Financial Instruments

Clean Note Bills

Note bills are essential to carry any type of transactions. Currency is of two types, note bills and coins. Generally, notes are used in almost all countries as a majority. The central bank of any country is responsible for the note bills printing and circulation. This role has been taken by Nepal Rastriya Bank.

The Nepal Rastriya Bank issues new note bills from time to time. It has passed a Clean Bills Act to keep clean notes in circulation. Note bills shouldn’t be stapled, written on, torn apart or folded. This decreases the lifespan of the note in circulation. Nepalese note bills feature Nepali nationality, nature, culture, civilization with subjects representing animals, birds, monuments, etc.

Bank Credit/Loans

Financial resources are required for any enterprise to conduct any business. We take credit or loans for various things like animal husbandry, operation of a business, emergency expenditure, social work or education. Banking system can provide with the necessary loans. Loan is the amount taken from a person or institution to be paid after a certain period with interest to be paid regularly as the loan condition. There are different types of such loans. These types of loans include capital loans, purchase loans, consumer loans, and investment loans.

If someone is unable to repay the loan taken from the bank or financial institution, they have to pay a fine as well as collateral. In such cases, legal action may be taken and the collateral is auctioned. The individual or institution that took out the loan may be blacklisted if they are unable to pay off the interest or loan amount within the fixed time period.

Remittance

Transfer of money from one place to another is called remittance. Banks, financial institution or money transfer agencies transfer funds. The contribution of remittance is about 23% of the total GDP of Nepal. Transfer of money through personal businesses, representatives, or unregistered organizations is generally referred as Hundi. These are illegal franchises. The funds should be sent via registered organizations and spent on productive enterprises.

Foreign Currency

Any currency is a foreign currency if it doesn’t belong to Nepal. The profit to any country is more if there is more foreign currency in circulation. Foreign currency is paid when doing any international business. Foreign currency enters Nepal through several sources. Foreign currency is received when Nepali workers earn money abroad and send it to Nepal, or when international agencies donate money to Nepal. Foreign Exchange is when one currency is exchanged with another currency.

Stock

Stock is the financial tool issued by the government or any company to collect the money needed to function properly. This includes government bonds, bond debentures, shares, etc. Any business development and expansion of services requires capital and bonds are issued to collect that capital. The investment in savings guarantees the security and operational development of a project and serves in the overall development of the economy of a country. The share price is generally maintained at Rs.100.

Generally shares are of two types, general shares and preference shares.

Preference Share

Preference shares are the shares that provide bonus amount before any other types of shares. The bonus amount percentage is fixed. The shareholders don’t get any right to attend company meetings or vote in any capacity. The people who do not want to risk much in investments prefer this share.

General Share

The share which provides bonus after the preference share bonus payment is done, and from the profits after that are general shares. This type of share is preferred by people who risk more in search for more return in their investment.

The following are needed to fill out the form for Shares:

1. Copy of citizenship certificate
2. Address, father and grandfather’s name and contact information.
3. Receipt for return of amount and bank account
4. Presently taken photograph.