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 Interest Rates and Health Care Costs in Nepal
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Posted on 09-18-10 6:18 PM     Reply [Subscribe]
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Questions:It looks like banks give you an interest rate of 12% for 5 year fixed deposits in Nepal. How long is this interest rate expected to  be so high? 5 years, 10 years, 40 years?

Are there companies that provide health insurance in Nepal? How good are they? What's the cost? 

Long Story: For the last few years I have been seriously considering returning to Nepal for good. I've lived in the US for 12 years. Came here when I was 18 for my undergraduate. I have a Masters Degree and 6+ years of full-time work experience. My work is in a pretty specialized field and as far as I know I won't be able to find any work in my field in Nepal .I didn't want to return unless I had decent amount of savings. These have been stopping me from going back. I was fortunate enough to get a good job right out of college. I've been living in one of the cheapest cities in the US and I am bit of a minimalist so every year I have been saving some money. In a few weeks I will hit my target saving of Rs 50 lakh. It seems banks give you an interest rate of around 12% yearly on 5 year fixed deposits in Nepal. That would mean that I would be making Rs 50,000 (fifty thousand) monthly in interest in Nepal. I have a home in Nepal (parent's home but I am the only son). I don't have any aspirations of marriage or having kids.  I am pretty sure that I can live a comfortable life in Nepal with 50,000 monthly for 1 person. My plan is to keep on putting the Rs 50 lakh in a fixed deposit and live off the interest rate for the rest of my life. My parents are middle-class but they are financial stable enough that they can support themselves for the rest of their life barring medical emergencies. However, I am concerned about the future interest rates in Nepal ,will the interest rates continue to be so high for the next 50 years? What about the health care costs? How would someone like me prepare for medical emergencies (for myself and my parents) in Nepal. Is there health insurance in Nepal? How good are they?

Interest Rate Example: http://www.nbbl.com.np/interest.php
Comparison: http://www.nepali.im/discussion/19/best-interest-rate-saving-account-in-nepal
Last edited: 18-Sep-10 06:28 PM

 
Posted on 09-19-10 3:36 AM     [Snapshot: 73]     Reply [Subscribe]
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I don't trust banks in Nepal to deposit 5 million rupees. Does anybody know if your deposits are insured by government or a third party, like FDIC in USA? If so, I would fly before dashain and won't return.
 
Posted on 09-19-10 9:05 AM     [Snapshot: 117]     Reply [Subscribe]
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Couple Years ago i asked my Father why he invested in Land and gold other than just putting the money in the bank and get easy 12% return on the money as an easy return. Here is what his responses were

1. Interest Rates are very volatile if they are paying you 12% now, couple year later it could be as low as 5%.

2. Financial institutions in Nepal could not be trusted. They can go down or get confiscated by the government any time.

3. The biggest threat is from the Kidnappers and the political hoodlums. Once they know you have couple Karods in liquid cash in the bank, you are prone to become a Kidnap or extortion victim. In some cases even the bank employees tell the extortionists how much liquid cash you have available in the bank.

4. If no of those three points applies to you then the local and global inflation makes your cash lesser and lesser each year.



 
Posted on 09-19-10 9:25 AM     [Snapshot: 129]     Reply [Subscribe]
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It seems you have not factored in some variables:

1. inflation rate, which is usually in double digits in Nepal
2. interest rate will not stay high as now
3. viability of the banks, therefore, the safety of your money should there be any disaster - big or small - in Nepal
4. As sidster mentioned, your personal safety as a high bank balance holder

But, these are all just minor inhibitors if you truly wish to return home, hence, can be dealt with appropriately.

Good luck.

 
Posted on 09-19-10 11:22 AM     [Snapshot: 156]     Reply [Subscribe]
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If i were you I wouldn't trust interest as my sole source of income. Do something on the side to hedge the risk. If no bank is too big to fail in the US then why would it be different in Nepal? US at least has FDIC that insures the money up to a certain limit.

Last edited: 19-Sep-10 11:50 AM

 
Posted on 09-20-10 4:07 AM     [Snapshot: 238]     Reply [Subscribe]
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I have a different opinion from the rest here regarding financial institutions and their safety in Nepal.


Rashtra Bank is fairly tough institution in Nepal, and they tend to move quickly if a bank has more than a certain percentage of bad debt (i.e. run a risk of being bankrupt). Their monitoring is fairly effective, and it is a surprise that a country like ours have such monitoring. They also try to protect small depositors first in case something bad happens (it happened in case of one bank , promoted by Uttam Pun). So far, one bank has "failed", but no depositor lost their money. (The average salary of Rashtra Bank karmachari is 106 thousand per month, and so, needless to say we pay them well and they are doing a good job)

So, even though there is no FDIC (it might be introduced soon), our money is safe. You can, however, spread your money in five different banks to be safe.

Also note that not all banks fall over night. You know which banks are safest and which are not. There are rankings of banks in Karobar daily and other newspapers. I think the general view is that "finance companies" are kind of bad. They offer high interest rate, but are extremely fishy. You can put a small fraction of your money there. 

Treasury bills too pay 9%, if I remember correctly. They are safe, if you can buy them. 

To be honest, I think the question about your personal safety is overblown. 50 lakh saving is a lot of money , but lots of people have that much money in Kathmandu, and they are all safe. It is not enough to get you noticed. 
-----





 
Posted on 09-20-10 1:41 PM     [Snapshot: 301]     Reply [Subscribe]
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