital appreciation
3.8 Intangible Assets
or both but not for sale in the ordinary course of business.
Recognition
Measurement
An intangible asset is an identifiable non-monetary asset
without physical substance, held for use in the production Investment property is accounted for under Cost in the
or supply of goods or services, for rental to others or for Financial Statements. Accordingly, after recognition as an
administrative purposes. An intangible asset is recognized asset, the property is carried at its cost, less impairment
if it is probable that the future economic benefits that are losses. If any property is reclassified to investment property
attributable to the asset will flow to the entity and the cost due to changes in its use, fair value of such property at the
of the asset can be measured reliably. An intangible asset date of reclassification becomes its cost for subsequent
is initially measured at cost. Expenditure incurred on an accounting.
intangible item that was initially recognized as an expense
by the Bank in previous annual Financial Statements or De-recognition
interim Financial Statements are not recognized as part of
the cost of an intangible asset at a later date. Investment properties are derecognized when they are
disposed of or permanently withdrawn from use since
no future economic benefits are expected. Transfers are
Computer Software
made to and from investment property only when there is
Cost of purchased licenses and all computer software a change in use. When the use of a property changes such
costs incurred, licensed for use by the Bank , which are that it is reclassified as Property, Plant and Equipment, its
not integrally related to associated hardware, which can be fair value at the date of reclassification becomes its cost
clearly identified, reliably measured, and it’s probable that for subsequent accounting.
they will lead to future economic benefits, are included in
the Statement of Financial Position under the category 3.10 Income Tax
‘Intangible assets’ and carried at cost less accumulated
amortization and any accumulated impairment losses. The Bank is subject to income tax and judgment is required
to determine the total provision for current, deferred and
Acquired computer software licenses are capitalized on other taxes due to the uncertainties that exist with respect
the basis of cost incurred to acquire and bring to use the to the interpretation of the applicable tax laws, at the time
specific software and are amortized over their useful life of preparation of these Financial Statements.
estimated as 5 years from the date of acquisition.
As per Nepal Accounting Standard- NAS 12 (Income
Subsequent Expenditure Taxes) tax expense is the aggregate amount included in
determination of profit or loss for the period in respect
Expenditure incurred on software is capitalized only of current and deferred taxation. Income Tax expense
when it is probable that this expenditure will enable the is recognized in the statement of Profit or Loss, except
asset to generate future economic benefits in excess of to the extent it relates to items recognized directly in
its originally assessed standard of performance and this equity or other comprehensive income in which case it is
expenditure can be measured and attributed to the asset recognized in equity or in other comprehensive income.
reliably. All other expenditure is expensed as incurred. The Management periodically evaluates positions taken in
tax returns with respect to situations in which applicable
Amortization of Intangible Assets tax regulation is subject to interpretation. It establishes
provisions where appropriate on the basis of amounts
Intangible Assets, except for goodwill, are amortized on
expected to be paid to tax authorities.
a straight–line basis in the Statement of Profit or Loss
from the date when the asset is available for use, over
187
Kumari Bank Limited
Current Tax 3.11 Deposits, debt securities issued and

Current tax assets and liabilities consist of amounts subordinated liabilities
expected to be recovered from or paid to Inland Revenue Deposits, debt securities issued and subordinated liabilities
Department in respect of the current year, using the tax are the Bank’s sources of funding. Deposits include non-
rates and tax laws enacted or substantively enacted on interest bearing deposits, saving deposits, term deposits,
the reporting date and any adjustment to tax payable in call deposits and margin deposits. The estimated fair value
respect of prior years. of deposits with no stated maturity period is the amount
repayable on demand. The fair value of fixed interest
Deferred Tax bearing deposits is considered as the interest receivable
Deferred tax is provided on temporary differences at on thesedeposits plus carrying amount of these deposits.
the reporting date between the tax bases of assets and The fair value of debt securities issued is also considered
liabilities and their carrying amounts for financial reporting as the carrying amount of these debt securities issued.
purposes. Deferred tax liabilities are recognized for all Sub-ordinate liabilities are liabilities subordinated, at the
taxable temporary differences except: event of winding up, to the claims of depositors, debt
• Where the deferred tax liability arises from the initial securities issued and other creditors.
recognition of goodwill or of an asset or liability in a
transaction that is not a business combination, and at 3.12 Provisions, Commitments and Contingencies
the time of transaction, affects neither the accounting
A provision is recognized if, as a result of a past event,
profit nor taxable profit or loss.
the Bank has a present legal or constructive obligation
• In respect of taxable temporary differences
that can be estimated reliably, and it is probable that an
associated with investments in subsidiaries,
outflow of economic benefits will be required to settle the
where the timing of the reversal of the temporary
obligation. The amount recognized is the best estimate
differences can be controlled and is probable that
of the consideration required to settle the present
the temporary differences will not reverse in the
obligation at the reporting date, taking in to account the
foreseeable future.
risks and uncertainties surrounding the obligation at that
date. Where a provision is measured using the cash flows
Deferred tax assets are recognized for all deductible
estimated to settle the present obligation, its carrying
temporary differences, carried forward unused tax credits
amount is determined based on the present value of
and unused tax losses (if any), to the extent that it is
those cash flows. A provision for onerous contracts is
probable that the taxable profit will be available against
recognized when the expected benefits to be derived by
which the deductible temporary differences, carried
the Bank from a contract are lower than the unavoidable
forward unused tax credits and unused tax losses can be
cost of meeting its obligations under the contract. The
utilized except:
provision is measured as the present value of the lower
• Where the deferred tax asset relating to the deductible
of the expected cost of terminating the contract and the
temporary differences arising from the initial
expected net cost of continuing with the contract.
recognition of an asset or liability in a transaction
that is not a business combination, and at the time of
Before a provision is established, the Bank recognizes
transaction, affects neither the accounting profit nor
any impairment loss on the assets associated with
taxable profit or loss.
that contract. The expense relating to any provision is
• In respect of deductible temporary differences
presented in the Statement of Profit or Loss net off any
associated with investments in Subsidiaries, deferred
reimbursement.
tax assets are recognized only to the extent that it is
probable that the temporary differences will reverse
All discernible risks are accounted for in determining the
in the foreseeable future and taxable profit will be
amount of all known liabilities. Contingent liabilities are
available against which the temporary difference will
possible obligations whose existence will be confirmed
be utilized.
only by uncertain future events or present obligations
where the transfer of economic benefit is not probable or
The carrying amount of deferred tax assets is reviewed
cannot be reliably measured. Contingent liabilities are not
at each reporting date and reduced to the extent that it is
recognized in the Statement of Financial Position but are
probable that sufficient profit will be available to allow the
disclosed unless they are remote.
deferred tax asset to be utilized. Unrecognized deferred
tax assets are reassessed at each reporting date and are
The Bank receives legal claims against it in the normal
recognized to the extent that it has become probable that
course of business. Management has made judgments
future taxable profit will allow the deferred tax asset to be
as to the likelihood of any claim succeeding in making
recovered.
provisions. The time of concluding legal claims is
uncertain, as is the amount of possible outflow of
Deferred tax assets and liabilities are measured at the tax
economic benefits.
rates that are expected to apply in the year when the asset
is realized or the liability is settled, based on tax rates (and
tax laws) that have been enacted or substantively enacted 3.13 Revenue Recognition
at the reporting date. Revenue is recognized to the extent that it is probable
that the economic benefits will flow to Bank and the
Current and deferred tax assets and liabilities are offset revenue can be reliably measured. The following specific
only to the extent that they relate to income taxes imposed recognition criteria must also be met before revenue is
by the same taxation authority. recognized.
188
housing, cars and free or subsidized goods or
Interest Income services) for current employees;

Interest income is recognized in profit or loss for all Short term employee benefits are measured on an
interest-bearing instruments on an accrual basis using undiscounted basis and are expensed as the related
the method which is approximately the same with service is provided. A liability is recognized for the
effective interest method as allowed by carveout on amount expected to be paid under short term cash bonus
NFRS. The effective interest rate is the rate that exactly or profit sharing plans if the Bank has present legal or
discounts the expected estimated future cash payments constructive obligation to pay this amount as a result of
and receipts through the expected life of the financial past service provided by the employee and the obligation
asset or liability. Where financial assets have been can be estimated reliably.
impaired, interest income continues to be recognized • Post-employment benefits, such as the following:
on the impaired value, based on the original effective I. Retirement benefits ( E.g.: pensions, lump sum
interest rate. payments on retirement); and
II. Other post-employment benefits such as post-
Bank has adopted the guideline issued by Nepal Rastra employment life insurance and post-employment
Bank issued on July 2019 for the recognition of Interest medical care;
Income i.e. the criteria for suspension of interest income • Other long term employee benefits and
and cessation of accrued Interest. The addition accrued • Termination benefits
interest on bad loan for FY 2075/76 as per Nepal Rastra
Bank directive.
1. Post employments benefits
Fee and Commission Income
Defined Contribution Plans
Fees earned for the provision of services over a period of
time are accrued over the period, which include service A defined contribution plan is a post-employment
fees and commission income. benefit plan under which the Bank makes fixed
contribution into a separate Bank account
(a fund) and will have no legal or constructive
Dividend Income
obligation to pay further contributions even if
Dividend income is recognized when the right to receive the fund does not hold sufficient assets to pay all
payment is established. employee benefits relating to employee services
in the current and prior periods as defined in
Net Trading Income Nepal Accounting Standards – NAS 19 (Employee
Benefits).
Net trading income comprises gains less losses relating
to trading assets and liabilities, and includes all realized The contribution payable by the employer to a
interest, dividend on financial assets held for trading defined contribution plan in proportion to the
and foreign exchange differences as wells as unrealized services rendered to Bank by the employees
changes in fair value of trading assets and liabilities. and is recorded as an expense under ‘Personnel
Expense’ as and when they become due. Unpaid
Net income from other financial instrument contributions are recorded as a liability under
measured at fair value through Profit or Loss ‘Other Liabilities’ in Notes 4.23.
Trading assets such as equity shares and mutual fund are
Bank contributed 10% of the salary of each
recognized at fair value through profit or loss. No other
employee to the Employees’ Provident Fund. The
financial instruments are designated at fair value through
above expenses are identified as contributions
profit or loss. The Bank has no income under the heading
to ‘Defined Contribution Plans’ as defined in
net income from other financial instrument at fair value
Nepal Accounting Standards – NAS 19 (Employee
through profit or loss.
Benefits).
3.14 Interest expense Defined Benefit Plans
For all financial liabilities measured at amortized cost,
A defined benefit plan is a post-employment
interest expense is recognized using the EIR. EIR is
benefit plan other than a defined contribution plan.
the rate that exactly discounts estimated future cash
Accordingly, staff gratuity has been considered
payments through the expected life of the financial
as defined benefit plans as per Nepal Accounting
liabilities or a shorter period, where appropriate, to the
Standards – NAS 19 (Employee Benefits).
net carrying amount of the financial liability.
Gratuity
3.15 Employee Benefits
An actuarial valuation is carried out every year to
Employee benefits include: ascertain the full liability under gratuity.
• Short-term employee benefits such as the following,
if expected to be settled wholly before twelve months Bank’s obligation in respect of defined benefit
after the end of the annual reporting period in which obligation is calculated by estimating the amount
the employees render the related services: of future benefit that employees have earned for
I. Wages, salaries and social security contributions; their service in the current and prior periods and
II. Paid annual leave and paid sick leave; discounting that benefit to determine its present
III. Profit sharing and bonuses, and value, then deducting the fair value of any plan
IV. Non-monetary benefits (such as medical care, assets to determine the net amount to be shown
in the Statement of Financial Position. The value
189
Kumari Bank Limited
of a defined benefit asset is restricted to the any actuarial gain and loss are recognized in the
present value of any economic benefits available Statement of Profit or Loss under ‘Personnel
in the form of refunds from the plan or reduction Expenses’ in the period in which they arise.
on the future contributions to the plan. In order
to calculate the present value of economic 3.16 Leases
benefits, consideration is given to any minimum
funding requirement that apply to any plan in The determination of whether an arrangement is a lease
Bank . An economic benefit is available to Bank or it contains a lease, is based on the substance of the
if it is realizable during the life of the plan, or on arrangement and requires an assessment of whether
settlement of the plan liabilities. the fulfillment of the arrangement is dependent on the
use of a specific asset or assets and the arrangement
The Gratuity recognition each year is as per the conveys a right to use the asset.
Bank’s employee bye laws which stipulates for
recognition of gratuity provision / payment as per Finance Lease
the latest staff basic remuneration; multiplied by Agreements which transfer to counterparties
the eligible number of years. substantially all the risks and rewards incidental to the
ownership of assets, but not necessarily legal title, are
Bank determines the interest expense on the classified as finance lease.
defined benefit liability by applying the discount
rate used to measure the defined benefit liability When Bank is the lessor under finance lease, the
at the beginning of the annual period. The discount amounts due under the leases, after deduction of
rate is the average yieldon government bonds unearned interest income, are included in, ‘Loans&
issued during the period having maturitydates receivables from other customers’, as appropriate.
approximating to the terms of Bank’s obligations. Interest income receivable is recognized in ‘Net interest
income’ over the periods of the leases so as to give a
The increase in gratuity liabilities attributable to constant rate of return on the net investment in the
the services provided by employees during the leases.
year ended 16th July, 2018 (current service cost)
has been recognized in the Statement of Profit When Bank is a lessee under finance leases, the leased
or Loss under ‘Personnel Expenses’ together with assets are capitalized and included in ‘Property, Plant
the net interest expense. Bank recognizes the and Equipment’ and the corresponding liability to the
total actuarial gain/(loss) that arises in computing lessor is included in ‘Other liabilities’. A finance lease
Bank’s obligation in respect of gratuity in other and its corresponding liability are recognized initially at
comprehensive income during the period in which the fair value of the asset or if lower, the present value of
it occurs. the minimum lease payments. Finance charges payable
are recognized in ‘Interest expenses’ over the period of
Other long term employee benefits the lease based on the interest rate implicit in the lease
Other long term employee benefits are all so as to give a constant rate of interest on the remaining
employee benefits other than short term employee balance of the liability.
benefits, post employment benefits and terminal
benefits. Accordingly, leave encashment plan Operating Lease
of the Bank has been considered as other long All other leases are classified as operating leases. When
term employee benefits as per Nepal Accounting acting as lessor, Bank includes the assets subject to
Standards – NAS 19 (Employee Benefits). operating leases in ‘Property, plant and equipment’ and
accounts for them accordingly. Impairment losses are
Unutilized Accumulated Leave recognized to the extent that residual values are not
Bank’s policy related to the accumulation of the fully recoverable and the carrying value of the assets is
leave states for accumulation of total 150 days thereby impaired.
leave (60 days annual leave and 90 days medical
leave), payable on gross salary of the staff on the Lease payments under an operating lease are
date of encashment. Thus the liability of the Bank recognized as an expense on a straight-line basis over
is provisioned as per the latest staff remuneration the lease term. The effect of change in the recognition
for the leave accumulated, further defined as per of lease expenses is taken retrospectively and restated
the actuarial valuation. Bank’s liability towards accordingly due to expiry of carve out on lease.
the accumulated leave which is expected to be
utilized beyond one year from the end of the 3.17 Foreign currency translation
reporting period is treated as other long term
All foreign currency transactions are translated into the
employee benefits. Bank’s net obligation towards
functional currency, which is Nepalese Rupees, using
unutilized accumulated leave is calculated by
the exchange rates (i.e. mid rate) prevailing at the dates
discounting the amount of future benefit that
when the transactions were affected.
employees have earned in return for their service
in the current and prior periods to determine the
Monetary assets and liabilities denominated in foreign
present value of such benefits. The discount rate
currencies at the reporting date are translated to
is the average yield on government bonds issued
Nepalese Rupees using the spot foreign exchange rate
during the period having maturity of five years
ruling at that date and all differences arising on non-
or more. The calculation is performed using the
trading activities are taken to ‘Other Operating Income’
Projected Unit Credit method. Net change in
in the Statement of Profit or Loss. The foreign currency
liability for unutilized accumulated leave including
gain or loss on monetary items is the difference between
190
amortized cost in the functional currency at the its liabilities. Changes in equity during the reporting
beginning of the period, adjusted for effective interest period comprise income and expenses recognized in the
and payments during the period, and the amortized cost statement of financial performance; plus contributions
in foreign currency translated at the rates of exchange from holders of equity claims, minus distributions to
prevailing at the end of the reporting period. holders of equity claims.
Non-monetary items in a foreign currency that are 3.20 Earnings per share including diluted
measured in terms of historical cost are translated
using the exchange rates as at the dates of the initial Bank presents basic and diluted Earnings per share
transactions. Non-monetary items in foreign currency (EPS) data for its ordinary shares. Basic EPS is
measured at fair value are translated using the exchange calculated by dividing the profit and loss attributable to
rates at the date when the fair value was determined. ordinary equity holders of Bank by the weighted average
number of ordinary shares outstanding during the
Foreign exchange differences arising on the settlement period. Diluted EPS is determined by adjusting both the
or reporting of monetary items at rates different from profit and loss attributable to the ordinary equity holders
those which were initially recorded are dealt with in the and the weighted average number of ordinary shares
Statement of Profit or Loss. outstanding, for the effects of all dilutive potential
ordinary shares, if any.

3.18 Financial guarantee and loan commitments
Earnings per share is calculated and presented in
Contingent Liabilities are possible obligations whose consolidated statement of profit or loss.
existence will be confirmed only by uncertain future
events or present obligations where the transfer 3.21 Segment Reporting
of economic benefits is not probable or cannot be
reliably measured as defined in the Nepal Accounting An operating segment is a component of an entity:
Standard- NAS 37 (Provisions, Contingent Liabilities and • that engages in business activities from which it
Contingent Assets). may earn revenues and incur expenses (including
revenues and expenses relating to transactions with
To meet the financial needs of customers, the Bank other components of the same entity),
enters into various irrevocable commitments and • whose operating results are regularly reviewed by
contingent liabilities. These consist of financial the entity’s chief operating decision maker to make
guarantees, letter of credit and other undrawn decisions about resources to be allocated to the
commitments to lend. Letters of credit, guarantees segment and assess its performance, and
and acceptances commit the Bank to make payments • for which discrete financial information is available.
on behalf of customers in the event of a specific act,
generally related to the import or export of goods. The Bank has identified the key segments of business
They carry a similar credit risk to loans. Operating lease on the basis of nature of operations that assists the
commitments of the Bank (as a lessor and as a lessee) Executive Committee of the Bank in decision making
and pending legal claims against the Bank to form part process and to allocate the resources. It will help the
of commitments of the Bank . Contingent liabilities are management to assess the performance of the business
not recognized in the Statement of Financial Position segments. The business segments identified are
but are disclosed unless they are remote. But these Banking (including loan, deposit and trade operations),
contingent liabilities do contain credit risk and are Payment solutions (Cards), Remittance, and Treasury.
therefore form part of the overall risk of the Bank .
3.22 Employee Bonus
Financial guarantees are initially recognized in the
Employee bonus shall be calculated at the rate of 10% of
Statement of Financial Position (within ‘other liabilities’)
Net Profit as per Bonus Act.
at fair value, being the premium received. Subsequent
to initial recognition, the Bank’s liability under each
guarantee is measured at the higher of the amount 3.23 Dividend on Ordinary Shares
initially recognized less cumulative amortization Dividend on ordinary shares are recognized as a liability
recognized in the Statement of Profit or Loss, and the and deducted from equity when they are approved by
best estimate of expenditure required to settle any the Bank’s shareholders. Dividend for the year that is
financial obligation arising as a result of the guarantee. approved after the reporting date is disclosed as an
event after the reporting date.
Any increase in the liability relating to the financial
guarantees is recorded in the Statement of Profit or Loss
3.24 Cash Flow Statement
under ‘Impairment Charges for Loans & other losses’.
The premium received is recognized in the Statement of The cash flow statement has been prepared using ‘The
Profit or Loss under ‘Net fees and commission income’ Direct Method’, whereby gross cash receipts and gross
on a straight line basis over the life of the guarantee; cash payments of operating activities, finance activities
except for the commission income up to Rs. 1,00,000, and investing activities have been recognized.
which is recognized as realized irrespective of the
period of guarantee. 3.25 Comparative Figures
The comparative figures and phrases have been
3.19 Share capital and reserves
rearranged wherever necessary to conform to the
Share capital and reserves are different classes of current year’s presentation.The changes in comparative
equity claims. Equity claims are claims on the residual figures are presented in 5.33.
interest in the assets of the entity after deducting all
191
Kumari Bank Limited
Cash and cash equivalent 4.1 4.1

Group Bank
Particulars
Cash in hand 2,217,438,325 2,033,651,302 2,217,438,325 2,033,651,302
Balances with B/FIs 1,818,207,267 1,199,589,518 1,815,452,885 1,199,589,518
Money at call and short notice 2,178,848,601 - 2,178,848,601 -
Other 2,609,395,821 547,403,000 2,609,395,821 547,403,000
Total 8,823,890,014 3,780,643,820 8,821,135,632 3,780,643,820
Cash and cash equivalent is measured in its carrying value. Balance with BFIs include balance maintained at various Bank s and
financial institutions. Other items in cash and cash equivalent includes interBank placements and other investments with maturity
above 7 days and within 3 months, based on original maturity
Due from Nepal Rastra Bank 4.1 4.2

Group Bank
Particulars
Statutory balances with NRB 3,574,461,207 5,548,147,227 3,574,461,207 5,548,147,227
Securities purchased under resale - - - -
agreement
Other deposit and receivable from NRB 6,053,142 34,613,593 6,053,142 34,613,593
Total 3,580,514,349 5,582,760,819 3,580,514,349 5,582,760,819
Balance with Nepal Rastra Bank is measured in its carrying amount. Balance with NRB is principally maintained as a part of
regulatory cash reserve ratio required by NRB. Other deposit and receivables from NRB includes balance at NRB in foreign currency.
Placements with Bank and Financial Instituitions 4.3

Group Bank
Particulars
Placement with domestic B/FIs 274,383,316 - 274,383,316 -
Placement with foreign B/FIs 109,999,481 714,095,685 109,999,481 714,095,685
Less: Allowances for impairment - - - -
Total 384,382,797 714,095,685 384,382,797 714,095,685
Placement with domestic as well as foreign BFIs with original maturities more than three months from the purchase date are
presented above.
Derivative financial instruments 4.4

Group Bank
Particulars
Held for trading - - - -
Interest rate swap - - - -
Currency swap - - - -
Forward exchange contract - - - -
Others - - - -
Held for risk management 5,858,648,394 - 5,858,648,394 -
Forward exchange contract 5,858,648,394 - 5,858,648,394 -
Other - - - -
Total 5,858,648,394 - 5,858,648,394 -
The Forward Exchange Contracts are derivative products used by the Bank for hedging purpose as a regular treasury activities.
The gross derivative assets and derivative liabilities are netted off and shown separately in the financial statements as derivative
assets or liabilities as a part of risk management.
192
Other trading assets 4.5
Group Bank
Particulars
Teasury bills - - - -
Government bonds - - - -
NRB Bonds - - - -
Domestic Corporate bonds - - - -
Equities - - - -
Other - - - -
Total - - - -
Pledged - - - -
Non-pledged - - - -
Loan and advances to B/FIs 4.6

Group Bank
Particulars
Loans to microfinance institutions 3,066,054,519 1,796,881,415 3,066,054,519 1,796,881,415
Other - - - -
Less: Allowances for impairment 30,650,545 17,946,832 30,650,545 17,946,832
Total 3,035,403,974 1,778,934,583 3,035,403,974 1,778,934,583
Loans to microfinance institutions
Group Bank
Particulars
Loans to microfinance institutions 3,065,306,249 1,794,683,167 3,065,306,249 1,794,683,167
Accrued Interest 748,270 2,198,248 748,270 2,198,248
Total 3,066,054,519 1,796,881,415 3,066,054,519 1,796,881,415
Loan and advances provided to microfinance financial institution are presented under this head.
4.6.1: Allowances for impairment
Balance at Shrawan 1 17,946,832 11,498,387 17,946,832 11,498,387

Impairment loss for the year: 12,703,714 6,448,445 12,703,714 6,448,445
Charge for the year 12,703,714 6,448,445 12,703,714 6,448,445
Recoveries/reversal - - - -
Amount written off - - - -
Balance at Ashad end 30,650,545 17,946,832 30,650,545 17,946,832
Loans and advances to customers 4.7

Group Bank
Particulars
Loan and advances measured at 74,355,360,821 61,717,696,530 74,355,360,821 61,717,696,530
amortized cost
Less: Impairment allowances 1,337,447,769 1,121,120,713 1,337,447,769 1,121,120,713
Collective impairment 765,099,806 626,268,801 765,099,806 626,268,801
Individual impairment 572,347,963 494,851,912 572,347,963 494,851,912
Net amount 73,017,913,052 60,596,575,817 73,017,913,052 60,596,575,817
Loan and advances measured at FVTPL - - - -
Total 73,017,913,052 60,596,575,817 73,017,913,052 60,596,575,817
Loans and advances are assessed individually and collectively as per incured loss model which is compared with the loss provision
prescribed by NRB directive no. 2. Higher of the loss as per incurred loss model and NRB directive is considered for impairment.
Accrued Interest Receivable on loans have been considered under Loans and Advances measured at Amortized Cost. Loan to
employees provided according to the Employee Bylaws of the Bank is presented under this head, which is also measured at
amortized cost.
193
Kumari Bank Limited
4.7.1: Analysis of loan and advances - By Product
Group Bank
Particulars
Product
Term loans 18,993,177,653 17,058,530,000 18,993,177,653 17,058,530,000
Overdraft 14,487,470,655 15,472,561,432 14,487,470,655 15,472,561,432
Trust receipt/Import loans 5,352,970,188 2,753,670,000 5,352,970,188 2,753,670,000
Demand and other working capital loans 15,168,675,010 11,356,320,000 15,168,675,010 11,356,320,000
Personal residential loans 4,785,290,028 6,066,970,000 4,785,290,028 6,066,970,000
Real estate loans 2,026,941,097 2,029,610,000 2,026,941,097 2,029,610,000
Margin lending loans 2,648,021,801 1,010,990,000 2,648,021,801 1,010,990,000
Hire purchase loans 3,171,083,830 3,462,180,000 3,171,083,830 3,462,180,000
Deprived sector loans 808,920,618 915,433,796 808,920,618 915,433,796
Bills purchased 6,000,000 8,950,000 6,000,000 8,950,000
Staff loans 543,520,850 451,721,286 543,520,850 451,721,286
Other 6,031,833,447 811,075,082 6,031,833,447 811,075,082
Sub total 74,023,905,177 61,398,011,595 74,023,905,177 61,398,011,595
Interest receivable 331,455,644 319,684,934 331,455,644 319,684,934
Grand total 74,355,360,821 61,717,696,529 74,355,360,821 61,717,696,529
4.7.2: Analysis of loan and advances - By Currency
Group Bank
Particulars
Nepalese rupee 69,252,440,390 59,251,279,740 9,252,440,390 59,251,279,740
Indian rupee - - -
United State dollar 5,102,920,431 2,466,416,790 5,102,920,431 2,466,416,790
Great Britain pound - - - -
Euro - - - -
Japenese yen - - - -
Chinese yuan - - - -
Other - - - -
Total 74,355,360,821 61,717,696,530 74,355,360,821 61,717,696,530
4.7.3: Analysis of loan and advances - By Collateral
Group Bank
Particulars
Secured
Movable/immovable assets 68,396,707,813 56,643,079,166 68,396,707,813 56,643,079,166
Gold and silver 2,986,252 14,827,292 2,986,252 14,827,292
Guarantee of domestic B/FIs 173,557,031 344,395,197 173,557,031 344,395,197
Government guarantee 151,183,084 151,189,015 151,183,084 151,189,015
Guarantee of international rated Bank - - - -
Collateral of export document 1,847,722 58,642,243 1,847,722 58,642,243
Collateral of fixed deposit receipt 338,429,004 238,661,302 338,429,004 238,661,302
Collateral of Governement securities 27,900,406 768,960 27,900,406 768,960
Counter guarantee 52,419,402 42,671,492 52,419,402 42,671,492
Personal guarantee 228,896,184 248,263,411 228,896,184 248,263,411
Other collateral 4,981,433,924 3,975,198,453 4,981,433,924 3,975,198,453
Subtotal 74,355,360,821 61,717,696,530 74,355,360,821 61,717,696,530
Unsecured - - - -
Grant Total 74,355,360,821 61,717,696,530 74,355,360,821 61,717,696,530
194
4.7.4: Allowances for impairment
Group Bank
Particulars
Specific allowances for impairment
Impairment loss for the year:
Charge for the year 735,679,001 127,685,606 735,679,001 127,685,606
Recoveries/reversal during the year - - - -
Write-offs - - - -
Exchange rate variance on foreign - - - -
currency impairment
Other movement - - - -
Balance at Ashad end 1,361,947,802 626,268,801 1,361,947,802 626,268,801
Collective allowances for impairment

