71 per cent of Citizens Saving Bonds subscribed till date

KATHMANDU:

Almost 71 per cent of the Citizens Saving Bonds floated by Nepal Rastra Bank (NRB) has been subscribed since their sales opened on May 26.

Nepal Rastra Bank (NRB), the central monetary authority, had floated Citizens Saving Bonds worth Rs 2.50 billion, as a part of the government’s plan to raise domestic debt of Rs 52.75 billion by the end of this fiscal year to finance reconstruction works in the aftermath of the earthquake.

As of today, bonds worth Rs 1.77 billion were subscribed. NRB will keep the sales of the bonds open till June 9 before they are formally issued to the public on June 16.

“We are hopeful that all the securities that we have floated will be subscribed within June 9,” Nara Bahadur Thapa, executive director of Public Debt Management Department at NRB, told The Himalayan Times.

With a maturity period of five years, these bonds are targeted at general public, and anyone with at least Rs 10,000 can invest in them. “These securities provide a window of opportunity for retail investors to make investment in totally safe tool,” said Thapa. Citizens Saving Bonds provide return of eight per cent per annum.

In the aftermath of the earthquake, when every sector from tourism, housing, insurance and banking to trade and manufacturing are expected to witness slow growth, it is hard to find a tool that generates yield of eight per cent,” added Thapa.

However, it might be an uphill task for NRB to sell all the bonds within the deadline as only three working days are left for their sales to close down. Considering this, bonds worth Rs 243.33 million have to be subscribed per working day till June 9.

Since the bonds were floated for the public, NRB has recorded subscription of above Rs 243.33 million only once, on May 28. On that day, bonds worth Rs 277.27 million were subscribed.

These bonds can be bought in the form of promissory notes or stocks.

Bonds bought in the form of promissory notes can be traded by owners anytime based on mutual understanding. But bonds purchased in the form of stocks can only be traded in the presence of NRB officials.

The stock option is for those who cannot read or write. This measure protects owners from being duped into buying or selling the bonds.

Source: THT