Kumari Bank Annual Report

Kumari Bank Limited
Annual Report 2008/09
w w w. k u m a r i b a n k . c o m
Contents Vision
Mission
Introduction
2
2
3
Chairman’s Message 4
Board of Directors 6
CEO’s Message 8
KBL Team 10
Director’s Report 12
Food for thought! (Story) 13
Health makes wealth (Story) 15
Hit the nail on the head! (Story) 17
Fueling success! (Story) 19
The power of steel! (Story) 21
Pumped up pride! (Story) 23
Rowing to prosperity! (Story) 25
Auditor’s Report 27
Balance Sheet 28
Profit & Loss Account 29
Profit & Loss Appropriation Account 30
Statement of Changes in Equity 31
Cash Flow Statement 32
Schedules 33
Significant Accounting Policies 54
Notes to Accounts 57
Disclosure as per Basel II Requirement 63
Branch Network 65
1
Vision • We are customer oriented. Client is always our first priority.
• Employees have direct input and control over work processes.
• Employees are treated equitably, with respect and good faith.
• We are transparent in our dealings and conduct.
For this, we identify the core purpose and value of our business. Our traits
hold true, when it comes to customer orientation, concern for people, value
creation, superior service, innovation and fostering accountability, besides
team spirit, transparency in all our dealings and integrity is paramount to our
business philosophy. We very well understand our customers’ need for a
better and efficient services, a better working environment for our employees
and sound strategies that enables us to achieve organizational goal.
Mission • Provide world-class service to our customer at a higher satisfaction level.

• Practice total quality management and embrace good governance.
• Optimize our assets to achieve sound business growth.
Our mission provides us a sense of direction to mobilize and integrate our

resources, for excellent delivery of services and products by practicing good
governance.
Mission Statement
We shall be the preferred provider of financial services to our target clients by
embracing good governance, service excellence and professional culture in
order to achieve business growth and maximize shareholders value.
Corporate Values
Our corporate values serve as the basis business principles, which set
foundation to achieve sustainable development. Adoption of these values
avial in protecting, sustaining and enhancing human and financial capital of
the bank for the future.
• Teamwork
• Driven
• Initiative
• Adaptable to changes
• Professional
• Always striving to improve quality of service
• Cost conscious
• High ethical standard
Our Focus
a. Long term win-win relationship
b. Excellence in business
c. Managing change
d. Need centered product are the KBL product
e. Innovative insights
Our Strength
Our most valuable strength is the trust customers have on us.
2
Introduction Kumari Bank Limited is a well-established
commercial bank. Its promoters represent a
group of highly reputed Nepalese. Managed by
experienced and dynamic professionals, Kumari
Bank’s competitive banking services have become
a hallmark amongst its ever-increasing customer
base.
As we present this year’s annual report, beyond

normal facts and figures, you will also witness a
few of the many success stories of our esteemed
customers –our partners whose dreams, courage
and perseverance are reflected in this year’s annual
report.
Simply because, we feel that without their

representation in our yearly performance, the entire
exercise would seem incomplete. More importantly,
it reflects the feeling of “afnopan” that our customers
have for Kumari Bank.
3
Dear Shareholders,
Chairman’s I am pleased to inform you that your bank has recorded yet another
Message successful year in terms of performance amidst all challenging
conditions, making it possible to distribute 10% Bonus shares this
fiscal year as well.
Your bank has continued its long term vision to be the most
preferred bank in the country by continuing to deliver innovative
products and services across the country through expansion of
service distribution network, while cultivating an environment that
promotes good corporate governance, proactive risk management
practices and corporate social responsibilities.
Furthermore, we will continue to guide and encourage the

management in adopting best international practices, through
the knowledge and dedication of our people, leading to superior
results for our shareholders, thereby contributing to the nation’s
economy.
As we see the days ahead to be more challenging, with sincere

gratitude, we seek the same support and cooperation from all our
stakeholders- customers, employees, shareholders, society and
regulators.
Thank You,
Shiva Ratan Sarada

Chairman
4
5
Board of Mr. Shiva Ratan Sarada
Chairman
Directors Mr. Jagdish P. Chaudhary

Director
Mr. Samson J.B. Rana

Director
Dr. S. K. Dhakal
Director
Mr. Amir Pratap J.B. Rana

Director
Mr. Santoo Shrestha

Director
Mr. Rasendra Bahadur Malla

Director
6
Mr. Samson J.B. Rana
Dr. S. K. Dhakal Mr. Jagdish P. Chaudhary
Mr. Shiva Ratan Sarada
Mr. Amir Pratap J.B. Rana Mr. Santoo Shrestha
Mr. Rasendra Bahadur Malla 7

CEO’s Dear Shareholders,
Message
I am privileged to be leading Kumari Bank at this juncture on your behalf.
As we weather the storm in these most challenging times, I am fully aware of the
responsibility you have bestowed upon me and the management team to lead the
bank. I can assure you that we are committed to delivering best results and taking
the bank to newer heights in spite of the country’s economic challenges we are
faced with.
In the fiscal year that we just completed, the bank has not only enhanced revenues
and business volumes but has managed to do it in conjunction with improvement
in its asset quality. This is justified by our NPA levels, one of the best in banking
industry. The balance sheet of the bank has increased to Rs 18.50 billion in the
fiscal year 2008/09, a growth of 23% compared to previous year’s balance sheet. In
the same period our total loans and advances increased to Rs 14.60 billion from Rs
11.30 billion, a growth rate of 29%. Even with such considerable growth in our loans
and advances portfolio, we have succeeded in reducing our non performing loans
to 0.44% in comparison to 1.32% last year. On the other hand, we have grown our
deposit base by 23% which stands at Rs 15.70 billion. Likewise the operating profit
after provisions for this fiscal year has increased by 35% to Rs 35.60 billion.
Our Earnings Per Share (EPS) stood at Rs 22.04 at the end of this fiscal year
compared with EPS of Rs 16.35 at the end of last fiscal year, an increase of 34.80%.
Furthermore, we issued 10% Bonus Share. Post issuance of Right Share and the
disbursement of Bonus Share proposed this year, the total paid-up capital of the
Bank will stand at Rs 1.48 billion.
We believe in providing access to finance to all, thus we continue to increase our

branch representation all across the country. In addition, we will be leveraging
technology as our major channel for service deliveries.
As we move forward, you will see that the bank will consciously be looking at a
typical businesses through which we are able to generate substantial revenues.
Reliance on interest income alone will not be sufficient to achieve extra-ordinary
results as competition further continues to stiffen in the banking sector.
In summary, Nepal’s currently tumultuous economic scenario notwithstanding, we,

as a bank, are well poised to deliver on our goals for this fiscal year.
The success of Kumari depends on the persistence and vision of its shareholders
and I and my colleagues are deeply grateful for your support.
Radhesh Pant
Chief Executive Officer
8
9
KBL Team
NAME DESIGNATION DEPARTMENT
Radhesh Pant Chief Executive Officer
Udaya Krishna Upadhyay Chief Business Officer
Geha Nath Dhungana Chief Operations Officer
Senior Management Suresh Kumar Karna
Tika Ram Chapagain
Chief Information Officer
Chief Coordination Officer

Binod Narasinha Shrestha Head Institutional Banking, Central Remittance
and Business Development
Sanjay Poudyal Head Corporate Strategy & Development
Saroj Shrestha Head Corporate & Business Banking
Ajit Bhattarai Head Finance & Planning
Bikas Khanal Head Credit Risk Management
Narayan Prakash Bhuju Head Information Technology
Narendra Prasad Chhatkuli Head Legal & Shares and Company Secretary
Rajesh Shrestha Head Card
Ashish Bhattarai Head Human Resources and Central Logistics
Manish Timilsina Head Corporate Credit
Mridul Mainali Head Risk Approval
Parmeshwar Pant Head Treasury & Correspondent Banking
Shreeyukta Thapaliya Pandey Head Corporate Communications
Sipa Regmi Head Marketing & Services
Milan Kumar Maskey Head Foreign Trade
Nirmal Khatiwada Head Internal Audit
Prajwal Pant Head Transaction & Retail Services
Vishal Rauniyar Head Credit Administration & Control Department
10
KBL Team
Sanjeeb Sainju Branch Manager Putalisadak
Binam Kumar Shrestha Branch Manager Biratnagar
Biswas Aryal Branch Manager Birgunj
Sudarshan Jung Rana Branch Manager Pokhara
Branch Managers Bishwa Mani Regmi
Ambar Bhattacharya
Branch Manager
Branch Manager
New Road
Itahari
Deepak Adhikari Branch In-Charge Dry Port
Anuradha Choudhary Branch Manager Kumaripati
Prabin Jha Branch Manager Gongabu
Roshan Chandra Gautam Branch Manager Narayangadh
Niraj Rai Branch Manager Birtamod
Suresh Raj Pandey Branch Manager Damauli
Bhupendra Khadka Branch Manager Baglung
Manish Timilsina Branch Manager Durbar Marg
Badri Kedar Shrestha Branch Manager Bhairahawa
Biswo Poudel Branch Manager Butwal
Kanchan Sharma Branch Manager Baneshwor
Namita Shakya Branch Manager Chabahil
Akash Dahal Branch In-Charge Urlabari
Samjhana Rana Branch Manager Budanilkantha
Renu Koirala Branch Manager Koteshwor
11
Dear Shareholders,
Director’s On behalf of the Bank and the Board of Directors, we
take pleasure in welcoming you to this 9th Annual
Report General Meeting of the Bank and would like to present

to this august gathering the Bank’s Annual Report for
the F/Y 2008/09.
1. Review of Bank’s Financial Performance in Fiscal Year 2008/09
The year under review saw sustained political instability in Nepal and unfavorable economic
environment both inside and outside Nepal, a highly competitive banking environment on
account of the ever increasing numbers of Financial Institutions in Nepal. Despite these and
numerous other challenges, the Bank has been able to substantially grow in all dimensions
in the year under review, which we are proud to share with vide the enclosed Financial
Statements.
Major highlights of the financial performance of the Bank are as follows:
Financial Highlights
Rs in million
Increase/
F/Y F/Y Decrease Growth
Particular 2008/09 2007/08 (Rs) (%)
Total Asset 18,538.56 15,026.59 3,511.97 23.37

Deposit Liabilities 15,710.93 12,774.28 2,936.65 22.99
Loans and Advances
(Net) 14,795.26 11,522.38 3,272.88 28.41
Investment 1,540.83 2,194.16 (655.33) 29.77
Interest Income 1374.72 957.24 417.48 43.61
Interest Expenses 816.20 498.73 317.47 63.66
Net Interest Income 558.52 458.51 100.01 21.81
Other Operating
Income 157.85 108.11 49.74 46.01
Other Operating
Expenses 302.48 237.71 64.77 27.25
Operating Profit 413.89 328.91 84.98 25.84
Net Profit 261.44 174.93 86.51 49.45
Growth in Business
The financial statement of the review period shows all round growth which can be judged
by the increase in the Bank’s Balance Sheet; the Bank’s Balance Sheet has increased by
23.37% to Rs 18.53 billion in the F/Y 2008/09 compared to last fiscal year.
Deposit
The deposit of the Bank has increased by 22.99 % to Rs 15.71 billion in the review period.
Rs in million
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2.000
-
12 2005/6 2006/7 2007/8 2008/9 2009/10
Food for thought!
Name it and he has it. Mr. Dayananda Khadgi, the proprietor of M/S Sea Food has made it his business to bring to
Kathmandu gastronomical delights. From sea food to cold cuts, frozen peas to potato chips, Sea Food is importer
and wholesaler to host of five star eateries and Super markets in Kathmandu.
The main meat-processing unit located at Dallu covers an area of 1.8 ropani of land. Owning the entire factory
premise, Sea Food has already set up same type of meat processing unit in the name of Ram Nagar Cold Store at
Narayanghat Chitwan, which is also involved in trading sea food items to cover a potential market of Narayanghat
and Pokhara since past six years.
Mr. Dayananda Khadgi as humble as he is states, that in Kumari Bank he found an able partner who helped him
realize his vision. Banking with Kumari Bank since 2001, the bank holds him in very high esteem.
13
Lending
In the FY 2008/09, total Loans and Advances stood at Rs 14.79 billion marking a substantial
growth of 28.41%. Although a substantial growth has been observed, the Bank continues to
adopt a stringent and selective approach towards its lending portfolio, which can be gauged
by the Bank’s success in maintaining Non-Performing Assets (NPA) at one of the lowest
levels in the banking industry in Nepal The Non-Performing Loan of the Bank was 0.44%
in the FY 2008/09. The comparative figure of Loan and Advances in the last five years is
listed below.
Rs in million
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2.000
-
2005/6 2006/7 2007/8 2008/9 2009/10
Investment
The Bank continues to follow a policy of investing in Risk-Free Government Securities

thereby maintaining adequate balance between Profitability and Liquidity. Further, to benefit
from opportunities available in the local and international Money Markets, the Bank has
been selectively investing in Shares, Bonds and other Financial Instruments both inside
and outside Nepal. The total value of such investments is Rs 1.54 billion as at the end of
F/Y 2008/09.
Profit
On account of the capital structure being augmented by ploughing back of profit by

means of Bonus Shares, the Bank has been able to post Operating Profit and Net Profit of
Rs 413.90 million and Rs 261.40 million respectively. The Bank saw a growth of 43.86% in
FY 2008/09 with the Gross Operating Income reaching Rs 1.53 billion. The Total Operating
Expenditure of the Bank stood at Rs 1.11 billion, an increase of 51.90 % during the review
period.
Capital Management
In the review period, Capital Management of the Bank has been quite satisfactory. After
issuance of Bonus Shares, the core and supplementary capital of the Bank at the end of
FY 2008/09 were Rs 1.61 billion and Rs 438.10 million, taking the Total Capital value to
Rs 2.05 billion. The Bank has been able to maintain capital adequacy ratio at 11.56 % at the
year end against the statutory requirement of 10% of Nepal Rastra Bank. It is believed that
this will help the Bank expand its Balance Sheet and Net Profit in the coming years
The Bank’s 8th Annual General Meeting had decided to issue Bonus Shares worth
Rs 107.80 million and Right Shares worth Rs 177.90 million. The Bonus Shares thus
declared have already been disbursed and the affect of which can be seen in increased
capital in the Balance Sheet. However, on account of numerous hindrances faced by the
Bank during the period under review including frequent changes in the management and
other technical issues, the Bank has not been able to issue Rights Share decided in the
last Annual General Meeting. We would like to inform that the process of issuance of Right
Shares is in its final stages. Post Right Share issuance and the disbursement of Bonus
Share proposed this year, the total paid-up capital of the Bank will stand at Rs 1.48 billion.
14
Health makes wealth!
Mr. Balaram Subedi the proprietor of M/S Balaram Dhanwantary Aushadhalaya, Narayangarh having
sound business knowledge of medicines and medical items sought a partner that would help him grow in
his field of medical and health care.
Keeping pace with father’s ambitions his son Mr. Som Raj Subedi with the help of Kumari Bank has
expanded the family business from a normal pharmacy to now that offers a mini pathology lab and a
minor surgical facility. They also invite the Doctors from Kathmandu on monthly basis to their clinic in
order to bring quality health care for people of Narayangarh.
15
Contribution in Government Revenue
The Bank had paid Rs 102 million to the Government of Nepal as Corporate Tax in
FY 2007/08 but this year in view of the growth in Profit, the Bank has paid Rs 113.70 million
as Corporate Tax.
Products & Services
To enable our valued customers have the competitive edge in their respective area of
operations, the Bank continues to provide innovative and modern banking products and
services leveraged by the latest available technological know-how.
Our products and services cover the whole range of banking requirements of our customers,
be it in the Retail, SMEs or Corporate areas. In addition to providing brick and mortar banking
services, the Bank from its inception has been providing IT based solutions like Internet
Banking, SMS Banking and globally accepted electronic VISA Debit Cards.
To cater to the ever increasing Nepalese diaspora across the world, the Bank has launched
its own e-remittance platform – Kumari Remit, and has received immense reception from
remitters The Bank will continue to embrace the latest technological innovations in future to
provide value addition to its customers
Branch Expansion
Acting as a conduit to the economic activities across the country and to cater to the needs
of customers, the Bank, over the years, has been opening branches in strategic locations in
Nepal. The period under review witnessed the Bank opening up of 3 more branches. With
the Bank planning to open additional 11 branches in the running fiscal year, the Bank’s
points of representation will reach 30. Additionally the Bank continues to reach out to its
varied clientele base through more than 20 ATMs spread throughout the country.
Corporate Governance
Being in a business which requires a lot of confidence on the part of customers, the Bank is
acutely aware of instilling a culture which espouses a high degree of Corporate Governance
at all levels in the Bank.
The Bank works in an environment which is equitable and transparent. In all its dealings
with both the internal and external stakeholders, the Bank practices non-discriminatory
policies taking into account various salient environmental nuances. The Bank also takes a
pro-active approach in Managing Risk and following both the spirit and letter of various rules
and regulations.
To be able to properly manage various risks inherent to its business and to stimulate a
culture of accountability, the Board has constituted numerous sub-committees in the Bank,
which look after various facets of banking.
To further strengthen the Bank and to take it to newer heights, the Board has recently
appointed Mr. Radhesh Pant as the CEO. Mr. Pant comes with a distinguished banking
background, having been the Managing Director of a well known Nepalese bank in addition
to being the President of Nepal Bankers Association – the apex body of banks in Nepal.
Risk Management
Management of Risk forms an integral part of bank’s philosophy. Risk is managed

