Khulit Annual 2016-2017

Annual Report 2016-2017 Standard Chartered 1
Annual Report 2016-2017

Driving investment, trade and the creation
of wealth across Asia, Africa and the Middle East
31st Annual General Meeting

Wednesday, 10th January 2018

2 Annual Report 2016-2017 Standard Chartered
About Us
Standard Chartered Bank Nepal Limited has corporates, multinationals, large public
been in operation in Nepal since 1987 when sector companies, government corporations,
it was initially registered as a joint-venture airlines, hotels as well as the Development
operation. Today the Bank is an integral Organisation segment comprising of
part of Standard Chartered Group having embassies, aid agencies, NGOs and
an ownership of 70.21% in the company INGOs. The Bank has been the pioneer in
with 29.79% shares owned by the Nepalese introducing ‘client focused’ products and
public. The Bank enjoys the status of the services and aspires to continue leadership
largest international bank currently operating in introducing new products. It is the first
in Nepal. Bank in Nepal to implement the Anti-
Money Laundering policy and to apply the
We are a leading international banking group, ‘Know Your Customer’ procedure on all
with more than 80,000 employees and a the customer accounts. Corporate Social
150-year history in some of the world’s most Responsibility is an integral part of Standard
dynamic markets. We bank the people and Chartered’s ambition to become the world’s
companies driving investment, trade and best international bank and is the mainstay
the creation of wealth across Asia, Africa of the Bank’s values. The Bank believes in
and the Middle East. Our heritage and delivering shareholder value in a socially,
values are expressed in our brand promise, ethically and environmentally responsible
Here for good. Standard Chartered PLC is manner. Standard Chartered throughout
listed on the London and Hong Kong Stock its long history has played an active role in
Exchanges as well as the Bombay and supporting those communities in which its
National Stock Exchanges in India.With 15 customers and staff live. The Bank is also
points of representation, 23 ATMs across actively engaged with the communities in
the country and more than 490 local staff, raising awareness around Financial Literacy.
Standard Chartered Bank Nepal Limited is Subsequent to the devastating earthquake
serving its clients and customers through an of April and May 2015, the Bank is engaging
extensive domestic network. In addition, the with its disaster relief partner Habitat for
global network of Standard Chartered Group Humanity in undertaking its rehabilitation and
enables the Bank to provide truly international reconstruction project. Standard Chartered
banking services in Nepal. Standard launched two major initiatives in 2003 under
Chartered Bank Nepal Limited offers a full its ‘Believing in Life’ campaign- ‘Positive
range of banking products and services Living’ and ‘Seeing is Believing’. Various
to a wide range of clients and customers activities and initiatives under this banner are
representing individuals, mid-market local ongoing in Nepal.
For further information please visit www.sc.com/np or /StandardCharteredNP

What’s inside this report
Strategic Report Performance Highlights........................................................06
Operational Overview...........................................................07
Report of the Board of Directors .........................................08
Chief Executive Officer’s Report..........................................15
Corporate governance Our Approach to Corporate Governance.............................19
Additional Information..........................................................28
Board of Directors................................................................30
Management Team...............................................................32
Sustainability........................................................................35
Our People...........................................................................40
Branch and ATM Network....................................................42
Auditor’s Report...................................................................43
Financial statements and notes
Balance Sheet......................................................................45
Profit & Loss Account...........................................................46
Profit & Loss Appropriation Account....................................47
Statement of Changes in Equity...........................................48
Cash Flow Statement...........................................................49
Schedules.............................................................................50
Significant Accounting Policies............................................84
Notes to Accounts................................................................88
Disclosure as per Bank’s disclosure policy........................103
Nepal Rastra Bank’s Approval and Directions...................110
Five Years Financial Summary...........................................111
Financial Statement as per NFRS......................................113

Performance highlights
Profit After Tax Market Value Per Share Earning Per Share
(Rs. Million) (Rs.) (Rs.)
Return on Total Assets Total Shareholder’s Equity Capital Adequacy Ratio

(In %) (Rs. Million) (In %)
NPL/Total Loan Net Worth Per Share Total Credit to Deposit Ratio
(In %) (Rs.) (In %)
As per regulatory (NRB) financial statement

Operational overview
Strong foundation
Standard Chartered has continued to deliver consistent, diverse and sustained growth while investing to underpin
future momentum and building balance sheet resilience.
Financial highlights
Operating Income Operating Profit Total Assets
Rs. 3,349m Rs. 1,986m Rs. 77,409m
Capital Adequacy Return on equity Dividend
21.08% 11.98% 105.26%
Non-financial highlights
Points of representation 15 Employees 495
Operational highlights
n
Stable income and operating profit despite a n
Disciplined and proactive approach to
scenario of margin compression risk management in Retail Banking and
Corporate & Institutional Banking business
n
Broad based and diversified income growth
in both Retail Banking and Corporate & n
Diverse, liquid, well capitalized and robust
Institutional Banking business balance sheet composition
n
Conscious decision to invest to underpin n
Strong market capitalization of ~ Rs. 92 Billion
future growth in both the businesses reflecting high shareholder confidence

Report of the Board of Directors
We remain committed in delivering profitable and sustainable growth
It is both an honour and a privilege to deliver this statement the most successful and landmark events in the Bank’s
on behalf of the Board of Directors of the Bank. I take this history in Nepal.
opportunity to report that Standard Chartered Bank Nepal
Limited has put a reasonable performance in the Financial `Here for good’, our brand promise, is firmly embedded
Year 2016/17. in our culture. It signifies how we operate as a bank and
conduct our business. Standard Chartered is deeply
The Board wants to reassure you that it is positive in the embedded in our community and we will continue to
Bank’s compelling opportunities and believes that the harness our efforts in remaining the best brand in our
current Management Team possesses the necessary focus market.
to reposition the business for the future. I together with
the Board, intend to support the Management Team while Results – A Synopsis
challenging appropriately to ensure that the Bank continues
to fulfill its obligations towards clients, the communities Financial Highlights*
that we serve and the employees. Dedicating ourselves • Net Profit after tax was up by 10 percent to Rs. 1.42
to those objectives is how the Bank will create value for billion compared to Rs. 1.29 billion in the previous year.
investors over the medium and longer term. • Earnings per share has decreased by Rs. 10.47 to Rs.
35.49 due to increase in number of shares.
Nepal continues to remain attractive through the medium • Risk Assets increased by 25 percent to Rs. 39.73 billion
and long terms and we remain well positioned to support compared to Rs. 31.70 billion last year.
the growth. We believe the medium-to long-term trend • Deposits increased by 14.62 percent to Rs. 63.87 billion
towards internationalization remains and we are committed compared to Rs 55.73 billion last year.
to providing cutting-edge services to our clients.
* as per regulatory(NRB) financial statements
The digital delivery model is set to transform Retail Banking
business. Significant improvements have been made Bank’s Performance
in Corporate and Institutional Banking too. Significant Standard Chartered Nepal has been delivering reasonable
progress has been made to reposition our Commercial performance year on year. The Bank has contributed an
Banking business for long-term sustainable growth and amount of Rs. 596 million to the Government Exchequer
better returns. Our worldwide presence and the unique as compared to Rs. 503 million last year on account of
networking capability makes us efficient in enabling trade corporate tax.
and investment around the globe. We remain committed
in Nepal’s economic growth by supporting our clients and In accordance with the statutory and regulatory
customers in different ways. To fulfill our social purpose, requirements, the Board recommends a transfer of Rs. 25
we will and have taken decisive actions to refocus our million to Exchange Fluctuation Reserve and transfer of Rs.
strategy and reposition the Bank for the future. 284 million to the General Reserve Fund. Further, the Board
has proposed the dividend of 5.26 percent for which
The Board very well recognizes the importance of payouts Rs. 210.83 million has been appropriated towards cash
to shareholders, and believes in balancing returns with dividend. Board has also proposed to increase the capital
investment in the franchise to support future growth, by issuing 100 percent bonus share for which Rs 4,005.72
while preserving strong capital ratios. Our capital position million has been allocated from current year profit and
will be relative to regulatory and market expectations. As share premium.
you are fully aware, our priority has been to maintain well
capitalized, highly liquid, and diverse balance sheet. We Our Tier 1 and Tier 2 Capital Adequacy Ratios were 19.58
also remain committed in delivering profitable & sustainable percent and 1.5 percent respectively with an overall ratio
growth within our risk appetite. You will appreciate that the of 21.08 percent, post appropriations. Our capital position
Bank issued shares through Further Public Offer (FPO) to is more than adequate to meet our business needs and
raise its capital and to expand the shareholder base this exceeds the current Nepal Rastra Bank’s capital adequacy
calendar year. It is with great pleasure we want to inform requirement under the Basel III capital accord and also
you that this historic Issue went on to receive subscription exceeds the international norms.
of more than 11 times of the Issue value. This was one of

Economic Environment Nepal

Nepal’s real GDP (at producers’ price) is expected to grow
Global Scenario at 7.5 percent in FY 2016/17 compared to 0.4 percent in
The world economy is currently benefiting from strong US the preceding year. Similarly, the real GDP at basic price
growth, solid export data from Asia and booming asset is estimated to grow 6.9 percent compared to a growth of
markets. Much of this comes down to a few common 0.01 percent in the previous year. Good monsoon rains,
factors – moderate oil prices, China’s inventory cycle, improved power supply and normal supply situation helped
and reflation expectations in the US. Growth rates have accelerate growth from the low base of the preceding year.
returned to levels not seen since the global financial crisis. The growth in real GDP at producers’ price of 7.5 percent
Geopolitical risk is difficult to price in, and we expect this in FY 2016/17 has been a record high since 1993/94.
to continue in the coming months; but it has declined
significantly in the Euro area. A policy deviation is the The balance of payment recorded a surplus of Rs. 82.15
biggest risk to our outlook as central banks normalise billion in FY 2016/17 compared to a surplus of Rs. 188.95
monetary policy. Tightening monetary policy without billion in the previous year. The current account slipped
derailing growth requires a tough balancing act. But given into a deficit of Rs.10.13 billion in FY 2016/17 as against
the lagged effect of monetary policy, this is likely to be a significant level of surplus of Rs.140.42 billion in the
more of a concern in the second half of 2018 than now. previous year. The surge in imports relative to exports
accounted for a deficit in the current account.
Economic performance in the Euro area is improving,
and growth is above potential. Domestic demand is The worker’s remittances increased 4.6% to Rs. 695.45
strengthening, and while southern countries still face billion in FY 2016/17 compared to growth of 7.7 percent in
challenges, employment is rising back to pre-crisis levels. the previous year.
We also expect monetary tightening in the Euro area, in the
form of Quantitative Easing (QE) tapering. We expect the The trade deficit widened by 30.4 percent to Rs. 917.06
European Central Bank to take a very moderate approach billion in FY 2016/17. The export import ratio declined
to QE tapering. We also do not anticipate interest rate hikes to 7.4 percent in the review year from 9.1 percent in
in the Euro area before 2019. An easy monetary stance the previous year. Total merchandise trade deficit as a
should give the Euro-area economy room to grow and percentage of GDP jumped to 35.3 in the review year
break out of its disappointing post-financial crisis growth from 31.3 percent of the previous year. Export increased
rates. by 4.2 percent in the FY 2016/17 compared to a drop of
17.8 percent in the previous year. Imports increased by 28
China had a 6.5 percent growth target for 2017, and percent in FY 2016/17 as against a drop of 0.1 percent in
the first half growth reached 6.9 percent. This gives the the previous year.
People’s Bank of China room to tighten monetary policy
and credit growth. Although growth is the priority, strong The gross foreign exchange reserves stood at Rs.1079.52
first half performance allows the authorities to focus on billion as at mid July 2017, an increase of 3.9 percent
other priorities, such as deleveraging. We expect monetary from Rs.1039.21 billion a year ago. Based on the existing
tightening to lead to slightly lower (but still strong) growth trend of imports, current level of reserves is sufficient
in the second half. for financing merchandise imports of 13.2 months and
merchandise and service imports of 11.4 months.
In India’s case, record Foreign Direct Investment (FDI) and
rising portfolio inflows more than offset the still-contained The annual average consumer price inflation moderated to
current account deficit. Political stability and bold reforms 4.5 percent in FY 2016/17 from 9.9 percent in the previous
(GST, demonetization) will widen the tax base and year. The annual average inflation of FY 2016/17 has been
should boost long-term growth potential. External-sector the lowest since FY 2004/05. The higher base price of the
dynamics remain favourable. preceding year, improved supply situation and lower global
prices in both food and other commodities contributed
We believe the world economy still has room to run over to easing of inflation in the review year. The year-on-year
the next few quarters. But strong confidence alone will not (y-o-y) consumer price inflation dipped to 2.7 percent in
be enough to sustain this. The positives we are seeing right mid-July 2017 from 10.4 percent in the previous year. The
now are mostly transitory in nature. Events will be crucial to y-o-y inflation rate has been the lowest since October-
keeping this momentum strong. For now, the key risk is US November 2004.
policy unpredictability and the threat of trade wars.

Nepalese currency appreciated by 3.8 percent vis-à-vis agile. With the Tourism sector remaining positive, all these
US Dollars as at mid-July 2017 vis-à-vis mid-July 2016. sectors are expected to support in keeping the national
Nepalese rupee has a fixed parity of 1:1.6 with the Indian economy resilient.
rupee. The buying exchange rate per US dollar stood at
Rs.102.86 in mid-July 2017 compared to Rs. 106.73 in Corporate Governance
mid-July 2016. Governance across the Bank is robust and is also integral
to our long-term success. As you may all appreciate,
The Year Ahead banking is a relationship business, we highly value the
Overall economic activities in most part of FY 2016/17 relationships that we have with our clients, regulators, staff
remained positive. and other stakeholders; all efforts will be made to further
deepen this relationship.
We are happy to share that successful Local, Federal and
Provincial elections within the timeline laid out in the new We are committed to ensuring the integrity of governance.
Constitution provided further impetus to believe that the In addition to the established committees, we have
political, social and economic environment will continue committees on Diversity and Inclusion, Health and
to improve and remain stable. The business opportunities Safety, Environment, and Community Partnership. The
remain positive and the Bank is in good shape to support initiatives taken by these committees have added value
the clients and customers in the coming years. Our to our stakeholders and delighted them. We believe good
strong cross-border capabilities, network proposition, governance provides clear accountabilities, ensures strong
collaboration with our Global Banking business and controls, instils the right behaviours and reinforces good
cutting-edge products and services are easy to be performance.
leveraged by our clients and customers.
The Bank has been following the Risk Management
Our digital delivery model to transform Retail Banking Principles and Practices of Standard Chartered Group
business resonates with the growing affluent and emerging which are in line with the latest international best practices
affluent client segments. Our plan to reach growing affluent in the areas of risk management in banks.
client base in the core cities will help us in expanding our
Retail Banking business. The management of credit, cross-border, market, liquidity,
operational, reputational, and other risks are inherent to
Efficiency is key in today’s world. To manage the ever the bank’s business. The risk management principles
- increasing complexity of regulations efficiently and followed by the Bank include balancing risk and return,
achieve sustainable improvement in both compliance and responsibility and accountability, anticipation of risk and
productivity, we are upgrading our technology platforms competitive advantage from effective risk management.
and re-engineering key processes. Similarly, the Bank follows risk management governance
structure of Standard Chartered Group covering the Board,
The external environment though remains challenging, our Audit Committee, Risk Committee, Executive Committee,
strong balance sheet, fortified capital position and well Business/Functional level risk management Committees
structured & diversified business portfolio will help weather etc. Roles and responsibilities for risk management
such challenges to a large extent. are defined under a Three Lines of Defence model i.e.
business/operations as first line of defence, risk function
Agriculture sector continues to remain a key pillar of our under the business/operations as second line of defence
economy. The damaging floods in the Terai during August and the independent internal audit function reporting to the
will likely impact the overall output though we can expect a Audit Committee as the third line of defence. In this way,
satisfactory agricultural yield this year. The trend of moving the risk management process involves active participation
from traditional to modern farming equipment, distribution from Board level to the business/operational level ensuring
of inputs & services should boost the sectorial contribution an effective system of risk management in the Bank.
to the GDP. Likewise, improvement in operating and
socio political landscape is expected to benefit in the Globalisation of standards for anti-money laundering
expansion and growth of the industrial sector. The ongoing and countering the financing of terrorism is required for
reconstruction work in the aftermath of the massive the governments to collectively fight against financial
earthquake of 2015, the infrastructural spending of the crime. Nepal is no longer isolated from these risks; we
government, remittance received from the Middle East and believe the financial sector should be better equipped to
the South East Asian nations continue to play a key role manage the implementation of Financial Action Task Force
to aid in the growth and keeping the national economy (FATF) guidelines, CDD and AML standards. Risks around

Correspondent Banking are bound to increase, making this Key indicators for driving economic prosperity i.e.
a high risk and costly channel, unless banks are prepared demographics; urbanization and growth in the middle class
to invest in infrastructure and staff to manage and oversee remain promising. Given this situation, we can expect
client accounts. The Bank adopts a policy of mitigating our market to do better in FY 2017/18 and beyond. While
this risk by educating the correspondent banking clients the intensity of some headwinds has eased, it will take
for having a robust AML program. The revised AML/CDD time to fully capitalize on the opportunities that a better
standards of Nepal Rastra Bank reaffirm that Banks should environment will present. We are now building deliberately
invest in systems and processes to effectively manage and patiently to deliver safe business growth. There
financial crime risks. however are some challenges facing the country such as
stability in the supply of power and trade imbalance etc.
Ms. Neeta Rege, Ms. Karen De Alwis and Mr. Joseph
Silvanus represent Standard Chartered Grindlays Australia The actions taken during FY 2016/17 and before made us
and Mr. Krishna Kumar Pradhan as Independent Director nimbler & fitter to find and execute the opportunities as its
continues to be in the Board of the Bank. Public Director’s important to remain so, so that the resources, the capability
post was vacant due to the resignation of the then public and the will should help us overcome the challenges &
director. Pursuant to Section 14 (kha) of the Bank & execute the strategies.
Financial Institutions Act, 2073, the Board has appointed
Mr. Mana Bahadur Rai, shareholder of the Bank, in the We are aware of the fact that our financial returns are not
vacant post for interim period to represent the public yet where they need to be and do not reflect the earnings
shareholders in the Board of the Bank effective from 4 capability we believe we possess. Having worked hard to
September 2017. I, Jitender Arora, have assumed the secure our foundations, we are now focused on realizing
Chairman’s role effective 8 December 2017 representing the earnings potential. We will do this by fully re-engaging
Standard Chartered Bank, U.K. in the Board of Standard with our clients, improving productivity, and investing
Chartered Bank Nepal Limited. in our people and culture. Our efforts will help enhance
the quality of service that we can provide to our clients,
As on the date of this report, the Board is made up of the improve our ability to capture profitable and safe growth
Non-Executive Chairman, one Executive Director and four opportunities and differentiate us from our competitors.
Non-Executive Directors of which one is Independent
Director appointed as per the regulatory requirement and We are passionate about advancing our Conduct agenda.
one of them is the Public Director representing General We have made good progress in the recent years and
Public shareholders as per the provisions of the Bank and have invested to build effective and sustainable systems
Financial Institutions Act and the Company Act. and infrastructure to ensure we can play a leading role
in discovering and disrupting financial crime. We have
In Conclusion sharpened our focus on all aspects of conduct, not simply
Financial Year 2017/18 needs to be the year we on combating financial crime, and have taken appropriate
demonstrate we have the capacity to grow safely and action where we find conduct inconsistent with our
sustainably. By using variety of financial and non-financial standards. We are focusing on the behaviors, values and
key performance indicators (KPIs), we will measure the principles that we follow as individuals to enable us each
performance and progress of the Bank and also at an to make the right decisions and exercise good judgement.
individual business level. Our renewed focus on putting We do this because it is the right thing to do, and because
clients rather than products at the core of our coverage it makes us stronger and more sustainable, and that it also
should respond well not to forget that we have a good and helps in reinforcing stakeholder confidence.
valuable franchise, core financial strength, outstanding
client relationships, and the right team of staff. Our client and customers have enormous affection for the
Bank and value our product capability and our presence
We are taking continuous actions in getting leaner and in the cities we serve. Some have been clear though that
more focused. We are also creating capacity to invest and we have become more difficult to deal with. We have
in the process, have set clear performance priorities for restructured our organization to address this, putting clients
better returns and sustainable growth. rather than products at the core of our coverage and they
are responding well to our renewed focus. We will continue
While political and social transitions do play a significant to balance support for strong, high-returning clients with
role on business confidence, we remain positive about discipline on our risk tolerances. We will continue to take
our market and its prospects for economic growth. out costs and invest much of these savings into the future

of the Bank. After the increase in paid up capital base, we We are conscious of the importance of retaining and
have a strong balance sheet which both protects us for attracting the best talent and building their learning and
economic volatility and positions us for future opportunity development capabilities. We will continue to reward
when conditions allow. The successful execution of our our staff for good performance as well as for their good
strategy will allow us to enhance the shareholder returns. behaviours. We are a Bank with strong performance and
As mentioned earlier, year 2017/18 needs to be year we values culture. I thank our staff members for their share of
demonstrate we have the capacity to grow safely and contribution; I appreciate their efforts.
sustainably and we will continue to track the progress we
make. We have a clear path, an experienced Management We recognize the importance of re-energising growth in
Team and Here for good, our brand promise, firmly income together with strong cost and risk management
embedded in our culture. The Board is determined that so that returns to shareholders can be restored to a
the Bank continues to adapt to the changing external sustainable level. While year 2017/18 will undoubtedly
environment and to realise the opportunities prevalent in have its share of challenges and uncertainty, we are
our markets. determined to deliver on our promises.
I take this opportunity to thank the Ministry of Finance

and Nepal Rastra Bank for their invaluable support
and guidance provided to the Bank. I appreciate their
continuous efforts to raise the standards of financial Jitender Arora
industry by introducing suitable measures through policy Chairman
decisions and regulations. I cannot remain without thanking
our investors for their strong and unflinching support.

Chief Executive Officer’s Report
We are taking significant actions to strengthen our long term growth
I am pleased to report that the Bank has delivered yet Correspondent Banking services. This includes cash
another year of stable performance in an eventful year. management and payment services in all major currencies
Financial Year 2016/17 remained a challenging year from respective locations/countries including international
in terms of socio-political environment. Nevertheless, trade services through our Documentary Credit Services to
because of our consistent and focused strategy, we have the commercial Banks in Nepal. Our Straight2Bank (S2B)
been able to deliver on our promises is a world class digital platform which provides payments,
collections and trade services to our Corporate clients
There is an increase in the volume of risk assets by 25.34 through various levels of online connectivity. We have also
percent to Rs. 39.73 billion compared to Rs. 31.70 billion recently integrated S2B with Nepal Clearing House Limited
last year. The Bank has been able to manage its credit (NCHL) to provide seamless and straight through national
portfolio better as a result of which the Non-performing payment processing via Inter-bank Payment System
credit to Total credit is 0.19 percent. The provisions made (IPS) which is expected to improve payment & collection
are adequate to cover all the potential credit losses as of experience for our clients. Our Financial Market business
the balance sheet date. offers wide range of Online trading services which include
FX Spot, Forward and Derivative Products thus enabling
After transfer of Rs. 284 million to general reserve, Rs. 25 counter parties to directly access global platform for
million to exchange fluctuation reserve, proposed dividend Foreign Exchange Dealing & Trading.
of Rs.211 million and proposed bonus shares of Rs.
4,006 million, total retained earnings as at 15 July, 2017 Most importantly, as a correspondent banking service
stood at Rs. 10 million. This performance reflects a good provider and as mandated by the regulator, we are
momentum in the underlying businesses and disciplined contributing largely for upliftment of AML and Sanction
management of risks and costs. Control adapted by commercial banks as recipients of our
correspondent banking services in Nepal. We are sharing
Representation our best practices and holding workshop and seminars
As at 15 July 2017, the Bank maintained fifteen points of such as Correspondent Banking Academy on an annual
representation which included twelve branches and three basis. The Bank has been organising Correspondent
extension counters. In addition to this, services were also Banking Academy Workshops in Nepal jointly in
extended to our clients & customers through twenty three association with Nepal Rastra Bank.
ATMs located at different parts of the country.
Retail Banking
Global Banking (GB) & Commercial Retail Banking has had an encouraging start to the fiscal
Banking (CB) year, with increased business momentum. The economic
We deepened our relationships with our clients in line with environment has shown signs of improvement although
our strategy to be the core bank and capitalize on growth the geopolitical outlook will largely remain influenced by
opportunities. Vis-à-vis last year, we achieved a growth of the progress we make in the economic agenda after the
19 percent in our GB & CB books. Our focus remains to recently held elections.
diversify our revenue stream. Our market continues to be
asset heavy but we are making efforts to increase the share The second half of the review year saw severe pressure on
of cash and trade revenues. the liquidity bearing down on Retail business. As a result,
both deposit and asset drive was impacted with underlying
From the second quarter of FY 2016/17, market witnessed interest rates being impacted as a consequence. Retail
unprecedented interest rate volatility. We stood firm by Banking continues to play a key role in maintaining
our clients in our belief of delivering Fair Outcomes for overall liquidity for the Bank. It is also regaining business
Clients. We are pleased to report that our efforts are being momentum, particularly post return of normalcy in the
much appreciated by our Clients. Nepal Rastra Bank’s liquidity situation.
introduction of Base Rate linked lending rates is expected
to bring further fair and transparent pricing in the system. Our strategic priorities in Retail Banking, which include,
We will continue to deliver on our digital drive, to bring revitalising our liability base, boosting risk assets, re-
efficiencies and automation at both our and clients’ end. engineering our footprints, ramping up sales capabilities
Our strategy remains to grow within our risk appetite and several digitisation initiatives are all working to deliver
focusing on growth areas of the economy. us benefits. Our efforts at Strategic Alliances/Partnerships,
reengineering processes and capabilities continue to be
Standard Chartered Bank has been supporting entire key in improving our Client Experience and helping us
banking community by providing comprehensive become a Core Bank to our Clients.

The business is making steady progress against its solutions to help the small and medium sized entities.
strategic objectives. We are stronger, leaner and becoming Our Business Banking portfolio is growing steadily with
more efficient. We are taking significant actions to increased momentum. We are working on leveraging our
strengthen our long term growth. Retail Banking has international network, working with our clients across the
undertaken several initiatives/actions during the review “ecosystems” of their supply chains.
year to propel business to the next level.
In order to continue to expand our client base & improve Our Business Banking portfolio continues to contribute
engagement, we have refreshed our liability strategy and in helping the Bank in the expansion of Priority Sector
launched an emerging affluent programme. We have business to drive the Central Bank’s agenda of credit
revamped coverage model for all segments of clients, to growth under this segment.
ensure we remain a market leader in pricing and Client
Value Propositions delivery. Whilst the economic environment is looking positive, we
will continue to be mindful of the geopolitical uncertainties.
Our Employee Banking proposition is steadily working to With our continued disciplined approach in Credit Risk,
drive our focused strategy of banking the ecosystem of our Operational Risk and Compliance, we remain optimistic
International Corporate, Commercial Banking and Business about our growth and we are on track to deliver the
Banking (BB) clients. This has led to strong momentum in planned business outcome for our Retail segment.
attracting new-to-bank clients.
Client Experience
We have simplified and improved product offerings, We believe in delivering high-quality client experience
updated our back end processes and policies to provide which will enable us to be Here for clients and help
greater benefits to our clients. Reengineering of processes demonstrate how we are Here for good.
and capabilities remains a key focus area in our continuous
improvement plans to enhance Client Experience. We With an aim to drive superior service delivery, the Bank has
continue to improve our end-to-end sales processes, established various client experience service standards
resulting in significant efficiencies in the way we do our viz Client Care Centre service level, Online Banking and
business. ATM uptime service level, Complaint Resolution, Client
Centric/ Treating Clients Fairly approach, Performance
Driving cost efficiencies continues to remain key to Measurement metrics and Standard Processing
prioritising investments in Retail Banking e.g. the Turnaround Times, etc.
cost efficiencies achieved has enabled us to increase
Our global policies and procedures on complaint
investment in strengthening our frontline capacity with
management help us to ensure that complaints are
additional Sales resources.
identified and resolved quickly in a fair manner. Root
Cause Analysis (RCA) of the complaints are conducted to
The Bank has undertaken several digitisation initiatives
understand the actual cause for occurrence of the issue
to overcome its footprint challenges. Online Banking
and actions are taken to prevent recurrence of similar
capability has been enhanced to provide faster and better
complaints and issues.
client experience for Personal Clients. Straight 2 Bank
(S2B) is driving convenience for our Business Banking Annual Loyalty Surveys are being conducted to gauge
clients, with ease of banking from their offices. whether our clients are our true advocates on overall
banking relationship across the Bank, Segments and
The Bank has introduced SC Mobile app to give its clients Products through Net Promoter Score (NPS). Based
easier and convenient access to Online Banking. The on the feedbacks received, the Bank has been driving
Good Life (TGL) App was launched to provide clients initiatives to enhance overall client experience.
with an exclusive program to allow the Credit and Debit
Cardholders to enjoy the best-in-class privileges at various The Bank leverages on the set service standards,
retail outlets. Access to over 2,000 ATMs across Nepal, complaint metrics, client interactions and surveys to
over and above the SCB Nepal ATM network, has been understand client’s needs, trends, and drive improvement
implemented at free and/or lower transaction fees for cash opportunities. Focused group discussions are held with
withdrawals. The Bank is already working on a complete the frontline and support staff to understand their pain
SMS Alert solution for both debit and credit transactions points and actions are taken to address these issues to
and for online purchases (eCommerce transactions) from deliver service excellence. The Bank continues to focus
the Bank issued Debit and Credit Cards. on improving productivity by improving the processes,
As we make a steady progress in our Retail business, digitisation initiatives and by standardising the operating
we also continue to do well at providing holistic financial rhythm.

The Bank believes that each staff owns and is accountable people and firmly believe that we can distinguish ourselves
for client experience; keeping this in mind it continues to from the competition only through increased engagement
focus on trainings on products, systems, soft skills, and with our clients. Our international status, expertise and
client experience for our staff to ensure we are heading on knowledge enormously help us in this process.
the right direction with our client focused strategy. We believe that our market will remain attractive through
the medium and long terms; and our strong financial
Future Plans position enables us to capture and support future
Our aim is to build stronger relationships with our clients growth opportunities. We remain committed in delivering
and to achieve this objective, we will continue to cater profitable, sustainable growth within our risk appetite.
client-centric new and improved product offerings. We have
made good progress over the last few years and will continue Credit Environment
to focus in offering strategic products for our clients. After the disappointing economic growth seen in the last
two years in a row, the economic activity rebounded in
Our priority is to maintain well capitalised, highly liquid FY year 2016/17. The Central Bureau of Statistics has
and diverse balance sheet. This enables us to pursue estimated GDP growth rate of 7.5 percent at current prices
growth more aggressively. We have opportunities to grow for the FY 2016/17 due to bumper agriculture output owing
our business by tapping infra, hydro and agri sectors. to good monsoon, consistent power supplies, increase in
Our aspiration to grow will however be influenced by the government expenditure vis-à-vis last year and increased
competitive landscape, regulatory changes, and economic momentum seen in the post-earthquake reconstruction
fundamentals. works. Economic activities gradually rebounded following
the ease in the trade routes with India from the beginning
of Feb 2016, and imports, manufacturing and tourism
activities picked up in the last fiscal year with the regular
supply of petroleum products and other essential items.
Similarly, notable improvement in power supply, decline

in political protests as well as labour unrests, resumption
of manufacturing activities following the lull after the
earthquakes in 2015 and the supplies disruption in 2016,
and pick up in post-earthquake reconstruction works
underpinned a manufacturing sector growth during last
fiscal year. Wholesale and retail trade activities, the largest
contributor to the GDP growth after agriculture, also
remained higher in comparison to the previous two years.
Marked improvement in the arrival of tourists in the review
year in comparison to the previous two years, boosted the
An overwhelming response was seen from the investors in the Further tourism activities. In addition, the local elections related
Public Offer (FPO) issued by the Bank to raise its paid up capital. spending as well as the disbursement of housing grants
boosted the consumption demand.
We have made good progress in achieving excellence
through our Digitisation agenda. This will help us to achieve Remittances continued to grow albeit slowly during last
improved service delivery for our clients through our fiscal year. In the US dollar terms, the workers’ remittances
operational efficiencies. Enhancement of digital channels increased by 4.8 percent to USD 6.556 billion during the
and offerings will continue to remain a priority for us. year 2016/17. Remittances, which constitute above 30
percent of country’s GDP, is a major element in keeping
The collaboration between our Commercial Banking (CB) the Balance of Payment (BoP) surplus despite a large trade
& Global Banking (GB) business and Retail Banking (RB) deficit. The workers’ remittance is one of the major pillars
is helping to address the client needs more effectively of the economy and remains a key factor for the financial
and efficiently. This collaboration is working effectively, sector stability.
particularly in driving our Employee Banking business. We
are also making effective use of our network points for During FY 2016/17, country’s total exports increased by
achieving synergies in client referrals and conversions. 9.9% and imports rose by a whopping 30% as compared
to the previous year. Nepal remains as an import based
We are a Bank with strong performance and values culture. economy and its export base continues to be very small –
We continue to invest in training and development of our share of export was 6.9% only in total trade during the year

2016/17. The increased reliance on imports resulting in During the FY 2016/17, the Bank has been successful in
high import to export ratio and ballooning trade deficit have achieving disciplined growth in loans and advances and
rendered economic vulnerability. in maintaining the credit quality of the loan portfolios.
Notwithstanding the unstable credit environment and
The principal uncertainties impacting overall credit increased refinancing risks due to deposit crunch in the
environment in last FY year 2016/17 were geo-political second half of the last fiscal year, our portfolios showed
uncertainty, tightening of liquidity / deposit crunch, lower resilience because of our risk culture, proactive portfolio
utilization of the government’s development expenditure measurement and adherence to risk appetite set in
etc. The frequent changes of the government at short tenor accordance with the Risk Management Principles, which
and its inability to address the demand raised by Madhesi include balancing risk and return, responsibility and
parties through amendment of the constitution and their accountability in taking risks, anticipation of material future
non-participation in first two phases of local elections had risks, and our competitive advantages. The Bank continues
increased uncertainty in political arena as well as policy to take measured risk exposures across all major risk types
instability. The government’s low development expenditure, with strong focus on conduct of business. We manage
decelerated growth of workers’ remittances, slew of right risk with the objective of maximizing of risk-adjusted
issues/FPOs of banks and FIs, demonetization of INR returns while remaining within the Bank’s risk appetite.
notes, etc resulted in slower growth of deposits vis-à-vis The fundamentals of our risk culture remain unchanged,
credit growth during the year. Lack of political stability particularly consistency of strategy and disciplined and
has played a key role for lower cap-ex year on year. focused approach, strong client relationship, rigors around
The extended credit crunch also impacted the business the portfolio quality, debate on risk-return dynamics,
confidence. vigilance and timely actions, etc.
Credit growth of commercial banks surpassed deposit The long term prognosis of the economy appears positive
collections in the last FY 2016/17. The pressure on the as we expect more stability in the political environment
banks to grow business in line with substantial capital with successful holding of all elections in the process of
growth also played a role in picking up credit off-take implementation of the new constitution and consolidation
rapidly in the last fiscal year. Owing to constraints in in the political front. The implementation of new
deposit growth, NRB had to allow banks to deduct 50% of constitution is expected to bring political stability and
the directed lending while calculating CDC Ratio through prioritize economic development. However, the country
mid-term Monetary Policy review in order to address the has limited growth potential in the short to medium term
issue of banks and FIs in complying with the regulatory in the absence of strong policies, sustained reforms and
CDC ratio (80%) due to mismatch between their deposits adequate infrastructures.
and credit growths.
Auditor
Inflation averaged at 4.5% in the last fiscal year, sharply M/S LDSA Associates, Chartered Accountants were
down from 9.9% in the previous year. The downward appointed as Statutory Auditors for FY 2016/17 by the 30th
correction of prices following the highs during and after Annual General Meeting of the Bank held on 15 December
the crippling supply disruption was expected as supplies 2016. As per the recommendation of the Audit Committee,
gradually normalized along with the favorable monsoon, this meeting will decide on the appointment of the auditor
improved power supply and cooling off of prices in India. for next financial year.
The low inflation rates, comfortable foreign exchange Proposed Dividend and Bonus Shares
reserves, surplus in BoP, low debt to GDP ratio, etc. were The 362nd Meeting of the Board of Directors of the Bank
some of the reassuring factors for the economy during the has proposed cash dividend and bonus shares to the
year. The banking sector proved its resilience amid the shareholders of the Bank for the year ended 15 July 2017
extended lendable fund crunch and substantial rise in cost at the rate of 5.26 percent and 100 percent respectively.
of deposits during the year.
Joseph Silvanus
Director and CEO

Our approach to Corporate Governance
A Synopsis Analysis
Following are the steps taken by the management for The Board of Standard Chartered Bank Nepal Limited is
strengthening Corporate Governance in the organization: responsible for the overall management of the Company
and for ensuring that proper corporate governance
• The Board of Standard Chartered Bank Nepal Limited standards are maintained. The Board is also responsible &
is responsible and accountable to the shareholders and accountable to the shareholders.
ensures that proper corporate governance standards
are maintained. The Board has complied with the principles and provisions
• The Audit Committee meets quarterly to review the of the Nepal Rastra Bank directives on Corporate
internal and external inspection reports, control and Governance and the provisions of Companies Act, 2063
compliance issues and provides feedback to the Board and Banks and Financial Institutions Act, 2073 (the
as appropriate. “Corporate Governance Code”). The directors confirm that:
• The Executive Committee (EXCO) represented by
all Business and Function Heads is the apex body • Throughout FY 2073/74, the Company complied with all
managing the day to day operations of the Bank. the provisions of the Corporate Governance Code. The
Chaired by the CEO, it meets at least once a month for Company complied with the listing rules of Nepal Stock
formulating strategic decisions. Exchange Limited.
• The Annual General Meeting is used as an opportunity • Throughout FY 2073/74, the Company was in
to communicate with all our shareholders. compliance with the Securities Registration and
• The Bank adheres to the applicable laws, regulations Issuance Regulation, 2065.
and directives to meet the local regulatory • The Company has adopted a Code of Conduct
requirements. In addition to this, the Board has also regarding securities transactions by directors on
adopted SCB Group policies and procedures relevant further terms no less than required by the Nepal Rastra
to business segments and functions. Bank Directives and the Company Act and that all
• Ultimate responsibility of effective Risk Management the Directors of the Bank complied with the Code of
rests with the Board supported by Audit Committee, Conduct throughout FY 2073/74.
Board Risk Committee, EXCO, Executive Risk
Committee and Asset & Liability Committee. The Board
• Embracing exemplary standards of governance and As on the date of this report, the Board is made up of the
ethics wherever we operate is an integral part of Non-Executive Chairman, one Executive Director and four
our Strategic Intent. The Group Code of Conduct is Non-Executive Directors of which one is Independent
adopted to help us meet this objective by setting out Director appointed as per the legal requirement and one
the standards of behaviour we must follow with each of them is the Public Director representing General Public
other and with our clients, communities, investors and shareholders as per the provisions of the Bank & Financial
regulators. Institutions Act & Company Act.
Bank’s 30th Annual General Meeting

The Board composition complied with the legal & Board Committees
regulatory requirements. Four Directors including the Non- The Board is accountable for the long-term success of the
Executive Chairman are nominated by the SCB Group to Bank and for providing leadership within a framework of
represent it in the Board in proportion to its shareholding. effective controls. The Board is also responsible for setting
The Board meets regularly and has a formal schedule of strategic targets and for ensuring that the Bank is suitably
matters specifically reserved for its decision. These matters resourced to achieve those targets. The Board delegates
include determining and reviewing the strategy of the certain responsibilities to its Committees to assist it in
Bank, annual budget, overseeing statutory and regulatory carrying out its function of ensuring independent oversight.
compliance and issues related to the Bank’s capital. The Committees play key role in supporting the Board.
Board is collectively responsible for the success of the
Bank. The Bank has two Board Level Committees viz. Audit
Committee and Risk Committee constituted as required by
During the year under review, 12 board meetings were the local law and regulation.
held. The Directors are given accurate, timely and clear
information so that they can maintain full and effective The Bank’s Board has made a conscious decision to
control over strategic, financial, operational, compliance delegate broader range of issues to the Board Committees.
and governance issues. The linkages between the committees and the Board are
critical, given that it is impractical for all non-executive
The following table illustrates the number of Board directors to be members of all the committees.
meetings held during the FY 2073/74 and sitting fees paid
to the directors: In addition to there being common committee membership,
Board Members Scheduled Meeting fees the Board receives the minutes of each of the committees’
Meeting paid meetings. In addition to the minutes, the Committee Chairs
Mr. Ananth Narayan1 10 Nil - Does not provide regular updates to the Board throughout the year.
Chairman take meeting fee
We have effective mechanisms in place to ensure that
Anurag Adlakha2 6 Nil - Does not
Chairman take meeting fee there are no gaps or unnecessary duplications between
the remit of each committee. The Bank also has clear
Sujit Mundul3 9 NPR 1,89,000
guidance for the committees in fulfillment of their oversight
Director (inclusive of tax)
responsibilities
Krishna K. Pradhan 12 NPR 2,52,000
Professional Director (inclusive of tax) Audit Committee
Neeta Rege4 4 Nil –Does not As mandated by the local regulations, the Board has
Director take meeting fee formed an Audit Committee with clear Terms of Reference
Shankar Lall Agrawal5 11 Nil –Does not (ToR). The duties and responsibilities of the Audit
Public Director take meeting fee Committee are in congruence with the framework defined
Joseph Silvanus 12 Nil –Does not by Nepal Rastra Bank Directives, Banks and Financial
CEO & Director take meeting fee Institution Act and Companies Act.
1. On Standard Chartered Bank Nepal’s Board till October 30, 2017. The Audit Committee is chaired by a non-executive
2. On Standard Chartered Bank Nepal’s Board till 27 Feb 2017. director. All other members of the Audit Committee
3. On Standard Chartered Bank Nepal’s Board till 2 June 2017.
excluding the Head of Internal Audit are also non executive
4. Joined Standard Chartered Bank Nepal’s Board on 9 April 2017.
5. Joined Standard Chartered Bank Nepal Board on 3 June 2016 and directors thus ensuring complete independence. The last
resigned on 22 June 2017. Audit Committee meeting for FY 2073/74 was held on 4
May 2017. The Composition of the Audit Committee as on
Director Induction and Ongoing that date was as below:
Engagement Plans
We have a very extensive, robust and tailor-made induction
and ongoing development programme in place for our Mr. Sujit Mundul, Chairman
Board members. We have been conducting induction Ms. Neeta Rege, Member
for the new directors representing in the Board. The
Mr. Shankar Lall Agrawal, Member
induction programmes are in-depth and cover areas such
as the basics of banking, including modules on sources Mr. Sanjay Ballav Pant, Head of Internal Audit,
of income, geographic diversity, client distribution, and Member Secretary
traditional and modern banking services etc.