Impairment loss for the year:
Charge/(reversal) for the year (519,351,945) (102,187,868) (519,351,945) (102,187,868)
Exchange rate variance on foreign - - - -
currency impairment
Other movement - - - -
Balance at Ashad end (24,500,033) 494,851,912 (24,500,033) 494,851,912
Total allowances for impairment 1,337,447,769 1,121,120,713 1,337,447,769 1,121,120,713
Investment securities 4.8

Group Bank
Particulars
Investment securities measured at 9,127,596,713 8,651,998,610 8,947,596,713 8,651,998,610
amortized cost
Investment in equity measured at 173,971,464 150,905,280 173,971,464 150,905,280
FVTOCI
Total 9,301,568,177 8,802,903,890 9,121,568,177 8,802,903,890
The total investment of the Bank in the financial instruments is presented under this account head in two categories; investment
securities measured at amortized cost and investment in equity measured at fair value through other comprehensive income
4.8.1: Investment securities measured at amortized cost
Group Bank
Particulars
Debt securities - - - -
Government bonds 7,178,107,897 5,111,140,225 7,178,107,897 5,111,140,225
Government treasury bills 1,769,488,816 3,483,641,384 1,769,488,816 3,483,641,384
Nepal Rastra Bank bonds - - - -
Nepal Rastra Bank deposits - - - -
instruments
Other 180,000,000 57,217,001 - 57,217,001
Less: specific allowances for - - - -
impairment
Total 9,127,596,713 8,651,998,610 8,947,596,713 8,651,998,610
4.8.2: Investment in equity measured at fair value through other comprehensive income
Group Bank
Particulars
Equity instruments
Quoted equity securities 134,964,764 139,398,580 134,964,764 139,398,580
Unquoted equity securities 39,006,700 11,506,700 39,006,700 11,506,700
Total 173,971,464 150,905,280 173,971,464 150,905,280
195
Kumari Bank Limited
4.8.3: Information relating to investment in equities

Group Bank
Particulars Ashad end 2076 Ashad end 2075 Ashad end 2076 Ashad end 2075
Cost Fair Value Cost Fair Value Cost Fair Value Cost Fair Value
Investment in Quoted Equity
Shikhar Insurance Co. Ltd. (SICL) 10,086,676 6,183,420 8,654,357 6,422,200 10,086,676 6,183,420 8,654,357 6,422,200
8,020 Ordinary Shares of Rs. 100 each, - - - - - - - -
fully paid
Ordinary Shares 7,150 Kitta of Rs. 100 each - - - - - - - -
Bonus Shares 870 Kitta of Rs. 100 each - - - - - - - -
Premier Insurance Co. Ltd. (PIC) 1,881,048 638,470 1,881,048 1,465,875 1,881,048 638,470 1,881,048 1,465,875
1,303 Ordinary Shares of Rs. 100 each, fully paid - - - - - - - -
Prime Life Insurance Co Ltd. (PLIC) 2,582,271 1,690,150 2,582,271 2,040,500 2,582,271 1,690,150 2,582,271 2,040,500
Siddhartha Insurance Ltd. (SIL) 2,716,866 1,351,350 2,639,866 1,518,000 2,716,866 1,351,350 2,639,866 1,518,000
Chilime Hydropower Company Limited (CHCL) 1,631,755 1,250,400 1,631,755 1,580,000 1,631,755 1,250,400 1,631,755 1,580,000
Bonus Shares 1,210 Kitta of Rs. 100 each - - - - - - - -
Sagarmatha Insurance Co. Ltd. (SIC) 3,068,385 1,270,500 3,068,385 2,814,000 3,068,385 1,270,500 3,068,385 2,814,000
NLG Insurance Co Ltd.(NLG) 4,527,922 3,070,860 4,527,922 3,747,900 4,527,922 3,070,860 4,527,922 3,747,900
Nepal Grameen Bikash Bank Limited (GBLBS) 5,595,585 4,120,200 5,214,085 4,677,190 5,595,585 4,120,200 5,214,085 4,677,190
7,630 Ordinary Shares of Rs. 100 each - - - - - - - -
Right shares 3,815 Kitta of Rs. 100 each - - - - - - - -
Sanima Mai Hydropower Ltd. (SHPC) 9,544,250 6,492,500 6,881,903 4,920,000 9,544,250 6,492,500 6,881,903 4,920,000
Bonus shares 1500 Kitta of Rs. 100 each - - - - - - - -
Nirdhan Utthan Bank (NUBL) 716,915 585,336 716,915 593,920 716,915 585,336 716,915 593,920
696 Ordinary Shares of Rs. 100 each, fully paid - - - - - - - -
580 Ordinary Shares of Rs. 100 each - - - - - - - -
Bonus shares 116 Kitta of Rs. 100 each - - - - - - - -
National Microfinance Bittiya Sanstha Ltd. (NMFBS) - 7,400 - 8,856 - 7,400 - 8,856
Ridi Hydropower Development Company Ltd. (RHPC) - 90 - 123 - 90 - 123
Swabalamban Laghubitta Bittiya Sanstha Limited (SWBBL) - 875 - 1,240 - 875 - 1,240
Hydroelectricity Investment and Development Company 2,877,098 5,095,328 4,958,700 7,685,985 2,877,098 5,095,328 4,958,700 7,685,985
Nepal Telecom (NTC) 47,627,199 43,239,735 43,283,881 41,014,085 47,627,199 43,239,735 43,283,881 41,014,085
Butwal Power Co. Ltd. (BPCL) - - 27,083,562 21,599,191 - - 27,083,562 21,599,191
51,989 Ordinary Shares of Rs. 100 each, fully paid 27,083,562 21,263,501 - - 27,083,562 21,263,501 - -
Lumbini General Insurance Co. Limited 8,750,400 8,750,400 6,955,200 8,976,100 8,750,400 8,750,400 6,955,200 8,976,100
89,761 Promoter Shares of Rs. 100 each, fully paid - - - - - - - -
Promoter Shares 69,552 Kitta of Rs. 100 each - - - - - - - -
Nepal Life Insurance Co. Ltd. (NLIC) 10,436 8,109 5,807,932 5,250,000 10,436 8,109 5,807,932 5,250,000
Kalika Microcredit Development Bank Limited - 325,734 - - - 325,734 - -
Upper Tamakoshi Hydropower Limited (UPPER) 3,040,686 3,239,225 - - 3,040,686 3,239,225 - -
196
Quoted Mutual Fund:
Nabil Equity Fund (NEF) 281,620 262,751 281,620 277,677 281,620 262,751 281,620 277,677
Of 28,162 ordinary share of Rs.10 - - - - - - - -
NMB Hybrid Fund L (NMBHF1) 394,350 395,533 394,350 382,125 394,350 395,533 394,350 382,125
NIBL Pragati Fund (NIBL PF) 428,220 318,596 428,220 385,398 428,220 318,596 428,220 385,398
Laxmi Equity Fund (LEMF) 1,462,390 1,115,804 1,462,390 1,184,536 1,462,390 1,115,804 1,462,390 1,184,536
Of 1,46,239 ordinary share of Rs.10 - - - - - - - -
Siddhartha Equity Fund (SEF) 9,677,480 9,764,577 9,677,480 9,251,671 9,677,480 9,764,577 9,677,480 9,251,671
Sanima Equity Fund (SAEF) 4,568,000 4,293,920 4,568,000 4,367,008 4,568,000 4,293,920 4,568,000 4,367,008
Citizens Mutual Fund (CMF-1) 5,000,000 5,090,000 5,000,000 4,640,000 5,000,000 5,090,000 5,000,000 4,640,000
NIC Asia Growth Fund (NICGF) 5,000,000 5,140,000 5,000,000 4,595,000 5,000,000 5,140,000 5,000,000 4,595,000
Investment in Unquoted Equity
Credit Information Centre Limited 1,330,000 1,330,000 1,330,000 1,330,000 1,330,000 1,330,000 1,330,000 1,330,000
Nepal Clearing House Limited 3,976,700 3,976,700 3,976,700 3,976,700 3,976,700 3,976,700 3,976,700 3,976,700
Nepal Electronic Payment System Limited 15,000,000 15,000,000 5,000,000 5,000,000 15,000,000 15,000,000 5,000,000 5,000,000
1,50,000 Ordinary Shares of Rs. 100 each, fully paid - - - - - - - -
National Banking Training Institute 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000
Unqouted Mutual Fund:
Nabil Balance Fund II (NBF II) 10,000,000 10,000,000 - - 10,000,000 10,000,000 - -

Of 10,00,000 ordinary share of Rs.10) - - - - - - - -
NIBL Sahabhagita Fund (NIBLSF) 2,500,000 2,500,000 - - 2,500,000 2,500,000 - -
Of 2,50,000 ordinary share of Rs. 10) - - - - - - - -
Citizens Mutual Fund (CMF-II) 5,000,000 5,000,000 - - 5,000,000 5,000,000 - -
Of 5,00,000 ordinary share of Rs. 10) - - - - - - - -
Total 197,559,814 173,971,464 164,206,541 150,905,280 197,559,814 173,971,464 164,206,541 150,905,280
197
Kumari Bank Limited
Current tax assets 4.9

Group Bank
Particulars
Current tax assets 596,796,795 525,333,474 596,796,795 525,333,474
Current year income tax assets 596,796,795 525,333,474 596,796,795 525,333,474
Tax assets of prior periods - - - -
Current tax liabilities 535,569,497 411,550,374 535,569,497 411,550,374

Current year income tax liabilities 535,569,497 411,550,374 535,569,497 411,550,374
Tax liabilities of prior periods - - - -
Total 61,227,298 113,783,100 61,227,298 113,783,100
Current tax assets of the Bank includes advance tax paid by the Bank and tax deducted at source (TDS) on behalf of the Bank . In
the same way the current income tax liabilities include the tax payable to the Government computed as per the provisions of the
income tax act 2058 under self assessment tax return filed
Investment in subsidiaries 4.10

Bank
Particulars
Ashad end 2076 Ashad end 2075
Investment in quoted subsidiaries - -
Investment in unquoted subsidiaries 200,000,000 200,000,000
Total investment 200,000,000 200,000,000
Less: Impairment allowances - -
Net carrying amount 200,000,000 200,000,000
4.10.1: Investment in quoted subsidiaries
Bank
Particulars
Cost Fair Value Cost Fair Value
Total
4.10.2: Investment in unquoted subsidiaries
Bank
Particulars
Cost Fair Value Cost Fair Value
Kumari Capital Ltd. 200,000,000 200,000,000 200,000,000 200,000,000
(20,00,000 Kitta of Rs. 100 each)
Total 200,000,000 200,000,000 200,000,000 200,000,000
4.10.3: Information relating to subsidiaries of the Bank
Bank
Particulars Percentage of ownership held by the Bank
Kumari Capital Ltd. 100% 100%
4.10.4: Non controlling interest of the subsidiaries
Group
Particulars
Ashad end 2076
...Ltd …Ltd. …Ltd …Ltd.
Equity interest held by NCI (%)
Profit/(loss) allocated during the year
Accumulated balances of NCI as on Ashad end 2074
Dividend paid to NCI
198
Ashad end 2075
Particulars
...Ltd …Ltd. …Ltd …Ltd.
Equity interest held by NCI (%)
Profit/(loss) allocated during the year
Accumulated balances of NCI as on Ashad end 2075
Dividend paid to NCI
As the subidiary is wholly owned by the Bank , hence non controlling interest does not exist as on the reporting date.
Investment in associates 4.11
Group Bank
Particulars
Investment in quoted associates 65,198,592 44,567,797 20,000,000 20,000,000
Investment in unquoted associates - - - -
Total investment 65,198,592 44,567,797 20,000,000 20,000,000
Less: Impairment allowances - - - -
Net carrying amount 65,198,592 44,567,797 20,000,000 20,000,000
4.11.1: Investment in quoted associates
Group Bank
Particulars Ashad end 2076 Ashad end 2075 Ashad end 2076 Ashad end 2075
Cost Fair Value Cost Fair Value Cost Fair Value Cost Fair Value
National Microfinance Bittiya Sanstha Limited 20,000,000 65,198,592 20,000,000 44,567,797 20,000,000 20,000,000 20,000,000 20,000,000
Promoter Shares 2,00,000 Kitta of Rs. 100
each
Bonus Shares 1,01,763 Kitta of Rs. 100 each
Total 20,000,000 65,198,592 20,000,000 44,567,797 20,000,000 20,000,000 20,000,000 20,000,000
4.11.2: Investment in unquoted associates
Group Bank
Particulars
Cost Fair Cost Fair Cost Fair Value Cost Fair Value
Value Value
Total - - - - - - - -
4.11.3: Information relating to associates of the Bank

Group Bank
Percentage of ownership held by the
Particulars Percentage of ownership held by the Bank
Bank
National Microfinance Bittiya Sanstha 20% 20% 20% 20%
Limited
Promoter Shares 2,00,000 Kitta of Rs.
100 each
Bonus Shares 101763 Kitta of Rs 100
each

4.11.4: Equity value of associates
Group Bank
Particulars
National Microfinance Bittiya Sanstha Limited 65,198,592 44,567,797 20,000,000 20,000,000
Total 65,198,592 44,567,797 20,000,000 20,000,000
199
Kumari Bank Limited
Investment properties 4.12
Group Bank
Particulars
Investment properties measured at fair value
Balance as on Shrawan 1, 2075 - - - -
Addition/disposal during the year - - - -
Net changes in fair value during the year - - - -
Adjustment/transfer - - - -
Net amount - - - -
Investment properties measured at cost

Balance as on Shrawan 1, 2075 134,171,003 160,183,594 134,171,003 160,183,594
Addition/disposal during the year - (26,012,591) - (26,012,591)
Adjustment/transfer (45,748,988) - (45,748,988) -
Accumulated depreciation - - - -
Accumulated impairment loss - - - -
Net amount 88,422,015 134,171,003 88,422,015 134,171,003
Total 88,422,015 134,171,003 88,422,015 134,171,003
200
Property and Equipment 4.13
Bank
Leasehold Computer & Furniture & Equipment & Total Ashad Total Ashad End
Particulars Land Building Vehicles Machinery
Properties Accessories Fixture Others End 2076 2075
Cost
As on Shrawan 1, 2074 90,972,155 35,444,275 157,462,928 158,394,712 174,831,097 99,590,333 - 242,467,408 959,162,908
Addition during the Year -
Acquisition - - 31,381,974 17,639,882 74,069,736 4,954,150 - 38,464,076 166,509,819
Capitalization - - - - - - -
Disposal during the year - - 163,674 7,727,287 26,525,211 2,197,956 - 12,650,167 49,264,294
Adjustment/Revaluation - - - - - - -
Balance as on Ashad end 2075 90,972,155 35,444,275 188,681,229 168,307,307 222,375,622 102,346,527 - 268,281,318 1,076,408,433 1,076,408,433
Addition during the Year 44,521,831 65,926,467 63,084,946 15,883,718 64,240,650 22,792,695 - 64,563,820 341,014,127
Acquisition 44,521,831 65,926,467 63,084,946 15,883,718 64,240,650 22,792,695 64,563,820 341,014,127
Capitalization - -
Disposal during the year - 40,934,782 5,324,576 20,554,800 10,575,752 36,347,504 113,737,413
Adjustment/Revaluation - (7,327,212) 1,322,357 (120,952) 13,485,170 7,359,362
Balance as on Ashad end 2076 135,493,986 101,370,742 218,158,605 177,544,093 266,061,472 114,684,422 - 283,012,465 1,296,325,785 -
Depreciation and Impairment

As on Shrawan 1, 2074 - 16,825,206 123,881,744 124,834,663 91,087,524 70,992,220 - 181,154,183 608,775,540
Depreciation charge for the Year - 930,953 14,013,694 10,674,222 23,345,318 7,489,645 - 18,902,092 75,355,925
Impairment for the year - - - - - - - - -
Disposals - - 163,674 7,555,973 20,013,570 2,050,370 - 11,982,498 41,766,084
Adjustment - - - - - - - - -
As on Ashad end 2075 - 17,756,160 137,731,765 127,952,912 94,419,272 76,431,495 - 188,073,777 642,365,381 642,365,381
Impairment for the year -
Depreciation charge for the Year - 884,406 18,562,437 11,980,273 29,161,912 8,249,858 27,411,338 96,250,223
Disposals - 39,010,019 4,992,678 9,579,334 8,607,459 33,804,551 95,994,041
Adjustment - (7,327,212) 1,264,135 593,991 13,608,152 8,139,066
As on Ashad end 2076 - 18,640,565 124,611,395 133,676,371 114,001,850 75,479,903 - 168,072,412 634,482,497 -
Capital Work in Progress 2074 - 261,369 - - - - - -

Capital Work in Progress 2075 - 261,369 - - - - - - 261,369
Capital Work in Progress 2076 - 261,369 - - - - - - 261,369
Net Book Value

As on Ashad end 2074 90,972,155 18,880,438 33,581,184 33,560,049 83,743,573 28,598,112 - 61,313,225 - -
As on Ashad end 2075 90,972,155 17,949,484 50,949,464 40,354,395 127,956,350 25,915,031 - 80,207,540 - 434,304,421
As on Ashad end 2076 135,493,986 82,991,545 93,547,209 43,867,722 152,059,622 39,204,519 - 114,940,052 662,104,656 -
201
202
Group
Leasehold Computer & Furniture & Equipment & Total Ashad Total Ashad End
Particulars Land Building Vehicles Machinery
Properties Accessories Fixture Others End 2076 2075
Cost
Kumari Bank Limited
As on Shrawan 1, 2074 90,972,155 35,444,275 157,462,928 158,394,712 174,831,097 99,590,333 - 242,467,408 - 959,162,908
Addition during the Year - - - - - - - - - -
Acquisition - - 31,381,974 17,639,882 74,069,736 4,954,150 - 38,464,076 - 166,509,819
Capitalization - - - - - - - - - -
Disposal during the year - - 163,674 7,727,287 26,525,211 2,197,956 - 12,650,167 - 49,264,294
Adjustment/Revaluation - - - - - - - - - -
Balance as on Ashad end 2075 90,972,155 35,444,275 188,681,229 168,307,307 222,375,622 102,346,527 - 268,281,318 1,076,408,433 1,076,408,433
- - - - - - - - - -
Addition during the Year 44,521,831 65,926,467 63,084,946 15,883,718 64,240,650 22,792,695 - 64,563,820 341,014,127 -
Acquisition 44,521,831 65,926,467 63,084,946 15,883,718 64,240,650 22,792,695 - 64,563,820 341,014,127 -
Capitalization - - - - - - - - - -
Disposal during the year - - 40,934,782 5,324,576 20,554,800 10,575,752 - 36,347,504 113,737,413 -
Adjustment/Revaluation - - (7,327,212) 1,322,357 - (120,952) - 13,485,170 7,359,362 -
Balance as on Ashad end 2076 135,493,986 101,370,742 218,158,605 177,544,093 266,061,472 114,684,422 - 283,012,465 1,296,325,785 -
Depreciation and Impairment - - - - - - - - - -

As on Shrawan 1, 2074 - 16,825,206 123,881,744 124,834,663 91,087,524 70,992,220 - 181,154,183 - 608,775,540
Depreciation charge for the Year - 930,953 14,013,694 10,674,222 23,345,318 7,489,645 - 18,902,092 - 75,355,925
Impairment for the year - - - - - - - - - -
Disposals - - 163,674 7,555,973 20,013,570 2,050,370 - 11,982,498 - 41,766,084
Adjustment - - - - - - - - - -
As on Ashad end 2075 - 17,756,160 137,731,765 127,952,912 94,419,272 76,431,495 - 188,073,777 642,365,381 642,365,381
Impairment for the year - - - - - - - - - -
Depreciation charge for the Year - 884,406 18,562,437 11,980,273 29,161,912 8,249,858 - 27,411,338 96,250,223 -
Disposals - - 39,010,019 4,992,678 9,579,334 8,607,459 - 33,804,551 95,994,041 -
Adjustment - - (7,327,212) 1,264,135 - 593,991 - 13,608,152 8,139,066 -
As on Ashad end 2076 - 18,640,565 124,611,395 133,676,371 114,001,850 75,479,903 - 168,072,412 634,482,497 -
-
Capital Work in Progress 2074 - 261,369 - - - - - - - -
Capital Work in Progress 2075 - 261,369 - - - - - - - 261,369
Capital Work in Progress 2076 - 261,369 - - - - - - 261,369 -
- - - - - - - - - -
Net Book Value - - - - - - - - - -
As on Ashad end 2074 90,972,155 18,880,438 33,581,184 33,560,049 83,743,573 28,598,112 - 61,313,225 - -
As on Ashad end 2075 90,972,155 17,688,115 50,949,464 40,354,395 127,956,350 25,915,031 - 80,207,540 - 434,304,421
As on Ashad end 2076 135,493,986 82,730,176 93,547,209 43,867,722 152,059,622 39,204,519 - 114,940,052 662,104,656 -
Goodwill and Intangible Assets 4.14
Bank
Software Total Ashad end Total Ashad end
Particulars Goodwill Other
Purchased Developed 2076 2075
Cost
As on Shrawan 1, 2074 - 71,886,993 - - 71,886,993
Addition during the Year - - - -
Acquisition - 106,893,052 - - 106,893,052
Capitalization - - - -
Disposal during the year - - - - -
Adjustment/Revaluation - - - - -
Balance as on Ashad end 2075 - 178,780,046 - - 178,780,046 178,780,046
Addition during the Year - 10,816,195 - - 10,816,195

Acquisition - 10,816,195 10,816,195
Capitalization - -
Disposal during the year - 423,750 423,750
Adjustment/Revluation - -
Amortization and Impairment

As on Shrawan 1, 2074 64,468,273 - - 64,468,273
Amortization charge for the 3,858,344 - - 3,858,344
Year
Impairment for the year - - -
Disposals - - -
Adjustment - - -
As on Ashad end 2075 - 68,326,617 - - 68,326,617 68,326,617
Amortization charge for the - 23,876,015 - - 23,876,015

Year
Impairment for the year - - - - -
Disposals - 423,750 - - 423,750
Adjustment - - - -
As on Ashad end 2076 - 91,778,881 - - 91,778,881 68,326,617
Capital Work in Progress - - - - -
Net Book Value

As on Ashad end 2074 - 7,418,721 - - - -
As on Ashad end 2075 - 110,453,429 - - - 110,453,429
As on Ashad end 2076 - 97,393,609 - - 97,393,609
203
Kumari Bank Limited
Group
Software Total Ashad end
Particulars Goodwill Other Total Ashad end 2075
Purchased Developed 2076
Cost
As on Shrawan 1, 2074 - 71,886,993 - - - 71,886,993
Addition during the Year - - - - - -
Acquisition - 106,893,052 - - - 106,893,052
Capitalization - - - - - -
Disposal during the year - - - - - -
Adjustment/Revaluation - - - - - -
- - - - - -
Addition during the Year - 10,816,195 - - 10,816,195 -
Acquisition - 10,816,195 - - 10,816,195 -
Capitalization - - - - - -
Disposal during the year - 423,750 - - 423,750 -
Adjustment/Revluation - - - - - -
- - - - - -
Amortization and Impairment - - - - - -
As on Shrawan 1, 2074 - 64,468,273 - - - 64,468,273
Amortization charge for the Year - 3,858,344 - - - 3,858,344
Impairment for the year - - - - - -
Disposals - - - - - -
Adjustment - - - - - -
As on Ashad end 2075 - 68,326,617 - - 68,326,617 68,326,617
- - - - - -
Amortization charge for the Year - 23,876,015 - - 23,876,015 -
Impairment for the year - - - - - -
Disposals - 423,750 - - 423,750 -
Adjustment - - - - - -
As on Ashad end 2076 - 91,778,881 - - 91,778,881 68,326,617
- - - - - -
Capital Work in Progress - - - - - -
- - - - - -
Net Book Value - - - - - -
As on Ashad end 2074 - 7,418,721 - - - -
As on Ashad end 2075 - 110,453,429 - - - 110,453,429
As on Ashad end 2076 - 97,393,609 - - 97,393,609 -
204
Deferred Tax 4.15
Group Bank
Particulars Deferred Net Deferred Deferred Net Deferred
Deferred Deferred
Tax Tax Assets/ Tax Tax Assets/
Tax Assets Tax Assets
Liabilities (Liabilities) Liabilities (Liabilities)
Deferred tax on temporory differences on
following items
Loan and Advance to B/FIs - - - - - -
Loans and advances to customers - - - - - -
Investment properties - - - - - -
Investment securities 7,076,505 - 7,076,505 7,076,505 - 7,076,505
Property & equipment (2,151,701) - (2,151,701) (2,151,701) - (2,151,701)
Employees' defined benefit plan 71,782,875 - 71,782,875 71,782,875 - 71,782,875
Lease liabilities 1,082,229 - 1,082,229 1,082,229 - 1,082,229
Provisions - - - - - -
Other temporory differences - - - - - -
Deferred tax on temporory differences 77,789,908 - 77,789,908 77,789,908 - 77,789,908
Deferred tax on carry forward of unused tax losses
Deferred tax due to changes in tax rate - - -
Net Deferred tax asset/(liabilities) as on year end
of 2075 - - 77,789,908 - - 77,789,908
Deferred tax (asset)/liabilities as on Shrawan 1, (20,361,526) (20,361,526)

