Kathmandu. Governor of Nepal Rastra Bank Maha Prasad Adhikari has said that the discounts and facilities being provided for mergers and acquisitions will be reduced from the monetary policy of the coming fiscal year. 

This was stated by Governor Adhikari after inviting the Chairman of the Board of Directors and members of the Audit Committee of the Commercial Banks to a hotel. Governor Adhikari urged the banks to go for merger and acquisition by mid-July, said Pawan Golyan, president of Confederation of Banks and Financial Institutions Nepal (CBFIN).Nepal Rastra Bank has been providing various facilities to the banks and financial institutions going for merger and acquisition through monetary policy.

The benefits and implications of the current fiscal year's monetary policy are as follows.

- In the Fiscal Year 2078/79, if the commercial banks conduct integrated transactions by participating in the merger, merger and acquisition process, in addition to the existing arrangement, the following additional facilities and discounts will be provided till mid-July 2080:

(A) The loan disbursement period in the specified area will be extended by one year.

(B) A discount of 0.5 percentage point will be provided on the limit of compulsory cash reserve for one year of integrated transaction.

(C) Discount will be provided by 1 percentage point in the ratio of statutory liquidity for one year of integrated transaction.

(D) The deposit collection limit per institution specified by this bank will be increased by 5 percentage points.

(E) Exemption will be provided in the existing provision of not being allowed to join any other organization licensed by this bank without at least 6 months having elapsed since the removal of the members of the Board of Directors and high ranking employees.

(F) The interest rate difference between loan and deposit to be maintained as directed by this bank will be discounted by 1 percentage point.

(G) One year time shall be provided for regularization if the loan-to-deposit ratio exceeds the limit when starting integrated business.

(H) In the course of integrated business operation 1 km. Arrangements will be made to maintain one of the branch offices within and to merge or close other branches without the approval of this bank.

(I) Provision will be made that fit and proper test will not be mandatory when the share holders of the founding group holding 0.10 percent or less share of the commercial bank sell such shares.

- The above mentioned facilities and discounts will be given to the development banks and finance companies declared as problematic by this bank if the licensed banks and financial institutions obtain them.

- In order to further encourage the merger of banks and financial institutions, after the merger / acquisition, an arrangement will be made for the founders and the shareholders holding general shares to be nominated for the post only by a group of shareholders.

- If the development bank operated at the state level is involved in the merger / acquisition process and conducts integrated business, approval will be given to establish a corporate office in a suitable place within the jurisdiction and to open a liaison office in the state capital and Kathmandu.