The Audit Committee meets at least on quarterly basis Audit Methodology;
and reviews internal and external audit reports, control • Reviewed the annual audit plan based on the risk
and compliance issues, bank’s financial condition assessment and regulatory requirements;
etc. Audit Committee provides feedback to Board • Reviewed the audit team resourcing and development
of Directors by tabling Audit Committee meeting activities;
minutes at the subsequent Board meeting for review. • Reviewed the findings of NRB Inspection Team and
The Audit Committee also liaises with Group Internal Statutory Auditor, and directed the management for
Audit to the extent necessary to ensure that the resolution of the issues raised;
conduct of Committee’s business is consistent with • Reviewed the status of audit issues raised in Internal
and complementary to the practice and requirement of Audit Reports, Statutory Audit Report and NRB
Standard Chartered Group in this regard. Inspection Report;
• Recommended to the Bank’s Annual General Meeting
The following table illustrates the Audit Committee’s through the Board for appointment of Statutory Auditor
attendance and meeting fees paid during FY 2073/74. A and fixation of remuneration;
total of 4 meetings were held during the period. • Reviewed quarterly and annual financial statements,
comparison of key financial indicators and adequacy of
Audit Committee Meeting Scheduled loan loss provisions;
Members fee paid Meeting • Reviewed and discussed top risks, emerging risks and
themes of the country and the appropriateness of the
Sujit Mundul1 4 NPR 60,000
Chairman (Inclusive of tax) management action plan to mitigate these risks;
• Reviewed the Compliance Monitoring Report to
Anurag Adlakha2 2 Nil – Does
understand the regulatory developments, emerging
Member not take
regulatory hotspots, regulatory breaches and state of
meeting fee
compliance of the Bank;
Neeta Rege3 1 Nil – Does
• Reviewed the Financial Crime Compliance Report;
Member not take
• Reviewed the Annual Compliance Plan;
meeting fee
• Reviewed the cases of fraud and loss to the Bank;
Shankar Lall Agrawal 4 2 Nil – Does • Reviewed the Pillar 3 disclosure comprising of capital
Public Director not take
structure, capital adequacy, risk exposures and risk
(Inclusive of tax) meeting fee
management function in the annual financial statements
Sanjay Ballav Pant5 4 Nil – Does of the Bank.
Member Secretary not take
meeting fee
Board Risk Committee
Ultimate responsibility for setting our risk appetite
1. On Standard Chartered Bank Nepal Board till 2 June 2017 only.
boundaries and for the effective management of risk rests
2. On Standard Chartered Bank Nepal Board till 27 Feb 2017 only.
with the Board.
Attended one meeting through Video Conferencing.
3. Joined Standard Chartered Bank Nepal Board on 9 April 2017.
Under Nepal Rastra Bank Directive on Corporate
Attended one meeting through Tele Conferencing.
Governance, the Board has established a Board Risk
4. Joined Standard Chartered Bank Nepal Board on 3 June 2016 and
Committee with clear terms of reference. The Board Risk
resigned on 22 June 2017. Attended one meeting through Tele
Committee is chaired by an Independent Non-Executive
Conferencing.
Director (INED), Chairman of the Audit Committee is a
5. On Audit Committee till 7 July 2017 only.
member and Chief Risk Officer & Senior Credit Officer
(“CRO & SCO”) is the member/Secretary. The Committee
During the financial year 2073/74 (2016/17) Audit
meets minimum four times annually. The Committee
Committee performed the following tasks, among others.
oversees and reviews the fundamental prudential risks
• Reviewed and reported to the Board on the Bank’s including operational, credit, market, reputational, capital,
internal control system; liquidity and funding, and country cross border risk, etc.
• Reviewed the issues raised in the Internal Audit Reports
and directed the management for resolution; The Board Risk Committee receives regular reports on risk
• Reviewed the work performed by Internal Audit against management, including our portfolio trends, policies and
the country audit plan; standards, stress testing, liquidity and capital adequacy,
• Reviewed and approved the Audit Committee’s Terms and is authorised to investigate or seek any information
of Reference; relating to an activity within its terms of reference.
• Reviewed and approved significant changes to the At the strategic level, risk in any business, but most

especially in a Bank’s business, is clearly owned by the Mr. Rajan Udas

Board. The Board Risk Committee’s role is to advise and Head, Human Resources
help, diving deeply into issues of risk so that the Board is
Mr. Sanjay Pant
well placed to perform its role as the ultimate owner of risk
Head, Compliance
appetite.
Mr. Sujit Shrestha
The Composition of the Board Risk Committee as on Chief Information Officer
October 17, 2017 was as below:
Mr. Suraj Lamichhane
• Krishna Kumar Pradhan, Chairman
Financial Controller
• Neeta Rege, Member
• Gopi Bhandari, Member Secretary
Risk Governance
Effective Risk management is essential to consistent
The following table illustrates the number of Board Risk
and sustainable performance for all of our stakeholders
Committee meetings held during the FY 2073/74 and fees
and is therefore a central part of the Bank’s financial and
paid:
operational performance. The Bank adds value to clients
and therefore the communities in which it operates,
Risk Committee Scheduled Meeting generates returns for shareholders by taking and managing
Members Meeting fees paid
risks.
Krishna Kumar NPR 52,500
Pradhan 4 Through our Risk Management Framework, we manage
Chairman enterprise wide risks, with the objectives of maximizing
(inclusive of tax)
risk-adjusted returns while remaining within our risk
Sujit Mundul 1 NPR 7,500 appetite.
Member
(inclusive of tax) As part of this framework, the Bank uses a set of principles
Gopi K Bhandari 4 Nil - Does not take that describe its risk management culture, we wish to
Member Secretary meeting fee sustain. The principles of risk management followed by the
Bank include:
• Balancing risk and return.
Executive Committee (EXCO)
The Executive Committee (EXCO) represented by all key • Conduct of business: seeking to achieve good
Business and Function Heads of the Bank is the apex body outcomes for clients, investors and the market in which
that manages the Bank’s operation on a day to day basis. we operate, while abiding by the spirit and letter of laws
EXCO meets formally at least once a month and informally and regulations and demonstrating that we are Here for
as and when required. The strategies for the Bank are good through our conduct.
decided and monitored on a regular basis and decisions • Responsibility and Accountability: Ensuring that
are taken collectively by this Committee. The CEO Chairs risk taking is disciplined and focused, particularly
the EXCO. As of the date of this report, the Bank’s Core within area of authority, and that risk taking is
Executive Committee comprised of the following: transparent, controlled and reported in line with
the Risk Management Framework, within risk
Mr. Joseph Silvanus
appetite boundaries and where there is appropriate
Chief Executive Officer & Head Retail Banking
infrastructure and resource.
Mr. Adarsha Bazgain • Anticipation: Anticipating material future risks, learning
Head, Financial Markets & Financial Markets Sales lessons from events producing adverse outcomes and
Mr. Bimal Singh ensuring awareness of known risks.
Head, Legal & Company Secretary
• Competitive advantage: Achieving competitive
Mr. Gopi K. Bhandari advantage through efficient and effective risk
Chief Risk Officer & Senior Credit Officer
management and control.
Mr. Gorakh Rana
Head, Global Banking and Commercial Banking Ultimate responsibility for setting our risk appetite
boundaries and for the effective management of risk rests
Mr. Michael Siddhi with the Board.
Head, Transaction Banking

Acting within an authority delegated by the Board, the Credit Risk
Board Risk Committee, chaired by an independent non- Credit risk is the potential for loss due to failure of a
executive director (INED), has responsibility for oversight counterparty to meet its obligations to pay the Bank
and review of prudential risks, including but not limited in accordance with agreed terms. Country Portfolio
to credit, country cross-border, market, pension, capital, Standards / Guidelines and the Credit Approval Document
liquidity and funding, and operational risks. (CAD) / Credit Processing Manual govern the extension
of credit to Corporate & Institutional Banking (CIB) and
The Executive Risk Committee is responsible for the Commercial Banking (CB) Clients and Retail Banking
establishment of, and compliance with, policies relating Clients respectively. Each policy provides the framework
to credit risk, country cross-border risk, market risk, for lending to counterparties, account management,
operational risk, pension risk and reputational risk. It is product approvals and other product related guidance,
responsible for the management of all risks other than credit processes and portfolio standards.
those managed by ALCO. Credit risk under Retail Banking (including Business
Banking), Commercial Banking and Corporate &
The Executive Risk Committee (ERC) is represented by Institutional Banking is managed through a defined
the senior management team including the heads of the framework which sets out policies, procedures and
concerned risk management units and Chaired by the standards covering the measurement and management
CEO. The committee meets normally in every two months of credit risk. There is a clear segregation of duties
and reviews the Credit Risk, Operational Risk, Market Risk, between transaction originators in the businesses and the
Country Cross-Border Risk and Reputational Risk; analyzes approvers in the Risk functions. All credit exposure limits
the trend, assesses the exposure impact on capital and are approved within a defined Credit Approval Authority
provides a summary report to the Executive Committee. Framework.
Its objective is to ensure the effective management
of risks throughout the Bank in support of the Bank’s All Corporate and Institutional borrowers, at individual and
Business Strategy. The Assets and Liabilities Committee group level, are assigned internal credit rating that supports
is responsible for the management of capital and identification and measurement of risk and integrated into
establishment of, and compliance with, policies relating overall credit risk analysis.
to balance sheet management, including management of
liquidity, capital adequacy and structural foreign exchange The Credit Issue Committee (“CIC”), a sub-committee
and interest rate exposure and tax exposure. of Executive Risk Committee (ERC), is responsible for
overseeing clients in CIB, CB and Business Banking
The Bank’s Committee Governance structure ensures segments showing signs of actual or potential weaknesses
that risk-taking authority and risk management policies and also for monitoring of agreed remedial actions for
are cascaded down from the Board to the appropriate such clients. The CIC reviews the existing Early Alert (“EA”)
functional, client business, senior management, and portfolio in CIB and CB and stress account management
committees. Information regarding material risk issues and (SAM) portfolio in Business Banking as well as new
compliance with policies and standards is communicated accounts presented to the Committee. It also reviews
through the business, functional, senior management, and Retail Portfolio to ensure credit issues / adverse trends
committees. in the portfolio are identified and addressed through
appropriate actions. The CIC additionally reviews and
monitors strategies and actions being taken on accounts
within GSAM’s portfolio. It is chaired by the CEO and
meets monthly.
For Retail exposures, portfolio delinquency trends are

monitored continuously at a detailed level. Individual
customer behaviour is also tracked and considered for
lending decisions. Accounts that are past due are subject
to a collections process, managed independently by the
Risk Function. Charged-off accounts are managed by
specialist recovery teams.
Standard Chartered Nepal organised a Correspondent Banking Academy
workshop to update Nepalese banks on emerging risks from Financial
Crime and to create awareness on compliance and best practices on the
subject.

The credit risk management covers credit rating and along with the treatment plan are agreed with the Risk
measurement, credit risk assessment and credit approval, Control Owner before raising the risk in the system, and
large exposures and credit risk concentration, credit tabling the risks in Country Executive Risk Committee
monitoring, credit risk mitigation and portfolio analysis. for acceptance. Mitigating controls are put in place and
mitigation progress monitored until its effectiveness.
Operational Risk
We define Operational Risk as the potential for loss • The Executive Risk Committee (ERC) ensures the
resulting from inadequate or failed internal processes, effective management of Operational Risk throughout
people, and systems or from the impact of external events, the business/functions in support of the Group’s
including legal risks. We seek to minimize our exposure strategy and in accordance with the Risk Management
to operational risk, subject to cost trade-offs. Operational Framework. The ERC assigns ownership, requires
risk exposures are managed through a consistent set actions to be taken and monitors progress of risks
of management processes that drive risk identification, identified, in addition to confirming the risk grading
assessment, control and monitoring. Operational provided at the business/unit level.
Risk Framework (ORF) adopted by the Bank provides
comprehensive risk management tools for managing • The Executive Risk Committee (ERC) accepts
operational risk. The Operational Risk Framework operational risks arising in the country provided the
(ORF) defines how risks are managed, how Operational residual risk rating is ‘low’ on the Group Operational
Risk policies and controls are assured, how effective Risk Assessment Matrix. All Risks that are rated
governance is exercised as well as the key roles required to Medium or above on the Group Operational Risk
manage the underlying processes. Assessment Matrix are reported to the Executive Risk
Committee (ERC) for endorsement and escalated to the
The Executive Risk Committee, chaired by the CEO, Group Process Owner by the relevant country process
oversees the management of operational risks across the owner for acceptance through the relevant Process
Bank. Each risk control owner is responsible for identifying Governance Committees (PGCs).
risks that are material and for maintaining an effective
control environment across the organization. Risk control • The Financial Crime Risk Committee, a sub-committee
owners have responsibility for the control of operational of ERC chaired by the CEO, ensures appropriate
risk arising from the management of the following activities: governance of Financial Crime risk and oversees the
External Rules & Regulations, Liability, Legal Enforceability, implementation of the Risk Management Framework as
Damage or Loss of Physical Assets, Safety & Security, it relates to Financial Crime.
Internal Fraud or Dishonesty, External Fraud, Information
Security, Processing Failure and Model. Operational risks • The Group Risk Committee (GRC) determines the
can arise from all business lines and from all activities Group’s approach to the management of operational
carried out by the Bank. Operational Risk management risk in accordance with the RMF. The GRC fulfils its
approach seeks to ensure management of operational risk responsibilities in part through delegation of authorities
by maintaining a complete process universe defined for all to properly constituted committees as listed below:
business segments, products, and functions processes.
Products and services offered to clients and customers are - Group Operational Risk Committee (GORC) is
also assessed and authorized in accordance with product responsible for governing operational risk across
governance procedures. all functions, client segments and products. It is in
turn supported by Business Process Governance
The OR governance structure is as follows: Committees (PGCs) appointed by Process Universe
Owners, which provide global oversight of all
• Operational Risk governance ensures consistent operational risks arising from end-to-end processes
oversight across all levels regarding the execution and within their Process Universes.
effectiveness of Operational Risk Framework (ORF).
- Group Financial Crime Risk Committee (GFCRC)
• Risk Control Owners for all major Risk Types are is responsible for governing financial crime risks
appointed as per the Risk Management Framework across the Group Process Universe. This includes
(RMF) and are responsible for effective management of financial crime operational risks arising from non-
operational risk of their respective control function. compliance with external rules and regulations
relating to International Sanctions, Anti-money-
• Operational risks are identified and graded at the laundering & Terrorist financing and Anti-bribery and
business/unit level. For all risk graded low and above Corruption.

- Group Information Management Governance Reputational risk is managed by the ERC and EXCO, which
Committee (GIMGC) provides oversight and drives are responsible for protecting the Group’s reputation locally
best practice in information management and data and has the responsibility to ensure that the Bank does not
governance. undertake any activities that may cause material damage to
the franchise. All employees are responsible for day-to-day
- Business and Geographic Risk Committees are identification and management of reputational risk.
responsible for ensuring the effective management
of risk in the businesses and across the geographies Pension Risk
in support of the Group’s strategy. Pension risk is the potential for loss due to having to meet
an actuarially assessed shortfall in the Bank’s defined
Market Risk benefits pension schemes. Pension obligation risk to a
We recognize Market Risk as the potential for loss of firm arises from its contractual or other liabilities to or with
earnings or economic value due to adverse changes respect to an occupational pension scheme. It represents
in financial market rates or prices. Risks arising out of the risk that additional contributions will need to be made
adverse movements in currency exchange rates, interest to a pension scheme because of a future shortfall in the
rates, commodity price and equity prices are covered funding of the scheme.
under Market Risk Management. Our exposure to
market risk arises predominantly from customer driven The ERC is responsible for pension risk. The Bank
transactions. In line with Risk Management Guidelines assesses and monitors the assets and liabilities within the
prescribed by NRB, the Bank focuses on exchange risk defined benefit scheme on actuarial value method.
management for managing/computing the capital charge
on market risk. The Bank adopts the Net Open Position Internal Control
approach for reporting market risk. The Bank is committed to managing risks and in controlling
its business and financial activities in a manner which
In addition to currency exchange rate risk, interest rate
enables it to maximize profitable business opportunities,
risk and equity price risk are assessed at a regular interval
avoid or reduce risks which can cause loss or reputational
to strengthen market risk management. The market risk is
damage, ensure compliance with applicable laws and
managed within the risk tolerances and market risk limits
regulations and enhance resilience to external events.
set by the Board.
To achieve this, the Board has adopted the SCB Group
Liquidity Risk policies and procedures of risk identification, risk
Liquidity risk is the potential that the Bank either does evaluation, risk mitigation and control/monitoring, besides
not have sufficient liquid financial resources available to implementation of the local regulations / NRB directives.
meet all its obligations as they fall due, or can only access
these financial resources at excessive cost. The Liquidity The effectiveness of the Company’s internal control
Risk Framework governs liquidity risk and is managed by system is reviewed regularly by the Board, its Committees,
ALCO. In accordance with that policy, the Bank maintains a Management and Internal Audit. The Audit Committee has
liquid portfolio of marketable securities as a liquidity buffer. reviewed the effectiveness of the Bank’s system of internal
The net liquid assets to total deposits ratio is 57 percent control during the year and provided feedback to the Board
which includes a buffer of Rs. 24 billion over the regulatory as appropriate.
requirement.
The Internal Audit monitors compliance with policies/
Reputational Risk standards and the effectiveness of internal control
Reputational risk is the potential for damage to the structures across the Company through its program of
franchise, resulting in loss of earnings or adverse impact business/unit audits. The Internal Audit function is focused
on market capitalisation as a result of stakeholders taking a on the areas of greatest risk as determined by a risk-
negative view of the organisation, its actions or inactions – based assessment methodology. Internal Audit reports
leading stakeholders to change their behaviour. are periodically forwarded to the Audit Committee. The
findings of all audits are reported to the Chief Executive
The Bank’s Reputational Risk Policy establishes the Officer and Business Heads for initiating immediate
framework for the governance and management of corrective measures.
reputational risk. The framework aims to protect the Bank’s
reputation and restrict the ability to undertake any activities
that may cause material damage to the Bank’s franchise.

Capital Management information, financial as well as non-financial, published

The capital management approach of the Bank is driven by the Company for the shareholder’s information. The
by its desire to maintain a strong capital base to support AGM is used as an opportunity to communicate with all the
the development of its business and to meet the regulatory shareholders.
capital requirements at all times.
The notice of the AGM, as required by the Companies
As Capital is the centerpiece of the Bank’s performance Act, was sent to shareholders at least 21 days before the
matrix, a sound capital management forms the very core of date of the meeting at their mailing addresses available
the overall performance landscape to ensure that the Bank in the Company’s records. In addition to that the notice
delivers on its objective of maximizing the shareholder’s and agenda of the AGM were also published twice in
value. The senior management of the Bank is engaged and the national level daily newspaper for the shareholders
responsible for prudent capital management at all times. information.
In compliance with the regulatory requirement of increasing
the capital base as prescribed by the Central Bank, the Group Code of Conduct - Summary
Bank is comfortable in meeting the minimum capital Standard Chartered is a company for which we can be
requirements and is strongly positioned to meet the proud to work. As a global bank, we have the privilege,
performance benchmarks. opportunity and responsibility to be a force for good in the
markets in which we operate. In an environment where
Crisis Management the conduct of banking is under increasing scrutiny, our
The Bank has in place a Crisis Management Plan and a ethical standards must be beyond reproach. We need to
Country Crisis Management Team to manage and resolve understand and follow both the letter and the spirit of the law,
the crises effectively which may affect the operations to play a robust role in the fight against financial crime, and to be
of the Bank. In addition to this, the Bank has Business mindful of the reputational consequences of our actions.
Continuity Plan (BCP) to maintain, manage and restore
critical business process to pre-defined level when they are Good conduct is built on four key pillars: creating the
impacted by disaster both natural and manmade. right environment; a fair outcome for clients; the effective
operation of financial markets and the prevention of
Health, Safety and Security financial crime. Our success will be measured by our ability
We aspire to create a culture whereby the management to achieve good outcomes for all our stakeholders —
of risk and prevention of harm is part of our everyday clients, investors, regulators, markets, our colleagues and
business. We recognise that managing Health & safety the communities we serve.
risk is a core management activity and an important
component of our values. Health & Safety is an integral Living the Group Code of Conduct is one way in which
part of our organizational culture and it is our top priority we can take a step towards achieving these outcomes.
to ensure that “H&S” risks are properly assessed and The Group Code of Conduct has been developed to help
mitigated, thereby reducing risks to staffs, customers all of us live our values and deliver our brand promise
and to our organization, including criminal liability and in everything we do. The Code is supplemented with
reputational damage. We regularly conduct audits of resources that will support you as you navigate through
Health, Safety & environment management and conduct sometimes tough and unfamiliar situations.
inspections of buildings and departments to provide
assurance to all stakeholders that risks are being managed The Code of Conduct is not something to be glanced
effectively and that there is a healthy and safety embedded at just once. It needs to be embedded in how we do
working environment for both our staff and our customers. business, so all of us need to know and understand it, and
As a part of H&S management; the bank during the year commit to it annually.
has carried out minor to major fire safety mitigation &
preventive maintenance works across all our buildings, Do the right thing — the importance of the Code:
organized the H&S campaigns to create the awareness Our values and our brand promise are integral to the way
amongst its staffs, customers, visitors. H&S has not only we work every day. The Code is important because it
become our integral part of our business but also the outlines how we can make sure that the decisions we make
management system that all our strategic partners can are the right ones.
adopt.
Act responsibly and within authority: Be disciplined,
Relations with Shareholders responsible and take accountability for the risks you take
The Board recognizes the importance of good and make sure they are appropriate to your business or
communications with all the shareholders. There is regular activity. You must keep to our limits and policies and not
make decisions that are beyond your delegated authority.

Use good judgment: Recognise when there are situations Manage conflicts of interest: It is important not to
without simple solutions. Use the Code’s decision making put yourself in a position where your judgment could be
framework to help you make decisions well, appropriately affected. You are responsible for identifying, assessing and
and with care. managing conflicts of interest (whether actual or issues
which could be viewed as conflicts) that arise in your daily
Speaking Up: You have a responsibility to Speak Up working life.
when you see behaviour, a process or system you are not
comfortable with at work. This helps to maintain a culture Do not engage in or support insider dealing:
of strong ethics, integrity and transparency. The misuse of inside information undermines the financial
system and unfairly disadvantages others in the market.
You must keep to the Group Personal Account Dealing
Comply with laws, regulations and Group standards: Policy to deal with the risk of insider dealing.
You are individually responsible for complying with the
spirit, not just the letter, of laws, regulations and our Group Protect confidential information: Building trust is a
standards. basic part of all our relationships with clients. You must not
release confidential information unless authorised to do so.
Combat financial crime: It is critically important to protect
the worldwide financial system. You must comply with Compete fairly in the market place:
laws, regulations and Group standards on anti-money You must understand and comply with the laws which
laundering (including those on tax evasion), preventing affect how you compete in your markets both locally and
financing for terrorism, fraud or sanctions. abroad.
Reject bribery and corruption: Bribery is illegal, Treat colleagues fairly and with respect: All staff are
dishonest and damages the communities where it takes entitled to a safe working environment that is inclusive and
place. You must not give or accept bribes nor take part in free from discrimination, bullying and harassment. Treating
any form of corruption. your colleagues as partners helps our people to deliver
on the brand promise, resulting in a positive effect on our
Treat clients fairly: A focus on building long-term business results.
relationships helps to increase our business by improving
our reputation. This includes having well-designed Be open and co-operate with regulators:
products and services, which: Deal with regulators in a responsive, open and co-operative
• Are clearly sold based on suitable advice way and give regulators information they would reasonably
expect to be told about.
• Perform as expected
• Give clients choice Respect our communities and the environment:
To contribute to economic stability in our markets, we
all have a responsibility to reduce our effect on the
environment and give back to our communities.

Additional Information
As required by Section 109 of the Company Act (First Amendment), 2006
Un-audited first quarter result of financial year 2017/18 is Forfeited Shares:

as follows: There are no shares forfeited during the financial year.
Amount in Thousands Transaction between the Bank and its Subsidiary

(Rs.) Company and the Progress made in the Business:
The Bank does not have a subsidiary company.
Loans and advances 39,851,258
Deposits 71,421,579 Main transactions carried out by the company and
Operating profit 742,694 its subsidiary company during the financial year and
Profit before bonus and 758,263 any important change in the business of the company
taxes during the period:
The Bank does not have a subsidiary company and there
Net Profit 482,531
is no significant change in the business of the company
during the period.
Achievements of the current year as of the date of
preparation of the report, and opinion of the Board of
Information furnished to the company by its basic
Directors on future actions:
shareholders during the previous financial year:
Please refer the ‘Board of Director Report’ & CEO Report.
There are no basic shareholders in the bank as no
shareholder, except the SCB Group, holds more than
A review of the business during the previous year:
1percent of the paid up capital of the Company. There has
Please refer the sections ‘Commercial Banking’ & ‘Retail
been no information received from the SCB Group in this
Banking’ under CEO Report.
regard.
Industrial or Professional Relations of the Company:

Particulars of the ownership of shares taken up by the
The Company maintains a good professional relationship
Directors and office-bearers of the company during
with its customers, people and regulators. Senior
the previous financial year, and information received
managers of the Company represent in number of
by the company from them about their involvement, if
councils, committees and sub-committees of regulators’,
any, in the transactions of the shares of the company:
professional organizations, associations, and forums. The
Directors and office bearers, except mentioned above,
Company is a member of Nepal Bankers Association,
have not involved in the shares transactions of the Bank in
Federation of Nepalese Chamber of Commerce & Industry,
FY 2073/74 as per the declaration provided by them to the
Nepal Britain Chamber of Commerce & Industry, Nepal
Bank.
India Chamber of Commerce & Industry, Management
Association of Nepal and Nepal Institute of Company
Particulars of information furnished by any Director or
Secretary.
any of his close relatives about his personal interest in
any agreement connected with the company signed
Changes made in the Board of Directors, and reasons
during the previous financial year:
therefore:
There are no such information furnished by the Directors
Please refer the section on ‘Corporate Governance and
and any of their close relatives.
Board of Director Report.
Purchase of own Shares:
Main factors affecting the business:
The Bank has not purchased its own shares in the year
Please refer the sections ‘Economic Environment’ and
under review.
‘Conclusion’ under Board of Directors Report and ‘Credit
Environment’ under CEO Report.
Whether or not there is an internal control system, and
if there is any such system, details there of :
Board of Directors’ Reaction to Remarks made, if any,
Please refer section on ‘Corporate Governance’ and ‘Our
in the Audit Report:
approach to Corporate Governance’ under CEO Report.
The Board does not have remarks on the findings
mentioned in the Auditor’s Report.
Particulars of the total management expenses of the
previous financial year:
The amount recommended for distribution as dividend:
The management expense of the financial year is Rs.
The Board has recommended paying Rs. 210,827,123 by
1,061,404,705 (total of Staff Expenses and Other Operating
way of dividend (for tax purpose) and Rs. 4,005,715,333 by
Expenses as per Schedule 4.23 & 4.24 of the Financial
way of bonus share to the shareholders.
Statements).

A list of members of the Audit Committee, Remunerations, allowances and bonus paid to the Chief
remunerations, allowances and facilities being Executive Officer in FY 2073/74, is Rs. 21,036,375.26
received by them, particulars of functions discharged (the tax at prevailing rate was borne by the Bank). Chief
by the Committee, and particulars of suggestions, if Executive Officer is entitled for the following facilities:
any, offered by the Committee: • Accommodation & Utilities
Please refer section ‘Our approach to Corporate • Vehicle & Driver
Governance’. • House Maid / Servant / Helper / Security
• Mobile / Telephone
Remunerations, allowances and facilities: • Medical Reimbursement
Please refer section ‘Our approach to Corporate • Leave Travel Allowance
Governance’. • Children Education Reimbursement
• Partner Support
Functions discharged by the Committee: • Club Membership & Utilities
Please refer section ‘Our approach to Corporate
Governance’. Dividends yet to be Collected by Shareholders:
As of Kartik end 2074, total dividends yet to be collected
Payments due, if any, to the company from any by the shareholders amounts to Rs. 48,957,705.53.
Director, Managing Director, Executive Chief or basic
shareholder of the company or any of their close Detail of property’s buy or sell as per Clause 141:
relatives, or from any firm, company or corporate body Nil.
in which he is involved:
Nil. Detail of the transactions held between Associated
Companies as per Clause 175:
Remunerations, Allowances and Facilities to the Nil.
Directors, the Managing Director, the Executive Chief
and other Office-bearers: Any other matter to be mentioned in the Board
Please refer section ‘Our approach to Corporate of Directors’ report under Companies Act (First
Governance’. Amendment), 2063:
Nil.

Board of Directors
Jitender Arora
Chairman
Based in Singapore Jitender leads and manages the
Commercial Banking (CB) business in 9 countries for
Standard Chartered Bank – Singapore, India, Malaysia,
Indonesia, Bangladesh, Thailand, Vietnam, Sri Lanka, and
Nepal. He is also responsible for driving the Transaction
Banking business for the Commercial Banking segment
globally.
Jitender joined the Bank in 2001, overseeing product

development for Cash Management. He held several
management positions for Transaction Banking in
South & Southern Asia and then managed Transaction
Banking Sales globally. He was also Head of Corporate &
Institutional Clients, ASEAN from 2013 to 2015. He holds
a Masters in Finance, from the Institute of Management
Technology in India.
Joseph Silvanus
Director & Chief Executive Officer
Joseph Silvanus has been with Standard Chartered Bank
for more than 26 years. He had earlier assumed the role
of CEO Afghanistan, and the Regional Head, Development
Organizations, Southern Asia. Prior to joining the Bank, he
also worked with other renowned organizations like Pepsi
Foods and Voltas in India. He holds a Post Graduate degree
in Management and an honours degree in Economics.
Neeta Rege
Director
Neeta is currently the Head of Compliance, India. She has
assumed Compliance roles in various capacities since
2006. Neeta in the past assumed roles of Head Retail
Clients Compliance – South Asia, Head Consumer Banking
Compliance India & South Asia. She has also served
as Head Quality Assurance and Risk Control and took
responsibility of Head Consumer Bank Integration between
2000 to 2002.
Neeta holds Masters in Management Studies (MMS) from

Mumbai University and Bachelor of Commerce also from
Mumbai University.

Mana Bahadur Rai
Public Director
Mana Bahadur Rai was the CEO of Sagarmatha Finance
Limited between December 2011 to July 2017. He served
as MD/CEO in Sagarmatha Finance Limited between
2005 to 2011. He has also assumed the responsibility
of Executive Chairman at Grihini Departmental Store,
Baluwatar. He was associated with different institutions
viz. Netex Pvt Ltd, SDB Brick and Tile Ind, BPFUMN Agro
Forestry Program and Taragon Bikash Samiti in different
capacities. He is currently serving as the 1st Vice Chairman
in Nepal Financial Institution Association, Kathmandu.
He is an MBA from Sikkim Manipal University, Gangtok,
India.
Krishna Kumar Pradhan

Independent Director
Krishna Kumar Pradhan has been in the Board of the Bank
since May 2014 in the capacity of a Professional Director.
Prior to this assignment, he served in Nabil Investment
Banking Limited as an Independent Director. He has also
served at Naya Nepal Laghu Bitta Bikas Bank, Dhulikhel
and Micro Finance Training and Research Institute
(MIFTARI) Pvt. Ltd. in the capacity of Chairman. He has
more than 28 years of service experience in Nepal Rastra
Bank, mainly in the areas of Development Finance, Rural
finance, Micro finance, Regulation etc.
Karen De Alwis
Director
Karen is the General Counsel, ASEAN & South Asia and
Head, Legal, Corporate Finance and Capital Markets.
She started her career as a banking litigation lawyer and
since then, held various legal and compliance roles with
Singapore Exchange and several US investment banks
including JP Morgan as Head, Private Banking Compliance,
Asia. Karen has over 18 years of Legal & Compliance
experience in the banking sector. Karen joined the Bank
in 2009 and led the global compliance and legal teams for
Corporate Finance, Capital Markets, Research and Control
Room based in HK and Singapore before taking up her
current roles.

Management Team
JOSEPH SILVANUS ADARSHA BAZGAIN

Chief Executive Officer & Head, Retail Banking Head, Financial Markets & Financial Market Sales
BIMAL SINGH DIWAKAR POUDEL

Head, Legal & Company Secretary Head, Brand & Marketing and Corporate Affairs
GOPI K. BHANDARI GORAKH RANA

Chief Risk Officer and Senior Credit Officer Head, Global Banking & Commercial Banking

MICHAEL SIDDHI RAJAN UDAS
Head, Transaction Banking Head, Human Resources
SANJAY PANT SRIPRASAD BHANDARI

Head, Compliance Head, Internal Audit
SUJIT SHRESTHA
Chief Information Officer SURAJ LAMICHHANE
Financial Controller

Schedule- 13 Ashwin end:
Related to Sub Rule (1) of Rule 22 of Securities Maximum- Rs. 3952, Minimum- Rs. 3145 Last- Rs. 3612.
Registration and Issuance Regulation, 2065 total number of shares traded – 2,43,973 and transacted
days 40
Report Functions
1. Report of Board of Directors: Poush end:
Covered in the Board of Directors Report of this Annual Maximum- Rs. 3893, Minimum- Rs.1870 Last- Rs. 1998,
Report. total number of shares traded – 361499 and transacted
days 57
2. Report of Auditor:
Included in the Annual Report. Chaitra end:
Maximum- Rs. 2,507, Minimum- Rs. 1,754 Last- Rs. 2020
3. Audited Financial Detail: total number of shares traded – 3,3,0916 and transacted
Balance Sheet, Profit & Loss, Cash Flow details and days -50.
related schedules Included.
Ashadh end:
4. Detail relating to Legal Actions: Maximum- Rs. 2,390, Minimum- Rs. 2,076 Last- Rs. 2,295
(a) If any case filed by Organized Institution in the year: total number of shares traded – 7,17,078 and transacted
Nil days -57.
b) If any case relating to commission of disobedience 6. Problem and Challenge:

or criminal offence filed by or against the Promoter or
Director of Organized Institution: INTERNAL
No such information has been received. Please refer Board of Directors Report & CEO Report of
this annual report
(c) any case relating to commission of financial crime filed
against any Promoter or Director: EXTERNAL
No such information has been received. Please refer Board of Directors Report & CEO Report of
this annual report
5. Analysis of share transaction and progress of
Organized Institution: STRATEGY
(a) Management view on share transaction happened at Please refer Board of Directors Report & CEO Report of
Securities Market: this annual report
Price and transactions of the Bank’s shares are being
determined by the open share market operations 7. Corporate Governance:
through a duly established Stock Exchange. Incorporated in detail under corporate Governance
Managements view on this is neutral. section in this annual report.
(b) Maximum, minimum and last share price of Organized

Institution including total transacted number of shares
and transacted day during each quarter of last FY
2073/74:

Sustainability
Sustainability and our business
As a bank operating across 68 countries with a focus on Contributing to Sustainable Economic

Asia, Africa and the Middle East, we have long recognized Growth
the role we can play in promoting economic and social Through our financing, we support key sectors of the
development in our markets. economy that are driving sustainable growth from
infrastructure to microfinance.
We express this through our three sustainability priorities:
contributing to sustainable economic growth, Against a requirement to lend 20 percent of the total loans
being a responsible company and investing in and advances to the Productive Sector, the Bank achieved
communities. These priorities inform how we work, 26.78 percent, which constitute total approved credit limits
and are the main structure of our achievements in year as on the date towards the Productive Sector.
2016/17. We have made good progress during the year
across each of the priorities. One major highlight has been The Bank also achieved an inner limit exposure of 15.25
the continued engagement of our employees and partners percent on Agri & Energy Sector within the Productive
in delivering impactful community programs. Sector lending requirement of 20 percent; this constituted
all approved credit limits towards Agri & Energy Sectors.
We seek to ensure that our core business of banking The minimum requirement for outlay of loans and advances
supports sustainable growth in our markets. for Agri & Energy within the Productive Sector lending
stands at 15 percent.
Sustainability is embedded in our brand promise, Here
for good, and affects every single thing we do: the way Similarly, as per the regulatory requirements, the Bank
we make decisions, the contribution we make to local has been advancing funds towards the Deprived Sector.
economies and the impact that we have when we bank The outstanding towards Deprived Sector as at the
the people and companies driving investment, trade and financial year end of 2016/17 was Rs 35.542 billion. This
the creation of wealth across Asia, Africa and the Middle included Rs. 35.490 billion in loans and advances and Rs.
East. Using our position as a leading financial institution, 52.25 million in the form of investments made in Rural
we are committed to promoting positive social and Microfinance Development Centre (RMDC) and Nepal
economic development in the countries where we operate. Grameen Bikash Bank. The total exposure under the
Sustainability to us is not just about using less energy, or Deprived Sector constituted 5.18 percent of the Bank’s
raising money for good causes, although we are proud of total loans and advances for the close of financial year end
our efforts in both. 2016/17.
Our commitment towards small & medium enterprises is

Our ambition is to be the world’s best international bank.
reflected under our segmental portfolio of
This means getting the basics right: being financially
Business Banking. This segment, considered as a
stable, continuously improving our governance and seizing
growth engine for the Bank, has been expanding with
the opportunities presented by our markets to provide and
CAGR of 20 percent and currently has an exposure of over
promote sustainable economic growth.
Rs.8 billion which constitutes over 15 percent of the Bank’s
total loans and advances. This business is well diversified
Financial Crime Prevention
Financial crime hinders economic progress and harms with exposures in16 key industries. Through this business,
individuals and communities. We strive to have the most the Bank has helped in creating direct and indirect
effective financial crime compliance programmes to employment to ~5,000 & 20,000 people respectively.
protect our clients, employees and the places where we
do business. Our goal is to prove that we are leading the Being a Responsible Company
way in combating financial crime, while providing a quality Being a responsible company is about how we manage
service for our clients. Over the past few years, the Group our business and promote the behaviours, values and
has dedicated substantial leadership attention, investment principles that enable us to make the right decisions. We
and training to financial crime compliance. During the focus on preventing financial crime, investing in our people
last few years the Group has more than doubled the staff and minimizing our environmental footprint. We continue
working in Financial Crime Compliance and hired industry to strengthen our Financial Crime Compliance standards
leaders into the function. Each year more than 80,000 by enhancing our financial crime controls, training our staff
employees complete training to prevent bribery, corruption, and sharing best practice with clients and partners. In
and money laundering. While we have made progress, we 2016/17, more than 99 per cent of our Nepal staff members
still have more to do to ensure our own behaviors’ and completed Financial Crime Compliance eLearning.
processes are operating above regulatory standards. Our
commitment to this work is absolute.

Sustainability
We recognise that our diversity is a critical lever for fund raising event of the Bank in support of Seeing is
delivering our business priorities and we actively work to Believing.
build an inclusive workplace. In 2016, we engaged staff
through country-based Employee Networks and three
Global Networks (Women, Disability, LGBT and Allies).
Between 2013 and 2016, Standard Chartered Bank Nepal

reduced its energy consumption by 5 percent, water
consumption by 3 per cent for its Head Office Building.
Our Sustainability Aspirations highlight our focus on

embedding the highest standards of conduct across the
organisation. In 2017, we will take forward our Aspirations
on people, conduct, financial crime compliance and
environment.
Investing in Communities
We support our communities to address local social and
economic needs. We work closely with local partners and Standard Chartered periodically organises cataract screening as
well as surgical eye camps in partnership with Tilganga Institute of
our employee volunteers to deliver programmes focused
Ophthalmology.
on health and education.
Our global community programmes include Seeing is Under the project Eastern Region Eye Care Program
Believing to address avoidable blindness; Positive Living (EREC-P), Standard Chartered Bank, with the help
and Financial Education to build the financial capability of of the Group, extended a financial support of USD
the community stakeholders. 1,000,000 (aprox NPR 103 million) in the construction of
Biratnagar Eye Hospital. SCB’s funding for the project
Seeing is Believing (SiB) was in the construction of pre-operative ward, canteen
Nepal is one of the countries where the Group funded building, hostel building, establishment of a spectacles
projects, are running. The local projects are also being shop, state of the art affluent treatment plan. The Bank
supported through local fund raising. Walkathon is a major also supported in several other initiatives including
The Bank regularly organises Employee led tree plantation campaigns with an aim to help protect the environment.

establishing 5 community eye centers in different districts Financial Literacy
of the Eastern Region, up scaling capabilities of Human The Bank runs Financial Literacy programs for the
Resources, Finance and Administration staff through a communities targeting schools and other community
project launched with Nepal Netra Jyoti Sangh (NNJS) and partners. The objective is to create awareness around by
financing of a bus for transferring patients from different imparting knowledge related to basics of banking and
parts of the Eastern Region. The then Honorable President finance. The Bank pioneered Financial Literacy program
Ram Baran Yadav inaugurated the Project which came to in year 2014 in partnership with World Vision Nepal (WVN)
successful completion in 2013. and then gave continuity in subsequent years by mobilising
the staff members. To this effect, Financial Literacy
Similarly, project activities are currently underway in programs are run through different locations, primarily
line with the Bank’s agreement and partnership with targeting the government run schools and communities
Tilganga Institute of Ophthalmology (TIO) to fund a major across our footprints. Our staff members in the Head Office
expansion project of TIO. The Bank has agreed to grant and Branches actively volunteer in spreading the financial
USD 1,000,000 (approx. NPR 103 million) to fund the TIO’s education in schools and the communities. This initiative of
project. the Bank will continue in 2017/18.
The objective of the project is to construct two permanent Earthquake Reconstruction Project
eye centres in two districts, upgrade Bhaktapur District Devastating earthquakes hit Nepal in April 25 and 12 May,
Community Eye Centre (DCEC) into Secondary Level 2015. This unfortunate event was a cause for the death of
Eye Centre (SLEC) and upgrade Nuwakot DCEC into a ~9,000 people, more than 20,000 injured, and 2.8 million
periodic surgical facility. The project also aims to create people were displaced. It was one of the biggest tragedies
an awareness of eye care among school teachers through in the history of Nepal.
training program; train 750 primary school teachers on
basic eye care; screen school children and supply 3,810 In line with our brand promise Here for good, the Bank
spectacles and provide cataract surgery service to people immediately took actions and announced relief support
in need through cross-subsidy model. and launched fundraising initiative to assist long term
rehabilitation of the impacted to supplement efforts of
Similarly, the Bank has established a unique banking Nepal Government.
lounge created in an art gallery at its Lazimpat Branch
premises. The exclusive lounge provides much needed Our global staff fundraising appeal in support of the
privacy and personalised service for its High Net Worth relief and rehabilitation received huge support; the Bank
clients. Art is the new emerging source for wealth creation raised over USD 673,000 including the Banks’ match
and now clients can order works from their favourite funding across our markets. Red Cross and Red Crescent
artists. Aptly named Drishti, this in-house art gallery aims Society of the UAE immediately absorbed USD 271,000
to provide emerging artists a platform to show case their for conducting emergency search and rescue services,
talent. Part of the proceeds of sales will go towards funding combined with first-aid relief. The Bank even funded their
the Bank’s “Seeing is Believing” initiative on tackling specialist health teams, mass water treatment facilities and
avoidable blindness by increasing access to eye-care. The mobile clinics.
Bank believes that, this market-first initiative will go a long
way in not only enhancing the banking experience but in The balance, USD 402,000 was then channeled through
raising awareness about avoidable blindness and eye sight Habitat for Humanity in support of their ‘Build Nepal’
restoration. strategy, focusing on an owner-driven approach for
reconstructing houses. Habitat utilised the funds to provide
Positive Living a permanent housing program in the Kavre district of
Bank’s Positive Living (erstwhile Living with HIV) program Nepal.
provides education on HIV and AIDS to our staff and the
communities where we operate. The Bank launched initially The Project has now delivered 20 demonstration homes
a ‘Living with HIV’ – a workplace HIV education in 1999 and which will be used as ‘technical assistance’ to train 21
currently has a large network of HIV Champions all across construction engineers and local community leaders.
the countries. In Nepal, the Bank has ~ 12 HIV Champions
who work to raise awareness of HIV and AIDS in the Bank, While the Bank has contributed directly by extending
communities and the external organisations. 2017 is the financial support in construction of permanent core
17th year of our Living with HIV program. houses, it is also supporting 58 additional families with

Sustainability
tiered grant support equivalent to USD 2,500 per family • Wearing the Seeing is Believing jersey, two of our
for reconstruction, repair and retrofit and/or skilled labor staff members, Sanjeev Dhakal and Saurav Poudyal
support and gifts-in-kind to repair/retrofit homes. The participated in half marathon event in the 10th edition
Bank is also helping the impacted through non-financial of the annual Kathmandu Marathon organized by
technical support to enable self-recovery. ProSports Nepal on 24 September 2016. Both Sanjeev
and Saurav completed the race successfully.
Employee Volunteering
The Bank supports its local communities by encouraging • The Bank successfully organized its signature annual
its staff for volunteering their time and skills, and seeking fund raising event Walkathon 2016 #WalkForAReason
to maximise Bank’s impact by encouraging skills-based on Saturday, November 26.
volunteering. All the Bank’s employees are entitled to three
days of paid volunteering leave annually. • To mark the International Volunteer Day, our staff
members engaged passionately with one of our
The Bank has constituted Standard Chartered Nepal disaster relief partners, Habitat for Humanity on 5
Community Partnership Forum (SCNCPF) for providing December 2016.
impetus to community initiatives. The Forum has been
registered with District Administrative Office and is also • Keeping in mind the importance Bank places on
affiliated to Social Welfare Council. wellbeing of its staff, to help and support them and their
immediate family members to handle their pressure
A summary of activities conducted during better and stay healthier during time of stress, the
FY 2016/17 Bank tied up with Centre for Mental Health Counselling
(CMC) Nepal for a workplace wellness program viz.
• The Bank organised Financial Literacy classes in Staff Emotional Wellbeing Enhancement Program
different schools through our Narayangarh, Birgunj and (SEWEP).
Pokhara Branches.
• In celebration of the International Wheelchair Day,
• A session on rainwater harvesting was conducted for the Bank supported Nepal Disabled Association,
our Priority Banking clients at Lazimpat on 5 June, Khagendra Navajeevan Kendra, Jorpati with 20 units of
the World Environment Day. Over 24 Priority Banking wheel chairs and 25 pairs of crutches. The support was
clients attended the event. made through funds collected from Staff Family Food
Fest & Fun organized during the year.
• Our staff took part in the cycle rally to mark
Ìnternational Youth Day 2016 on 12 August. The event • The Bank organized a Blood Donation program in
was organized by `We’ for Change, our partner for the partnership with Grande International Hospital on 11
Bank’s Positive Living initiative. March 2017. Staff members & clients participated in
the event by donating their blood. Grande team also
• Priority Banking organized a `Stress Relief’ session for briefed the clients & staff about the importance of
the Priority Banking clients on 10th of August at the human blood, its safety and use.
Priority Lounge in Lazimpat. Over 23 Priority Clients
attended this event. The session was conducted by • To mark the 200th week of Clean Bagmati Campaign
Mr. L P Bhanu Sharma, an educationist, spiritualist, and under the Bank’s Employee Volunteering program,
management consultant and trainer. Bank staff members represented the Bank in the Clean
Campaign activities held on 11 March 2017.
• Bank’s Pokhara Branch conducted a Financial Literacy
session at the `Forum for the Welfare of Himalayan • Under the Seeing is Believing program, staff members
Children’ for 25 children in grade 7 & 8 on 25 August. volunteered at the cataract surgical workshop at
Tilganga Institute of Ophthalmology (TIO) on 25 March
• The Bank in partnership with Tilganga Institute of 2017. 164 patients were successfully operated during
Ophthalmology organized an eye camp on 27 & 28 the cataract surgical workshop.
August at Eye Centre in Bhakatpur, Chyamsing. More
than 25 staff from the Bank volunteered through the
Bank’s Employee Volunteering program.