16
Hit the nail on the head!
Initially a banker by profession, Mr. Robin Rijjal surprised everyone when he resigned from his lucrative
job and started a hardware shop in Biratnagar in small scale. When he started his hardware shop, there
was a fierce completion amongst the existing hardware shops. However with the financial support from
Kumari Bank and his desire to excel in business, in just five years time he is giving tough competition to
the hardware shops that were in business since decades. Today his surprise move from a banker to a
business man has paid off big time.
17
pro-actively at all levels starting from the Board of Directors, Sub-committees and across
Departmental functions. Additionally, an independent Department accountable solely to the
CEO has also been created which looks at a varied range of Risk from a holistic point of
view, to further strengthen the risk taking ability of the Bank.
2. Review of Economic Scenario
A large number of developed economies were affected by the global economic recession but
were able to limit the negative ramifications of the recession to a certain extent, on account of
the aggressive Monetary Policies adopted across the world by Central Banks in conjunction
with their respective Government. Being a part of a closely knit financial world, banks even in
the developing economies were affected by the slowdown in major countries.
Nepal also has not been beyond the affects of this fiscal malaise. Signs of slowdown in worker
Remittances have started to surface in recent months, triggering fear that it might lead to
tightening of the money supply in the country which in turn may have negative consequences
for the overall economy. Further, if the global financial situation does not improve, the country
stands to lose out in its major source of foreign currency related to the Tourism Industry and
also may have an impact on the trade cycle and International Institutional assistance.
Taking into consideration the macro economic indicators, country’s GDP growth is estimated
to be around 3% in the review period and is expected to grow at 3.5% next year. The GDP
growth at basic price is expected to be 3.8% in the FY 2008/09. The agriculture sector that
contributes 36% to the GDP grew at 2.2% as against 5.3% of the previous year. Continuous
political uncertainties, deteriorating law and order, increasing bandhas and strikes, rising energy
crisis gives indication that economic activities would not be accelerated in the coming year.
In the FY 2008/09, total export went up by 13.50% in contrast to a nominal decline of 0.20%
in the previous year. In FY 2008/09, total imports soared by 28.20% in comparison to an
increase of 14% in the previous year. The sharp rise in the remittances and foreign assistance
contributed positively in the overall Balance of Payment and Gross Foreign Exchange Reserves
of the country at mid-July 2009 stood at Rs 280 billion, an increase of 31.70% compared to the
level as at mid-July 2008. The government expenditure increased by 32% to Rs 1,980 billion
in FY 2008/09 against an increase of 19.70% of the previous year. The Budget Deficit of the
government rose by 16.30% to Rs 26.2 billion in FY 2008/09. Such deficit was Rs 22.50 billion
in FY 2007/08. Likewise, the Annual Average Consumer Inflation increased to 13.20% in the
review period compared to an increase of 7.70% in FY 2007/08.
Banking industry has made new strides in the review period registering positive growth in
numbers and transactions volume. With the entry of new players in the market, competition
in the banking sector has intensified. The number of A Class licensed institutions has
increased to 26 in FY 2008/09 from 25 in previous year. Similarly, the number of B, C and
D class licensed institutions has increased to 63, 77 and 76 respectively in the FY 2008/09.
Likewise, the total deposits of the commercial banks have increased to Rs 549.80 billion in the
FY 2008/09 with 30.40% growth over the previous year.
3. Sub-Committees
Pursuant to the existing regulations and the Bank’s own internal guidelines, the following
committees and sub-committees are in existence in the Bank:
Audit Committee
In addition to carrying out responsibilities statutorily required, the Audit Committee is involved
in the evaluation and recommendation of External Statutory Auditors, defining the scope
18
Fueling success!
In the petrochemical industry, Mr. Bikash Dhamala and Mr. Subodh Koirala’s project would be termed as
relatively small. But for them it was dream project of a lifetime. Kumari Bank the sole banker to Koshi
Petro Chemical Pvt. Ltd., a mini refinery which manufacturers Diesel financed the project. It manufactures
diesel from low viscosity furnace oil/crude oil imported from third country especially Dubai. Today, this
is only the industry in Nepal which currently manufactures of 60KL (60,000 liters) of diesel per day. The
total production of the unit hardly fulfills 10% of the total demand of Diesel of Sunsari Morang Corridor.
With tremendous scope for expansion Koshi Petro Chemical is in process of expanding its production
capacity to 120 KL per day.
19
and responsibilities of the Internal Audit Department, reviewing the findings in the reports
generated by Internal, Statutory and NRB Audit teams and ensuring the Management
complies with all the issues highlighted in the reports. The Bank’s Internal Audit Department
is directly reportable to the Audit Committee for all its activities. At present, three non-
Executive Directors of the Bank, namely, Mr. Samson JB Rana (Convenor), Mr. Jagadish
Prasad Chaudhary and Dr. Shova Kanta Dhakal are in the Committee.
Human Resources Sub-Committee
An organization is as good as its employees. It is through employees that organizations

are differentiated. In view of this, to keep the morale of the employees high in the
extreme environment, a HR Sub-committee is in existence in the Bank with three
Non-Executive Directors of the Bank, namely, Dr Shova Kanta Dhakal (Convenor),
Mr. Amir Pratap JB Rana and Mr. Santoo Shrestha as member The Sub-committee
provides strategic guidance to the Management on issues of staff recruitment, staff
development and benefits.
Executive Sub-Committee
To expedite decision making with regards to Credit and other banking issues, an Executive
Sub-Committee is in existence in the Bank. The Sub-Committee consists of two Non-
Executive Directors, Mr. Santoo Shrestha (Convenor), Mr. Rasendra Bahadur Malla
and CEO of the Bank as its third member. The Sub-Committee’s scope, function, role,
responsibilities and authority have been clearly spelt out and followed accordingly.
Outside of the approved meeting allowances, Conveners and Members of the Committees
and Sub-Committee have not been provided with any additional monetary or non-monetary
benefits.
4. Management Level Committees
For effective and efficient decision making capabilities in the Bank, various committees have
been functioning under the convenorship of the CEO. These committees are responsible
for both the day to day activities as well as strategic insights into the Banks functioning.
Committees so constituted are, Management Committee, Assets and Liability Management
Committee, Bid Committee, Loan Recovery Committee, Discipline and Performance Review
Committee.
5. Human Resources
The Human Resource policy of the bank is focused on hiring and retaining competent
people, and investing in them because the bank strongly believes that it is the people that
provide the competitive advantage required to sustain and grow in a highly competitive
environment.
The bank is also involved in continuously improving and realigning its resources to meet
the overall goals and objectives of the bank while cultivating an environment that fosters
innovative ideas and promotes good governance.
6. Bank’s Performance In The Current Fiscal Year
As per Nepal Rasta Bank’s statistics, 26 commercial banks, 63 development banks, 77 finance
companies and 76 micro-finance companies are currently in operation in the country. The
number of banks and financial institutions illustrate banking and finance business is extremely
competitive and challenging in the country. Despite this, the Bank has been able to post
20
The power of steel!
Ambe Steels Pvt. Ltd. is a dream project of three individuals; Mr. Shovakar Neupane, Mr. Ramesh Kumar
Agrawal and Mr. Mukunda Prasad Timilsina. It is an upcoming re-rolling plant with Thermex Cooling
Technology to manufacture 81,000MT per annum TMT steel re-bars and Continuous Casting Machine
(Concaster) unit with manufacturing capacity of 160 MT of steel billets per day. Company is second in
the country manufacturing steel billets, which is major raw material to manufacture steel re-bars. Its
factory is located at Barshauli VDC – 6 (At present Gonaha VDC) Rupendehi is spread over around 8.5
bighas of land. The project was financed under the consortium arrangement with Kumari Bank being the
lead bank.
21
significant progress in the first three months of current FY. The achievements of first three
months are listed below.
Financial Highlights of First Three Months of 2009/10

Rs in ‘000
F/Y F/Y Growth in
Particular 2008/09 2009/10 percentage
Loan & Advances 1,24,93,977 1,46,54,828 17.29
Interest Income 3,69,007 4,88,463 32.37
Other Income 35,399 37,453 5.80
Interest Expenses 259,693 320,358 23.36
Other Expenses 57,618 85,840 48.98
Operating Profit 87,095 1,19,718 37.46
7. Programmes in the Current Fiscal Year
Considering the directives of the Nepal Rastra Bank requiring banks to raise their Capital Base
to Rs 2 billion by the F/Y 2012/13 and the five years capital plan formulated by the Bank there
of, the Bank, after a sustained and thorough discussion is proposing issuance of Bonus Share
@10%. We request approval of the same from the floor of the Annual General Meeting.
Nepal Rastra Bank’s circular allows existing founder promoters to decrease their share
ownership to 51% from the existing levels. In view of the fact that the Bank’s existing founder
promoters hold 70% of the shares, a proposal for the reduction of founder promoters share
ownership to 51% and convert the remaining portion into General Shares is being put to
the Annual General Meeting for approval. Further, a proposal is also being put to the floor’s
approval for making necessary amendments in the required clauses of the Bank’s Articles
of Association and Memorandum of Association to reflect the new share ownership and
composition in the Board Structure. Post AGM approval and on obtaining approval from all the
required Governmental bodies, the ownership of Public and Private Shareholders will stand
at 51% and 49% respectively.
8. Changes in Board of Directors
As you are aware, the previous Annual General Meeting appointed Dr. Shova Kanta Dhakal
and Mr. Rashendra Bahadur Malla as Directors of the Bank replacing Mr. Lalit Jung Shahi
and Mr. Surendra Bahadur Khadka respectively. We would like to record our sincere words
of appreciation for the effort put in by our erstwhile Directors and take this opportunity to
welcome the new Directors and wish them an eventful and successful tenure as Directors of
the Bank.
9. Dividend Declaration
Meeting dated 18/06/2066 (October 4, 2009) of the Board of Directors decided to recommend
to the shareholders, distribution of stock dividend @10% and Cash Dividend @0.56% less
applicable taxes from the accumulated profit till F/Y 2008/09. This proposal has further
been approved by Nepal Rastra Bank on 30/06/2066 (October 16, 2009). In view of this,
Rs 125,420,472.00 has been earmarked for the same in the enclosed Annual Report. A
separate special proposal on this matter has been tabled in the AGM for your approval.
10. Board of Directors responses to the Auditor’s Report
No major observations were received from the Bank’s Auditor for the period under review. The
Management has been instructed to act on the suggestions made by the Auditors on a few
common comments relating to the normal banking activities of the Bank. Further, comments
22
Pumped up pride!
Mr. Sakaldev Raut Kurmi is known as an industrious and honest person. He started his business being a
petrol tanker driver with purchase of an old model petrol tanker seven year back. Today, he is the Proprietor
of Rishav Oil Store; an authorized dealer of NOC located on the busy Birgunj–Kalaiya road and has completed
its three years of operation.
Since its inception, Kumari Bank is the sole banker to the unit. Starting with only Rs 1.5 million overdraft
facility to meet working capital requirement of the firm, currently Rishav Oil Store enjoys Rs 3.5 million
facility. In just a spate of three years, Mr. Sakaldev’s has been able to increase its sales turnover from
Rs 34.0 million to above Rs 60.0 million covering the market of Bara and Parsa.
Future is nothing but spectacular. With a plan to install another petrol pump named ‘Dilip Oil Store’ at
Kalaiya-Nijgadh highway for which Mr. Sakaldev has already acquired a plot of land just 200 meters away
from Kalaiya Municipality area.
23
and instructions given by Nepal Rastra Bank to the Bank during the approval of the Financial
Statements for the F/Y 2008/09 have been published in the enclosed Annual Report for your
reference.
11. Forfeited Shares
No shares were forfeited during the review period.
12. Performance of the Bank and its Subsidiary Companies
Details of the Bank’s performance in the period under review has been detailed in the enclosed
Financial Statements. The Bank does not have any Subsidiary Companies till date.
13. Important Information Provided by Valued Shareholder
No such information was received.
14. Personal Interest of Directors and his/her Relatives on dealings with bank
No such dealings were recorded.
15. Details of share Re-Purchase
No such activities were recorded.
16. Details of Bank’s Administrative Expenses
Following are the major heads under the Bank’s Administrative Expenses during
F/Y 2008/09:
Staff Expenses : Rs 115,984,919.00

Other Operating Expenses : Rs 186,502,160.00
Detailed breakdown of the above can be found in Schedules 4.23 and 4.24 respectively in the
enclosed Financial Statements.
17. Amount to be paid to the Bank by Directors, Managing Director, Chief

Executive Officer, Promoters of the Bank and their relatives or firm, company
or organized institutions
Mr. Dinesh Lal Shrestha, father-in-law of Mr. Santoo Shrestha, a representative from the
Promoters Group in the Board of Directors and Mr. Nirmal Pradhan, father-in-law of
Mr. Rasendra Bahadur Malla, a representative from the Public Shareholders in the Board of
Directors have availed Credit facilities from the Bank.
18. Remuneration, Allowance and Facilities provided to Directors, Managing

Director and Chief Executive Officer:
Details of allowance received by the Directors as per approved guidelines are as follows:
Chairman Directors
Meeting Allowance Rs 10,000.00 Rs 8,000.00
Monthly Business Development Allowance Rs 2,000.00 Rs 2,000.00
Total Rs 1,911,422.00
24
Rowing to prosperity!
The stories of three proud men; Mr. Sunder Bika, Mr. Tek Bahadur Bhujel and Mr. Maniram Pariyar have a
very modest beginning. Engaged in a day-to-day, hand to mouth existence, the boatmen often wondered what
the future held in store for them. Fortunately, their hard work and determination found an able partner in
Kumari Bank.
With financial assistance from Kumari Bank, each of them got their own boat through a simple short-loan
procedure. Rowing their way to prosperity, within no time all three successfully repaid their loans and now
are proud owners of their livelihoods. Going by the experience with Kumari Bank, Mr. Tek Bahadur Bhujel
even today wonders how a bank trusted an illiterate individual from marginal society for a loan. Thankfully,
the trust of Kumari Bank in three honest men stands vindicated today.
25
Considering that the current approved Travelling and Dearness Allowances of the Directors
are low, the floor is requested to make adequate adjustments in the same.
Annual Salary, Allowance and other facilities provided to Chief Executive Officer and Managers
/ Other Executives.
(Rs)
S.No Particulars C.E.O Managers / Other Executives

1. Salary 2,637,436.00 7,242,522.00
2. Allowances 684,077.00 1,816,755.00
3. Provident Fund 263,743.60 724,252.20
4. Dashain Allowance 303,190.00 827,430.00
5. Total Remuneration 3,888,446.00 10,610,959.20
6. Bonus As per the Bonus Act
7. Vehicle, Fuel and Maintenance Allowance,
Driver Facility, Personal Loan Scheme, As per the
Newspaper and Telephone facility Contract As per bank’s
8. Medical Allowance, between the Personal
Leave Fare Allowance, Bank and the Policies
Accident Insurance, CEO Guidelines
Life Insurance
In the period under review, the Board of Directors approved the resignation of,
Mr. Kapil Sharma – General Manager of the Bank effective June 14, 2009 and handed over
all the responsibilities handled by him to Mr. Bhusan Rana – Deputy General Manager.
Subsequent to the approval of Mr. Rana’s resignation from the services of the Bank on July
27, 2009, the Bank appointed Mr. Radhesh Pant as the CEO effective the same day.
19. Uncollected Cash Dividend by shareholders:
No such cases recorded.
20. Others:
None
Acknowledgment
We would like to express our sincere gratitude and appreciation to all our shareholders,
customers and well wishers for the continued support and cooperation bestowed upon us and
would like reiterate that we are indebted for their constant invaluable benefaction.
We are also thankful to external auditor Mr. Madan Krishna Sharma for his valuable advice
and Nepal Rastra Bank for its relentless support and guidance. Similarly, we appreciate the
efforts of the staff members for their relentless hard work in delivering such good results.
Thanking you.
For and on behalf of the Board of Directors,
Shiva Ratan Sarada