2075
Origination/(Reversal) during the year - - (98,151,434) - - (98,151,434)
Deferred tax expense/(income) recognised in

profit or loss - - (76,263,185) - - (76,263,185)

other comprehensive income - - (21,888,249) - - (21,888,249)

directly in equity - - - - - -

205
Kumari Bank Limited
Group Bank
Particulars Deferred Tax Deferred Net Deferred Deferred Tax Deferred Net Deferred
Assets Tax Tax Assets/ Assets Tax Tax Assets/
Liabilities (Liabilities) Liabilities (Liabilities)
Deferred tax on temporory differences on
following items
Loan and Advance to B/FIs - - - - - -
Loans and advances to customers - 82,318,572 (82,318,572) - 82,318,572 (82,318,572)
Investment properties - - - -
Investment securities 3,990,378 - 3,990,378 3,990,378 - 3,990,378
Property & equipment 1,578,578 - 1,578,578 1,578,578 - 1,578,578
Employees' defined benefit plan 55,994,469 - 55,994,469 55,994,469 - 55,994,469
Lease liabilities 393,620 - 393,620 393,620 - 393,620
Other temporary differences - - - - - -
Deferred tax on temporory differences 61,957,045 82,318,572 (20,361,526) 61,957,045 82,318,572 (20,361,526)
Deferred tax on carry forward of unused tax losses - - - - - -
Deferred tax due to changes in tax rate - - - - - -
Net Deferred tax asset/(liabilities) as on year end
- - (20,361,526) - - (20,361,526)
of 2075
Deferred tax (asset)/liabilities as on Shrawan 1, (96,106,573) (96,106,573)
2074
Origination/(Reversal) during the year - - (75,745,047) - - (75,745,047)
Deferred tax expense/(income) recognised in profit (69,576,633) (69,576,633)
or loss
Deferred tax expense/(income) recognised in other (3,805,208) (3,805,208)
comprehensive income
Deferred tax expense/(income) recognised in - - - -
directly in equity
Other assets 4.16
Group Bank
Particulars
Assets held for sale - - - -
Other non Banking assets - - - -
Bills receivable - - - -
Accounts receivable 23,881,925 32,854,353 23,881,925 33,139,353
Accrued income 2,547,192 435,729 2,547,192 435,729
Prepayments and deposit 26,815,325 20,955,719 26,815,325 20,955,719
Income tax deposit 27,898,264 25,820,871 27,898,264 25,820,871
Deferred employee expenditure 7,415,980 6,546,457 7,415,980 6,546,457
Other 198,388,888 368,025,972 196,422,606 368,025,972
Total 286,947,574 454,639,100 284,981,292 454,924,100
Due to Bank and Financial Institutions 4.17
Group Bank
Particulars
Money market deposits - - - -
InterBank borrowing 1,540,300,000 519,400,000 1,540,300,000 519,400,000
Other deposits from BFIs 10,606,155,539 9,384,787,331 10,628,182,092 9,584,787,331
Settlement and clearing accounts - - - -
Total 12,146,455,539 9,904,187,331 12,168,482,092 10,104,187,331
Balances maintained by other local financial institutions with the Bank is presented under this head.
206
Due to Nepal Rastra Bank 4.18
Group Bank
Particulars
Refinance from NRB 859,948,037 19,457,578 859,948,037 19,457,578
Standing Liquidity Facility - - - -
Lender of last report facility from NRB - - - -
Securities sold under repurchase agreements - - - -
Other payable to NRB 573,300,000 520,100,000 573,300,000 520,100,000
Total 1,433,248,037 539,557,578 1,433,248,037 539,557,578
The amount payable to NRB shall include amount of refinance from NRB, standing liquidity facilities, lender of last resort facility,
sale and purchase agreements. Other payable to NRB includes deposit from NRB.
Derivative financial instruments 4.19
Group Bank
Particulars
Held for trading - - - -
Forward exchange contract - - - -
Others - - - -
Held for risk management 5,715,359,938 6,111,249 5,715,359,938 6,111,249
Forward exchange contract 5,715,359,938 6,111,249 5,715,359,938 6,111,249
Other - - - -
Total 5,715,359,938 6,111,249 5,715,359,938 6,111,249
The Forward Exchange Contracts are derivative products used by the Bank for hedging purpose as a regular treasury activities. The
gross derivative assets and derivative liabilities are netted off and shown separately in the financial statements as derivative assets
or liabilities as a part of risk management.
Deposits from customers 4.20
Group Bank
Particulars
Institutions customers: 37,431,358,725 29,404,531,226 37,431,358,725 29,404,531,226
Term deposits 24,412,193,942 19,374,110,000 24,412,193,942 19,374,110,000
Call deposits 9,345,509,803 8,207,931,931 9,345,509,803 8,207,931,931
Current deposits 3,485,705,454 1,767,316,095 3,485,705,454 1,767,316,095
Other 187,949,525 55,173,200 187,949,525 55,173,200
Individual customers: 35,769,785,042 30,141,804,293 35,769,785,042 30,141,804,293
Term deposits 16,785,085,194 11,741,637,703 16,785,085,194 11,741,637,703
Saving deposits 18,000,201,092 16,328,222,121 18,000,201,092 16,328,222,121
Current deposits 311,855,292 924,895,616 311,855,292 924,895,616
Other 672,643,464 1,147,048,853 672,643,464 1,147,048,853
Total 73,201,143,766 59,546,335,519 73,201,143,766 59,546,335,519
207
Kumari Bank Limited
4.20.1: Currency wise analysis of deposit from customers

Group Bank
Particulars
Nepalese rupee 72,362,539,204 58,832,361,245 72,362,539,204 58,832,361,245
Indian rupee - - - -
United State dollar 829,037,964 703,731,713 829,037,964 703,731,713
Great Britain pound 3,751,887 3,968,019 3,751,887 3,968,019
Euro 5,812,914 6,272,703 5,812,914 6,272,703
Japenese yen - - - -
Chinese yuan - - - -
Other - - - -
AUD 943 1,839 943 1,839
CAD 854 854 -
Total 73,201,143,766 59,546,335,519 73,201,143,766 59,546,335,519
Currency wise deposit include NPR converted value of deposit on different currencies as on reporting date.
Borrowing 4.21
Group Bank
Particulars
Domestic Borrowing
Nepal Government - - - -
Other Institutions - - - -
Other - - - -
Sub total - - - -
Foreign Borrowing -
Foreign Bank and Financial - - - -
Institutions
Multilateral Development Bank s - - - -
Other Institutions - - - -
Sub total - - - -
Total - - - -
Provisions 4.22
Group Bank
Particulars
Provisions for redundancy - - - -
Provision for restructuring - - - -
Pending legal issues and tax - - - -
litigation
Onerous contracts - - - -
Other 2,231,750 2,231,750 2,231,750 2,231,750
Total 2,231,750 2,231,750 2,231,750 2,231,750
The other provision is created for the audit fee payable for each reporting periods.
4.22.1: Movement in provision

Group Bank
Particulars
Provisions made during the year 2,231,750 690,287 2,231,750 690,287
Provisions used during the year 2,231,750 - 2,231,750 -
Provisions reversed during the - - - -
year
Unwind of discount - - - -
Balance at Ashad end 2,231,750 2,231,750 2,231,750 2,231,750
208
Other liabilities 4.23
Group Bank
Particulars Ashad end
Ashad end 2076 Ashad end 2075 Ashad end 2075
2076
Liability for employees defined benefit obligations 84,941,038 58,196,783 84,941,038 58,196,783
Liability for long-service leave 154,335,212 109,679,585 154,335,212 109,679,585
Short-term employee benefits - - - -
Bills payable 5,151,836 198,601,977 5,151,836 198,601,977
Creditors and accruals 107,809,247 931,306,841 107,809,247 931,306,841
Interest payable on deposit 2,784,212 26,788,866 2,784,212 26,788,866
Interest payable on borrowing 10,558,450 135,476 10,558,450 135,476
Liabilities on defered grant income - - - -
Unpaid Dividend 3,057,079 8,684,586 3,057,079 8,684,586
Liabilities under Finance Lease - - - -
Employee bonus payable 197,337,445 153,544,096 197,337,445 153,544,096
Other 508,007,481 478,075,906 505,959,524 478,047,655
Total 1,073,982,000 1,965,014,116 1,071,934,043 1,964,985,865
4.23.1: Defined benefit obligations

The amounts recognised in the statement of financial position are as follows:

Group Bank
Particulars
Present value of unfunded obligations - - - -
Present value of funded obligations 393,020,354 275,113,564 393,020,354 275,113,564
Total present value of obligations 393,020,354 275,113,564 393,020,354 275,113,564
Fair value of plan assets 308,079,316 216,916,781 308,079,316 216,916,781
Present value of net obligations 84,941,038 58,196,783 84,941,038 58,196,783
Recognised liability for defined benefit
obligations 84,941,038 58,196,783 84,941,038 58,196,783
4.23.2: Plan assets

Group Bank
Plan assets comprise
Equity securities - - -
Government bonds - - -
Bank deposit 308,079,316 216,916,781 308,079,316 216,916,781
Other (Deposit with CIT) - - -
Total 308,079,316 216,916,781 308,079,316 216,916,781
Actual return on plan assets
209
Kumari Bank Limited
4.23.3: Movement in the present value of defined benefit obligations
Group Bank
Particulars
Defined benefit obligations at Sawan 1 275,113,564 248,493,105 275,113,564 248,493,105
Actuarial losses 62,673,742 (18,771,860) 62,673,742 (18,771,860)
Benefits paid by the plan (5,276,609) (7,118,535) (5,276,609) (7,118,535)
Current service costs and interest 60,509,657 52,510,854 60,509,657 52,510,854
Defined benefit obligations at Asar end 393,020,354 275,113,564 393,020,354 275,113,564
4.23.4: Movement in the fair value of plan assets
Group Bank
Particulars
Fair value of plan assets at Sawan 1 216,916,781 166,075,504 216,916,781 166,075,504
Contributions paid into the plan 96,439,144 57,959,812 96,439,144 57,959,812
Benefits paid during the year (5,276,609) (7,118,535) (5,276,609) (7,118,535)
Actuarial (losses) gains - - - -
Expected return on plan assets - - - -
Fair value of plan assets at Asar end 308,079,316 216,916,781 308,079,316 216,916,781
4.23.5: Amount recognised in profit or loss

Group Bank
Particulars
Current service costs 36,641,169 33,286,531 36,641,169 33,286,531
Interest on obligation 23,868,488 19,224,323 23,868,488 19,224,323
Expected return on plan assets - - - -
Total 60,509,657 52,510,854 60,509,657 52,510,854
4.23.6: Amount recognised in other comprehensive income
Group Bank
Particulars
Acturial (gain)/loss 62,673,742 (18,771,860) 62,673,742 (18,771,860)
Total 62,673,742 (18,771,860) 62,673,742 (18,771,860)

4.23.7: Actuarial assumptions

Group Bank
Particulars
Discount rate 9% 9% 9% 9%
Expected return on plan asset 0% 0% 0% 0%
Future salary increase 9% 9% 9% 9%
Withdrawal rate 8% 9% 8% 9%
Debt securities issued

4.24
Group Bank
Particulars
Debt securities issued designated as at fair value - - - -
Debt securities issued at amortised cost - - - -
Total - - -
210
Subordinated Liabilities 4.25
Group Bank
Particulars
Redeemable preference shares - - - -
Irredemable cumulative preference shares (liabilities - - - -
component)
Other - - - -
Total - - -
Share capital 4.26
Group Bank
Particulars
Ordinary shares 8,685,573,112 7,163,394,973 8,685,573,112 7,163,394,973
Convertible preference shares (equity component only) - - - -
Irredemable preference shares (equity component only) - - - -
Perpetual debt (equity component only) - - - -
Total 8,685,573,112 7,163,394,973 8,685,573,112 7,163,394,973
4.26.1: Ordinary shares

Bank
Particulars
Authorized Capital
100,000,000 Ordinary shares of Rs. 100 each share 10,000,000,000 10,000,000,000
Issued capital
8,68,55,731 Ordinary shares of Rs.100 each share 8,685,573,112 7,163,394,973
(Previous Year7,16,33,950 Ordinary shares of Rs.100 each share)
Subscribed and paid up capital
8,68,55,731 Ordinary shares of Rs.100 each share 8,685,573,112 7,163,394,973
(Previous Year 7,16,33,950 Ordinary shares of Rs.100 each share)
Total 8,685,573,112 7,163,394,973
4.26.2: Ordinary share ownership

Bank
Particulars
Percent Amount Percent Amount
Domestic ownership 100% 8,685,573,112 100% 7,163,394,973
Nepal Government - - - -
"A" class licensed institutions - - - -
Other licensed intitutions - - - -
Other Institutions 4.75% 412,906,040 4.58% 328,083,490
Public 95.25% 8,272,667,072 95.42% 6,835,311,484
Other - - - -
Foreign ownership - - - -
Total 100% 8,685,573,112 100% 7,163,394,973
211
Kumari Bank Limited
Reserves 4.27
Group Bank
Particulars
Statutory general reserve 1,531,065,436 1,284,989,784 1,531,065,436 1,284,989,784
Exchange equilisation reserve 45,184,144 39,685,586 45,184,144 39,685,586
Corporate social responsibility reserve 15,131,685 15,960,683 15,131,685 15,960,683
Capital redemption reserve - - - -
Regulatory reserve 584,402,477 477,170,416 584,402,477 477,170,416
Investment adjustment reserve - 5,000,000 - 5,000,000
Capital reserve - - - -
Assets revaluation reserve - - - -
Fair value reserve (16,511,845) (9,310,883) (16,511,845) (9,310,883)
Dividend equalisation reserve - - - -
Actuarial gain / (loss) (94,755,507) (50,883,888) (94,755,507) (50,883,888)
Special reserve - - - -
Other reserve 30,494,232 32,249,403 30,494,232 32,249,403
Employee Training Reserve - 1,755,171 - 1,755,171
Capital Adjustment Reserve 30,494,232 30,494,232 30,494,232 30,494,232
Debenture Redemption Reserve - - - -
Deferred Tax Reserve - - - -
Other - - - -
Total 2,095,010,622 1,794,861,101 2,095,010,622 1,794,861,101
Statutory General Reserve

General reserve maintained as per the regulatory requirements. The regulatory requirement to set aside 20% of net profit until
the reserve is twice the paid up capital and thereafter minimum 10% of the net profit

Exchange Equalization Reserve
Exchange equalization is maintained as per requirement of NRB Directive, which is set at 25% of foreign exchange realuation gain
on the translation to the reporting currency. This reserve is accumulation of such gains over the years
Corporate Social Responsibility Reserve

Corporate Social Responsibility Reserve is created as per NRB directive, which is set aside of 1% of net profit of previous year. The
balance in the reserve is the amount which is not exhausted in the current fiscal year to be utilized for Corporate Social Responsibility
Objective in the coming years.
Regulatory Reserve
Regulatory Reserve is created due to the changes in the NFRS conversion and adoption with effect in the retained earnings of the
Bank
Investment Adjustment Reserve

Investment Adjustment Reserve is created as per the directive of NRB created against the quoted as well as unqoted investments
Fair Value Reserve

The fair value reserve is created against the valuation of the investment of the Bank as per the fair valuation of the investment
made, quoted as available for sale investments.

Actuarial gain/(losses)
The reserve created against the actuarial valutation of gratuity benefit to the employee of the Bank
Other Reserves
Other Reserves include reserve created for the Employee Training Reserve created as per the NRB directive, the allocation is
fully utilized in the current year and zero balance is allocated to training reserve. Capital Adjustment Reserve is created against
the income recognition by capitalization in loans, for which capitalization is allowed by NRB, but distribution is not done till the
settlement of the capitalized interest part, this is also included in the other reserves.
212
Contingent liabilities and commitments 4.28
Group Bank
Particulars
Contingent liabilities 9,584,407,734 15,644,795,580 9,584,407,734 15,644,795,580
Undrawn and undisbursed facilities 19,262,115,327 12,947,087,657 19,262,115,327 12,947,087,657
Capital commitment - - - -
Lease Commitment - - - -
Litigation 72,447,968 67,334,153 72,447,968 67,334,153
Total 28,918,971,029 28,659,217,390 28,918,971,029 28,659,217,390
4.28.1: Contingent liabilities

Group Bank
Particulars
Acceptance and documentary credit 1,519,156,999 4,470,584,001 1,519,156,999 4,470,584,001
Bills for collection - - - -
Forward exchange contracts 2,743,916,734 5,721,331,009 2,743,916,734 5,721,331,009
Guarantees 5,321,334,000 5,452,880,571 5,321,334,000 5,452,880,571
Underwriting commitment - - - -
Other commitments - - - -
Total 9,584,407,734 15,644,795,580 9,584,407,734 15,644,795,580
4.28.2: Undrawn and undisbursed facilities

Group Bank
Particulars
Undisbursed amount of loans 6,032,241,000 6,771,625,329 6,032,241,000 6,771,625,329
Undrawn limits of overdrafts 3,086,405,422 4,219,957,486 3,086,405,422 4,219,957,486
Undrawn limits of credit cards 52,423,283 39,343,663 52,423,283 39,343,663
Undrawn limits of letter of credit 10,091,045,623 1,888,557,569 10,091,045,623 1,888,557,569
Undrawn limits of guarantee - 27,603,611 - 27,603,611
Total 19,262,115,327 12,947,087,657 19,262,115,327 12,947,087,657
4.28.3: Capital commitments

Capital expenditure approved by relevant authority of the Bank but provision has not been made in financial statements
Group Bank
Particulars
Capital commitments in relation to Property and - - - -
Equipment
Approved and contracted for - - - -
Approved but not contracted for - - - -
Sub total - - - -
Capital commitments in relation to Intangible assets
Approved and contracted for - - - -
Approved but not contracted for - - - -
Sub total - - - -
Total - - - -
213
Kumari Bank Limited
4.28.4: Lease commitments
Group Bank
Particulars
Operating lease commitments
Future minimum lease payments under non cancellable
operating lease, where the Bank is lessee
Not later than 1 year - - -
Later than 1 year but not later than 5 years - - -
Later than 5 years - - -
Sub total - - - -
Finance lease commitments
Future minimum lease payments under non cancellable
operating lease, where the Bank is lessee
Not later than 1 year - - - -
Later than 1 year but not later than 5 years - - - -
Later than 5 years - - - -
Sub total - - - -
Grand total - - - -
4.28.5: Litigation
Tax settlement up to the FY 2066/67 has been completed. Against tax reassessment order of FY 2067/68, 2068/69 and 2069/70, the
Bank has filed a case at Revenue Tribunal. For the FY 2070/71 and 2071/72, the Bank has filed a case for Administrative Review. The
Bank had acquired Kasthamandap Development Bank and Paschimanchal Finance Company Limited, whose tax assessment of FY
2071/72 a case is filed at Administrative Review.
Interest income 4.29
Group Bank
Particulars
Current Year Previous Year Current Year Previous Year
Cash and cash equivalent 40,449,066 18,326,032 35,628,190 18,326,032
Due from Nepal Rastra Bank - - - -
Placement with Bank and financial institutions 7,934,152 22,661,486 7,934,152 22,661,486
Loan and advances to Bank and financial 290,141,368 175,900,871 290,141,368 175,900,871
institutions
Loans and advances to customers 8,334,882,386 6,223,470,419 8,334,882,386 6,223,470,419
Investment securities 394,384,306 307,469,284 394,384,306 307,469,284
Loan and advances to staff 35,603,437 56,183,289 35,603,437 56,183,289
Other - - - -
Total interest income 9,103,394,715 6,804,011,381 9,098,573,839 6,804,011,381
Interest expense 4.30
Group Bank
Particulars
Due to Bank and financial institutions 54,711,156 20,181,839 58,303,413 20,181,839
Due to Nepal Rastra Bank 76,355,040 - 76,355,040 -
Deposits from customers 6,061,783,361 4,751,151,400 6,061,783,361 4,751,151,400
Borrowing - - - -
Debt securities issued - - - -
Subordinated liabilities - - - -
Other 32,178,098 26,654,124 32,178,098 26,654,124
Total interest expense 6,225,027,655 4,797,987,363 6,228,619,912 4,797,987,363
214
Fees and Commission Income 4.31
Group Bank
Particulars
Loan administration fees 188,412,541 180,868,609 188,412,541 180,868,609
Service fees 8,167,027 1,170,568 8,167,027 1,170,568
Consortium fees - - - -
Commitment fees 1,593,230 879,072 1,593,230 879,072
DD/TT/Swift fees 10,490,421 10,146,283 10,490,421 10,146,283
Credit card/ATM issuance and renewal 73,932,342 60,458,366 73,932,342 60,458,366
fees
Prepayment and swap fees 10,270,274 16,598,982 10,270,274 16,598,982
Investment Banking fees - - - -
Asset management fees - - - -
Brokerage fees - - - -
Remittance fees 17,052,550 21,589,615 17,052,550 21,589,615
Commission on letter of credit 64,889,497 45,713,833 64,889,497 45,713,833
Commission on guarantee contracts 81,187,146 52,740,252 81,187,146 52,740,252
issued
Commission on share underwriting/issue - - - -
Locker rental 3,845,797 2,704,485 3,845,797 2,704,485
Other fees and commission income 6,145,693 3,945,374 6,145,693 3,945,374
Total fees and Commission Income 465,986,518 396,815,439 465,986,518 396,815,439
Fees and commission expense 4.32
Group Bank
Particulars
ATM management fees 414,434 7,552,518 414,434 7,552,518
VISA/Master card fees 25,598,469 13,717,376 25,598,469 13,717,376
Guarantee commission - - - -
Brokerage - - - -
DD/TT/Swift fees 5,598,033 5,863,699 5,598,033 5,863,699
Remittance fees and commission - - - -
Other fees and commission 255,127 188,868 255,127 188,868
expense
Total fees and Commission
Expense 31,866,063 27,322,461 31,866,063 27,322,461
Net trading income 4.33
Group Bank
Particulars
Changes in fair value of trading - - - -
assets
Gain/loss on disposal of trading - - - -
assets
Interest income on trading assets - - - -
Dividend income on trading assets - - - -
Gain/loss foreign exchange 258,904,627 148,951,414 258,904,627 148,951,414
transation
Other - - - -
Net trading income 258,904,627 148,951,414 258,904,627 148,951,414
215
Kumari Bank Limited
Other operating income 4.34
Group Bank
Particulars
Foreign exchange revaluation gain 21,994,232 17,507,376 21,994,232 17,507,376
Gain/loss on sale of investment 2,844,781 15,213,178 2,844,781 15,213,178
securities
Fair value gain/loss on investment - - - -
properties
Dividend on equity instruments 10,035,659 5,224,044 10,035,659 5,224,044
Gain/loss on sale of property and (2,667,035) 5,843,136 (2,667,035) 5,843,136
equipment
Gain/loss on sale of investment property - 10,024,429 - 10,024,429
Operating lease income - - - -
Gain/loss on sale of gold and silver 10,979,072 11,136,810 10,979,072 11,136,810
Other 41,743,402 27,171,845 41,732,689 27,171,845
Total 84,930,111 92,120,818 84,919,398 92,120,818
Impairment charge/(reversal) for loan and other losses 4.35
Group Bank
Particulars Previous Previous
Current Year Current Year
Year Year
Impairment charge/(reversal) on loan and advances to B/FIs 12,703,714 6,448,445 12,703,714 6,448,445
Impairment charge/(reversal) on loan and advances to customer 216,327,056 25,497,738 216,327,056 25,497,738
Impairment charge/(reversal) on financial Investment - - - -
Impairment charge/(reversal) on placement with Bank s and financial - - - -
institutions
Impairment charge/(reversal) on property and equipment - - - -
Impairment charge/(reversal) on goodwill and intangible assets - - - -
Impairment charge/(reversal) on investment properties - - - -
Total 229,030,770 31,946,183 229,030,770 31,946,183
Personnel Expense 4.36
Group Bank
Particulars
Salary 341,745,680 279,271,268 341,720,257 279,271,268
Allowances 212,840,768 158,670,013 212,840,768 158,670,013
Gratuity expense 36,641,169 33,286,531 36,641,169 33,286,531
Provident fund 32,559,789 24,939,086 32,559,789 24,939,086
Uniform 5,879,528 - 5,879,528 -
Training & development expense 22,118,040 9,080,893 22,118,040 9,080,893
Leave encashment 71,047,182 23,332,637 71,047,182 23,332,637
Medical 19,191,682 17,980,850 19,191,682 17,980,850
Insurance 22,810,435 18,756,192 22,810,435 18,756,192
Employees incentive - - - -
Cash-settled share-based payments - - - -
Pension expense - - - -
Finance expense under NFRS 1,774,393 27,668,851 1,774,393 27,668,851
Other expenses related to staff 14,939,680 28,656,182 14,939,680 28,656,182
Subtotal 781,548,345 621,642,503 781,522,923 621,642,503
Employees bonus 197,337,445 153,544,096 197,337,445 153,544,096
Grand total 978,885,790 775,186,599 978,860,368 775,186,599
216
Other operating expense 4.37
Group Bank
Particulars
Directors' fee 3,662,516 3,440,000 3,662,516 3,440,000
Directors' expense 793,055 1,415,144 793,055 1,415,144
Auditors' remuneration 1,497,250 1,469,000 1,469,000 1,469,000
Other audit related expense 762,750 791,000 762,750 762,750
Professional and legal expense 4,434,384 3,281,265 4,434,384 3,281,265
Office administration expense 96,162,737 73,736,786 96,162,737 73,736,786
Operating lease expense 123,769,676 93,200,148 123,769,676 93,200,148
Operating expense of investment - - - -
properties
Corporate social responsibility expense 13,132,781 1,210,121 13,132,781 1,210,121
Onerous lease provisions - - - -
Other 311,813,016 196,121,875 310,469,321 195,836,875
Total 556,028,165 374,665,338 554,656,220 374,352,088
Depreciation & Amortisation 4.38
Group Bank
Particulars
Depreciation on property and 96,250,224 75,355,925 96,250,224 75,355,925
equipment
Depreciation on investment property - - - -
Amortisation of intangible assets 23,876,014 3,858,344 23,876,014 3,858,344
Total 120,126,238 79,214,269 120,126,238 79,214,269
Non operating income 4.39
Group Bank
Particulars
Recovery of loan written off - - - -
Other income 11,842,001 67,228,853 11,842,001 32,572,057
Total 11,842,001 67,228,853 11,842,001 32,572,057
Non operating expense 4.40
Group Bank
Particulars
Loan written off - - - -
Redundancy provision - - - -
Expense of restructuring - - - -
Other expense 1,029,811 - 1,029,811 -
Total 1,029,811 - 1,029,811 -
217
Kumari Bank Limited
Income tax expense 4.41
Group Bank
Particulars
Current tax expense 623,935,895 411,550,374 621,921,927 411,550,374
Current year 537,583,465 411,550,374 535,569,497 411,550,374
Adjustments for prior years 86,352,430 - 86,352,430 -
Deferred tax expense (76,263,185) (69,576,633) (76,263,185) (69,576,633)
Origination and reversal of temporary (76,263,185) (69,576,633) (76,263,185) (69,576,633)
differences
Changes in tax rate - - - -
Recognition of previously - - - -
unrecognised tax losses
Total income tax expense 547,672,710 341,973,741 545,658,742 341,973,741
4.41.1: Reconciliation of tax expense and accounting profit

Group Bank
Particulars
Profit before tax 1,783,063,479 1,388,462,144 1,776,037,002 1,388,462,144
Tax amount at tax rate of 30% 534,919,044 414,569,058 532,811,101 414,569,058
Add: Tax effect of expenses that are not deductible for tax 695,059 39,700 695,059 39,700
purpose
Less: Tax effect on exempt income 3,010,698 5,224,044 3,010,698 5,224,044
Add/less: Tax effect on other items 4,980,060 2,165,660 5,074,035 2,165,660
Total income tax expense 537,583,465 411,550,374 535,569,497 411,550,374
Effective tax rate 30.15% 29.64% 30.16% 29.64%
218
5. Disclosures and Additional Information
5.1 Risk Management
5.1.1.a Risk management framework