• Staff members of the Bank volunteered at the
cataract surgical workshop at Tilganga Institute of
Ophthalmology (TIO) on 29 May 2017. 115 patients
were successfully operated during the cataract surgical
workshop.
• Information, Technology & Operations (ITO) - Risk &

Control Team visited Ni:sahaya Sewa Sadan, an old age
home for elderly women on 9 June 2017 and distributed
water bottles and snack & food items to the elderly
women residing in the premises.
• To celebrate World Environment Day 2017. A Tree

Plantation campaign was organized at the Institute
of Engineering (IOE) Pulchowk, Lalitpur on 17 June
2017. More than 90 staff members volunteered and
The Bank sponsored Britain Nepal Bicentenary Exhibition (BIEX) to mark
200 years of Nepal-Britain relationship and also hosted an exhibition of participated in the event.
numismatic collections at the Bank’s Lazimpat Branch.
• As part of the Diversity and Inclusion (D&I) Council
• As part of celebration of 200 years of Nepal – Britain agenda, an opportunity was created to raise awareness
relationship, Nepal Britain Bicentenary Exhibition (BIEX) on LGBTI within the Bank staff members in support of
was held at the gallery of Nepal Art Council. This the LGBT community. Such awareness programs were
exhibition, which started on 15 April ran until 30 April. held at majority of the Branches of the Bank, including
An extended exhibition was also put up at the Bank’s those outside Kathmandu.
Lazimpat Branch. BIEX exhibition was sponsored by
the Bank. • The Bank handed over 10 units of used computers in
June 2017 to its partner organization for Community
• To mark the Cultural Diversity Day, D&I Nepal organized Activities, Maiti Nepal. The computers are for use of
a Cultural Attire Day at work on 22 May 2017 with the students at Teresa Academy for computer literacy, a
theme – We all are Nepali. school run by Maiti Nepal for orphans and children of
parents suffering from HIV/AIDS.

Our People
We are committed to creating an inclusive environment
Our Success is Built on Our People With the view of providing an opportunity and platform to
We are proud of our people who are the foundation of the our staff to enhance their public speaking and leadership
Bank, on which we operate and perform consistently and skills and benefit on their personal developments “Standard
securely and central to our growth and success. We have Chartered Bank Nepal Toastmasters Club” (SCBNTC) has
been able to build in our employee’s trust, integrity and been formally established on February 1, 2017.
allow them to give their best every day, committed to their
organization’s goals and values, motivated to contribute We have sharpened our focus on quality performance and
to organizational success, with an enhanced sense of their career coaching. For this we launched a new approach for
own well-being. developing our Managers with new career development
guides and toolkits.
Talent, Learning & Culture
We continue to focus on our Conduct agenda. We have This fiscal year also the Bank has exploited all modes of
sharpened our focus on all aspects of conduct. We are learning for its staff, be it through self-learning, learning
focusing on the behaviours, values, and principles that from others or classroom with blend of internal and
we follow as individuals to enable us to make the right external trainings. Various modes of learning and different
decisions and exercise good judgements. Our conduct types of programs were made available to staff - in-house
management framework touches all parts of our business trainings under Masterclass and Learn & Grow sessions;
and sets out elements that we need to identify, control Day 1 Readiness program for Frontline sales staff of
and govern conduct related risks. It empowers our leaders Retail Clients; Right Start Live session for new joiners;
to create an ethical environment where our people are classroom trainings conducted by local external trainers;
incentivized to exercise good judgement. All employees online training such as e-learnings and soft skills program.
receive mandatory conduct trainings and their performance Unlimited learning opportunities are readily available for
objectives and reward mechanism are explicitly linked to staff in the Bank’s Learning Portal- SABA.
behaving appropriately.
Two successful Learning Weeks were conducted in first
We view diversity & inclusion as critical to our business and second quarter of 2017 by Senior Facilitators of
success in the long term. It enables teams to bring diverse SCB India and SCB Bangladesh which provided learning
perspectives, make better decisions and manage risk. We opportunities to over 95 percent of our staff across all
are committed to creating an inclusive environment, free Businesses and Functions.
from bias where everyone can realise their full potential. We
are committed to gender diversity and have been providing Employee Engagement & Wellbeing
equal employment opportunity to aspiring candidates who We focus on creating a fair, safe and inclusive place
have been considering Standard Chartered Bank as their to work that encourages creativity, collaboration and
employer of first choice. To achieve this, bank has robust continuous improvement. Increasing engagement across
recruitment and selection procedures with vacancies the Bank by creating a better working environment for
posted in our career website www.sc.com and internal job employees will translate into improved client experience.
watch. It’s evident that regular interaction and transparent
communication are key to motivate staff, provide them
This fiscal year we hired a total of 100 new talents in a platform to interact and participate with a sense of
different positions. As at the end of financial year 2016/17, belongingness and to know that their opinion/voice counts.
our strong people strength was 495 with a gender balance One of the ways by which we measure engagement of our
of 59 percent male and 41 percent female. people is through “My Voice” a global survey completed by
employees across the Group.
Developing a learning culture is not merely an option but
Respecting the work life balance of its employees, 5
an absolute necessity in today’s competitive world. We
working days in a week, crèche or child day care facilities
recognize the importance of learning and development
well managed cafeteria, availability of 24 hours bank’s
to each staff and as it is equally important to develop our
doctor, 3 days paid employee volunteering leave are some
internal leadership pipeline learning and development has
of the initiatives that we have provided to our people.
always been given very high priority. We provide learning
and development opportunities to our people to create From April 2017, the number of leave entitlement days
an engaged and value driven team and likewise staff are pertaining to Maternity Leave, Paternity Leave and
making learning and development as much a normal part Adoption Leave have been increased to further ease
of their working lives as any other activity in which they the lives of working parents with 140 calendar days
indulge at work. maternity leave, 2 calendar weeks paternity leave and 14

calendar days adoption leave. These initiatives help our staff engagement with their family. Staff cooked and sold
people balance work and their career with their family food, organized games and sold raffle tickets.
responsibilities.
The Bank has tied up with Centre for Mental Health

Counselling (CMC) Nepal for a workplace wellness
program, Staff Emotional Wellbeing Enhancement
Program (SEWEP) which has been well appreciated by our
employee.
Throughout this fiscal year different types of engagement

programs and activities were given momentum which
allowed staff to showcase their talent out of their regular
office work.
Anna Marrs, Regional CEO ASEAN & South Asia and CEO Commercial &
Private Banking addressing the launch event of Women Win @ Work (WWW),
Retro Theme Staff Party: An annual staff engagement Standard Chartered Bank Nepal’s women’s Empowerment Network.
event a retro theme staff party was organized on December
17, 2016. The event saw a maximum level of staff A key initiative under the Bank’s Diversity and Inclusion
participation with a total of 54 staff being awarded with (D&I) agenda Women Win @ Work” - Standard Chartered Bank
long service award recognizing their 10, 15, 20, 25 and 30 Nepal Women’s Empowerment Network was launched on
years of their service with the Bank. June 12, 2017.
Pulse Session: With the objective to enhance Awards: Recognizing our efforts on development of our
engagement between the staff and senior leaders of the people, and their well being we were awarded the ‘Asia
Bank proposes to establish a formal talk platform called – Best Employer Brand Awards 2016’ at the 7th edition of
‘Pulse sessions’ was rolled out and was held every month this Award, hosted by Employer Branding Institute (EBI),
in 2016 facilitated successfully by each Senior Manager of World HRD Congress and other strategic partners and
the Bank. A total of 255 staff were covered. endorsed by Asian Confederation of Businesses was
organised on 4th August 2016 in Singapore.
Diversity & Inclusion(D&I): The Diversity & Inclusion
The research on Best Employer Brand in each Country
Committee of the Bank organized various events to
was done by a team of independent Asian Professionals
celebrate and mark various important dates and festivals in
consisting of Post Graduates in History & Management
the year eg Teej, International Women’s Day, World Cultural
with over 7 years research experience and judged by senior
Diversity Day.
leaders, researchers and academicians.
D&I took the initiative for fund raising for charity through The winners were selected on the basis of their exemplary
SCB Family Fun Fest which was successfully organized Learning & Development initiatives, communicating
on November 5, 2016. It was a fun event with high level of distinctiveness in Employee hiring; training and retention
practices and continuous innovation.
Standard Chartered Bank Nepal runs an in-house Toastmasters Club for employees with an aim to hone their
leadership and communications skills.

Branch Network
BIRATNAGAR BRANCH
P.O. Box 201, Main Road, DHARAN BRANCH NAYA BANESHWORE BRANCH
Biratnagar-3, Nepal Panna Kamala Complex, Ward No.7 P.O. Box 3990, Naya Baneshwore,
Tel: 977-21-528983 100Ka, Buddha Marga, Kathmandu, Nepal
Fax No: 977-21-528982 Dharan Sunsari, Nepal Tel: +977-01-4782333, 4783753
Tel: 977-25-520505, 530980 Fax No: +977-01- 4780762
BIRGUNJ BRANCH Fax No: 977-25-530981
Adarsha Nagar-13, NEPALGUNJ BRANCH
Birgunj, Nepal LALITPUR BRANCH Surkhet Road, Ward No.13,
Tel: 051-529494 P.O. Box 3990, Jawalakhel, Nepalgunj Banke, Nepal
Fax No: 051-529677 Lalitpur, Nepal Tel: +977-81-525514, 520022
Tel: +977-10-55405/66 Fax No: +977-81-525515
BOUDHA BRANCH Fax No: +977-01-5523266
Bhatbhateni premises (ground floor), NEW ROAD BRANCH
Chuchepati, Boudha ward no. 7, LAZIMPAT BRANCH Raina Basera, Basantapur Durbar
Kathmandu, Nepal P.O. Box 3990, Lazimpat, Square, New Road-23,
Tel: +977-01- 4481819/22 Kathmandu, Nepal Kathmandu, Nepal
Fax: +977-01-4481821 Tel: +977-01-4418456 Tel: +977-01-4244406, 4244505,
Fax No: +977-01-4420727 4244124
BUTWAL BRANCH Fax No: 01-4244961
Milan Chowk, Butwal, Municipality-11, NARAYANGARH BRANCH
Rupandehi, Nepal Bhatbhateni premises (ground floor), POKHARA BRANCH
Tel: 977-71-546832 Bharatpur-10, Chitwan, Nepal. P.O. Box 08, New Road,
Fax No: 977-71-546882 Tel: +977-056-571277/78 Pokhara, Nepal
Fax No: +977-056-571279 Tel: +977-06-523875/76, 536231, 536230
Fax: +977-06-531676
Extension Counters
UN COUNTER BRITISH GURKHAS PPO POKHARA
UN Building, Lalitpur Tel: 977 61 440517
Tel:977 1 5537134 Fax No:977 61 440517
Fax No:977 1 5540512
ATM Network
KATHMANDU Thamel BUTWAL
Maharajgunj Fire Club Building Standard Chartered Bank Nepal Limited
Hot Bread Chowk, Chaksibari Marg
Saleways Department Store
Kathmandu Guest House DHARAN
Boudha Standard Chartered Bank Nepal Limited
Adjacent to the main Lazimpat
entrance gate of Boudhanath Stupa Standard Chartered Bank Nepal Limited B P Koirala Institute Of Health
Sciences (BPKIHS) premises
Bhatbhateni premises
Standard Chartered Bank Nepal Limited
LALITPUR
Jawalakhel NARAYANGARH
Durbar Marg Standard Chartered Bank Nepal Limited
Hotel De’l Annapurna
UN House POKHARA
Basantapur Standard Chartered Bank Nepal Limited New Road
Durbar Square, Raina Basera Standard Chartered Bank Nepal Limited
Standard Chartered Bank Nepal Limited Near UNDP Complex
Standard Chartered Bank Nepal Limited Lakeside
Naya Baneshwore Hallan Chowk, ATM Lounge, Centre Point
Standard Chartered Bank Nepal Limited BIRATNAGAR Trekkers lodge, Fishtail Gate
Head Office Standard Chartered Bank Nepal Limited
BIRGUNJ

Auditor’s Report
To the Shareholders of Standard Chartered Bank Nepal Limited
Report on the Financial Statements

We have audited the accompanying financial statements of Standard Chartered Bank Nepal Limited which comprise
the balance sheet as of July 15, 2017 (Ashadh 31, 2074) 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 have been prepared by management in accordance with the financial reporting framework
as specified by Nepal Rastra Bank.
Management’s responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with
the financial reporting framework as specified by Nepal Rastra Bank and for such internal control as management
determines is necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
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 comply with ethical requirements and
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement.
An audit involves performing procedure to obtain evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor’s professional judgment, including the assessment of
the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers the internal control relevant to the entity’s preparation and fair presentation of
the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of entity’s internal control.
An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness
of accounting estimates made by the management, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Opinion
In our opinion, the accompanying financial statements presents fairly, in all material respects, the financial position of
Standard Chartered Bank Nepal Limited as at Ashadh 31,2074 (15 July, 2017) and its financial performance and its cash
flows for the year then ended in accordance with the financial reporting framework as specified by Nepal Rastra Bank
and Banks and Financial Institutions Act, 2073.
Basis of Accounting
Without modifying our opinion, we draw attention to point 4 of Significant Accounting Policies to the financial
statements, which describes the basis of accounting. The financial statements are prepared as per financial reporting
framework specified by Nepal Rastra Bank. As a result, the financial statements may not be suitable for another
purpose.
Report on the requirements of Banks and Financial Institutions Act 2073 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, though
the statements are independently not audited, were adequate for the purpose of the audit; the financial statements
including the Balance Sheet, the Profit and Loss Account, the Cash flow Statement, Statement of Changes in Equity,
and attached Schedules have been prepared in all material respect in accordance with financial reporting framework as
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 explanations given to us, in the course of our audit, we observed
that the loans have been provisioned and 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 of accounting related fraud and the 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 of the funds of bank.
Other Matter
Standard Chartered Bank Nepal Limited has prepared a separate set of financial statements for the year ended July 15,
2017 in accordance with Nepal Financial Reporting Standards on which we issued a separate auditor’s report to the
shareholders of Standard Chartered Bank Nepal Limited dated December 08, 2017.
Date: December 08, 2017 Sunir Kumar Dhungel

Place: Kathmandu Managing Partner
LDSA ASSOCIATES
Chartered Accountants

Balance Sheet
As at 15 July 2017 (31 Ashad 2074)
Capital & Liabilities Schedule This Year Rs. Previous Year Rs.
1. Share Capital 4.1 8,011,430,667 3,749,901,333
2. Reserves and Funds 4.2 3,852,594,649 3,774,273,853
3. Debentures and Bonds 4.3 - -
4. Loans and Borrowings 4.4 - 500,000,000
5. Deposit Liability 4.5 63,872,885,452 55,727,178,456
6. Bills Payables 4.6 76,659,624 310,183,573
7. Proposed Dividend 210,827,123 49,340,807
8. Income Tax Liability - -
9. Other Liabilities 4.7 1,384,200,179 1,074,854,457
Total Liabilities 77,408,597,693 65,185,732,479
Assets Schedule This Year Rs. Previous Year Rs.

1. Cash Balance 4.8 811,609,528 799,366,056
2. Balance with Nepal Rastra Bank 4.9 7,067,997,124 1,514,671,384
3. Balance with Banks/Financial Institutions 4.10 1,048,695,313 1,658,294,743
4. Money at Call and Short Notice 4.11 12,623,564,000 6,069,660,000
5. Investments 4.12 15,632,025,143 23,094,621,556
6. Loans, Advances and Bills Purchased 4.13 39,263,690,286 31,302,949,596
7. Fixed Assets 4.14 102,917,965 71,306,083
8. Non-Banking Assets 4.15 - -
9. Other Assets 4.16 858,098,333 674,863,061
Total Assets 77,408,597,693 65,185,732,479
Contingent Liabilities Schedule 4.17

Declaration of Directors Schedule 4.29
Capital Adequacy Table Schedule 4.30 (Ka 1)
Statement of Credit Risk Schedule 4.30 (Kha)
Statement of Eligible Credit Risk Mitigation Schedule 4.30 (Ga)
Statement of Operational Risk Schedule 4.30 (Gha)
Statement of Market Risk Schedule 4.30 (Nga)
Key Indicators Schedule 4.31
Significant Accounting Policies Schedule 4.32
Notes to Accounts Schedule 4.33
Schedules 4.1 to 4.17 form integral part of the Balance Sheet As per our report of even date
Suraj Lamichhane Joseph Silvanus Jitender Arora CA. Sunir K Dhungel

Financial Controller CEO & Director Chairman Partner
For and on behalf of LDSA Associates.
Mana B Rai Krishna Kumar Pradhan Chartered Accountants
Director Director
Date: 8th December 2017 | Place: Kathmandu

Profit and Loss Account
for the period 16 July 2016 to 15 July 2017 (1 Shrawan 2073 to 31 Ashadh 2074)
Particulars Schedule This Year Rs. Previous Year Rs

1. Interest Income 4.18 3,060,619,093 2,415,582,668
2. Interest Expenses 4.19 863,459,635 565,704,649
Net Interest Income 2,197,159,458 1,849,878,019

3. Commission and Discount 4.20 489,269,316 357,519,713
4. Other Operating Incomes 4.21 51,978,659 48,095,736
5. Exchange Fluctuation Income 4.22 610,568,563 629,555,473
Total Operating Income 3,348,975,995 2,885,048,940

6. Staff Expenses 4.23 548,555,543 488,289,822
7. Other Operating Expenses 4.24 512,849,162 434,759,691
8. Exchange Fluctuation Loss 4.22 - -
Operating Profit Before Provision for Possible Loss 2,287,571,290 1,961,999,428

9. Provision for Possible Losses 4.25 301,728,548 260,751,090
Operating Profit 1,985,842,742 1,701,248,338

10. Non-Operating Income/ (Loss) 4.26 8,113,260 37,852,982
11. Provision for Possible Loss Written Back 4.27 229,977,923 257,973,683
Profit from Ordinary Activities 2,223,933,925 1,997,075,003

12. Income/(Expenses) from Extra Ordinary Activities 4.28 8,055,204 1,787,396
Net Profit after considering all Activities 2,231,989,129 1,998,862,399

13. Provision for Staff Bonus 202,908,103 181,714,764
14. Provision for Income Tax 607,484,890 524,653,003
- Current Year’s Tax Provision 595,512,262 502,475,497
- Upto Previous Year’s Tax Provision - 856,419
- Current Year’s Deferred Tax Income/Expenses 11,972,628 21,321,087
Net Profit/Loss 1,421,596,136 1,292,494,632
Schedules 4.18 to 4.28 form integral part of this Profit and Loss Account
As per our report of even date

Director Director

Profit and Loss Appropriation Account
Particulars Schedule This Year Rs. Previous Year Rs.
Income
1. Accumulated Profit up to Previous Year 115,368,464 32,606,508
2. Adjustment to Opening Reserve
3. This Year’s Profit 1,421,596,136 1,292,494,632
4.Share Premium 3,044,186,600
5. Exchange Fluctuation Fund - -
6. Deferred tax 17,818,848 89,556,937
7. Acturial Gain/(Losses) (59,396,160) 880,000
8. First Time adoption of NFRS - (25,231,350)
9. Deferred Tax Previous Year - (264,000)
Total 4,539,573,888 1,390,042,728

Expenses
1. Accumulated Loss up to Previous Year - -
2. Current Year’s Loss - -
3. General Reserve Fund 284,319,227 258,498,926
4. Contingent Reserve - -
5. Institutional Development Fund - -
6. Dividend Equalisation Fund - -
7. Employees Related Reserves - -
8. Proposed Dividend 210,827,123 49,340,807
9. Proposed Issue of Bonus Shares 4,005,715,333 937,475,333
10. Special Reserve Fund - -
11. Exchange Fluctuation Fund 24,582,829 29,357,997
12. Capital Redemption Reserve Fund - -
13. Capital Adjustment Fund - -
14. Deferred Tax Reserve
15. Investment Adjustment Reserve 4,343,006 1,200
Total 4,529,787,518 1,274,674,264
Accumulated Profit/(Loss) 9,786,370 115,368,464


Director Director

48
Statement of Changes in Equity
Financial Year 2073/74 (FY 2016/17)
Particulars Share Accumulated General Capital Share Exchange Investment Other Total Rs.
Capital Profit Reserve Reserve Premium Fluctuation Adjustment Reserve
Fund Fund Reserve & Fund
Opening Balance as at 16 July 2016 3,749,901,333 115,368,464 2,897,528,788 - - 413,839,141 347,537,460 - 7,524,175,186
Adjustments - - - - - - - - -
Restated Balance as at 16 July 2016 3,749,901,333 115,368,464 2,897,528,788 - - 413,839,141 347,537,460 - 7,524,175,186
Annual Report 2016-2017 Standard Chartered

Surplus/ Deficit on revaluation of properties - - - - - - - -
Surplus/ Deficit on revaluation of investments - - - - - - - -
Net Profit for the Period - 1,421,596,136 - - - - - 1,421,596,136
First Time Adoption of NFRS - -
Acturial Gains/(Losses) (59,396,160) (59,396,160)
Deferred Tax Through OCI 17,818,848 17,818,848
Transfer to General Reserve - (284,319,227) 284,319,227 - - - - -
Proposed Dividend - (210,827,123) - - - - - (210,827,123)
Issue of Bonus Share - - - - - - - -
Proposed Issue of Bonus Shares 4,005,715,333 (4,005,715,333) - - - - - -
Issue of Share Capital 255,814,000 3,044,186,600 - - - - - 3,300,000,600
Exchange Fluctuation Fund - (24,582,829) - - - 24,582,829 - -
Deferred Tax Reserve - - - - - - - -
Investment Adjustment Reserve (4,343,006) (124,999,167) - (129,342,173)
Closing Balance as on 15 July 2017 8,011,430,667 9,786,370 3,181,848,015 - - 438,421,970 222,538,293 - 11,864,025,315
Cash Flow Statement
Particulars This Year Rs. Previous Year Rs.

(A) Cash Flow from Operating Activities (6,231,713,766) 2,865,532,070
1. Cash Receipts 4,217,967,265 3,471,731,701
1.1 Interest Income 3,066,314,015 2,398,116,214
1.2 Commission and Discount Income 481,050,825 378,075,401
1.3 Income from Foreign Exchange Transaction 610,568,563 629,555,473
1.4 Recovery of Loan Written Off 8,055,204 10,295,392
1.5 Other Income 51,978,659 55,689,220
2. Cash Payments 2,421,685,310 2,291,350,756
2.1 Interest Expenses 632,115,151 574,162,356
2.2 Staff Expenses 741,482,555 763,897,562
2.3 Office Operating Expenses 452,450,189 411,989,576
2.4 Income tax Payment 595,637,415 541,301,262
2.5 Other Expenses - -
Cash Flow before Changes in Working Capital 1,796,281,955 1,180,380,945
Decrease/ (Increase) of Current Assets (15,471,415,729) 2,570,405,371
1. Decrease / (Increase) in Money at Call and Short Notice (6,553,904,000) 5,903,886,000
2. Decrease / (Increase) in Short-term Investment
3. Decrease / (Increase) in Loan and Bills Purchase (8,032,491,317) (3,676,089,573)
4. Decrease / (Increase) in Other Assets (234,689,365) (113,645,057)
5. Decrease / (Increase) in Restricted Balance (CRR) (650,331,047) 456,254,000
(Decrease) /Increase of Current Liabilities 7,443,420,008 (885,254,246)
1. (Decrease) / Increase in Deposits 8,145,706,997 (1,559,303,581)
2. (Decrease) / Increase in Certificate of Deposits
3. (Decrease) / Increase in Short Term Borrowings (500,000,000) 500,000,000
4. (Decrease) / Increase in Other Liabilities (202,286,989) 174,049,335
(B) Cash Flow from Investment Activities 7,370,940,369 (9,651,986,366)
1. Decrease/ (Increase) in Long term Investment 7,330,279,533 (9,767,215,941)
2. Decrease/ (Increase) in Fixed assets (56,737,674) 12,779,819
3. Interest Income from Long Term Investment 90,462,290 93,077,074
4. Dividend Income 6,936,220 9,372,682
5. Others - -
(C) Cash Flow from Financing Activities 3,166,412,134 (357,401,449)
1. Increase/ (Decrease) in Long term Borrowings (Bond, Debenture etc) - -
2. Increase / (Decrease) in Share Capital 3,300,000,600 2,224,500
3. Increase / (Decrease) in Other Liability
4. Increase / (Decrease) in Refinance /Facilities received from Nepal Rastra Bank - -
5. Dividend paid to ordinary shareholders net of scrip (133,588,466) (359,625,949)
(D) Income/Expense from change in exchange rate in Cash and - -
Bank Balance
(E) Current year’s cash flow from all activities 4,305,638,736 (7,143,855,745)
(F) Opening Cash and Bank Balance 2,067,287,183 9,211,142,928
(G) Closing Cash and Bank Balance 6,372,925,919 2,067,287,183
Cash At Vault 811,609,528 799,366,056
Balances at Nepal Rastra Bank 7,067,997,124 1,514,671,384
Balances with Banks 1,048,695,313 1,658,294,743
Less Restricted Balances (CRR maintain at NRB) (2,555,376,047) (1,905,045,000)
Net Closing Cash and Bank Balances 6,372,925,919 2,067,287,183
Director Director

Schedule 4.1:
Share Capital and Ownership
As at 15 July 2017 (31 Ashad 2074)
Particulars This year Rs. Previous Year Rs.

1. Share Capital
1.1 Authorised Capital 8,000,000,000 4,000,000,000
A) 80,000,000 Ordinary Shares of Rs. 100 each 8,000,000,000 4,000,000,000
40,000,000 Ordinary Shares of Rs. 100 each (Last Year)
B) - Non-Redeemable Preference Shares of Rs. - each - -
C) - Redeemable Preference Shares of Rs. - each - -
1.2 Issued Capital 4,005,715,333 2,812,426,000
1.3 Paid Up Capital 4,005,715,333 2,812,426,000
1.4 Proposed Bonus Share 4,005,715,333 937,475,333
1.5 Calls in Advance - -
1.6 Total 8,011,430,667 3,749,901,333
This Year Previous Year

Share Ownership Details
% Share Capital % Share Capital
1. Domestic Ownership 29.79 1,193,289,333 25.00 703,106,500
1.1 Government of Nepal - - - -
1.2 “Ka” Class Licensed Institutions - - - -
1.3 Other Licensed Institutions - - - -
1.4 Other Entities 1.04 41,764,466 0.64 18,123,500
1.5 Individuals 28.75 1,151,524,867 24.36 684,983,000
1.6 Others - - - -
2. Foreign Ownership 70.21 2,812,426,000 75.00 2,109,319,500
Total 100.00 4,005,715,333 100.00 2,812,426,000
Details of the Shareholders holding 0.5 % or more of the Total Shares
S.N. Name of the Shareholders Number of % of Total Amount Rs.

Shares Held Shares
1 Standard Chartered Grindlays Ltd, Sydney, Australia 18,749,507 46.81 1,874,950,667
2 Standard Chartered Bank, London, UK 9,374,753 23.40 937,475,333
3 Priyanka Agrawal 280,729 0.70 28,072,900
4 Avinash Agrawal 280,729 0.70 28,072,900
5 Komal Agrawal 280,729 0.70 28,072,900
6 Sashi Agrawal 280,729 0.70 28,072,900
7 Shankar Lall Agrawal 280,729 0.70 28,072,900

Schedule 4.2:
Reserves and Funds
As at 15 July, 2017 (31 Ashad 2074)

1. General Reserve Fund 3,181,848,015 2,897,528,788
2. Capital Reserve Fund - -
3.Capital Redemption Reserve - -
4. Capital Adjustment Fund - -
5. Other Reserves and Funds 222,538,293 347,537,460
5.1. Contingent Reserve - -
5.2. Institutional Development fund - -
5.3. Dividend Equalisation Fund - -
5.4. Special Reserve Fund - -
5.5. Assets Revaluation Reserve - -
5.6. Deferred Tax Reserve - -
5.7. Other Free Reserves - -
5.8. Other Reserves 222,538,293 347,537,460
6. Accumulated Profit/ (Loss) 9,786,370 115,368,464
7. Exchange Fluctuation Fund 438,421,970 413,839,141
Total 3,852,594,649 3,774,273,853
Schedule 4.3:
Debentures and Bonds
As at 15 July, 2017 (31 Ashad 2074)
1. ...… Percent Bond/Debentures of Rs………each issued on……………….and - -
Maturing on…………... (Outstanding balance of Redemption Reserves Rs……..
2. ...… Percent Bond/Debentures of Rs………each issued on……………….and - -
Maturing on…………... (Outstanding balance of Redemption Reserves Rs……..
Total ( 1+2 ) - -
Schedule 4.4:
Loans and Borrowings
As at 15 July, 2017 (31 Ashad 2074)
A. Local
1. Government of Nepal - -
2. Nepal Rastra Bank - -
3. Repo Liabilities - -
4. Inter Bank and Financial Institution - 500,000,000
5. Other Institutions - -
6. Others - -
Total A - 500,000,000
B. Foreign
1. Banks - -
2. Others - -
Total B - -
Total (A+B) - 500,000,000

Schedule 4.5:
Deposit Accounts
As at 15 July, 2017 (31 Ashad 2074)

1. Non-Interest Bearing Accounts
A. CURRENT DEPOSITS 12,422,300,151 13,690,280,642
1. Local Currency 8,507,052,940 9,103,897,871
1.1 Government of Nepal 194,507,586 203,664,328
1.2 “Ka” Class Licensed Institutions 59,381,851 154,337,632
1.3 Other Licensed Institutions 3,420,216 2,524,040
1.4 Other Organised Institutions 7,790,040,775 8,211,445,593
1.5 Individuals 318,523,644 385,562,560
1.6 Others 141,178,868 146,363,718
2. Foreign Currency 3,915,247,211 4,586,382,771

2.2 “Ka” Class Licensed Institutions 8,659,438 13,614,712
2.3 Other Licensed Institutions -
2.5 Individuals 136,050,849 160,429,121
2.6 Others 16,891,904 89,189,817
B. MARGIN DEPOSITS 794,854,713 582,880,062

1. Employees Guarantee
2. Guarantee Margin 448,409,219 437,131,851
3. Letter of Credit Margin 178,021,317 127,454,541
4. Others 168,424,177 18,293,670
C. OTHERS - -
1. Local Currency - -
1.1 Financial Institutions - -
1.2 Other Organised Institutions - -
1.3 Individuals
2. Foreign Currency - -
2.1 Financial Institutions - -
2.2 Other Organised Institutions
2.3 Individuals - -
Total of Non-Interest Bearing Accounts 13,217,154,864 14,273,160,704

Schedule 4.5:
Deposit Accounts (Continued)
As at 15 July, 2017 (31 Ashad 2074)

2. Interest Bearing Accounts
A. SAVING DEPOSITS 22,797,492,438 26,911,357,484
1. Local Currency 19,634,190,592 23,293,232,532
1.1 Organised Institutions 1,598,746,054 2,455,663,281
1.2 Individuals 18,035,430,508 20,837,555,340
1.3 Others 14,030 13,911
2.1 Organised Institutions 243,967,449 286,576,898
2.2 Individuals 2,919,334,397 3,331,548,054
2.3 Others -
B. FIXED DEPOSITS 23,096,964,142 3,214,055,415

1. Local Currency 11,690,109,900 2,479,053,693
1.1 Organised Institutions 7,754,084,690 1,136,167,556
1.2 Individuals 3,936,025,209 1,342,886,137
1.3 Others
2. Foreign Currency 11,406,854,242 735,001,722
2.1 Organised Institutions 11,248,696,989 710,182,985
2.2 Individuals 158,157,254 24,818,737
2.3 Others - -
C. CALL DEPOSITS 4,761,274,008 11,328,604,853

1. Local Currency 2,752,211,687 2,518,254,837
1.2 Other Licensed Institutions 276 3,494,048
1.4 Individuals 32,019,220 55,993,764
1.5 Others 2,020,496 1,877,254
2.1 “Ka” Class Licensed Institutions 428,214,825 -
2.2 Other Licensed Institutions - -
2.4 Individuals - -
2.5 Others - -
D. CERTIFICATE OF DEPOSITS - -
1. Organised Institutions - -
2. Individuals - -
3. Others - -
Total of Interest Bearing Accounts 50,655,730,588 41,454,017,752
Total Deposits (1+2) 63,872,885,452 55,727,178,456

Schedule 4.6:
Bills Payable
As at 15 July, 2017 (31 Ashad 2074)

1. Local Currency 48,323,986 269,573,409
2. Foreign Currency 28,335,638 40,610,164
Total 76,659,624 310,183,573
Schedule 4.7:
Other Liabilities
As at 15 July, 2017 (31 Ashad 2074)

1. Pension/Gratuity Fund 3,259,159 14,471,407
2. Employees Provident Fund - -
3. Employees Welfare Fund - -
4. Provision for Staff Bonus 202,908,101 181,714,762
5. Interest Payable on Deposits 289,319,761 60,908,204
6. Interest Payable on Borrowings - 41,780
7. Unearned Discount and Commission 189,671,475 159,158,220
8. Sundry Creditors 394,861,291 360,740,199
9. Branch Adjustment Account - -
10. Deferred Tax Liability
11. Dividend Payable 55,906,752 140,154,411
12. Others 248,273,640 157,665,473
a) Audit Fees Payable 2,050,000 2,050,000
b) Others 246,223,640 155,615,473
Total 1,384,200,179 1,074,854,457
Schedule 4.8:
Cash Balance
As at 15 July, 2017 (31 Ashad 2074)

1. Local Currency (including coins) 758,103,007 752,853,889
2. Foreign Currency 53,506,521 46,512,167
Total 811,609,528 799,366,056

Schedule 4.9:
Balance with Nepal Rastra Bank
As at 15 July, 2017 (31 Ashad 2074)
Foreign Currency Rs.

Local Grand Total Previous Year
Particulars INR Convertible Total
Currency Rs. Rs. Rs.
Foreign Currency
1. Nepal Rastra Bank 7,032,487,555 - 35,509,570 35,509,570 7,067,997,124 1,514,671,384
a) Current A/C 7,032,487,555 - 35,509,570 35,509,570 7,067,997,124 1,514,671,384
b) Other A/C - - - - - -
Schedule 4.10:
Balance with Banks / Financial Institutions
As at 15 July, 2017 (31 Ashad 2074)
Foreign Currency (Rs.)

Local
INR Convertible Total Grand Total Previous Year
Particulars Currency
Foreign Rs. Rs.
Rs.
Currency
1. Local Licensed 49,752,997 - - - 49,752,997 47,614,290
Institutions
a. Current Account 49,752,997 - 49,752,997 47,614,290
b. Other Account - - - - - -
2. Foreign Banks - 373,644,279 625,298,037 998,942,316 998,942,316 1,610,680,453
a. Current Account - 373,644,279 625,298,037 998,942,316 998,942,316 1,610,680,453
b. Other Account - - - - - -
Total 49,752,997 373,644,279 625,298,037 998,942,316 1,048,695,313 1,658,294,743
Note: Balance as per the confirmation and statement received from respective banks is NPR Rs 1,219,601,879 and the differences
have been reconciled.

Schedule 4.11:
Money at Call and Short Notice
As at 15 July, 2017 (31 Ashad 2074)

1. Local Currency - -
Total 12,623,564,000 6,069,660,000
Schedule 4.12:
Investments
As at 15 July, 2017 (31 Ashad 2074)
Purpose This Year Previous Year

Particulars
Trading Other Rs. Rs.
1.Government of Nepal Treasury Bills - 4,280,892,441 4,280,892,441 7,021,721,973
2.Government of Nepal Saving Bonds - - - -
3. Government of Nepal Other Securities - 256,646,915 256,646,915 259,621,622
4. Nepal Rastra Bank Bonds - - 2,530,000,000
5. Foreign Securities - - - -
6. Local Licensed Institutions - - - -
7. Foreign Banks - 10,318,000,000 10,318,000,000 12,880,800,000
8. Corporate Shares - 273,135,788 273,135,788 402,477,960
9. Corporate Debenture and Bonds - - - -
10. Other Investments - 503,350,000 503,350,000 -
Total Investments - 15,632,025,143 15,632,025,143 23,094,621,556
Provision - - -
Net Investments - 15,632,025,143 15,632,025,143 23,094,621,556

Schedule 4.12(A):
Investment in Shares, Debentures and Bonds
As at 15 July, 2017 (31 Ashad 2074)
Particulars Cost Price As per Market Provision This Year Previous
Rs. Price Rs. Amount Rs. Year
Rs. Rs.
1. Investment in Shares 55,985,500 - - 273,135,788 402,477,960
1.1 Nepal Grameen Bikas Bank Ltd. 60,000 373 223,800 324,000
600 Ordinary Shares of Rs.100 each fully NA (Note - 1, 2,4)
paid up
1.3 Rural Micro Finance Development 52,190,000 388 - 269,176,488 398,418,460
Centre Ltd.
694,649 Ordinary Shares of Rs.100 each NA (Note - 4)
fully paid up (including 172,749 bonus
shares fully paid up)
1.4 Credit Information Centre Ltd. 1,235,500 100 - 1,235,500 1,235,500
54,899 Ordinary Shares of Rs.100 each NA (Note - 3)
fully paid up (including 42,544 bonus
shares fully paid up)
1.5 Nepal Clearing House Ltd. 2,500,000 100 - 2,500,000 2,500,000
25,000 Ordinary Shares of Rs. 100 each NA (Note - 3)
fully paid up
2. Investment in Debentures and Bonds - - - - -
Total Investment 55,985,500 - - 273,135,788 402,477,960
3. Provision for Loss

3.1 Upto Previous year
3.2 Increase/Decrease this Year
Total Provision - -
Net Investments 55,985,500
NOTE:
1. Nepal Grameen Bikas Bank has not distributed dividends in the last three years.
2. After the merger of Purwanchal Grameen Bikas Bank and Sudur Paschimanchal Grameen Bikas Bank along
with 3 other Bikas banks, the share certificate of the merged entity, Nepal Grameen Bikas Bank was issues to
the Bank in exchange of 30,000 shares of both the Bikas banks.
3. Shares of Credit Information Centre Ltd and Nepal Clearing House Ltd are not listed at the Nepal Stock
Exchange Ltd (NEPSE).
4. Promoter shares are not traded in the stock exchange, thus the market value of these shares are taken as
50% of Market Price as per Level 2 Input of IAS 39.