Chairman
Dr. Shova Kanta Dhakal

Director
26
CSC & Co
Chartered Accountants
1955, Tanka Prasad Ghumti Sadak

Babar Mahal
PO Box: 4861, Kathmandu, Nepal
Tel :+977-1-4259414, 4268798, 4251518
Fax :+977-1-4244255
E-mail: csc@cscnepal.com
Auditors’ To the Shareholders of Kumari Bank Limited
Financial statements and management’s responsibility

Report We have audited the accompanying financial statements of Kumari Bank Limited which
comprises the balance sheet as of July 15, 2009 (Ashadh 31, 2066) and the profit and loss
account, statement of changes in equity and cash flow statement for the year then ended and
a significant accounting policies and other explanatory notes. These financial statements are
the responsibility of the Bank’s management.
Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with Nepal Standards on Auditing. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
Report on the requirements of Banks and Financial Institutions Act 2063 and
company Act 2063
We have obtained satisfactory information and explanations asked for, which to the best of our
knowledge and belief were necessary for the purpose of our audit; the returns received from the
branch offices of the bank were adequate for the purpose of the audit; the financial statements
including the Balance Sheet, the Profit and Loss Account and the Cash flow Statement have
been prepared in accordance with the methods and format specified by Nepal Rastra Bank,
and they are in agreement with the books of accounts of the Bank; and the accounts and
records of the Bank are properly maintained in accordance with the prevailing laws.
To the best of our information and according to the explanation given to us, in the course of our
audit, we observed that the bank has taken actions for protection of the interest of depositors
and investors; the capital fund and risk bearing fund were adequately maintained; loans have
been written off as specified; the business of the Bank was conducted satisfactorily and the
Bank’s transactions were found to be within the scope of its authority. We did not come across
cases where the board of directors or any director or any office bearer of the Bank has acted
contrary to the provisions of law or caused loss or damage to the Bank or committed any
misappropriation or violated directives of Nepal Rastra Bank.
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of the
Bank as of 31 Ashad, 2066 (15 July 2009), and its financial performance and cash flows for the
year then ended in accordance with Nepal Accounting Standards, the directives From Nepal
Rastra Bank, Bank and Financial Institution Act 2063 and Company Act 2063.
Date : 20 Ashwin, 2066 Madan Krishna Sharma

(6 Oct, 2009) Partner
CSC & Co.
Place : Kathmandu
27
Kumari Bank Limited
Balance Sheet
End of Ashad 2066 (15 July 2009)
Capital and Liabilities Schedule Current Year (Rs) Previous Year (Rs)
1. Share Capital 4.1 1,186,099,200 1,070,000,000
2. Reserves and Funds 4.2 438,853,508 294,885,269
3. Debentures & Bonds 4.3 400,000,000 400,000,000
4. Borrowing Outstanding 4.4 293,420,000 100,000,000
5. Deposit Liabilities 4.5 15,710,925,263 12,780,153,444
6. Bills Payable 4.6 70,087,025 65,296,714
7. Proposed Dividend Payable - 6,583,752 -
8. Income Tax Liabilities - 234,986 -
9. Other Liabilities 4.7 432,361,375 325,914,001
Total Capital and Liabilities 18,538,565,109 15,036,249,428
Assets Schedule Current Year (Rs) Previous Year (Rs)

1. Cash Balance 4.8 549,108,504 565,641,118
2. Balance with Nepal Rastra Bank 4.9 1,120,760,644 244,576,115
3. Balance with Banks/Financial Institution 4.10 106,429,652 123,624,444
4. Money at Call and Short Notice 4.11 30,000,000 55,360,000
5. Investment 4.12 1,510,828,482 2,138,797,590
6. Loans, Advances and Bills Purchase 4.13 14,593,346,830 11,335,087,939
7. Fixed Assets 4.14 247,832,774 222,000,872
8. Non Banking Assets 4.15 - 3,140,779
9. Other Assets 4.16 380,258,223 348,020,571
Total Assets 18,538,565,109 15,036,249,428
Contingent Liabilities Schedule 4.17

Declaration of Directors Schedule 4.29
Capital Adequacy Table Schedule 4.30 (A)
Statement of Credit Risk Schedule 4.30 (B)
Applicable Credit Risk Mitigants Schedule 4.30 (C)
Statement of Operational Risk Schedule 4.3 (D)
Statement of Market Risk Schedule 4.30 (E)
Principal Indicators Schedule 4.31
Principal Accounting Policies Schedule 4.32
Notes to Accounts Schedule 4.33
Details of Loan Availed by Promoters schedule 4.34 Comparative statement of audited & unaudited financial results schedule 4.35.
Unaudited Financial Result schedule 4.36.
As per our report of even date
Radhesh Pant Shiva Ratan Sarada Amir Pratap J.B. Rana Santoo Shrestha Samson J.B. Rana
Chief Executive Officer Chairman Director Director Director
Geha Nath Dhungana Jagdish P. Chaudhary Dr. Shova Kanta Dhakal Rashendra B. Malla
Chief Operations Officer Director Director Director
Madan K. Sharma
Partner,
CSC & Co.,
Date: 6 Oct, 2009

Place: Kathmandu
28
Kumari Bank Limited
Profit and Loss Account
From 1st Shrawan 2065 to 31 Asadh 2066 (From 16 July 2008 to 15 July 2009)
Particulars Schedule Current Year (Rs) Previous Year (Rs)

1. Interest Income 4.18 1,374,722,467 957,245,724
2. Interest Expenses 4.19 816,202,890 498,734,222
Net Interest Income 558,519,577 458,511,502
3. Commission and Discount 4.20 79,104,277 48,494,633
4. Other Operating Income 4.21 19,746,723 17,805,210
5. Exchange Fluctuation Income 4.22 59,001,781 41,807,623
Total Operating Income 716,372,358 566,618,968
6. Staff Expenses 4.23 115,984,919 89,570,438
7. Other Operating Expenses 4.24 186,502,160 148,143,138
8. Exchange Fluctuation Loss 4.22 - -
Operating Profit before Provision for Possible Losses 413,885,279 328,905,392
9. Provision for Possible Losses 4.25 57,403,005 64,023,790
Operating Profit 356,482,274 264,881,602
10. Non Operating Income /(Loss) 4.26 1,111,653 15,588,389
11. Loan Loss Provision Written Back 4.27 47,021,147 7,240,964
Profit from Regular Activities 404,615,074 287,710,955
12. Profit/Loss from Extra-Ordinary Activities 4.28 (876,031) (4,531,068)
Net profit after considering all activities 403,739,043 283,179,887
13. Provision for Staff Bonus 36,703,549 25,743,626
14. Provision for Income Tax 105,592,905 82,506,034
* Current Year’s 113,669,682 80,721,591
* Upto Previous year - -
* Deferred Tax (8,076,777) 1,784,443
Net Profit/Loss 261,442,589 174,930,227
Schedule 4.18 to 4.28 and 4.32- 4.35 form integral part of Profit and Loss Account
Chief Operations Officer Director Director Director
Madan K. Sharma
Partner,
CSC & Co.,
Date: 6 Oct, 2009

Place: Kathmandu
29
Kumari Bank Limited
Profit and Loss Appropriation Account
Particulars Schedule Current Year (Rs) Previous Year (Rs)

Income
1. Accumulated Profit up to Last Year 41,357,165 35,031,460
2. This Year’s Profit 261,442,589 174,930,227
3. Exchange Fluctuation Fund
4. Capital Adjustment Fund -
Total 302,799,754 209,961,687
Expenses
1. Accumulated Loss up to Last Year
2. Current Year’s Loss
3. General Reserve Fund 52,288,518 34,986,045
4. Contingent Reserve
5. Institution Development Fund
6. Dividend Equalization Fund
7. Staff Related Reserves
8. Proposed Dividend 6,583,752 5,675,116
9. Issue of Proposed Bonus Shares 118,836,720 107,827,200
10. Special Reserve Fund
11. Exchange Fluctuation Fund 7,754 116,161
12. Capital Redemption Reserve Fund 95,000,000 20,000,000
13. Capital Adjustment Fund
14. Previous Year’s Tax Adjustment 3,063,398 -
15. Deferred Tax Fund 6,292,334
Total 282,072,476 168,604,522
16. Accumulated Profit/(Loss) 20,727,278 41,357,165
Chief Operation Officer Director Director Director
Madan K. Sharma
Partner,
CSC & Co.,
Date: 6 Oct, 2009

Place: Kathmandu
30
Kumari Bank Limited
Statement of Changes in Equity
Particulars Share Capital Accumulated General Capital Share Exchange Other Reserve Total
Profit/Loss Reserve Fund Reserve Fund Premium Fluctuation Fund & Fund Amount (Rs)
Opening Balance 1,070,000,000 41,357,165 119,847,501 - 5,853,403 127,827,200 1,364,885,270

Adjustments 116,099,200 (20,629,888) 52,288,518 - - 7,754 112,301,854 260,067,438
Net profit for the period 261,442,589 261,442,589
Transfer to General Reserve (52,288,518) 52,288,518 -
Capital Adjustment Fund -
Declaration of Dividend (6,583,752) (6,583,752)
Exchange Fluctuation Fund (7,754) 7,754 -
Right Share Issued 8,272,000 8,272,000
Issue of Bonus Share 107,827,200 (107,827,200) -
Proposed Bonus Share (118,836,720) 118,836,720 -
Capital Redemption Fund (95,000,000) 95,000,000 -
Previous Year tax Adjustment (3,063,398) (3,063,398)
Deferred Tax Fund (6,292,334) 6,292,334 -
Closing Balance 1,186,099,200 20,727,278 172,136,019 - - 5,861,157 240,129,054 1,624,952,708
Chief Operation Officer Director Director Director
Madan K. Sharma
Partner,
CSC & Co.,
Date: 6 Oct, 2009

Place: Kathmandu
31
Kumari Bank Limited
Cash Flow Statement
From 1st Shrawan 2065 to 31 Ashad 2066 ( From 16 July 2008 to 15 July 2009)
Particulars Current Year (Rs) Previous Year (Rs)
(A) Cash Flow from Operating Activities 914,637,801 (373,116,233)
1. Cash Received 1,533,633,183 1,080,550,334
1.1 Interest Income 1,370,968,716 956,854,479
1.2 Commission and Discount Income 79,243,277 48,494,633
1.3 Income from Foreign Exchange transaction 59,001,781 41,807,623
1.4 Recovery of loan written off - -
1.5 Other Income 24,419,409 33,393,599
2. Cash Payment (1,191,574,514) (809,005,678)
2.1 Interest Expenses (803,428,742) (493,513,029)
2.2 Staff Expenses (152,688,468) (115,314,064)
2.3 Office Overhead Expenses (136,686,240) (113,141,483)
2.4 Income Tax Paid (98,771,064) (82,506,034)
2.5 Other Expenses - (4,531,068)
Cash Flow before changes in Working Capital 342,058,669 271,544,656

Increase /(Decrease) of Current Assets (2,649,937,224) (2,851,731,892)
1.(Increase)/Decrease in Money at Call and Short Notice 25,360,000 316,855,000
2. (Increase)/Decrease in short term Investment 634,769,108 (442,511,675)
3. (Increase)/Decrease in Loans, Advances and Bills Purchase (3,273,756,619) (2,459,947,172)
4. (Increase)/Decrease in Other Assets (36,309,713) (266,128,045)

Increase /(Decrease) of Current Liabilities 3,222,516,356 2,207,071,003
1. Increase/(Decrease) in Deposits 2,930,771,819 2,217,189,816
2. Increase/(Decrease) in Certificates of Deposits
3. Increase/(Decrease) in Short Term Borrowings 193,420,000 (112,970,000)
4. Increase/(Decrease) in Other Liabilities 98,324,537 102,851,187

(B) Cash Flow from Investment Activities (80,452,678) (85,155,041)
1. (Increase)/Decrease in Long-term Investment (6,800,000) (17,867,500)
2. (Increase)/Decrease in Fixed Assets (74,969,016) (67,678,786)
3. Interest income from Long term Investment 1,316,338 391,245
4. Dividend Income - -
5. Others - -
(C) Cash Flow from Financing Activities 8,272,000 720,000,000
1. Increase/(Decrease) in Long term Borrowings (Bonds,Debentures etc) - 400,000,000
2. Increase/(Decrease) in Share Capital 8,272,000 320,000,000
3. Increase/(Decrease) in Other Liabilities - -
4. Increase/(Decrease) in Refinance/facilities received from NRB - -

(D) Income/Loss from change in exchange rate in Cash & bank balances - -
(E) This Year’s Cash Flow from All Activities 842,457,123 261,728,726
(F) Opening Balance of Cash and Bank Balances 933,841,677 672,112,951
(G) Closing Balance of Cash and Bank Balances 1,776,298,800 933,841,677
32
Schedule 4.1
Kumari Bank Limited
Share Capital and Ownership
1. Share Capital
1.1 Authorized Capital 1,600,000,000 1,600,000,000
a) 16,000,000 Ordinary Shares of Rs 100 each 1,600,000,000 1,600,000,000
b) ………...Non-redeemable Preference Shares of Rs…....each - -
c) …………Redeemable Preference Shares of Rs……….. each - -
1.2 Issued Capital 1,186,099,200 1,080,000,000
a) 11,860,992 Ordinary Shares of Rs 100 each 1,186,099,200 1,080,000,000
b) ………..Non-redeemable Preference Shares of Rs….... each - -
c) …………Redeemable Preference Shares of Rs……….. each - -
1.3 Paid Up Capital 1,186,099,200 1,070,000,000
a) 11,860,992 Ordinary Shares of Rs100 each 1,186,099,200 1,070,000,000
b) ……….Non-redeemable Preference Shares of Rs……..each - -
c) …………Redeemable Preference Shares of Rs………...each - -
Kumari Bank Limited

Share Ownership
Current Year Previous Year

Particulars % (Rs) % (Rs)
A. Promoters 70 830,269,440 70 749,000,000
1.1 Government of Nepal - - - -
1.2 Foreign Institution - - - -
1.3 “A” Class Liscensed Institutions - - - -
1.4 Other Liscensed Institutions - - - -
1.5 Other Institutions 0.12 1,425,600 0.12 1,284,000
1.6 Personal 69.88 828,843,840 69.88 747,716,000
1.7 Others - - - -
B. General Public 30 355,829,760 30 321,000,000
Total 100 1,186,099,200 100 1,070,000,000
33
Share Capital And Ownership
List of Shareholders Holding Share Capital of 0.5% or More
S.N. Name Current Year Previous Year

