KATHMANDU: The Foreign Employment Saving Bonds (FESB) were first established by Nepal Rastra Bank (NRB) thirteen years ago with the intention of diverting remittance monies toward profitable investments. The program, nevertheless, has had trouble successfully involving migrant workers. Roughly 4.9% of the issued FESB have been sold since they were issued, according to a recent NRB analysis. Even though the NRB requested applications for bonds totaling Rs 15.56 billion during the previous ten years, only bonds worth Rs 762.3 million were sold.
The FESB is targeted at Nepalis working abroad, non-resident Nepalis, and those returning from foreign employment within four months. The funds raised are intended for government deficit financing and development projects. Despite these bonds being available since July 2010, their performance has been disappointing from the outset, with only 0.40 percent of the initial Rs 1 billion in bonds sold and even lower sales in subsequent years.
To attract investments, NRB offers FESB at rates slightly higher than fixed deposits and regular development bonds. Despite these incentives, the bonds have not gained traction among migrant workers. The NRB report highlights a lack of information as a primary barrier, with 39.5 percent of survey respondents citing inadequate information as a major issue. Other reasons included the complex purchasing process, lengthy loan disbursement times, and insufficient funds for investment.
The NRB’s report suggests several measures to improve the bond's appeal, including policy and procedural reforms, increased publicity, and transitioning to a paperless system. Additionally, allowing the withdrawal of principal and interest from foreign banks might help attract more migrant workers to invest in FESB, potentially addressing the current low subscription rates.