Schedule 4.12.1:
Business Investment (Held For Trading)
As at 15 July, 2017 (31 Ashad 2074)
Particulars Cost Price Previous Current This Year Previous Remarks

Rs. Market Market Profit/ Year
Price a) Price (Loss) Profit/
Rs. (b) Rs. (b-a) Rs. (Loss) Rs.
1. Nepal Government’s Treasury Bills 4,280,892,441 - - - -
2. Nepal Government’s Saving Bonds - - - - -
3. Nepal Government’s Other Securities - - - - -
4. Nepal Rastra Bank Bond - - - - -
5. Foreign Securites - - - - -
6. Shares of Domestic Licensed Institution - - - - -
7. Debenture and Bond of Domestic - - - - -
Licensed Institution
8. Shares, Debentures and Bond of - - - - -
Domestic Corporates
9. Foreign Bank Investment (Placement) - - - - -
10. Interbank Lending - - - - -
11. Other Investments - - - - -
Total Investment 4,280,892,441 - - - -
Schedule 4.12.2:
Investment Held To Maturity
As at 15 July, 2017 (31 Ashad 2074)
Particulars Cost Price (a) Impairment Impairment This Year Previous Remarks
Rs. till Date (b) this year Profit/(Loss) Year Profit/
Rs. (c) Rs. (a-b-c) Rs. (Loss) Rs.
1. Nepal Government’s - - - - -
Treasury Bills
2. Nepal Government’s - - - - -
Saving Bonds
3. Nepal Government’s 256,646,915 - - - -
Other Securities
4. Nepal Rastra Bank Bond - - - - -
5. Foreign Securites - - - - -
6. Shares of Domestic - - - - -
7. Debenture and Bond of - - - - -
Domestic Licensed
Institution
8. Shares, Debentures and - - - - -
Bond of Domestic
Corporates
9. Foreign Bank Investment 10,318,000,000 - - - -
(Placement)
10. Other Investments 503,350,000 - - - -
Total 11,077,996,915 - - - -

Schedule 4.12.3:
Business Investment (Available For Sale)
As at 15 July, 2017 (31 Ashad 2074)
Particulars Cost Previous Current This Year Previous Remarks

Price Market Market Price Fund Adj Year Profit/
Rs. Price (a) Rs. (b) Rs. (b-a) Rs. (Loss) Rs.
1. Nepal Government’s
Treasury Bills
Saving Bonds
Other Securities
4. Nepal Rastra Bank Bond
5. Foreign Securites
6. Shares of Domestic 52,250,000 398,742,460 269,400,288 (129,342,173) 210,668,460
7. Debenture and Bond of
Domestic Licensed Institution
8. Shares, Debentures and Bond 3,735,500 3,735,500 3,735,500 - -
of Domestic Corporates
9. Foreign Bank Investment
(Placement)
10. Other Investments
Total 55,985,500 402,477,960 273,135,788 (129,342,173) 210,668,460
The market price of the investments which are either not listed or are not actively traded are shown at cost price.

60
Schedule 4.13:
Classification of Loans, Advances and Bills Purchased and Provisioning
As at 15 July, 2017 (31 Ashad 2074)
Loans & Advances Bills Purchased and Discounted
Domestic
This Year Previous Year
Particulars Deprived Sector Foreign Total Domes- Foreign Total Rs. Rs.
Other Rs. Rs. tic Rs. Rs.
Insured Uninsured Rs. Rs.
Rs. Rs.
1. Performing Loans - 1,747,990,549 37,587,722,291 219,108,547 39,554,821,387 - 98,294,461 98,294,461 39,653,115,849 31,595,525,093
1.1 Pass 1,747,990,549 37,202,178,751 219,108,547 39,169,277,848 98,294,461 98,294,461 39,267,572,309 31,022,251,728
1.2 Watch list - 385,543,540 - 385,543,540 - - 385,543,540 573,273,365
2. Non-Performing Loans - - 76,720,052 - 76,720,052 - - - 76,720,052 101,819,490

2.1 Restructured/Rescheduled - - - - - - -
2.2 Substandard 22,631,453 22,631,453 - - - 22,631,453 42,775,468
2.3 Doubtful 11,107,496 11,107,496 - - - 11,107,496 18,591,570
2.4 Loss 42,981,103 42,981,103 - - - 42,981,103 40,452,452
(A) Total Loans - 1,747,990,549 37,664,442,342 219,108,547 39,631,541,439 - 98,294,461 98,294,461 39,729,835,900 31,697,344,583
3. Loan Loss Provision
3.1 Pass 17,479,905 372,021,788 2,191,085 391,692,778 - 982,945 982,945 392,675,723 310,182,546
3.2 Watch list - 19,277,177 - 19,277,177 - 19,277,177 23,770,337
3.3 Rescheduled/ Restructured - - - -
3.4 Substandard 5,657,863 5,657,863 - - - 5,657,863 10,693,867
3.5 Doubtful 5,553,748 5,553,748 - - - 5,553,748 9,295,785
3.6 Loss 42,981,103 - 42,981,103 - - - 42,981,103 40,452,452
(B) Total Provision - 17,479,905 445,491,679 2,191,085 465,162,670 - 982,945 982,945 466,145,614 394,394,987
4. Provision up to Previous Year
4.1 Pass 14,981,339 295,670,074 364,797 311,016,210 - 5,739 5,739 311,021,949 276,427,999
4.2 Watch list - 22,930,935 - 22,930,935 - - - 22,930,935 10,545,405
4.3 Rescheduled/Restructured loan - - -
4.4. Substandard 10,693,867 10,693,867 - - - 10,693,867 12,056,216
4.5 Doubtful 9,295,785 9,295,785 - - - 9,295,785 3,064,960
4.6 Loss 40,452,454 40,452,454 - - - 40,452,454 40,415,171
(C)Total Provision upto PreviousYear - 14,981,339 379,043,114 364,797 394,389,250 - 5,739 5,739 394,394,989 342,509,751
(D) Previous Year’s Provision written back 13,201,434 213,984,480 2,788,120 229,974,033 - 3,890 3,890 229,977,923 203,712,692
(E) This Year’s additional provision 15,700,000 283,127,012 2,901,536 301,728,548 - - - 301,728,548 255,597,928
Net Adjustments for the Year - 2,498,566 66,448,565 1,826,289 70,773,420 - 977,206 977,206 71,750,625 51,885,236
Net Loan (A-B) - 1,730,510,644 37,218,950,664 216,917,462 39,166,378,769 - 97,311,517 97,311,517 39,263,690,286 31,302,949,596
Schedule 4.13(A):
Securities Against Loan, Advance and Bills Purchased
As at 15 July, 2017 (31 Ashad 2074)

(A) Secured 39,729,835,900 31,697,344,584
1. Movable / Immovable Assets 34,364,823,326 26,602,937,814
2. Guarantee of Local Licensed Institutions - -
3. Government Guarantee 138,807,033 138,807,033
4.Guarantee of Internationally Rated Banks 1,603,893,094 1,737,054,048
5. Export Documents - -
6. Fixed Deposit Receipts 381,016,330 410,959,409
(a) Own Fixed Deposit Receipts 41,244,730 24,576,997
(b) Fixed Deposit Receipts of Other Licensed Institutions 339,771,601 386,382,412
7. Government Securities/ Bonds - -
8. Counter Guarantee - -
9. Personal Guarantee - -
10. Other Securities 3,241,296,117 2,807,586,280
(B) Unsecured - -
Total 39,729,835,900 31,697,344,584

Schedule 4.14:
Fixed Assets
As at 15 July, 2017 (31 Ashad 2074)
Particulars Assets This Year Previous

Freehold Vehicles Machinery Office Other Rs. Year
and Rs. Rs. Equipment Leasehold Rs.
Buildings Rs. Assets Rs.
Rs.
1. Cost
a. Balance upto 58,867,417 - 243,012,182 88,959,478 390,839,077 422,842,984
Previous Year
b. Addition this year - 8,895,000 - 19,483,629 26,294,029 54,672,658 10,539,571
c. Revaluation/ - - - - - -
Written-back this
year
d. Sold this year (4,934,900) - (23,658,188) (5,521,636) (34,114,724) (42,543,477)
e. Written-off this - - - -
year
Total Cost - 62,827,517 - 238,837,623 109,731,872 411,397,011 390,839,078
(a+b+c+d+e)
2. Depreciation
a. Upto Previous Year 55,607,417 - 218,313,681 67,181,248 341,102,346 348,529,643
b. For this Year 3,591,792 - 14,084,632 8,601,459 26,277,882 20,463,281
c. Depreciation on - - -
Revaluation /
Written-back
d. Depreciation (4,934,900) - (23,658,188) (4,069,596) (32,662,684) (27,890,577)
adjustment/ write
back
Total Depreciation - 54,264,309 - 208,740,125 71,713,111 334,717,544 341,102,347
(a+b+c+d)
3. Book Value - 8,563,209 - 30,097,498 38,018,761 76,679,467 49,736,730
(WDV)* (1-2)
4. Land -
5. Capital Work in - - 26,238,498 26,238,498 21,569,353
Progress
(To be Capitalised)
6. Leasehold Assets - - - - - - -
Total (3+4+5+6) - 8,563,209 - 30,097,498 64,257,259 102,917,965 71,306,083
*Written Down Value

Schedule 4.15:
Non-Banking Assets
As at 15 July, 2017 (31 Ashad 2074)
Name and Address of Date of Total Amount Provision for Loss Net Non Previous Year
Borrower or Party assuming of Non-Bank- % Amount Banking Rs.
Non Bank- ing Assets Rs. Assets
ing Assets Rs. Rs.
- - - - - - -
- - - - - - -
Total - - - - - -
Schedule 4.16:
Other Assets
As at 15 July, 2017 (31 Ashad 2074)
1. Stock of Stationery - -
2. Income Receivable on Investments 62,654,227 54,041,574
3. Accrued Interest on Loan 179,351,558 12,609,152 117,379,017
Less: Interest Suspense Amount (166,742,406) (117,379,017)
4.Commission Receivable 115,198,319 76,466,574
5. Sundry Debtors 74,394,172 25,084,300
6. Staff Loan and Advances 458,628,153 314,118,765
7. Prepayments 24,110,308 22,087,788
8. Cash in Transit - -
9. Other Transit Items (Including Cheques) - -
10. Drafts Paid without Notice - -
11. Expenses Not Written-off
12. Branch Adjustment Account - -
13. Deferred Tax Assets 83,726,403 77,880,183
14. Others 26,777,599 105,183,877
a) Advance Income Tax (net of Provision) 18,415,563 55,931,538
b) Others 8,362,036 49,252,339
Total 858,098,333 674,863,061

Schedule 4.16(A):
Other Assets (Additional Statement)
As at 15 July, 2017 (31 Ashad 2074)
Particulars This Year (Rs.) Previous

Up to 1 1 to 3 Above 3 Total Year
Year Years Years Rs.
1. Accrued Interest on Loans and Advances 179,351,558 - 179,351,558 117,379,017

2. Drafts Paid without Notice - - - - -
3. Branch Adjustment Account - - - - -
4. Local/Foreign Agency Account - - - - -
Schedule 4.17:
Contingent Liabilities
As at 15 July, 2017 (31 Ashad 2074)

1. Claims on Bank but not Acknowledged as Liabilities by the Bank 2,000,000
2. Letters of Credit (Full amount) 2,282,628,247 2,458,814,600
(a) Maturity period of less than 6 months 2,197,811,299 2,366,418,274
(b) Maturity period of more than 6 months 84,816,948 92,396,326
3. Rediscounted Bills - -
4. Unmatured Guarantees/Bonds 1,822,331,312 1,079,877,816
(a) Bid Bonds 530,388,617 43,637,500
(b) Performance Bonds 799,950,220 565,123,676
(c) Other Guarantee/Bonds 491,992,475 471,116,640
5. Unpaid amount on Investment in Shares - -
6. Outstanding Liabilities of Forward Exchange Contracts 2,376,477,206 2,226,620,057
7. Bills for Collection 1,173,476,647 756,880,383
8. Acceptance and Endorsements 729,589,385 331,057,625
9. Underwriting Commitment - -
10. Irrevocable Loan Commitments 6,591,130,889 6,698,707,078
11. Guarantee against Counter Guarantee of Internationally Rated Banks 11,075,996,648 11,080,380,603
12. Advance Payment Guarantee 28,697,944 22,164,388
13. Financial Guarantee 26,701,500 41,500,000
14. Contingent Liabilities on Income Tax -
15. Others 788,640,415 550,902,660
Total 26,895,670,192 25,248,905,210

Schedule 4.18:
Interest Income
for the period 16 July 2016 to 15 July 2017 (1 Shrawan 2073 to 31 Ashad 2074)

A. On Loan, Advances and Overdraft 2,700,067,209 2,173,091,628
1. Loan and Advances 2,297,233,411 1,887,976,410
2. Overdrafts 402,833,798 285,115,218
B. On Investment 90,462,290 93,415,293
1. Government of Nepal Securities 90,462,290 93,077,074
a. Treasury Bills 63,780,700 76,186,822
b. Development Bonds 26,681,590 16,890,252
c. National Savings Certificates - -
2. Foreign Securities - -
3. Nepal Rastra Bank Bonds 338,219
4. Debenture and Bonds - -
5. Interest on Inter bank Investment - -
a. Financial Institutions - -
b. Other Organisations
C. On Agency Balances 2,549,850 1,305,659
1. Local Banks / Financial Institutions - -
2. Foreign Banks 2,549,850 1,305,659
D. On Money at Call and Short Notice 78,045,486 28,509,350
1. Local Banks / Financial Institutions - -
2. Foreign Banks 78,045,486 28,509,350
E. On Others 189,494,258 119,260,738
1. Certificate of Deposits - -
2. Inter-Bank / Financial Institution Loan 1,255,509 24,268,546
3. Placement with Foreign Banks 186,886,455 94,450,263
4. Others 1,352,294 541,929
Total 3,060,619,093 2,415,582,668

Schedule 4.19:
Interest Expenses

A. On Deposit Liabilities 858,605,387 561,332,428
1. Fixed Deposits 438,355,056 125,144,917
1.1. Local Currency 421,850,661 123,756,674
1.2. Foreign Currency 16,504,395 1,388,243
2. Savings Deposits 297,807,779 329,796,092
2.1. Local Currency 292,797,845 324,560,503
2.2. Foreign Currency 5,009,933 5,235,589
3. Call Deposits 122,442,553 106,391,419
3.1. Local Currency 107,228,059 105,415,660
3.2. Foreign Currency 15,214,494 975,759
4. Certificate of Deposits - -
B. On Borrowings 1,447,740 63,014
1.Debentures and Bonds - -
2. Loans from Nepal Rastra Bank - -
3. Inter Bank /Financial Institutions Borrowings 1,447,740 63,014
4. Other Institutions - -
5. Other Loans - -
C. On Others 3,406,509 4,309,208
1. Others 3,406,509 4,309,208
Total 863,459,635 565,704,649

Schedule 4.20:
Commisssion and Discount

A. Bills Purchased and Discounted 9,739,705 11,322,570
1. Domestic 1,056 100,292
2. Foreign 9,738,648 11,222,278
B. Commission 368,090,350 253,531,408
1. Letters of Credit 31,251,349 30,001,449
2. Guarantees 240,570,850 142,610,291
3. Collection Fees 11,806,518 8,225,650
4. Remittance Fees 50,223,771 48,951,937
5. Credit Cards 34,233,415 23,736,856
6. Share Underwriting/Issues - -
7. Government Transactions - -
8. E.Pra. Commission - -
9. Exchange Fees ( Batta Income) 4,446 5,225
C. Others 111,439,262 92,665,735
1. Management Fees 3,765,725 1,889,394
2. Loan Processing Fees 71,417,102 46,207,918
3. Ledger and Activity Fees 18,789 19,069
4. Commission on Travellers Cheque - -
5. Others (including income from Derivatives) 36,237,645 44,549,354
Total 489,269,316 357,519,713
Schedule 4.21:
Other Operating Income

1. Rental on Safe Deposit Locker 6,436,170 5,236,549
2. Issue and Renewals of Credit Cards 16,855,434 17,246,201
3. Issue and Renewals of ATM Cards 12,335,151 10,166,671
4. Telex /T.T. 14,454,146 14,133,776
5. Service Charges - -
6. Renewal Fees - -
7. Others 1,897,758 1,312,539
Total 51,978,659 48,095,736

Schedule 4.22:
Exchange Fluctuation Gain/Loss

A. Revaluation Gain 98,331,317 117,431,988
B. Trading Gain (except Batta) 512,237,246 512,123,485
Total Income (Loss) 610,568,563 629,555,473
Schedule 4.23:
Staff Expenses

1. Salary 335,127,206 300,485,037
2. Allowances 1,987,935 1,258,665
3. Contribution to Provident Fund 18,918,632 16,140,020
4. Training Expenses 5,194,596 6,449,647
5. Uniform 169,400 254,625
6. Medical 8,082,073 7,338,473
7. Insurance 2,479,193 3,925,477
8. Pension and Gratuity Provision 21,324,035 20,673,000
9. Others 155,272,474 131,764,877
a) Staff Incentive 109,258,878 89,396,735
b) Others 46,013,596 42,368,143
Total 548,555,543 488,289,822

Schedule 4.24:
Other Operating Expenses

1. House Rent 81,611,272 81,044,617
2. Light, Electricity and Water 15,966,862 25,614,975
3. Repair and Maintenance 15,292,571 21,480,068
(a) Building 5,464,014 6,692,836
(b) Vehicles 3,022,872 2,047,872
(c) Others 6,805,685 12,739,359
4. Insurance 22,095,640 14,173,565
5. Postage, Telex, Telephone, Fax 32,414,198 27,977,282
6. Office Equipment, Furniture and Repair 43,602,567 37,138,567
(a) Office Equipment and Furniture (non capitalised item) 33,464,571 25,872,367
(b) Repairs 10,137,996 11,266,200
7. Travelling Allowances and Expenses 12,958,718 11,053,569
8. Stationery and Printing 28,344,748 17,947,045
9. Periodicals and Books 36,570 99,766
10. Advertisement 17,177,857 21,095,755
11. Legal Expenses 644,213 405,880
12. Donations - -
13. Expenses Relating to Board of Directors 1,049,347 1,278,609
(a) Meeting Allowance 554,000 702,500
(b) Others Expenses 495,347 576,109
14. General Meeting Expenses 1,594,155 1,458,070
15. Expenses Relating to Audit 2,050,000 2,050,000
(a) Audit Fees 2,050,000 2,050,000
(b) Other Expenses - -
16. Commission on Remittances - -
17. Depreciation on Fixed Assets 26,277,882 20,463,281
18. Amortization of Pre Operating Expenses - -
19. Share Issue Expenses 21,741,635 -
20. Technology Support Cost (Technical Services Fees ) 96,993,597 62,726,476
21. Entertainment 2,915,395 2,102,430
22. Written Off Expenses 2,199,207 5,181,869
23. Security Expenses 22,071,040 23,724,375
24. Credit Guarantee Premium - -
25. Commission and Discount 8,494,221 9,602,142
26. Others 57,317,465 48,141,350
(a) Software Expenses 10,494,632 8,034,695
(b) Cleaning, Pest Control and Waste Management 8,912,701 9,617,341
(c) Share Listing and Registration Expenses 3,909,227 670,000
(d) Other Professional Fees 13,338,595 13,385,143
(e) Hire of Vehicle and Equipments 1,760,999 1,561,750
(f) Clearing House Charges 2,118,741 1,480,345
(g) Credit information and Collection Expenses 1,024,026 818,015
(h) Professional & regulatory body fees 3,172,951 759,500
(i) IT infrastructure expenses 1,506,486 1,295,165
(j) Property & Signage Fee 832,845 888,362
(k) Others 10,246,262 9,631,034
Total 512,849,162 434,759,691

Schedule 4.25
Provision for Possible Losses
1. Increase in Loan Loss Provision 301,728,548 255,597,928
2. Increase in Provision for Loss on Investments - -
3. Provision for Non-Banking Assets - -
4. Provision for Other Assets - 5,153,162
Total 301,728,548 260,751,090
Schedule 4.26:
Non Operating Income/ (Loss)

1. Profit (Loss) on Sale of Investment
2. Profit (Loss) on Sale of Assets 1,152,091 20,695,782
3. Dividend (Net) 6,936,220 9,372,682
4. Subsidies Received from Nepal Rastra Bank - -
a. Compensation against Losses of Specified Branches - -
b. Interest Indemnity - -
c. Exchange Counter - -
5. Others 24,950 7,784,518
Net Non Operating Income/ (Loss) 8,113,260 37,852,982
Schedule 4.27:
Provision for Possible Loss Written Back

1. Loan Loss Provision Written Back 229,977,923 203,712,692
2. Provision against Non-Banking Assets Written Back - -
3 Investment Provision Written Back - 6,000,000
4. Provision against Other Assets Written Back - 48,260,991
Total 229,977,923 257,973,683

Schedule 4.28:
Income / (Expenses) from Extra-Ordinary Activities
1. Recovery of Loans Written Off 8,055,204 10,295,392
2. Voluntary Retirement Scheme Expenses - -
3. Unrecoverable Loan Write Off (Schedule 4.28A) - (2,567,996)
4. Other Expenses/Income (5,940,000)
Total 8,055,204 1,787,396
Schedule 4.28 A:
Statement of Loans Written Off
for the period 16 July 2016 to 15 July 2017
(1 Shrawan 2073 to 31 Ashad 2074)
Type of Loan
Written off Basis of Initiations
Security Approving
S.N Types of Loan Amount Valuation of made for Remarks
and Amount Authority /
Rs. Security Recovery
Rs. Designation
1 Working Capital Loan -
2 Project Loan -
3 Fixed Capital Loan -
4 Personal Loan
5 Other Loan -
a) Credit Cards -
b) Gramin Prathamik Karja -
c) Auto Loan -
d) Corporate loan
Total Loan -

Schedule 4.29:
Statement of Loans & Advances Extended to
Directors/ Chief Executive Officer/ Promoters/Staff
and Shareholders
As at 15 July, 2017 (31 Ashad 2074)
The Statement of amount, included under total amount of Bills Purchased and Discounted, Loans, Advances and
Overdraft, provided to the Directors, Chief Excecutive Officer, Promoters, Staff, Shareholders and to the individual
members of their undivided family or against the guarantee of such persons or to the organisations or companies in
which such individuals are managing agent, are as follows:
Additions
Balance upto Recovery made This Balance as at
Name of Promoter/ during the
Previous Year Year Ashad end
Director/ Chief Executive year
Officer Principal Interest Principal Interest Rs. Principal Interest
Rs. Rs. Rs. Rs. Rs. Rs.
(A) Directors - -
(B) Chief ExecutiveOfficer - - - - - - -
(C) Promoters - - - - - - -
(D) Staff - - - - - - -
(E) Shareholders - - - - - - -
Total - - - - - - -
Note: As per clause 4 of the Nepal Rastra Bank Directive No. 6, loans given to executive officers and employees are as per Bank staff
rules and hence not disclosed above.

Schedule 4.30 (Ka 1):
Capital Adequacy Table
As at 15 July, 2017 (31 Ashad 2074)
NPR ‘000’
1.1 RISK WEIGHTED EXPOSURES This Year Previous Year

A Risk Weighted Exposure for Credit Risk 50,192,675 41,402,347
B Risk Weighted Exposure for Operational Risk 4,598,926 4,350,273
C Risk Weighted Exposure for Market Risk 1,330,724 1,155,729
Adjustments Under Pillar-II
Add: 2% of the Gross Income(6.4 a 7) 679,668 577,121
Add: 3% of the total RWE due to non compliance to Disclosure Requirement (6.4 - -
a 10)
Add: ...% of the total deposits due to insufficient liquid assets (6.4 a 6) -
Total Risk Weighted Exposures (A+B+C) 56,801,993 47,485,471
1.2 CAPITAL FUND This Year Previous Year
Core Capital (Tier 1) 11,119,338 6,684,918
a Paid up Equity Share Capital 4,005,715 2,812,426
b Irredeemable Non-cumulative preference shares - -
c Share Premium - -
d Proposed Bonus equity Shares 4,005,715 937,475
e Statutory General Reserves 3,181,848 2,897,529
f Retained Earnings 9,786 115,368
g Current year profit/loss - -
h Capital Redemption Reserve - -
i Capital Adjustment Reserve - -
j Dividend Equalization Reserves - -
k Debenture Redemption Reserves
l Other Free Reserve - -
Less
a Goodwill -
b Deferred Tax Assets (83,726) (77,880)
c Fictitious Assets - -
d Investment in equity in licensed Financial Institutions - -
e Investment in equity of institutions with financial interests - -
f Investment in equity of institutions in excess of limits - -
g Investments arising out of underwriting commitments - -
h Reciprocal crossholdings - -
i Land building unutilised and purchased in excess of limits -
j Other Deductions - -
Adjustments Under Pillar-II - -
Less: Shortfall in provisions (6.4 a 1) - -
Less: Loans and Facilities extended to related parties and restricted lending (6.4 - -
a 2)
Supplementary Capital (Tier 2) 855,763 1,094,490
a Cumulative and/or Redeemable Preference Share - -
b Subordinated Term Debt - -
c Hybrid Capital Instruments - -
d General Loan Loss Provision 411,953 333,114
e Exchange Equalization Reserve 438,422 413,839
f Investment Adjustment Reserve 5,388 347,537
g Assets Revaluation Reserve - -
h Other Reserves - -
Total Capital Fund (Tier 1 and Tier 2) 11,975,101 7,779,409
1.3 Capital Adequacy Ratios Current Period Previous Period
Tier 1 Capital to Total Risk Weighted Exposures (After Bank’s Adjustments of 19.58% 14.08%
Pillar II)
Tier 1 and Tier 2 Capital to Total Risk Weighted Exposures 21.08% 16.38%
(After Bank’s Adjustments of Pillar II)

74
Schedule 4.30 (Kha):
Credit Risk
As at 15 July, 2017 (31 Ashad 2074)
NPR ‘000’
Assets 15th July, 2017(31 Asadh 2074) Previous Year

Balance Sheet Exposure Book Specific Eligible Net Value Risk Weight Risk Net Value Risk
Value Provision CRM d=a-b-c e Weighted Weighted
a b c Exposures Exposures
f=d*e
Cash Balance 811,610 - - 811,610 0% - 799,366 -
Balance With Nepal Rastra Bank 7,067,997 - - 7,067,997 0% - 1,514,671 -
Gold - - - - 0% - - -

Investment in Nepalese Government Securities 4,537,539 - - 4,537,539 0% - 7,281,344 -
All claims on Government of Nepal 138,807 - - 138,807 0% - 138,807 -
Investment in Nepal Rastra Bank securities - - - - 0% - 2,530,000 -
All claims on Nepal Rastra Bank 503,350 - - 503,350 0% - - -
Claims on Foreign Government and Central Bank (ECA Rating 0-1) - - - - 0% - - -
Claims on Foreign Government and Central Bank (ECA Rating 2) - - - - 20% - - -
Claims on Foreign Government and Central Bank (ECA Rating 4-6) - - - - 100% - - -
Claims On BIS, IMF, ECB, EC and on Multilateral Development Banks - - - - 0% - - -
(MDBs) recognized by the framework.
Claims on Other Multilateral Development Banks - - - - 100% - - -
Claims on Public Sector Entity (ECA 0-1) - - - - 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) - - - - 150% - - -
Claims on domestic banks that meet capital adequacy requirements 1,658,937 - - 1,658,937 20% 331,787 1,404,865 280,973
Claims on domestic banks that do not meet capital adequacy require- - - - - 100% - 2,076 2,076
ments
Claims on foreign bank (ECA Rating 0-1) 20,306,320 - - 20,306,320 20% 4,061,264 16,253,043 3,250,609
Claims on foreign bank (ECA Rating 2) 1,717 - - 1,717 50% 859 1,809 904
Claims on foreign bank (ECA Rating 3-6) 3,611,300 - - 3,611,300 100% 3,611,300 4,293,600 4,293,600
Claims on foreign bank (ECA Rating 7) - - - - 150% - - -
Claims on Foreign bank incorporated in SAARC Region operating with 21,169 - - 21,169 20% 4,234 12,689 2,538
a buffer of 1% above their respective regulatory capital requirement
Credit Risk (Continued)
As at 15 July, 2017 (31 Ashad 2074)
NPR ‘000’

Balance Sheet Exposure Book Specific Eligible Net Value Risk Weight Risk Net Value Risk
Value Provision CRM d=a-b-c e Weighted Weighted
a b c Exposures Exposures
f=d*e
Claims on Domestic Corporates 16,262,790 - 102,651 16,160,139 100% 16,160,139 13,328,530 13,328,530
Claims on Foreign Corporates (ECA rating 0-1) - - - - 20% - - -
Claims on Foreign Corporates (ECA rating 2) - - - - 50% - - -
Claims on Foreign Corporates (ECA rating 3-6) - - - - 100% - - -
Claims on Foreign Corporates (ECA rating 7) - - - - 150% - - -
Regulatory Retail Portfolio (Not Overdue) 5,317,222 - - 5,317,222 75% 3,987,917 4,018,780 3,014,085
Claims fulfilling all criterion of regulatory retail except granularity - - - - 100% - - -
Claims secured by residential properties 6,425,569 - - 6,425,569 60% 3,855,341 4,539,220 2,723,532
Claims not fully secured by residential properties - - - - 150% - - -
Claims secured by residential properties (Overdue) 182,361 18,108 - 164,253 100% 164,253 103,553 103,553
Claims secured by Commercial real estate 7,364,702 - - 7,364,702 100% 7,364,702 5,002,393 5,002,393
Past due claims (except for claim secured by residential properties) 229,555 36,083 - 193,472 150% 290,208 215,368 323,052
High Risk claims 2,199,647 1 77,050 2,122,596 150% 3,183,894 1,699,121 2,548,682
Investment in equity and other capital instruments of institutions listed 269,400 - - 269,400 100% 269,400 398,742 398,742
in the stock exchange
Investment in equity and other capital instruments of institutions not 3,736 - - 3,736 150% 5,604 3,736 5,603
listed in the stock exchange
Staff loan secured by residential property 267,395 - - 267,395 60% 160,437 162,848 97,709
Interest Receivable/claim on government securities 1,852 - - 1,852 0% - 2,372 -
Cash in transit and other cash items in the process of collection - - - - 20% - - -
Other Assets 1,355,587 762,297 - 593,290 100% 593,290 321,419 321,419
Total 78,538,562 816,489 179,701 77,542,371 44,044,627 64,028,352 35,698,001

75
76
Credit Risk
As at 15 July, 2017 (31 Ashad 2074)
NPR ‘000’
Off Balance Sheet Exposures Book Specific Eligible Net Value Risk Weight Risk Net Value Risk
Value Provision CRM c d=a-b-c e Weighted Weighted
a b Exposures Exposures
f=d*e
Revocable Commitments 528,797 - - 528,797 0% - 466,586 -
Bills Under Collection 1,173,477 - - 1,173,477 0% - 756,880 -
Forward Exchange Contract 2,376,477 - - 2,376,477 10% 237,648 2,226,620 222,662
LC Commitments With Original Maturity Up to 6 months (domestic 2,197,811 - 91,395 2,106,416 20% 421,283 2,234,287 446,857

counterparty)
Foreign Counterparty ECA Rating 0-1 - - - - 20% - - -
Foreign Counterparty ECA Rating 2 - - - - 50% - - -
L C Commitments With Original Maturity Over 6 months (domestic 84,817 - 76,814 8,003 50% 4,002 67,240 33,620
counterparty)
Bid Bond, Performance Bond and Counter Guarantee (domestic 538,070 - 229,695 308,375 50% 154,188 221,284 110,642
counterparty)
Foreign Counterparty ECA Rating 0-1 5,245,008 - 4,075,700 1,169,308 20% 233,862 1,022,914 204,583
Foreign Counterparty ECA Rating 2 3,564,531 - 1,696,660 1,867,871 50% 933,936 1,808,989 904,494
Foreign Counterparty ECA Rating 3-6 213,775 - - 213,775 100% 213,775 158,614 158,614
Foreign Counterparty ECA Rating 7 7,817 - - 7,817 150% 11,726 14,903 22,355
Underwriting commitments - - - - 50% - - -
Lending of Bank’s Securities or Posting of Securities as collateral - - - - 100% - - -
Repurchase Agreements, Assets sale with recourse - - - - 100% - - -
Advance Payment Guarantee 2,834,079 - 1,693,462 1,140,617 100% 1,140,617 1,010,674 1,010,674
Financial Guarantee 58,456 - 16,452 42,004 100% 42,004 42,259 42,259
Acceptances and Endorsements 729,589 - 16,412 713,177 100% 713,177 321,013 321,013
Unpaid Portion of Partly paid shares and Securities - - - - 100% - - -
Credit Risk
As at 15 July, 2017 (31 Ashad 2074)
NPR ‘000’
Off Balance Sheet Exposures Book Specific Eligible Net Value Risk Weight Risk Net Value Risk
Value Provision CRM c d=a-b-c e Weighted Weighted
a b Exposures Exposures
f=d*e
Irrevocable Credit commitments (Short Term) 6,291,131 - 2,251,739 4,039,392 20% 807,878 5,819,867 1,163,973
Irrevocable Credit commitments (Long Term) 300,000 - - 300,000 50% 150,000 476,000 238,000
Other Contingent Liabilities 1,280,633 - 196,678 1,083,955 100% 1,083,955 820,599 820,599
Unpaid Guarantee Claims - 200% - 2,000 4,000
Total 27,424,468 - 10,345,007 17,079,461 6,148,048 17,470,730 5,704,346
Total RWE for Credit Risk (A) +(B) 105,963,030 816,489 10,524,708 94,621,832 50,192,675 81,499,082 41,402,347
Adjustments under Pillar-II - -
Add: - - - - - - - -
10% of the loan and facilities in excess of Single Obligor Limits
(6.4 a 3)
Add: - - - - - - - -
1% of the contract (sale) value in case of the sale of credit with
recourse (6.4 a 4)
Total RWE for Credit Risk (After Bank’s adjustments of Pillar II) 105,963,030 816,489 10,524,708 94,621,832 - 50,192,675 81,499,082 41,402,347

77
78
Schedule 4.30 (Ga):
Eligible Credit Risk Mitigants
As at 15 July, 2017 (31 Ashad 2074)
NPR ‘000’
Credit exposures Deposits Deposits Gold Govt. G’tee of Sec/G’tee G’tee of G’tee Sec/ Total
with with & NRB Govt. of of Other domestic of G’tee of
Bank other Securities Nepal Sovereigns banks MDBs Foreign
banks/FI Banks
Balance Sheet Exposures
Cash Balance - - - - - - - - - -
Balance With Nepal Rastra Bank - - - - - - - - - -
Gold - - - - - - - - - -

Investment in Nepal Government Securities - - - - - - - - - -
All claims on Government of Nepal - - - - - - - - - -
Investment in Nepal Rastra Bank securities - - - - - - - - - -
All claims on Nepal Rastra Bank - - - - - - - - - -
Claims on Foreign Government and Central Bank (ECA Rating 0-1) - - - - - - - - - -
Claims on Foreign Government and Central Bank (ECA Rating 2) - - - - - - - - - -
Claims on Foreign Government and Central Bank (ECA Rating 4-6) - - - - - - - - - -
Claims 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 requirements - - - - - - - - - -
Claims on domestic banks that do not meet capital adequacy - - - - - - - - - -
requirements
Claims on foreign bank (ECA Rating 0-1) - - - - - - - - - -
Claims on foreign bank (ECA Rating 2) - - - - - - - - - -
Claims on foreign bank (ECA Rating 3-6) - - - - - - - - - -
Claims on foreign bank (ECA Rating 7) - - - - - - - - - -
Schedule 4.30 (Ga):
Eligible Credit Risk Mitigants (Continued)
As at 15 July, 2017 (31 Ashad 2074)
NPR ‘000’
banks/FI Banks
Claims on Foreign bank incorporated in SAARC Region operating - - - - - - - - - -
with a buffer of 1% above their respective regulatory capital
requirement
Claims on Domestic Corporates - 102,160 - - - - - - 491 102,651
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) - - - - - - - - - -
Claims fulfilling all criterion 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 77,050 - - - - - - - - 77,050
Investment in equity and other capital instruments of institutions - - - - - - - - - -
Investment in equity and other capital instruments of institutions not - - - - - - - - - -
Other Assets - - - - - - - - - -
Off Balance Sheet Exposures - - - - - - - - - -
Forward Exchange Contract Liabilities - - - - - - - - - -
LC Commitments With Original Maturity Up to 6 months (domestic 91,395 - - - - - - - - 91,395
counterparty)
Foreign Counterparty ECA Rating 0-1 - - - - - - - - - -
Foreign Counterparty ECA Rating 2 - - - - - - - - - -

79
80
Schedule 4.30 (Ga):
Eligible Credit Risk Mitigants (Continued)
As at 15 July, 2017 (31 Ashad 2074)
NPR ‘000’
banks/FI Banks
L C Commitments With Original Maturity Over 6 months (domestic 76,814 - - - - - - - - 76,814
counterparty)

Bid Bond, Performance Bond and Counter Guarantee (domestic 229,695 - - - - - - - - 229,695
counterparty)
Foreign Counterparty ECA Rating 0-1 - - - - - - - - 4,075,700 4,075,700
Foreign Counterparty ECA Rating 2 - - - - - - - - 1,696,660 1,696,660
Underwriting commitments - - - - - - - - - -
Lending of Bank’s Securities or Posting of Securities as collateral - - - - - - - - - -
Repurchase agreements, Assets sale with recourse - - - - - - - - - -
Advance Payment Guarantee 633 - - - - - - - 1,692,829 1,693,462
Financial Guarantee 975 - - - - - - - 15,477 16,452
Acceptance and Endorsements 16,412 - - - - - - - - 16,412
Unpaid Portion of Partly paid shares and Securities - - - - - - - - - -
Irrevocable Credit Commitments(short term) - 60 - - - - - - 2,251,679 2,251,739
Irrevocable Credit Commitments(long term) - - - - - - - - - -
Claims on Foreign bank incorporated in SAARC Region operating - - - - - - - - - -
with a buffer of 1% above their respective regulatory capital
requirement
Other Contingent Liabilities 196,678 - - - - - - - - 196,678
Claim Received on Guarantee (As per directive 13/065/66) - - - - - - - - - -
Total Eligible CRM 689,651 102,220 - - - - - - 9,732,834 10,524,708
Schedule 4.30 (Gha):
Operational Risk NPR ‘000’
As at 15 July, 2017 (31 Ashad 2074)
S.N. Particulars
16.07.2015 15.07.2016 15.07.2017 15.07.2016
1 Net Interest Income 1,913,515 1,849,878 2,197,159
2 Commission and Discount Income 362,964 357,520 489,269
3 Other Operating Income 38,010 48,096 51,979
4 Exchange Fluctuation Income 613,936 629,555 610,569
5 Additional/ Deduction Interest Suspense during the period (14,520) 558 49,363
Gross Income (a) 2,913,905 2,885,607 3,398,339
Fixed Percentage (b) 15% 15% 15%
Gross Income as per Fixed Percentage[ c=(a*b)] 437,086 432,841 509,751
Capital Requirement for Operational Risk(d) (average of c) 459,893 435,027
Risk Weight (reciprocal of capital requirement of 10%) in 10 10
times (e)
Equivalent Risk Weight Exposure for Operational 4,598,926 4,350,273
Risk[f=(d*e)]
Pillar-II Adjustments
If Gross Income for all the last three years is negative
(6.4 a 8)
Total Credit and investments (net of Specific Provision)
Capital Requirement for operational risk (5%)
Risk Weight (reciprocal of capital requirement of 10%) in times
Equivalent Risk Weight Exposure (g)
Equivalent Risk Weight Exposure [(h=f or g)] 4,598,926 4,350,273

Schedule 4.30 (Nga):
Market Risk NPR ‘000’
As at 15 July, 2017 (31 Ashad 2074)
As on 15 July, 2017 As on 15 July, 2017 Previous Year
Currency Open Open Position Relevant Relevant Open
S. N. Position (NPR) Open Position (NPR) as on
(FCY) Position 15.07.2016
(NPR)
1 INR 1,580,126 2,529,387 2,529,387 2,241,631
2 USD 998 103,019 103,019 44,951
3 GBP (4) (489) 489 466
4 EUR (21) (2,492) 2,492 1,654
5 THB 30 92 92 95
6 CHF 42 4,460 4,460 359
7 AUD 38 3,024 3,024 4,349
8 CAD 54 4,409 4,409 3,325
9 SGD 63 4,752 4,752 2,795
10 JPY 1,983 1,808 1,808 4,185
11 HKD 101 1,329 1,329 1,631
12 DKK 57 905 905 1,488
13 SEK 53 652 652 1,257
14 SAR 29 800 800 562
15 QAR 2 62 62 61
16 AED 24 686 686 129
17 MYR 37 877 877 478
18 KRW 2,697 245 245 34
19 CNY 119 1,817 1,817 1,871
20 KWD - 68 68 137
21 BHD - 73 73
Total Open Position (a) 2,661,447 2,311,459
Fixed Percentage (b) 5% 5%
Capital Charge for Market Risk [c=(a*b)] 133,072 115,573
Risk Weight (reciprocal of capital requirement of 10%) in times (d) 10 10
Equivalent Risk Weight Exposures for Market Risk [e=(c*d)] 1,330,724 1,155,729

Schedule 4.31:
Key Indicators
FY FY FY FY FY
Particulars Indicators
2012/2013 2013/2014 2014/2015 2015/2016 2016/2017
1. Net Profit/Gross Income Percent 34.96 36.73 33.76 34.46 31.88
2. Earning Per Share Rs. 65.70 65.47 57.38 45.96 35.49
3. Market Value Per Share Rs. 1,820 2,799 1,943 3,600 2,295
4. Price Earning Ratio Ratio 27.70 42.75 33.86 78.33 64.67
5. Dividend (including bonus) on Percent 50.00 51.50 44.21 35.09 105.26
Share Capital
6. Cash Dividend on Share Capital Percent 40.00 41.50 19.21 1.75 5.26
7. Interest Income/Loan & Advances Percent 9.76 9.31 8.68 6.86 6.80
8. Staff Expenses/Total Operating Percent 29.79 33.80 32.13 32.52 28.50
Expenses
9. Interest Expenses on Total Deposit Percent 1.55 1.24 1.15 1.01 1.35
and Borrowings
10. Exchange Fluctuation Income/Total Percent 14.78 13.14 16.06 16.78 13.69
Income
11. Staff (statutory) Bonus/Total Staff Percent 29.24 28.30 27.01 27.29 27.00
Expenses
12. Net Profit/Loan and Advances Percent 5.26 5.08 4.60 4.08 3.58
13. Net Profit/Total Assets Ratio 2.67 2.51 1.99 1.98 1.84
14. Total Credit/Deposit Percent 58.63 56.87 48.92 56.88 62.20
15. Total Operating Expenses/Total Percent 3.10 2.67 2.42 2.28 2.49
Assets
16. Adequacy of Capital Fund on Risk
Weighted Assets
a. Core Capital Percent 11.03 10.83 11.67 14.08 19.58
b. Supplementary Capital Percent 1.51 1.44 1.43 2.30 1.50
c. Total Capital Fund Percent 12.54 12.27 13.10 16.38 21.08
17. Liquidity (CRR) Ratio 16.43 21.18 24.03 7.98 19.71
18. Non-performing Credit/Total Credit Percent 0.77 0.48 0.34 0.32 0.19
19. Base Rate Percent 6.34 5.18 4.92 4.47 6.47
20. Weighted Average Interest Rate Percent 4.12 7.09 5.27 4.64 5.01
Spread (different basis till 2012/13)
21. Book Net-worth Rs’000 4,617,574 5,088,091 5,948,555 7,524,175 11,864,025
22. Total Shares No. 18,539,000 20,416,720 22,481,612 28,124,260 40,057,153
23. Total Staff No. 454 460 433 435 495
24. Networth Per Share Rs. 249 249 265 268 296
25. Return on Equity Percent 26.38 26.27 21.69 17.18 11.98
26. Profit per Employee Rs’000 2,683 2,906 2,979 2,971 2,872

Schedule 4.32:
Significant Accounting Policies
Financial Year 16 July 2016 to 15 July 2017 (1 Shrawan 2073 to 31 Ashad 2074)
1. General Information
Standard Chartered Bank Nepal Limited (SCBNL or “the Bank”) has been in operation in Nepal since 1987. It was
initially registered as a joint venture operation. Today it is an integral part of Standard Chartered Group, which has
ownership of 70.21% in the company and remaining 29.79% is owned by the Nepalese public.
The Bank is registered with the office of company registrar as a public limited company and carries out commercial
banking activities in Nepal under the license from Nepal Rastra Bank (The Central Bank of Nepal) as Class “Ka” licensed
institution. The Bank is listed on Nepal Stock Exchange. The Bank’s ultimate parent company is Standard Chartered
Plc., (SCPLC), which is incorporated in the United Kingdom.
The Bank offers full range of banking products and services to wide range of clients encompassing individuals, mid-
market, local corporate, multinationals, large public sector companies, government corporations, airlines and hotels, as
well as the DO segment comprising of embassies, aid agencies, INGOs and NGOs.
2. Statement of Compliance
The financial statements (for regulatory purpose) have been prepared and approved by the Board of directors in
accordance with Nepal Financial Reporting Standards (NFRS) to the extent applicable and as published by the
Accounting Standards Board (ASB) – Nepal. The format of the Financial Statements is as prescribed by Nepal Rastra
Bank. The Profit and Loss appropriation is treated as Other Comprehensive Income (OCI).
Approval of financial statements

Accompanied financial statements have been adopted by the Board of Directors on its meeting held on 8 December
2017 and have been recommended for approval by shareholders in the Annual General Meeting
3. Basis of Preparation
The Bank, while complying with the reporting standards, makes critical accounting judgement as having potentially
material impact on the financial statements. The significant accounting policies that relate to the financial statements as
a whole along with the judgements made are described herein.
Where an accounting policy is generally applicable to a specific item, the policy is described within that relevant note.
NFRS requires the Bank to exercise judgement in making accounting estimates. Description of such estimates has
been given in the relevant sections wherever they have been applied.
4. This Regulatory purpose financial statements has been prepared under the historical cost convention on the accrual
basis of accounting (except for interest income on loans and advances which is accounted for on cash basis), and in
accordance with Nepal Financial Reporting Standards (NFRS) to the extent they are in conformity with the regulatory
requirements and in accordance with the Statutory requirements of Banks and Financial Institutions Act 2073 BS,
The Companies Act 2063, directives, circulars and guidelines issued by Nepal Rastra Bank (NRB) from time to time.
A reconciliation report between these Financial Statements and the NFRS compliant Financial Statements has been
presented in notes to Annual Accounts.
5. Use of Estimates
The preparation of financial statements in conformity with NFRS requires the Management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, income and expenses and disclosures relating to
the contingent liabilities reported in the financial statements. The Management believes that the estimates used in the
preparation of the financial statements are prudent and reasonable. Actual results could differ from these estimates. Any
revision to accounting estimates is recognised prospectively in the current and future periods.
6. Significant Accounting Policies
6.1 Income Recognition

Interest income on Loans and advances is accounted for on cash basis except for the month of Ashad where NRB
regulations allow for recognition of income for cash collected upto 15 Shrawan.
Interest income on discounted instruments is recognised over the tenor of the instrument on a constant effective yield
basis.