Amount % Amount %
1. Noor Pratap J. B. Rana 77,220,000.00 6.51 70,200,000.00 6.50
2. Laxman Shrestha 71,280,000.00 6.01 64,800,000.00 6.00
3. Amir Pratap J. B. Rana 60,112,800.00 5.07 54,648,000.00 5.06
4. Sabitri Gurung 47,520,000.00 4.01 43,200,000.00 4.00
5. Gaurab Agrawal 36,872,000.00 3.11 29,160,000.00 2.70
6. Rishi Agrawal 28,512,000.00 2.40 25,920,000.00 2.40
7. Sanjay Lama 23,760,000.00 2.00 21,600,000.00 2.00
8. Rajendra Prasad Shrestha 23,760,000.00 2.00 21,600,000.00 2.00
9. Bidhya Krishna Shrestha 21,780,000.00 1.84 18,360,000.00 1.70
10. Govinda Das Shrestha 17,820,000.00 1.50 16,200,000.00 1.50
11. Yagya Pratap Rana 17,208,400.00 1.45 18,144,000.00 1.68
12. Mahabir Prasad Goyel 15,681,600.00 1.32 14,256,000.00 1.32
13. Manju Tapadiya 11,989,800.00 1.01 10,800,000.00 1.00
14. Bhim Krishna Udas 11,880,000.00 1.00 10,800,000.00 1.00
15. Phurba Wangdel Lama 11,880,000.00 1.00 10,800,000.00 1.00
16. Anil Das Shrestha 11,880,000.00 1.00 10,800,000.00 1.00
17. Santoo Shrestha 11,880,000.00 1.00 10,800,000.00 1.00
18. Januki Kumari J. B. Rana 11,880,000.00 1.00 10,800,000.00 1.00
19. Anupam Rathi 10,692,000.00 0.90 9,720,000.00 0.90
20. Nirmal Pradhan 10,689,700.00 0.90 10,789,948.00 1.00
21. Shree Niwas Sharada 10,454,400.00 0.88 9,504,000.00 0.88
22. Shiva Shanker Agrawal 10,406,800.00 0.88 9,460,800.00 0.88
23. Kumud Kumar Dugad 10,131,000.00 0.85 7,560,000.00 0.70
24. Antu Shrestha 9,266,400.00 0.78 8,424,000.00 0.78
25. CIT 8,910,000.00 0.75 8,100,000.00 0.75
26. Atmaram Murarka 8,316,000.00 0.70 7,560,000.00 0.70
27. Pradeep Kumar Murarka 8,316,000.00 0.70 7,560,000.00 0.70
28. Pashupati Murarka 8,316,000.00 0.70 7,560,000.00 0.70
29. Naresh Dugad 8,316,000.00 0.70 7,560,000.00 0.70
30. Bikash Dugad 8,316,000.00 0.70 7,560,000.00 0.70
31. Prava Laxmi Rana 7,920,000.00 0.67 8,640,000.00 0.80
32. Gauri Shrestha 7,160,700.00 0.60 7,108,428.00 0.66
33. Jagadish Prasad Chaudhary 7,128,000.00 0.60 6,480,000.00 0.60
34. Sharmila Aryal 7,128,000.00 0.60 6,480,000.00 0.60
35. Dev Kishan Mudanda 7,128,000.00 0.60 6,480,000.00 0.60
36. Rita KC 7,084,000.00 0.60 8,640,000.00 0.80
37. Vidushi Rana 6,890,400.00 0.58 6,264,000.00 0.58
38. Jamuna Maheshwori Rathi 6,544,300.00 0.55 8,709,220.00 0.81
39. NCM Mutual Fund 6,028,000.00 0.51 6,750,000.00 0.63
40. Sandeep Lama 5,940,000.00 0.50 5,400,000.00 0.50
41. Uttam Prasad Bhattarai 5,940,000.00 0.50 5,400,000.00 0.50
42. Rakshya Pahadi 5,940,000.00 0.50 5,400,000.00 0.50
43. Surender Bhandari 5,940,000.00 0.50 5,400,000.00 0.50
34
Kumari Bank Limited Schedule 4.2
Reserves and Funds

Particulars Current Year Rs Previous Year Rs
1. General Reserve Fund 172,136,019 119,847,501
2. Proposed Bonus Share 118,836,720 107,827,200
3. Capital Reserve Fund - -
4. Capital Redemption Reserve 115,000,000 20,000,000
5. Capital Adjustment Fund - -
6. Other Reserve & Funds - -
a. Contingent Reserve - -
b. Institution Development Fund - -
c. Dividend Equalization Fund - -
d. Special Reserve Fund - -
e. Assets Revaluation Fund - -
f. Other Free Reserves - -
g. Other Reserves - -
h. Deferred Tax Fund 6,292,334 -
7. Accumulated Profit/Loss 20,727,278 41,357,165
8. Exchange Fluctuation Fund 5,861,157 5,853,403
Total 438,853,508 294,885,269
Schedule 4.3
Kumari Bank Limited
Debenture and Bond
1. 8 % “KBL Bond 2070” of Rs1,000 each 400,000,000 400,000,000
Issued on June 06, 2008 and to be matured on June 08, 2013 - -
(Outstanding balance of Redemption Reserve Rs115,000,000) - -
2. ……….% Bond/Debentures of Rs……..…each - -
Issued on …………… and to be matured on ………. - -
(Outstanding balance of Redemption Reserve Rs…….) - -
Total (1+2) 400,000,000 400,000,000
Schedule 4.4
Kumari Bank Limited

Outstanding Loan (Borrowings)
A. Domestic 293,420,000 100,000,000
1. Government of Nepal - -
2. Nepal Rastra Bank - -
3. Repo Obligations - -
4. Inter Bank and Financial institutions 293,420,000 100,000,000
5. Other Organized Institutions - -
6. Others - -
Total 293,420,000 -
B. Foreign - -
1. Banks - -
2. Others - -
Total - -
Total (A+B) 293,420,000 100,000,000
35
Deposit
1. Non-Interest bearing accounts
A. Current Deposit 780,096,899 601,721,057
1. Local Currency 758,944,958 570,865,953
1.1 Government of Nepal - -
1.2 “A” Class Liscensed Institutions 4,151,914 3,463,370
1.3 Other Liscensed Financial Institutions 14,882,902 45,255,821
1.4 Other Organized Institutions 605,221,110 420,113,592
1.5 Individuals 134,689,032 102,033,170
1.6 Others - -
2. Foreign Currency 21,151,941 30,855,104
2.1 Government of Nepal - -
2.2 “A” Class Liscensed Institutions - -
2.3 Other Liscensed Financial Institutions - 633,572
2.4 Other Organized Institutions 712,769
2.5 Individuals 20,439,172 30,221,532
2.6 Others - -
B. Margin Deposits 97,890,467 109,638,749
1. Employees Guarantee (Locker Margin) 2,682,900 2,317,850
2. Guarantee Margin 43,841,129 43,867,728
3. Margin on Letter of Credit 51,366,438 63,453,171
C. Others - -
1. Local Currency - -
1.1 Financial Institutions - -
1.2 Other Organized Institutions - -
1.3 Individuals - -
2. Foreign Currency - -
2.1 Financial Institutions - -
2.3 Individuals - -
Total of Non-Interest Bearing Accounts
2. Interest Bearing Accounts
A. Saving Deposits 4,170,318,071 4,144,681,777
1. Local Currency 4,063,131,831 3,968,091,842
1.1 Organized Institutions 185,253,638 142,571,077
1.2 Individuals 3,877,878,193 3,825,520,765
1.3 Others - -
2.1 Organized Institutions 86,986 76,232
2.2 Individuals 107,099,254 176,513,703
2.3 Others - -
B. Fixed Deposits 4,527,051,149 3,799,556,049
1. Local Currency 4,506,532,536 3,472,970,040
1.1 Organized Institutions 4,192,177,035 2,864,222,959
1.2 Individuals 314,355,501 608,747,081
1.3 Others - -
2.1 Organized Institutions - -
2.2 Individuals 20,518,613 326,586,009
2.3 Others - -
C. Call Deposits 6,135,568,677 4,124,555,812
1. Local Currency 6,088,036,682 4,072,911,004
1.1 “A” Class Liscensed Institutions 1,007,452,663
1.2 Other Liscensed Financial Institutions 1,202,008,262 1,325,158,227
1.3 Other Organized Institutions 3,201,964,707 2,628,405,915
1.4 Individuals 676,611,050 119,346,862
1.5 Others - -
2.1 “A” Class Liscensed Institutions - -
2.2 Other Liscensed Financial Institutions 19,558 17,000
2.4 Individuals 47,512,437 51,627,808
2.5 Others - -
D. Certificate of Deposit - -
1. Organized Institutions - -
2. Individuals - -
3. Others - -
Total of Interest Bearing Accounts 14,832,937,897 12,068,793,638
Total Deposits (1+2) 15,710,925,263 12,780,153,444
36
Schedule 4.6
Kumari Bank Limited

Bills Payable

1. Local Currency 64,884,614 64,396,889
2. Foreign Currency 5,202,411 899,825
Total 70,087,025 65,296,714
Schedule 4.7
Kumari Bank Limited
Other Liabilities
1. Pension/Gratuity Fund - -
2. Employees Provident Fund - -
3. Employees Welfare Fund - -
4. Provision for Staff Bonus 36,703,549 25,743,626
5. Interest Payable on Deposits 36,361,180 23,608,155
6. Interest Payable on Borrowings 54,000 32,877
7. Unearned Discount and Commission 156,500 17,500
8. Sundry Creditors 10,467,942 9,309,564
9. Branch Reconciliation Account - 119,434
10. Others 348,618,204 267,082,845
a. Audit Fees 231,000 - -
b. Others 348,387,204 - -
Total 432,361,375 325,914,001
Schedule 4.8
Kumari Bank Limited

Cash Balance

1. Local Currency (Including Coins) 530,557,201 542,398,781
Total 549,108,504 565,641,118
37
Balance with Nepal Rastra Bank
Local Foreign Currency in equivalent Rs Curremt Previous
Particulars Currency INR Convertible FCY Total Year (Rs) Year (Rs)
1. Nepal Rastra Bank 29,717,863 - 29,717,863 1,120,760,644 1,091,042,781 244,576,115

a. Current Account 29,717,863 - 29,717,863 1,120,760,644 1,091,042,781 244,576,115
b. Other Account - - - - - -
Schedule 4.10
Kumari Bank Limited
Balance with Bank/Financial Institution
Local Foreign Currency in equivalent Rs Current Previous

Particulars Currency INR Convertible FCY Total Year (Rs) Year (Rs)
1. Local Licensed Institutions 12,481,430 - 3,671,404 3,671,404 16,152,834 59,218,199

a. Current Account 12,481,430 - 3,671,404 3,671,404 16,152,834 59,218,199
b. Other Account - - - - -
2. Foreign Banks - 30,492,939 59,783,879 90,276,818 90,276,818 64,406,245
a. Current Account - 30,492,939 59,783,879 90,276,818 90,276,818 64,406,245
b. Other Account - - - - - -
Total 12,481,430 30,492,939 63,455,283 93,948,222 106,429,652 123,624,444
Note: Total balance for which the confirmations are received from respective Banks is Rs 1,371,746,863.
Money at Call and Short Notice

1. Local Currency 30,000,000 55,360,000
2. Foreign Currency - -
Total 30,000,000 55,360,000
Schedule 4.12
Kumari Bank Limited
Investment
Purpose
Particulars Trading Other Current Year (Rs) Previous Year (Rs)
1. Government Treasury Bills - 882,519,990 882,519,990 1,278,195,002

2. Government Saving Certificate - - - -
3. Government Other Bonds - 197,575,000 197,575,000 190,900,000
4. Nepal Rastra Bank Bonds - - - -
5. Foreign Bonds - - - -
6. Local Licensed Institutions - 200,000,000 200,000,000 175,000,000
7. Foreign Banks - 212,387,992 212,387,992 476,482,088
8. Shares of Organized Institutions - 1,360,500 1,360,500 1,235,500
9. Bonds and Debentures in Organized Institutions - 16,985,000 16,985,000 16,985,000
10. Other Investment - - - -
Total Investment - 1,510,828,482 1,510,828,482 2,138,797,590
Provision - - - -
Net Investment - 1,510,828,482 1,510,828,482 2,138,797,590
38
Kumari Bank Limited Schedule 4.12 (A)
Investment in Shares, Debentures and Bonds
1. Investment in Shares 1,360,500 1,235,500
1.1 Credit Information Centre Limited 1,235,500 1,235,500
14,120 Ordinary Shares of Rs 100 each, fully paid
Primary Shares 3,530 Kitta
Right Shares 8,825 Kitta
Bonus Shares 1,765 Kitta
1.2 Nepal Clearing House Limited 125,000
5 % of committed equity of Rs 2,500,000
2. Investment in Debentures and Bonds 16,985,000 16,985,000
2.1 Nepal Electricity Authority, Electricity Bond 16,985,000 16,985,000
7.75 Percent 16,985 Bonds of Rs 1,000 each - -
Total Investment 18,345,500 18,220,500
3. Provision for Loss
3.1 Up to previous year - -
3.2 Change in current year - -
Total Provision -
Net Investment 18,345,500 18,220,500
Note : Credit Information Center Ltd & Nepal Clearing House Ltd. have not provided any dividend for past 3 years.
Classification of Loans, Advances and Bills Purchase & Provision

Loans & Advances Bills Purchased/Discounted

Domestic Current
Year
Priority Sector Foreign Total Domestic Foreign Total (Rs)
Particulars Other Previous Year
Insured Uninsured (Rs)
1. Performing Loan - 418,492,133 14,195,230,438 - 14,613,722,571 75,524,247 41,471,740 116,995,987 14,730,718,558 11,369,905,053
1.1 Pass - 418,492,133 14,189,227,519 - 14,607,719,652 75,524,247 41,471,740 116,995,987 14,724,715,639 11,332,148,877
1.2 Restructured - - 6,002,919 - 6,002,919 - - - 6,002,919 37,756,176
2. Non-Performing Loan - - 64,542,683 - 64,542,683 - - - 64,542,683 152,475,600
2.1 Sub-Standard - - 13,082,971 - 13,082,971 - - - 13,082,971 58,320,876
2.2 Doubtful - - 31,735,261 - 31,735,261 - - - 31,735,261 78,966,480
2.3 Loss - - 19,724,451 - 19,724,451 - - - 19,724,451 15,188,244
A. Total Loan - 418,492,133 14,259,773,121 - 14,678,265,254 75,524,247 41,471,740 116,995,987 14,795,261,241 11,522,380,653
3. Loan Loss Provision
3.1 Pass - 4,184,921 141,892,275 - 146,077,196 755,242 414,717 1,169,959 147,247,155 113,321,489
3.2 Restructured - - 750,365 - 750,365 - - - 750,365 4,719,522
3.3 Sub-Standard - - 3,270,743 - 3,270,743 - - - 3,270,743 14,580,219
3.4 Doubtful - - 30,921,697 - 30,921,697 - - - 30,921,697 39,483,240
3.5 Loss - - 19,724,451 - 19,724,451 - - - 19,724,451 15,188,244
B. Total Provisioning - 4,184,921 196,559,531 - 200,744,452 755,242 414,717 1,169,959 201,914,411 187,292,714
4. Provisioning up to previous year
4.1 Pass - 2,735,918 109,767,096 - 112,503,014 452,546 365,929 818,475 113,321,489 89,577,026
4.2 Restructured - - 4,719,522 - 4,719,522 - - - 4,719,522 4,826,507
4.3 Sub-Standard - - 14,580,219 - 14,580,219 - - - 14,580,219 2,594,619
4.4 Doubtful - - 39,483,240 - 39,483,240 - - - 39,483,240 19,318,178
4.5 Loss - - 15,188,244 - 15,188,244 - - - 15,188,244 17,104,037
C. Total provision till Last year - 2,735,918 186,474,239 - 186,474,239 452,546 365,929 818,475 187,292,714 133,420,367
D. Written Back from last year provision - - - - - - - (42,781,308) (7,240,964)
E. Additional Provision in this year - 1,449,003 10,085,292 - 14,270,213 302,696 48,788 351,484 57,403,005 61,113,311
Change in this year - 1,449,003 10,085,292 - 14,270,213 302,696 48,788 351,484 14,621,697 53,872,347
Net Loan (A-B) - 14,063,213,590 - 14,477,520,802 74,769,005 41,057,023 115,826,028 14,593,346,830 11,335,087,939
39
Security for Loan Advances and Bills Purchased
A. Secured 14,795,261,241 11,522,380,653
1. Against Security of Movable/Immovable Assets 13,444,857,320 10,565,023,333
2. Against Guarantee of Local Licensed Institutions - -
3. Against Government Guarantee - -
4. Against Guarantee of Internationally Rated Bank - -
5. Against Security of Export Documents 1,817,000 -
6. Against Security of Fixed Deposit Receipts - -
a. Own FDR 2,787,554 6,955,361
b. FDR of Other Licensed Institutions 52,571,204 105,990,568
7. Against Security of Government Bonds - -
8. Against Counter Guarantee - -
9. Against Personal Guarantee - -
10. Against Other Securities 1,293,228,163 844,411,391
B. Unsecured - -
Total 14,795,261,241 11,522,380,653
Kumari Bank Limited