All of the Bank’s activities involve, to varying degrees, the analysis, evaluation, acceptance and management
of risks or combinations of risks. The Bank has placed high importance to identification, assessment and well
thought out handling of all the prominent risk that it faces or likely to face in execution of its activities. The Bank
is quite aware about the risk profile of the business and is committed to establish a strong Risk Management
System in the Bank . An established risk management framework ensures oversight of and accountability for
the effective management of risk at Country and regional business levels. For managing risks effectively, the
Bank has an independent risk management department to assess its position regarding each separate risk
area including Credit Risk, Market Risk, Operational Risk, Compliance & Legal Risk and Reputation Risk. The
management through Risk Management Committee (RMC) comprising 4 members, 2 of which represent BOD
and one from Operating Unit and another one from Credit Risk. Risk management is an all round practice in
the Bank . Every business unit and department is well informed about its activities and risks corresponding to
those activities.
5.1.1.b. Risk appetite and tolerance limits for key types of risks
Risk appetite in the context of Kumari Bank Limited is defined as the level and nature of risk that the Bank is willing to take
for pursuing its mission on behalf of its shareholders, subject to constraints imposed by other stakeholders, such as debt
holders, regulators, and customers. It provides a framework for strategic decision making for the Bank .
The Board of Directors of the Bank is responsible for setting the Bank’s tolerance for the risks. The Bank sets out the
aggregated level and risk types it accepts in order to achieve its business objectives in the Risk Management Policy of the
Bank . Risk strategy of the Bank shall reflect the Bank’s business preferences and conduct, and shall be aligned with its risk
tolerance capacity.
The Bank’s actual performance is reported against approved risk profile and risk appetite, enabling senior management
to monitor the risk profile and guide business activity to balance risk and return. The Bank shall state the business it
wants to undertake sector wise, location wise and product wise. Accordingly the Bank shall formulate a risk tolerance
level or risk appetite.
Following steps shall be undertaken to formulate a risk appetite statement for the Bank :
Steps Description
1. Identify & Classify Risks • Identification of all material risks.
• Classify the risks as acceptable or unacceptable risks.
2. Identify risk return • Identify risk and return measures based on benchmarking with the peers.
matrices • For example, proportion of NPL to total loans serves as a good measure to
quantify risk appetite for credit risk
3. Identify peer group • The peer group of the Bank shall comprise of Bank’s functioning in same or
similar geographical regions, comparable size and business strategies
4. Analyze, measure and • Measures chosen are scrutinized among the peers for identifying drivers and
formulate risk appetite set tolerance limits for risk measures and target levels for return measures.
statements • These risk appetite statements shall drive the business growth strategy of
the Bank
The risk appetite is proposed by the management and reviewed by the board level risk management committee.
5.1.1.c. Stress testing

Stress Testing is the process where a number of statistically defined possibilities are determined based on the most
damaging combination of events, and the loss they would produce. It is a valuable risk management tool which studies
the impact of unlikely but not impossible stress events. A stress event is an exceptional but credible event to which
a Bank’s portfolio is exposed. As a part of its risk measurement mechanism, Kumari Bank Ltd. puts an emphasis on
evaluating where the Bank stands under stressful market conditions. It helps to provide information on the kinds of
conditions under which strategies or position, the Bank would be most vulnerable and thus, strategies are devised such
that such circumstance doesn’t arise and/or to ensure least impact upon the Bank from such scenarios even if they do
occur.
In conducting stress tests, the Bank gives special consideration to instruments or markets where concentrations
exist as such positions may be more difficult to liquidate or offset in stressful situations. The Bank considers both
historical market events as well as forward-looking scenarios and also considers worst case scenarios in addition to
more probable events. Ad hoc scenarios are also prepared reflecting specific market conditions and for particular
concentrations of risk that arise within the businesses. For example, credit shock scenario is measured in terms
219
Kumari Bank Limited
of deterioration of assets quality in terms of the characteristics of its market portfolio. The interest
adequacy of capital of the Bank . rate risks, exchange rate risks and equity price
risks are evaluated and the results are reviewed
The stress testing methodology assumes that scope periodically.
for management action would be limited during
a stress event, reflecting the stress scenarios in III. Liquidity Shocks:
Credit Shocks, Market Shocks, Liquidity Shock and
Stress test scenarios are continually
other factors of stress scenarios in the Banking
reviewed and updated for the liquidity risk scenarios
sector. The Board of the Bank has responsibility for
whereby, various factors as impact of continual
reviewing stress exposures and, where management
withdrawals on case or collective basis on CAR and
oversight, monitoring, evaluation and reporting at
liquidity positions are stressed. Also, concentration
regular intervals. Regular stress test scenarios are
risks are also evaluated and the various scenarios
applied and the report on regular basis reviewed by
are developed to assess the risks possessed due to
the Board of the Bank along with discussions at Risk
high level of deposit concentrations.
Management Committee (RMC).
The stress testing mechanism at KBL aims to

Results of stress testing
address: The result of stress testing is communicated
a) Concentration risk; to the Board of Directors and senior management on
b) Illiquidity of markets in stressed market regular basis. The same is also discussed in detail in
conditions; Risk Management Committee. The report of stress
c) Credit Shocks- CAR perspectives and NPL testing is also shared with Nepal Rastra Bank as
perspectives; per the requirement of Unified Directives issued by
d) Market Interest rate risk scenarios; Nepal Rastra Bank .
e) Exchange rate and equity investment
fluctuations risks; and Scenario analysis and Sensitivity
f) Other Risks Analysis
Scenario analysis and sensitivity analysis
KBL’s stress tests are both of a quantitative
is conducted through the model developed by
and qualitative nature, incorporating credit risk,
Bank Supervision Department, Nepal Rastra Bank .
market risk and liquidity risk aspects. Quantitative
However, on need basis, the Bank also adopts other
criteria identify plausible stress scenarios to
techniques and develops other scenarios on case to
which Bank could be exposed. Qualitative criteria
case basis.
emphasizes that two major goals of stress testing
are to evaluate the capacity of the Bank’s capital to
5.1.2.a Credit Risk
absorb potential large losses and to identify steps
the Bank can take to reduce its risk and conserve Credit risks are the risk associated with the
capital. This assessment is integral to setting and probability of default of loan provided by the Bank
evaluating the Bank’s strategy and the results of . Hence, the credit risks comprises of the highest
stress testing are routinely communicated to RMC risk exposure of the Bank . Management of the
and the board of the Bank . credit risks largely signifies the risk management
of the Bank as whole.
The Bank carries out stress testing in three
broad areas based on credit shocks, market shocks Credit risk:
and liquidity shocks which are discussed below: • Is measured as the amount which could be lost
if a customer or counterparty fails to make
I. Credit Shocks: repayments.
The Bank subjects its portfolios to a series • Is monitored within limits, approved by individuals
of simulated stress scenarios. The Bank stresses within a framework of delegated authorities.
its portfolios with the shocks of the magnitude These limits represent the peak exposure or loss
experienced elsewhere, even when the Bank has to which the Bank could be subjected should
never been exposed to those in the past. the customer or counterparty fail to perform its
contractual obligations;
The Bank has formulated stress testing • Is managed through a robust risk control
framework where various historical scenarios have framework which outlines clear and consistent
been analyzes. The Bank carries out stress testing policies, principles and guidance for credit risk
in line with the stress testing framework on a regular management.
basis as prescribed by Stress Testing Framework or
NRB guidelines issued from time to time, under Case 5.1.2.b Credit Risk Management
basis or collective basis of CAR and NPL perspective The Bank has its own Credit Risk Policy and
along with Concentration stress risks. Strategy to handle the Credit Risk Management
philosophy that involves a continual measurement
II. Market Shocks: of probability of default/loss; identification of
possible risks and mitigations. In order to manage
In addition to the above credit shocks,
and eliminate the credit risk, the Bank has a
the Bank has also developed stress tests which
practice of maintaining the best quality assets
it identifies as most adverse based on the
220
in its book. The Bank’s Credit Policy elaborates Incurred but not yet identified
detailed procedures for proper risk management. impairment
The Bank has delegated credit approval limits to Individually assessed financial assets
various officials to approve and sanction various for which no evidence of loss has been
amount of credit request based on their individual specifically identified on an individual basis
expertise and risk judgment capability. are grouped together according to their
As a check and balance mechanism, each credit credit risk characteristics for the purpose
case requires dual approval. Regular monitoring of calculating an estimated collective loss.
of the credit portfolio ensures that the Bank does This reflects impairment losses that the Bank
not run the risk of concentration of portfolio in a has incurred as a result of events occurring
particular business sector or a single borrower. before the reporting date, which the Bank is
Similarly the Bank also exercises controlled not able to identify on an individual loan basis
investment policy with adequately equipped and that can be reliably estimated.
resource looking after the investment decisions.
To cap these all, the Bank has strong Credit These losses will only be individually identified
processing channels in place comprising of in the future. As soon as information
various Directors from the Board of the Bank becomes available which identifies losses on
which reviews all credit proposals beyond a individual financial assets within the group,
specified amount. those financial assets are removed from the
group and assessed on an individual basis for
5.1.2.c. Impairment assessment and credit risk impairment.
mitigation
The Bank creates impairment allowances for The collective impairment allowance is
impaired loans promptly and appropriately. determined after taking into account:
• Historical Loss Experience in portfolios of
Impairment assessment methodology similar credit risk; and
• Management’s experienced judgment as
a. Impairment of Financial Assets carried to whether current economic and credit
at Amortized Cost conditions are such that the actual level of
inherent losses at the reporting date is like
The Bank first assesses individually whether to be greater or less than that suggested by
objective evidence of impairment exists historical experience.
for financial assets that are individually
significant. When an account is classified Homogeneous groups of Financials
as default or when the Bank no longer Assets
expect to recover the principle or interest
due on a loan in full or in accordance with Statistical methods are used to determine
the original terms and conditions, it is impairment losses on a collective basis for
assessed for impairment. If exposures are homogenous groups of financial assets.
secured, the current net realizable value Losses in these groups of financial assets
of the collateral will be taken into account are recorded on an individual basis when
when assessing the need for an impairment individual financial assets are written off, at
allowance. When the net present value of which point they are removed from the group.
the collateral is sufficiently adequate to
cover the outstanding facilities, impairment Bank uses the following method to calculate
is not calculated for such cases. historical loss experience on collective basis:
In the event Bank determines that no
objective evidence of impairment exists After grouping of loans on the basis of
for an individually assessed financial homogeneous risks, the Bank uses net flow
asset, it includes the asset in a group of rate method. Under this methodology, the
financial assets with similar credit risk movement in the outstanding balance of
characteristics such as collateral type, past customers into default categories over the
due status and other relevant factors and periods are used to estimate the amount
collectively assesses them for impairment. of financial assets that will eventually be
However, assets that are individually irrecoverable, as a result of the events
assessed for impairment and for which occurring before the reporting date which the
an impairment loss is or continues to be Bank is not able to identify on an individual
recognized are not included in a collective loan basis.
assessment of impairment.
Under this methodology, loans are grouped
Impairment is assessed on a collective basis into ranges according to the number of days
in two circumstances: in arrears and statistical analysis is used to
• To cover losses which have been incurred but estimate the likelihood that loans in each
have not yet been identified on loans subject range will progress through the various
to individual assessment; and stages of delinquency and ultimately prove
• For homogeneous groups of loans those are irrecoverable.
not considered individually significant.
Current economic conditions and portfolio risk
221
Kumari Bank Limited
factors are also evaluated when calculating the iv) All loans and advances were then grouped into
appropriate level of allowance required covering homogenous types such as home loans, auto
inherent loss. These additional macro and loans, term loans, etc to calculate collective
portfolio risk factors may include: impairment.
• Recent loan portfolio growth and product mix v) Collective impairment was calculated
• Unemployment rates following net flow rate method. Under
• Gross Domestic Production (GDP) Growth this methodology, the movements in the
• Inflation outstanding balance of customers into default
• Interest rates categories over the periods are used to
• Changes in government laws and regulations estimate the amount of financial assets that
• Property prices will eventually be irrecoverable, as a result of
• Payment status the events occurring before the reporting date
which the Bank is not able to identify on an
But, the amount of provision to be created against individual loan basis.
Loans and Advances shall be higher of the vi) Collective impairment as per the method
following two amounts: mentioned in Pt. (v) in each FY 2075-76 is
i) Impairment calculated as per Impairment shown below:
Assessment Methodology as described in Pt.
5.1.2. c above or, Particulars 2075/76
ii) Loan Loss Provision calculated as per Total Collective Impairment as
per paragraph 63 of NAS 39 46,07,07,967
the provisions of Directive No. 2, Unified
Directives, 2075.
Write off of loans and receivables
Impairment calculation by following the methodology Loans (and the related impairment allowance) are
described in Pt. 5.1.2.c above normally written off, either partially or in full, when
i) Firstly, top borrowers constituting around there is no realistic prospect of recovery. Where
25%-30% of total funded exposure of the loans are secured, this is generally after receipt
Bank is subjected to Individual Impairment of any proceeds from the realization of security.
Testing in FY 2075-76 In circumstances where the realizable value of
ii) Loans and advances as filtered out following any collateral has been determined and there is no
pt-(i) were tested for individual impairment reasonable expectation of further recovery, write
including following criteria but not limited to: off may be earlier.
• Known Cash Flow difficulties experienced
by the borrowers: Collateral management
• Past due contractual payments of either
principal or interest; The Bank seeks to use collateral, where possible,
• Breach of loan covenants or conditions; to mitigate its risks on financial assets. The
• The probability that the borrower will collateral comes in various forms such as cash,
enter Bank ruptcy or other financial securities, letters of credit/guarantees, real
reorganization; and estate, receivables, inventories, other non-
• A significant downgrading in credit rating financial assets and credit enhancements such as
by an external credit rating agency. netting agreements. The fair value of collateral is
generally assessed, at a minimum, at inception and
• Bank’s aggregate exposure to the
based on the guidelines issued by the Nepal Rastra
customer;
Bank . Non-financial collateral, such as real estate,
• The viability of the customer’s business
is valued based on data provided by third parties
model and their capacity to trade
such as independent valuator and audited financial
successfully out of financial difficulties
statements.
and generate sufficient cash flows to
service debt obligations;
• The amount and timing of expected
Credit Risk Mitigants availed under CRM
receipts and recoveries; Types of eligible credit risk mitigants used and the
• The extent of other creditors ‘commitments benefits availed under CRM as at 16 July 2019 are as
ranking ahead of, or pari-pasu with the follows:
Bank and the likelihood of other creditors
continuing to support the company;
• The realizable value of security and
Particulars Eligible CRM (Rs.
likelihood of successful repossession; 000)
iii) As per the impairment testing conducted as Deposit with Bank & Cash 555,251
per Pt. (ii), only few loans and advances were margin
identified as individually impaired in each FY Deposit with Other Bank / FI -
2075-76. Total 555,251
Amount (Rs.)
Particulars 2075/76 b. Impairment of Financial Assets – Available
Total Individual Impairment as for Sale
3,45,75,949
per NAS 39
For available for sale financial investments, Bank
assesses at each reporting date whether there is
objective evidence that an investment is impaired.
222
In the case of debt instruments, Bank assesses necessary liquidity risk management framework
individually whether there is objective evidence and Bank is capable of confronting uneven liquidity
of impairment based on the same criteria as scenarios. The Bank has formulated liquidity risk
financial assets carried at amortized cost. management policy, risk management policies
However, the amount recorded for impairment is which are recommended by senior management
the cumulative loss measured as the difference and approved by the Board of Directors. The
between the amortized cost and the current fair Bank utilizes flow measures to determine its cash
value, less any impairment loss on that investment position. A maturity ladder analysis estimates a
previously recognized in the Income Statement. Bank’s inflows and outflows and thus net deficit
Future interest income is based on the reduced or surplus (GAP) over a time horizon. A maturity
carrying amount and is accrued using the rate of ladder is a useful device to compare cash inflows
interest used to discount the future cash flows and outflows both on a day-to-day basis and over
for the purpose of measuring the impairment a series of specified time periods as presented in
loss. If, in a subsequent period, the fair value of a the NRB Ni.Fa.No.5.1 under NRB Directives No. 5.
debt instrument increases and the increase can
be objectively related to a credit event occurring Liquidity of the Bank is assessed, measured and
after the impairment loss was recognized, the maintained by Financial Market Department by
impairment loss is reversed through the Income ensuring minimal compliance with Nepal Rastra
Statement. Bank prescribed ratios such as CRR, SLR, and
Credit to Deposit Ratio and Liquidity Coverage
In the case of equity investments classified as Ratio. The department also maintains investments
available for sale, objective evidence would also over and above the prescribed limit to cope up with
include a ‘significant’ or ‘prolonged’ decline in the the unprecedented liquidity risks that the Bank is
fair value of the investment below its cost. Where ever exposed to.
there is evidence of impairment, the cumulative
loss measured as the difference between the 5.1.3.c. Market Risk
acquisition cost and the current fair value, less
any impairment loss on that investment previously Market risks are the risk of losses in on-balance
recognized in profit or loss is removed from equity sheet and off- balance sheet positions arising
and recognized in the Statement of profit or loss. from adverse movements in market prices. The
However, any subsequent increase in the fair value major constituents of market risks are:
of an impaired available for sale equity security is a) The risks pertaining to interest rate related
recognized in other comprehensive income. instruments;
b) Foreign exchange risk (including gold
Bank writes-off certain available for sale financial positions) throughout the Bank ; and
investments when they are determined to be c) The risks pertaining to investment in equities
uncollectible. and commodities.
5.1.3.a. Liquidity Risk 5.1.3.d. Management of Market Risk
Liquidity is crucial to the ongoing viability of any The Bank has Asset Liability Management (ALM)
financial institution. Liquidity risk is the potential Policy, Market Risk Management Policy, Investment
for loss to a Bank arising from either its inability to Policy along with Treasury manuals in place, which
meet its obligations or to fund increases in assets serves as a guide to address the market risk of the
as they fall due without incurring unacceptable Bank . As for the monitoring of market and liquidity
cost or losses. Liquidity is the ability of an risk, the Bank has an active Assets and Liability
institution to transform its assets into cash or its Management Committee (ALCO) in place which
equivalent in a timely manner at a reasonable price meets regularly and takes stock of the Bank’s
to meet its commitments as they fall due. Liquidity assets and liability position and profile of assets
risk is considered a major risk for Bank s. It arises & liabilities, monitors risks arising from changes
when the cushion provided by the liquid assets in exchange rates in foreign currencies. All foreign
are not sufficient enough to meet its obligation. In exchange positions are managed by financial
such a situation Bank s often meet their liquidity market consisting of front office dealers with
requirements from market. Funding through specific dealing limits and an independent back
market depends upon liquidity in the market and office. The back office executes the deals made by
borrowing Bank’s liquidity. the dealers and also monitors the liquidity position
of the Bank . For the purpose of proper check and
control, the front dealing room of financial market
Liquidity risk is:
and the back office has different reporting line.
Measured using maturity ladder analysis
Monitored against the Bank’s liquidity risk Apart from Financial Market (or front office)
management framework and overseen by Asset and back office, the Bank also has Treasury Mid
and Liability Management Committee. Office; which works as a third eye which assesses
Managed on a stand-alone basis with no reliance on the risks and timely evaluates and report to the
any related party or the Nepal Rastra Bank , unless senior management, whose reporting chain is also
this represents routine established business as separate to the front and back office.
usual market practice.
5.1.3.e. Market Risk Assessment Methodology
5.1.3.b. Management of liquidity risk
Out of the various components of market risk,
The board has ensured that the Bank has
223
Kumari Bank Limited
foreign exchange risk is the predominant risk in value measurement in both cases is the same – to
Nepal. Thus, a net open position approach has estimate the price at which an orderly transaction
been adopted to measure the operational risk to sell the asset or to transfer the liability would
exposure of the Bank in aggregation and the take place between market participants at
capital requirement in commensurate of the same the measurement date under current market
as set out by Capital Adequacy Framework issued conditions (i.e. an exit price at the measurement
by Nepal Rastra Bank . date from the perspective of a market participant
that holds the asset or owes the liability).
5.1.4.a. Operational Risk
Fair values are determined according to the
Operational risks are risk of loss resulting from following hierarchy:
inadequate internal processes, people and
systems, or from external events. Operational
Level-1 inputs
risks are highly important as it entails cent percent
loss to the Bank in the event of its occurrence. Level 1 inputs are quoted prices (unadjusted) in
active markets for identical assets or liabilities that
5.1.4.b. Management of Operational Risk the entity can access at the measurement date.
Held for trading and available for sale investments
As a part of monitoring operational risks, the have been recorded using Level 1 inputs.
Bank has devised operational manuals for various
Banking functions, which are reviewed and
Level-2 inputs
modified time to time as per the changing business
context. Level 2 inputs are inputs other than quoted prices
included within Level 1 that are observable for the
The Bank has adopted dual control mechanism asset or liability, either directly or indirectly.
in its all operational activities where each and
every financial and non financial transaction is Level-3 inputs
subject to approval from an authority higher than
the transaction initiator. Regular review meetings Level 3 inputs are unobservable inputs for the
are conducted to assess the adequacy of risk asset or liability.
monitoring mechanism and required changes are
made as and when felt necessary. Independent 5.2. Capital Management
reconciliation unit is established to conduct daily
reconciliation of all Nostro / agency accounts,
I. Qualitative disclosures
Inter-Branch and Inter-Department account.
Capital management approach is driven by its desire
The Bank has independent internal audit, which to maintain a strong capital base to support the
reports to the Audit Committee of the Bank . The development of its business and to meet the regulatory
Audit Committee meets frequently and reviews capital requirements.
the business process and financial position of the
Bank . In order to have better focus on managing Capital planning and management is essential to ensure
operational risks across branches and to monitor adequate level of capital is available at all times. In order
them from Head Office level, the Bank has separate to be prepared for distressed economic environments,
Branch Operation Department and Operation capital management plan of the Bank incorporate
Risk Management & Compliance Department at various potential scenarios and is responsive to
Head Office. The Bank has strong MIS in place to changes in the economy, market, competitive or
monitor the regular operational activities. political landscape, or other external factors.
5.1.4.c. perational Risk Assessment Methodology Following elements are taken into consideration while
devising an effective capital management plan for the
Operational risks are assessed employing the Bank :
Basic Indicators Approach as set out by Capital • Minimum capital requirements as per NRB
Adequacy Framework issued by Nepal Rastra • Business growth prospects and risks
Bank . The Basic Indicators Approach assesses • Potential capital raising instruments such as equity,
operational risk in aggregation and is calculated preference stocks, bonds etc
by multiplying the operational risk capital charge • Various stress scenarios
by 10. Bank assesses the operational risk based • Others as considered necessary by the senior
on the past operational loss due to system failure, management
staff embezzlement and other external factors
which is considered at the time of calculation of
economic capital.
5.1.5.a. Fair value of financial assets and liabilities

Fair value is a market-based measurement, not
an entity specific measurement. For some assets
and liabilities, observable market transactions
or market information might be available. For
other assets and liabilities, observable market
transactions and market information might not
be available. However, the objective of a fair
224
Paid up Share Capital of the Bank
Over the years the Bank has raised share capital as follows:
Cumulative Paid
Fiscal Year Remarks
up Capital
2057/58 350,000,000
2058/59 350,000,000
2059/60 350,000,000
2060/61 500,000,000 Initial Public Offering of NPR. 150 million
2061/62 625,000,000 Right share issue of NPR. 125 million (25%)
2062/63 750,000,000 Bonus share issue of NPR. 125 million (20%)
2063/64 900,000,000 Bonus share issue of NPR. 150 million (20%)
2064/65 1,070,000,000 Right share issue of NPR. 180 million (20%). NPR. 170 million capitalized on balance sheet date and
balance on subsequent year.
2065/66 1,186,099,200 In the fiscal year 2064/65, the Bank had proposed 10 % bonus share and 15 % right share. 10 % bonus
share had been capitalized as on balance sheet date pending issuance of right share.
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 NPR. 1,080,000 issued on FY 2064/65 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 NPR. 178,200,000 (15%) 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% (NPR. 118,800,000) had been proposed in the FY 2067/68.
2068/69 1,603,800,000 -
2069/70 1,828,332,000 14% bonus share of NPR. 224.532 million issued in the FY 2069/70.
2070/71 2,431,681,560 33% bonus share of NPR. 603,349,560 issued in the FY 2070/71
2071/72 2,699,166,532 11% bonus share of Rs. 267,484,972 issued in the FY 2071/72
2072/73 3,265,991,503 21% bonus share of Rs. 566,824,971 issued in the FY 2072/73
2073/74 5,969,495,823 50% right share issued amounting to Rs. 1,349,583,266.00 before acquisition plus share capital of Rs.
1,353,921,054 added from acquisition.
2074/75 7,163,394,973 20% right share issued amounting to Rs. 1,193,559,650.00
2075/76 8,685,573,112 21.25% of bonus share for the FY 2073-74 and 2074-75.
II. Quantitative disclosures
1. Capital structure and capital adequacy

• Tier 1 capital and a breakdown of its components:
Rs. in ‘000
S.N. Particulars Amount
Tier 1 Capital (Core Capital) ( CET1+ AT1) 10,591,966
Common Equity Tier 1 (CET 1) 10,591,966
a Paid Up Equity Share Capital 8,685,573
b Equity Share Premium 54,803
c Proposed Bonus Equity shares
d Statutory General Reserves 1,531,065
e Retained Earnings 883,699
f Current year cumulative profit/(Loss)
g Capital Adjustment Reserve 30,494
h Capital Redemption Reserve
i Other Free Reserves
j Less: Deferred Tax Assets 77,790
k Less: Intangible Assets 97,394
l Less: Investment in equity of institutions with financial interests 200,000
m Less: Purchase of land and building in excess of limit and unutilized 218,486
n Less: Other Deductions
Additional Tier 1 (AT1) -
225
Kumari Bank Limited
• Tier 2 capital and a breakdown of its components:
Rs. in ‘000
S.N. Particulars Amount
a Cumulative and/or Redeemable Preference Shares
b Subordinated Term Debt
c Hybrid Capital Instruments
d General Loan Loss Provision 795,750
e Investment Adjustment Reserve
f Assets Revaluation Reserve
g Exchange Equalization Reserve 45,184
h Other Reserves
Total Tier 2 Capital 840,934
• Deductions from Capital:

The Bank has investments of Rs. 200 million in the equity shares of Kumari Capital Ltd. which has been deducted
from the core capital while computing capital adequacy.
• Total Qualifying Capital:

Rs. in ‘000
Particulars Amount
Common Equity Tier 1 (CET1) 10,591,966
Additional Tier 1 (AT1) -
Supplementary Capital (Tier 2) 840,934
Total Capital Fund 11,432,900
• Capital Adequacy Ratio:
Capital Adequacy Ratio Amount

Common Equity Tier 1 Ratio 10.89%
Core Capital Ratio - Tier 1 10.89%
Total Capital Adequacy Ratio (Tier 1 & Tier 2) 11.75%
• Internal approach of the Bank to assess capital adequacy

In order to be prepared for distressed economic environments, the Bank assesses the adequacy of its capital by
incorporating various potential scenarios and being responsive to changes in the economy, market, competitive or
political landscape, or other external factors.
Bank s are faced with the challenge of developing internal procedures and systems in order to ensure that they
possess adequate capital resources in commensuration with all material risks posed to it by its operating
activities. The Bank has devised Internal Capital Adequacy Assessment Process (ICAAP), which is a set of policies,
methodologies, techniques and procedures to assess the capital adequacy requirements in relation to Bank’s risk
profile and effectiveness of its risk management, control environment and strategic planning.
Following elements are taken into consideration while assessing capital adequacy of the Bank :
• Minimum capital requirements as per NRB
• Business growth prospects and risks
• Potential capital raising instruments such as equity, preference stocks, bonds etc
• Various stress scenarios
• Others as considered necessary by the senior management
226
2. Risk exposures
• Risk weighted exposures for Credit Risk, Market Risk and Operational Risk:
Rs. in ‘000
Particulars Amount
Risk Weighted Exposure for Credit Risk 90,439,190
Risk Weighted Exposure for Operational Risk 2,925,785
Risk Weighted Exposure for Market Risk 98,222
Adjustments under Pillar II:
Add: 4% of Gross income of last FY due to supervisor is not satisfied with sound practice of management of
operational risk (6.4 a 7) 1,035,200
Add: 3% of the total RWE due to supervisor is not satisfied with the overall risk management policies and
procedures of the Bank (6.4 a 9) 2,803,895
Total Risk Weighted Exposure (After Pillar II Adjustment) 97,302,294
• Risk Weighted Exposures under different categories of Credit Risk:

