Kathmandu. Nepal Rastra Bank is going to further facilitate the merger of banks and financial institutions.

The central bank has given special priority to the process of merging or acquiring big banks and financial institutions for financial stability and has issued new directives further clarifying the direction adopted by the monetary policy for the current fiscal year.

The central bank has also adopted a loose policy regarding the age limit of Chief Executive Officer (CEO) in case of merger of Class A banks. According to the previous law, a person could not become the chief executive officer of a class A commercial bank as he had reached the age of 65. However, in case of merger of big banks, the central bank has taken a policy of not imposing any barrier even on the age limit.

 As per the integrated directive issued, it has been mentioned that the provision will not be applicable for one term after the commencement of integrated transactions in case of merger of commercial banks by mid-July 2078 BS.

Similarly, as mentioned in the monetary policy of the central bank, the directive has been clarified to give a discount of 0.50 percent till mid-July 2079 BS in case of compulsory holding of large commercial banks in case of merger or acquisition.

The directive also stipulates that a licensed institution can mobilize institutional deposits from any one firm, company or organization without exceeding the maximum limit of 10 percent of its total deposits.

Similarly, the commercial banks operating by merging and acquiring by mid-July 2078 BS will be able to mobilize institutional deposits up to five percent more than the deposit limit to be maintained by mid-July 2079 BS.

There was a provision not to maintain more than 50 percent of the total deposits of licensed institutions in government institutions and corporations, public limited companies, savings and credit cooperatives and the fund operated under such institutions and corporations.

 According to the directive, the commercial banks that have completed the merger / acquisition process by mid-July 2078 BS will be able to maintain the share of such deposits in their total deposits up to an additional 10 percentage points by mid-July 2079 BS. The central bank has taken the policy of 'force merger' of the organization run by the members of one house.

The central bank is going to put pressure on the organizations that are promoted by the same person / group and have direct or indirect ownership / control of one family and business group. It is mentioned in the directive that instructions will be given to merge and merge commercial banks with similar business relationship.