Commission on guarantees and letters of credit are recognised over the facility tenure, except for commission on sight
bills which is recognised upfront.
Fees on loans and credit cards are recognised at the inception of the transactions.
Dividend on equity shares is recognised as income when the right to receive the same is established, i.e. after it is
declared in the company’s Annual General Meeting.
6.2 Foreign Currency Transactions and Balances

Transactions in Foreign currency are recorded at exchange rates prevailing on the date of transaction. Exchange
differences arising on foreign exchange transactions settled during the year are recognised as trading gains/losses in
the Profit and Loss Account.
Monetary assets and liabilities denominated in foreign currencies are translated at mid-point exchange rates on a
daily basis and resultant exchange differences are recognised as revaluation gain/loss in the profit and loss account.
In conformity with the directives of Nepal Rastra Bank, 25% of the total revaluation gain is transferred to Exchange
Fluctuation Fund by charging to Profit and Loss Appropriation Account.
6.3 Loans, Advances and Bills Purchased

Classification and provisioning of Loans, Advances and Bills Purchased is carried out in accordance with the directives
issued by Nepal Rastra Bank.
Classification
Loans, Advances & Bills Purchased are classified into performing loans and Non Performing Loans based on
Management’s periodical internal assessment and NRB’s directives on classification. Further Performing Loans
are classified into Good Loan and Watch List Loan and Non Performing Loans are classified into Restructured/
Rescheduled, Substandard, Doubtful & Loss assets based on the criteria stipulated by NRB.
Loans and advances granted to staff in accordance with the Staff loan scheme as prescribed by Staff By laws are
reflected under Other Assets.
Provisioning
Loans Advances and Bills Purchased are stated net of specific & General Loan Loss provisions. Specific provisions are
maintained in line with the minimum provisioning norms laid down by NRB. The Bank also maintains a General Loan
Loss Provision at rates and as per the norms prescribed by NRB.
Write off
The Bank has written off unrecoverable loans and advances as per the procedures prescribed in the directives issued
by NRB. Amounts recovered against loans written off in earlier as well as current year are recognized as income in the
year of recovery.

6.4 Investments
Classification and valuation of Banks Investments is carried out in accordance with the directives issued by NRB.
Classification
Investments are classified as ‘Held to Maturity (HTM) or ‘Held for Trading’ (HFT) or ‘Available for Sale’ (AFS) at the
time of their purchase. Investments acquired by the Bank with the intention and ability to hold up to maturities are
classified as HTM. Investments acquired with the intention to trade by taking advantage of short term price/interest rate
movement are classified as HFT. All other investments are classified as AFS.
The Bank follows the settlement date accounting for its investments.
Valuation
Investments classified as HTM are carried at acquisition cost. Any premium or discount on acquisition is amortised
over the remaining period till maturity on the basis of a constant yield to maturity. Where in the opinion of management
and in accordance with NRB guidelines, there is a diminution in the value of any HTM security, which is other than
temporary, appropriate provisions are made and charged to Profit and Loss Account

Investments classified as AFS are marked to market regularly and any movement in the value is adjusted through
Investment Adjustment Reserve, while the permanent decline in value is charged to Profit and Loss Account. Similarly
increase in the recoverable value of the impaired equity investment (up to cost value) is recognised in Investment
Adjustment Reserve.
Investments classified as HFT are marked to market on a daily basis and any appreciation/depreciation in the value is
recognised in the profit and loss account.
Treasury Bills being discounted instruments are disclosed at cost including the pro rata discount accreted for the
holding period.
As required by NRB Directives, the Bank also maintains Investment Adjustment Reserve to the extent of 2% of Available
for Sale Portfolio. This Reserve is considered as Tier 2 capital.
All investments are subject to regular review according to the directives of Nepal Rastra Bank.
6.5 Property Plant & Equipment (PPE)

PPE are stated at acquisition cost less depreciation. Acquisition cost includes expenditures that are directly attributable
to the acquisition of the assets.
PPE Individually costing less than or equal to Rs. 400,000 (Rs. Four Lakhs) is expensed in the year of purchase.
Costs of refurbishment and renovation of leasehold/owned premises are capitalised provided they are in excess of Rs.
400,000 (Rs. Four Lakhs).
Computer software costing less than or equal to Rs. 40,000,000 (Rs. Four Crores) is expensed in the year of purchase.
Licence fees for the software paid by the Bank is amortised over the period of the licence.
Profit or loss on disposal of fixed assets is recognised in the profit and loss of the year.
Land is not depreciated. Depreciation of other assets is calculated using the straight-line method to amortise their cost
over their estimated useful lives, as follows:
S.N. Assets Types Life of an Asset
1. Equipment 36 months
2. Furniture & Fittings/Fixtures 36 months
3. Vehicle 36 months
4. Computers – PC, Printer, Laptop etc. 36 months
5. Computers – Server 60 months
6. Computer – ATM 84 months
7. Freehold Premises 600 months
8. Software Applications 36 months
Costs of refurbishment and renovation of leasehold premises are depreciated over the remaining period of that lease or
120 months whichever is less.
For additions during the year, depreciation is charged from the month the assets is put to use and for disposed assets,
depreciation is charged up to the month immediately preceding the month of disposal.
6.6 Accounting for Leases

Premises are taken as operating leases which are cancellable in nature. The expenses under operating leases as per the
lease agreements are charged to Other Operating Expenses in the Profit and Loss account.
Lease rental for premises are charged on straight line basis in accordance to the lease. All other expenses are
recognised when they become due for payment.
6.7 Retirement and Other Employee Benefits

The Bank operates a defined contribution plans as provident fund contribution of its employees and defined benefit
plans for the Gratuity payment requirement under its staff rules.
For defined contribution plans, the Bank pays contributions to the publicly administered provident fund plans on a
mandatory basis, and such amounts are charged to operating expenses. The Bank has no further payment obligations
once the contributions have been paid.

For funded defined benefit plans, the liability recognised in the Balance Sheet is the present value of the defined benefit
obligation at the Balance Sheet date less the fair value of plan assets. Such obligations are estimated on the basis of
the actuarial assumptions.

6.8 Taxation
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 tax asset is realised
or the deferred tax liability is settled.
The principal temporary differences arise on account of differences in depreciation of PPE, lease expenses, provisions
for gratuity, performance bonus and premium on development bonds between financial statements and tax bases.
Deferred tax created on temporary differences adjusted in PL Account is charged to PL Account while those charged to
PL Appropriation Account are charged to PL Appropriation Account .
Deferred tax assets are recognised where it is probable that future taxable profit will be available against which the
temporary differences can be utilised. Deferred tax assets are deducted from the calculation of core capital.
6.9 Stationery
Stationery purchased is expended directly for consumption.
6.10 Non Banking Assets

Non Banking Assets are accounted for as per the directives of Nepal Rastra Bank.
6.11 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.
Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer
probable that an outflow of resources would be required to settle the obligation, the provision is reversed.
Contingent assets are neither recognised nor disclosed in the financial statements. However, contingent assets are
assessed continually and if it is virtually certain that an economic benefit will arise, the asset and related income are
recognised in the period in which the change occurs.
Liabilities on account of derivative contracts are reported under Contingent liabilities under sub heading Outstanding
Liabilities for Forward Exchange Contract. These include notional principal on outstanding forward rate agreements.
6.12 Provision for reward points awarded to customers

The Bank has a policy of awarding reward points to customers for credit card spends. Provision for such reward points
is made on the basis of behavioural analysis of utilisation trends.
6.13 Provision for Staff Bonus

Provision for staff bonus is computed at 10% of net profit after such staff bonus of regulatory purpose financial
statement.
6.14 Rounding off

The financial statements are presented in Nepalese Rupees, rounded off to the nearest rupee.

Schedule 4.33:
Notes to Accounts
Financial Year 16 July 2016 to 15 July 2017 (1 Shrawan 2073 to 31 Ashad 2074)
1. Provision for Bonus

Provision for bonus has been calculated and provided for at 10% of net profit, after making adjustments for loan loss
provision and bonus.
2. Staff Housing Fund

The Staff By-Laws approved by our Board and also approved by NRB, has a provision for extending housing loans to
the eligible staff at concessional rates. Hence a separate housing fund has not been created in accordance with Labour
Act, 2048.
3. Taxation Assessment Status
Financial Year 2005-06

For the financial year 2005-06 (2062-63) the Revenue Tribunal had decided the case in the banks favour. The same has
been challenged by the LTPO in the Supreme Court and the case in under consideration. The total amount that was
demanded by LTPO is Rs. 2.6 Mio.

For financial year 2012-13 (2069-70) LTPO had done the reassessment of tax in the previous year. A demand of Rs. 0.16
Mio was made.
Financial Year 2013-14 to 2015-16

The self assessment returns filed by the Bank for financial year 2013-14 (2070-71 BS) to 2015-16 (2072-73 BS), has not
yet been opened for reassessment by the LTPO.
4. Provision for Gratuity

Bank has booked the cost for gratuity liability on actuarial basis. The net amount charged/movement is given below:
Defined Benefit Plan – Liabilities

Rs. ‘000
Particulars 2073/74 2072/73 2071/72
Opening Liability (excluding pre-payment) 250,982 231,226 209,354
Interest Charge (unwinding interest) 19,921 15,991 14,475
Current Service cost 22,887 18,716 17,351
Less: Gratuity Paid during the year (1,932) (14,071) (7,855)
Closing Liability
Actuarial Gain or Loss 59,396 (880) (2,099)
Assessed Liability (actuarial assessment) 351,254 250,982 231,226
Rs ‘000
Defined Benefit Plan – Assets
Particulars 2073/74 2072/73 FY 2071/72
Opening Assets 236,512 148,443 134,093
(+) Estimated Investment Returns for the year 21,484 14,035 10,473
(+) Additional Investment during the year 91,932 88,105 11,732
(-) Withdrawal (payouts during the year) (1,932) (14,071) (7,855)
Closing Assets 347,996 236,512 148,443
Net Defined Benefit Plan Liability 3,259 14,471 82,783

Net Charge 80,720 19,793 19,254
Net Charge - P&L 21,324 20,673 21,353
Net Charge (credit) – SoCE (P&L App.) 59,396 (880) (2,099)

Principal actuarial assumptions
Particulars Basis
Financial Assumptions
Discount Rate 7%
Inflation 5%
Salary inflation 6%
Investments of Plan Assets % of the fund
Interest bearing term deposits with the Bank 100%
5. Performance Bonus
The Bank’s total reward consists of fixed and variable compensation. Performance Bonus is a variable component
based on the Bank’s overall performance and individual employee’s annual performance. It is provisioned on the basis
of the individual targets set and paid in line with the actual achievements. A total of Rs 82,011,762 has been provided
for the performance bonus in this year.
6. Dividend and Bonus

The Board has recommended Rs. 210,827,123 as cash dividend (for tax purposes) and Rs. 4,005,715,333 bonus shares
as appropriation for the reported year. This proposal of the Board has been shown under Proposed Dividend for the
cash portion and under Share Capital for the Proposed Bonus Shares issue respectively.
7. Training and Corporate Social Responsibility (CSR) Fund Allocations

As per Nepal Rastra Bank regulation, the Bank is required to create a fund for Corporate Social Responsibilities related
activities equivalent to one percent of the net profit for FY 2016/17 i.e. fund of Rs. 14,215,961 from its Net Profit. The
Bank however has not separately provided for this as Standard Chartered Bank funded projects viz. Seeing is Believing
and Build Nepal Program in Nepal received financial grant of Rs. 39,265,811 from Standard Chartered Bank in FY
2016/17. The financial grant received during the period for running projects of Standard Chartered Bank constituted
more than One Percent of the profit of Standard Chartered Bank Nepal Limited for FY 2016/17.
Similarly, as per Nepal Rastra Bank regulation, the Bank is required to spend 3% of staff cost of previous FY 2015/16
i.e. Rs. 14,648,695 in the Training & Development of the staff. The Bank has spent Rs. 5,194,596 in this head, besides
this, employees of the Bank being an integral part of the Standard Chartered Group are required to undergo classroom,
virtual, e-Learning courses – various trainings modules of the Standard Chartered Group which are free of cost to the
Bank. In view of that, no separate fund is created for the Training and Development.
8. Investment Adjustment Reserve

There has been change in the Investments Adjustment Reserve due to change in market price of Investments classified
as Available for sale (AFS).

The total decreases this year amounts to Rs. 124,999,166 as per below table.
Particulars Balance Balance Remarks

15.07.2017 15.07.2016
Total Available For Sale (AFS) Investments 55,985,500 55,985,500
Less; Exempted for Reserve creation as per 3,735,500 3,735,500 Credit Information Company and
NRB directives NepalClearing House Ltd are exempted
Net AFS Investment 52,250,000 52,250,000
Mark to Market value of Portfolio 269,400,288 398,742,460

Opening Investment Adjustment 1,045,000 1,045,000
Reserve@2%
Additional Investment Adjustment Reserve 4,343,006 -

@2%
Total Investment Adjustment Reserve @2% 5,388,006 1,045,000

MTM reserve 217,150,288 346,492,460
Closing balance of Investment Adjustment 222,538,293 347,537,460 Balance reported as Other Reserves
Reserve
9. Unpaid Dividend
As on the balance sheet date, unpaid dividend for over five years amounts to Rs. 6,341,583.The Bank published a
notice in a national daily detailing the information about the unclaimed dividend on 11th August 2017.
10. Provision for Taxation

a. Current & Deferred Tax
Current tax has been provided for in the books as per the provisions of Income Tax Act 2058 and Rules thereon
prevailing as on the year end. Following table details the calculation of Income Tax provisions for the current financial
year:
Particulars Amount (Rs. ‘000) Permanent Difference Temporary Difference

Profit before Tax 2,029,081
Adjustment for tax purposes
(presented on net basis)
Depreciation 6,909 6,909
Repairs & Maintenance 3,866 3,866
Gratuity (70,608) (70,608)
Performance & Other Bonus 9,389 9,389
Premium on Development Bond 2,975 2,975
Dividend Income (6,936) (6,936) -
Lease expenses 7,560 - 7,560
Miscellaneous 2,805 2,805 -
Total 1,985,041 (4,131) (39,909)
Current & Deferred Tax @30% 595,512 11,973
Net Tax charge for current year 607,485
b. Deferred Tax
Deferred tax is calculated on temporary differences between the book values of financial assets/liabilities and tax bases
of assets/liabilities using the statutory tax of 30%.

The items attributable to deferred tax assets and liabilities and their movement are as follows: (in Rs ‘000)
Balance 15 Jul 2016 Movement during Balance
the year 15 Jul 2017
Deferred Tax Assets
Fixed Assets 38,469 3,232 41,701
Gratuity Provision 4,341 (3,363) 978
Provision for Performance bonus 14,275 2,817 17,092
Lease expenses 12,971 2,269 15,240
Premium on Development Bond 7,823 893 8,716
Total Deferred Tax Assets 77,880 5,847 83,727
Deferred Tax Liabilities - -
Net – Deferred Tax Asset 77,880 5,847 83,727
The deferred tax impact of Rs. 17,819 on account of actuarial re-measurement has been credited in the profit and loss
appropriation account.
11. Paid up share capital

Paid up share capital of the Bank has moved over the years as follows:
Financial Year Cumulative Paid up Capital Rs. Remarks

1987-88 (2044-45 BS) 30,000,000 Opening Share Capital at Rs. 60 paid up
1990-91 (2047-48 BS) 50,000,000 Capitalisation of Reserve Rs. 100 paid up
1992-93 (2049-50 BS) 100,000,000 Issuance of 100% Bonus Shares
2008-09 (2065-66 BS) 1,398,483,600 Issuance of 50% Bonus Shares
2015-16 (2072-73 BS) 3,749,901,333 Issuance of 33.33% Bonus Shares
2016-17 (2073-74 BS) 4,005,715,333 Issuance of 2,558,140 units of shares by way of FPO
12. Related Party Disclosures

Accounting Policy
The Bank identifies the following as the related parties under the requirements of NAS 24.
i) Ultimate parent company as a result of the bank’s major shareholders and companies within definition of the Group of
the ultimate parent company
ii) Post employment benefit plan for the benefit of the employees
iii) Directors of the bank and their close family members if any
iv) Key Managerial Personnel and their close family members if any

Explanatory Notes
Ultimate Parent and the Group

i) Ultimate Parent Company : Standard Chartered Plc, London UK
ii) Major Shareholders
(a) Standard Chartered Grindlays Ltd, Australia: Holding 46.81% of shares
(b) Standard Chartered Bank, UK: Holding 23.40% of shares
Related parties with whom transactions have occurred during the current year.
(a) Head Office and Branches of Head Office
1. Standard Chartered Bank, UK
2. Standard Chartered Bank, India
3. Standard Chartered Bank, Japan
4. Standard Chartered Bank, Singapore
5. Standard Chartered Bank, USA
6. Standard Chartered Bank, Germany
7. Standard Chartered Bank, Indonesia
8. Standard Chartered Bank, Qatar
9. Standard Chartered Bank, U.A.E
10. Standard Chartered Bank, Bangladesh
11. Standard Chartered Bank, Sri Lanka
12. Standard Chartered Bank, Vietnam
(b) Subsidiaries of Head Office (Standard Chartered Bank UK)

1. Standard Chartered Bank (Mauritius) Limited
2. Scope International Private Limited
3. Standard Chartered Bank (Hong Kong) Limited
4. Standard Chartered Bank (China)
5. Standard Chartered Bank Malaysia
6. Standard Chartered Thailand
7. Standard Chartered Pakistan
The Bank being a subsidiary of an international bank avails of support services from its global support functions
governed by approved agreements. Foreign currency funds have mainly been placed with Standard Chartered Bank
(SCB) network points. These funds are all under the management of Standard Chartered Group with high governance
levels and acceptable country risks and returns.
Rs. ‘000
SCB Group
Transaction during the year
2016-17 2015-16
Placements (total placements made during the year) 2,345,733,346 2,462,434,945
Interest on placements 220,347 155,769
Shared Service Center Costs 96,994 62,726
Training Fees - -
Other transactions - -
Rs. ‘000
SCB Group
Year end Balance
15.07.2017 15.07.2016 16.07.2015
Placements 22,941,564 14,656,860 11,973,546
Nostro Balances 778,636 1,204,156 652,392
Interest Receivable 60,727 31,435 39
Shared Service Cost Payable - - -
Trade Contingents 5,363,496 4,958,486 1,130,403
Fee Income Receivables 110,917 16,543 44,123

Post Retirement Employee benefit plan for the benefit of Bank’s employees
The Bank operates an approved retirement benefit plan for the benefit of its employees. The amount of the contribution
made to such plan and amount of payments made to the Bank’s employees under the Bank’s staff rules have been
described in note 4.
Transactions with and payments to directors of the bank

Following payments have been made to the directors of the bank
Rs. ‘000
Particulars 2016-17 2015-16
Directors’ sitting fees 554 703
Directors’ travel and meeting expenses 495 576
Other directors’ expenses (if any) - -
Remuneration and bonus of the executive director(s) 21,036 21,259
Other benefits of the executive director(s) 13,146 12,505
35,231 35,042
Payments to the executive director are net of taxes, tax amounted for Rs. 15,767 thousand (previous year Rs 16,066
thousand).
Details of the board of directors and their composition, and changes if any during the period, are disclosed in the
director’s report.
There has been no payment or transactions with the close family member of the directors, except in the normal course
of banking business.
Transactions with and payment to key management personnel (other than directors)
compensation
The Bank defines its executive committee members as the key management personnel other than its directors. One
of executive committee members is the director of the Bank and payments and transactions relating to the executive
director are disclosed above.
Rs. ‘000
Remuneration and current employee benefits 25,524 22,810
Terminal benefit (gratuity) 10,365 5,645
Bonus (statutory bonus and welfare assistance) 14,609 14,437
Performance Bonus 9,583 9,245
Vehicle benefit - car allowance 3,960 3,960
Other benefits and payments 1,907 1,722
65,948 57,819
Benefits are paid as per the Staff Service bye-laws. Statutory bonus is paid in accordance with the requirement of the
Bonus Act. Performance bonus is paid in accordance with the performance assessment procedures practiced within
the Bank. Vehicle allowance is as per the Bank’s rules.
Details of the key management personnel and their composition, and changes if any during the period, are disclosed in
the key management personnel report.
There has been no payment or transactions with the close family member of the key managerial personnel except in the
normal course of banking business.

13. Operating Lease Commitment
The future minimum lease payment under non-cancellable operating leases, where the Bank is lessee is NIL.
recognised when they become due for payment. The change in the accounting policy has resulted in an increase of
lease expenses by Rs 7,560,495 the current year and Rs 10,659,000 in the previous year.
14. Details of Lending/Investment qualifying as Deprived sector lending

Rs. Mio
S. N. Particulars Outstanding % of total Requirement
Loans
a. As of 15th July 2017 1,840 5.18% 5. %
a. As of 15th July 2016 1,550 5.94% 5. %
15. Concentration of Deposits, Loans & advances and Contingents

Rs. Mio
S. N. Particulars As at 15th July 2017 As at 15th July 2016
a. Total deposits 63,872 55,727
b. Total deposits of twenty largest depositors 26,366 18,469
c. Total Deposit of a single largest depositor 10,795 8,790
d. Percentage of deposits of twenty largest depositors to total 41.28% 33.14%
deposit of the Bank
e. Percentage of highest single depositor 16.90% 15.77%
f. Total Loans & Advances 39,730 31,697
g. Total loans & advances of twenty largest borrowers 16,911 14,629
h. Total loans & advances to a single largest borrower 2,193 2,227
i. Percentage of twenty largest borrowers to total loans and 42.57% 46.15%
advances
j. Percentage of highest exposure in a single largest borrower 5.52% 7.03%
k. Total Contingent Liabilities 26,896 25,249
l. Total Contingent to a single largest customer 381.92 382.13
m. Highest exposure in a single largest customer 1.42% 1.51%
16. Reconciliation status

Particulars Total Amount < 3 Months >3<9 Months > 9<12 > 12
Months Months
Branch Adjustments Accounts - - - - -
Agency Accounts 113,645,369 105,611,574 8,033,796
The reasons for differences are fully identified and are being addressed in regular course of business.
17. Summary of Loans and Advances Disbursed, Recovered and Principal and Interest
Written-off during the year:
Rs. ‘000
Particulars Amount
Loans Disbursed 74,303,084
Loans Recovered 66,270,593
Loans Written-off 0
Interest Written-off 0

18. Summary of Changes in Deposit Liabilities :
Rs. ‘000
Particulars Balance as at Received/ Balance as at
15.07.2016 (Withdrawn) 15.07.2017
Current and Margin Accounts 14,273,161 (1,056,006) 13,217,155
Saving Account 26,911,357 (4,113,865) 22,797,492
Call Deposits 11,328,605 (6,567,331) 4,761,274
Fixed Deposits 3,214,055 19,882,909 23,096,964
Total 55,727,178 8,145,707 63,872,885
19. Weighted Average Interest Spread:

Particulars Rate %
a. Weighted average yield on loans and investments (Gsec) 8.07
b. Average Cost of local currency deposits 3.06
c. Spread (Yield - Cost) i.e. c=b-a 5.01

20. Particulars of Amortised Expenses yet to be Expensed Off:
Rs. in ‘000
Particulars Amount
Software Costs -
Licence Fees -
Premium on Development Bonds -
Total -
21. Classification of Assets and Liabilities based on Maturity

Rs. In Mio
Particulars 1-90 91-180 181-270 271 Days - Over 1 Total
Days Days Days 1 Year Year
Assets
Cash Balance 812 - - - - 812
Balance with Banks & FIs 8,117 - - - - 8,117
Investment in Foreign Banks 9,802 516 - - - 10,318
Call Money 12,624 - - - - 12,624
Government Securities 2,945 1,140 - 196 257 4,538
Nepal Rastra Bank Bonds - - - - - -
Inter Bank & FI Lending - - - - - -
Loans, Advances & Bills 13,949 5,341 2,246 2,065 16,129 39,730
Purchased
Interest Receivable 55 6 - 0 2 63
Reverse Repo - - - - - -
Receivables from other - - - - - -
Institutions under Commitment
Payments under - - - - - -
S.No. 20,21 & 22
Other Assets - - - 774 385 1,159
Total Assets 48,303 7,003 2,246 3,035 16,772 77,359

Liabilities
Current Deposits 5,812 - - - 6,610 12,422
Saving Deposits (Including call) 10,595 - - - 16,964 27,559
Fixed Deposits 15,700 2,943 2,325 1,906 224 23,097
Debentures and Bonds - - - - - -
Borrowings - - - - - -
Call/Short Notice - - - - - -
Inter-bank/Financial Institutions - - - - - -
Refinance - - - - - -
Others - - - - - -
Other Liabilities and Provisions 747 197 - 499 526 1,969
Sundry Creditors 395 - - - - 395
Bills Payable 77 - - - - 77
Interest Payable 289 - - - - 289
Provisions - 197 - - 472 669
Others - - - 499 - 499
Payable to other institutions - - - - - -
under Commitment
Irrevocable Loan Commitment 5,792 114 228 144 314 6,591
Letter of Credit/Guarantee (Net 3,720 2,002 934 1,974 5,980 14,610
of Margin)
Repo - - - - - -
Payable under s.no.11 - - - - - -
Others 209 - - - 11,824 12,032
Total Liabilities 42,575 5,256 3,486 4,522 42,442 98,281
Net Financial Assets 5,729 1,747 (1,240) (1,488) (25,670) (20,922)

Cumulative Net Financial Assets 5,729 7,476 6,236 4,748 (20,922) -
22. Borrowing by Bank against the collateral of own asset is Nil.
23. Details of Customer complaints

S. N. Particulars For the fiscal
year 2016/17
a. No. of complaints pending at the beginning of the year 11
b. No. of complaints received during the year 718
c. No. of complaints redressed during the year 724
d. No. of complaints pending at the end of the year 5
24. Penalties
There were no penalties paid by the Bank during the reported year to the regulators i.e. NRB, Company Registrar’s
Office, SEBON and NEPSE.
25. Interest Realisation after Year End

Bank has utilised the facility given in Unified Directive 4(5)(1) for accounting in income the interest on customer loans
and advances which were due as at end of financial year and were collected within 15 days of end of financial year.
Such amount has been Rs. 12,609 thousand.

26. Regulatory Profit and NFRS Profit reconciliations
2016-17 2015-16
Profit as per Regulatory accounts 1,421,596,136 1,292,494,632
Govt. bond - adjustment to income
Notional Interest - staff Loan 20,155,511 15,961,000
Notional Interest - staff cost (20,155,511) (15,961,000)
Loan Processing Fee (71,417,102) (46,207,918)
Loan amortised cost interest 49,130,524 12,535,000
Accrued Interest (P/Y difference) 61,972,541 (4,074,668)
Adjust Loan Loss Provision 301,728,548 215,468,928
Adjust Reversal of loan loss (210,394,339) (240,965,683)
Deferred Tax (24,370,980) (12,826,421)
Reversal of previous impairments 48,260,991
Share Issue Expenses 21,741,635
NFRS Profit 1,549,986,963 1,264,684,862
27. Country Governance Framework with Chart.

The diagram below illustrates the high level risk committee structure.
Board of Directors
Audit Committee Risk Committee
Executive Committee (EXCO) (Board Level) (Board Level)
Asset & Liability

Recruitment
Committee Executive Risk Committee (ERC)
Committee
(ALCO)
Financial
Credit Issues Crime Risk
Committee Committee
(CIC) (FCRC)

Schedule 4.34:
Statement of loan availed by bank’s promoter/
promoters’ group from other bank and financial
institutions by pledging their shares.
as on 15th July 2017 (31 Ashad 2074)
S.N. Name of Shares under the ownership Description of Loan Remarks

Promoter/ of Promoter
Shareholders Percentage Name of other bank/ Loan No. of
under Total no. of of total financial institution amount shares
Promoters’ shares paid up from which loan has Rs. pledged
Group capital been taken
1
2
3
4
5

Schedule 4.35:
Comparison of Unaudited and Audited Financial
Statement as of FY 2073/74
NPR ‘000’
As per As per Variance

Unaudited Audited Reasons for
S. N. Particulars
Financial Financial In Amount In % Variance
Statement Statement
1 Total Capital and Liabilities 77,445,283 77,390,182 (55,101) -0.07%
(1.1 to 1.7)
1.1 Paid up Capital 4,005,715 8,011,431 4,005,715 100.0% Proposed issue of Bonus
Shares
1.2 Reserve and Surplus 8,158,836 3,852,595 (4,306,241) -52.8% Change in Profits,
Investment value & Proposed
appropriations
1.3 Debenture and Bond - - - 0.0%

1.4 Borrowings - - - 0.0%
1.5 Deposits (a+b) 63,872,885 63,872,885 - 0.0%
a. Domestic Currency 43,160,854 43,160,854 - 0.0%
b. Foreign Currency 20,712,031 20,712,031 - 0.0%
1.6 Income Tax Liability (34,937) (18,416) 16,521 47.29% Change in Tax provision
1.7 Other Liabilities 1,442,784 1,671,687 228,903 15.9% Proposed dividend,

Gratuity, Staff Bonus &
Reclassification of Sundry
Debtors/Creditors
2 Total Assets (2.1 to 2.7) 77,445,283 77,390,182 (55,101) -0.1%

2.1 Cash and Bank Balance 8,928,302 8,928,302 - 0.0%
2.2 Money at Call and Short Notice 12,623,564 12,623,564 - 0.0%
2.3 Investments 15,761,367 15,632,025 (129,342) -0.8% Change in market value of
Investments
2.4 Loans and Advances (a+b+c+d+e+f)* 39,203,690 39,263,690 60,000 0.2%

a. Real Estate Loan 2,705,625 2,705,625 - 0.0%
1. Residential Real Estate Loan (Except 934,464 934,464 - 0.0%
Personal Home Loan upto Rs.10
million)
2. Business Complex and Residential - - -
Apartments Construction Loan
3. Income generating Commercial - - -
Complex Loan
4. Other Real Estate Loan (including 1,771,160 1,771,160 - 0.0%
land purchase and plotting)
b. Personal Home Loan of Rs. 10 6,058,461 6,058,461 - 0.0%
million or Less
c. Margin Type Loan - - -
d. Term Loan 2,604,301 2,604,301 - 0.0%
e. Overdraft/ TR Loan/WC Loan 17,032,160 17,092,160 60,000 0.4% Due to change in the loan
loss provisions
f. Others 10,803,144 10,803,144 - 0.0%

2.5 Fixed Assets 102,918 102,918 - 0.0%
2.6 Non Banking Assets - - - 0.0%
2.7 Other Assets 825,442 839,683 14,241 1.7% Reclassification of Sundry
Debtors/Creditors

Schedule 4.35:
Comparison of Unaudited and Audited Financial
Statement as of FY 2073/74 (Continued)
NPR ‘000’
As per As per Variance

Unaudited Audited Reasons for
S. N. Particulars In
Financial Financial In % Variance
Statement Statement Amount
3 Profit and Loss Account
3.1 Interest Income 3,058,891 3,060,619 1,728 0.1% Interest income
adjustment
3.2 Interest Expense 863,460 863,460 - 0.0%

A. Net Interest Income (3.1 - 3.2) 2,195,431 2,197,159 1,728 0.1%
3.3 Fees, Commission and Discount 450,757 489,269 38,512 8.5% Reclassification
3.4 Other Operating Income 90,491 51,979 (38,512) -42.6% Reclassification
3.5 Foreign Exchange Gain/Loss (Net) 610,569 610,569 - 0.0%

B. Total Operating Income (A+3.3+3.4+3.5) 3,347,248 3,348,976 1,728 0.1%
3.6 Staff Expenses 547,964 548,556 592 0.1% Additional expenses

3.7 Other Operating Expenses 514,010 512,849 (1,161) -0.2% Expenses reversal
C. Operating Profit Before Provision 2,285,274 2,287,571 2,297 0.1%

(B -3.6 - 3.7)
3.8 Provision for Possible Losses 361,729 301,729 (60,000) -16.6% Change in the loan
loss provisions
D. Operating Profit (C -3.8) 1,923,546 1,985,843 62,297 3.2%
3.9 Non Operating Income/Expenses (Net) 8,113 8,113 - 0.0%

3.10 Write Back of Provision for Possible Loss 229,978 229,978 - 0.0%
E. Profit from Regular Activities 2,161,637 2,223,934 62,297 2.9%
(D+3.9+3.10)
3.11 Extraordinary Income/Expenses (Net) 8,055 8,055 - 0.0%

F. Profit before Bonus and Taxes (E +3.11) 2,169,692 2,231,989 62,297 2.9%
3.12 Provision for Staff Bonus 197,245 202,908 5,663 2.9% Change in profits
3.13 Provision for Tax 590,495 607,485 16,990 2.9% Change in profits
G. Net Profit/Loss (F - 3.12 - 3.13) 1,381,953 1,421,596 39,643 2.9%
* Loans & advances are shown on net value.

Schedule 4 A:
Unaudited Financial Results (Quarterly)
As at the end of Fourth Quarter (15/07/2017) of the Fiscal Year 2073/74 ( FY 2016-2017)
NPR ‘000’
This Previous Corresponding

Quarter Quarter Previous Year
S.N. Particulars
Ending Ending Quarter Ending
(Unaudited) (Unaudited) (Audited)
1 Total Capital and Liabilities 77,445,283 79,584,178 65,580,127
1.1 Paid-up Capital 4,005,715 3,749,901 2,812,426
1.2 Reserves and Surplus 8,158,836 4,838,557 4,761,090
1.3 Debenture and Bond - - -
1.4 Borrowings - - 500,000
1.5 Deposits (a+b) 63,872,885 69,567,471 55,727,178
a Domestic Currency 43,160,854 42,158,017 37,883,973
b Foreign Currency 20,712,031 27,409,454 17,843,205
1.6 Income Tax Liability (Net) (34,937) 6,576 -
1.7 Other Liabilities 1,442,784 1,421,673 1,779,433
2 Total assets 77,445,283 79,584,178 65,580,127
2.1 Cash & Bank Balance 8,928,302 8,856,008 3,972,332
2.2 Money at Call and Short Notice 12,623,564 16,356,464 6,069,660
2.3 Investments 15,761,367 16,210,243 23,094,622
2.4 Loans and Advances 39,203,690 37,355,946 31,697,345
a. Real Estate Loan 2,705,625 2,471,822 1,773,787
1. Residential Real Estate Loan (Except Personal Home Loan upto 934,464 920,213 572,765
Rs 10 million)
2. Business complex and residential apartments construction loan - - -
3. Income generating Commercial Complex Loan - - -
4. Other Real Estate Loan (including land purchase and plotting) 1,771,160 1,551,610 1,201,022
b. Personal Home Loan of Rs. 10 million or less 6,058,461 5,566,422 4,835,523
c. Margin Type Loan - - -
d. Term Loan 2,604,301 1,974,898 1,987,523
e. Overdraft/ TR loan/WC loan 17,032,160 17,301,565 14,455,608
f. Others 10,803,144 10,041,238 8,644,904
2.5 Fixed Assets 102,918 87,684 71,306
2.6 Non Banking Assets -
2.7 Other assets 825,442 717,833 674,863
Up to
Up to
Up to This Corresponding
3 Profit and Loss Account Previous
Quarter Previous Year
Quarter
Quarter
3.1 Interest Income 3,058,891 2,063,519 2,415,583
3.2 Interest Expense 863,460 507,983 565,705
A Net Interest Income 2,195,431 1,555,535 1,849,878
3.3 Fees, Commission and Discount 450,757 361,321 357,520
3.4 Other Operating Income 90,491 52,485 48,096
3.5 Foreign Exchange gain / Loss (Net) 610,569 479,544 629,555
B Total Operating Income 3,347,248 2,448,886 2,885,049
3.6 Staff Expense 547,964 388,086 484,136
3.7 Other Operating Expenses 514,010 336,438 438,914

Schedule 4 A:
Unaudited Financial Results (Quarterly) (Continued)
As at the end of Fourth Quarter (15/07/2017) of the Fiscal Year 2073/74 ( FY 2016-2017) NPR ‘000’
This Quarter Previous Corresponding

Ending Quarter Ending Previous Year
S.N. Particulars
(Unaudited) (Unaudited) Quarter Ending
(Audited)
C Operating Profit Before Provision 2,285,275 1,724,363 1,961,999
3.8 Provision for Possible Losses 361,729 110,372 260,751
D Operating Profit 1,923,547 1,613,991 1,701,248
3.9 Non Operating Income / Expense ( Net) 8,113 6,395 37,853
3.10 Write back of Provision for Possible Losses 229,978 46,342 257,974
E Profit from Regular Activities 2,161,638 1,666,727 1,997,074
3.11 Extraordinary Income/ Expenses ( Net) 8,055 5,718 1,787
F Profit Before Bonus and Taxes 2,169,692 1,672,444 1,998,862
3.12 Provision for Staff Bonus 197,245 152,040 181,715
3.13 Provision for Tax 590,495 456,121 524,653
G Net Profit / Loss 1,381,953 1,064,283 1,292,495
At the End of
At the End
At the End of Corresponding
4 Ratios of Previous
This Quarter Previous Year
Quarter
Quarter
4.1 Capital Fund to RWA 22.04% 16.89% 16.49%
4.2 Non Performing Loan ( NPL) to Total Loan 0.19% 0.23% 0.32%
4.3 Total Loan Loss Provision to Total NPL 685.80% 531.55% 387.35%
4.4 Cost of Funds (LCY) 3.06% 2.64% 1.25%
4.5 Credit to Deposit Ratio (as per NRB Directive) 72.34% 75.77% 70.31%
4.6 Base Rate 6.47% 5.97% 4.47%
4.7 Average Yield 8.07% 7.73% 5.89%
4.8 Net Interest Spread 5.01% 5.09% 4.64%
Note:
Loans and Advances includes Bills Purchased amount, figures are shown in Net Value. Figures have been regrouped wherever
necessary. Above figures may change with the audited figures if modified by the External Auditors or the Regulators.

Disclosure as per Bank’s disclosure policy under the
Capital Adequacy Framework of Nepal Rastra Bank
1. Capital structure and capital adequacy
a. Tier 1 capital and a breakdown of its components;
As on 15.07.2017
Core Capital (Tier 1) 11,119,338,648
a Paid up Equity Share Capital 4,005,715,333
b Share Premium -
c Proposed Bonus Equity Share 4,005,715,333
d Statutory General Reserves 3,181,848,015
e Retained Earnings 9,786,370
f Current year profits -
g Other Free Reserve -
h Less : Deferred Tax Assets (83,726,403)
i Less : Deferred Revenue Expenses -
b. Tier 2 capital and a breakdown of its components;
As on 15.07.2017
Supplementary Capital (Tier 2) 855,762,876
a General loan loss provision 411,952,900
b Exchange Equalization Reserve 438,421,970
c Investment Adjustment Reserve 5,388,006
c. Detailed information about the Subordinated Term Debts with information on the outstanding amount, maturity, and
amount raised during the year and amount eligible to be reckoned as capital funds.
• Not applicable.
d. Deductions from capital;

• Rs. 83,726,403.
e. Total qualifying capital;

• Rs 11,975,101,524.
f. Capital adequacy ratio;

• 21.08%.
g. Summary of the bank’s internal approach to assess the adequacy of its capital to support current and future
activities, if applicable; and
Board and Senior Management Oversight

Ultimate responsibility for setting our risk appetite boundaries and for the effective management of risk rests with the
Board.
The Bank management is responsible for understanding the nature and level of risk taken by the Bank and relating the
risk to the capital adequacy level. The Country Executive Risk Committee (CERC) reviews Credit Risk, Operational Risk,
Market Risk, Reputational Risk and country cross-border risk; analyzes the trend, assesses the exposure impact on
capital and provides a summary report to the Executive Committee.
The Assets and Liabilities Committee is responsible for the management of capital and establishment of, and
compliance with, policies relating to balance sheet management, including management of our liquidity, capital
adequacy and structural foreign exchange and interest rate exposure and tax exposure.