Fixed Assets Schedule 4.14
Assets
Particulars Building Vehicles Machinery Office Equipment Others Current Year (Rs) Previous Year (Rs)
1. Cost Price
a. Previous Year’s Balance 5,569,365 54,721,923 135,323,119 18,216,888 213,831,295 178,187,735
b. Addition This Year 6,008,271 56,211,518 158,388 62,378,177 69,592,900
c. Revaluation/Written Back This Year - -
d. This Year Sold (7,550,000) (735,210) (8,285,210) (13,639,948)
e. This Year Written Off (755,324) (755,324) (20,309,392)
Total Cost (a+b+c+d+e) 4,814,041 53,180,194 - 190,799,427 18,375,276 267,168,938 213,831,295
2. Depreciation
a. Up to previous year 454,831 15,579,120 - 68,871,252 7,847,326 92,752,529 92,298,930
b. For this year 229,715 8,166,713 28,875,805 3,492,664 40,764,897 28,354,180
c. Depreciation on revaluation/Written Back (70,355) (3,440,844) (539,740) (4,050,939) (27,900,581)
d. Depreciation Adjusment/Add back
Total Depreciation 614,191 20,304,989 - 97,207,317 11,339,990 129,466,487 92,752,529
3. Book Value (WDV*) (1-2) 4,199,850 32,875,205 - 93,592,110 7,035,286 137,702,451 121,078,766
4. Land 85,593,635 85,593,635
5. Capital Work In Progress (pending Capitalization)
6. Leasehold Assets 24,536,688 15,328,471
Total (3+4+5+6) 4,199,850 32,875,205 - 93,592,110 7,035,286 247,832,774 222,000,872
40
Non Banking Assets
Name & Address of Acquired Date of Total Amount of Provision for loss Net
Previous Year
(Rs) Borrower of Party Non Banking Assets Non Banking Assets Percent Amount (Rs) Non Banking Asset (Rs)
3,140,779

3,140,779 Grand Total

Other Assets

1. Stock of Stationery 3,733,594 3,116,957
2. Income receivable on Investment 18,266,753 15,829,340
3. Accrued Interest Receivable on Loan - -
Accrued Interest Receivable on Loan 75,082,974 59,306,341
Less:Interest Suspense Account (75,082,974) (59,306,341)
4. Commission Receivable - -
5. Sundry Debtors 84,943,749 14,449,873
6. Staff Loan & Advances 102,297,824 46,719,936
7. Pre Payments 9,950,331 7,959,739
8. Cash in Transit - -
9. Other Transit items (including Cheques) - -
10. Drafts payment without notice - -
11. Expenses not written off - -
12. Branch Reconciliation Account 21,930,506 -
13. Deferred Tax Assets 6,292,334 -
14. Others 132,843,132 259,944,726
a. Advance Tax - 9,650,253
b. Others 132,843,132 - 250,294,473
Total 380,258,223 348,020,571
Kumari Bank Limited Schedule 4.16(A)

Other Assets (Additional Statement)
Current Year (Rs)

Particulars Up to 1 Year 1 to 3 Year Above 3 Years Total Previous Year (Rs)
1. Accrued Interest Receivable on Loan 62,786,437 12,296,537 - 75,082,974 59,306,341
2. Drafts Payment without notice - - - - -
3. Branch Reconciliation Account - - - - -
41
Contingent Liabilities
1. Claims Lodged but not accepted by the Institution - -
2. Letter of Credit (Full Amount) 813,973,672 1,113,996,185
a. Maturity period up to 6 months 608,688,994 886,717,522
b. Maturity period more than 6 months 205,284,678 227,278,663
3. Rediscounted Bills - -
4. Unmatured Guarantees/Bonds 547,659,355 512,512,449
a. Bid Bonds 85,527,713 15,725,275
b.Performance Bonds 462,131,642 496,787,174
c. Other Guarantee/Bonds - -
5. Unpaid Shares Investment - -
6. Outstanding of Forward Exchange Contract Liabilities - -
7. Bills under Collection - -
8. Acceptance & Endorsement 139,840,967 54,757,155
9. Underwriting Commitment - -
10. Irrevocable Loan Commitment - -
11. Guarantees against Counter Guarantee of Internationally Rated Banks 35,096,418
12. Advance Payment Guarantee 116,164,047 150,573,285
13. Financial Guarantee for loan disbursement - -
14. Contingent Liabilities on Income Tax - -
15. Others - -

Interest Income
From 1st Shrawan 2065 to 31 Ashad 2066 (From 16 July 2008 to 15 July 2009)
A On Loans, Advances and Overdraft 1,233,549,009 877,009,516
1. Loans & Advances 553,755,728 465,122,390
2. Overdraft 679,793,281 411,887,126
B. On Investment 89,856,012 46,978,242
1. Government Securities 88,539,674 46,586,997
a. Treasury Bills 74,990,179 43,361,548
b. Development Bonds 13,549,495 3,225,449
c. National Saving Certificates - -
2. Foreign Debt Papers - -
a. ……… - -
b. ……… - -
3. Nepal Rastra Bank Bonds - -
4. Debenture & Bonds 1,316,338 391,245
5. Interest on Interbank Investment - -
a. Bank/ Financial Institutions - -
b. Other Institutions - -
C. On Agency Balances 967,556 2,113,916
1. Domestic Banks/ Financial Institutions - -
2. Foreign Banks 967,556 2,113,916
D. On Money at Call and Short Notice 50,349,890 31,144,050
1. Domestic Banks/Financial Institutions 42,610,458 21,189,231
2. Foreign Banks 7,739,432 9,954,819
E. On Others - -
1. Certificate of Deposits - -
2. Inter-Bank/ Financial Institution Loan - -
3. Others - -
Total 1,374,722,467 957,245,724
42
Interest Expenses

A. On Deposit Liabilities 760,503,809 463,374,013
1. Fixed Deposits 310,276,518 180,664,935
1.1 Local Currency 303,943,983 172,131,676
1.2 Foreign Currency 6,332,535 8,533,259
2. Saving Deposits 153,388,406 130,199,103
2.1 Local Currency 150,717,770 125,515,994
3. Call Deposits 296,838,885 152,509,975
3.1 Local Currency 295,635,922 149,286,396
4. Certificate of Deposits -
B. On Borrowings 55,699,081 35,360,209
1. Debentures & Bonds 32,000,000 3,951,005
2. Loan from Nepal Rastra Bank -
3. Inter Bank /Financial Institutions Borrowing 23,699,081 31,409,204
4. Other Organized Institution -
5. Other Loans -
C. On Others -
1. -
2. -
Total 816,202,890 498,734,222

Commission and Discount Income

A. Bills Purchase & Discount 1,211,386 1,400,837
1. Local 1,211,386 1,400,837
2. Foreign
B. Commission 24,691,051 20,290,207
1. Letters of Credit 8,380,872 8,597,043
2. Guarantees 7,456,950 7,638,828
3. Collection Fees 339,895 328,914
4. Remittance Fees 8,477,490 3,465,109
5. Credit Card
6. Share Underwriting/Issue
7. Government Transactions
8. Agency Commission 35,844 260,313
9. Exchange Fee
C. Others 53,201,840 26,803,589
Total 79,104,277 48,494,633
43
Other Operating Income

1. Safe Deposit Lockers Rental 769,075 690,075
2. Issue & Renewals of Credit Cards - -
3. Issue & Renewals of ATM Cards 12,010,454 8,927,977
4. Telex / T. T./ SWIFT 2,537,666 3,072,861
5. Service Charges 3,300,568 3,936,498
6. Renewal Fees - -
7. Others 1,128,960 1,177,799
Total 19,746,723 17,805,210
Schedule 4.22
Kumari Bank Limited
Exchange Fluctuation Gain/Loss
From 1st Shrawan 2065 to 31 Ashad 2066 (16 July 2008 to 15 July 2009)

a. From Revaluation 31,015 464,643
b. From Trading (except Exchange Fees) 58,970,766 41,342,980
Total Gain (Loss) 59,001,781 41,807,623
Expenses Relating to Employees

From 1st Shrawan 2065 to 31 Ashad 2066 (16 July 2008 to 15 July 2009)
1. Salary 54,583,324 41,126,851

2. Allowances 32,252,547 30,185,203
a. Normal Allowance 16,465,603 17,713,039
b. Inchargeship Allowance 52,500 11,690
c. Relocation Allowance 63,533 118,605
d. Outstation Allowance 791,539 459,102
e. Dashain Allowance 5,650,210 4,524,422
f. Vehicle Maintenance Allowance 283,350 236,440
g. Leave Fare Allowance 8,945,812 7,121,905
3. Contribution to Provident Fund 5,128,583 4,016,353
4. Training Expenses 3,068,402 1,996,501
5. Uniform - -
6. Medical 3,491,305 2,833,882
7. Insurance 3,234,006 2,502,788
8. Pension and Gratuity Provision 7,428,478 2,680,562
9. Others 6,798,274 4,228,298
a. Wages 1,624,774 887,686
b. Teller Risk Fund 346,459 300,592
c. Other Staff Benefits 3,343,582 2,356,939
d. Overtime 1,483,459 683,081
Total 115,984,919 89,570,438
44
Other Operating Expenses

1. House Rent 28,416,708 26,236,814
2. Electricity & Water 7,894,002 5,444,706
3. Repair & Maintenance 1,465,733 768,517
a. Building 671,083 - -
b. Vehicles 794,650 - -
c. Others - -
4. Insurance 2,915,674 2,840,284
5. Postage, Telex, Telephone & Fax 13,807,390 11,250,139
6. Office Equipment, Furniture and Repair 2,752,513 1,365,052
7. Travelling Allowances & Expenses 4,080,693 4,583,579
8. Stationery & Printing 4,890,221 4,819,679
9. Periodicals & Books 239,033 258,107
10. Advertisements 2,715,437 7,013,922
11. Legal Expenses 835,277 850,973
12. Donations 588,911 67,700
13. Expenses relating to Board of Directors 1,911,422 2,583,058
a. Meeting Fees 1,880,345 - -
b. Other Expenses 31,077 - -
14. Annual General Meeting Expenses 1,195,626 860,175
15. Expenses relating to Audit - -
a. Audit Fees 231,000 460,584 643,497
b. Other Expenses 229,584 - -
16. Commission on Fund Transfer - -
17. Depreciation on Fixed Assets 49,815,920 35,001,655
18. Amortization of Pre-operating Expenses - -
19. Share Issue expenses 941,905 963,745
20. Technical Services (Reimbursment) - -
21. Entertainment Expenses 462,320 176,561
22. Written Off Expenses - -
23. Security Expenses 10,532,754 6,933,404
24. Credit Guarantee Premium - -
25. Commission & Discount - -
26. Others 50,580,037 35,481,571
a. Transport 6,051,837 - 3,384,226
b. Professional Fees 1,864,947 - 1,946,145
c. Public Relation Expenses 1,046,235 - 1,379,268
d. Banking and Corporate Expenses 2,646,587 - 2,121,270
e. Correspondent Banking Charges 810,390 - 655,450
f. Fees and Taxes 10,882,378 - 8,742,767
g. Visa Fees and Charges 7,806,946 - 3,964,295
h. NRB Charges on FCY Deposit 17,706,998 - 10,890,574
i. Miscellaneous 443,559 - 434,725
j. Prior Period Expenses - - 845,601
k. Error, Fine and Losses - - 25,793
l. Janitorial 1,320,160 - 1,091,457
Total 186,502,160 148,143,138
45
Provision for Possible Losses

1. Increase in Provision for Loan Loss 57,403,005 61,113,311
2. Increase in Provision for Loss on Investment - -
3. Provision for Loss on Non-Banking Assets - 1,845,155
4. Provision for Other Assets - 1,065,324
Total 57,403,005 64,023,790

Non-Operating Income / Loss

1. Profit/ (Loss) on Sale of Investments - -
2. Profit/ (Loss) on Sale of Assets 678,806 555,500
3. Dividend - -
4. Subsidies received from Nepal Rastra Bank - -
a. Compensation for losses of specified branches - -
b. Interest Compensation - -
c. Exchange Counter - -
5. Others 432,847 15,032,889
Net Non-Operating Income (Loss) 1,111,653 15,588,389

Written Back from Provision for Possible Losses
(Fiscal Year 2008/09)

1. Provision for Loan Loss Written Back 42,781,308 7,240,964
2. Provision against Non Banking Assets Written Back 4,239,839 -
3. Provision for Investment Written Back - -
4. Provision for other Assets Written Back - -
Total 47,021,147 7,240,964

Income/ (Expenses) from Extra Ordinary Transactions
From 1st Shrawan 2065 to 31 Ashad 2066 ( From 16 July 2008 to 15 July 2009)

1. Recovery of Written Off Loan - -
2. Voluntary Retirement Expenses - -
3. Irrecoverable Loan Written Off {4.28(A)} (876,031) (4,531,068)
4. Other Expensess/Income - -
5. ……………………………………………… - -
Total (876,031) (4,531,068)
46
Kumari Bank Limited Schedule 4.28(A)
Statement of Loan Written-Off
(Fiscal Year 2008/09)
S.N. Types of Loan Written off Type of Basis of Valuation Loan Approving Initiations Made for Recovery Remarks
Amount Security of Collateral Authority/ Level
Several verbal and written reminders were served.
Borrower’s name appears in CICL Blacklist. The account
1. Bills Purchase 131,529 - CEO remained overdue for more than 5 years and thus had to be KC & Company
mandatorily written off in line with regulatory provisions and
Loan Write- off policy of the Bank.
Price Quotation Manager Several verbal and written reminders fo the settlement of
submitted by Retail Banking, the Loan were served . After several discussions/meetings
2. Hire Purchase Loan 93,757 Voyager Authorized Hira Kumari Thakuri
Micro Bus Manager-Credit, with micro-bus and transport operators, the vehicle was
Vehicle AGM disposed through mutual consensus.
Distributor
Price Quotation The bank had served several verbal and written reminders
Vehicle - Manager to the borrower.Client had approached the Bank seeking
submitted by Retail Banking,
3. Hire Purchase Loan 3,853 Mahindra - Authorized waiver of penal Interest. Based on the borrower’s request Ramesh Kumar
576 Manager-Credit, and commitment of the borrower to settle entire loan, the Khadge
Vehicle A G M, CEO
Distributor decision to waive Penal Interest was taken by the Acting
CEO.
Several verbal and written reminders were served. As
Price Quotation vehicles sold through the Auction process are barred from
submitted by Manager-Credit, operating within the Kathmandu valley and there would be,
4. Voyager Authorized if at all, very few bidders to operate it outside the valley and
Hire Purchase Loan 418,892 Micro Bus AGM Ram Kumar Sunam
Vehicle offer decent price for it. Thus, after several discussions with
Distributor micro-bus and transport operators, the vehicle was thus
disposed through mutual consensus.
Several verbal and written reminders were served to the

borrower. A 35 days public notice was also published on
31.03.2008. The borrower had remained out of contact
for a considerable period of time. Apparently the borrower
Valutation by has migrated to U.S. The possibility of receiving bids
Land, Stock, Authorized through Auction was remote considering the fact that the
Receivables, Valuator of the Manager-Credit, collateralized security was located in Terai coupled with Luna Trade
5. Overdraft Loan 228,000 A G M, CEO International
PG Bank the deteriorating security situation and political unrest in
the Terai region. A series of discussions were held with the
remaining family members and eventually we reached a
one time negotiated settlement for Rs 1,810,000.00 ( Rs
132,000.00 more than the Loan principal amount) at Interest
of 9.25% p.a stretched over the period of the exposure.
Total 876,031
Schedule 4.29
Kumari Bank Limited
Statement of Loans and Advances Extended to Directors/Chief Executive /Promoters/
Employees and Shareholders
31 Ashad 2066 (15 July 2009)
The Statement of amount,included under total amount of Bills Purchased and Discounted, Loans, Advances and Overdraft, provided to
the Directors, Chief Executive,Promoters, Employees, Shareholders and the individual members of ‘ their undivided family’ or against
the guarantee of such person or to the organization or companies in which such individual are ‘managing agent’ are as follows:
(Rs)
Name of Promoter/Director/ Outstanding up to Last Year Recovered in Current Year Additional Lending Outstanding as of Ashad End 2063
Chief Executive Principal Interest Principal Interest in this year Principal Interest
A. Directors
1. ……………………………………
2. ……….……………………...…
3. ……………………………………………
B. Chief Executive
1. ………………………………..
2. ………………………………..
C. Promoters’ Group
D. Employee (Family Members’ Company)
E. Shareholder’s Company
Total
47
Table of Capital Fund
Rs in ‘000
Particulars Current Year Previous Year

