Kathmandu. Citizen Investment Trust (CIT), a government-owned investment institution established in 1991, is celebrating 35 years of its operation. The impressive fund is entering its 36th year with funding. But the institution has been overwhelmed by persistent concerns about good governance, mismatched financial transactions with banks and financial institutions, outstanding dues from the National Life Insurance Company Limited (RLIC), long-standing undisclosed funds, and frank observations from the Attorney General’s Office regarding institutional transparency.
Huge financial situation with rising balance sheets:
By mid-January of the current fiscal year 2082/83, the total fund mobilization under various retirement and savings schemes of the Fund has reached Rs. 2.94 trillion was Rs. 2.946 trillion, an increase of 11.46 percent from the previous year. The total investment portfolio of the company is Rs. It reached Rs 298 billion, up 12.80 percent from the previous year. At the time of installation, only Rs. From the paid-up capital of Rs 1.4 crore, the fund has increased its paid-up capital to Rs. 6.80 billion.
The fund currently serves more than 7 lakh participants in seven different schemes including insurance fund. The net profit of the second quarter of the current fiscal year is Rs. The company has a reserve fund of Rs. 67 crores. 2.89 billion.
The challenge of investment centralization:
Parbat Kumar Karki, executive director of the fund, admitted in the organization’s souvenir that nearly half of all investable funds are held in fixed-term deposits with commercial banks. Of the total investment portfolio as of mid-January, fixed deposits stood at 48.68 per cent, while participatory debt stood at 21.84 per cent, shares and securities 10.61 per cent, short-term debt at 8.81 per cent, treasury bills at 4.75 per cent, Government of Nepal bonds at 4.40 per cent, and subsidiaries (Citizen Stock Dealer Company) at 0.91 per cent.
This heavy concentration on fixed deposits, which once attracted premium interest rates, has now become a growing liability. Executive Director Karki admitted, “The sharp fall in the interest rate of fixed deposits in the financial market has had a significant impact on the income from fixed deposits.” Noting that this has created significant pressure on the financial position of the institution in the current financial year. The institution understands the need for diversification but faces obstacles including sluggish credit demand, unfavourable investment conditions and a lack of bankable projects.
Unmatched account:
The fund’s financial health has been further strained by long-pending and unpaid dues from various banks, financial institutions and state-owned enterprises. Most notably, Nepal Airlines Corporation (NAC), which has contributed about Rs. It had taken a loan of Rs 37 billion. Still the interest and principal arrears are about Rs. It has reached 45 billion.
The volatile financial transaction with the National Life Insurance Company Limited is yet to be resolved. There are discrepancies in the transfer of insurance premiums and claim payment between the Fund and National Life Insurance.
Poor Corporate Governance by the Office of the Auditor General:
The Office of the Comptroller and Auditor General, in its periodic institutional review, has expressed concern about the lack of transparency and corporate governance of the fund. Among the major issues highlighted: The governance structure of the organization has not been able to keep pace with its growing size and operational complexity.
The Auditor General’s observation also touches on the adequacy of internal audit mechanisms, the management of participant data, and the reconciliation of delayed accounts of funds with partner institutions.