Rs. in ‘000
Risk Weighted
S.N. Categories
Exposure
1 Claims on Government & Central Bank -
2 Claims on Other Financial Entities -
3 Claims on domestic Bank s that meet capital adequacy requirements 681,168
4 Claims on domestic Bank s that do not meet capital adequacy requirements -
5 Claims on Foreign Bank s (ECA 0-1) 342,621
6 Claims on foreign Bank ( ECA 2) 590,512
7 Claims on foreign Bank ( ECA Rating 3-6) -
Claims on foreign Bank incorporated in SAARC region operating with a buffer of 1% above their
38,335
8 respective regulatory capital requirement
9 Claims on Domestic Corporate 54,022,375
10 Claim on Foreign Corporate (ECA 0-1) -
11 Claim on Foreign Corporate (ECA 7) -
12 Claims on Regulatory Retail Portfolio (not overdue) 9,014,363
13 Claims secured by residential properties 2,553,852
14 Claims secured by residential properties (overdue) 323,747
15 Claims Secured by Commercial Real Estate 783,397
16 Past due claims (except for claim secured by residential properties) 834,630
17 High Risk Claims 5,848,433
18 Investments in equity and other capital instruments of institutions listed in the stock exchange 172,723
19 Investment in Equity of Institution not listed in the Stock Exchange 367,254
20 Staff Loan secured by residential property 179,004
21 Cash in transit and other cash items in the process of collection -
22 Other Assets 2,229,986
23 Off Balance Sheet Items 12,456,783
Total 90,439,190
• Total Risk Weighted Exposure calculation table:

Rs. in ‘000
Particulars Amount
Total Risk Weighted Exposures 97,302,294
Tier 1 Capital (Core Capital) ( CET1+AT1) 10,591,966
Total Capital Fund 11,432,900
Total Core Capital to Total Risk Weighted Exposures % 10.89
Total Capital Fund to Total Risk Weighted Exposures % 11.75
227
Kumari Bank Limited
Details of Non-Performing Assets
• Amount of Non-Performing Assets (both Gross and Net):

Rs. in ‘000
Non-Performing Assets Amount Loan Loss Provision Net NPL
Restructured/Rescheduled 5,114 639 4,474

Sub-Standard 140,045 35,011 105,034
Doubtful 185,882 92,941 92,941
Loss 443,755 443,755 0
Total 774,798 572,347 202,450
III. Compliance with external requirement

The Bank is required to comply with the minimum Capital Adequacy Requirements of Nepal Rastra Bank . For the year
ended 16 July 2019, such Capital Adequacy Requirement was set at 11% of Total Risk Weighted Exposures of the Bank .
During the year ended 16 July 2019, the Bank has complied with such minimum Capital Adequacy Requirements.
5.3 Classification of financial assets and financial liabilities
Financial Assets
NAS 39 requires financial assets to be classified in one of the following categories:
• Financial assets at fair value through profit or loss
• Available-for-sale financial assets
• Loans and receivables
• Held to maturity investments
Financial assets at fair value through profit or loss have two sub-categories:
• Financial asset that is designated on initial recognition as one to be measured at fair value with fair value changes in profit
or loss.
• Held for trading
Financial Liabilities
NAS 39 recognizes two classes of financial liabilities:
• Financial liabilities at fair value through profit or loss
• Other financial liabilities measured at amortized cost using the effective interest rate method
The category of financial liability at fair value through profit or loss has two sub-categories:
• Financial liability that is designated by the entity as a liability at fair value through profit or loss upon initial recognition
• Held for trading
5.4 Operating Segment Information
1. General Information
a. Factors used to identify the Bank’s reportable segments

The Bank has identified the key segments of business on the basis of nature of Banking operations. It helps the
management to assess the performance of the business segments. The business segments identified are Banking
(including loans, deposits and trade operations), Cards, Remittance and Treasury.
228
b. Types of products and services from which each reportable segment derives its revenues
(a) Remittance Services

1 Remittance fee and commission
2 Other remit related fees and commission
(b) Card Business
1 Interchange Income (VISA/NIBL)
2 Credit Card
3 Debit Card
4 Prepaid Card
5 ATM Fees
6 Merchant Settlement Fees and commission
7 Other Fees and Commission
(c) Treasury
1 Interest Income from placements and investments
2 Purchase and Sale of shares/bonds and other financial instruments
3 Bullion Trading Income
4 Dividend Income on Investments
5 Forex Gain
6 Rebate from Nostro Bank s
7 Other Fees and Commission income
(d) Banking
1 Income from Loan Products
2 Income from Bills Purchase and Discounting
3 Income from issuance of Letter of Credit
4 Income from issuance of Bank Guarantee
5 Income from Document Collection
7 Income from Bancassurance
8 Profit on sale of assets
9 Profit on sale of Non Banking Assets
10 Income from other Banking Services
2. Information about profit or loss, assets and liabilities
In '000
Remittance Card
Particulars Treasury Business Banking Total
Services Business
(a) Revenue from external customers 17,053 77,228 742,705 9,082,211 9,919,197
(b) Intersegment revenues - - - - -
(c) Net Revenue 17,053 77,228 742,705 9,082,211 9,919,197
(d) Interest Revenue - 3,296 437,947 8,657,331 9,098,574
(e) Interest Expense - - 134,658 6,093,961 6,228,620
(f) Net interest revenue (b) - 3,296 303,288 2,563,370 2,869,954
(g) Depreciation and Amortization 1,252 4,798 1,878 112,199 120,126
(h) Segment profit/(loss) (7,557) 437 579,265 1,203,892 1,776,037
(i) Entity’s interest in the profit or loss of associates -
accounted for using equity method
(j) Other material non-cash items: -

(k) Impairment of assets - (2,529) - (226,502) (229,031)
(l) Segment assets 48 40,710 14,545,867 90,724,861 105,311,485
(m) Segment liabilities 2,817 11,593 2,400,248 91,177,742 93,592,400
229
Kumari Bank Limited
3. Measurement of operating segment profit or loss, assets and liabilities
a. Basis of Accounting
All transactions between the reportable segments are accounted as separate unit and allocation is based upon use of
resources and output derived from the reportable segments.
b. Nature of differences between the measurements of the reportable segments’ profits or losses and the
Bank’s profit or loss before income tax
There is no difference between the measurement of the reportable segments’ profit and the Bank’s profit before income
tax.
c. Nature of differences between the measurements of the reportable segments’ assets and the Bank’s asset
There is no difference between the measurement of the reportable segments’ assets and the Bank’s asset.
d. Nature of any changes from prior periods in the measurement methods used to determine reported
segment profit or loss and the effect, if any
No changes are made in the measurement methods used to determine reported segment profit or loss from prior
periods.
e. Nature and effect of any asymmetrical allocations to reportable segments

No asymmetrical allocations are made to reportable segments.
4. Reconciliations
(a) Revenue
2075-76 2074-75
Total revenues for reportable segments 9,919,196,573 7,449,942,025
Other revenues - -
Elimination of intersegment revenues - -
Entity’s revenues 9,919,196,573 7,449,942,025

(b) Profit or loss
2075-76 2074-75
Total profit or loss for reportable segments 1,776,037,002 1,357,367,777
Other profit or loss - -

Elimination of intersegment profits - -
Unallocated amounts: - -
Profit before income tax 1,776,037,002 1,357,367,777
(c) Assets
2075-76 2074-75
Total assets for reportable segments 105,311,485,153 82,723,550,667
Other assets - -
Unallocated amounts - -
Entity’s assets 105,311,485,153 82,723,550,667
(d) Liabilities
2075-76 2074-75
Total liabilities for reportable segments 93,592,399,626 82,723,550,667
Other liabilities - -
Unallocated liabilities - -
Entity’s liabilities 93,592,399,626 82,723,550,667
230
5. Information about products and services
S. No. Particulars 2075-76 2074-75
(a) Remittance Services 17,052,550 21,589,614
1 Remittance fee and commission 17,052,550 21,589,614
2 Other fees and commission - -
(b) Card Business 77,228,113 61,981,352
1 Interchange Income (VISA/CUP/NEPS) 13,098,802 10,928,977
2 Credit Card 5,893,099 2,859,105
3 Debit Card 11,912,993 6,810,288
4 Prepaid Card 9,000 112,750
5 ATM Fees 11,051,961 7,552,518
6 Merchant Settlement Fees and commission 10,215,319.00 759,825
7 Other Fees and Commission 25,046,939 32,957,886
(c) Treasury 742,705,019 549,930,134
1 Interest Income from placements and investments 437,946,648 348,456,801
2 Purchase and Sale of shares/bonds and other financial instruments 2,844,781 15,213,178
3 Bullion Trading Income 10,979,072 11,136,810
4 Dividend Income on Investments 10,035,659.00 5,224,043
5 Forex Gain 280,898,859 166,458,789
6 Rebate from Nostro Bank s - 3,440,512
7 Other Fees and Commission income -
(d) Banking 9,082,210,890 6,816,440,923
1 Income from Loan Products 8,865,774,493 6,455,554,579
2 Income from Bills Purchase and Discounting - 37,867
3 Income from issuance of Letter of Credit 64,889,497 45,713,833
4 Income from issuance of Bank Guarantee 81,187,146 52,740,251
5 Income from Document Collection 10,490,421 944,599
6 Income from Banc-assurance 10,675,458 4,792,953
8 Profit on sale of assets (2,667,035) 5,843,135
9 Profit on sale of Non Banking Assets - 10,024,429
10 Income from other Banking Services 51,860,910 240,789,273
Total Revenue 9,919,196,572 7,449,942,025
6. Information about geographical areas (Total Operating Income)
2075-76 2074-75
(a) Domestic 3,647,898,408 2,643,243,351
Province 1 989,786,637 898,266,418
Province 2 334,766,501 322,915,422
Province 3 1,309,879,317 665,581,091
Province 4 212,383,821 164,060,115
Province 5 536,563,681 364,071,978
Province 6 130,406,651 117,477,006
Province 7 134,111,800 110,871,321
(b) Foreign - -
Total 3,647,898,408 2,643,243,351
231
Kumari Bank Limited
7. Information about major customers

None of the external customer of the Bank individually contributes 10% or more to the Bank’s revenue as at Asadh 31,
2076 as well as Asadh 32, 2075.
5.5 Share options and share based payment

A share-based payment is a transaction in which the Bank receives goods or services either as consideration for its equity
instruments or by incurring liabilities for amounts based on the price of the entity’s shares or other equity instruments of the
entity.
The Bank has not entered into any share option or share based payment contract as of Asadh 31, 2076.
5.6 Contingent liabilities and commitment
Contingent Liabilities:
Where the Bank undertakes to make a payment on behalf of its customers for guarantees issued, such as for performance
bonds or as irrevocable letters of credit as part of the Bank’s transaction Banking business for which an obligation to make a
payment has not arisen at the reporting date, those are included in these financial statements as contingent liabilities.
Other contingent liabilities primarily include revocable letters of credit and bonds issued on behalf of customers to customs,
for bids or offers.
Commitments:
Where the Bank has confirmed its intention to provide funds to a customer or on behalf of a customer in the form of loans,
overdrafts, future guarantees, whether cancellable or not, or letters of credit and the Bank has not made payments at the
reporting date, those instruments are included in these financial statement as commitments.
Please refer Note No. 4.28 (including Note No. 4.28.1- 4.28.5) for detail of contingent liabilities and commitments as at Asadh
31, 2076 and Asadh 32, 2075.
5.7 Interest Income recognition with reference to Nepal Rastra Bank Guideline, 2019
Bank has adopted the guideline issued by Nepal Rastra Bank issued on July 2019 for the recognition of Interest Income- the
criteria for suspension of interest income and cessation of Accrued Interest. Accordingly, after considering the recovery of
NPR 4,078,391 within Shrawan end 2076, Bank has suspended NPR 79,133,834 from booking interest income of the borrowers
with arrears on contractual payments for more than a year. The Net Realizable Value (NRV) of collateral is adequate to cover the
principal and accrued interest of the borrowers with arrears of more than three months and within 12 months, and therefore,
accrued interest is recognized as interest income.
5.8 Related parties disclosures

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence
over the other party in making financial or operational decisions and include major shareholders, subsidiary companies,
associates, retirement funds, directors and key management personnel and their close family members.
Banking transactions with the related parties are executed substantially on the same terms, including mark-up rates and
collateral, as those prevailing at the time for comparable transactions with unrelated parties and do not involve more than a
normal risk.
a) Subsidiary
Transactions between the Bank and its subsidiary, Kumari Capital Limited, meet the definition of related party as defined
under NAS-24 “Related Party Disclosures”.
Transactions during the year 2075-76 (Rs.) 2074-75 (Rs.) 2073-74 (Rs.)
Equity Investment by Kumari Bank Limited on Kumari Capital Ltd. - 200,000,000 -
Deposits held by Kumari Capital Limited at Kumari Bank Ltd. 22,026,552 200,000,000 -
Interest Expenses incurred by Kumari Bank Limited, which formed
3,592,256 - -
part of income of Kumari Capital Limited
Expenses of Kumari Capital Limited paid by Kumari Bank Ltd,
- 285,000 -
reimbursable
b) Associates
Transactions between the Bank and its associates also meet the definition of related parties. The Bank considers an
investee as its associate if the Bank can exercise significant influence in the financial and operating policy decisions of
the investee but does not have control or joint control of those policies.
232
The Bank does not exercise significant influence in the financial and operating policy decisions of any of its investees as
at and Asadh 31, 2076 and Asadh 32, 2075.
The Bank has appointed its employee as a director in case of following investees but do not exercise significant influence
in their financial and operating policy decisions:
Transactions during the year 2075-76 2074-75 2073-74

(Rs.) (Rs.) (Rs.)
National Microfinance Bittiya Sanstha Limited
Investment in shares 20,000,000 20,000,000 20,000,000
Shareholding % 20% 20% 20%
c) Directors and other Key Managerial Personnel (KMP)

Key Management Personnel and their immediate family members are also considered to be related parties for disclosure
purpose as per NAS-24 “Related Party Disclosures”.
As per Nepal Financial Reporting Standard (NAS 24) “Related Party Disclosures”, Key Management Personnel are those
having authority and responsibility for planning, directing and controlling the activities of the entity. The Bank considers
the members of its Board, Chief Executive Officer and all managerial level executives as Key Management Personnel
(KMP) of the Bank .
Following is a list of Board of Directors and CEO bearing office at Asadh 31, 2076.
Mr. Amir Pratap J. B. Rana Chairman

Mr. Krishna Prasad Gyawali Director
Mr. Mahesh Prasad Pokharel Director
Mrs. Anuradha Chaudhari Director
Prof. Dr. Ganesh Prasad Pathak Director
Mr. Surender Bhandari Chief Executive Officer
Mr. Surender Bhandari has been appointed as Chief Executive Officer since 16 July 2017.
Compensation to the members of the Board

All members of the Board are non-executive directors and no executive compensation is paid to the directors. Specific non-
executive allowances paid to directors are as under:
Board Meeting fees Rs. 3,662,516
Other benefits Rs. 793,055
These allowances and benefits are approved by the Annual General Meeting of the Bank .
Compensation to Chief Executive Officer of the Bank

In ‘000
Total Compensation (Rs.)
Nature of Compensation
2075-76 2074-75
Short-term employee benefits 14,025 12,522
Employee Bonus 5,469 -
Post employee benefits - -
Festival Allowances and payment against annual leave 1,968 1,758
Other Allowances - 55
Total 21,463 14,335
233
Kumari Bank Limited
Compensation to Senior Management Personnel of the Bank

In ‘000
Total Compensation (Rs.)

Nature of Compensation
2075-76 2074-75
Short-term employee benefits 34,595 31,754
Employee Bonus 12,273 5,593
Post employee benefits 2,650 1,155
Festival Allowances and payment against annual leave 4,735 3,444
Other Allowances 841 1,454
Total 55,096 43,400
Senior Management Personnel is represented by employees of AGM level and above
d) Loans and deposits of Directors and other Key Managerial Personnel (KMP); along with Close Family
Members (CFMs)
In ‘000
Particulars 2075-76 2074-75
Loans and Receivables 43,873 34,020
Credit Cards 167 229
Deposits 61,992 44,341
The above figures indicate the details of directors and staffs of AGM level and above and identified close family members
of KMPs.
5.9 Merger and acquisition

The Bank had acquired erstwhile Kasthamandap Development Bank Limited, Paschimanchal Finance Company Limited,
Mahakali Bikas Bank Limited and Kakre Bihar Bikas Bank Limited and had started joint operation from 16th Asadh 2074.
Apart from the acquisition mentioned above on the FY 2073-74, the Bank has not entered into any merger or acquisition
activity in the current fiscal year as well as on comparative period.
5.10 Additional disclosures of non-consolidated entities

Nepal Financial Reporting Standard (NAS 24) “Disclosure of Interests in Other Entities”, is applicable when an entity has
interest in any of the following:
• Subsidiaries
• Joint arrangements (joint operations or joint ventures)
• Associates
• Unconsolidated structured entities
The Bank has already disclosed its interests in subsidiaries and associates in 5.7. Related parties’ disclosures. The Bank does
not have any interest in any form of joint arrangements or unconsolidated structured entities as on Asadh 31, 2076 as well as
Asadh 32, 2075.
5.11 Events after reporting period

Events after the reporting date are those events, favorable and unfavorable, that occur between the reporting date and the
date the Financial Statements are authorized for issue.
The Bank follows NAS-10 “Events after the Reporting Period” to account for and report the events that have occurred after
the reporting period.
There are no material events after reporting period except allowance of recognition of interest income collected after year
end till Shrawan end 2076 and the settlement of some loans and advances bearing provision of more than 1%.
5.12 Availment of Carve-outs notified by Institute of Chartered Accountants of Nepal

The Institute of Chartered Accountants of Nepal has notified 7 Carve-outs in NFRS which allows alternative treatment. Out of
the 7 Carve-outs, the Bank has availed following Carve-outs while preparing its financial statements for FY 2075/76:
a) Carve-Out: 3 - NAS 28: Investment in Associates and Joint Venture
b) Carve-Out: 5 - NAS 39: Financial Instruments: Recognition and Measurement (Incurred Loss Model to measure the Impairment
Loss on Loan and Advances)
c) Carve-Out: 6 - NAS 39: Financial Instruments: Recognition and Measurement (Impracticability to determine transaction cost
234
of all previous years which is the part of effective interest rate)
d) Carve-Out: 7 - NAS 39: Financial Instruments: Recognition and Measurement (Impracticability to determine interest income
on amortized cost)
a) Carve-Out : 3 - NAS 28: Investment in Associates and Joint Venture)
As per Par 35 of NAS 28, The entity’s financial statements shall be prepared using uniform accounting policies for like
transactions and events in similar circumstances. However, carve-out is available for Associates which allows that unless, in
case of an associate, it is not required if it is impracticable to do so. The investment in National Micro Finance Bittya Sanstha
(i.e.; associates) is reported in financial statement although its financial statement is not converted into NFRS.
b) Carve-Out : 5 - NAS 39: Financial Instruments: Recognition and Measurement (Incurred Loss Model to measure the
Impairment Loss on Loan and Advances)
As per NAS-39, an entity shall assess at the end of each reporting period whether there is any objective evidence that a
financial asset or group of financial assets measured at amortized cost is impaired. If any such evidence exists, the entity
shall apply paragraph 63 to determine the amount of any impairment loss.
The Carve-out requires Bank s to measure impairment loss on loans and advances as the higher amount derived as per norms
prescribed by Nepal Rastra Bank for loan loss provision and amount determined as per paragraph 63 of NAS-39; and shall
apply paragraph 63 to measure the impairment loss on financial assets and other assets other than loan and advances. The
Bank shall disclose the impairment loss as per the Carve-out and the amount of impairment loss determined as per paragraph
63.
The Bank has availed the Carve-out and has accordingly recognized impairment loss on loans and advances as the higher
amount derived as per norms prescribed by Nepal Rastra Bank for loan loss provision and amount determined as per
paragraph 63 of NAS-39. The detail of impairment loss on loans and advances are as follows:
Amount (Rs.)
Particulars 2073/74 2074/75 2075/76
Total Loan loss provision as per norms prescribed by Nepal
1,107,121,361 1,139,067,544 1,368,098,314
Rastra Bank (NRB Directive No. 2)
Total Impairment as per paragraph 63 of NAS 39 288,879,350 337,030,710 495,283,916
As, Loan loss provision as per norms prescribed by Nepal Rastra Bank is higher, impairment loss on loans and advances is
made accordingly.
The Bank has classified total loan loss provision mentioned above into 2 categories viz. Individual Impairment and Collective
Impairment. The Bank has classified general loan loss provision as Collective Impairment and specific loan loss provision as
Individual Impairment.
c) Carve-out : 6- NAS 39: Financial Instruments: Recognition and Measurement (Impracticability to determine transaction
cost of all previous years which is the part of effective interest rate)
As per NAS-39, an entity shall estimate cash flows considering all contractual terms of the financial instrument (for example,
prepayment, call and similar options) but shall not consider future credit losses while calculating the effective interest rate.
The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the
effective interest rate (see NAS 18 – Revenue)
The Carve-out states that the effective interest rate calculation shall include all fees and points paid or received, unless it is
immaterial or impracticable to determine reliably.
The Bank has availed this Carve-out and has not considered all fees and points paid or received which are impracticable to
measure reliably while determining effective interest rate.
d) Carve-Out : 7 - NAS 39: Financial Instruments: Recognition and Measurement (Impracticability to determine interest
income on amortized cost)
As per NAS-39, once a financial asset or a group of similar financial assets has been written down as a result of an impairment
loss, interest income is thereafter recognized using the rate of interest used to discount the future cash flows for the purpose
of measuring the impairment loss.
The Carve-out states that once a financial asset or group of similar financial assets has been written down as a result of an
impairment loss, interest income is thereafter recognized using the rate of interest used to discount the future cash flows for
the purpose of measuring the impairment loss. Interest income shall be calculated by applying effective interest rate to the
gross carrying amount of a financial asset unless the financial asset is written off either partially or fully.
The Bank has availed this Carve-out and has calculated interest income on gross carrying amount of financial assets rather
than calculating the interest income on amortized cost.
235
Kumari Bank Limited
5.13 Dividend and Bonus

Bank’s BOD meeting held on 28th August 2019 has decided to propose Rs 868,557,312.70 (10 % of the existing paid-up capital)
as bonus shares and Rs.45,713,542.77 (0.526% of the existing paid up capital) as cash dividend for the purpose of dividend
distribution tax from the share premium of Rs. 54,803,159 and remaining from retained earnings up to FY 2075/76.
5.14 Unpaid Dividend

Out of total cash dividend proposed in FY 2066/67 & FY 2068/69 which were distributed in FY 2067/68 & FY 2069/70 respectively,
cash dividend of NPR. 603,549.90 is still payable because shareholders have not yet collected the dividend. Also, dividend
payable amounting to NPR. 2,453,529 stands payable as of Asadh 2076 for the payable of the acquisition institutions.
5.15 Provision for staff bonus

Provision for staff bonus has been provided at 10% of net profit before providing for income tax provision. This provision has
been made as per Bonus Act 2030.
5.16 General Reserve

20 percent of the profit after tax is transferred to General Reserves as per Section 44 of Bank s and Financial Institutions Act
2073. In FY 2075/76, the Bank has transferred Rs. 246,075,652 to the General Reserve Fund from the current year’s profit. The
balance in General Reserve Stands at Rs. 1,531,065,436 as at 31st Ashad 2076.
5.17 Exchange Fluctuation Fund

25 percent of the revaluations gain on foreign exchange is transferred to exchange fluctuation fund as per Section 45 of
Banks and Financial Institutions Act 2073. In FY 2075/76, the revaluation gain on foreign exchange amounts to Rs. 21,994,232.
Therefore, the Bank has transferred Rs. 5,498,558 to Exchange Fluctuation Fund from the current year profit. The balance in
Exchange Fluctuation Fund stands at Rs. 45,184,144 as on Asadh 31, 2076.
5.18 Investment Adjustment Reserve

Total outstanding investment adjustment reserve as at Balance Sheet date is Nil as per the exemption provided by Nepal Rastra Bank
Directive 8 as given below;
In Rs.
Investment Adjustment
Particulars Cost Price Rs. % Reserve
Reserve
1. Investment in Shares
Credit Information Center Limited 1,330,000 Exemption by NRB -
Nepal Clearing House Limited 3,976,700 Exemption by NRB -
National Banking Training Institute 1,200,000 Exemption by NRB -
Kumari Capital Ltd 200,000,000 100% Subsidiary Company -

Nepal Electronic Payment System Ltd 15,000,000 Exemption by NRB -
Total Investment 221,506,700 -
236
5.19 Interest Capitalization
Following are the loans, on which interest is capitalized to recognize income in accordance with NRB approval. These loans
are the project loans, interest on which was capitalized for moratorium period. Detail of such loans and interest recognized in
FY 2075/76 is as follows –
Amount in NPR
SN Name of the client Type Capitalized Interest NRB approval date
1 HIMALAYAN HYDROPOWER Term Loan 14,020,840 06/30/2074
2 CIVIL HYDROPOWER PVT. LTD Term Loan 51,873,205 03/07/2074
3 PASHUPATI ENVIRONMENTAL POWER CO. PVT LTD Term Loan 17,823,413 09/20/2075
4 SINGATI HYDRO ENERGY PVT LTD Term Loan 19,074,933 6/24/2075
5 CHHYANGDI HYDROPOWER LIMITED Term Loan 379,022 03/30/2076
6 BINDHYABASINI HYDROPOWER LTD Term Loan 12,721,254 3/8/2074
7 UNIVERSAL POWER CO. LTD Term Loan 15,335,360 9/30/2074
8 SANIGAD HYDRO PVT LTD Term Loan 11,685,037 12/30/2074
9 PAN HIMALAYAN ENERGY PVT LTD Term Loan 2,583,139 12/25/2075
10 PEOPLES HYDROPOWER COMPANY PVT LTD Term Loan 3,679,969 12/24/2075
11 RAPTI HYDRO AND GENERAL CONSTRUCTION Term Loan 1,873,626 6/18/2075
12 SAMRAT CEMENT PVT LTD Term Loan 1,364,842 1/29/2076
13 SARBOTTAM CEMENT PVT LTD Term Loan 14,132,904 6/19/2075
14 GAUTAM BUDDHA AIRPORT HOTEL PVT LTD Term Loan 20,337,799 6/10/2075
15 CG CEMENT INDUSTRIES PALPA PVT LTD Term Loan 3,123,130 8/21/2075
Total 190,008,479
5.20 Regulatory Reserve

As per NRB, the Bank is required to create regulatory reserve; the details included in the regulatory reserve are as:
Particulars Amount Rs.

Accrued Interest 288,121,080
Provision for possible losses on investment 16,511,845
Provision on Non Banking Assets 88,422,015
Deferred Tax Asset 77,789,908
Actuarial Loss recognized 113,557,630
Total 584,402,477
5.21 Other Reserves

Employee Related Reserve Fund
As per NRB circular, the Bank is required to expend at least 3% of total staff expenses of previous year 074/75 in employees
training and development. If the required amount could not be spent for the purpose, employees related reserve fund should
be created for the shortfall amount. As of Balance Sheet date, the Bank’s Employee Related Reserve Fund stands at Nil, as
the expenses incurred in relation to the Employee Training exceeds the reserve requirement and previous year carry forward
reserve.
Particulars Amount (Rs.)

Opening balance as on 1stShrawan 2075 (A) 1,755,171
3% of Total Employee expenses for FY 2074/75 (B) 18,649,275
Actual Expense incurred in Employee training and development in FY 2075/76 (C) 20,404,446
Expenses Incurred During the Year 22,118,040
Closing balance as on 31stAsadh 2076 -
237
Kumari Bank Limited
CSR Reserves
As per NRB circular, the Bank has to transfer 1% of current year’s profit to CSR fund. The Bank has transferred Rs 12,357,482
to CSR Fund from net profit of FY 075/76. As of Balance Sheet date, the Bank’s CSR fund stands at Rs 15,185,384.
Particulars Amount (Rs.)