In respect of Operational Risk, this is managed through Country Executive Risk Committee which exercises oversight
of the Bank’s operational risk profile to ensure that risk exposures are managed in a manner consistent with the
Operational Risk Framework and contained within the Bank’s risk appetite. The responsibility for daily management of
Operational Risk exposures rests with Business and Business Support Functions. Country Operational Risk Officer has
been appointed with the key responsibilities to ensure consistency in the application of the Operational Risk Framework
across all areas of operational risk management by monitoring the controls associated with the Operational Risk
Framework processes and working with the Chief Risk Officer to remediate identified gaps.
With regard to Market Risk, the Financial Market Operations maintain net open position of all currencies on a daily
basis and provides data to Head FM who reviews and analyzes the trend, assesses the exposure impact on capital and
provides a summary report to the ALCO. The net open position report is also discussed at the ALCO.
Executive Committee reviews the inputs received from CERC and ALCO and provides a synopsis to the Board along
with its view on the risks exposure and the adequacy of capital, for review and noting.
Sound Capital Assessment

In order to ensure a sound capital assessment process, all three risks that have direct impact on the capital adequacy
level are managed in a structured manner with clear roles and responsibilities.
Effective risk management is fundamental to being able to generate profits consistently and sustainably and is therefore
a central part of the financial and operational management of the Bank. Through the Risk Management Framework,
we manage enterprise-wide risks with the objective of maximizing risk-adjusted returns while remaining within our risk
appetite.
Roles and responsibilities for risk management are defined under a ‘three lines of defense’ model, which reinforce
the risk management culture in the bank. Each ‘line of defense’ describes a specific set of responsibilities for risk
management and control.
• The First Line of defense comprises of all individuals that have management responsibility to ensure the effective
management of risks within the scope of their direct organizational responsibilities and align business strategy with
risk appetite.
• The Second Line of defense comprises of the Risk Control Owners, supported by their respective control functions.
The Second Line is independent of the origination, trading and sales functions and is responsible for ensuring that
the residual risks within the scope of their responsibilities remain within appetite.
• The Third Line of defense comprises the independent assurance provided by the Group Internal Audit (GIA) function,
which has no responsibilities for any of the activities it examines. GIA provides independent assurance of the
effectiveness of management’s control of its own business activities (the First Line) and of the processes maintained
by the Risk Control Functions (the Second Line). As a result, GIA provides assurance that the overall system of
control effectiveness is working as required within the Risk Management Framework. The findings from GIA’s audits
are reported to all relevant management and governance bodies – accountable line managers, relevant oversight
function or committee and committees of the Board.
Credit Risk is managed through a framework that sets out policies, procedures and standards covering the
measurement and management of credit risk. Credit policies and standards are considered and approved by the
Board. Any exception to the credit policies and standards get escalated and approved by the appropriate authorities as
stipulated in the policies and standards.
Operational Risk is managed through Operational Risk Framework (ORF) which sets out the Bank’s approach to risk
management and the control framework.
The Market Risk is managed in line with the Bank’s market risk and other related policies, giving due consideration to
the prevalent market conditions.
Comprehensive assessment of risks

The Country Executive Risk Committee is responsible for overseeing the effective implementation of the Risk
Management Framework, including the clear assignment of the roles and responsibilities of Risk Control Owners for the
effective management of risk throughout the Bank. ERC is responsible for the management of all risks, except those for
which ALCO has direct responsibilities. Risk limits and risk exposure approval authority frameworks are set by the ERC
in respect of all risks including credit risk, country risk and market risk.

Credit risk
Credit risk is the potential for loss due to the failure of counterparty to meet its obligations to pay the Bank in
accordance with agreed terms. Credit exposures arise from both the banking and trading book.
The credit risk of individual counterparties or groups of connected counterparties as well as at the portfolios of
retail clients is assessed and reviewed. The credit risk management covers credit rating and measurement, credit
approval, large exposures and credit risk concentration, credit monitoring, and portfolio analysis. All Business Banking,
Commercial and Corporate & Institutional borrowers, at individual and group levels, are assigned internal credit rating
that supports identification and measurement of risk and integrated into overall credit risk analysis.
Operational Risk
Operational Risk is the potential for loss resulting from inadequate or failed internal processes, people and systems or
from the impact of external events, including legal risks.
Operational Risk Framework (ORF) adopted by the Bank provides the Bank’s approach to the management of
operational risk in accordance with the RMF and the Board’s Risk Appetite. The bank’s operational risk management
approach serves to continually improve the Bank’s ability to anticipate all material risks and to increase our ability to
demonstrate, with a high degree of confidence, that those risks are well controlled. It also clarifies and reinforces the
need for clear ownership and accountability for all processes across the Bank, with no significant gaps or duplication.
The bank aims to control operational risks to ensure that operational losses (financial or reputational), including any
related to conduct of business matters, do not cause material damage to the bank.
We seek to minimize our exposure to operational risk, subject to cost trade-offs. Operational risk exposures are
managed through a consistent set of management processes that drive risk identification, assessment, control and
monitoring.
The OR governance structure is as follows:
• Operational Risk governance ensures consistent oversight across all levels regarding the execution and effectiveness
of Operational Risk Framework (ORF).
• Risk Control Owners for all major Risk Types are appointed as per the RMF and are responsible for effective
management of operational risk of their respective control function.
• Operational risks are identified and graded at the business/unit level. For all risk graded low and above along with
the treatment plan are agreed with the Risk Control Owner before raising the risk in the system and tabling the risks
in Country Executive Risk Committee for acceptance. Mitigating controls are put in place and mitigation progress
monitored until its effectiveness.
• The Executive Risk Committee (ERC) ensures the effective management of Operational Risk throughout the
business/functions in support of the Group’s strategy and in accordance with the Risk Management Framework.
The ERC assigns ownership, requires actions to be taken and monitors progress of risks identified, in addition to
confirming the risk grading provided at the business/unit level.
• The Executive Risk Committee (ERC) accepts operational risks arising in the country provided the residual risk rating
is ‘low’ on the Group Operational Risk Assessment Matrix. All Risks that are rated Medium or above on the Group
Operational Risk Assessment Matrix are reported to the Executive Risk Committee (ERC) for endorsement and
escalated to the Group Process Owner by the relevant country process owner for acceptance through the relevant
Process Governance Committees (PGCs).
• The Financial Crime Risk Committee, chaired by the CEO, ensures appropriate governance of Financial Crime risk
and oversees the implementation of the Risk Management Framework as it relates to Financial Crime.
• The Group Risk Committee (GRC) determines the Group’s approach to the management of operational risk in
accordance with the RMF. The GRC fulfils its responsibilities in part through delegation of authorities to properly
constituted committees as listed below:
• Group Operational Risk Committee (GORC) is responsible for governing operational risk across all functions, client
segments and products. It is in turn supported by Business Process Governance Committees (PGCs) appointed by
Process Universe Owners, which provide global oversight of all operational risks arising from end-to-end processes
within their Process Universes.
• Group Financial Crime Risk Committee (GFCRC) is responsible for governing financial crime risks across the Group
Process Universe. This includes financial crime operational risks arising from non-compliance with external rules
and regulations relating to International Sanctions, Anti-money-laundering & Terrorist financing and Anti-bribery and
Corruption.
• Group Information Management Governance Committee (GIMGC) provides oversight and drives best practice in
information management and data governance.
• Business and Geographic Risk Committees are responsible for ensuring the effective management of risk in the
businesses and across the geographies in support of the Group’s strategy.

Market Risk
We recognize Market Risk as the potential for loss of earnings or economic value due to adverse changes in financial
market rates or prices. Our exposure to market risk arises predominantly from customer-driven transactions. The
objective of our market risk policies and processes is to obtain the best balance of risk and return while meeting
customer’s requirement.
Risks arising out of adverse movements in exchange rates, interest rates, liquidity and equity are covered under
market risk management. In line with capital framework prescribed by NRB, the bank focuses on exchange rate risk
management for managing / computing the capital charge on market risk. In addition the interest rate risk, currency
exchange rate risk, liquidity risk and equity price risk are assessed at a regular interval to strengthen market risk
management. The market risk is managed within the risk tolerance limit set by the Board.
Market risk is tightly monitored using value at risk (VaR) methodologies complemented by sensitivity measures, gross
nominal limits and loss triggers at a detailed portfolio level. This is supplemented with extensive stress testing which
takes account of more extreme price movements.
Other risks
In addition to the credit, operational, market and liquidity risk, the bank identifies, assesses and monitors strategic and
reputational risks at a regular interval. The Board maintains the primary responsibility to establish the strategic direction
of the Bank. The Country Executive Risk Committee and EXCO are also responsible for the management of reputational
risk.
Monitoring and Reporting

All risks, including credit, operational and market risks are identified, escalated, monitored and mitigated to the
satisfaction of the Risk Control Owner. The Risk Control Owner is responsible for ensuring that risks are adequately
identified, escalated monitored and mitigated. The Bank has adequate system for monitoring and reporting risk
exposures and assessing how the changing risk profile affects the need for capital. The Country Executive Risk
Committee reviews and assesses the credit risk, operational risk, reputational risk, market risk, etc. and provides a
summary report to the Executive Committee.
Internal Control Review

The Bank is committed to managing risk and controlling its business and financial activities in a manner which enables
it to maximize profitable business opportunities, avoid or reduce risks which can cause loss or reputational damage,
ensure compliance with applicable laws and regulations and enhance resilience to external events.
The effectiveness of the Bank’s internal control system is reviewed regularly by the Board, its committees, Management
and Internal Audit. The Audit Committee has reviewed the effectiveness of the internal control system during the
FY 2073/74 BS and reported on its review to the Board. The Internal Audit monitors compliance with policies and
standards and the effectiveness of internal control structures across the Bank through its program of business/unit
audits. The Internal Audit function is focused in the areas of greatest risk as determined by a risk-based assessment
methodology. Internal Audit reports regularly to the Audit Committee. The findings of all adverse audits are also notified
to the Chief Executive Officer and Business Heads for immediate corrective actions.
h. Summary of the terms, conditions and main features of all capital instruments, especially in case of
subordinated term debts including hybrid capital instruments.
• Bank has fully paid equity shares as qualifying capital.
2. Risk exposures
a. Risk weighted exposures for Credit Risk, Market Risk and Operational Risk
RISK WEIGHTED EXPOSURES As on 15.07.2017

A Risk Weighted Exposure for Credit Risk 50,192,675,320
B Risk Weighted Exposure for Operational Risk 4,598,925,881
C Risk Weighted Exposure for Market Risk 1,330,723,677
D Adjustments under Pillar-II 679,667,877
Total Risk Weighted Exposures (a+b+c) 56,801,992,755

b. Risk Weighted Exposures under each of 11 categories of Credit Risk
In NPR
No. Particulars Claim As on 15.07.2017 RWE as on 15.07.2017
1 Claims on govt. and central Bank 13,061,155,230 -
2 Claims on other official entities - -
3 Claims on Banks 25,599,442,830 8,009,443,631
4 Claims on corporate and securities firm 16,262,789,948 16,160,139,183
5 Claims on regulatory retail portfolio 5,317,221,644 3,987,916,233
6 Claim secured by residential properties 6,875,324,495 4,180,030,656
7 Claims secured by commercial real state 7,364,701,905 7,364,701,905
8 Past due Claims 229,555,218 290,208,598
9 High risk claims 2,472,782,594 3,458,896,635
10 Other Assets 1,355,587,328 593,290,205
11 Off Balance sheet Items 27,424,467,569 6,148,048,275
Total 105,963,028,761 50,192,675,320
c. Total risk weighted exposure calculation table;

Please refer Schedule 4.30 (Kha), 4.30 (Ga), 4.30 (Gha) and 4.30 (Nga) of the financial statements for details.
d. Amount of NPAs (both Gross and Net)

• Restructure/Reschedule Loan
NIL
• Substandard Loan
Gross value Rs. 22,631,453 Net values Rs. 16,973,589.
• Doubtful Loan
Gross value Rs. 11,107,496 Net value Rs 5,553,748.
• Loss Loan
Gross value Rs. 42,981,103 Net value: NIL
e. NPA ratios
• Gross NPA to gross advances
0.19%
• Net NPA to net advances
0.06 %
f. Movement of Non Performing Assets

Year on year downward movement of Rs. 25,099,438.
g. Write off of Loans and Interest Suspense

Loans Write off during the year is Nil and interest suspense charged off during the year is Nil.
h. Movements in Loan Loss Provisions and Interest Suspense

Year on year upward movement in Loan Loss Provisions of Rs. 71,750,625.
Year on year upward movement in Interest suspense of Rs. 49,363,389.
i. Details of additional Loan Loss Provisions

No major additional provisions have been made.
j. Segregation of Investment Portfolio into Held for Trading, Held to Maturity and Available for Sale
Investment Portfolio Net Amount (NPR)

Held For Trading 4,280,892,441
Held To Maturity 11,077,996,915
Available For Sale 273,135,788

3. Risk Management Function
a. For each separate risk area (Credit, Market and Operational risk), banks must describe their risk management
objectives and policies, including:
• Strategies and processes;

• The structure and organization of the relevant risk management function;
• The scope and nature of risk reporting and/or measurement systems; and
• Policies for hedging and/or mitigating risk and strategies, and processes for monitoring the continuing effectiveness
of hedges/mitigants.
Credit Risk Management strategies include effectively managing the risk of financial loss arising out of booking an
exposure on counterparty and also ensuring independence of the Credit Risk function from the origination, trading and
sales function.
Credit risk under Retail Banking (including Business Banking), Commercial Banking and Corporate & Institutional
Banking is managed through a defined framework which sets out policies, procedures and standards covering the
measurement and management of credit risk. There is a clear segregation of duties between transaction originators in
the businesses and the approvers in the Risk functions. All credit exposure limits are approved within a defined Credit
Approval Authority Framework.
A standard alphanumeric credit risk grade system is used for quantifying the risk associated with the counterparty in
Corporate and Institutional Banking and Commercial Banking Clients (including Business Banking clients). The grading
is based on our internal estimate of probability of default over a one year horizon, with customers or portfolios assessed
against a range of quantitative and qualitative factors, using an appropriate scorecard. The numeric grades run from
1 to 14 and some of the grades are further sub-classified into A, B or C. Lower credit grades are indicative of a lower
likelihood of a default. Credit Grades 1A to 12C are assigned to performing customers or accounts, while credit grades
13 and 14 are assigned to non-performing or default customers.
In addition to nominal aggregate exposure, Expected Loss and Tenor are used in the delegation of credit approval
authority and must be calculated for every transaction to determine the appropriate level of approval. Significant
exposures beyond the authority of Credit Officers in Retail Banking and Corporate & Institutional Banking and
Commercial Banking are approved by CEO on behalf of Executive Risk Committee after support from the respective
credit risk function at the Group level. The SCB Nepal Board delegates its authority to approve credit, market and other
risks exposures (“Risk Authorities”) to the Executive Committee for onward delegation of these Risk Authorities to the
Executive Risk Committee.
The independence of the Risk function is effectively maintained to ensure that the necessary balance in risk/return
decisions is not compromised by short term pressures to generate revenues. This is particularly important given that
revenues are recognized from the point of sale while losses arising from risk positions typically manifest themselves
over time.
Credit function in Retail Banking uses standard application forms which are processed in central units and credit
approval process is guided by Credit Approval Document (CAD) and Credit Processing Manual for each loan product.
The probably of default is calculated using portfolio delinquency flow rates and judgement, where applicable.
There are risk officers in Retail Banking (including Business Banking), Commercial Banking and Corporate & Institutional
Banking. They have their primary reporting line into the country and Group functional levels. Credit approval authorities
are delegated by Executive Risk Committee to Senior Credit Officer in Commercial Banking and Corporate &
Institutional Banking, and Credit Head in Retail Banking based on their judgment and experience, who may further
delegate the credit authorities to other credit officers in their respective segment. We have a manual approval process
in Retail Banking segment and on-line approval process in Business Banking, Commercial Banking and Corporate &
Institutional Banking segments.
The scope and nature of risk reporting and/or measurement procedures are covered in the Country Portfolio/
Underwriting Standards approved by the Board, CAD and Credit Processing Manual specific to each business or loan
product and other Group level policies & procedures adopted after the Board approval. The Executive Risk Committee
chaired by the CEO, reviews the portfolio exposure, portfolio quality, country level risk triggers, etc on a bi-monthly
(once in two months) basis.

Country Portfolio/Underwriting Standards and CAD / Credit Processing Manual outlines the Bank’s policies and
processes for underwriting, hedging and/or mitigating and monitoring risk. We regularly monitor credit exposures,
portfolio performance and external trends including political and economic trends that may impact risk management
outcomes.
Internal risk information reports are presented to the Executive Risk Committee containing information on key
environmental, political and economic trends, portfolio delinquency and loan impairment performance. Commercial,
Corporate & Institutional and Business Banking clients’ accounts or portfolios are placed on early alert when they
display signs of actual or potential weakness or financial deterioration. Such accounts and portfolios are subjected to
a dedicated process overseen by the Credit Issue Committee. Client account plans and credit grades are re-evaluated.
In addition, remedial actions are agreed and monitored. Remedial actions include, but are not limited to, exposure
reduction, security enhancement, exiting the account, or immediate movement of the account into the control of Group
Special Assets Management (GSAM), our special recovery unit.
In Retail Lending portfolio, delinquency trends are monitored continuously at a detailed level. Individual client behavior
is also tracked and considered for lending decision. Accounts that are past due are subject to a collections process,
managed independently by the Risk Function. Charged-off accounts are managed by specialist recovery teams.
Collateral is held to mitigate credit risk exposures and risk mitigation policies determine the eligibility of collateral types.
Regular valuation of collateral is required in accordance with the Risk Mitigation Policy and Portfolio Standards, which
prescribe both the process and the frequency of valuation for different collateral types. Collateral held against impaired
loans is maintained at fair value.
The Executive Risk Committee which has been formed by and receives authority from the Executive Committee is
responsible for ensuring the effective risk governance and management of credit risk, operational risk, market risk,
country cross-border risk, reputational risk, etc. throughout the Bank. Liquidity and capital risks are managed and
monitored by ALCO.
b. Types of eligible credit risk mitigants used and the benefits availed under CRM.
No. Credit Risk Mitigants As on 15.07.2017

1 Deposits with Bank 689,651,486
2 Deposits with other banks/FI* 102,220,000
3 Govt. & NRB Securities
4 G’tee of Domestic Banks*
5 Sec/G’tee of Foreign Banks* 9,732,836,140
Total 10,524,707,626
* net of supervisory haircut

Directives from Nepal Rastra Bank while approving the Dividend Declaration/
Distribution and Financial Statements Publication
Based on the financial statements and other documents submitted by the Bank, the provisions of Sub-section 2 of
Section 47 of Banks and Financial Institutions Act 2073 are seen to have been complied; therefore as per Sub-section
1 of the said Section, approval has been granted for Proposed cash dividend of Rs. 210,827,123 and Bonus shares of
equivalent to Rs. 4,005,715,333 subject to fulfilment of other prevailing legal provisions and approval of the same by the
annual general meeting of the Bank. Additionally, consent has been granted for publication of the financial statements
of FY 2016/17 for tabling it for approval at the Bank’s annual general meeting along with the below directives.
1. Interest rate spread as on 15th July 2017 has been 5.01% which is higher than the prescribed limit, therefore the
spread should be brought within limit.
2. Arrangement should be made for full compliance of point 10.1(ka) and 10.3(tha) of Directive 12 related to Credit
Information and Blacklisting, from the Unified Directives 2016 issued by Nepal Rastra Bank.
3. Arrangement should be made for full compliance of the observations/exceptions noted by the auditors in their report
and for ensuring that such observations/exceptions do not repeat in future.
Above directives should be published as a separate page in the annual report of the Bank.

Five years Financial Summary
Balance Sheet
NPR ‘000’
2069-70 2070-71 2071-72 2072-73 2073-74

Particulars
2012-13 2013-14 2014-15 2015-16 2016-17
Assets
Cash and Bank Balance 6,404,999 9,188,304 11,572,442 3,972,332 8,928,302
Money at Call and Short Notice 3,009,064 7,960,305 11,973,546 6,069,660 12,623,564
Investments 12,753,518 9,391,379 13,120,063 23,094,622 15,632,025
Loans and Advances 22,828,838 25,976,585 27,681,313 31,302,950 39,263,690
Fixed Assets 81,518 68,726 83,853 71,306 102,918
Other Assets 553,163 738,804 627,827 674,863 858,098
Total Assets 45,631,100 53,324,102 65,059,044 65,185,732 77,408,598

Liabilities
Borrowings - - 500,000 -
Deposits 39,466,453 46,298,532 57,286,482 55,727,178 63,872,885
Other Liabilities 1,547,073 1,937,479 1,679,818 1,434,379 1,671,687
Total Liabilities 41,013,526 48,236,011 58,966,300 57,661,557 65,544,572

Shareholders Fund
Paid Up Capital 1,853,900 2,041,672 2,248,161 2,812,426 4,005,715
Proposed Bonus Shares 185,390 204,167 562,040 937,475 4,005,715
Reserve (including Exchange Reserve) 2,546,916 2,832,223 3,249,936 3,658,905 3,842,808
Undistributed Profit 31,368 10,028 32,607 115,368 9,786
Total Shareholders Fund 4,617,574 5,088,091 6,092,744 7,524,175 11,864,025
Contingent Liabilities
Letter of Credit 3,046,891 3,583,307 2,146,922 2,458,815 2,282,628
Guarantees 8,560,504 12,779,883 11,075,683 12,223,923 12,953,727
Forward Exchange Contracts 3,097,266 1,100,001 1,377,681 2,226,620 2,376,477
Other Contingent Liabilties 3,389,423 4,715,704 8,456,444 8,339,548 9,282,837
Total Contingent Liabilities 18,094,084 22,178,895 23,056,730 25,248,905 26,895,670

Five years financial Summary
Profit & Loss Account
NPR ‘000’
2069-70 2070-71 2071-72 2072-73 2073-74

Particulars
2012-13 2013-14 2014-15 2015-16 2016-17
Interest Income 2,535,359 2,583,958 2,571,012 2,415,583 3,060,619
Interest Expenses 611,382 576,299 657,497 565,705 863,460
Net Interest Income 1,923,977 2,007,659 1,913,515 1,849,878 2,197,159
Commission and Discount 294,968 383,611 362,964 357,520 489,269
Other Operating Incomes 42,727 44,157 38,010 48,096 51,979
Exchange fluctuation Income 515,050 477,996 613,936 629,555 610,569
Total Operating Income 2,776,721 2,913,423 2,928,425 2,885,049 3,348,976
Staff Expenses 421,631 482,083 468,278 488,290 548,556
Other Operating Expenses 382,484 368,030 420,973 434,760 512,849
Exchange fluctuation Loss
Operating Profit Before Provision for 1,972,607 2,063,310 2,039,174 1,961,999 2,287,571
Possible Loss
Provision for Possible Losses 110,125 84,401 188,682 260,751 301,729
Operating Profit 1,862,481 1,978,909 1,850,492 1,701,248 1,985,843
Non-Operating Income/ (Loss) 1,170 51,874 63,861 37,853 8,113
Provision for Possible Loss Written Back 50,135 63,531 149,688 257,974 229,978
Profit from Ordinary Activities 1,913,786 2,094,314 2,064,041 1,997,075 2,223,934
Income/(Expenses) from Extra Ordinary 2,410 (1,524) 17,525 1,787 8,055
Activities
Net Profit after considering all Activities 1,916,196 2,092,790 2,081,566 1,998,862 2,231,989
Provision for Staff Bonus 174,200 190,254 187,099 181,715 202,908
Provision for Income Tax 524,056 565,947 584,115 524,653 607,485
Net Profit/Loss 1,217,941 1,336,589 1,310,352 1,292,495 1,421,596
Accumulated Profit up to Previous Year 10,795 31,582 10,028 32,607 115,368
Adjustment to Opening Reserve (444) -
This Year’s Profit 1,217,941 1,336,589 1,310,352 1,292,495 1,421,596
Share Premium 3,044,187
Deferred tax - 89,557 17,819
Actuarial Gain/(Losses) 2,099 880 (59,396)
First Time adoption of NFRS (12,987) (25,231)
Deferred Tax Previous Year (630) (264)
Total 1,228,736 1,368,171 1,308,419 1,390,043 4,539,574
General Reserve Fund 243,588 267,318 258,005 258,499 284,319
Proposed Dividend 741,560 847,294 431,884 49,341 210,827
Proposed Issue od Bonus Shares 185,390 204,167 562,040 937,475 4,005,715
Exchange Fluctuation Fund 27,971 25,742 23,883 29,358 24,583
Capital Adjustment Fund 0 0 0
Other Appropriations (1,141) 13,622 - 1 4,343
Accumulated Profit/(Loss) 31,368 10,028 32,607 115,368 9,786
Profit Before Tax 1,741,996 1,902,536 1,894,467 1,817,148 2,029,081
Return on Shareholder’s Fund 26.38% 26.27% 21.69% 17.18% 11.98%
Cost Income ratio 35.23% 35.71% 36.76% 38.29% 37.75%
Profit per employee 2,683 2,906 2,979 2,971 2,872
Dividend Cover ratio 1.31 1.27 1.30 1.31 0.34

Financial Statements as per
Nepal Financial
Reporting Standards

Auditor’s Report
To the Shareholders of Standard Chartered Bank Nepal Limited
Report on the Financial Statements We believe that the audit evidence we have obtained
We have audited the accompanying financial statements is sufficient and appropriate to provide a basis for our
of Standard Chartered Bank Nepal Limited which comprise opinion.
the balance sheet as of July 15, 2017 (Ashadh 31, 2074)
and the profit and loss account, statement of changes in Opinion
equity and cash flow statement for the year then ended In our opinion, the accompanying financial statements
and a significant accounting policies and other explanatory presents fairly, in all material respects, the financial position
notes. of Standard Chartered Bank Nepal Limited as at Ashadh
31, 2074 (15 July 2017) and its financial performance and
Management’s responsibility for the its cash flows for the year then ended in accordance with
Financial Statements the Nepal Financial Reporting Standard and Company Act
Management is responsible for the preparation and fair 2063.
presentation of the financial statements in accordance with
Nepal Financial Reporting Standards and for such internal Report on the requirements of Banks
control as management determines is necessary to enable and Financial Institutions Act 2073 and
the preparation of financial statements that are free from
Company Act 2063
material misstatement, whether due to fraud or error.
We have obtained satisfactory information and
explanations asked for, which to the best of our knowledge
Auditor’s responsibility and belief were necessary for the purpose of our audit;
Our responsibility is to express an opinion on these
the returns received from the branch offices of the bank,
financial statements based on our audit. We conducted
though the statements are independently not audited,
our audit in accordance with Nepal Standards on
were adequate for the purpose of the audit; the financial
Auditing. Those standards require that we comply with
statements including the Balance Sheet, the Profit and
ethical requirements and plan and perform the audit to
Loss Account, the Cash flow Statement, Statement of
obtain reasonable assurance about whether the financial
Changes in Equity, and attached Schedules have been
statements are free of material misstatement.
prepared in all material respect in accordance with the
provisions of the Company Act 2063, and they are in
An audit involves performing procedure to obtain evidence
agreement with the books of accounts of the Bank; and the
about the amounts and disclosures in the financial
accounts and records of the Bank are properly maintained
statements. The procedures selected depend on the
in accordance with the prevailing laws.
auditor’s professional judgment, including the assessment
of the risks of material misstatement of the financial
To the best of our information and according to the
statements, whether due to fraud or error. In making those
explanations given to us, in the course of our audit, we
risk assessments, the auditor considers the internal control
observed that the loans have been written off as specified;
relevant to the entity’s preparation and fair presentation of
the business of the Bank was conducted satisfactorily,
the financial statements in order to design audit procedures
and the Bank’s transactions were found to be within the
that are appropriate in the circumstances, but not for the
scope of its authority. We did not come across cases of
purpose of expressing an opinion on the effectiveness of
accounting related fraud and the cases where the board of
entity’s internal control.
directors or any director or any office bearer of the Bank
has acted contrary to the provisions of law or caused loss
An audit also includes evaluating the appropriateness
or damage to the Bank or committed any misappropriation
of the accounting policies used and the reasonableness
of the funds of bank
of accounting estimates made by the management, as
well as evaluating the overall presentation of the financial
statements.
Date: December 08, 2017 Sunir Kumar Dhungel

Place: Kathmandu Managing Partner
LDSA ASSOCIATES
Chartered Accountants

Statement of Financial Position
As on 15 July 2017
Notes 15-Jul-17 15-Jul-16

Assets
Cash 4.1 811,609,528 799,366,056
Balances at central banks 4.2 7,067,997,124 1,514,671,384
Treasury Bills 4.3 4,280,892,441 7,021,721,973
Government Bonds 4.4 256,646,915 2,789,621,622
Balances with other banks 4.5 1,048,695,313 1,658,294,743
Loans and advances to banks 4.6 22,941,564,000 18,950,460,000
Loans and advances to customers 4.7 39,532,576,906 31,469,115,666
Investment in securities 4.8 776,485,788 402,477,960
Other assets 4.9 941,114,493 700,294,876
Property, plant and equipment 7 102,917,966 71,306,086
Deferred tax assets / (liability) 12.4 (46,962,306) (28,906,492)
Total Assets 77,713,538,121 65,348,423,874
Liabilities and Equity
Liabilities
Deposits by banks 4.10 499,676,606 173,970,432
Customer accounts 4.11 63,373,208,846 55,553,208,024
Bills payable 4.12 76,659,624 310,183,573
Borrowings 4.13 - 500,000,000
Other liabilities 4.14 1,380,941,020 1,060,383,050
Retirement benefit obligations (net) 8.2 3,259,159 14,471,407
Proposed Dividend - -
Total liabilities 65,333,745,254 57,612,216,486
Equity
Share capital 10 4,005,715,333 2,812,426,000
Reserves 11 8,374,077,534 4,923,781,388
Total shareholders’ equity 12,379,792,867 7,736,207,388
Non-controlling interests - -
Total equity 12,379,792,867 7,736,207,388
Total equity and liabilities 77,713,538,121 65,348,423,874

Director Director

Statement of Profit or Loss
for the period 16 July 2016 - 15 July 2017
Notes 2016-17 2015-16

Interest income 6.1 3,191,877,669 2,440,004,000
Interest expense 6.2 (863,459,635) (565,704,649)
Net interest income 2,328,418,034 1,874,299,351
Fees and commission income 6.3 417,852,214 311,311,795
Net trading income 6.4 610,568,563 629,555,473
Other operating income 6.5 60,091,919 85,948,718
Non-interest income 1,088,512,696 1,026,815,986
Operating income 3,416,930,730 2,901,115,337
Staff costs 8.1 (771,619,157) (685,965,585)
Premises costs 15 (125,113,188) (137,076,803)
General administrative expenses 16 (339,716,456) (277,219,607)
Depreciation and amortisation 7, 17 (26,277,882) (20,463,281)
Operating expenses (1,262,726,684) (1,120,725,276)
Operating profit before impairment losses and taxation 2,154,204,046 1,780,390,061
Impairment losses on loans and advances to customers 5 - (40,129,000)
Impairment on loans and advances to customers reversed 5 19,583,583 17,008,000
Other impairment - 43,107,829
Other 18 8,055,204 1,787,396
Profit from associates and joint ventures
Profit before taxation 2,181,842,833 1,802,164,286
Taxation
Income Taxes 12.1 (595,512,262) (503,331,917)
Deferred tax income / (expense) 12.4 (36,343,608) (34,147,508)
Profit for the year 1,549,986,963 1,264,684,862
Profit attributable to:
Equity shareholders 1,549,986,963 1,264,684,862
Earnings per share:
Basic earnings per ordinary share (NPR) 19 45.55 54.68
Diluted earnings per ordinary share (NPR) 19 45.55 54.68

Director Director

Statement of Other Comprehensive Income
Notes 2016-17 2015-16

Other comprehensive income:
Items that will not be reclassified to income
statement:
Actuarial (losses)/gains on retirement benefit obligations 8.2 (59,396,000) 880,000
Deferred tax implication of actuarial gain / (losses) 12.4 17,818,800 (264,000)
Items that may be reclassified subsequently to
income statement:
Available-for-sale investments:
Net valuation gains taken to equity 4.8 (129,342,173) 210,667,485
Reclassified to income statement
Other comprehensive income for the year, net of taxation
Total comprehensive income for the year 1,379,067,591 1,475,968,347
Total comprehensive income attributable to: - -

Equity shareholders 1,379,067,591 1,475,968,347
1,379,067,591 1,475,968,347

Director Director

Statement of Cash Flows
for the period 16 July 2016 – 15 July 2017
Notes 2016-17 2015-16

Cash flows from operating activities
Loss / (profit) before taxation 2,181,842,833 1,802,164,286
Adjustments for non-cash items and non operating
adjustments
Depreciation 26,277,882 20,463,281
Gain on disposal of assets (1,152,091) (20,695,782)
Dividend income (6,936,220) (9,372,682)
Defined benefit plan net charge 21,324,035 20,673,000
Changes in Operating assets and Liabilities
Change in operating assets (7,622,311,541) (7,539,115,183)
Change in operating liabilities 7,825,804,464 (851,713,724)
Contributions to defined benefit schemes (net) (90,000,000) (74,033,300)
Taxes paid (557,996,286) (540,973,046)
Net cash from operating activities 1,776,853,077 (7,192,603,150)
Cash flows from investing activities
Purchase of property, plant and equipment (54,672,658) (10,539,571)
Disposal of property, plant and equipment (2,065,014) 23,319,386
Investment in subsidiaries, associates & joint ventures - -
Purchase of investment securities - -
Disposal and maturity of investment securities - -
Dividends received from investment in securities 6,936,220 9,372,682
Net cash used in investing activities (49,801,453) 22,152,498
Cash flows from financing activities
Issue of ordinary and preference share capital, net of 3,278,258,965 2,224,500
expenses
Dividends paid to ordinary shareholders, net of scrip (49,340,807) (431,883,592)
Net cash (used in)/from financing activities 3,228,918,158 (429,659,092)
Net increase/(decrease) in cash and cash equivalents 4,955,969,783 (7,600,109,745)
Cash and cash equivalents at beginning of year 3,972,332,184 11,572,441,928
Effect of exchange rate changes on cash & cash equivalents
Cash and cash equivalents at end of year 8,928,301,966 3,972,332,183

Director Director

120
Statement of Changes in Equity
Statutory / Regulatory Reserves
Share capital Retained General Exchange Deferred Tax Available for Total
earnings Reserve Fluctuation Reserve Reserve sale reserve
As at 16 July 2015 2,248,161,200 1,174,613,100 2,639,029,861 384,481,144 89,556,937 136,928,775 6,672,771,017
Opening NFRS Adjustment (156,447,796) (156,477,796)
Adjustments (16,866,254) (60,975) (16,927,229)
Restated 16 July 2015 2,248,161,200 1,001,299,050 2,639,029,861 384,481,144 89,556,937 136,867,800 6,499,395,992
Profit for the year - 1,475,968,347 - - - - 1,475,968,347
Transfer to General Reserve - (258,498,926) 258,498,926 - - - -

OCI Adjustments 616,000 616,000
Bonus Share 562,040,300 (562,040,300) - - - - -
Dividend (431,883,592) (431,883,592)
Issue of Share Capital 2,224,500 - - - - - 2,224,500
Exchange Fluctuation Fund - (29,357,997) - 29,357,997 - - -
Deferred Tax Reserve - 89,556,937 - - (89,556,937) - -
Investment Adjustment Reserve - (1,200) - - - 210,669,660 210,668,460
Adjustments - (20,782,320) - - - - (20,782,320)
As at 15 July 2016 2,812,426,000 1,264,875,999 2,897,528,787 413,839,141 - 347,537,460 7,736,207,387
Share Premium
As at 16 July 2016 2,812,426,000 1,264,875,999 2,897,528,787 413,839,141 - 347,537,460 7,736,207,387
Opening NFRS Adjustment (162,691,395) (162,691,395)
Adjustments - - - - - - -
Restated 16 July 2016 2,812,426,000 1,102,184,604 2,897,528,787 413,839,141 - 347,537,460 7,573,515,993
Profit for the year - 1,379,067,591 - - - - 1,379,067,591
Transfer to General Reserve - (284,319,227) 284,319,227 -
Bonus Share 937,475,333 (937,475,333) -
Dividend - (49,340,807) (49,340,807)
Share Issue Expenses - (21,741,635) (21,741,635)
Issue of Share Capital 255,814,000 - 255,814,000
Share Premium - 3,044,186,600 3,044,186,600
Exchange Fluctuation Fund - (24,582,829) 24,582,829 -
Investment Adjustment Reserve - - (129,342,173) (129,342,173)
Adjustments (Note 22) - 327,633,298 309,814,498
As at 15 July 2017 4,005,715,333 1,491,425,661 3,181,848,015 438,421,970 3,044,186,600 218,195,288 12,379,792,867
Accounting Policies and Explanatory Notes
2016-17
1. General Information
Standard Chartered Bank Nepal Limited (SCBNL or “the Bank”) has been in operation in Nepal since 1987. It was
initially registered as a joint venture operation. Today it is an integral part of Standard Chartered Group, which has
ownership of 70.21% in the company and remaining 29.79% is owned by the Nepalese public.
The Bank is registered with the office of company registrar as a public limited company and carries out commercial
banking activities in Nepal under the license from Nepal Rastra Bank (The Central Bank of Nepal) as Class “Ka” licensed
institution. The Bank is listed on Nepal Stock Exchange. The Bank’s ultimate parent company is Standard Chartered
Plc., (SCPLC), which is incorporated in United Kingdom.
The Bank offers full range of banking products and services to wide range of clients encompassing individuals, mid-
market, local corporate, multinationals, large public sector companies, government corporations, airlines and hotels, as
well as the DO segment comprising of embassies, aid agencies, INGOs and NGOs.
2. Statement of Compliance
The financial statements have been prepared and approved by the Board of directors in accordance with Nepal
Financial Reporting Standards (NFRS) to the extent applicable and as published by the Accounting Standards Board
(ASB) – Nepal. The Profit and Loss appropriation is treated as Other Comprehensive Income (OCI).
2.1 Approval of financial statements

Accompanied financial statements have been adopted by the Board of Directors on its meeting held on 8 December
2017 and have been recommended for approval by shareholders in the Annual General Meeting
3. Basis of Preparation
The Bank, while complying with the reporting standards, makes critical accounting judgement as having potentially
material impact on the financial statements. The significant accounting policies that relate to the financial statements as
a whole along with the judgements made are described herein.
Where an accounting policy is generally applicable to a specific item, the policy is described within that relevant note.
NFRS requires the Bank to exercise judgement in making accounting estimates. Description of such estimates has
been given in the relevant sections wherever they have been applied.
3.1 Reporting Pronouncements

The Bank has, for the preparation of financial statements, adopted the NFRS pronounced by ASB as effective on
September 13, 2013.
NFRS conform, in all material respect, to International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB)
3.2 Accounting Conventions

The financial statements have been prepared on a historical cost basis, as modified by the revaluation of financial
assets and liabilities (including derivatives) at fair value through profit or loss.
The financial statements have been prepared on a going concern basis where the accounting policies and judgements
as required by the standards are consistently used and in case of deviations disclosed specifically.
3.3 New reporting standards in issue but not yet effective

NFRS 9 – Financial Instruments has been issued but is not effective until further notified. For the reporting of financial
instruments, NAS 32 Financial Instruments, Presentation, NAS 39 Financial Instruments Recognition and Measurements
and NFRS 7 Financial Instruments – Disclosures have been applied.
A number of new standards and amendments to the existing standards and interpretations have been issued by
IASB after the pronouncements of NFRS with varying effective dates. Those become applicable when ASB Nepal
incorporates them within NFRS.

A significant impact on classification and measurement including impairment of financial instruments will arise as a
result of application of NFRS 9.
3.4 Presentation
The financial statements have been presented in the nearest Nepalese Rupees (NPR).
For presentation of the statement of financial position assets and liabilities have been bifurcated into current and non-
current, by their respective maturities and are disclosed in the notes.
The statement of profit or loss has been prepared using classification ‘by nature’ method.
The cash flows from operation within the statement of cash flows have been derived using the indirect method.
3.4.1 Presentation currency

Financial statements are denominated in Nepalese Rupees, which is the functional and presentation currency of the
Bank.
3.4.2 Current and Non-Current distinction
Assets
Apart from the property, plant and equipment and deferred tax assets all the assets are taken as current assets unless
specific additional disclosure is made in the notes for current and non-current distinction.
Liabilities
Apart from the defined benefit plan obligations all the liabilities are taken as current liabilities unless specific additional
disclosure is made in the notes for current and non-current distinction.
3.5 Accounting Policies and accounting estimates

The Bank, under NFRS, is required to apply accounting policies to most appropriately suit its circumstances and
operating environment. Further the Bank is required to make judgement in respect of items where the choice of
specific policy, accounting estimate or assumption to be followed could materially affect the financial statements. This
may later be determined that a different choice could have been more appropriate.
Accounting policies have been included in the relevant notes for each item of the financial statements. The effect and
nature of the changes, if any, have been disclosed.
NFRS requires the Bank to make estimates and assumptions that will affect the assets, liabilities, disclosure of
contingent assets and liabilities, and profit or loss as reported in the financial statements.
The Bank applies estimates in preparing and presenting the financial statements. The estimates and underlying
assumptions are reviewed periodically. Revision to accounting estimates are recognised in the period in which the
estimates are revised, and are applied prospectively.
Disclosures of the accounting estimates have been included in the relevant sections of the notes wherever the
estimates have been applied along with the nature and effect of changes of accounting estimates, if any.
3.6 Financial Periods

The Bank follows the Nepalese financial year based on the Nepalese calendar. The corresponding dates for the English
calendar are as follows:
Relevant Financial Statement Nepalese Calendar English Calendar

Date / Period Date / Period
Comparative SFP* Date 31 Ashadh 2073 15 July 2016
Comparative reporting period 1 Shrawan 2072 - 31 Ashadh 2073 16 July 2015 - 16 July 2016
* SFP = Statement of financial position

3.7 Discounting
Discounting has been applied where assets and liabilities are non-current and the impact of the discounting is material.
3.8 Limitation of NFRS implementation

Wherever the information is not adequately available and the cost to develop the same would exceed the benefit
derived, such exception to NFRS implementation has been noted and disclosed in respective sections.
4. Financial Instruments
Accounting Policy
The Bank classifies its financial assets into the following measurement categories: a) financial assets held at fair value
through profit or loss; b) loans and receivables; c) held-to-maturity; and d) available-for-sale. Financial liabilities are
classified as either held a) at fair value through profit or loss, or b) at amortised cost.
Management determines the classification of its financial assets and liabilities at initial recognition or, where applicable,
at the time of reclassification.
Financial assets and liabilities held at fair value through profit or loss
This category has two sub-categories: financial assets and liabilities held for trading, and those designated at fair value
through profit or loss at inception. A financial asset or liability is classified as held for trading if acquired principally for
the purpose of selling in the short term.
Financial assets and liabilities may be designated at fair value through profit or loss when:
- The designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise
arise from measuring assets or liabilities on a different basis
- A group of financial assets and/or liabilities is managed and its performance evaluated on a fair value basis
- The assets or liabilities include embedded derivatives and such derivatives are required to be recognised separately
Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market and it is expected that substantially all of the initial investment will be recovered, other than because of
credit deterioration.
Held-to-maturity
Held-to-maturity assets are non-derivative financial assets with fixed or determinable payments and fixed maturities
that the bank’s management has the intention and ability to hold to maturity.
Available-for-sale
Available-for-sale assets are those non-derivative financial assets intended to be held for an indefinite period of time,
which may be sold in response to liquidity requirements or changes in interest rates, exchange rates, commodity prices
or equity prices.
Financial liabilities held at amortised cost

Financial liabilities, not classified as held at fair value through statement of profit or loss which includes borrowings, are
classified as amortised cost instruments.
Initial recognition
All financial instruments are initially recognised at fair value, which is normally the transaction price plus, for those
financial assets and liabilities not carried at fair value through profit and loss, directly attributable transaction costs
Purchases and sales of financial assets and liabilities held at fair value through profit or loss, and financial assets
classified as held-to-maturity or available-for-sale are initially recognised on the trade-date (the date on which the Bank
commits to purchase or sell the asset).
Loans are recognised when cash is advanced to the borrowers.

