Kathmandu. Commercial banks are in the throes of a merger. Merger has started in the banks after the Nepal Rastra Bank (NRB) said that it will provide tax exemption and other benefits only to those who have signed a MoU with the commercial banks within this month. Banks have started participating in the merger process one after another after pressure from the National Bank to reduce the number of banks and financial institutions. Of the 27 commercial banks currently in operation, six have signed MoUs for the merger process.

 A MoU has been signed between Nabil-NB, Nepal Investment-Mega and Global IME-BOK Bank for merger. Nabil-NB Bank is in the final stages of merger while other banks have only signed MoUs. Discussions for merger between Prabhu-Century, Kumari-Lakshmi and Himalayan-Civil Bank have been taken forward. Meanwhile, Nabil Bank is in the race to merge with NCC Bank to become the No. 1 bank after acquiring Nepal Bangladesh Bank.

In the merger proposal of Prabhu Bank, Century Bank has demanded that the swap ratio should be maintained up to 90. Century has maintained its position on repeated proposals. But Prabhu Bank is urging to merge at a swap ratio of up to 80 percent. In the end, the merger could be at 90 percent swap ratio.

Nabil Bank, which has been acquiring Nepal Bangladesh Bank and is preparing for integrated business within the current fiscal year, is going to merge with another bank. After Global IME Bank merged with BOK to get the crown of No. 1 Bank, Nabil Bank has started discussions to merge with Nepal Credit and Commerce (NCC) Bank.

Himalayan Bank is looking for a suitable partner after the merger process with Nepal Investment Bank broke down. Himalayan has the highest merger pressure after Investment Bank signed MoU with Mega Bank. Earlier, only Rs 75 could be given to Nepal Investment Bank, but now Civil Bank has demanded Rs 90 from Himalayan. According to a bank source, the merger, which was halted due to the long stay of Himalayan CEO Ashok Rana in the US, has come to the fore recently.

Merger is also being discussed between Laxmi Bank and Kumari Bank. Discussions have also started between Laxmi and Kumari Bank after the NRB suggested Kumari Bank to merge. Discussions are underway between Laxmi and Kumari Bank to merge to 100% swap ratio. However, if Lakshmi Bank is a strong bank lately, the swap may be less due to the decline in some of Kumari's financial indicators, the sources said.