Opening balance as on 1stShrawan 2075 (A) 15,960,683
1% of Net profit for FY 2075/76 to be transferred to CSR Fund (B) 12,303,783
CSR expenses incurred out of CSR Fund in FY 2075-76 (C) 13,132,781
Closing balance as on 31stAsadh 2076 (A+B-C) 15,131,685
Capital Adjustment Reserve

Capital Adjustment Reserve is created on interest income recognized by capitalizing interest income for the loans provided
under National Priority after approval for such capitalization from Nepal Rastra Bank . The total capital adjustment reserve
created in the FY 2074-75 is carried forward in the current year, while no addition to the capital adjustment reserve is required
to be created as per NRB directive.
5.22 Summary of Loans and Advances Disbursed, Recovered and Principal & Interest Written-off (except
for Staff Loans and advances and interest accrued)
The loan and advances disbursed, recovered and written off during the year is given below:
(Rs in million)
Particulars Amount
Opening Loans and Advances 62,740
Loans and Advances disbursed during the year 67,868
Loans and Advances recovered during the year 54,024

Loans and Advances written off during the year -
Closing Loans and Advances 76,584
Interest written off -
5.23 Weighted Average Interest Rate Spread
Particulars Rate (%)

Average Rate of return from loans and advances & investments 11.86
Average Rate of interest on deposits & borrowings 8.32
Net Spread 3.54
5.24 Summary of Concentration of exposure

No balance sheet and off balance sheet transaction have been highly 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:
NPR In Million
Maximum concentration to a single customer

Particulars Total Exposure
Amount %
Loans & Advances 76,584.77 1,645.00 2.15
Deposits 84,402.84 3,218.08 3.81
Off Balance Sheet Items 16,047.22 2,156.69 13.44
238
5.25 Summary of Changes in deposit during the year
Growth in deposits during the year is given below:
NPR In Million
Particulars This Year (Rs.) Last Year (Rs) Changes in amount
1) Current Deposit 5,383 3,198 2,186

a) Local Currency 5,263 3,153 2,109
b) Foreign Currency 121 44 76
2) Saving Deposit 18,137 16,383 1,754
a) Local Currency 18,004 16,277 1,726
b) Foreign Currency 133 106 27
3) Fixed Deposit 45,564 32,551 13,012
a) Local Currency 41,893 31,925 9,968
b) Foreign Currency 3,670 626 3,044
4) Call Deposit 14,614 17,285 (2,671)
a) Local Currency 14,404 17,018 (2,614)
b) Foreign Currency 210 267 (57)
5) Margin Deposit 705 234 471
a) Local Currency 705 234 471
b) Foreign Currency - - -
Total Deposit 84,403 69,651 14,752
239
Kumari Bank Limited
5.26 Classification of Assets and Liabilities based on Maturity

NPR In Million
1-90 91-180 181-270 271-365 More than
S.N. Particulars Total
days days days days 1 year
Assets
1 Cash Balance 1,635 - - - - 1,635
2 Balance with Bank s & FIs 5,517 - - - - 5,517
3 Investment in Foreign Bank s 1,336 118 - - - 1,454
4 Call Money 159 - - - - 159
5 Government Securities 2,774 260 - 317 5,050 8,402
6 Nepal Rastra Bank Bonds - - - - - -
7 Inter Bank & FI Lending 59 - - - - 59
8 Loans & Advances 20,191 13,447 5,697 4,878 24,420 68,635
9 Interest Receivable 520 3 1 1 4 531
10 Reverse Repo - - - - - -
11 Acceptance Receivable - - - - - -
Payments under S.No. 20,21 &
12 4,034 568 279 768 10,437 16,088
22
13 Others 2,784 928 928 928 1,016 6,585
Total (A) 39,013 15,326 6,906 6,894 40,928 1,09,069
Liabilities
14 Current Deposits 1,508 502 502 502 335 3,351
15 Saving Deposits (including call) 8,179 1,635 1,635 1,635 19,629 32,716
16 Fixed Deposits 10,103 8,026 8,269 4,765 5,081 36,246
17 Debentures/Bonds - - - - - -
18 Borrowings - 2,518 - - - 2,518
Call/Short Notice - - - - - -
Inter-Bank /Financial Institution - 2,518 - - - 2,518
Refinance - - - - - -
Others - - - - - -
19 Other Liabilities and Provisions 110 9 9 9 - 138
Sundry Creditors - - - - - -
Bills Payable 23 8 8 8 - 47
Interest Payable 82 - - - - 82
Others 4 1 1 1 - 8
20 Acceptance Liabilities - - - - - -
21 Irrevocable Loan Commitment 1,523 2,157 2,157 2,157 2,157 10,153
22 Letter of Credit/Guarantee 5,763 812 398 372 1,130 8,478
23 Repo - - - - - -
24 Payable under s.no.11 - - - - - -
25 Others 2,578 859 859 859 - 5,156
Total (B) 29,766 16,522 13,832 10,302 28,334 98,758
Net Financial Assets (A-B) 9,246 (1,195) (6,926) (3,408) 12,594 10,310
Cumulative Net Financial Assets 9,246 8,050 1,124 (2,283) 10,310 -
240
5.27 Reconciliation Status
The Bank reconciles inter branch transactions and other agency accounts regularly. The difference has been identified,
reviewed and reconciled and it has been or will be adjusted in due course of business.
Rs. in ‘000
Reconciliation status Ledger Credit Statement Credit Ledger Debit Statement Debit
Less than 1 Month 131,468 32,662 45,665 3,042

More than 1 Month To Less than 3 Months 2,054 - - -
More than 3 Months To Less than 9 Months - - - -
More than 9 Months - - - -
Total 133,523 32,662 45,665 3,042
5.28 Details of Software Application (Intangible Assets)

Amount in NPR
Net Opening Balance Net Additions during the year Amortization during the year Net Closing Balance
110,453,429 10,816,195 23,876,015 97,393,609
5.29 Capital Work in Progress (WIP)

Carrying amount of capital work-in-progress includes cost incurred for the soil testing work for building construction site at
Naxal. As of the balance sheet date, the carrying amount of WIP is NPR. 261,369.
5.30 Disclosure of Actuarial Valuation of Gratuity and Leave
2075-76
Particulars Annual Leave Encashment
Gratuity (Funded)
(Non Funded)
Change in Present Value Obligations
PV of Obligation at beginning of the year 275,113,564 109,679,585
Interest Cost 23,868,488 8,309,610
Current Service Cost 36,641,169 18,572,938
Benefit paid (5,276,609) (34,701,165)
Actuarial (Gain)/ Loss 62,673,742 52,474,244
Liability at the end of the year 393,020,354 154,335,212
Change in Fair Value of Plan Assets
Fair Value of Plan Asset at Beginning of the Year 216,916,781 -
Contribution by Employer 96,439,144 -
Benefit paid (5,276,609) -
Actuarial (Gain)/ Loss on Plan Assets - -
Fair Value of Plan Asset at End of the Year 308,079,316 -
Amount Recognized in Statement of Financial Position
Present Value of Obligations at Year End 393,020,354 154,335,212
Fair Value of Plan Assets at Year End 308,079,316 -
Funded Status (84,941,038) (154,335,212)
Unrecognized Actuarial (Gain)/Loss at Year End
Unrecognized Past Service Cost
Net Asset/(Liability) Recognized in Balance Sheet (84,941,038) (154,335,212)
241
Kumari Bank Limited
5.31 Operating Lease recognized on straight line basis over the lease term
As per NAS 17, Lease payments under an operating lease shall be recognized as an expense on a straight-line basis over the
lease term. For the first time adoption of lease, the effect is recognized and restated from previous years as:
Particulars 75-76 74-75 73-74

Leases expenses charged in PL 121,474,313 99,765,431 69,502,314
Additional Lease expenses as per NFRS 2,295,363 (6,565,284) 7,877,352
Total Lease Expenses 123,769,676 93,200,148 77,379,666
Total Lease Liability 36,07,430 1,312,068 7,877,352
5.32 Disclosure of Non Banking Assets

As at Asadh 31, 2076, Non Banking Assets assumed by Bank are as follows:
Total Non-Banking
Name of Borrower/Party Date of assuming of Non-Banking Assets
Assets (Rs.)
Opportunity Manpower Service 27-Jan-14 2,892,225
Bishnu Kumari Galla Bhandar 15-Jul-08 242,555
Rina Darji 22-Jan-17 837,270
Jite Kami 22-Jan-17 811,812
Jyam Maya B.K. 22-Jan-17 840,213
Uma Kumari Ghimire 22-Jan-17 820,283
Sita Nepali 22-Jan-17 839,711
Lul Bdr. B.K. 22-Jan-17 842,190
Sunil B.K. 22-Jan-17 837,509
Moti Kala Damai 22-Jan-17 841,806
Kamal Prasad Gyawali 30-Jan-17 1,751,787
Tul Prd. Gauchan 30-Jan-17 737,844
Bhim Bdr. Khasu 30-Jan-17 1,060,001
Suntala Khatri Chettri 30-Jan-17 1,048,480
Gita Balal 9-Mar-17 615,257
Ram Bdr. Bhujel 9-Mar-17 1,040,544
ChabiRaj Gurung 9-Mar-17 942,378
Gun Bdr. Bishwokarma 9-Mar-17 1,013,233
Sunil Kumar Shrestha 9-Mar-17 883,901
Nirmala Shrestha 9-Mar-17 956,138
Gyan Bdr. Damai 9-Mar-17 762,531
Aaiet Siri Tamang 9-Mar-17 657,603
Tika Bdr. Sunar 13-Apr-17 872,791
Dil Bdr. Nepali 13-Apr-17 790,522
Hum Bdr. Sarki 13-Apr-17 774,201
Mohan Bdr. Gurung 13-Apr-17 756,633
Poti Maya Gurung 13-Apr-17 783,816
Ram Krishna Kami 13-Apr-17 859,909
Sumitra Sunari Magar 13-Apr-17 680,235
Mitre Damai 13-Apr-17 824,395
Tau Maya Gurung 13-Apr-17 901,786
Bhobisara Chidi 13-Apr-17 691,073
Padam Bdr. Malla 13-Apr-17 784,664
Deepak B.K. 13-Apr-17 814,572
Gyan Bahadur Gurung 21-Apr-17 787,845
MinaSara Ale 3-May-17 751,759
242
Fulmaya Pulami 3-May-17 889,608
Tilisara Gharti 3-May-17 925,684
Gitasara Darlami 3-May-17 745,537
Janga Bdr. Damai 3-May-17 691,001
Jamuna Sarki 3-May-17 1,022,564
Bhagwati Timilsina 3-May-17 920,123
Krishna Ratana 3-May-17 1,043,864
Fanimaya Darlami 3-May-17 1,142,127
Chowk Bdr. Rakhal 3-May-17 829,483
RamKrishna Kami 3-May-17 792,528
Sambhu Sunar 3-May-17 793,771
Laxmi Bishwokarma 3-May-17 793,771
Arjun Bdr. Bishwokarma 3-May-17 793,814
Dal Bdr. Kami 3-May-17 838,702
Krishna Bdr. B.K 3-May-17 793,771
Basanti Khadka 3-May-17 820,719
Gita Saru 3-May-17 728,194
Chabi Lal Sinjali 28-May-17 830,667
Sonu Tamang 28-May-17 830,348
Damaya Gurung 28-May-17 713,768
Umi Sara Singjali 15-Jun-17 614,883
Amita Gaha 15-Jun-17 676,950
Pratap Pariyar 15-Jun-17 636,328
KaliMaya Darji 15-Jun-17 532,219
Som Bdr. Sarki 15-Jun-17 757,340
Bir Bdr. Bishwokarma 15-Jun-17 758,314
Dhan Bdr. Kami 15-Jun-17 639,698
Uday Raj Tharu 15-Jun-17 531,206
Dhan Bdr. Bishwokarma 15-Jun-17 635,109
Maya Gharti 15-Jun-17 531,723
Khim Bdr. Sunar 15-Jun-17 529,701
Kashiram Gahatraj 15-Jun-17 529,709
Sita Sunar 15-Jun-17 533,826
Karan Bdr. Kami 15-Jun-17 533,834
Sushila Darji 15-Jun-17 531,912
Santa Lal Sunar 15-Jun-17 482,146
Khum Bdr. Sartunge 15-Jun-17 531,733
Kamal Bishwokarma 15-Jun-17 532,285
Jagat Bdr. Ale 15-Jun-17 532,089
Ram Bdr. B.K. 15-Jun-17 532,297
Min Bdr. Shreenet 15-Jun-17 532,627
Sita Pariyar 15-Jun-17 532,532
Fulmati Darji Bhane Fulmati 15-Jun-17 595,199
Man Kumari Rana 15-Jun-17 531,758
Bishnu Maya Gurung 15-Jun-17 594,308
Deepak Gahatraj 15-Jun-17 530,056
Chandra Bdr. Midhun 15-Jun-17 531,557
Tila Chaudhary 15-Jun-17 533,119
Shankar Nepali 15-Jun-17 531,912
Manakamana Diagnostic & Imaging Center 15-Oct-15 10,086,674
243
Kumari Bank Limited
Raj kumar Tamang 5-Feb-16 5,890,530

Narayan Karki 28-Nov-16 4,000,000
Buddhi Hotel 1-Jun-17 1,807,084
Shree Ajima Grocery 27-Jun-17 51,840
Jeni Karmacharya 27-Jun-17 800,000
Total 88,422,015
Investment Property amounting to Rs. 45,748,988 is transferred to Property, Plant and equipment, whereby Rs. 44,521,831
is transferred to Land Property and remaining Rs. 1,227,157 as Building. The transferred property to Property, Plant and
equipment is valued at cost recognized as Investment Property.
5.33 Rounding off and Comparative Figures

Figures are rounded to nearest rupees. Previous year's figure has been regrouped or rearranged where necessary.
In ‘000
Group Bank
Component
Line Items Presently Earlier Presently Earlier Reason
of FS Difference Difference
Reported Reported Reported Reported
Deferred tax assets/
(liabilities) (20,362) (20,755) 394 (20,362) (20,755) 394
Other liabilities 1,965,014 1,963,702 1,312 1,964,986 1,963,674 1,312
Retrospective adjustment
SOFP Retained earnings 1,550,975 1,561,983 (11,007) 1,526,721 1,527,639 (918) of lease accounting
Interest expense 4,797,987 4,771,333 26,654 4,797,987 4,771,333 26,654 Interest Cost on Defined
benefit plan reclassified
Personnel expenses 775,187 801,841 (26,654) 775,187 801,841 (26,654) to interest expenses
Other operating
income 92,121 100,164 (8,043) 92,121 100,164 (8,043)
Non operating Reclassified for better
income 67,229 59,186 8,043 32,572 24,529 8,043 presentation
Other operating
expenses 374,665 381,231 (6,565) 374,352 380,917 (6,565)
Retrospective adjustment
SOPL Deferred Tax (69,577) (71,546) 1,970 (69,577) (71,546) 1,970 of lease accounting
Due to Adjustment in RE for earlier impact of
Opening Retained Earning 5,514 Lease accounting on Straight Line Basis.
244
Statement of distributable profit or loss
For the year ended 31 Ashad 2076
(As per NRB Regulation)

FY 2075-76 FY 2074-75
Net profit or (loss) as per statement of profit or loss 1,230,378,260 1,041,892,704
Appropriations:
a. General reserve (246,075,652) (208,378,541)
b. Foreign exchange fluctuation fund (5,498,558) (4,376,844)
c. Capital redemption reserve - -
d. Corporate social responsibility fund - (9,208,806)
e. Employees' training fund - (1,755,171)
f. Other -
- Investment Adjustment Reserve - 868,392
- Other Reserve 31,168,452
Profit or (loss) befor regulatory adjustment 978,804,050 850,210,186
Regulatory adjustment :
a. Interest receivable (-)/previous accrued interest received (+) (5,316,437) (282,804,643)
b. Short loan loss provision in accounts (-)/reversal (+) - -
c. Short provision for possible losses on investment (-)/reversal (+) (7,200,962) (9,310,883)
d. Short loan loss provision on Non Banking Assets (-)/reversal (+) 45,748,988 (134,171,003)
e. Deferred tax assets recognised (-)/ reversal (+) (77,789,908) -
f. Goodwill recognised (-)/ impairment of Goodwill (+) - -
g. Bargain purchase gain recognised (-)/reversal (+) - -
h. Actuarial loss recognised (-)/reversal (+) (62,673,742) (50,883,888)
i. Other (+/-) - -
Distributable profit or (loss) 871,571,989 373,039,770
245
Kumari Bank Limited
Kumari Bank Limited

Comparision Unaudited and Audited Financial Statements as of FY 2075/76
As per Variance
As per Audited
Unaudited
Statement of Financial Position Financial Reason for variance
Financial In amount In %
Statement
Statement
Assets
Cash and Cash Equivalents 8,821,135,632 8,821,135,632 - 0.00%
Due from Nepal Rastra Bank 3,580,514,349 3,580,514,349 - 0.00%
Placement with Bank and Financial 384,382,797 384,382,797 - 0.00%
Institutions
Derivative Financial Instruments 143,288,455 5,858,648,394 5,715,359,938 3988.71% Due to gross booking of Derivative
Other Trading Assets - - - 0.00%
Loans and Advances to BFIs 3,066,054,519 3,035,403,974 (30,650,545) -1.00% Due to Change in Loan Loss
Provision and reclassification
Loans and Advances to Customers 73,120,310,169 73,017,913,052 (102,397,116) -0.14% Due to Change in Loan Loss
Provision and reclassification
Investment Securities 9,121,568,177 9,121,568,177 - 0.00%
Current Tax Assets 16,114,389 61,227,298 45,112,910 279.95% Due to Taxable Income calculation
as per Income Tax Act.
Investment in Subsidiaries 200,000,000 200,000,000 - 0.00%
Investment in Associates 20,000,000 20,000,000 - 0.00%
Investment Property 88,422,015 88,422,015 - 0.00%
Property and Equipment 661,726,420 662,104,656 378,236 0.06% Adjustments
Goodwill and Intangible Assets 97,393,607 97,393,609 2 0.00%
Deferred Tax Assets 47,804,087 77,789,908 29,985,821 62.73% Due to Taxable Income calculation
as per Income Tax Act.
Other Assets 887,967,863 284,981,292 (602,986,572) -67.91% Reclassification of Other Assets
Total Assets 100,256,682,479 105,311,485,153 5,054,802,674 5.04%
Liabilities -
Due to Bank and Financial Institutions 12,168,482,092 12,168,482,092 - 0.00%
Due to Nepal Rastra Bank 1,433,248,037 1,433,248,037 - 0.00%
Derivative Financial Instruments - 5,715,359,938 5,715,359,938 0.00% Due to gross booking of Derivative
Deposits from Customers 73,201,353,705 73,201,143,766 (209,938) 0.00% Reclasification
Borrowings - - - 0.00%
Current Tax Liabilities - - - 0.00%
Provisions 2,231,750 2,231,750 - 0.00%
Deferred Tax Liabilities - - - 0.00%
Other Liabilities 1,583,823,271 1,071,934,043 (511,889,228) -32.32% Reclassification of Other Liabilities
Debt Securities Issued - - - 0.00%
Subordinated Liabilities - - - 0.00%
Total Liabilities 88,389,138,853 93,592,399,626 5,203,260,773 5.89%
Equity
Share Capital 8,685,573,112 8,685,573,112 - 0.00%
Share Premium 54,803,159 54,803,159 - 0.00%
Retained Earnings 977,456,343 883,698,633 (93,757,710) -9.59% Impact of Changes in Statement of
Profit or Loss
Reserves 2,149,711,011 2,095,010,622 (54,700,389) -2.54% Impact of Changes in Statement of
Profit or Loss
Total Equity Attributable to Equity 11,867,543,626 11,719,085,527 (148,458,099) -1.25% Impact of Changes in Statement
Holders of Profit or Loss
Non Controlling Interest - - - 0.00%
Total Equity 11,867,543,626 11,719,085,527 (148,458,099) -1.25% Impact of Changes in Statement
of Profit or Loss
Total Liabilities and Equity 100,256,682,479 105,311,485,153 5,054,802,674 5.04% Impact of Changes in Statement
of Profit or Loss
246
As per Unaudited As per Audited
Variance
Statement of Profit or Loss Financial Financial In % Reason for variance
In amount
Statement Statement
Due to impact of interest
lnterest income 9,217,980,501 9,098,573,839 (119,406,662) -1.3% recognition circular
issued by NRB.
Due to Impact of
Interest expense 6,198,524,129 6,228,619,912 30,095,783 0.5%
actuarial valuation
Net interest income 3,019,456,372 2,869,953,928 (149,502,444) -5.0%
Recognition of income
Fee and commission income 454,875,235 465,986,518 11,111,283 2.4%
pertaining to the year
Fee and commission expense 31,866,063 31,866,063 - 0.0%
Net fee and commission income 423,009,172 434,120,455 11,111,283 2.6%
Net interest, fee and commission

3,442,465,544 3,304,074,383 (138,391,161) -4.0%
Income
Net trading income 258,904,627 258,904,627 - 0.0%
Recognition of income
Other operating income 92,713,335 84,919,398 (7,793,937) -8.4%
TotaI operating income 3,794,083,506 3,647,898,408 (146,185,098) -3.9%
Changes in the Loan
lmpairment charge/ (reversal) for
212,086,554 229,030,770 16,944,216 8.0% Loss provision after audit
Loans and other losses
remarks
Net operating income 3,581,996,952 3,418,867,638 (163,129,314) -4.6%
Operating expense - 0.0%
Bonus changes and
PersonneI expenses 1,013,301,865 978,860,368 (34,441,498) -3.4%
expenses reclassification
Reclassification and
Other operating expenses 523,801,134 554,656,220 30,855,086 5.9% recognition of expenses
Depreciation & Amortization 120,098,121 120,126,238 28,117 0.0% Adjustment
Operating Profit 1,924,795,832 1,765,224,812 (159,571,019) -8.3%
Non operating income 11,842,000 11,842,001 1 0.0%
Non operating expense 1,029,812 1,029,811 (1) 0.0%
Profit before income tax 1,935,608,020 1,776,037,002 (159,571,017) -8.2%
lncome tax expense 601,561,729 545,658,742 (55,902,987) -9.3%
Due to Taxable Income
Current Tax 667,034,836 621,921,927 (45,112,909) -6.8% calculation as per Income
Tax Act.
Due to Taxable Income
Deferred Tax (65,473,107) (76,263,185) (10,790,078) 16.5% calculation as per Income
Tax Act.
Profit/(loss) for the period 1,334,046,290 1,230,378,260 (103,668,030) -7.8% Due to above factors
Statement of Comprehensive lncome
Profit/(loss) for the period 1,334,046,290 1,230,378,260 (103,668,030) -7.77%

Due to Actuarial loss
Other Comprehensive lncome (7,200,962) (51,072,582) (43,871,619) 609.25%
charged in OCI.
Total Comprehensive lncome for the
1,326,845,328 1,179,305,679 (147,539,650) -11.12%
period
-
Basic earnings per share 15.36 14.17 (1.19) -7.77%
Diluted earnings per share 15.36 14.17 (1.19) -7.77%
-
Profit attributable to: -
Equity holders of the Bank 1,326,845,328 1,179,305,679 (147,539,650) -11.12%
Non-controlling interest - - 0.00%
247
Kumari Bank Limited
Kumari Bank Limited

Condensed Consolidated Statement of Financial Position
As at Fourth Quarter (16 July 2019) of the Fiscal Year 2018/19
Amount in NPR
Group Bank
Particulars Immediate Previous Immediate Previous
This Quarter Ending This Quarter Ending
Year Ending Year Ending
Assets
Cash and Cash Equivalents 8,823,890,014 3,780,643,820 8,821,135,632 3,780,643,820
Due from Nepal Rastra Bank 3,580,514,349 5,582,760,819 3,580,514,349 5,582,760,819
Placement with Bank and Financial Institutions 384,382,797 714,095,685 384,382,797 714,095,685
Derivative Financial Instruments 143,288,455 - 143,288,455 -
Other Trading Assets - - - -
Loans and Advances to BFIs 3,066,054,519 1,778,934,583 3,066,054,519 1,778,934,583
Loans and Advances to Customers 73,120,310,169 60,596,575,817 73,120,310,169 60,596,575,817
Investment Securities 9,301,568,177 8,802,903,890 9,121,568,177 8,802,903,890
Current Tax Assets 16,114,389 113,783,100 16,114,389 113,783,100
Investment in Subsidiaries - - 200,000,000 200,000,000
Investment in Associates 68,240,600 44,567,797 20,000,000 20,000,000
Investment Property 88,422,015 134,171,003 88,422,015 134,171,003
Property and Equipment 661,726,420 434,304,421 661,726,420 434,304,421
Goodwill and Intangible Assets 97,393,607 110,453,429 97,393,607 110,453,429
Deferred Tax Assets 47,804,087 - 47,804,087 -
Other Assets 889,934,146 454,639,100 887,967,863 454,924,100
Total Assets 100,289,643,743 82,547,833,464 100,256,682,479 82,723,550,667
Liabilities
Due to Bank and Financial Institutions 12,146,455,539 9,904,187,331 12,168,482,092 10,104,187,331
Due to Nepal Rastra Bank 1,433,248,037 539,557,578 1,433,248,037 539,557,578
Derivative Financial Instruments - 6,111,249 - 6,111,249
Deposits from Customers 73,201,353,705 59,546,335,519 73,201,353,705 59,546,335,519
Borrowings - - - -
Current Tax Liabilities - - - -
Provisions 2,231,750 2,231,750 2,231,750 2,231,750
Deferred Tax Liabilities - 20,755,147 - 20,755,147
Other Liabilities 1,585,598,313 1,963,702,048 1,583,823,271 1,963,673,797
Debt Securities Issued - - - -
Subordinated Liabilities - - - -
Total Liabilities 88,368,887,344 71,982,880,622 88,389,138,853 72,182,852,371
Equity
Share Capital 8,685,573,112 7,163,394,973 8,685,573,112 7,163,394,973
Share Premium 54,803,159 54,803,159 54,803,159 54,803,159
Retained Earnings 1,030,669,117 1,551,893,608 977,456,343 1,527,639,061
Reserves 2,149,711,011 1,794,861,101 2,149,711,011 1,794,861,101
Total Equity Attributable to Equity Holders 11,920,756,400 10,564,952,842 11,867,543,626 10,540,698,296
Non Controlling Interest - - - -
Total Equity 11,920,756,400 10,564,952,842 11,867,543,626 10,540,698,296
Total Liabilities and Equity 100,289,643,743 82,547,833,464 100,256,682,479 82,723,550,667
248
Condensed Consolidated Statement of Profit or Loss
For the Fourth Quarter Ended (16 July 2019) of the Fiscal Year 2018/19
Amount in NPR
Group Bank
Current Year Previous Year Corresponding Current Year Previous Year Corresponding
Particulars
Upto this Quarter Upto this Quarter Upto this Upto this Quarter
This Quarter This Quarter This Quarter This Quarter
(YTD) (YTD) Quarter (YTD) (YTD)
lnterest income 2,487,901,552 9,222,801,377 2,068,916,088 6,804,011,381 2,484,232,500 9,217,980,501 2,068,916,088 6,804,011,381
Interest expense 1,694,248,122 6,194,931,873 1,426,083,719 4,771,333,239 1,697,840,378 6,198,524,129 1,426,083,719 4,771,333,239
Net interest income 793,653,430 3,027,869,504 642,832,370 2,032,678,141 786,392,122 3,019,456,372 642,832,370 2,032,678,141
Fee and commission income 131,334,586 454,875,235 146,497,902 396,815,439 131,334,586 454,875,235 146,497,902 396,815,439
Fee and commission expense 12,330,153 31,866,063 13,874,648 27,322,461 12,330,153 31,866,063 13,874,648 27,322,461
Net fee and commission income 119,004,433 423,009,172 132,623,254 369,492,978 119,004,433 423,009,172 132,623,254 369,492,978
Net interest, fee and commission Income 912,657,863 3,450,878,676 775,455,624 2,402,171,119 905,396,556 3,442,465,544 775,455,624 2,402,171,119
Net trading income 44,878,858 258,904,627 31,787,895 148,951,414 44,878,858 258,904,627 31,787,895 148,951,414
Other operating income 79,510,417 92,724,047 59,660,059 100,163,792 79,510,417 92,713,335 51,617,084 92,120,818
TotaI operating income 1,037,047,138 3,802,507,350 866,903,577 2,651,286,325 1,029,785,830 3,794,083,506 858,860,603 2,643,243,351
lmpairment charge/ (reversal) for Loans and
(24,305,257) 212,086,554 86,721,300 31,946,183 (24,305,257) 212,086,554 86,721,300 31,946,183
other losses
Net operating income 1,061,352,395 3,590,420,796 780,182,278 2,619,340,142 1,054,091,088 3,581,996,952 772,139,304 2,611,297,167
Operating expense -
PersonneI expenses 369,247,782 1,013,327,288 285,282,747 801,840,723 370,796,393 1,013,301,865 285,282,747 801,840,723
Other operating expenses 152,379,017 525,173,079 134,662,197 381,230,622 152,307,072 523,801,134 134,348,947 380,917,372
Depreciation & Amortization 34,824,700 120,098,121 24,701,775 79,214,269 34,824,700 120,098,121 24,701,775 79,214,269
Operating Profit 504,900,897 1,931,822,308 335,535,559 1,357,054,527 496,162,923 1,924,795,832 327,805,835 1,349,324,803
Non operating income (13,730,696) 11,842,000 28,820,708 59,185,879 2,147,108 11,842,000 2,206,885 32,572,057
Non operating expense 1,029,812 1,029,812 - - 1,029,812 1,029,812 - -
Profit before income tax 490,140,389 1,942,634,496 364,356,267 1,416,240,406 497,280,219 1,935,608,020 330,012,720 1,381,896,860
lncome tax expense 164,014,238 603,302,782 24,438,914 340,004,156 166,523,077 601,561,729 24,438,914 340,004,156
Current Tax 229,487,344 668,775,889 95,985,133 411,550,374 231,996,183 667,034,836 95,985,133 411,550,374
Deferred Tax (65,473,107) (65,473,107) (71,546,219) (71,546,219) (65,473,107) (65,473,107) (71,546,219) (71,546,219)
Profit/(loss) for the period 326,126,152 1,339,331,714 339,917,353 1,076,236,251 330,757,142 1,334,046,290 305,573,806 1,041,892,704
Condensed Consolidated Statement of Comprehensive lncome