Subsequent measurement
Financial assets and liabilities held at fair value through profit or loss are subsequently carried at fair value, with gains
and losses arising from changes in fair value taken directly to the net trading income line in the statement of profit or
loss.
Available-for-sale financial assets are subsequently carried at fair value, with gains and losses arising from changes in
fair value taken to the available-for-sale reserve within equity until the asset is sold, or is impaired, at which point the
cumulative gain or loss is transferred to the statement of profit or loss.
Loans and receivables and held-to-maturity financial assets are subsequently measured at amortised cost using the
effective interest rate method. Within this category loans and advances to the customers have been recognised at
amortised cost using the method that very closely approximates effective interest rate method.
Financial liabilities are subsequently measured at amortised cost, with any difference between proceeds net of directly
attributable transaction costs and the redemption value recognised in the statement of profit or loss over the period of
the borrowings using the effective interest method.
Derecognition
Financial assets are derecognised when the right to receive cash flows from the assets have expired or where the Bank
has transferred substantially all risks and rewards of ownership. If substantially all the risks and rewards have been
neither retained nor transferred and the Bank has retained control, the assets continue to be recognised to the extent of
the Bank’s continuing involvement.
Financial liabilities are derecognised when they are extinguished. A financial liability is extinguished when the obligation
is discharged, cancelled or expires.
Explanatory Notes

As at 15 July 2017
Assets at fair value Assets at amortised costs
Financial Assets Notes Trading Designated at Available for Loans and Held to maturity Total
FVTPL sale Receivables
Cash at vault 4.1 - - - 811,609,528 - 811,609,528
Balance with central bank 4.2 - - - 7,067,997,124 - 7,067,997,124
Treasury bills 4.3 - 4,280,892,441 - - - 4,280,892,441
Government bond 4.4 - - - - 256,646,915 256,646,915
Balances with banks 4.5 - - - 1,048,695,313 - 1,048,695,313
Loans and Advances to banks 4.6 - - - 22,941,564,000 - 22,941,564,000
Loans and Advances to Customers 4.7 - - - 39,532,576,906 - 39,532,576,906
Investment in corporate securities 4.8 - - 776,485,788 - - 776,485,788
Other Financial Assets 4.9 - - - 834,247,820 - 834,247,820
- 4,280,892,441 776,485,788 72,236,690,692 256,646,915 77,550,715,835
Liabilities at fair value Liabilities at amortised costs

Financial Liabilities Notes Trading Designated at Total
FVTPL
Deposit by Bank 4.10 - - 499,676,606 499,676,606
Customer Accounts 4.11 - - 63,373,208,846 63,373,208,846
Bills Payable 4.12 - - 76,659,624 76,659,624
Borrowings 4.13 - - - -
Other Financial Liabilities 4.14 - - 1,191,269,545 1,191,269,545
- - 65,140,814,620 65,140,814,620

125
126
As at 15 July 2016
Assets at fair value Assets at amortised costs
Financial Assets Notes Trading Designated at Available for Loans and Held to maturity Total
FVTPL sale Receivables
Cash at vault 4.1 - - - 799,366,056 - 799,366,056
Balance with central bank 4.2 - - - 1,514,671,384 - 1,514,671,384
Treasury bills 4.3 - 7,021,721,973 - - - 7,021,721,973
Government bond 4.4 - - - - 2,789,621,622 2,789,621,622
Balances with banks 4.5 - - - 1,658,294,743 - 1,658,294,743
Loans and Advances to banks 4.6 - - - 18,950,460,000 - 18,950,460,000
Loans and Advances to Customers 4.7 - - - 31,469,115,666 - 31,469,115,666

Investment in corporate securities 4.8 - - 402,477,960 - - 402,477,960
Other Financial Assets 4.9 - - - 603,870,453 - 603,870,453
- 7,021,721,973 402,477,960 54,995,778,302 2,789,621,622 65,209,599,857
Liabilities at fair value Liabilities at amortised costs

Financial Liabilities Notes Trading Designated at Total
FVTPL
Deposit by Bank 4.10 - - 173,970,432 173,970,432
Customer Accounts 4.11 - - 55,553,208,024 55,553,208,024
Bills Payable 4.12 - - 310,183,573 310,183,573
Borrowings 4.13 - - 500,000,000 500,000,000
Other Financial Liabilities 4.14 - - 901,224,830 901,224,830
- - 57,438,586,859 57,438,586,859
Unless specifically disclosed financial assets and liabilities are current assets and liabilities respectively.
Financial Assets
4.1 Cash at Vault

15-Jul-17 15-Jul-16
LCY 758,103,007 752,853,889
FCY 53,506,521 46,512,167
811,609,528 799,366,056
The fair value of cash is the carrying amount.
Cash at vault is adequately insured for physical and financial risks. The amount of cash at vault is maintained on the
basis of the regulatory, liquidity and business requirements. To that extent there are regulatory and liquidity restrictions
placed on the cash at vault. Cash held in FCY is subject to risk of changes in the foreign exchange rates. These are
closely monitored, and risks, if identified, are promptly managed.
4.2 Balance with central bank (non interest bearing)

15-Jul-17 15-Jul-16
LCY 7,032,487,555 1,459,122,505
FCY 35,509,570 55,548,879
7,067,997,124 1,514,671,384
The fair value of balance with the central bank is the carrying amount. Balance with central bank is categorised as
loans and receivable to be subsequently measured at amortised cost.
Balance with the central bank is principally maintained as a part of the regulatory cash reserve ratio required by the
central bank. There are regulatory and liquidity restrictions placed on the level of balance with the central bank.
4.3 Treasury bills

15-Jul-17 15-Jul-16
Treasury Bills (LCY) 4,280,892,441 7,021,721,973
4,280,892,441 7,021,721,973
Treasury bills have been classified as financial assets designated at fair value through Statement of Profit or Loss
(SoPL). Valuation of these instruments is assessed on the basis of similar bills on issue. These bills have the maturity
period of less than one year and no variation has been observed from the subsequent bills on issue, that have been
considered as observable inputs.
These instruments have been considered as risk free instruments. Considering the short maturity period of these
instruments, risks as a result of changes in macro economic conditions is assessed to be nominal. These are highly
liquid instruments and can be converted into cash immediately on requirement.
4.4 Government Securities

15-Jul-17 15-Jul-16
Government of Nepal - Bonds and Securities 256,646,915 259,621,622
NRB Bond - 2,530,000,000
256,646,915 2,789,621,622
Government bonds have been classified as held to maturity instrument as the Bank has intention and capacity to hold
these instruments until their maturity. These instruments are carried at amortised costs.

These instruments are issued by the government. Bank considers that the fixed return on these bonds adequately
compensates for associated risks.
15-Jul-17 15-Jul-16
Current - 2,530,000,000
Non-current 256,646,915 259,621,622
Total 256,646,915 2,789,621,622
4.5 Balance with banks (non-interest bearing)

15-Jul-17 15-Jul-16
Local Banks - LCY
With BFI Class A 49,752,997 47,614,290
Foreign Banks - FCY
INR 373,644,279 338,030,937
Other Convertible currencies 625,298,037 1,272,649,516
1,048,695,313 1,658,294,743
These assets have been classified as loans and receivables and are subsequently measured at amortised costs.
Risks associated with these assets are regularly assessed.
4.6 Loans and advances to banks

15-Jul-17 15-Jul-16
Money at Call – Foreign Banks (FCY) 12,623,564,000 6,069,660,000
Short term Placements in Foreign Banks (FCY) 10,318,000,000 12,880,800,000
Less: Individual Impairment - -
Less: Portfolio Impairment - -
Loans and advances to bank net of impairments 22,941,564,000 18,950,460,000
These assets have been classified as loans and receivables and are subsequently measured at amortised costs.
Risks associated with these assets are regularly assessed.
These are interest bearing advances and the income on these assets is credited to statement of profit or loss under
interest income.
4.7 Loans and advances to customers

15-Jul-17 15-Jul-16
Gross Loan 39,707,549,323 31,663,671,666
Less: Individual Impairment (22,337,221) (26,651,000)
Less: Portfolio Impairment (152,635,196) (167,905,000)
Loans and advances to customers net of impairments 39,532,576,906 31,469,115,666

4.7.1 Current and non-current Loans and advances to customers

15-Jul-17 15-Jul-16
Current 23,601,074,524 19,392,512,666
Non-current 16,106,474,799 12,271,159,000
Total 39,707,549,323 31,663,671,666

4.7.2 Segmental Loan and advances
Loans and advances to customers have been further sub classified into two business segments, namely i) Corporate
and institutional banking customers and ii) Retail banking customers (including SME).
Corporate and Institutional customers

15-Jul-17 15-Jul-16
Gross Loan 19,056,114,210 16,154,830,000
Less: Individual Impairment - -

SME and Retail customers
15-Jul-17 15-Jul-16
Gross Loan 20,651,435,112 15,508,841,666
Less: Individual Impairment (22,337,221) (26,651,000)
4.7.3 Collateral securities against loans and advances to customers

Loans and advances to customers are backed by collateral securities to mitigate the default risk. The type of the
collaterals corresponding to the loans and advances to customers are given in the table below.
15-Jul-17 15-Jul-16
Secured
Movable / Immovable assets 34,364,823,326 26,602,937,814
Guarantee of NRB licensed BFI
Government Guarantee 138,807,033 138,807,033
Guarantee of international rated bank 1,603,893,094 1,737,054,048
Export documents
Fixed Deposit receipts 381,016,330 410,959,409
Own 41,244,730 24,576,997
Other BFI 339,771,601 386,382,412
Government securities / bonds
Counter guarantee
Personal guarantee
Other securities 3,241,296,117 2,807,586,280
Unsecured
Total 39,729,835,900 31,697,344,584
4.8 Investments in corporate securities

15-Jul-17 15-Jul-16
Corporate Securities 273,135,788 402,477,960
Other Investments 503,350,000 -
less Impairments - -
776,485,788 402,477,960
These include equity investments in four different companies. None of these investments result in control or significant
influence over the invested entities. These investments have been classified as available for sale assets. The movement
in fair value of these instruments have been adjusted through other comprehensive income.

Investments in CIC Ltd. and NCH Ltd.
These investments have been made as a strategic investment to support the Bank’s operational requirement. Similar
investments in the companies have been made by other banks and financial institutions. Both of these investments are
not actively traded in the market and, therefore are not liquid. The Bank has no intention to dispose these investments
in foreseeable future. The Bank considers that the cash flows that it expects to receive in the future exceeds the
carrying value of the investments. These investments have been carried at cost.
4.8.1 Nepal Grameen Bikas Bank Ltd. (NGBB)

Equity investment in NGBB is as a result of the Bank’s earlier investment in merged components of the new company,
namely in Purwanchal Grameen Bikas Bank Ltd. and Sudur Paschimanchal Grameen Bikas Bank Ltd. NGGB is the
merged entity of the 5 Bikas banks. Investments in NGBB include 600 ordinary shares of NPR 100 each fully paid up.
Initial investments in the erstwhile companies stood at NPR 6,000,000. The decrease in the paid up value was as a
result of the poor performance of those two companies and the agreed share exchange ratio in the merged entity. The
Bank made these investments to comply with the deprived sector lending requirement of the central bank.
4.8.2 Rural Micro-Finance Development Centre Limited (RMDC)

Investment in RMDC includes 694,649 ordinary shares of NPR 100 each fully paid up. This includes 172,749 bonus
shares received by the Bank.
4.8.3 Credit Information Centre Ltd. (CICL)

Investment in CIC includes 54,899 ordinary shares of NPR 100 each fully paid up, including 42,544 bonus shares
received by the Bank.
4.8.4 Nepal Clearing House Ltd. (NCHL)

Investment in NCH includes 25,000 ordinary shares of NPR 100 each fully paid up.
Fair Value Movement AFS Corporate Securities

15-Jul-17 15-Jul-16
Investment in equity shares at cost
NGBB Ltd -
PGBBL - -
SPGBBL - -
RMDC Ltd 52,190,000 52,190,000
CIC Ltd 1,235,500 1,235,500
NCH Ltd 2,500,000 2,500,000
55,926,000 55,926,000
No of shares
NGBB Ltd 600 600
PGBBL - -
SPGBBL - -
RMDC Ltd 694,649 574,090
CIC Ltd 54,899 36,599
NCH Ltd 25,000 25,000
Fair Value (also refer Note 4.15)

NGBB Ltd 223,800 324,000
PGBBL - -
SPGBBL - -
RMDC Ltd 269,176,488 398,418,460
CIC Ltd 1,235,500 1,235,500
NCH Ltd 2,500,000 2,500,000
273,135,788 402,477,960
Changes in Fair value (129,342,173) 210,667,485
NGBB Ltd (or the erstwhile entities in which the Bank had investments and that merged to form NGBB) has not
declared or distributed dividend in the past three years. Valuation of these financial instruments are given in Note 4.15.

4.9 Other Assets
Accounting Policy
The other assets that fall under the classification of financial instruments are carried at amortised costs and those
other assets that do not fall within the definition are carried at cost. These instruments are regularly monitored for
impairment.
Explanatory Notes

Particulars 15-Jul-17 15-Jul-16
Other Financial Assets
Income Receivable on investments 62,654,227 54,041,574
Accrued interest on loans 179,351,558 103,312,000
Commission receivable 115,198,319 76,466,574
Staff loans and advances 458,628,153 314,118,765
cash in transit - -
Advance Income Tax 18,415,563 55,931,539
834,247,820 603,870,453
Other Non-Financial Assets
Sundry debtors 74,394,172 25,084,300
Pre payments 24,110,308 22,087,788
Expenses not written off - -
Others 8,362,148 49,252,335
106,866,623 96,424,423
941,114,448 700,294,876
The expenses not written off pertaining to the unamortised premium on purchase of bonds has been included with the
bond under amortised cost method.
15-Jul-17 15-Jul-16
Non-Current 479,157,427 105,721,997
Current 461,957,021 594,572,879
941,114,448 700,294,876
Financial Liabilities
4.10 Deposits by banks
15-Jul-17 15-Jul-16
Non-Interest Bearing
Current Accounts LCY
Class A BFI * 59,381,851 154,337,632
Other BFI ** 3,420,216 2,524,040
Current Accounts FCY
Class A BFI 8,659,438 13,614,712
Interest Bearing
Call Deposits LCY
Class A BFI - -
Other BFI 276 3,494,048
Call Deposits FCY
Class A BFI 428,214,825 -
499,676,606 173,970,432
*Class A BFIs are Class A Banks (commercial Banks) licensed by Nepal Rastra bank
** Other BFIs are financial institutions other than Class A BFIs licensed by Nepal Rastra bank

4.11 Customer Accounts
15-Jul-17 15-Jul-16
Non Interest Bearing
Current Account deposits (LCY)
GoN 194,507,586 203,664,328
Other Organised Bodies 7,790,040,775 8,211,445,593
Individuals Others 459,702,512 531,926,278
Current Account deposits (FCY)
GoN 56,244,473 467,924,066
Margin deposits (LCY)
Guarantee Margin 448,409,219 437,131,851
LC Margin 178,021,317 127,454,541
Others 168,424,177 18,293,670
Other deposits (LCY)
Individuals Others - -
Interest Bearing
Saving Account deposits (LCY)
Individuals Others 18,035,430,508 20,837,555,340
Others 14,030 13,911
Saving Account deposits (FCY)
Other Organised Bodies 243,967,449 286,576,898
Others - -
Fixed deposits (LCY)
Fixed deposits (FCY)
Other Organised Bodies 11,248,696,989 710,182,985
Call deposits (LCY)
GoN 23,155,031 23,392,324
Others 2,020,496 1,877,254
Call deposits (LCY)
63,373,208,846 55,553,208,024
Current 63,349,411,078 55,516,588,024

Non-current 23,797,768 36,620,000
Total 63,373,208,846 55,553,208,024

4.12 Bills payables
15-Jul-17 15-Jul-16
LCY 48,323,986 269,573,409
FCY 28,335,638 40,610,164
76,659,624 310,183,573
4.13 Borrowings
15-Jul-17 15-Jul-16
Borrowing - 500,000,000
- 500,000,000
This is a short term borrowing from a local bank.
4.14 Other Financial Liabilities
Accounting Policy
Non financial liabilities are recorded and reported at cost based on legal and constructive obligation to the bank.
Provisions are recognised when the bank has a present legal or constructive obligation as a result of past events; it is
more likely than not that an outflow of resources will be required to settle the obligation and the amount can be reliably
estimated.
Explanatory Notes

Other Financial Liabilities
Interest payable on deposits 289,319,761 60,908,204
Interest payable on borrowings - 41,780
Dividend payable 55,906,752 140,154,411
Staff Bonus Payable 202,908,101 181,714,762
Other Creditors 394,861,291 360,740,199
Audit Fee Payable 2,050,000 2,050,000
Other Payables 246,223,640 155,615,473
1,191,269,545 901,224,830
Other Non-Financial Liabilities
Unearned discount and commission 189,671,475 159,158,220
189,671,475 159,158,220
1,380,941,020 1,060,383,050
Current 1,380,941,020 1,060,383,050

Non-current - -
Total 1,380,941,020 1,060,383,050
4.15 Valuation hierarchy

Assets and liabilities carried at fair value or for which fair values are disclosed have been classified into three levels
according to the observability of the significant inputs used to determine the fair values. Changes in the observability
of significant valuation inputs during the reporting period may result in a transfer of assets and liabilities within the fair
value hierarchy. The Bank recognises transfers between levels of the fair value hierarchy when there is a significant
change in either its principal market or the level of observability of the inputs to the valuation techniques as at the end
of the reporting period.

Level 1 fair value measurements are those derived from unadjusted quoted prices in active markets for identical assets
or liabilities.
Level 2 valuations are those with quoted prices for similar instruments in active markets or quoted prices for identical
or similar instruments in inactive markets and financial instruments valued using models where all significant inputs are
observable.
Level 3 portfolios are those where at least one input, which could have a significant effect on the instrument’s valuation,
is not based on observable market data.
Hierarchy of fair value measurement

15-Jul-17 Level 1 Level 2 Level 3
Assets
Treasury bills 4,280,892,441
Corporate Securities
NGBB Ltd 223,800
RMDC Ltd 269,176,488
CIC Ltd 1,235,500
NCH Ltd 2,500,000
269,400,288 4,280,892,441 3,735,500

Assets
Treasury bills 7,021,721,973
Corporate Securities
NGBB Ltd 324,000
RMDC Ltd 398,418,460
CIC Ltd 1,235,500
NCH Ltd 2,500,000
398,742,460 7,021,721,973 3,735,500

The following table presents the Bank’s financial instruments, which are held at the fair value. The table also presents
the valuation techniques used to measure the fair value of those financial instruments, the significant unobservable
inputs, and the range of values for those inputs.
Instrument Principal valuation technique Significant unobservable inputs

Treasury Bills Discounted cash flows Yield
Corporate securities
NGBB Ltd Comparable pricing Proxy pricing
RMDC Ltd Comparable pricing Proxy pricing
CIC Ltd Internal pricing model EV/EBITDA multiples, P/E multiples, Liquidity discount
NCH Ltd Internal pricing model EV/EBITDA multiples, P/E multiples, Liquidity discount
The following section describes the significant unobservable inputs identified in the valuation technique table.
Proxy pricing
Proxy pricing refers to the method where valuation is done by calculating an implied yield from the price of a similar
comparable observable instrument. The comparable instrument for a private equity investment is a comparable listed
company. The comparable instrument in case of bonds is a similar comparable but observable bond.
This may involve adjusting the yield to derive a value for the unobservable instrument.

EV/EBITDA ratio multiples
This is the ratio of EV to EBITDA, EV is the aggregate market capitalisation and debt minus the cash and cash
equivalents. An increase in EV/EBITDA multiple in isolation will result in a favourable movement in the fair value of the
unlisted firm.
P/E and price to book (P/B) multiples

P/E multiple is the ratio of the market capitalisation to the net income after tax. P/B multiple is the ratio of the market
capitalisation to the book value. The multiples are determined from multiples of listed comparables, which are
observable. An increase in P/E multiple or P/B multiple will result in a favourable movement in the fair value of the
unlisted firm.
Yield
Yield is the interest rate that is used to discount the future cash flows in a discounted cash flow model.
Liquidity discounts in the valuation of unlisted investments

A liquidity discount is primarily applied to the valuation of unlisted investments to reflect the fact that these stocks are
not actively traded. An increase in liquidity discount in isolation will result in unfavourable movement in the fair value of
the unlisted firm.
4.16 Fair value of Financial Instruments held at Amortised Costs on recurring basis
The following table shows the carrying amounts and incorporates the Bank’s estimate of fair value of those financial
assets and liabilities not presented on the Bank’s statement of financial position at fair value. These fair values may be
different from the actual amount that will be received or paid on the settlement or maturity of the financial instruments.
For certain instruments, fair value may be determined using assumptions for which no observable prices are available.
4.16.1 Fair value of Financial Assets held at amortised cost

Cash at vault 811,609,528
Balance with central bank 7,067,997,124
Balances with banks 1,048,695,313
Loans and Advances to banks 22,941,564,000
Loans and Advances to Customers 39,532,576,906
Other Financial Assets 834,247,820
72,236,690,692

Cash at vault 799,366,056
Balance with central bank 1,514,671,384
Balances with banks 1,658,294,743
Loans and Advances to banks 18,950,460,000
Loans and Advances to Customers 31,469,115,666
Other Financial Assets 603,870,453
54,995,778,302

4.16.2 Fair Value of Financial Liabilities held at amortised cost

Deposit by Bank 499,676,606
Customer Accounts 63,373,208,846
Bills Payable 76,659,624
Borrowings -
Other Financial Liabilities 1,191,269,545
65,140,814,620

Deposit by Bank 173,970,432
Customer Accounts 55,553,208,024
Bills Payable 310,183,573
Borrowings 500,000,000
Other Financial Liabilities 901,224,830
57,438,586,859
4.17 Fair value Level 3 disclosures

The following sets out the basis of establishing fair values of amortised cost financial instruments. These are not
generally traded and there is a significant level of management judgement involved in calculating the fair values.
Cash and balances at central banks

The fair value of cash and balances at central banks is their carrying amounts.
Loans and advances to banks

For loans and advances to banks, the estimated fair value of fixed interest bearing deposits is based on discounted
cash flows using the prevailing money market rates for debts with a similar credit risk and remaining maturity period.
These are generally the carrying amount of these assets.
Loans and advances to customers

The loans and advances to customers portfolio is well diversified by industry. The fair value of loans and advances to
customers with a residual maturity period of less than one year generally approximates the carrying value, subject to
any significant movement in credit spreads. The estimated fair value of loans and advances with a residual maturity
of more than one year represents the discounted amount of future cash flows expected to be received, including
assumptions relating to prepayment rates and, where appropriate, credit spreads. Expected cash flows are discounted
at current market rates to determine fair value. The rates for discounting for the purpose of fair value measurement
closely approximates the effective interest rate inherent in the instruments therefore the carrying value represents the
fair value.
Others assets
These assets are generally with the residual maturity of less than one year. The impact of discounted cash flows of
those assets having maturity period of more than one year is insignificant. Therefore the fair value of other assets
generally approximates the carrying amount.
Deposits and borrowings

The estimated fair value of deposits with no stated maturity period is the amount repayable on demand. The estimated
fair value of fixed interest bearing deposits and other borrowings without quoted market prices is based on discounting
cash flows using the prevailing market rates for debts with a similar credit risk and remaining maturity period.
4.18 Reclassification of financial assets

Financial assets and liabilities have been classified in accordance with the requirements of NFRS. These have been
presented consistently and there have been no reclassifications since 2013-14, when financial instruments were
restated under first time adoption of NFRS.

4.19 Risk Management
Board Risk Committee
Board.
Under Nepal Rastra Bank Directive on Corporate Governance, the Board has established a Board Risk Committee
with clear terms of reference. The Board Risk Committee is chaired by an Independent Non-Executive Director (INED),
Chairman of the Audit Committee is a member and Chief Risk Officer & Senior Credit Officer (“CRO & SCO”) is the
member/Secretary. The Committee meets minimum four times annually. The Committee oversees and reviews the
fundamental prudential risks including operational, credit, market, reputational, capital, liquidity and funding, and
country cross border risk, etc. The Board Risk Committee receives regular reports on risk management, including our
portfolio trends, policies and standards, stress testing, liquidity and capital adequacy, and is authorised to investigate or
seek any information relating to an activity within its terms of reference.
At the strategic level, risk in any business, but most especially in a Bank’s business, is clearly owned by the Board. The
Board Risk Committee’s role is to advise and help, diving deeply into issues of risk so that the Board is well placed to
perform its role as the ultimate owner of risk appetite.
Risk Governance
Effective Risk management is essential to consistent and sustainable performance for all of our stakeholders and
is therefore a central part of the Bank’s financial and operational performance. The Bank adds value to clients and
therefore the communities in which it operates, generating returns for shareholders by taking and managing risks.
Through our Risk Management Framework, we manage enterprise wide risks, with the objectives of maximizing risk-
adjusted returns while remaining within our risk appetite.
As part of this framework, the Bank uses a set of principles that describe its risk management culture, we wish to
sustain. The principles of risk management followed by the Bank include:
• Balancing risk and return.
• Conduct of business: seeking to achieve good outcomes for clients, investors and the market in which we operate,
while abiding by the spirit and letter of laws and regulations and demonstrating that we are Here for good through
our conduct.
• Responsibility and Accountability: Ensuring that risk taking is disciplined and focused, particularly within area of
authority, and that risk taking is transparent, controlled and reported in line with the Risk Management Framework,
within risk appetite boundaries and where there is appropriate infrastructure and resource.
•Anticipation: Anticipating material future risks, learning lessons from events producing adverse outcomes and
ensuring awareness of known risks
• Competitive advantage: Achieving competitive advantage through efficient and effective risk management and
control
Board.
Acting within an authority delegated by the Board, the Board Risk Committee, chaired by an independent non-executive
director (INED), has responsibility for oversight and review of prudential risks, including but not limited to credit, country
cross-border, market, pension, capital, liquidity and funding, and operational risks.
The Executive Risk Committee is responsible for the establishment of, and compliance with, policies relating to credit
risk, country cross-border risk, market risk, operational risk, pension risk and reputational risk. It is responsible for the
management of all risks other than those managed by ALCO.
The Executive Risk Committee (ERC) is represented by the senior management team including the heads of the
concerned risk management units and Chaired by the CEO. The committee meets normally in every two months
and reviews the Credit Risk, Operational Risk, Market Risk and Reputational Risk; analyzes the trend, assesses the
exposure impact on capital and provides a summary report to the Executive Committee. Its objective is to ensure
the effective management of risks throughout the Bank in support of the Bank’s Business Strategy. The Assets and
Liabilities Committee is responsible for the management of capital and establishment of, and compliance with, policies
relating to balance sheet management, including management of our liquidity, capital adequacy and structural foreign
exchange and interest rate exposure and tax exposure.
The Bank’s Committee Governance structure ensures that risk-taking authority and risk management policies are
cascaded down from the Board to the appropriate functional, client business, senior management and committees.
Information regarding material risk issues and compliance with policies and standards is communicated through the
business, functional, senior management and committees.

Credit Risk
Credit risk is the potential for loss due to failure of a counterparty to meet its obligations to pay the Bank in accordance
with agreed terms. Country Portfolio Standards / Guidelines and the Credit Approval Document (CAD) / Credit
Processing Manual govern the extension of credit to Corporate & Institutional Banking (CIB) and Commercial Banking
(CB) Clients and Retail Banking Clients respectively. Each policy provides the framework for lending to counterparties,
account management, product approvals and other product related guidance, credit processes and portfolio standards.
Credit risk under Retail Banking (including Business Banking), Commercial Banking and Corporate & Institutional
Banking is managed through a defined framework which sets out policies, procedures and standards covering the
measurement and management of credit risk. There is a clear segregation of duties between transaction originators in
the businesses and the approvers in the Risk functions. All credit exposure limits are approved within a defined Credit
Approval Authority Framework.
All Corporate and Institutional borrowers, at individual and group level, are assigned internal credit rating that supports
identification and measurement of risk and integrated into overall credit risk analysis.
The Credit Issue Committee (“CIC”), a sub-committee of Executive Risk Committee (ERC), is responsible for overseeing
clients in CIB, CB and Business Banking segments showing signs of actual or potential weaknesses and also for
monitoring of agreed remedial actions for such clients. The CIC reviews the existing Early Alert (“EA”) portfolio in CIB
and CB and stress account management (SAM) portfolio in Business Banking as well as new accounts presented to
the Committee. It also reviews Retail Portfolio to ensure credit issues / adverse trends in the portfolio are identified and
addressed through appropriate actions. The CIC additionally reviews and monitors strategies and actions being taken
on accounts within GSAM’s portfolio. It is chaired by the CEO and meets monthly.
For Retail exposures, portfolio delinquency trends are monitored continuously at a detailed level. Individual customer
behaviour is also tracked and considered for lending decisions. Accounts that are past due are subject to a collections
process, managed independently by the Risk Function. Charged-off accounts are managed by specialist recovery
teams.
The credit risk management covers credit rating and measurement, credit risk assessment and credit approval, large
exposures and credit risk concentration, credit monitoring, credit risk mitigation and portfolio analysis.
Operational Risk
We define Operational Risk as the potential for loss resulting from inadequate or failed internal processes, people and
systems or from the impact of external events, including legal risks. We seek to minimize our exposure to operational
risk, subject to cost trade-offs. Operational risk exposures are managed through a consistent set of management
processes that drive risk identification, assessment, control and monitoring. Operational Risk Framework (ORF)
adopted by the Bank provides comprehensive risk management tools for managing operational risk. The Operational
Risk Framework (ORF) defines how risks are managed, how Operational Risk policies and controls are assured, how
effective governance is exercised as well as the key roles required to manage the underlying processes.
The Executive Risk Committee, chaired by the CEO, oversees the management of operational risks across the Bank.
Each risk control owner is responsible for identifying risks that are material and for maintaining an effective control
environment across the organization. Risk control owners have responsibility for the control of operational risk arising
from the management of the following activities: External Rules & Regulations, Liability, Legal Enforceability, Damage
or Loss of Physical Assets, Safety & Security, Internal Fraud or Dishonesty, External Fraud, Information Security,
Processing Failure and Model. Operational risks can arise from all business lines and from all activities carried out by
the Bank. Operational Risk management approach seeks to ensure management of operational risk by maintaining a
complete process universe defined for all business segments, products and functions processes.
Products and services offered to clients and customers are also assessed and authorized in accordance with product
governance procedures.
The OR governance structure is as follows:
• Operational Risk governance ensures consistent oversight across all levels regarding the execution and effectiveness
of Operational Risk Framework (ORF).
• Risk Control Owners for all major Risk Types are appointed as per the Risk Management Framework (RMF) and are
responsible for effective management of operational risk of their respective control function.
• Operational risks are identified and graded at the business/unit level. For all risk graded low and above along with
the treatment plan are agreed with the Risk Control Owner before raising the risk in the system and tabling the risks
in Country Executive Risk Committee for acceptance. Mitigating controls are put in place and mitigation progress
monitored until its effectiveness.

• The Executive Risk Committee (ERC) ensures the effective management of Operational Risk throughout the
business/functions in support of the Group’s strategy and in accordance with the Risk Management Framework.
The ERC assigns ownership, requires actions to be taken and monitors progress of risks identified, in addition to
confirming the risk grading provided at the business/unit level.
• The Executive Risk Committee (ERC) accepts operational risks arising in the country provided the residual risk rating
is ‘low’ on the Group Operational Risk Assessment Matrix. All Risks that are rated Medium or above on the Group
Operational Risk Assessment Matrix are reported to the Executive Risk Committee (ERC) for endorsement and
escalated to the Group Process Owner by the relevant country process owner for acceptance through the relevant
Process Governance Committees (PGCs).
• The Financial Crime Risk Committee, a sub-committee of ERC chaired by the CEO, ensures appropriate governance
of Financial Crime risk and oversees the implementation of the Risk Management Framework as it relates to Financial
Crime.
• The Group Risk Committee (GRC) determines the Group’s approach to the management of operational risk in
accordance with the RMF. The GRC fulfils its responsibilities in part through delegation of authorities to properly
constituted committees as listed below:
• Group Operational Risk Committee (GORC) is responsible for governing operational risk across all functions, client
segments and products. It is in turn supported by Business Process Governance Committees (PGCs) appointed by
Process Universe Owners, which provide global oversight of all operational risks arising from end-to-end processes
within their Process Universes.
• Group Financial Crime Risk Committee (GFCRC) is responsible for governing financial crime risks across the Group
Process Universe. This includes financial crime operational risks arising from non-compliance with external rules
and regulations relating to International Sanctions, Anti-money-laundering & Terrorist financing and Anti-bribery and
Corruption.
• Group Information Management Governance Committee (GIMGC) provides oversight and drives best practice in
information management and data governance.
• Business and Geographic Risk Committees are responsible for ensuring the effective management of risk in the
businesses and across the geographies in support of the Group’s strategy.
Market Risk
We recognize Market Risk as the potential for loss of earnings or economic value due to adverse changes in financial
market rates or prices. Risks arising out of adverse movements in currency exchange rates, interest rates, commodity
price and equity prices are covered under Market Risk Management. Our exposure to market risk arises predominantly
from customer driven transactions. In line with Risk Management Guidelines prescribed by NRB, the Bank focuses on
exchange risk management for managing/computing the capital charge on market risk. The Bank adopts the Net Open
Position approach for reporting market risk.
In addition to currency exchange rate risk, interest rate risk and equity price risk are assessed at a regular interval to
strengthen market risk management. The market risk is managed within the risk tolerances and market risk limits set by
the Board.
Liquidity Risk
Liquidity risk is the potential that the Bank either does not have sufficient liquid financial resources available to meet
all its obligations as they fall due, or can only access these financial resources at excessive cost. The Liquidity Risk
Framework governs liquidity risk and is managed by ALCO. In accordance with that policy, the Bank maintains a liquid
portfolio of marketable securities as a liquidity buffer. The net liquid assets to total deposits ratio is 57 % which includes
a buffer of Rs.23.6 billion over the regulatory requirement.
Reputational Risk
Reputational risk is the potential for damage to the franchise, resulting in loss of earnings or adverse impact on market
capitalisation as a result of stakeholders taking a negative view of the organisation, its actions or inactions – leading
stakeholders to change their behaviour.
The Bank’s Reputational Risk Policy establishes the framework for the governance and management of reputational
risk. The framework aims to protect the Bank’s reputation and restrict the ability to undertake any activities that may
cause material damage to the Bank’s franchise.
Reputational risk is managed by the ERC and EXCO, which are responsible for protecting the Group’s reputation locally
and has the responsibility to ensure that the Bank does not undertake any activities that may cause material damage
to the franchise. All employees are responsible for day-to-day identification and management of reputational risk.

Pension Risk
Pension risk is the potential for loss due to having to meet an actuarially assessed shortfall in the Bank’s defined
benefits pension schemes. Pension obligation risk to a firm arises from its contractual or other liabilities to or with
respect to an occupational pension scheme. It represents the risk that additional contributions will need to be made to a
pension scheme because of a future shortfall in the funding of the scheme.
The ERC is responsible for pension risk. The Bank assesses and monitors the assets and liabilities within the defined
benefit scheme on a full liability method. The gross obligation is calculated taking into account the last drawn salary of
the individual staff and number of year’s service with the Bank.
Internal Control
The Bank is committed to managing risks and in controlling its business and financial activities in a manner which
enables it to maximize profitable business opportunities, avoid or reduce risks which can cause loss or reputational
damage, ensure compliance with applicable laws and regulations and enhance resilience to external events. To achieve
this, the Board has adopted the SCB Group policies and procedures of risk identification, risk evaluation, risk mitigation
and control/monitoring, besides implementation of the local regulations / NRB directives.
The effectiveness of the Company’s internal control system is reviewed regularly by the Board, its Committees,
Management and Internal Audit. The Audit Committee has reviewed the effectiveness of the Bank’s system of internal
control during the year and provided feedback to the Board as appropriate.
The Internal Audit monitors compliance with policies/standards and the effectiveness of internal control structures
across the Company through its program of business/unit audits. The Internal Audit function is focused on the areas of
greatest risk as determined by a risk-based assessment methodology. Internal Audit reports are periodically forwarded
to the Audit Committee. The findings of all audits are reported to the Chief Executive Officer and Business Heads for
initiating immediate corrective measures.
5. Impairment
Impairment of financial assets

The Bank assesses at each reporting date whether there is objective evidence that a financial asset or group of financial
assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred if, and
only if, there is objective evidence of impairment as a result of one or more events occurring after the initial recognition
of the asset (a loss event), and that loss event (or events) has an impact on the estimated future cash flows of the
financial asset or group of financial assets that can be reliably estimated.
The Bank considers the following factors in assessing objective evidence of impairment:
1. Whether the counterparty is in default of principal or interest payments
2. When a counterparty files for bankruptcy and this would avoid or delay discharge of its obligation
3. Where the Bank initiates legal recourse of recovery in respect of a credit obligation of the counterparty
4. Where the Bank consents to a restructuring of the obligation, resulting in a diminished financial obligation,
demonstrated by a material forgiveness of debt or postponement of scheduled payments
5. Where there is observable data indicating that there is a measurable decrease in the estimated future cash flows of a
group of financial assets, although the decrease cannot yet be identified with specific individual financial assets
Assets carried at amortised cost

The Bank first assesses whether objective evidence of impairment exists individually for financial assets that are
individually significant, and individually or collectively for financial assets that are not individually significant.
If the Bank determines that no objective evidence of impairment exists for an individually assessed financial asset,
whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics
and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an
impairment loss is or continues to be recognised, are not included in a collective assessment of impairment.
If there is objective evidence that an impairment loss on a loan and receivable or a held-to-maturity asset has been
incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present
value of estimated future cash flows (excluding future credit losses that have not been incurred), discounted at the
asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance
account and the amount of the loss is recognised in the statement of profit or loss. As a practical expedient, the Bank
may measure impairment on the basis of an instrument’s fair value using an observable market price.