1.1. Risk Weighted Exposures 17,743,239 14,418,707
a. Risk Weighted Exposure for Credit Risk 16,983,993 13,688,722
b. Risk Weighted Exposure for Operational Risk 709,435 713,923
c. Risk Weighted Exposure for Market Risk 49,811 16,062
1.2. Capital Fund (A+B) 2,050,908 1,858,207
A. Core Capital (Tier I) 1,612,799 1,359,032
a. Paid Up Capital 1,186,099 1,070,000
b. Irredeemable Non- cumulative preferenece share - -
c. Share premium - -
d. Proposed Bonus Share 118,837 107,827
e. General Reserves Fund 172,136 119,848
f. Accumulated Profit/ (Loss) till previous fiscal year 20,727 41,357
g. Net Profit/ (Loss) for current fiscal year - -
h. Capital Redemption Reserve - -
i. Capital Adjustment Reserve - -
j. Dividend Equalization Reserves - -
k. Bond Redemption Reserve 115,000 20,000
l. Other free Reserve - -
m. Less: Goodwill - -
n. Less: Miscellaneous Expenditure not written off - -
o. Less: Investment in equity in licensed Financial Institutions - -
p. Less: Investment in equity of institutions with financial interests - -
q. Less: Investment in equity of institutions in excess of limits - -
r. Less: Investments arising out of underwriting commitments - -
s. Less: Reciprocal crossholdings - -
t. Less: Other Deduction - -
B. Supplementary Capital (Tier II) 438,108 499,175
a. Cumulative and/or Reedemable Preference Share - -
b. Subordinated term debt 400,000 400,000
less: Amortization of Subordinate Term Debt (115,000) (20,000)
c. Hybrid Capital Instuments - -
d. General Loan Loss provision 147,247 113,321
e. Exchange Equalisation Reserve 5,861 5,853
f. Investment Adjustment Reserve - -
g. Assets Revaluation Reserve - -
h. Other Reserve - -
1.3 Capital Adequacy Ratios - -
Core Capital/ Total Risk Weighted Exposure (Tier I) 9.09% 9.43%
Capital Fund/ Total Risk Weighted Exposure (Tier I & Tier II) 11.56% 12.89%
48
Kumari Bank Limited Schedule 4.30 (B)
Credit Risk Exposure
Rs in ‘000
Current Year Previous year
Gross Book Specific Eligible CRM Net Value “Risk Weight Risk Weighted Net Value Risk weighted
Particulars Value (a) Provision (c) (d)=(a)-(b)-(c) (e)” Exposures Exposure
(b) (f)=(d)*(e)
On Balance Sheet Exposures (A)

Cash Balance 549,109 - - 549,109 0% - 565,641 -
Balance With Nepal Rastra Bank 1,120,761 - - 1,120,761 0% - 244,576 -
Investment in Nepalese Government Securities 1,080,095 - - 1,080,095 0% - 1,469,095 -
All Other Claims on Government of Nepal 77,142 - - 77,142 0% - 13,416 -
Investment in Nepal Rastra Bank Securities - - - - 0% - - -
All Other Claims on Nepal Rastra Bank - - - - 0% - - -
Investment in Foreign Government Securities (ECA rating 0-1) - - - - 0% - - -
Investment in Foreign Government Securities (ECA rating 2) - - - - 20% - - -
Investment in Foreign Government Securities (ECA rating 4-6) - - - - 100% - - -
Claims On BIS, IMF, ECB, EC and Claims On Multilateral...
Development Banks(MDB’s) Recognised By Standard Framework - - - - 0% - - -
Claims on Other MDB’s - - - - 100% - - -
Claims on Public Sector Entity (ECA - 1) - - - - 20% - - -
Claims on Public Sector Entity (ECA - 2) - - - - 50% - - -
Claims on Public Sector Entity (ECA 3-6) - - - - 100% - - -
Claims on Public Sector Entity (ECA - 7) 100,875 - - 100,875 150% 151,313 - -
Claims on Domestic Banks that meet Capital Adequacy requirements 245,073 - - 245,073 20% 49,015 450,151 90,030
Claims on Domestic Banks that do not meet Capital Adequacy Requirements 1,079 - - 1,079 100% 1,079 31,080 31,080
Claims on Foreign Bank (ECA Rating 0- 1) 290,616 - - 290,616 20% 58,123 272,872 54,574
Claims on Foreign Bank (ECA Rating - 2) 11,271 - - 11,271 50% 5,635 2,258 1,129
Claims on Foreign Bank (ECA Rating 3-6) - - - - 100% - 265,758 265,758
Claims on Foreign Bank (ECA Rating - 7) - - - - 150% - - -
Claims on foreign bank incorporated in SAARC region operating ...
with a buffer of 1 %above their respective regulatory capital requiremente 778 - - 778 20% 156 - -
Claims on Domestic Corporates 6,293,544 - 12,295 6,281,248 100% 6,281,248 6,667,765 6,667,765
Claims on Foreign Corporates (ECA 0 - 1) - - - - 20% - - -
Claims on Foreign Corporates (ECA 2) - - - - 50% - - -
Claims on Foreign Corporates (ECA 3-6) - - - - 100% - - -
Claims on Foreign Corporates (ECA - 7) - - - - 150% - - -
Regulatory Retail Portfolio (Not Overdue) 1,803,218 - 39,633 1,763,584 75% 1,322,688 228,728 171,546
Claims fulfilling all creterion of regulatory retail except granularity 35,838 - - 35,838 100% 35,838 - -
Claims secured by residential properties 1,061,245 - - 1,061,245 60% 636,747 2,912,614 2,184,461
Claims not fully secured by residential properties - - - - 100% - - -
Claims secured by residential properties (Overdue) 10,299 697 - 9,602 100% 9,602 2,405 2,405
Claims secured by Commercial real estate 2,152,675 - - 2,152,675 100% 2,152,675 1,038,513 1,038,513
Past due claims (except for claims secured by residential properties) 199,038 53,220 - 145,818 150% 218,728 82,099 123,149
High Risk claims 3,090,357 - - 3,090,357 150% 4,635,536 218,347 327,520
Investment in equity and other capital instruments of institutions ..
listed in the stock exchange - - - - 100% - 1,236 1,853
Investment in equity and other capital instruments of institutions ...
not listed in the stock exchange 1,361 - - 1,361 150% 2,041 16,985 25,478
Cash and Cash Item in Transit 110,815 - - 110,815 20% 22,163 - -
Other Assets (as per attachment) 1,045,477 435,894 - 609,583 100% 609,583 642,094 642,094
Total 19,280,666 489,811 51,929 18,738,926 - 16,192,170 15,125,634 11,627,355
49
Schedule 4.30 (B) Continued....
Rs in ‘000
Current Year Previous year
Gross Book Specific Eligible CRM Net Value Risk Weight Risk Weighted Net Value Risk weighted
Particulars Value (a) Provision (c) d=a-b-c (e) Exposures Exposure
(b) f=d*e
On Balance Sheet Exposures (B)

Revocable Commitments - - - - 0% - - -
Bills Collection - - - - 0% - - -
Forward Exchange Contract Liabilities 16,522 - - 16,522 10% 1,652 - -
LC Commitments With Original Maturity Up to 6 months domestic counterparty 608,689 - 33,490 575,199 20% 115,040 823,264 164,653
ECA Rating 0-1 - - - - 20% - - -
ECA Rating 2 - - - - 50% - - -
ECA Rating 3-6 - - - - 100% - - -
ECA Rating 7 - - - - 150% - - -
L C Commitments With Original Maturity Over 6 months domestic counterparty 205,285 - 11,226 194,059 50% 97,029 183,411 91,705
ECA Rating 0-1 - - - - 20% - - -
ECA Rating 2 - - - - 50% - - -
ECA Rating 3-6 - - - - 100% - - -
ECA Rating 7 - - - - 150% - - -
Bid Bond, Performance Bond and counter guarantee domestic counterparty 547,659 - 34,785 512,875 50% 256,437 503,741 251,871
ECA Rating 0-1 - - - - 20% - - -
ECA Rating 2 - - - - 50% - - -
ECA Rating 3-6 - - - - 100% - - -
ECA Rating 7 - - - - 150% - - -
Underwriting commitments - - - - 50% - - -
Lending of Bank’s Securities or Posting of Securities as collateral - - - - 50% - - -
Repurchase Agreements, Assets sale with recourse - - - - 100% - - -
Advance Payment Guarantee 116,164 - 9,056 107,108 100% 107,108 - -
Financial Guarantee - - - - 100% - - -
Acceptence and Endrosements 139,841 - 6,650 133,191 100% - 54,757 54,757
Unpaid portion of Partly paid shares and securities - - - - 100% - - -
Irrevocable Credit Commitments (short term) 1,072,784 - - 1,072,784 20% 214,557 2,996,761 1,498,380
Irrevocable Credit Commitments (long term) - - - - 100% - - -
Other Contingent Liabilities - - - - 100% - - -
Total 2,706,944 - 95,207 2,611,737 - 791,823 4,561,934 2,061,366
Total RWE for Credit Risk (A + B) 21,987,610 489,811 147,135 21,350,664 - 16,983,993 19,687,568 13,688,722
50
Kumari Bank Limited Schedule 4.30 (C)
Eligible Amount for Credit Risk Mitigation (CRM)
Rs in ‘000
Deposit with Deposit with Gold Govt. &NRB G’tee of Sec/G’tee G’tee of G’tee of Sec/G’tee of
bank other bank/FI Securities Govt. of of other other MDBs Foreign Total
Nepal Sovereigns Banks Banks
Particulars
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Credit Exposures
On Balance Sheet Credit exposures - - - - - - - - - -
Investment in Foreign Government Securities (ECA-2) - - - - - - - - - -
Investment in Foreign Government Securities (ECA-4-6) - - - - - - - - - -
Claim on Other Multilateral Development Banks - - - - - - - - - -
Claims on Public Sector Entity(ECA-0-1) - - - - - - - - - -
Claims on Public Sector Entity(ECA-2) - - - - - - - - - -
Claims on Public Sector Entity(ECA-3-6) - - - - - - - - - -
Claims on Public Sector Entity(ECA -7) - - - - - - - - - -
Claims on domestic banks that meet capital adequacy requiremaent - - - - - - - - - -
Claims on domestic banks that do not meet capital adequacy - - - - - - - - - -
requiremaent - - - - - - - - - -
Claims to a Foreign bank (ECA Rating 0-1) - - - - - - - - - -
Claims to a Foreign bank(ECA Rating 2) - - - - - - - - - -
Claims to a Foreign bank(ECA Rating 3-6) - - - - - - - - - -
Claims to a Foreign bank(ECA Rating 7) - - - - - - - - - -
Claims on foreign bank incorporated in SAARC region operating with - - - - - - - - - -
a buffer of 1 %above their respective regulatory capital requirement - - - - - - - - - -
Claims on Domestic Corporates 12, 295 - - - - - - - - 12,295
Claims on Foreign Corporates (ECA 0-1) - - - - - - - - - -
Claims on Foreign Corporates (ECA 2) - - - - - - - - - -
Claims on Foreign Corporates (ECA 3-6) - - - - - - - - - -
Claims on Foreign Corporates (ECA 7) - - - - - - - - - -
Regulatory Retail Portfolio (Not Overdue) 23,633 16,000 - - - - - - - 39,633
Claims fulfilling all creterion of regulatory retail except granularity - - - - - - - - - -
Claims secured by residential properties - - - - - - - - - -
Claims not fully secured by residential properties - - - - - - - - - -
Claims secured by residential properties (Overdue) - - - - - - - - - -
Claims secured by commercial real estate - - - - - - - - - -
Past due claims(except for claim secured by residential properties) - - - - - - - - - -
High Risk Claims - - - - - - - - - -
Investment in equity and other capital instruments of institutions - - - - - - - - - -
listed in the stock exchange - - - - - - - - - -
Investment in equity and other capital instruments of institutions - - - - - - - - - -
not listed in the stock exchange - - - - - - - - - -
Other Assets (as per attachment) - - - - - - - - - -
Off Balance Sheet Exposures - - - - - - - - - -
Forward Exchange Contract Liabilities - - - - - - - - - -
LC Commitments With Original Maturity Up to 6 months domestic - - - - - - - - - -
counterparty 33,490 - - - - - - - - 33,490
ECA Rating 0-1 - - - - - - - - - -
ECA Rating 2 - - - - - - - - - -
ECA Rating 3-6 - - - - - - - - - -
ECA Rating 7 - - - - - - - - - -
L C Commitments With Original Maturity Over 6 months domestic - - - - - - - - - -
counterparty 11,227 - - - - - - - - 11,227
ECA Rating 0-1 - - - - - - - - - -
ECA Rating 2 - - - - - - - - - -
ECA Rating 3-6 - - - - - - - - - -
ECA Rating 7 - - - - - - - - - -
Bid Bond and Performance Bond(Domestic) 34,785 - - - - - - - - 34,785
ECA Rating 0-1 - - - - - - - - - -
ECA Rating 2 - - - - - - - - - -
ECA Rating 3-6 - - - - - - - - - -
ECA Rating 7 - - - - - - - - - -
Underwriting commitments - - - - - - - - - -
Lending of Bank’s Securities or Posting of Securities as collateral - - - - - - - - - -
Repurchase Agreements,Assets salewith resourse - - - - - - - - - -
Advance Payment Guarantee 9,056 - - - - - - - - 9,056
Financial Guarantee - - - - - - - - - -
Acceptances and Endorsements 6,650 - - - - - - - - 6,650
Unpaid portion of partly paid shares and securities - - - - - - - - - -
Irrevocable Credit Commitments - - - - - - - - - -
Other Contingent Liabilities - - - - - - - - - -
51
Kumari Bank Limited Schedule 4.30 (D)
Risk Weight Exposure for Operational Risk
End of Ashad 2066 (15 July 2009) Rs in ‘000
Year 1 Year 2 Year 3 Previous

Particulars (2005/06) (2006/07) (2007/08) Year
Net Interest Income 268,471 394,231 458,512
Commission and Discount income 26,281 40,764 48,495
Other Operating Income 10,003 15,281 17,805
Exchange Fluctuation Income 26,374 20,294 41,808
Addititonal Interest Suspense during the period 871 32,496 17,185
Total Gross Income (a) 331,999 503,067 583,804
Alfa (b) 15% 15% 15% 15%
Fixed Percentage of Gross Income {c= (a*b)} 49,800 75,460 87,571
Capital Requirement for operational risk (d) (average of c) 70,944 71,392
Risk Weight ( reciprocal of capital requirement of 10%) in times (e) 10 10
Equivalent Risk Weight Exposure {f=(d*e)} 709,435 713,923
Kumari Bank Limited Schedule 4.30 (E)

Risk Weight Exposure for Market Risk Rs in ‘000
Previous Year
Open Position Open Position Relevant Open Relevant Open
S.N. Particulars (FCY) (Rs) Position Position (Rs)
1. INR 41,867 67,019 67,019 -
2. USD 65 5,089 5,089 9,423
3. EUR 36 3,922 3,922 4,259
4. GBP 75 9,594 9,594 377
5. CHF 1 71 71 -
6. AUD 71 4,423 4,423 107
7. CAD 0 0 0 -
8. SGD 1 58 58 228
9. JPY 1,069 890 890 2,236
10. SEK - - -
11. DKK 67 975 975 1,284
12. HKD - - - 2
13. SAR 174 3,611 3,611 7,473
14. QAR 146 3,131 3,131 4,009
15. CNY - - - 5
16. MYR 17 373 373 1,504
17. THB 0 0 0 10
18. AED 22 464 464 1,207
Total Open Position (a) 99,621 32,124
Fixed Pecentage (b) 5% 5%
Capital Charge for Market Risk {c=(a*b)} 4,981 1,606
Risk Weight (reciprocal of capital requiremnet of 10%) in times (d) 10 10
Equivalent Risk Weight Exposure {e=(c*d)} 49,811 16,062
52
Principal Indicators
(For Previous 6 years)
F. Y. F. Y. F. Y. F. Y. F. Y. F. Y.
Particulars Indicators 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09
1. Net Profit/Gross Income % 14.20% 16.26% 15.52% 19.61% 16.18% 16.54%