Profit/(loss) for the period 326,126,152 1,339,331,714 339,917,353 1,076,236,251 330,757,142 1,334,046,290 305,573,806 1,041,892,704
Other Comprehensive lncome 1,845,205 (7,200,962) 13,219,419 (8,878,818) 1,845,205 (7,200,962) 13,219,419 (8,878,818)
Total Comprehensive lncome for the period 327,971,356 1,332,130,752 353,136,772 1,067,357,433 332,602,347 1,326,845,328 318,793,225 1,033,013,886
Basic earnings per share 15.42 15.02 15.36 14.54

Diluted earnings per share 15.42 15.02 15.36 14.54

Equity holders of the Bank 327,971,356 1,332,130,752 353,136,772 1,067,357,433 332,602,347 1,326,845,328 318,793,225 1,033,013,886
249
Non-controlling interest - - - - - -
Kumari Bank Limited
Statement of Distributable Profit or Loss

For the period ended 31 Asadh 2076
Amount in NPR
Net Profit for the period end Ashad 2076 quarter 1,334,046,290
1. Appropriations
1.1 Profit required to be appropriated to statutory reserve
a. General Reserve (266,809,258)
b. Capital Redemption Reserve -
c. Exchange Fluctuation Fund (5,498,558)
d. Corporate Social Responsibility Fund (207,682)
e. Employees Training Fund 2,516,200
f. Other (10,000,000)
1.2 Profit required to be transfer to Regulatory Reserve
a. Transfer to Regulatory Reserve
(86,950,249)
b. Transfer from Regulatory Reserve
Net Profit for the period end Ashad 2076 quarter available for distribution 967,096,744
Ratios as per NRB
Group Bank
Previous Year Previous Year
Current Year Current Year
Corresponding Corresponding
Particulars
Upto this Upto this Upto this Upto this
This This
Quarter This Quarter Quarter This Quarter Quarter Quarter
Quarter Quarter
(YTD) (YTD) (YTD) (YTD)
Capital fund to RWA 12.07% 13.93% 12.07% 13.93%
Non-performing loan (NPL) to total
0.97% 1.01% 0.97% 1.01%
loan
Total loan loss provision to Total
182.22% 177.12% 182.22% 177.12%
NPL
Cost of Funds 8.35% 8.25% 8.35% 8.25% -
Credit to Deposit Ratio 78.32% 76.54% 78.32% 76.54% -
Base Rate 10.82% 11.60% 10.82% 11.60% -
Interest Rate Spread 3.54% 3.37% 3.54% - 3.37% -
Notes to the Interim Financial Statements

1. Above figures are prepared in accordance with Nepal Financial Reporting Standards subject to change upon otherwise
directions of Statutory Auditor and/or Regulatory Authorities.
2. Group represents the Bank and its wholly owned subsidiary Kumari Capital Limited and an Associate National Microfinance
Bittiya Sanstha Limited.
3. The NFRS reporting has been complied by adopting appropriate accounting judgment, those having potential material impact
on the financial statements and had made appropriate judgment in making accounting estimates.
4. Figures have been regrouped and rearranged wherever necessary.
5. Loan and Advances include interest receivables and are presented net of impairment charges.
6. Personnel Expenses include employment bonus provision calculated at 10 percent of profit and amortization of prepayment
amount of subsidized loans provided to the employees of the Bank .
7. Interest income on loans and advances to customers are shown on accrual basis
8. The detail Interim report has been published in the Bank’s website www.kumariBank .com
250
Kumari Bank Limited
Major Indicators
F. Y. F. Y. F. Y. F. Y. F. Y.
Particulars Indicators
2071/2072 2072/2073 2073/2074 2074/2075 2075/76
1. Net Profit/Gross Income % 32.27% 47.29% 42.58% 38.90% 12.40%
2. Earnings Per Share
Basic EPS Rs. 16.24 26.53 13.29 14.54 14.81
Diluted EPS Rs. 16.24 26.53 13.29 14.54 14.81
3. Market Value per Share Rs. 380 - 327.00 199.00 220.00
4. Price Earning Ratio Times 23.41 0.00 24.61 13.68 14.85
5. Dividend (including bonus) on share Rs 11.00% 21.00% 12.75% 8.50% 10.00%
capital
6. Cash Dividend on share Capital Rs. 0.58% 1.10% 0.00% 0.00% 0.53%
7. Interest Income/Loans & Advances % 8.81% 8.56% 8.36% 10.91% 11.96%
8. Employee Expenses/Total Operating % 52.83% 54.48% 51.29% 51.37% 47.26%
Expenses
9. Interest Exps on Total Deposit and % 4.47% 4.00% 4.51% 6.85% 7.30%
Borrowings
10. Exchange Fluctuation Gain/Total % 7.79% 7.20% 5.71% 6.21% 7.81%
Income
11. Staff Bonus/ Total Employee Expenses % 16.60% 24.91% 24.41% 23.68% 25.25%
12. Net Profit/Loans & Advances % 1.46% 2.38% 1.77% 1.67% 1.62%
13. Net Profit/ Total Assets % 1.06% 1.69% 1.29% 1.26% 1.17%
14. Total Credit/Deposit % 81.00% 79.34% 87.60% 89.55% 90.11%
15. Total Operating Expenses/Total Assets % 1.44% 1.37% 0.48% 0.56% 1.57%
16. Adequacy of Capital Fund on Risk
Weightage Assets
a. Core Capital % 9.89% 10.75% 13.55% 12.48% 10.89%
b. Supplementary Capital % 0.96% 0.94% 0.95% 0.88% 0.86%
c. Total Capital Fund % 10.84% 11.69% 14.50% 13.36% 11.75%
17. Liquidity % 7.48% 8.74% 10.33% 6.85% 4.59%
18. Non Performing Loans/Total Loans % 2.49% 1.15% 1.86% 1.05% 1.01%
19. Base Rate % 8.66% 7.15% 11.31% 11.60% 10.82%
20. Weighted Average Interest Rate Rs. 3.17% 3.59% 3.26% 3.12% 3.54%
Spread *
21. Book Net worth (in lakhs) Rs. 33,473 40,336 82,579 105,398 117,191
22. Total Shares Number 24,316,816 26,991,665 59,694,958 71,633,950 86,855,731
23. Total Employees Number 392 385 755 796 1043
24. Others
Per employee Buisness in lakhs Rs. 669.54 775.42 592.00 783.61 729.18
Employee Expense/ Total Income % 23.24% 20.59% 23.28% 24.10% 7.88%
No. of Branches Number 36 36 74 89 106
251
`t
Kumari Bank Limited
c
7
KBL
Subsidiaries
1. About KBL Subsidiaries 254

2. Audit Report of Kumari Capital 255
3. Financials of Kumari Capital 256
4. Major Upcoming Plans of
Kumari Capital Limited 262
252
253
Kumari Bank Limited
About KBL
Subsidiaries
Kumari Capital Limited KBL Securities Limited
Kumari Capital Limited is a wholly-owned subsidiary of As permitted by SEBON for carrying the securities
Kumari Bank Limited. Kumari Capital was incorporated business by BFIs, Kumari Bank Limited has invested in
under the Companies Act 2007 of Nepal and is licensed K.B.L securitites NPR 20,000,000 with 100% investment.
by the Securities Board of Nepal (SEBON) to undertake K.B.L Securitites Ltd is the fully-owned subsidiary of
Merchant Banking activities which includes a diverse array Kumari Bank Limited and shall carry the brokering
of services like Issue Management and Underwriting, services of purchasing and selling of securities in the
Share Registrar, Depositary Participant, Corporate name of the client as per the client's order after obtaining
Advisory and Portfolio Management. license from SEBON. KBL Securities has already been
registered under Company Registration Office (CRO) and
It is the merchant-Banking unit of Kumari Bank Limited, shall be carrying the activitites, after obtaining the same.
which strives to provide the best merchant and investment
Banking services in the country, as per the scope, depth
and movement of the Nepalese capital markets.
Our business-ethics revolve around the concepts of

partnership, integrity, quality-service and synergic
growth, both via the coordination of our efforts within
our organization as well as the interactions with our
clients. We hold integrity of the investment profession
and the interest of the client above our organizational
interests. We exercise utmost vigilance and professional
judgment when conducting investment analysis, making
investment recommendations, taking investment
actions, and engaging in other professional endeavors.
We are proud to share that our employee values are

well-structured and clearly defined as the company
believes that, those values will be ultimately reflected
in our system of customer-care. We encourage an
open and collaborative working environment in which
everyone has the opportunity to deliver their best. We
strive to maintain a work environment that fosters
professionalism, excellence, cooperation among our
employees and hold ourselves accountable to the highest
standards of corporate ethics. We are striving to become
a responsible corporate-entity and cherish social and
economic harmonies existing in the communities, where
we operate.

254
255
Kumari Bank Limited
Kumari Capital Limited

Statement of Financial Position
As on 31st Ashad 2076
Particulars Ashad end 2076 Ashad end 2075

Assets - -
Non Current Assets - -
Property, Plant and Equipments - -
Intangible Assets - -
Financial Assets Measured at Amortized Cost - -
Loans and Advances - -
Deferred tax assets - -
Total Non Current Assets - -
Current Assets
Cash and Cash Equivalents 24,780,934 200,000,000
Trade Receivables - -
Prepaid Expenses and Advances 1,520,032
Loans and Advances - -
Financial Assets Measured at Amortized Cost 180,446,250 -
Financial Assets held at fair value through Profit or Loss - -
Total Current Assets 206,747,216 200,000,000
Total Assets 206,747,216 200,000,000
Equity & Liabilities - -

Non Current Liabilities - -
Employee Benefits - -
Trade and Other Payables - -
Deferred tax liabilities - -
Total Non Current Liabilities - -
Current Liabilities - -
Trade and Other Payables 2,047,958 313,250
Total Current Liabilities 2,047,958 313,250
Equity - -
Share capital 200,000,000 200,000,000
Retained earnings 4,699,259 (313,250)
Total Equity 204,699,259 199,686,750
Total Equity and liabilities 206,747,216 200,000,000
Rajesh Shrestha Anuj Mani Timilsina As per our report on even date
Chief Executive Officer Chairman
Ram Chandra Khanal

Director
CA Suman Dangol
Narendra Prasad Chhatkuli Principal
Director S. Dangol & Associates
Chartered Accountants
Date: 1 Bhadra 2076

Place: Kathmandu
256
Statement of Profit or Loss and ther Comprehensive Income
Particulars Current Year Previous Year

Income from Merchant Banking Activities - -
Income from Mutual Fund - -
Gain on Disposal of Equity Securities - -
Interest on Deposits 8,413,132
Collection Commissions - -
Underwriting Income - -
Net Unrealised gain on financial assets held at fair value - -
Other Income 10,712 -
Total Operating Income 8,423,844 -
Merchant Banking Expenses - -
Mutual Fund Expenses - -
Commission on Sale of Securities - -
Other Expenses - -
Operating Profit 8,423,844 -
Non Operating Expenses - -
Staff Cost 25,423 -
Occupancy Cost - -
Advertisement and Promotion Expenses - -
General Administrative Expenses 1,371,945 313,250
Finance Cost - -
Depreciation and Amortization - -
Profit Before Tax 7,026,477 (313,250)
Provision for Tax 2,013,968 -
Profit for the year 5,012,509 (313,250)
Other Comprehensive Income / (expenses) - -
Net gains on available for Sale investment - -
Actuarial Gain / (Loss) on defined benefit plans - -
Total Other Comprehensive Income / (expenses) - -
Less: Tax Expenses related to Components of OCI - -
Total Comprehensive income for the year - -
Equity holders 5,012,509 (313,250)
Profit for the year 5,012,509 (313,250)
Ram Chandra Khanal

Director
CA Suman Dangol
Date: 1 Bhadra 2076

Place: Kathmandu
257
Kumari Bank Limited

Statement of Cash Flow
For the Period ended 31 Asadh 2076 (For the Period ended 16 July 2019)
Particulars Current Year (Rs.) Previous Year (Rs.)

(A) Cash Flow from Operating Activities 4,780,934 -
1. Cash Received 7,977,594 -
1.1 Interest Income 7,966,882 -
1.2 Commission and Fee Based Income - -
1.3 Other Income 10,712 -
2. Cash Payment (1,363,378) (313,250)
2.1 Interest Expenses - -
2.2 Staff Expenses (19,683) -
2.3 Office Overhead Expenses (1,343,695) (313,250)
2.4 Income Tax Paid - -
2.5 Other Expenses - -
Cash Flow before Changes in Working Capital (1,833,282) 313,250
Increase /( Decrease) of Current Assets (1,520,032) -
1. (Increase)/Decrease in Short Term Investment - -
2. (Increase)/Decrease in Other Current Assets (1,520,032) -
Increase /( Decrease) of Current Liabilities (313,250) 313,250
1. Increase/(Decrease) in Short Term Borrowings - -
2. Increase/(Decrease) in Other Current Liabilities (313,250) 313,250
(B) Cash Flow from Investment Activities (180,000,000) -
1. (Increase)/Decrease in Long-term Investment (180,000,000) -
2. (Increase)/Decrease in Fixed Assets - -
3. Interest income from Long Term Investment - -
4. Dividend Income - -
5. Others - -
(C) Cash Flow from Financing Activities - 200,000,000
1. Increase/(Decrease) in Long term Borrowings (Bonds,Debentures etc) - -
2. Increase/(Decrease) in Share Capital - 200,000,000
3. Increase/(Decrease) in Other Liabilities - -
(E) This Year's Cash Flow from All Activities (175,219,066) 200,000,000
(F) Opening Balance of Cash and Bank Balances 200,000,000 -
(G) Closing Balance of Cash and Bank Balances 24,780,934 200,000,000
Ram Chandra Khanal

Director
CA Suman Dangol
Date: 1 Bhadra 2076

Place: Kathmandu
258
Statement of Changes in Equity
For the Period ended 31 Asadh 2076 (For the Period ended 16 July 2019)
" Accumulated Other Reserve &

Particulars Share Capital Share Premium Deferred Tax Fund Total Amount (Rs.)
Profit/Loss " Fund
Opening Balance - - - - - -
Adjustments 20,000,000 (313,250) - - - 19,686,750
Capital Issued 20,000,000 (313,250) - - - 19,686,750
Net Profit for the Period - - - - - -
Dividend Paid during the - - - - - -
year
Other Comprehensive - - - - - -
Income/(expenses) (net of
Tax)
Deferred Tax Fund - - -
Closing Balance 20,000,000 (313,250) - - - 19,686,750
Opening Balance 200,000,000 (313,250) - - - 199,686,750
Adjustments - 5,012,509 - - - 5,012,509

Capital Issued - - - - - -
Net Profit for the Period - 5,012,509 - - - 5,012,509
Dividend Paid during the - - - - - -
year
Other Comprehensive - - - - - -
Income/(expenses) (net of
Tax)
Deferred Tax Fund - - - - - -
Closing Balance 200,000,000 4,699,259 - - - 204,699,259
Ram Chandra Khanal

Director
CA Suman Dangol
Date: 1 Bhadra 2076

Place: Kathmandu
259
Kumari Bank Limited
more appropriate.
As on Asadh 31, 2076 (16 July 2019) Accounting policies have been included in the relevant
notes for each item of the financial statements. The
Notes to the Financial Statements effect and nature of the changes, if any, have been
disclosed.
Overview of the Company
NFRS requires the company to make estimates and
Kumari Capital Limited is a wholly owned subsidiary of Kumari assumptions that will affect the assets, liabilities,
Bank Limited. Kumari Capital Limited is registered under at disclosure of contingent assets and liabilities, and profit
Companies Registrar’s Office with registered office at Naxal, or loss as reported in the financial statements.
Kathmandu. It has been registered in Inland Revenue Office with
its PAN No. 606868806. The company applies estimates in preparing and
presenting the financial statements. The estimates
Kumari Capital Limited is formed with an objective of providing and underlying assumptions are reviewed periodically.
merchant Banking and investment Banking services like Revision to accounting estimates are recognized in the
Issue Management & Underwriting, Registrar to Shares (RTS), period in which the estimates is revised, and are applied
Depository Participant (DP), Portfolio Management Services and prospectively.
Mutual Funds. The company has not been registered in VAT as it
provides financial services which are exempt under Schedule 1 Disclosures of the accounting estimates have been
of VAT Act, 2052. included in the relevant section of the notes wherever
the estimates have been applied along with the nature
The Board of Directors of the company acknowledges the and effect of changes of accounting estimates, if any.
responsibility of preparation of Financial Statements of the
company. The financial statements were authorized for issue Share Capital
by the Board of Directors and have been recommended for
Kumari Capital Limited is 100% Subsidiary of Kumari Bank
approval by shareholders in the Annual General Meeting. Limited, with paid up capital of NPR. 200,000,000.00 (NPR Two
Hundred Millions) and Authorized capital of NPR 500,000,000.00
Significant Accounting Policies (NPR Five Hundred Millions)
The Principal accounting policies are adopted in preparation
of financial statements, which have been consistently applied Reserve and Surplus
unless otherwise stated. The Company is yet to come to full operation, the total reserve
and surplus of the company stands at Rs. 5 Million.
1.1 Statement of Compliance
The Financial Statements have been prepared in Dividend and Bonus
accordance with Nepal Financial Reporting Standards Kumari Capital Limited’s BOD meeting held on 8th August 2019
(NFRS). Further the financial statements are in has decided to propose 2% of the capital as cash dividend from
compliance with the Companies Act with amendments the distributable reserves up to FY 2075/76.
and other relevant laws.
Income Tax
1.2 Basis of Preparation
Income tax on the profit for the year comprises current tax.
The Financial Statements are presented in NPR, rounded Income tax is recognized directly in the statement of profit or
to the nearest Rupee. The company while complying loss except to the extent that it relates to items recognized
with the reporting standards makes critical accounting directly in equity or other comprehensive income.
judgment as having potentially material impact on the
financial statements. The significant accounting policies Current tax is the expected tax payable on the taxable income
that relate to the financial statements as a whole along for the year, using tax rates enacted at the reporting date, and
with the judgments made are described therein. any adjustment made to tax payable in respect of previous
years. The amount of current tax payable or receivable is the
1.3 Accounting Conventions best estimate of the tax amount expected to be paid or received
The financial statements have been prepared on a that reflects uncertainty related to income taxes, if any.
historical cost basis, as modified by the revaluation of
financial assets and liabilities at fair value through profit Capital Commitments and Contingencies
or loss. The financial statements have been prepared on Contingent liabilities are possible obligations whose existence
a going concern basis where the accounting policies and will be confirmed only by uncertain future events or present
judgments as required by the standards are consistently obligations where the transfer of economic benefits is not
used and in case of deviations disclosed specifically. probable or cannot be reliably measured.
1.4 Accounting Policies and Accounting Estimates Related Party Transaction:

The company, under NFRS, is required to apply 100% share capital is investment of its parent company Kumari
accounting policies to most appropriately suit its Bank Limited. Bank account of Kumari Capital Limited is
circumstances and operating environment. Further the opened at Kumari Bank Limited, total interest income earned
company is required to make judgment in respect of by Kumari Capital Limited against the account maintained at
items where the choice of specific policy, accounting Kumari Bank Limited amounts to Rs. 35,92,256.32.Other small
estimate or assumption to be followed could materially transactions are considered as immaterial transactions.
affect the financial statements. This may later be
determined that a different choice could have been
260
Segmental Reporting:
The company is organized for management and reporting
purposes into segments such as: Portfolio Management
Services, Issue Management Services, Registrar to Shares,
Depository Participants and Others. The segmental information
is immaterial, as also the company is yet to earn operational
income.
Event after Reporting date / period

The materiality of the events after the reporting date has been
considered and appropriate adjustments and provisions have
been made in the financial statements wherever necessary. The
company monitors and assesses events that may have potential
impact to qualify as adjusting and/ or non-adjusting events after
the end of the reporting period. All adjusting events are adjusted
in the books with additional disclosures and non-adjusting
material events are discloses in the notes with possible financial
impact, to the extent ascertainable. There are no material
events that have occurred subsequent to 16 July 2019 till the
signing of this financial statement.
261
Kumari Bank Limited
Major Upcoming
Plans of
Kumari Capital
• Filing and New Fund Offer (NFO) of Mutual Fund As a portfolio manager, we shall be focused to create
Scheme diversified portfolio for our valuable clients to match
their investment objective combining the knowledge
The company plans to extend its services in the and experience that our professional teamcarries.
area of mutual fund management via issuance of
open-ended mutual fund-scheme. After a detailed We have estimates of managing at least two IPO/FPO in
research on filing the close-ended scheme, we are FY 2076/77 and have put appropriate marketing and HR
now in the process of applying for fund-management recruitment plans in place for it. We have planned for
license of Kumari Mutual Fund from Securities Board underwriting two issues during FY 2076/77 and obtain
of Nepal (SEBON). Post the approval, we shall launch the contracts of three new companies in addition
an open-ended scheme within FY 2076/77. to Kumari Bank Limited. Furthermore, we are also
working to obtain contract of at least one company for
• Focus on Depository Participants Business Debenture Trusteeship and operate a total portfolio of
throughout the year NPR Fifty Million fund size.
We have also planned to expand our business

aggressively in the area of depository participant
throughout the year using extensive network of our
parent company. We have been working to provide
online account opening, and renewal facility to our
customers which will contribute to the development
of Nepalese capital market by increasing the market
participants. We have targeted to open 20,000
new accounts in FY 2076/77. Similarly, the buy and
sell transactions from our DP account holders are
targeted to 5,000 within FY 2076/77.
• Operation of Merchant Banking Business

We have planned to improve the service and enhance
our client base for further expansion of business. We
shall expand our merchant Banking business that
includes: issue management, underwriting services,
registrar to shares, portfolio management services.
We shall be focused on providing quality issue

management services to help our clients raise capital
to finance their business plans. Based on extensive
research, we shall also provide underwriting services
to clients having value and growth opportunity.
As a Registrar and Transfer Agent (RTA) of our clients,

we are committed to provide quality and impeccable
services such as maintaining and updating register of
shareholders, pledging and transfer of ownerships,
payment of dividends to the valued shareholders of
our client companies.
262
263
Kumari Bank Limited
8
Award
Certification
1. Moving Forward 265

2. Awards & Milestones 266
264
Moving
Forward
Embracing the Culture of Change

The power to change and transform is embedded in us all. We live as creatures of
habit, yet change is the only constant in this ever-changing world. The energy of
the universe vibrates with continuity, connection, and creation. A small change
within one of us inevitably sends its ripples in the environment. When we fight
against this cosmic flow by submitting to the comfort of familiarity, we step out
of our dance with life and are left bruised by the inner conflict and gasping for air
in a breathless stagnation.
When we anchor our thoughts, keeping them fixed and immutable, it whittles
away our sense of wonder, thereby restricting the capabilitites of our mind and the
heart. It disrupts our need for movement and enrichment from new experiences.
We move out of the universal flow when we remain rutted in thoughts and
behaviors that are neither enlightening nor progressive. It is an inner struggle
the whole of human race faces, yet one that we can choose to adapt to the flow
rather than battle against it. Rather than fight against our challenges, we can
patiently and passionately guide ourselves through them. In doing so, we engage
with the strength within us, fortifying our intuitive processes in alignment with a
heightened sense of the inner forces.
" The power to change is embedded in all of us, yet

we live as creatures of habit "
Chaos and conflict create the chemistry for transformation and propel the
stripping of the inessential. We can choose to lace ourselves with a patient
and unswerving trust that the new will bring growth and value to our journey. In
this regard, we can remind ourselves what Maya Angelou put best in words,"We
delight in the beauty of the butterfly, but rarely admit the changes it has gone
through to achieve that beauty"
We can turn to mother nature for inspiration in the form of butterflies, a symbol
of transformation, joy and originality (no two sets of butterfly wings are ever
the same). They swirl around petals of vibrant colors, moving swiftly from one
flower to the next as they revel in their rythmic dance to change. Butterflies are
the masters of metamorphosis and adaptability, facilitating change so that life
continues. The caterpillar cocooned into her chrysalis does not fight to break
the shell or resist her growth! She implicitly trusts in her own inherent timing and
continuity of being.
Butterflies teach us to seek our own flexibility and flow with life. To paint new
pictures, one brush-stroke at a time. We can understand that true awakening lies
in our own unique reflection, and that through wakefulness emanates our natural
pattern of existence. Just as the butterfly, we can gracefully acknowledge that
change is necessary for unravelling our blossom of riches. We, at Kumari, are
en route to imbibing the culture of flexibility and transformation via adoption
of innovation at work. We do so, by embracing the concept of customer-care,
solution-driven approaches to grievance handling and deviations and frequent
performance-checks.
265
Kumari Bank Limited
2019 Kumari Bank Limited has been awarded

with International recognition: the “Accelerated
Transformation Award” at the InfoSys Finacle Client
Innovation Awards 2019. Kumari Bank is the first ever
Nepali Bank to receive the said-award by Finacle InfoSys.
The said-award has recognized the competence and
potential of the comprehensive Nepali Banking Industry.
The Finacle Client Innovation Award is a global platform

of recognition given to Bank delivering breakthrough
innovations in Banking products, customer service,
process design and distribution channels via capitalization
on Finacle solutions.
With over 250 nominations received over 8 categories,