The calculation of the present value of the estimated future cash flows of a collateralised financial asset reflects the
cash flows that may result from foreclosure, less costs for obtaining and selling the collateral, whether or not foreclosure
is probable. Further details on collateral held by the Bank is discussed in note 4.7.3.
For the purposes of a collective evaluation of impairment, financial assets are grouped on the basis of similar credit
risk characteristics (i.e. on the basis of the Bank’s grading process which considers asset type, industry, geographic
location, collateral type, past-due status and other relevant factors). These characteristics are relevant to the estimation
of future cash flows for groups of such assets being indicative of the debtors’ ability to pay all amounts due according
to the contractual terms of the assets being evaluated.
Future cash flows in a group of financial assets that are collectively evaluated for impairment are based on the
probability of default inherent within the portfolio of impaired loans or receivables and the historical loss experience for
assets with credit risk characteristics similar to those in the group. Historical loss experience is adjusted on the basis of
current observable data to reflect the effects of current conditions that did not affect the period on which the historical
loss experience is based, and to remove the effects of conditions in the historical period that do not exist currently.
To the extent a loan is irrecoverable, it is written down by charge to the profit or loss. Such loans are written off after all
the necessary procedures have been completed, it is decided that there is no realistic probability of recovery and the
amount of the loss has been determined.
Subsequent recoveries of amounts previously written off decrease the amount of the impairment charge to the profit
or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised (e.g. improvement in the debtor’s credit rating),
the previously recognised impairment loss is reversed by adjusting the allowance account and is recognised as income
in profit or loss.
Available-for-sale assets
Where objective evidence of impairment exists for available-for-sale financial assets, the cumulative loss (measured as
the difference between the amortised cost and the current fair value, less any impairment loss on that financial asset
previously recognised in the statement of profit or loss) is reclassified from equity and recognised in the profit or loss. A
significant or prolonged decline in the fair value of an equity security below its cost is considered, among other factors
in assessing objective evidence of impairment for equity securities.
If, in a subsequent period, the fair value of a debt instrument classified as available-for-sale increases and the increase
can be objectively related to an event occurring after the impairment loss was recognised, the impairment loss is
reversed through the statement of profit or loss. Impairment losses recognised in the profit or loss on equity instruments
are not reversed through the profit or loss.
Impairment of assets other than financial assets

At each reporting date the Bank assesses whether there is any indication that an asset may have been impaired. If
such indication exists, the recoverable amount is determined.
Explanatory Notes
Impairment Charge for the year 2016-17 2015-16
Financial Instruments
Cash at Vault - -
Balance with Central bank - -
Treasury Bills - -
Government Bonds - -
Balances with other banks - -
Loans and Advances to banks - -
Loans and Advances to customers
Impairment Charge for the period - 40,129,000
Impairment Reversed for the period (19,583,583) (17,008,000)
Investment in corporate securities - -
Property Plant and Instruments - -
Other Assets
Other Assets impairment reversed - (43,107,829)
(19,583,583) 19,986,829

6. Revenue
Accounting Policy
Income from financial instruments
Gains and losses arising from changes in the fair value of financial instruments held at fair value through profit or loss
are included in the statement of profit or loss in the period in which they arise. Contractual interest income and expense
on financial instruments held at fair value through profit or loss is recognised within net interest income.
For available-for-sale assets and financial assets and liabilities held at amortised cost, interest income and interest
expense is recognised using the effective interest method.
For income from loans and advances to customers, initial charges are amortised over the actuarially assessed life of the
loan and advances. The income so recognised closely approximates the income that would have been derived under
effective interest rate method. The difference is not considered material. The Bank considers that the cost of exact
calculation of effective interest rate method exceeds the benefit that would be derived from such compliance.
The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and
of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that
discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when
appropriate, a shorter period, to the net carrying amount of the financial asset or financial liability. When calculating
the effective interest rate, the Bank estimates cash flows considering all contractual terms of the financial instrument
(for example, prepayment options) but does not consider future credit losses. The calculation includes all fees paid or
received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all
other premiums or discounts.
Where the estimates of cash flows have been revised, the carrying amount of the financial asset or liability is adjusted to
reflect the actual and revised cash flows, discounted at the instrument’s original effective interest rate. The adjustment
is recognised as interest income or expense in the period in which the revision is made.
If the financial asset has been reclassified, subsequent increases in the estimates of future cash receipts as a result of
increased recoverability are recognised as an adjustment to the effective interest rate from the date of the change in
estimate.
Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss,
interest income is recognised using the rate of interest used to discount the future cash flows for the purpose of
measuring the impairment loss.
Gains and losses arising from changes in the fair value of available-for- sale financial assets, other than foreign
exchange gains and losses from monetary items, are recognised directly in equity, until the financial asset is
derecognised or impaired at which time the cumulative gain or loss previously recognised in equity is recognised in
profit or loss.
Dividends on equity instruments are recognised in the statement of profit or loss within other income when the Bank’s
right to receive payment is established.
Fees and commissions

Fees and commissions are generally recognised on an accrual basis when the service has been provided or significant
act performed. Loan syndication fees are recognised as revenue when the syndication has been completed and the
Bank retained no part of the loan package for itself, or retained a part at the same effective interest rate as for the other
participants. Portfolio and other management advisory fees and service distribution fees are recognised based on the
applicable contracts, usually on a time apportionment basis.
Explanatory Notes

Revenue 2016-17 2015-16
Interest Income 3,191,877,669 2,440,004,000
less: Interest Expense (863,459,635) (565,704,649)
Net Interest Income 2,328,418,034 1,874,299,351
Fees and Commission Income 417,852,214 311,311,795
Net Trading Income 610,568,563 629,555,473
Other Operating Income 60,091,919 85,948,718

3,416,930,730 2,901,115,337
6.1 Interest Income
2016-17 2015-16
Deposit with central Banks -
Treasury Bills 63,780,700 76,186,822
Govt Bond/NRB Bonds 26,681,590 17,228,471
Loans and Advances to Banks & FI 268,737,300 148,533,818
Debt investments -
Loans and Advances to Customers 2,811,170,275 2,181,551,960
Accrued on discounted assets (unwinding of discounts) - -
Other 21,507,804 16,502,929
3,191,877,669 2,440,004,000
6.2 Interest Expense

2016-17 2015-16
Customers accounts
Interest bearing savings deposits 297,807,779 329,796,092
Term (Time) Deposits 438,355,056 125,144,917
Call deposits 122,442,553 106,391,419
Debt Securities in issue -
Unwinding discount
Others 3,406,509 4,309,208
On borrowings 1,447,740 63,014
863,459,635 565,704,649

6.3 Fees and commission income
2016-17 2015-16
A. Bills Purchased and Discounted
Domestic 1,056 100,292
Foreign 9,738,648 11,222,278
B. Commission
Letters of Credit 31,251,349 30,001,449
Guarantees 240,570,850 142,610,291
Collection Fees 11,806,518 8,225,650
Remittance Fees 50,223,771 48,951,937
Credit Cards 34,233,415 23,736,856
Exchange Fees ( Batta Income) 4,446 5,225
C. Fees
Management Fees 3,765,725 1,889,394
Loan Processing Fees - -
Ledger and Activity Fees 18,789 19,069
Others (including income from Derivatives) 36,237,645 44,549,354
Total 417,852,214 311,311,795
6.4 Net Trading Income

2016-17 2015-16
Gains and Losses from Instruments Held for Trading
Foreign currency gains and losses arising on the translation 610,568,563 629,555,473
of foreign currency monetary assets and liabilities (also refer
Note 11.2)
610,568,563 629,555,473
6.5 Other Operating Income

2016-17 2015-16
Gains and losses on disposal of financial instruments -
Available for sale -
Loans and receivables -
Dividend Income 6,936,220 9,372,682
Gain on disposal of Property Plant and Equipments 1,152,091 20,695,782
Rental on Safe Deposit Locker 6,436,170 5,236,549
Issue and Renewals of Credit Cards 16,855,434 17,246,201
Issue and Renewals of ATM Cards 12,335,151 10,166,671
Telex /T.T. 14,454,146 14,133,776
Others operating income 1,897,758 1,312,539
Other non operating income 24,950 7,784,518
60,091,919 85,948,718

7. Property Plant and Equipments
Accounting Policy
Land and buildings comprise branches and offices. All property, plant and equipment is stated at cost less accumulated
depreciation and impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the
assets.
Subsequent costs are included in the asset’s carrying amount or are recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Bank and the cost of the
item can be measured reliably. All other repairs and maintenance are charged to the statement of profit or loss during
the financial period in which they are incurred.
Freehold land is not depreciated although it is subject to impairment testing. Depreciation on other assets is calculated
using the straight- line method to allocate their cost to their residual values over their estimated useful lives, as follows:
Buildings up to 50 years
Machineries up to 3 years
Leasehold improvements life of the lease period
Furniture and Fixtures up to 3 years
Computers and Office Equipments up to 3 years
Motor Vehicles up to 3 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial
position date. The value of the assets fully depreciated but continued to be in use is considered not material.
At each reporting date, assets are also assessed for indicators of impairment. In the event that an asset’s carrying
amount is determined to be greater than its recoverable amount, the asset is written down immediately to the
recoverable amount.
Assets with costs less than NPR 400,000 are charged off on purchase as revenue expenditure.
Gains and losses on disposals are included in the Statement of Profit or Loss.
Explanatory Notes

146
Description LAND BUILDINGS MACHINERY LEASEHOLD FURNITURE & OFFICE VEHICLES CAPITAL TOTAL
ASSETS FIXTURE EQUIPMENTS WIP
Original Cost (Rs.)

As at 16 July 2016 - - 45,143,838 84,404,749 26,278,895 176,144,179 58,867,417 - 390,839,078
Additions 26,294,029 19,483,629 8,895,000 54,672,658
Adjustment (5,521,636) (23,658,188) (4,934,900) (34,114,724)
(disposals and transfers)
As at 15 July 2017 - - 45,143,838 105,177,143 26,278,895 171,969,620 62,827,517 411,397,012

Depreciation (Rs.)
As at 16 July 2016 - - 36,941,633 67,697,702 24,580,217 156,330,752 55,552,041 - 341,102,345
Charge for the year 8,601,459 14,084,632 3,591,792 26,277,882
Attributable to sold/ (4,069,596) (23,658,188) (4,934,900) (32,662,684)
transferred/written off
As at 15 July 2017 - - 36,941,633 72,229,565 24,580,217 146,757,196 54,208,933 334,717,544
Impairment Charge -
Capital Work in Progress 26,238,498 26,238,498
As at 15 July 2017 - - 8,202,205 32,947,578 1,698,677 25,212,424 8,618,584 26,238,498 102,917,966
As at 16 July 2016 - - 8,202,205 16,707,047 1,698,677 19,813,427 3,315,375 21,569,353 71,306,086
8. Employee Benefits
Accounting Policy
Retirement benefit obligations

The Bank operates a defined contribution plan as provident fund contribution of its employees and defined benefit plan
for the Gratuity payment requirement under its staff rules. .
For defined contribution plan, the Bank pays contributions to an independently administered retirement fund on a
mandatory basis, and such amounts are charged to operating expenses. The Bank has no further payment obligations
once the contributions have been paid.
For funded defined benefit plans, the liability recognised in the statement of financial position (SFP) is the present value
of the defined benefit obligation less the fair value of plan assets. Such obligations are estimated on the basis of the
actuarial assumptions.
Explanatory Notes
8.1 Current Employee benefits

Following employee benefits costs are charged to the Statement of Profit or Loss for the period.

Salaries 335,127,206 300,485,037
Allowances 1,987,935 1,258,665
Training Expenses 5,194,596 6,449,647
Uniform Expenses 169,400 254,625
Medical Expenses 8,082,073 7,338,473
Insurance Expenses 2,479,193 3,925,477
Defined Contribution Plan – Expenses 18,918,632 16,140,020
Defined Benefit Plan – Expenses 21,324,035 20,673,000
Employee loan (interest rate benefit) 20,155,511 15,961,000
Staff Incentives 109,258,878 89,396,735
Others 46,013,596 42,368,143
Provision for staff bonus 202,908,103 181,714,764
771,619,157 685,965,585
Provision for staff bonus is a mandatory requirement under the requirement of the Bonus Act.
8.2 Retirement Benefits
Defined Benefit Plan – Liabilities

Opening Liability (excluding pre-payment) 250,982,390 231,225,917
Interest Charge (unwinding interest) 19,921,000 15,991,356
Current Service cost 22,887,000 18,715,871
Less: Gratuity Paid during the year (1,932,442) (14,071,000)
Closing Liability
Actuarial Gain or Loss 59,396,000 (880,000)
Assessed Liability (actuarial assessment) 351,253,948 250,982,390

Defined Benefit Plan – Assets

Opening Assets 236,511,593 148,443,000
(+) Estimated Investment Returns for the year 21,483,965 14,034,700
(+) Additional Investment during the year 91,932,443 88,104,300
(-) Withdrawal (payouts during the year) (1,932,442) (14,071,000)
Closing Assets 347,995,559 236,511,593
Net Defined Benefit Plan Liability 3,258,389 14,470,797

Net Charge 80,720,035 19,792,526
Net Charge – P&L 21,324,035 20,673,000
Net Charge (credit) – SoCE 59,396,000 (880,000)
Principal actuarial assumptions
Particulars Basis
Financial Assumptions
Discount Rate 7%
Inflation 5%
Salary inflation 6%
Investments of Plan Assets % of the fund
Interest bearing term deposits with the bank 100%
9. Intangible assets
Accounting Policy
Acquired Intangible Assets

Intangible assets are initially measured at fair value, which reflects market expectations of the probability that the future
economic benefits embodied in the asset will flow to the Bank, and are amortised on the basis of their expected useful
lives.
Computer software
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use
the specific software. Costs associated with the development of software are capitalised where it is probable that it
will generate future economic benefits in excess of its cost. Computer software costs are amortised on the basis of
expected useful life. Costs associated with maintaining software are recognised as an expense as incurred.
At each reporting date, these assets are assessed for indicators of impairment. In the event that an asset’s carrying
amount is determined to be greater than its recoverable amount, the asset is written down immediately.
Software assets with costs less than NPR 40,000,000 are charged off on purchases as revenue expenditure.
Explanatory Notes
The Bank has been operating on the software provided by its parent company, the Standard Chartered Bank (SCB).
No cost has been incurred by the Bank in procuring the software systems. The Bank pays for the maintenance of the
system, when required and such costs are included in the periodic maintenance expenses charged to SoPL.

10. Share Capital
Accounting Policy
Financial instruments issued are classified as equity when there is no contractual obligation to transfer cash, other
financial assets or issue available number of own equity instruments. Incremental costs directly attributable to the issue
of new shares are shown in equity as deduction net of taxes from the proceeds.
Dividends on ordinary shares and preference shares classified as equity are recognised in equity in the period in which
they are declared.
Explanatory Notes
10.1 Share capital detail

The company’s registered capital structure is as follows:
2016-17 No of share Value per share Capital in Value

Authorised capital 40,000,000 NPR100 4,000,000,000
Issued capital 40,000,000 NPR100 4,000,000,000
Paid up capital 40,057,153 NPR100 4,005,715,333
2015-16 No of share Value per share Capital in Value

Authorised capital 40,000,000 NPR100 4,000,000,000
Issued capital 28,124,260 NPR100 2,812,426,000
Paid up capital 28,124,260 NPR100 2,812,426,000
10.2 Share ownership detail

The shareholding pattern on the company is as follows
Shareholder Category 2016/17 2015/16

% of holding % of holding
Foreign Ownership 70.21 75
Domestic Ownership
Organised Entities 1.04 0.64
Individuals 28.75 24.36
100 100
10.2.1 Shareholders Holding 0.5% or more of the total share capital
Shareholder Category 2016/17 2015/16

% of holding % of holding
Standard Chartered Grindlays Ltd, Australia 46.81 50.00
Standard Chartered Bank, UK 23.40 25.00
Sashi Agrawal 0.7 0.75
Priyanka Agrawal 0.7 0.75
Komal Agrawal 0.7 0.75
Shankar Lall Agrawal 0.7 0.75
Avinash Agrawal 0.7 0.75
Arjun Bandhu Regmi 0.71

10.3 Equity Share Capital – over the years movements
Paid up share capital of the Bank has moved over the years as follows:
Financial Year Cumulative Paid up Capital NPR Remarks

1987-88 (2044-45 BS) 30,000,000 Opening Share Capital at NRS 60 paid up
1990-91 (2047-48 BS) 20,000,000 Capitalisation of Reserve NRS 100 paid up
1992-93 (2049-50 BS) to 1,991,672,000 Issuance of Bonus Shares and fraction adjusted
2013-14 (2070-71 BS)
2,041,672,000 Balance as at 17 July 2014
14-15 206,489,200 Issuance of Bonus Shares and fraction adjusted
15-16 564,264,800 Issuance of Bonus Shares and fraction adjusted
16-17 937,475,333 Issue of Bonus Shares and Fraction adjusted
255,814,000 Further Public Offer Issued
New shares have been issued by further public offering in the current year. The issue expenses for the further public
issue has been charged in Reserves.
Share capital also includes amounts collected from the shareholders for any odd lot bonus shares. Reconciliation of the
movements are given below.

Opening Share Capital 2,812,426,000 2,248,161,000
Bonus Share Capital 937,475,333 562,040,000
Fraction adjustment collected 2,225,000
Further Public Offer 255,814,000
Total Capital Increase 1,193,289,333 564,265,000
Closing Share capital 4,005,715,333 2,812,426,000
11. Reserves
Accounting Policy
The reserves include regulatory and free reserves.
Explanatory Notes

Regulatory / Statutory reserves
General reserve 3,181,848,015 2,897,528,787
Exchange fluctuation reserve 438,421,970 413,839,141
Available for Sale - reserve 218,195,288 347,537,460
Deferred Tax Reserve -
Free Reserve
Retained Earning 1,491,425,661 1,264,875,999
Share Premium 3,044,186,600
8,374,077,534 4,923,781,388

11.1 General Reserve
There is a regulatory requirement to set aside 20% of the net profit to the general reserve until the reserve is twice the
paid of share capital and thereafter minimum 10% of the net profit. The reserve is the accumulation of setting aside of
profits over the years.
11.2 Exchange Fluctuation Fund

There is a regulatory requirement to set aside 25% of the foreign exchange revaluation gain on the translation of foreign
currency to the reporting currency. The reserve is the accumulation of such gains over the years. (also refer note 6.4)
11.3 Other reserve (2% provision on Available for Sale - Financial Assets)
There is a regulatory requirement to make a provision by appropriating the reserve equivalent to 2% of the available for
sale financial assets.
11.4 Movement in reserves

Movements in the reserves are given in detail in Statement of Changes in Equity.
12. Taxation
Accounting Policy
Income tax payable on profits is based on the applicable provisions of the Income Tax Act 2058 BS and is recognised
as an expense in the period in which profits arise.
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax is
determined using tax rate applicable to the bank as at the reporting date which is expected to apply when the related
deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised where it is probable that future taxable profit will be available against which the
temporary differences can be utilised.
Current and deferred tax relating to items which are charged or credited directly to equity, is credited or charged directly
to equity and is subsequently recognised in the statement of profit or loss together with the current or deferred gain or loss.
Explanatory Notes
12.1 Current Taxes

The Bank‘s current tax liabilities are calculated using the Income Tax Act 2058 BS as applicable in Nepal. Current tax
payable (or recoverable) is based on the taxable profit for the year. Taxable profit differs from the profit reported in the
statement of profit or loss, because some item of income or expense are taxable or deductible in different years or may
never be taxable or deductible. .
12.1.1 Reconciliation between the reported profit and profit for the computation of
current year’s provision for taxes.
Net Profit As per SoPL 1,484,313,913

NFRS Adjustments 62,717,777
Regulatory NPAT 1,547,031,689
Provision for Tax 595,512,262
Deferred Tax 102,016,659
PY Tax
Bonus Provision 202,908,103
2,447,468,713
Bonus 10% 202,908,103
Profit Before Tax After Bonus 2,244,560,610
Income Tax Related Adjustments (259,519,736)
Taxable Income 1,985,040,874
Provision for Income Tax (@ 30%) 595,512,262

12.2 Tax Settlement Status
The Bank’s income tax assessments by the tax authorities are final and settled up to the income year 2011-12. For
financial year 2012-13 (2069-70) LTPO had done the reassessment of tax in the previous year. A demand of Rs. 0.16
Mio was made.
The income years whose settlement are still due where the bank has made provisions as per its self assessment returns
and the amount of advance tax paid is as under.
Income Years Provision for Tax Advance Tax Advance Cumulative

(as per self- Paid Tax Net of (yet to be
assessment) Provision assessed)
2012-13 527,104,938 546,675,233 19,570,295 19,570,295
2013-14 571,524,721 595,490,233 23,965,512 43,535,807
2014-15 586,716,733 561,471,336 (25,245,397) 18,290,410
2015-16 502,475,497 540,116,625 37,641,128 55,931,538
2016-17 595,512,262 557,996,287 (37,515,975) 18,415,563
12.3 Tax assessment Status

For the financial year 2005-06 (2062-63) the Revenue Tribunal had decided the case in the banks favour. The same has
been challenged by the LTPO in the Supreme Court and the case in under consideration. The total amount that was
demanded by LTPO is Rs. 2.6 Mio.
Financial Year 2013-14 to 2015-16

The self assessment returns filed by the Bank for financial year 2013-14 (2070-71 BS) to 2015-16 (2072-73 BS), has not
yet been opened for reassessment by the LTPO.
12.4 Deferred Taxes
2016-17
Particulars Carrying Amount Tax Base Temporary

Diff
Property, Plant & Equipment 76,679,468 215,683,871 (139,004,403)
Defined Benefit Plan Prov 3,259,159 - (3,259,159)
Performance bonus Prov 56,973,239 - (56,973,239)
Premium on Development Bond 6,646,918 35,699,630 (29,052,712)
Lease Liability 50,798,495 - (50,798,495)
Interest receivable 166,742,406 - 166,742,406
Loans and Advances 39,532,576,906 39,263,690,286 268,886,620
Total 156,541,018
Tax Rate @ 30% 46,962,305
Deferred Tax Liability / (Asset) - 15.07.2016 28,906,299
Deferred Tax Expense / (Income) - 2016-17 18,056,006
Deferred Tax liability / (Asset) - 15.07.2017 46,962,305
Deferred Tax Expense / (Income) - 2016-17 P&L 35,874,806
Deferred Tax Expense / (Income) - 2016-17 OCI (17,818,800)

2015-16
Particulars Carrying Amount Tax Base Temporary Diff
Property, Plant & Equipment 49,737,000 177,965,000 (128,228,000)
Defined Benefit Plan Prov 14,471,407 - (14,471,407)
Performance bonus Prov 47,584,000 - (47,584,000)
Premium on Development Bond 9,622,000 35,700,000 (26,078,000)
Lease Liability 43,238,072 - 43,238,072
Interest receivable 103,312,000 - 103,312,000
Loans and Advances 31,469,115,666 31,302,950,000 166,165,666
Total 96,354,331
Tax Rate @30% 28,906,299
Deferred Tax Liability / (Asset) - 16.07.2015 (5,504,807)
Deferred Tax Expense / (Income) - 2015-16 34,411,106
Deferred Tax liability / (Asset) - 15.07.2016 28,906,299
Deferred Tax Expense / (Income) - 2015-16 P&L 34,147,106
Deferred Tax Expense / (Income) - 2015-16 OCI 264,000
13. Assets held for sale and discontinued operations
Accounting Policy
Non-current assets (such as property) and disposal groups (including both the assets and liabilities of the disposal
groups) are classified as held for sale and measured at the lower of their carrying amount and fair value less cost to sell
when: (i) their carrying amounts will be recovered principally through sale; (ii) they are available-for-sale in their present
condition; and (iii) their sale is highly probable.
Immediately before the initial classification as held for sale, the carrying amounts of the assets (or assets and liabilities
in a disposal group) are measured in accordance with the applicable accounting policies described above.
Explanatory Notes
There are no assets that meet the recognition criteria for assets held for sale and discontinued operation.
The assets pertaining to the branches that are closed are relocated to other operating branches for reuse. Those that
cannot be reused are charged off immediately.
The Bank does not hold any assets that were pledged as collateral by the customer as a result of foreclosure of the
loan.
14. Foreign Currencies
Accounting Policy
Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
transaction date.
Foreign exchange gains and losses resulting from the settlement of such transactions, and from the translation at
year-end exchange rates of monetary assets and liabilities denominated in foreign currencies, are recognised in the
statement of profit or loss.
Non-monetary assets and liabilities are translated at historical exchange rates if held at historical cost, or year-end
exchange rates if held at fair value, and the resulting foreign exchange gains and losses are recognised in either the
statement of profit or loss or shareholders’ equity depending on the treatment of the gain or loss on the asset or liability.
Explanatory Notes

2016-17 2015-16
Net Transaction gain / (loss) due to changes in foreign exchange rates 512,237,246 512,123,485
Net Translation gain / (loss) as a result of translation of balances of monetary assets 98,331,317 117,431,988
and liabilities held at foreign currencies
610,568,563 629,555,473
25% of the translation gain to be set aside in reserves 24,582,829 29,357,997
15. Premises cost
Accounting Policy
recognised when they become due for payment.
Explanatory Notes
2016-17 2015-16
Lease rental (building and premises rent) 81,611,272 81,044,617
Light Electricity Water 15,966,862 25,614,975
Repair and maintenance - building 5,464,014 6,692,836
Security Expenses 22,071,040 23,724,375
125,113,188 137,076,803
16. General Administrative Expenses
Accounting Policy
All the general administrative expenses are recognised when the bank is obligated to make the payments, either legally
or constructively.
Explanatory Notes
2016-17 2015-16
Repair and Maintenance
Vehicle 3,022,872 2,047,872
Office equipments and furniture 10,137,996 11,266,200
Others 6,805,685 12,739,359
PPE charged off (not capitalized items) 33,464,571 25,872,367
Insurance 22,095,640 14,173,565
Postage, Telex, Telephone, Fax 32,414,198 27,977,282
Travelling Allowances and Expenses 12,958,718 11,053,569
Stationery and Printing 28,344,748 17,947,045
Periodicals and Books 36,570 99,766
Advertisement 17,177,857 21,095,755
Legal Expenses 644,213 405,880
Donations - -
Expenses Relating to Board of Directors
Meeting Allowance 554,000 702,500
Others Expenses 495,347 576,109
General Meeting Expenses 1,594,155 1,458,070
Expenses Relating to Audit
Audit Fees 2,050,000 2,050,000
Other Expenses

Share Issue Expenses -
Technology Support Cost (Technical Services Fees ) 96,993,597 62,726,476
Entertainment 2,915,395 2,102,430
Written Off Expenses 2,199,207 5,181,869
Commission and Discount 8,494,221 9,602,142
Others
Software Expenses 10,494,632 8,034,695
Cleaning, Pest Control and Waste Management 8,912,701 9,617,341
Share Listing and Registration Expenses 3,909,227 670,000
Other Professional Fees 13,338,595 13,385,143
Hire of vehicles and equipments 1,760,999 1,561,750
Clearing House Charges 2,118,741 1,480,345
Credit information and Collection Expenses 1,024,026 818,015
Others 15,758,543 12,574,061
339,716,456 277,219,607
16.1 Audit Fees and expenses

Details of expenses relating to audit and auditors are as follows.
2016-17 2015-16
Audit Fees - -
Other audit related expenses - -
Audit and other expenses 2,050,000 2,050,000
2,050,000 2,050,000
17. Depreciation and Amortisation
Accounting Policy
The Bank’s accounting policy related to the depreciation of property plant and equipment has been discussed in note 7.
Amortisation of expenses, wherever appropriate is apportioned on the basis of the pattern of the economic benefit
derived, which for the Bank is usually the time apportioned basis.
Explanatory Notes
2016-17 2015-16
Amortisation of expenses -
26,277,882 20,463,281
18. Others (extraordinary items)

2016-17 2015-16
Recovery of Loans written off 8,055,204 10,295,392
Unrecoverable loan written off (2,567,996)
Others (5,940,000)
8,055,204 1,787,396
19. Earnings per share

Accounting Policy
The Bank measures earning per share on the basis of the earning attributable to the equity shareholders for the period.
The number of shares is taken as the weighted average number of shares for the relevant period as required by NAS 33
Earnings per Share.
Explanatory Notes

2016-17 2015-16
Earning attributable to equity shareholders 1,549,986,963 1,264,684,862
Weighted average number of shares for the period 34,031,848 23,130,903
Earning per share (NPR) 45.55 54.68
There are no instruments, such as convertibles, that would require dilution of EPS, therefore diluted EPS has not been
computed and disclosed.
20. Dividends
Accounting Policy
Distribution of profit to the shareholders is done by way of payment of cash dividend and /or issue of bonus shares.
Applicable withholding taxes are deducted from such distribution. The distributions are proposed by the board and
approved by the Annual general meeting. The proposed dividend and bonus shares are not adjusted in the books
instead disclosed by way of notes.
Explanatory Notes
1.1 Proposed Distributions (Dividends and Bonus Shares)
The Board has recommended 5.26% as cash dividend and 100% bonus shares as appropriation for the reported year,
2016-17. This proposal of the Board of Directors is subject to the ratification by the Annual General meeting of the
Shareholders.

Cash Dividends declared - 49,340,807
Bonus Shares - 937,475,333
Total - 986,816,140
1.2 Unpaid Dividends
As at the reporting date, unpaid dividends for over five years amounts to as follows.

Not collected for more than 5 years 13,248,546 6,989,871
Not collected less than 5 years 42,658,205 133,164,540
55,906,752 140,154,411
21. Segmental Reporting
Accounting Policy
The Bank is organised for management and reporting purposes into segments such as: Retail Clients, Corporate &
Institutional Clients and Treasury. The products offered to these client segments are summarised under ‘Income by
product’ below. The focus is on broadening and deepening the relationship with clients, rather than maximising a
particular product line. Hence the Bank evaluates segmental performance based on overall profit or loss before taxation
(excluding corporate items not allocated) and not individual product profitability. Product revenue information is used
as a way of assessing client needs and trends in the market place. The strategies adopted by the client segments is
adapted to local market and regulatory requirements.

Segment Description: the Bank has disclosed its operations under the following segments:
Segment Definition Activity
Retail Banking Retail Banking serves retail clients through the branch network and other
delivery channels. This segment raises deposits from customers and makes
loans and provides other services to such customers. This segment also
includes activities relating to credit cards, debit cards, mortgage loans, auto
loans, SME segments and third party product distribution. Exposures are
classified under Retail Banking taking into account the orientation, product,
granularity and individual exposure criteria.
Commercial (CB) and Corporate
& Institutional Client (C&IB) Local corporate financing, advances to partnership firms, companies and
statutory bodies, which are not included under Retail Banking segments,
Treasury include foreign exchange, fixed income, and money market and
derivative transactions are reported under CB,C&IB and
Others Others include ALM, Corporate Real Estate Services, other items not allocable
in the aforementioned Segments.
Explanatory Notes:
Segment revenues are aggregate of net income reported by the Bank under various heads. Segment results are
determined after considering the following inter-unit notional charges/recoveries.
i) Fund Transfer Pricing (FTP): Treasury gives notional interest benefits to other segments for funds mobilised by the
latter through deposits and similarly charges notional interest to other divisions for funds utilised by them for lending
and investment purposes. Based on tenor of assets/liabilities and market scenarios, Treasury calculates notional
interest rates used for this purpose.
ii) Support costs (costs pertaining to Finance, HR, Corporate Real Estate Services, Legal & Compliance, Corporate
Affairs, Information Technology etc) are allocated to Retail, C&I & Treasury segments based on Management’s
estimates of the benefits accruing to these segments for the costs incurred. This is similar to the basis used for the
internal management reporting.
2016-17 Retail Commercial C&IB Others Total

Particulars
Net Segment Revenue 1,508,625,516 647,880,834 1,145,894,178 114,530,202 3,416,930,730
Net Segment Results 674,200,816 493,139,264 876,799,937 110,064,030 2,154,204,046
Provision for Tax 186,757,878 136,602,686 242,879,112 29,272,586 595,512,262
Net Profit 484,675,885 354,512,637 630,322,265 80,476,176 1,549,986,963
Segment Assets 21,193,601,893 14,472,267,050 4,658,625,378 37,389,043,799 77,713,538,121
Segment Liabilities 29,968,205,751 2,869,736,987 31,884,787,392 12,990,807,991 77,713,538,121
Depreciation 11,941,457 - 272,243 14,064,183 26,277,882
Contingent 596,279,265 4,687,923,923 21,558,003,753 53,463,251 26,895,670,192
2015-16 Retail Commercial CIB Others Total

Particulars
Net Segment Revenue 1,280,885,382 550,077,590 972,911,492 97,240,873 2,901,115,337
Net Segment Results 557,208,326 407,565,962 724,650,897 90,964,876 1,780,390,061
Provision for Tax 157,849,311 115,457,726 205,283,445 24,741,433 503,331,917
Net Profit 395,462,845 289,258,410 514,300,472 65,663,134 1,264,684,862
Segment Assets 17,821,457,015 12,169,563,552 3,917,384,707 31,440,018,600 65,348,423,874
Segment Liabilities 25,199,920,867 2,413,128,953 26,811,552,411 10,923,821,642 65,348,423,874
Depreciation 9,299,127 - 212,003 10,952,150 20,463,281
Contingent 559,770,347 4,400,892,259 20,238,052,794 50,189,809 25,248,905,210

Related Party Disclosures
Accounting Policy
The Bank identifies the following as the related parties under the requirements of NAS 24.
i) Ultimate parent company as a result of the Bank’s major shareholders and companies within definition of the Group
of the ultimate parent company
ii) Post employment benefit plan for the benefit of the employees
iii) Directors of the Bank and their close family members, if any
iv) Key Managerial Personnel and their close family members, if any
Explanatory Notes
21.1 Ultimate Parent and the Group
i) Ultimate Parent Company : Standard Chartered Plc., London, UK
ii) Major Shareholders

(a) Standard Chartered Grindlays Ltd, Australia: Holding 46.81% of shares
(b) Standard Chartered Bank, UK: Holding 23.40% of shares
Related parties with whom transactions have occurred during the current year.
(a) Head Office and Branches of Head Office
1. Standard Chartered Bank, UK
2. Standard Chartered Bank, India
3. Standard Chartered Bank, Japan
4. Standard Chartered Bank, Singapore
5. Standard Chartered Bank, USA
6. Standard Chartered Bank, Germany
7. Standard Chartered Bank, Indonesia
8. Standard Chartered Bank, Qatar
9. Standard Chartered Bank, U.A.E
10. Standard Chartered Bank, Bangladesh
11. Standard Chartered Bank, Sri Lanka
12. Standard Chartered Bank, Vietnam
(b) Subsidiaries of Head Office (Standard Chartered Bank UK)

1. Standard Chartered Bank (Mauritius) Limited
2. Scope International Private Limited
3. Standard Chartered Bank (Hong Kong) Limited
4. Standard Chartered Bank (China)
5. Standard Chartered Bank Malaysia
6. Standard Chartered Thailand
7. Standard Chartered Pakistan
The Bank being a subsidiary of an international bank avails of support services from its global support functions
governed by approved agreements. Foreign currency funds have mainly been placed with Standard Chartered Bank
(SCB) network points. These funds are all under the management of Standard Chartered Group with high governance
levels and acceptable country risks and returns.
NPR ‘000
SCB Group
Transaction during the year
2016-17 2015-16
Placements (total placements made during the year) 2,345,733,346 2,462,434,945
Interest on placements 220,347 155,769
Shared Service Center Costs 96,994 620,001
Training Fees - -
Other transactions - -

NPR ‘000
SCB Group
Yearend Balance
15.07.2017 15.07.2016
Placements 22,941,564 14,656,860
Nostro Balances 778,636 1,204,156
Interest Receivable 60,727 31,435
Shared Service Cost Payable - -
Trade Contingents 5,363,496 4,958,486
Fee Income Receivables 110,917 16,543
21.2 Post Employee benefit plan for the benefit of bank’s employees
The Bank operates an approved retirement benefit plan for the benefit of its employees. The amount of the contribution
made to such plan and amount of payments made to the Bank’s employees under the Bank’s staff rules have been
described in note 8.
21.3 Transactions with and payments to directors of the bank

Following payments have been made to the directors of the Bank
NPR ‘000
Directors’ sitting fees 554 703
Directors’ travel and meeting expenses 495 576
Other directors’ expenses (if any) - -
Remuneration and bonus of the Executive director(s) 21,036 21,259
Other benefits of the Executive director(s) 13,146 12,505
35,231 35,042
Payments to the executive director are net of taxes, tax amounted for NPR 15,767 thousand (previous year NPR 16,066
thousand)
Details of the board of directors and their composition, and changes if any during the period, are disclosed in the
director’s report.
There have been no payments or transactions with the close family member of the directors, except in the normal
course of banking business.
21.4 Transactions with and payment to key management personnel (other than
directors) compensation
The Bank defines its executive committee members as the key management personnel other than its directors. One
of executive committee members is the director of the Bank and payments and transactions relating to the executive
director are disclosed above under 21.3.
NPR ‘000
Remuneration and current employee benefits 25,524 22,810
Terminal benefit (gratuity) 10,365 5,645
Bonus (statutory bonus and welfare assistance) 14,609 14,437
Performance Bonus 9,583 9,245
Vehicle benefit - car allowance 3,960 3,960
Other benefits and payments 1,907 1,722
65,948 57,819

Benefits are paid as per the Staff service bye-laws. Statutory bonus is paid in accordance with the requirement of the
Bonus Act. Performance bonus is paid in accordance with the performance assessment procedures practiced within
the Bank. Vehicle allowance is as per the Bank’s Rules.
Details of the key management personnel and their composition, and changes if any during the period, are disclosed in
the key management personnel report.
There have been no payments or transactions with the close family member of the key managerial personnel except in
the normal course of banking business.
22. Regulatory reporting reconciliations for 2016-17

2016-17 2015-16
Profit as per Regulatory accounts 1,421,596,136 1,292,494,632
Govt bond - adjustment to income
Notional Interest - staff Loan 20,155,511 15,961,000
Notional Interest - staff cost (20,155,511) (15,961,000)
Processing Fee (71,417,102) (46,207,918)
Loan amortised cost interest 49,130,524 12,535,000
Accrued Interest (P/Y difference) 61,972,541 (4,074,668)
Govt Bond unwinding Interest
Adjust Loan Loss Provision 301,728,548 215,468,928
Adjust Reversal of loan loss (210,394,339) (240,965,683)
Deferred Tax (24,370,980) (12,826,421)
Reversal of previous impairments 48,260,991
Share Issue Expenses 21,741,635
DBP Adjustment -
NFRS Profit 1,549,986,963 1,264,684,862
Reconciliation of adjustments made to SoCE
Loans and Advances Impairment (199,838,987)

Loans and Advances EIR Adjustments 33,672,918
Interest Suspense adjustment (103,312,000)
Deferred Tax 106,786,675
Total (162,691,395)
Interest Suspense adjustment 166,742,406

AFS FV Adjustment 129,342,173
Loans and Advances Impairment 291,173,198
Accrued Income (61,972,541)
Loans and Advances Charge / Reversal (91,334,209)
Deferred Tax Adjustment (130,688,708)
Deferred Tax OCI Adjustment 24,370,980
Total 327,633,298

23. Events after reporting period
Accounting Policy
Bank monitors and assesses events that may have potential impact to qualify as adjusting and / or non-adjusting
events after the end of the reporting period. All adjusting events are adjusted in the books with additional disclosures
and non-adjusting material events are disclosed in the notes with possible financial impact, to the extent ascertainable.
Explanatory Notes
There are no material events that have occurred subsequent to 15 July 2017 till the signing of this financial statement on
8 December 2017.
24. Contingent Liabilities and Commitments
Accounting Policy
Contingent liabilities: Where the Bank undertakes to make a payment on behalf of its customers for guarantees issued,
such as for performance bonds or as irrevocable letters of credit as part of the Bank’s transaction banking business
for which an obligation to make a payment has not arisen at the reporting date, those are included in these financial
statements as contingent liabilities.
Other contingent liabilities primarily include revocable letters of credit and bonds issued on behalf of customers to
customs, for bids or offers.
Commitments: Where the Bank has confirmed its intention to provide funds to a customer or on behalf of a customer
in the form of loans, overdrafts, future guarantees, whether cancellable or not, or letters of credit and the Bank has not
made payments at the reporting date, those instruments are included in these financial statement as commitments.
Explanatory Notes
The Bank seeks to comply with all applicable laws and regulations, but may be subject to regulatory actions and
investigations, the outcome of which are generally difficult to predict and can be material to the bank.
In addition to these matters, the Bank may receive legal claims against it in the normal course of business. The Bank
considers none of these claims as material. Where appropriate, the bank recognises a provision for liabilities when it is
probable that an outflow of economic resources embodying economic benefits will be required and for which a reliable
estimate can be made of the obligation(s).
15-Jul-17 15-Jul-16
A. Contingent Liabilities
Claims on Bank not acknowledged as liabilities - 2,000,000
Irrevocable Letter of Credits
Maturity period of less than 6 months 2,197,811,299 2,366,418,274
Maturity period of more than 6 months 84,816,948 92,396,326
Unexpired Guarantees
Bid Bonds 530,388,617 43,637,500
Performance Bonds 799,950,220 565,123,676
Guarantees against counter guarantee of International Rated Banks 11,075,996,648 11,080,380,603
Financial Guarantees 26,701,500 41,500,000
Advance Payment Guarantee 28,697,944 22,164,388
Other Guarantees 491,992,475 471,116,640
Contingent Liabilities on Taxes - -
Other Contingent Liabilities 788,640,415 550,902,660
16,024,996,066 15,235,640,067

B. Rediscounted Bills - -
C. Bills for Collections 1,173,476,647 756,880,383
D. Commitments
O/s liabilities of forward exchange contracts 2,376,477,206 2,226,620,057
Acceptances and Endorsements 729,589,385 331,057,625
Underwriting Commitments - -
Irrevocable Loan Commitments 6,591,130,889 6,698,707,078
Other Commitments - -
9,697,197,480 9,256,384,760
Grand Total 26,895,670,192 25,248,905,210
24.1 Risk management

These exposures have been managed under the Bank’s risk management system. The risk management system has
been discussed in Note 4.19.
24.2 Collateral
The contingent liability exposures are adequately covered by collateral securities from the customers.
25. Cash Flow Statements
25.1 Effect of changes in foreign exchange rates on cash and cash equivalent
Effect of changes in foreign exchange rates on cash and cash equivalent has been disclosed under the net trading
revenue. These are operating assets and the effect of exchange rates on cash and cash equivalent cannot be
separately calculated.
25.2 Cash and cash equivalents
Accounting Policy
For the purposes of the cash flow statement, cash and cash equivalents comprise cash, on demand and overnight
balances with central banks (unless restricted) and balances with banks with less than three months maturity period.
Loans and advances to banks, treasury bills and government bonds are not considered for cash and cash equivalent as
these are investments made by the Bank.
Explanatory Notes

15-Jul-17 15-Jul-16
Cash at vault 811,609,528 799,366,056
Balances with Central bank 7,067,997,124 1,514,671,384
Balances with banks 1,048,695,313 1,658,294,743
Less restricted balances* (2,555,376,047) (1,905,045,000)
Total 6,372,925,919 2,067,287,184
*Note: Restricted balance comprises of minimum balance required to be held at central bank
26. Interim reports

Interim reports corresponding to the financial statements reported had been reported in accordance with the regulatory
reporting requirements. Those statements have been published.

Disclaimer
Standard Chartered Bank Nepal Limited is an
Equal employment Opportunity/Affirmative
Action employer. Standard Chartered Nepal
Bank Limited is committed to providing equal
employment opportunities to every employee
and every applicant for employment, regardless
of, but not limited to, such factors as race,
color, religion sex, age, familial or marital status,
ancestry, sexual orientation, veteran status or
being qualified individual with a disability; within
the legal framework of the country.
Standard Chartered Bank Limited undertakes
no obligation to update any statement in this
Annual Report 2016-2017 to reflect events or
circumstances after the date on which such
statement is made.


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Annual Report 2016-2017 Standard Chartered 1

Annual Report 2016-2017

31st Annual General Meeting

Annual Report 2016-2017 Standard Chartered 1

For further information please visit www.sc.com/np or /StandardCharteredNP

Annual Report 2016-2017 Standard Chartered 3

Strategic Report Performance Highlights........................................................06

Report of the Board of Directors .........................................08

Chief Executive Officer’s Report..........................................15

Corporate governance Our Approach to Corporate Governance.............................19

Branch and ATM Network....................................................42

Proﬁt & Loss Account...........................................................46

Proﬁt & Loss Appropriation Account....................................47

Statement of Changes in Equity...........................................48

Cash Flow Statement...........................................................49

Signiﬁcant Accounting Policies............................................84

Disclosure as per Bank’s disclosure policy........................103

Nepal Rastra Bank’s Approval and Directions...................110

Five Years Financial Summary...........................................111

Financial Statement as per NFRS......................................113

Annual Report 2016-2017 Standard Chartered 5

Return on Total Assets Total Shareholder’s Equity Capital Adequacy Ratio

As per regulatory (NRB) financial statement

6 Annual Report 2016-2017 Standard Chartered

Annual Report 2016-2017 Standard Chartered 7

8 Annual Report 2016-2017 Standard Chartered

Economic Environment Nepal

10 Annual Report 2016-2017 Standard Chartered

Annual Report 2016-2017 Standard Chartered 11

12 Annual Report 2016-2017 Standard Chartered

I take this opportunity to thank the Ministry of Finance

Annual Report 2016-2017 Standard Chartered 13

Annual Report 2016-2017 Standard Chartered 15

16 Annual Report 2016-2017 Standard Chartered

Similarly, notable improvement in power supply, decline

Annual Report 2016-2017 Standard Chartered 17

18 Annual Report 2016-2017 Standard Chartered

Bank’s 30th Annual General Meeting

Annual Report 2016-2017 Standard Chartered 19

20 Annual Report 2016-2017 Standard Chartered

Annual Report 2016-2017 Standard Chartered 21

especially in a Bank’s business, is clearly owned by the Mr. Rajan Udas

22 Annual Report 2016-2017 Standard Chartered

For Retail exposures, portfolio delinquency trends are

Annual Report 2016-2017 Standard Chartered 23

24 Annual Report 2016-2017 Standard Chartered

Annual Report 2016-2017 Standard Chartered 25

Capital Management information, financial as well as non-financial, published

26 Annual Report 2016-2017 Standard Chartered

Annual Report 2016-2017 Standard Chartered 27

Un-audited first quarter result of financial year 2017/18 is Forfeited Shares:

Amount in Thousands Transaction between the Bank and its Subsidiary

Industrial or Professional Relations of the Company:

28 Annual Report 2016-2017 Standard Chartered

Annual Report 2016-2017 Standard Chartered 29

Jitender joined the Bank in 2001, overseeing product

Neeta holds Masters in Management Studies (MMS) from

30 Annual Report 2016-2017 Standard Chartered

Krishna Kumar Pradhan