2. Earnings Per Share Rs 9.74 17.58 16.59 22.70 16.35 22.04
3. Market Value Per Share Rs 369.00 443 830 1,005 700
4. Price Earning Ratio Ratio 20.99 26.71 36.56 61.47 31.76
5. Dividend (including bonus) on share capital % 21.05% 21.05% 10.53% 10.58%
6. Cash Dividend on Share Capital % 1.05% 1.05% 0.53 0.55
7. Interest Income/Loans & Advances % 8.39% 8.33% 5.89% 7.63% 7.61% 8.34%
8. Employee Expenses/Total Operating Expenses % 11.48% 11.96% 12.32% 17.22% 15.66% 10.37%
9. Interest Expenses on Total Deposit and Borrowings % 3.41% 4.48% 4.20% 3.69% 3.87% 5.10%
10. Exchange Fluctuation Gain/Total Income % 4.20% 2.77% 3.95% 2.34% 3.87% 3.73%
11. Staff Bonus/ Total Employee Expenses % 26.88% 34.24% 24.59% 25.08% 22.32% 24.04%
12. Net Profit/Loans & Advances % 1.32% 1.55% 1.48% 1.88% 1.52% 1.77%
13. Net Profit/ Total Assets % 0.89% 1.13% 1.15% 1.43% 1.16% 1.41%
14. Total Credit/Deposit % 76.91% 90.62% 90.20% 85.84% 90.20% 94.17%
15. Total Operating Expenses/Total Assets % 4.53% 4.76% 5.39% 4.83% 4.90% 6.03%
16. Adequacy of Capital Fund on Risk Weightage
Assets
a. Core Capital % 12.50% 10.20% 11.28% 10.26% 10.40% 9.09
b. Supplementary Capital % 0.91% 1.01% 1.08% 0.96% 4.01% 2.47
c. Total Capital Fund % 13.41% 11.21% 12.36% 11.22% 14.41% 11.56
17. Liquidity (CRR) Ratio 11.02% 3.44% 2.71% 3.65% 1.91% 7.13%
18. Non Performing Loans/Total Loans % 0.76% 0.95% 0.92% 0.73% 1.32% 0.44%
19. Weighted Average Interest Rate Spread % 3.82% 3.85% 4.58% 4.67% 4.30% 4.17%
20. Book Net Worth Per Share Rs 114 141 149 137 128 137
21. Total Shares Number 5,000,000 5,000,000 6,250,000 7,500,000 10,700,000 11,860,992
22. Total Employees Number 115 143 177 212 256 260
23. Others
53
Schedule 4.32
Kumari Bank Limited
Significant Accounting Policies
Financial Year 16 July 2008 to 15 July 2009 (1 Shrawan 2065 to 31 Ashad 2066)
1. General Information
Kumari Bank Limited (the “Bank”) is a limited liability company domiciled in Nepal. The address of its registered office is G.P.O.
Box 21128, Putalisadak, Kathmandu, Nepal. The Bank is listed on the Nepal Stock Exchange Limited.
The Bank carries out commercial banking activities in Nepal under license from Nepal Rastra Bank (the central bank of Nepal)
as Class “A” licensed institution.
2. Summary of Significant Accounting Policies

The Significant accounting policies applied in the preparation of the financial statements of the bank are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated.
2.1 Statement of Compliance

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

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

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

Commission income of the bank is accounted for on cash basis in general. However, Commission income exceeding
Rs 100,000 earned on guarantees covering more than a year is accounted for on accrual basis over the period of the
guarantee.
2.5 Dividend Income

Dividend is recognised as income when the right to receive the payment is established. However, no dividend is received
during the year.
2.6 Foreign Exchange Transactions

i. Foreign currency assets and liabilities as on 31 Ashad 2066 have been translated at mid rate (average of buying and
selling r ate) of exchange prevalent as on 31 Ashad 2066.
ii. Gain/Loss realised in foreign currency transaction is accounted for and shown as “Trading Gain” under the head
“Exchange Fluctuation Gain/Loss”
iii. Revaluation gain arising due to fluctuation in exchange rate of foreign currencies is accounted for and shown as”
Revaluation G ain/Loss”. Amount equivalent to 25% of revaluation gain of the current year is transferred to Exchange
Fluctuation Fund by w ay of appropriation as per directive issued by Nepal Rastra Bank.
2.7 Interest Expense

Interest on deposit liabilities and borrowing from other banks are accounted for on accrual basis.
2.8 Loans and Advances, Overdraft and Bills Purchased

Loans and advances, overdrafts and bills purchased include direct finance provided to the customers such as bank
overdrafts, personal loans, term loans, hire purchase finance and loans to deprived sectors. All loans are subject to regular
review and are graded according to the level of credit risk and classified as per Nepal Rastra Bank’s Directives. Loans and
advances, overdraft and bills purchased are net of loan loss provisions.
54
2.9 Staff Loans
Staff loan has been provided as per the product papers approve by board and shown under the head other assets.
2.10 Loan Loss Provision

Provision is made for possible losses on loans and advances, overdraft and bills purchased at 1% to 100% on the basis
of classification of loans and advances, overdraft and bills purchased in accordance with the directives of Nepal Rastra
Bank.
2.11 Extra-ordinary Items

Disclosure of extraordinary items are made as per the directives issued by Nepal Rastra Bank which is not which is not in
accordance with Nepal Accounting Standards.
2.12 Loans & Advances Write off

Unrecoverable loans and advances are written off in accordance with the bye-laws of the Bank approved by the Nepal
Rasta Bank.
Amounts recovered against loans written off in earlier years are recognized as income in the profit and loss account in the
year of recovery. However, there is no such case in this fiscal year.
2.13 Investments
Investments in Government Securities are valued at cost. Placements with maturity period more than 7 days are classified
as Investment and valued at cost. Similarly, investment in the shares of Credit Information Centre Limited and bond of
Nepal Electricity Authority is valued at cost since it has not been listed yet.
All investments are subject to regular review according to the directives of Nepal Rasta Bank.
2.14 Fixed Assets and Depreciation

a. Fixed assets are stated at historical cost. Historical cost includes expenditures that are directly attributable to the
acquisition of the assets.
b. Fixed assets are depreciated in accordance with Income Tax Act 2058 except for lease hold development expenses and
machinery.
c. Assets are depreciated only after their full capitalisation.
d. Computer software cost is amortised over the period of five years in equal instalments.
e. Asset under construction for which final settlement has not been made is booked as Asset in Process.
f. Lease hold development costs are amortised over a period of 5 years.
g. Machinery is depreciated applying the rate of 25% on written down value.
2.15 Proposed Dividend

Disclosure of proposed dividend is made as per the directives issued by Nepal Rastra Bank which is not which is not in
accordance with Nepal Accounting Standards.
2.16 Lease Rental

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

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

a. Current Income Tax
Provision for current income tax is made in accordance with the provisions of the prevailing Income Tax Act, 2058 and
Rules as amended.
b. Deferred Income Tax
Deferred income tax is provided on temporary differences arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws) that have
been enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled.
The principal temporary differences arise from depreciation of fixed assets.
Deferred tax assets are recognised where it is probable that future taxable profit will be available against which the
temporary differences can be utilised.
55
Deferred taxes related to temporary differences of the year are recognised in the income statement together with the deferred
gain or loss.
2.19 Stationery
Stationery purchased for consumption is expended at the time of consumption.
2.20 Non Banking Assets

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

The Bank creates a provision when there is a present obligation as a result of past events that probably requires an outflow
of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability
is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow
of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made.
Contingent assets are not recognised in the financial statements.
3. Rounding off and Comparative Figures

Figures are rounded to nearest rupees. Previous year’s figure has been regrouped or rearranged where necessary.
56
Schedule 4.33
Kumari Bank Limited
Notes to Accounts
Financial Year 16 July 2008 to 15 July 2009 (1 Shrawan 2065 to 31 Ashad 2066)
1. Provision for Bonus

Provision for bonus has been provided for at 10% of net profit, after making adjustments for loan loss provision and bonus as per
the Bonus Act, 2030.
2. Staff Housing Fund

Staff Home Loan is provided as per the bank’s policy. A separate housing fund has not been created in accordance with Labour
Act, 2048.
3. General Reserve
As per the requirement of Nepal Rastra Bank, 20% of the current year’s profit has been transferred to General Reserve.
4. Tax Settlement Outstanding / Contingent Liability

Self assessment returns filed by the bank for the fiscal year 2062/63, 2063/64 & 2064/65 are pending for assessment at the Inland
Revenue Office.

5. Provision for Gratuity
During the year, the Bank has provided Rs 7,428,478 (Previous Year Rs 2,680,562) on account of gratuity. Gratuity is treated as
Approved Retirement Fund for the purpose of tax assessment of individual staff.
6. Dividend and Bonus

The Board has proposed 10% bonus share for the current year. Further, 10% bonus share as proposed in the financial year
2064/65 related to the 10,800 kitta right share of blacklisted promoter withheld by bank as per circular of NRB has also been
shown under the head proposed issue of bonus share subsequent to the clearance of said promoter from the blacklist.
7. Unpaid Dividend
None
8. Paid up Share Capital

Rs in million
Paid up share capital of the Bank has moved over the years as follows:
Fiscal Year Cumulative Paid up Capital Remarks
2057/58 350,000,000
2058/59 350,000,000
2059/60 350,000,000
2060/61 500,000,000 Initial Public Offering of Rs 150 million
2061/62 625,000,000 (4:1) Right share issue of Rs 250 million
2062/63 750,000,000 Issue of Bonus share of Rs 125 million
2063/64 900,000,000 Issue of Bonus Share of Rs 150 million
2064/65 1,007,000,000 In fiscal year 2063/64, the bank has issued right share
of Rs 180 million. Out of total issue, Rs 170 million has
been capitalized as on balance sheet date. Further
Rs 8.272 million has been capitalized as on signing
date of financial statements.
2065/66 1,186,099,200 In the fiscal year 2064/65, the bank has issued 10 %
bonus share and 15% right share. 10% bonus share
has been capitalized on Share Capital while right share
is not yet issued.
9. Sale of Land and Building

A portion of building owned by the bank having its book value Rs 755,323.80 is demolished during the year and Rs 800,000 is
fetched there from.
10. KBL Bond 2070

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

Deferred income taxes are calculated on temporary differences using an effective tax rate of 30%.
57
The items attributable to deferred income tax assets and liabilities and their movement are as follows:
(Rs)
Particulars Balance Movement Balance

15 Jul 2008 during the year 15 Jul 2009
Deferred Income Tax Assets
Fixed Assets - 6,292,334 6,292,334
Total Deferred Tax Assets - 6,292,334 6,292,334
Deferred Income Tax Liabilities - - -
Fixed Assets (1,784,443) 1,784,443 -
Total Deferred Tax Liabilities (1,784,443) 1,784,443 -
Net – Deferred Income Tax Asset/(Liabilities) (1,784,443) 8,076,777 6,292,334
12. Reconciliation Status Rs in million
Particulars More than 3

Total Amount Upto 1 Year 1 Year to 3 Years Years
Agency Accounts (144.56) (144.56) - -
13. Loan Disbursed, recovered, written off and outstanding during the year.
The loan disbursed, recovered and outstanding during the year is given below:
Rs in million
Opening Balance Total Disbursed Total Settled Outstanding
11,522 10,883 7,610 14,795
14. Summary of Changes in deposit during the year
The financial growth of the deposits during the year is given below: Rs in million
Pre. Year (Rs) Particulars This Year (Rs) Changes

602 1) Current Deposit 780 178
571 a) Local Currency 759 188
31 b) Foreign Currency 21 (10)
4,139 2) Saving Deposit 4,170 31
3,962 a) Local Currency 4,063 101
3,800 3) Fixed Deposit 4,527 727
3,473 a) Local Currency 4,507 1,034
4,125 4) Call Deposit 6,136 2,011
4,073 a) Local Currency 6,088 2,015
110 5) Margin Deposit 98 (12)
110 a) Local Currency 98 (12)
0 b) Foreign Currency - -
12,775 Total Deposit 15,711 2,936
15. Weighted Average Interest Rate Spread
Particulars Percentage
The weighted average yield on Interest bearing assets for the year 9.98
The weighted average cost on Interest bearing liability for the year 5.81
The weighted average Interest Rate Spread 4.17
58
17. Classification of Assets and Liabilities based on Maturity
Rs in million
Assets 1-90 Days 91 - 180 Days 181 - 270 Days 271 - 365 Days More than 1 Year Total
Cash 549 549
Bank Balance 1,227 1,227
Investment in Foreign Banks -
HMG Debt Paper 197 197
NRB Debt Paper 882 882
Inter bank Loan 230 212 442
Loan 10,652 208 139 29 3,767 14,795
Total Assets 12,658 420 139 911 3,964 18,092
Liabilities
Borrowings 293 293
Current/Call Account 777 100 877
Savings Account 6,136 4,170 10,306
Time Deposit 0.4 2,692 1,835 4,527
Debt Papers -
Total Liabilities 7,206 - 0.4 2,692 6,105 16,003
Net Assets / Liabilities 5,452 420 139 (1,781) (2,141) 2,089
Cumulative Net Assets / Liabilities 5,452 5,872 6,011 4,230 2,089
18. Borrowing by the bank against the collateral of own assets:

The bank has no such borrowing in this year.
59
Schedule 4.34
Kumari Bank Limited
List of Promoters / Shareholders from Promoter’s Group availing loan from different banks
and financial institutions against the security of KBL shares
As on 15th July 2009 (31st Ashad 2066)
Shares under the Description of loan
ownership
Name of promoter/ Percentage Name of other banks and No. of shares
Shareholders under Total No. of paid up financial institutions from which Loan Details pledged
S.N. Promoter Group of Shares capital loan has been taken (Kitta) Remarks
1. Yaggya Pratap Rana 1,72,084 1.45 Nepal Investment Bank Limited, Durbarmarg, Ktm 59,000
2. Rajendra Das Shrestha 23,760 0.20 Global Bank Limited 5,000
Machhapuchhre Bank Limited 1,000
3. Bhim Krishna Udas 1,18,800 1.00 Sanima Bikash Bank Limited 50,000
4. Janak Raj Wagle 4,752 0.04 Bigunj Finance Limited, Ktm 2,000
5. Phurba Wangdel Lama 1,18,800 1.00 Nabil Bank Limited, Kantipath, Ktm 20,000
6. Govinda Das Shrestha 1,78,200 1.50 Lumbini Bank Limited 30,000
Lumbini Bank Limited 45,000
7. Bidhya Krishna Shrestha 2,17,800 1.84 Prime Bank Limited 75,000
8. Anil Das Shrestha 1,18,800 1.00 Lumbini Bank Limited 20,000
Global Bank Limited 30,000
9. Laxman Shrestha 7,12,800 6.01 Standard Finance Limited 95,000
Prudential Finance Limited 65,000
ILFC Finance Limited 1,05,000
Siddhartha Bank Limited 5,000
Gurkha Development Bank Limited 30,000
10. Antu Shrestha 92,664 0.78 Prudential Finance Limited 39,000
11. Sunil Nand Singh Pradhan 11,880 0.10 Lalitpur Finance Limited 5,000
12. Madhav Kumar Basnet 11,880 0.10 Lalitpur Finance Limited 5,000
13. Shiva Shankar Agrawal 1,04,068 0.88 Nepal Investment Bank Limited 14,500
14. Sophie Upadhaya 57,024 0.48 Lumbini Bank Limited 24,000
15. Tara Rana 11,880 0.10 Siddhartha Bank Limited 5,000
16. Pegi Pandey 23,760 0.20 Reliable Finance Limited 5,000
17. Sita Gurung 35,640 0.30 Himalayan Bank Limited 5,000
18. Sabitri Gurung 4,75,200 4.01 Nepal Investment Bank Limited, 1,80,000
Citizens Bank International Limited 20,000
19. Kamal Thapa 19,008 0.16 Harati Maa Saving and Co-Operative Limited 3,000
20. Atmaram Murarka 83,160 0.70 Machhapuchhre Bank Limited 35,000
21. Pradeep Kumar Murarka 83,160 0.70 Machhapuchhre Bank Limited 35,000
21. Pashupati Murarka 83,160 0.70 Machhapuchhre Bank Limited 35,000
22. Naresh Dugad 83,160 0.70 NIC Bank Limited 35,000
23. Kumud Kumar Dugad 1,01,310 0.85 NIC Bank Limited 35,000
24. Bikash Dugad 83,160 0.70 NIC Bank Limited 35,000
25. Bachha Raj Tated 47,520 0.40 NIC Bank Limited 20,000
26. Ananda Kumar Ringata 35,640 0.30 Nepal SBI Bank Limited 15,000
27. Jeevan Nepal 23,760 0.20 Bank of Asia Nepal Limited 5,000
28. Balram Neupane 23,760 0.20 Prime Bank Limited 5,000
Siddhartha Bank Limited 5,000
29. Mahabir Prasad Goyel 1,56,816 1.32 Machhapuchhere Bank Limited 65,000
30. Ganga Amatya 49,500 0.42 Prime Bank Limited 25,000
31. Bhubaneshwori Pant 47,520 0.40 ICFC Bittya Sanstha Limited 20,000
60
Principal Indicators
Rs in ‘000
(For Previous 6 years)
Variance
As per Unaudited As per Audited
S.N. Particulars Financial Statement Financial Statement In Amount In % Reasons for Variance
1 Total Capital and Liabilites (1.1 to 1.7) 18,533,226 18,538,565 (5,339) -