Kumari Bank Limited has successfully bagged the winning
title for Core Banking modernization in the “Accelerated
Transformation” category this year. With this, Kumari Bank
has set up a historical record for successful migration of
CBS Finacle Version 10.2.19 in the shortest recorded time
of 4.5 months.
266
2011 - Receives the coveted international
recognition - mBillionth Award South Asia
2011 for its Kumari Mobile Cash product. It is
a platform that recognizes some of the key
innovative applications and services and
honored excellence in the arena of mobile
communications across South Asia.
2011 - The first of its kind, Kumari

Mobile Cash pioneered the “mobile wallet”
concept in Nepal, which allows users to
store cash balances in their mobile phones.
Users are then able to deposit and withdraw
cash from their mobile phones, and use the
stored cash value for various purposes such
as remittance, bill payments, and airtime
recharge, with the push of a few buttons.
For this, Kumari Bank won the Manthan
Award South Asia 2011 for the concept and
introduction of Kumari Mobile Cash in Nepal,
out of 481 participants across 30 categories.
267
Kumari Bank Limited
2019 Kumari Bank Limited has launched its ATM

service at the base of Mt. Everest (Altitude of 4,410
meters). The said-ATM located at Khumbu Pasang Lhamu
Rural Municipality- 4, Dingboche, Solukhumbu shall serve
to facilitate the mountaineers, tourists as well as the
locals in their day-to-day financial transactions. With the
launch of this ATM at Dingboche, Solukhumbu, Kumari
Bank has become the only Bank in the country to render
its ATM services to the customers from the highest point.
In this context, introduction of this ATM outlet marks
the inception of Bank’s strides towards unprecedented
heights of Banking outreach.
268
Kumari Bank has always pioneered in prompt
E-Inauguration of implementation of modern technology in its operations.
It strengthened its status as an organization, committed
its Branches to adopting the latest technology by implementing the
mobile-based electronic-inauguration of some of its new
branches.
The Bank 's Chairman used this mobile-based technology

from the Bank's central-office, while the actual opening
took place in presence of the Bank officials, respective
guests, prominent local figures and the media from the
actual places.
269
Kumari Bank Limited
9
KBL
Networks
1.
Branches 271
2.
ATM locations 274
270
Our Branches
Province 1 Province 2 Province 3
(Inside Valley)
Bargachhi Branch Barahathawa Branch
Biratnagar Metropolitan, Barahathawa Municipality, Aalapot Branch
Ward No. 5, Bargachhi, Morang Ward No. 07, Barahathawa, Sarlahi Kageshowari Manahara Municipality,
Mobile: 9862186897 Tel: 046-540387 Ward No. 2, Aalapot, Kathmandu
Tel: 01-4156779/798
Belaka Branch Bardibas Branch
Belaka -9, Rampur, Udayapur Bardibas Municipality, Ward No. 01 Bagmati Branch
Tel: 035-430086 Bardibas, Mahottari Bagmati Gaupalika - 5 Gha,
Mobile: 9807321234 Tel: 044-550558/580/680 Bhattedanda, Lalitpur
Mobile: 9841456896
Biratnagar Branch Bhangaha Branch
Goshwara Road, Biratnagar-9, Bhangaha-5, Mahottari Baneshwor Branch
Morang, Byapaar Sangh Building Mobile: 9841521424 Old Baneshwor, Kathmandu
Tel: 021-537101/02/03/04 Tel: 01-4499322
Birgunj Branch Boudha Branch
Birtamod Branch Ghadiarwa, Birgunj, Parsa Boudha, Kathmandu
Purano Bhadrapur Line, Anarmani, Tel: 051-524812/13 Tel: 01-4913075/ 76
Jhapa
Tel: 023-541028 Chandrapur Branch Budhanilkantha Branch
Chandrapur Municipality, Ward No. Narayanthan Milan Chowk
Chisankhugadhi Branch 04, Chandrapur, Rautahat Budhanilkantha, Kathmandu
Chisankhugadhi, Rural Municipality - 5 Tel: 055-540006/ 07 Tel: 01-4377718
Serna, Okhaldhunga
Mobile : 9860748484/9842330733 Chabahil Branch
Dryport Branch
Chuchepati, Chabahil, Kathmandu
Sirsiya, Parsa
Damak Branch Tel: 01-4484434
Tel: 051-590022
Damak Municipality, Ward No. 6, Durbarmarg Branch
Damak, Jhapa Hariwon Branch Annapurna Arcade, Durbarmarg,
Tel: 023-582580 Hariwon Municipality, Ward No. 11, Kathmandu
Hariwon, Sarlahi Tel: 01-4226650 /59
Itahari Branch Mobile: 9851147100
Pathivara Market, Itahari, Sunsari Gatthaghar Branch
Tel: 025-586659/ 61 Jitpur Branch Madhyapur Thimi Municipality, Ward
Jitpur Simara Sub-Metropolitan City, No. 3, Gatthaghar, Bhaktapur
Lukla Branch Ward Nos. 07, Jitpur, Bara Tel: 01-5903941/42
Khumbu Passanglamu Rural Tel.: 053-412275/76 Golfutar Branch
Municipality, Ward No. 02,
Golfutar, Kathmandu
Lukla, Solukhumbu Lahan Branch Tel: 01-4378873
Mobile: 9813036097 Lahan Municipality, Ward No. 2,
Lahan, Siraha Gongabu Branch
Namche Branch Tel: 033-561758/59 Buddha Mall, Gongabu, Kathmandu
Namche Bazar, Solukhumbu Tel: 01-4385456/807/809
Tel: 038-540414 Mahendranagar Branch
Mahendranagar-5, Dhanusa Imadol Branch
Okhaldhunga Branch Mahalaxmi Municipality,
Tel: 041-540351
Ram Bazar, Okhaldhunga-4 Ward No. 04, Imadol, Lalitpur
Tel: 037-520626 Malangwa Branch Tel: 01-5202157/ 177
Malangwa Municipality, Ward No. 09,
Pathari Branch Jagati Branch
Malangwa, Sarlahi
Pathari Sanischare Municipality, Ward Jagati Chowk, Bhaktapur
Mobile: 9801660025
No. 1, Pathari, Morang Tel: 01-6616006/ 007
Tel: 021-556132 Nijgadh Branch
Nijgadh-7, Bara Jhamsikhel Branch
Urlabari Branch Jhamsikhel, Lalitpur Metropolitan-3
Tel: 053-540483
Itahara Road, Urlabari-4, Morang Tel: 01-5522080/ 81
Tel: 021-541901/ 02 Sirsiya Branch
Birgunj Metropolitan City,Ward No.25, Kalanki Branch
Sirsiya, Dryport, Parsa Purano Kalimati, Kalanki, Kathmandu
Mobile: 9855039875 Tel: 01-5225394/ 400
271
Kumari Bank Limited
Kalimati Branch Tokha Branch Purano Parsa Branch

Kalimati, Kathmandu Tokha Grande Hospital Road, Khairahani Municipality, Ward No. 06,
Tel: 01-4271845 Kathmandu Purano Parsa, Chitwan
Tel: 01-4386827 Tel: 056-582639/ 582649
Kirtipur Branch
Kirtipur Municipality, Ward No. 09, Sauraha Branch
Nayabazaar, Kirtipur
Province 3
Hattichowk, Ratna Nagar - 6, Chitwan
Tel: 01- 4330726/ 01- 4333164 (Outside Valley) Tel: 056-580491
Koteshwor Branch Amachhodingbo Branch

Siddhalekh Branch
Tinkune, Koteshwor, Kathmandu Amachhodingbo Gaupalika -5,
Siddhalekh Gaupalika -4, Bungchung,
Tel: 01-5199117/ 221/ 372 Chilime, Rasuwa
Dhading
Molibe: 9808133434
Tel: 01-6227413
Kumaripati Branch
Kumaripati, Lalitpur
Tel: 01-5556025/ 26
Gandaki Province
Baglung Branch
Mangal Bazar Branch Mahendrapath, Baglung
Mahapal, Mangal Bazar, Tel: 068-522472/473
Lalitpur
Tel: 01-5529701
Naxal Branch
Naxal, Kathmandu
Tel: 01-4445495/ 96
New Baneshwor
Branch
New Baneshwor,
Kathmandu
Tel: 01-
4785654
New Road Branch

New Road, Kathmandu
Tel: 01-5713323/ 75/ 79/ 88/ 92
01-5713412/ 32/ 33/ 36/ 56
Putalisadak Branch
Putalisadak, Kathmandu
Tel: 01-4232112/113 Banepa
Branch
Sanobharyang Branch Banepa Municipality,
Namgyelchowk, Echangu Ward No. 09, Banepa, Kavre
Sanobharyang, Kathmandu Tel: 011-660140/142
Tel: 01-5249479/ 80
Hetauda Branch
Satdobato Branch Nayasadak, Hetauda Sub-
Tutepaani, Satdobato, Lalitpur Beni Branch
Metropolitan-04
Tel: 01-5230016/ 146 Beni Bazar, Myagdi
Tel: 057-524143/243
Tel: 069-520151/ 963
Thahity Branch
Thahity, Kathmandu Melamchi Branch
Bhimad Branch
Tel: 01-4255005/4257141/ Melamchi Municipality, Ward No. 11,
Bhimad Municipality, Ward No. 6,
4258400 Melamchi, Sindhupalchok
Bhimad, Tanahun
Mobile: 9851007035
Thali Branch Mobile: 9857630925
Thali Chowk, Kathmandu Narayangadh Branch
Tel: 01-4451285/431/486 Birauta Branch
Kamalnagar Chowk, Bharatpur,
Birauta, Pokhara - 17, Kaski
Chitwan
Thamel Branch Tel: 061-467760/ 61
Tel: 056-571092
Chhayadevi Complex, 3rd Floor
Tridevi Marga, Thamel Chumnumbri Branch
Naya Parsa Branch
Tel: 01-5252022/ 23 Chumnumbri Gaupalika -3, Filim
Khairahani Municipality,
Gorkha, Gandaki
Ward No. 8, Naya Parsa, Chitwan
Tel: 01-6227410
Tel: 056-583326/27
272
Damauli Branch Pragatinagar Branch Kaligandaki Branch
Vyas-02, Shree tole, Damauli Devchuli Municipality-15, Kaligandaki Gaupalika - 4, Purtighat,
Tel: 065-561787 pragatinagar, Nawalparasi Gulmi
Tel: 9849034950 Mobile: 9857062121
Dulegaunda Branch
Shuklagandaki Municipality-04, Rishing Branch Kohalpur Branch
Uniquechowk, Dulegaunda,Tanahun Rishing Gaupalika -2, Pokhari, New Road Chowk, Kohalpur-11, Banke
Tel: 065-414304/325 Tanahun Tel: 081-541264
Gaidakot Branch Tel: 065-620002
Narayanpur Branch
Gaidakot Municipality - 4, Gaidakot, Syangja Branch Narayanpur, Ghorahi, Dang
Nawalparasi Putalibazar-1, Syangja Tel: 082-530258/ 59
Tel: 078-501655/501580 Tel: 063-420370/ 71
Nepalgunj Branch
Ghiring Branch Waling Branch Dhambhoji chowk, Nepalgunj-1, Banke
Ghiring Gaupalika -3, Manpur, Tanahun Waling Nagarpalika, Syangja Tel: 081-528062/ 63
Tel: 065-620003 Tel: 063-440310
Palpa Branch
Gorkha Branch Tansen-4, Makkhan Tole, Palpa
Gorkha Municipality-6, Gorkhabazar,
Province 5
Tel: 075-522690
Gorkha
Bansgadhi Branch Parasi Branch
Mobile: 9841534895
Bansgadhi Nagarpalika, Bardia Ramgram Municipality-3,
Harinash Branch Tel: 084-400179/ 181 Parasibazaar, Nawalparasi
Harinash Gaupalika - 4, Chittre Tel: 078-520391/ 392
Bhairahawa Branch
Bhanjyang, Syangja
Narayanpath, Siddharthanagar - 8, Ridi Branch
Tel: 063-620004
Rupandehi Ridi Bazar, Gulmi
Kawasoti Branch Tel: 071-521008/009 Tel: 079-400098
Sabhapati Chowk, Kawasoti-5,
Bhumahi Branch Sukrapath Branch
Nawalparasi
Sunwal Municipality-I2, Bhumahi, Sukrapath, Butwal -10, Rupandehi
Tel: 078-540524/525
Nawalparasi Tel: 071-541609/924
Tel: 078415425
Kushma Branch
Thakurbaba Branch
Melmilaap Chowk, Butwal Branch Thakurbaba, Bardiya
Kushma Rammandir Line, Butwal-6, Tel: 084-403203/ 04
Tel: 067-421145 Rupandehi
Tel: 071-551546/547 Tulsipur Branch
Driver Tole Branch "Ka" Line, Tulsipur-5, Dang
Tillotama-4, Driver Tole, Rupandehi Tel: 082-521775/ 76
Tel: 071-414350/403
Karnali Province
Babiachaur Branch
Babiachaur-1,Surkhet
Tel: 083-416031/032
Kanakasundari Branch
Kanakasundari Gaupalika
-3, Gothijiula, Jumla,
Karnali
Mobile: 9758007590
Kapurkot Branch
New Road, Kapurkot-3,
Salyan
Tel: 088 - 410011
Mehelkuna Branch
Mehelkuna-1, Surkhet
Lakeside Branch Jitpur Tel: 083-410003
Lakeside, Pokhara, Kaski (Kapilvastu)
Tel: 061-468123/ 24/ 25 Branch Musikot Khalanga
Banaganga Municipality-01, Jitpur, Branch
Pokhara Branch Kapilvastu Tallao Bazar, Musikot-1, Khalanga,
BBC Building, B P Chowk, Tel: 076-550446 /447 Rukum
Chipledhunga, Pokhara, Kaski Tel: 088-530308
Tel: 061-540266/ 67
273
Kumari Bank Limited
Salyan Branch
ATM Location Boudha ATM
Khalanga-5, Old Buspark, Salyan Kumari Bank Limited, Boudha,
Tel: 088-520317/ 18 Province 1 Kathmandu
Surkhet Branch Biratnagar ATM Buddha Mall ATM

Tallo Bazzar, Birendra Nagar Kumari Bank Limited, Goshwara Kumari Bank Limited, Buddha Mall,
Surkhet Road, Morang Byapaar Sangh Gongabu,Kathmandu
Tel: 083-521256/2256 Building, Biratnagar, Morang Buddhanilkantha ATM
Dingboche ATM Kumari Bank Limited,
Sudurpashchim Province Kumari Bank ATM at the highest Buddhanilkantha, Kathmandu
Attariya Branch altitude of 4,410 metres, Solukhumbu Chabahil ATM
Godawari Municipality-2, Itahari ATM I Chabahil Plaza ATM, Chabahil,
Mahendranagar Road, Attariya, Kailali Kumari Bank Limited, Pathivara Kathmandu
Tel: 091-551334/088 Market , Dharan Road, Itahari , Sunsari
Chhaya Complex ATM
Belauri Branch Itahari ATM II Chhay Devi Complex, Thamel,
Belauri Na. Pa. 6, Kanchanpur Reliance Spinning Mills, Itahari-12 Kathmandu
Tel: 099-580099 Jhapa ATM Chhetrapati ATM
Kumari Bank Limited, Birtamode, Near to Chhetrapati Chowk,
Campus Chowk Branch
Jhapa Chhetrapati, Kathmandu
Campus Chowk, Dhangadhi-8, Kailali
Tel: 091-522869 Lukla ATM China Town, Thamel ATM
Kumari Bank Limited, Lukla, China Town premise, Thamel,
Chandani Dodhara Branch Solukhumbu Kathmandu
Dodhara Chandani, Na. Pa. 5
Namchebazar ATM Chuchhepati ATM
Kanchanpur
Khumbu Lodge, Namchebazar Kumari Bank Limited, Chuchhepati,
Tel: 099-400001
Chowk,Solukhumbu Chabahil
Chhabispathivera Branch Okhaldhunga ATM
Chhabispathivera Gaupalika Dadeldhura ATM
Kumari Bank Limited, Rambazar, Kumari Bank Limited, Dadeldhura
Byasi, Bajhang Okhaldhunga
Mobile: 9848721893 Dhumbarahi ATM
Urlabari ATM Himal Dental Hospital, Dhumbarahi,
Dadeldhura Branch Kumari Bank Limited, Urlabari, Kathmandu
Amargadhi Na. Pa. 5 Bagbazaar Morang
Durbarmarg ATM
Tel: 096-420423 Province 2 Hotel Annapurna, Durbarmarg,
Dhangadi Branch Kathmandu
Birgunj ATM I
Ratopul, Dhangadi-7, Kailali Kumari Bank Limited, Adarsha Nagar, Ekantakuna ATM
Tel: 091-526036/037 Birgunj, Parsa Department of Transport
Management, Lalitpur
Dilasaini Branch Birgunj ATM II
Dilasaini Gaupalika - 9, Gokuleswor, National Medical College Golfutar ATM
Baitadi Kumari Bank Limited, Golfutar,
Dryport ATM
Mobile: 9858753509 Kathmandu
Kumari Bank Limited (Custom Office)
Durgathali Branch Dryport, Birgunj, Parsa Gongabu ATM
Durgathali Gaupalika Jitpur ATM BG Mall (Ground Floor) , Gongabu,
Chaudhaari, Bajhang Jitpur Simara Sub-Metropolitan City, Kathmandu
Mobile: 9869910793 Ward No. 07, Jitpur, Bara Hetauda ATM
Jhalari Branch Mahendranagar ATM Kumari Bank Limited, Nayasadak,
Jhalari Bazaar-7, Kanchanpur Kumari Bank Limited, Hetauda
Tel: 099-540171 Mahendranagar
Imadol ATM
Nijhgadh ATM Kumari Bank Limited
Kanchanpur Branch
Kumari Bank Limited, Nijhgadh Mahalaxmi Municipality, Ward No. 04
Campus Road-4,
Mahendranagar, Kanchanpur Province 3 Imadol Lalitpur
Tel: 099-521365 Jagati ATM
ALOFT ATM, Thamel
Jagati Chowk, Bhaktapur
Hotel Aloft, Thamel, Kathmandu
Jhamsikhel ATM
Basundhara ATM
8 Degrees Fine Dine & Venues
Green City Hospital (Ground Floor) ,
(opposite St. Mary's Bus Stop),
Basundhara, Kathmandu
Jhamsikhel, Laltipur
Jhamsikhel ATM II
Kumari Bank Limited, Jhamsikhel,
274
Laltipur Kathmandu
Jyatha ATM Gandaki Province
Opposite to Kantipur Temple House, Purano Parsa, Chitwan ATM
Kumari Bank Limited, Khairahani Beni ATM
Jyatha, Thamel, Kathmandu
Municipality Ward No: 06 Kumari Bank Limited, Beni Bazar,
Kalanki ATM Myagdi
Kumari Bank Limited, Near Kalanki Putalisadak ATM I
Chowk Kumari Bank Limited, Main Entrance Birauta ATM
Gate, Putalisadak, Kathmandu Kumari Bank Limited, Birauta, Kaski
Kalimati ATM
Kumari Bank Limited, Kalimati, Putalisadak ATM II Busy Bee ATM
Kathmandu Kumari Bank Limited, Main Entrance Busy Bee Restaurant, Lakeside,
Koteshwor ATM Gate, Putalisadak, Kathmandu Pokhara
Koteshwor (Way to Bus Park from
Tinkune), Kathmandu Putalisadak ATM III Damauli ATM
Kumari Bank Limited, Ground Floor Kumari Bank Limited,Damauli-2
Kumaripati ATM
(Lobby), Putalisadak, Kathmandu Dulegauda ATM
Kumari Bank Limited, Kumaripati,
Lalitpur Kumari Bank Limited, Dulegauda,
Ratna Park ATM
Tanahun
Lazimpat ATM Nepal Electricity Authority Building,
Big Mart Building (Way to Hotel Ratna Park, Kathmandu Gaidakot ATM
Radisson), Lazimpat, Kathmandu Kumari Bank Limited
Sano Bharyang ATM Gaidakot Municipality -4
Lazimpat ATM II Kumari Bank Limited, Sanobharyang Gaidakot, Nawalparsi
Cocino Mitho Chha (opposite to Chowk, Kathmandu
Ka.Ma.Na. Pa. Ward no.02), Lazimpat, Hallanchowk ATM
Satdobato ATM Hallanchowk, Lakeside, Pokhara
Kathmandu
Kumari Bank Limited
Mangal Bazar ATM Satdobato Branch, Lalitpur Kawasoti ATM
Kumari Bank Limited, Mangal Bazar, Kumari Bank Limited, Sabhapati
Sauraha ATM Chowk, Kawasoti
Lalitpur
Kumari Bank Limited, Bacchauli-2,
Marshyangdi ATM Sauraha, Chitwan Kushma ATM
Hotel Marshyangdi, Thamel , Kumari Bank Limited, Kushma,
Kathmandu Sher-Bhawan ATM Parbat
Sher Bhawan Complex, Thamel,
Mediciti ATM Kathmandu Lakeside ATM-II
Nepal Mediciti Hospital, Nakhu Opposite to Chilly Bar & Restaurant,
Tangal ATM-I Hallanchowk, Lakeside
Mobile VAN ATM Corporate Office, Kumari Bank
KBL Corporate Office Limited, Thirbaum Sadak, Tangal, Lakeside Pokhara ATM
Thirbaum Sadak, Tangal, Kathmandu Kathmandu Lakeside ATM, Center Point,
Laskeside, Pokhara
Narayangadh ATM Tangal ATM-II
Kumari Bank Limited, Narayangadh, Corporate Office, Kumari Bank Pokhara ATM I
Pulchowk, Narayangadh Limited, Thirbaum Sadak, Tangal, Chiple Dhunga, Pokhara, Kaski
Kathmandu
Naxal ATM Pragatinagar ATM
Opposite Police Head Quarter, Naxal, Thahity ATM Kumari Bank Limited,
Kathmandu Kumari Bank Limited, Thahity, Devchuli Municipality-15
Kathmandu Pragatinagar, Nawalparasi
New Baneshwor ATM
Royal Thai Restaurant premise, New Thali ATM Syangja ATM
Baneshwor Chowk, Kathmandu Kumari Bank Limited, Thali Kumari Bank Limited, Putalibazar,
Syangja
New Baneshwor ATM II Thamel ATM I
Kumari Bank Limited, Baneshwor, Fire Club Building, Thamel,
Kathmandu Province 5
Kathmandu
Baglung ATM
New Road ATM Thamel ATM II
Kumari Bank Limited, Mahendra Path,
Kumari Bank Limited, New Hotel Arts (Ground Floor) , Thamel,
Baglung
Road,Kathmandu Kathmandu
Bhairahawa ATM
New Road ATM II Thamel ATM III
Kumari Bank Limited, Narayan Path,
Tamrakar Complex (Ground Floor) , Opposite of Kathmandu Guest House
Bhairahawa
New Road, Kathmandu (KGH), Thamel.
Tokha ATM Bhumahi ATM
Old Baneshwor ATM
Kumari Bank Limited, Tokha, Kumari Bank Limited, Bhumahi,
Kumari Bank Limited, Old Baneshwor,
Kathmandu Nawalparasi
275
Kumari Bank Limited
Karnali Province
Butwal ATM
Infront of Kumari Bank Limited, Ram Kapurkot ATM
Mandir Line, Butwal Kumari Bank Limited, Kapurkot,
Salyan
Drivertole ATM
Kumari Bank Limited, Drivertole, Salyan ATM
Rupandehi Kumari Bank Limited, Khalanga,
Salyan
Kohalpur ATM
Kumari Bank Limited, Kohalpur Surkhet ATM
Kumari Bank Limited, Birendra Nagar,
Musikot ATM Surkhet
Kumari Bank Limited, Musikot
Narayanpur ATM
Sudurpashchim Province
Kumari Bank Limited, Narayanpur, Attariya ATM
Ghorahi, Dang Kumari Bank Limited, Attariya, Kailali
Nepalgunj ATM Belauri ATM

Kumari Bank Limited, Surkhet Road, Kumari Bank Limited, Belauri,
Dhambhoji, Nepalgunj Kanchanpur
Palpa ATM Dhangadi ATM

Kumari Bank Limited, Palpa Kumari Bank Limited, Ratopul,
Dhangadi, Kailali
Parasi ATM
Kumari Bank Limited, Parasibazaar, Jhalari ATM
Nawalparasi Kumari Bank Limited, Jhalari,
Kanchanpur
Ridi ATM
Kumari Bank Limited, Ridi,Gulmi Kanchanpur ATM
Kumari Bank Limited, Kanchanpur
Sukrapath ATM
Kumari Bank Limited, Sukrapath,
Butwal
Tulsipur ATM
Kumari Bank Limited, B.P. Chowk,
Tulsipur, Dang
276
277
Kumari Bank Limited
278

19th Annual Report English

Uploaded by

Copyright:

Available Formats

19th Annual Report English

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

19th Annual Report English

Uploaded by

Copyright:

Available Formats

1

Kumari Bank Limited

Photo Courtesy: Udyog Suwal

3 Products and Services

Management Leadership & CSR

Kumari Capital Limited 262

1. About Kumari Bank 10

About Kumari Bank

The first of its kind, Kumari Mobile Cash pioneered the

Commenced its first Branchless

Kumari Bank introduces its ATM

Culture is society's way of creating social connectivity among a group of

We want to empower our customers, clients and shareholders via

Kumari Culture can be best understood with the following points:

Culture of Service: Our customers are King!!! Our sophisticated

Culture of Retention: Culture can be preserved and given continuity

Culture of Performance: At Kumari Bank, we believe that we can do well

employees so On qualities that make a leader

A good leader observes, gathers

Mr. Amir Pratap JB Rana Mr. Krishna Prasad Gyawali

• Profession: Entrepreneur, • Profession: Businessperson

• Profession: Investor • Profession: Lecturer • Profession: Lecturer

Kumari Bank Limited has entered a new era of innovation,

Kumari Culture is a brand promise – we will always be on our toes

Kumari Culture is a brand promise – which entails that we will not

willing to change, develop proven across the globe.

Mr. Rajib Giri Mr. Ram Chandra Khanal

Mr. Bikas Khanal

Mr. Angir Man Singh

Mr. Ganesh Kumar KC

Mr. Prabin Kumar Jha

Mr. Rohit Singh Mr. Milan Kuinkel

Mr. Nabin Raj Poudel Mr. Manish Timilsina

Mr. Umesh Singh Bhandari

Mr. Narayan Prasad Ghimire

Ms. Rosita Shah

Mr. Binod Narasinha

Ms. Smriti Joshi

Mr. Anuj Mani Timilsina

Mr. Sanjeeb Sainju Mr. Manish Shrestha

Mr. Sudarshan Rana

Mr. Biswas Raj Aryal

Mr. Siddhartha Singh

Despite an overall optimistic picture for the global Banking industry,

3.6 3.3 3.6

2.2 1.8 1.7

2018 2019 2020 2018 2019 2020 2018 2019 2020

World Economic Outlook Report-IMF 2019, July 2019

World Economic Outlook Report-IMF 2019, July 2019

Current and Future Economic Outlook-South Asia

According to the ADB, Nepali economy has remained solid with

Current Economic Outlook -Nepal

Macro Economics of Nepal (2018/19)

Future Economic Outlook-Nepal

(Based on NRB Macroeconomic Situation 2019 and Nepal Economic Outlook

1. Performance Review FY 2075-76 51

Particulars Targeted Actual Variance Variance in %

Paid up capital of bank was NPR 8.68 billion on

11th Ashwin 2076. Paid up capital of the Bank, 10,000 8,686