1.1 Paid Up Capital 1,186,099 1,186,099 0 0.00
1.2 Reserve and Surplus 451,800 445,437 6,362 1.41 Tax on proposed bonus share and change in income/
expenses as below.
1.3 Debenture and Bond 400,000 400,000 0 -
1.4 Borrowings 293,420 293,420 0 -
1.5 Deposits (a+b) 15,710,925 15,710,925 0 0.00
a. Domestic Currency 15,514,536 15,514,536 0 -
b. Foreign Currency 196,389 196,389 0 0.00
1.6 Income Tax Liability (9,967) 235 (10,202) 102.36 Adjustment of deferred tax assets after statutory audit
& changes by tax assessment.
1.7 Other Liabilities 500,950 502,448 (1,499) (0.30) Medical and accumulated leave to retired staffs &
provision for audit fee
2 Total Assets (2.1 to 2.7) 18,533,226 18,538,565 (5,339) -
2.1 Cash & Bank Balance 1,776,299 1,776,299 0 -
2.2 Money at Call and Short Notice 30,000 30,000 0 -
2.3 Investment 1,510,828 1,510,828 0 -
2.4 Loans and Advances 14,593,570 14,593,347 223 0.0015 Change in loan loss provision during the statutory audit
2.5 Fixed Assets 247,833 247,833 0 -
2.6 Non Banking Assets - - -
2.7 Other Assets 374,696 380,258 (5,562) (1.48) Creation of deferred tax assets after audit & adjustment
of interest receivable on loans
3 Profit and Loss Acccount
3.1 Interest Income 1,375,453 1,374,722 730 0.05 Adjustment of interest receivable
3.2 Interest Expenses 816,203 816,203 0 0.00
A. Net Interest Income (3.1-3.2) 559,250 558,520 730 -
3.3 Fees, Commission and Discount 79,104 79,104 0 -
3.4 Other Operating Income 19,747 19,747 0 -
3.5 Foreign Exchange Gain/ Loss (Net) 59,002 59,002 0 -
B. Total Operating Income (A+3.3+3.4+3.5) 717,103 716,372 730 -
3.6 Staff Expenses 114,451 115,985 (1,534) (1.34) Medical and accumulated leave to retired staffs
3.7 Other Operating Expenses 186,271 186,502 (231) (0.12) Statutory audit fee
C. Operating Profit Before Provision (B- 3.6-3.7) 416,380 413,885 2,495 -
3.8 Provision for Possible Losses 61,419 57,403 4,016 6.54 Write back of provision on NBA erroneously included
under Provision Write Back on Loans
& change in loan loss provision.
D. Operating Profit (C-3.8) 354,961 356,482 (1,522) -
3.9 Non Operating Income/Expenses (Net) 1,091 1,112 (21) (1.89) Adjustment of the amount recovered from staff who
left the bank without prior notice
3.10 Write Back of Provision for Possible Loss 51,261 47,021 4,240 8.27 write back of provision on NBA erroneously included
under Provision Write Back on Loans
E. Profit from Regular Activites (D+3.9+3.10) 407,313 404,615 2,698 -
3.11 Extraordinary Income/Expenses (Net) (876) (876) 0 (0.00)
F. Profit before Bonus and Taxes ( E+3.11) 406,437 403,739 2,698 -
3.12 Provision for Staff Bonus 36,949 36,704 245 0.66 Change in net profit before bonus
3.13 Provision for Tax 101,683 113,670 (11,987) (11.79) Difference in depreciation and after tax audit
G. Net Profit/Loss (F-3.12-3.13) 267,805 253,366 14,439 -
61
Schedule 4.36
Kumari Bank Limited

Unaudited Financial Results (Quarterly)
As at Fourth Quarter (15 July 2009) of the Fiscal Year 2008/09
Rs in ‘000
This Quater Ending Previous Quater Ending Corresponding Previous
S.N. Particulars (Unaudited) (Unaudited) Year Quater Ending (Audited)
1. Total Capital and Liabilites (1.1 to 1.7) 18,533,226 17,988,143 15,026,599

1.1 Paid Up Capital 1,186,099 1,078,272 1,070,000
1.2 Reserve and Surplus 451,800 477,460 294,885
1.3 Debenture and Bond 400,000 400,000 400,000
1.4 Borrowings 293,420 87,741 100,000
1.5 Deposits (a+b) 15,710,925 15,561,725 12,774,281
a. Domestic Currency 15,514,536 15,338,963 12,188,605
b. Foreign Currency 196,389 222,762 585,676
1.6 Income Tax Liability (9,967) (5,837) (9,650)
1.7 Other Liabilities 500,950 388,781 397,083
2. Total Assets (2.1 to 2.7) 18,533,226 17,988,143 15,026,599
2.1 Cash & Bank Balance 1,776,299 1,868,972 933,841
2.2 Money at Call and Short Notice 30,000 125,000 55,360
2.3 Investment 1,510,828 1,929,946 2,138,798
2.4 Loans and Advances 14,593,570 13,501,387 11,335,088
2.5 Fixed Assets 247,833 253,630 222,001
2.6 Non Banking Assets - 3,141
2.7 Other Assets 374,696 309,207 338,370
3. Profit and Loss Acccount Up to This Up to Previous Up to Corresponding
Quarter Year Quarter Previous Year Quarter
3.1 Interest Income 1,375,453 965,876 957,245
3.2 Interest Expenses 816,203 585,132 498,734
A. Net Interest Income 559,250 380,743 458,511
3.3 Fees, Commission and Discount 79,104 52,839 48,495
3.4 Other Operating Income 19,747 14,644 17,805
3.5 Foreign Exchange Gain/ Loss (Net) 59,002 46,646 41,807
B. Total Operating Income (A.+3.3+3.4+3.5) 717,103 494,872 566,618
3.6 Staff Expenses 114,451 77,153 89,570
3.7 Other Operating Expenses 186,271 126,522 148,143
C. Operating Profit Before Provision (B.- 3.6-3.7) 416,380 291,197 328,905
3.8 Provision for Possible Losses 61,419 14,283 64,024
D. Operating Profit (C-3.8) 354,961 276,914 264,881
3.9 Non Operating Income/Expenses (Net) 1,091 1,297 15,588
3.10 Write Back of Provision for Possible Loss 51,261 7,241
E. Profit from Regular Activites (D+3.9+3.10) 407,313 278,211 287,710
3.11 Extraordinary Income/Expenses (Net) (876) (225) (4,531)
F. Profit before Bonus and Taxes ( E. + 3.11) 406,437 277,985 283,179
3.12 Provision for Staff Bonus 36,949 25,271 25,743
3.13 Provision for Tax 101,683 75,814 82,506
G. Net Profit/Loss (F.-3.12-3.13) 267,805 176,900 174,930
4. Ratios
At the End of At the End of At the End of Corresponding
This Quater Previous Quater Previous Year Quater

4.1 Capital Fund To RWA 11.57% 12.93% 14.41%
4.2 Non Performing Loan (NPL) to Total Loan 0.43% 0.82% 1.32%
4.3 Total Loan Loss Provision to Total NPL 313.61% 182.06% 122.83%
62
Disclosure as per Basel II Requirement
1. Capital Structure and Capital Adequacy

a. Please refer the Schedule 4.30 (A)
b. Subbordinated Term Debt has its maturity on the FY 2070. Interrest rate on the debt is 8% payable on semiannual basis.
2. Risk Exposures

a. Please refer the Schedule 4.30(A), 4.30(B), 4.30(D) & 4.30(E)
b. Total Amount of NPAs-
(Rs)
Gross Loan Amount Net Loan Amount

Restructured Loan 6,002,919 5,525,554
Substandard Loan 13,082,971 9,812,228
Doubtful Loan 31,735,261 15,867,631
Loss Loan 19,724,451 0
Total 70,545,602 30,923,413
c. Gross NPA to Gross Advance is 0.44%

d. Net NPA to Net Advances is 0.18%.
e. Nonperforming loan is reduced by 58% in comparison to the previous fiscal year.
f. For loan write off, please refer to Schedule 4.28(A). There is no interest write off during the year.
g. Additional loan loss provision during the year is Rs 57,403,005 while loss provision of Rs 42,781,308 is written back during
the same year. So, net additional loan loss provision is Rs 14,621,697.
h. For investment detail, please ferer Schedule 4.12.1, 4.12.2 & 4.12.3.
3. Risk Management Function
Risk Assessment / Mitigation Practices at Kumari Bank Limited
Considering the need to establish effective Risk Management and Risk Mitigation practices at Kumari Bank Ltd, we have
developed a system of continuous improvement of processes wherein each member of the bank works towards balancing
profitability with prudence. The system encompasses all banking functions from client interface, to back-office operation, to the
strategic decisions formulated by the management committees and the Board of Directors. Each area has its own check and
balance procedure to assess and mitigate risks involved. The practices thus observed are as follows:
KBL Organization Structure
The bank’s lending approval authority is divided into two distinct units, namely Credit and Risk Assessment. While the Credit unit
or the Business Development Division concentrates more on optimum utility of assets, every lending decision of this Division is re-
assessed and revaluated by the Risk Assessment Division for final approval. The Risk Assessment Division applies its objective
judgment on risk variables deemed appropriate in each instance of lending decision. For this purpose, the Risk Assessment
Division has two distinct units, the Risk Approval Department, which facilitates final lending decision after duly adjudging risks
as mitigaged to an acceptable level, and the Credit Administration and Control Department, which evaluates the endorsed
paperwork prior to actual sanction, and also after it.

Depending upon the volume of loans and the nature of risks associated, lending decisions are subject to validation and approval
by various levels of the hierarchy, in which some lending decision are to be approved by the General Manager, and other by even
the Board of Directors as each case may require.
Risk Measurement Criteria and Mitigation Process
Credit risks are evaluated from the initial customer interface on an array of risk variable by the Credit Policy Guidelines of the
Bank, as well as on individual intuition of experiences officers. As proposals escalated for approval, judgmental and analytical
criteria become broader and more conceptual.

Kumari Bank Ltd uses the best practices in banking, to make its operation secure through a system of procedural crosschecking
63
mechanism in each operational transaction. An Internal Audit Department, which also doubles as a Concurrent Audit Department
system, continuously functions to alert bank personnel to the meticulousness required in handling operations in every functional
department. A credit monitoring system is well established in the Bank, which created a continious learning and improvement
environment, and the Bank’s efficiency goal has been to move towards the most prudent practices in the industry.
Types of eligible credit risk mitigants used and the benefits availed under CRM-
(Rs)
Particulars Eligible CRM

Deposit with Bank 131,136,332
Deposit with other bank/FI 16,000,000
Total 147,136,332
64
Branch Network
Corporate Office
Durbarmarg, Kathmandu
Tel: 01-4221311, 4221314
Fax: 01-4226644
Baneshwor
Inside KTM Valley Putalisadak Baburam Acharya Sadak,
Govinda Bhawan, Putalisadak, Kathmandu Old Baneshwor, Kathmandu
Tel: 01-4232112, 4232113 Tel: 01-4499322
Fax: 01-4231960 Fax: 01-4497120
New Road Chabahil

Pratap Bhawan, New Road, Kathmandu Chuchepati, Chabahil, Kathmandu
Tel: 01-4238388, 4238385 Tel: 01-4484434
Fax: 01-4238365 Fax: 01-4490978
Kumaripati Budhanilkantha
Kumaripati, Lalitpur Narayanthan Milan Chowk,
Tel: 01-5556024, 5556025 Budhanilkantha, Kathmandu
Fax: 01-5556027 Tel: 01-4377718
Fax: 01-4385644
Gongabu
Kantipur Mall, Gongabu, Kathmandu Koteshwor
Tel: 01-4385807, 4385809 Tinkune, R.K. Mahal, Kathmandu
Fax: 01-4385644 Tel: 01-4492921, 4499613
Fax: 01-4497325
Durbar Marg
Durbar marg, Kathmandu
Tel: 01-4226629, 4226650
Fax: 01-4226644
Outside KTM Valley Biratnagar Birtamode

Biratnagar, Goshwara Road, Anarmani-3, Birtamode, Jhapa
Morang Byapaar Sangh Building Tel: 023-541028
Tel: 021-537101, 537102 Fax: 023-543822
021-537105
Damauli
Birgunj Damauli - 2, Tanahun
Adarsha Nagar, Birgunj Tel: 065-561787
Tel: 051-524812, 524813 Fax: 065-561788
Fax: 051-521641
Baglung
Dry Port Birgunj Baglung Muncipality -2 , Baglung
Tel: 051-621025 Tel: 068-522472, 522473
Fax: 051-621818 Fax: 068-522474
Mr. Bhupendra Khadka
National Medical College
Birgunj (Extension Counter) Bhairahawa
Tel: 051-621890 Siddharthanagar - 8, Bhairahawa,
Rupandehi
Pokhara Tel: 071-521008, 521009
New Road, Pokhara Fax: 071-521000
Tel: 061-540266, 540267
Fax: 061-541717 Butwal
Butwal - 6, Shreeram Tower
Itahari Rammandir Line
Pathivaraa Market, Dharan Road, Itahari Tel: 071-551546, 551547
Tel: 025-586661, 586659 Fax: 071-551545
Fax: 025-586658
Urlabari
Narayangadh Urlabari, Itahari Road
Pulchowk, Narayangadh, Chitwan Tel: 021-541901
Tel: 056-523091, 523092 Fax: 021-541902
Fax: 056-523090 65
Notes
66

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Kumari Bank Limited

Annual Report 2008/09

Mission • Provide world-class service to our customer at a higher satisfaction level.

Our mission provides us a sense of direction to mobilize and integrate our

As we present this year’s annual report, beyond

Simply because, we feel that without their

Furthermore, we will continue to guide and encourage the

As we see the days ahead to be more challenging, with sincere

Shiva Ratan Sarada

Directors Mr. Jagdish P. Chaudhary

Mr. Samson J.B. Rana

Mr. Amir Pratap J.B. Rana

Mr. Santoo Shrestha

Mr. Rasendra Bahadur Malla

Dr. S. K. Dhakal Mr. Jagdish P. Chaudhary

Mr. Shiva Ratan Sarada

Mr. Amir Pratap J.B. Rana Mr. Santoo Shrestha

Mr. Rasendra Bahadur Malla 7

We believe in providing access to finance to all, thus we continue to increase our

In summary, Nepal’s currently tumultuous economic scenario notwithstanding, we,

Report General Meeting of the Bank and would like to present

1. Review of Bank’s Financial Performance in Fiscal Year 2008/09

Major highlights of the financial performance of the Bank are as follows:

Total Asset 18,538.56 15,026.59 3,511.97 23.37

The Bank continues to follow a policy of investing in Risk-Free Government Securities

On account of the capital structure being augmented by ploughing back of profit by

Products & Services

Management of Risk forms an integral part of bank’s philosophy. Risk is managed

2. Review of Economic Scenario

Human Resources Sub-Committee

An organization is as good as its employees. It is through employees that organizations

4. Management Level Committees

6. Bank’s Performance In The Current Fiscal Year

Financial Highlights of First Three Months of 2009/10

7. Programmes in the Current Fiscal Year

8. Changes in Board of Directors

10. Board of Directors responses to the Auditor’s Report

11. Forfeited Shares

No shares were forfeited during the review period.

12. Performance of the Bank and its Subsidiary Companies

13. Important Information Provided by Valued Shareholder

No such information was received.

No such dealings were recorded.

15. Details of share Re-Purchase

No such activities were recorded.

16. Details of Bank’s Administrative Expenses

Staff Expenses : Rs 115,984,919.00

17. Amount to be paid to the Bank by Directors, Managing Director, Chief

18. Remuneration, Allowance and Facilities provided to Directors, Managing

S.No Particulars C.E.O Managers / Other Executives

19. Uncollected Cash Dividend by shareholders:

No such cases recorded.

For and on behalf of the Board of Directors,

Shiva Ratan Sarada

Dr. Shova Kanta Dhakal

1955, Tanka Prasad Ghumti Sadak

Auditors’ To the Shareholders of Kumari Bank Limited

Financial statements and management’s responsibility

Date : 20 Ashwin, 2066 Madan Krishna Sharma

Assets Schedule Current Year (Rs) Previous Year (Rs)

Contingent Liabilities Schedule 4.17

As per our report of even date

Date: 6 Oct, 2009