Aug Mon 2020 11:40:23
Kathmandu. Nepal Rastra Bank has put forward a policy to reduce the number of commercial banks. NRB has stated that it is going to reduce the number of commercial banks by half within the current fiscal year by forcing the banks to merge.
The central bank had made public the policy of making commercial banks compulsory for merger through the monetary policy of the current fiscal year.
The unified directive issued for the implementation of the provisions in the monetary policy states that the single-family bank will be forced to merge.
Article 37 of the Unified Directive stipulates that ‘merger directives shall be given to commercial banks which are promoted by the same person and group and are directly or indirectly owned by the same family and business group and established commercial relations’.
The central bank is conducting further studies on banks owned by single-family households or promoted by the same business group. NRB is preparing to merge him with the details of the bank which has 'crossholding' (investment in two or more banks of the same group).
These Banks are Merger preparation
The possibility of merging Himalayan and Nepal Investment has increased within a month after the directive of NRB. The operators of these two banks have already started preliminary discussions and preparations for the merger.
The main promoters of both Himalayan and Investment Bank are close relatives. Himalayan Bank's promoter and chief advisor Himalaya Shamsher Rana and Investment Bank chairman Prithvi Bahadur Pandey are close relatives with family ties. Pandey also has investments in Himalayan Bank.
If the NRB policy is implemented, NIC Asia and NMB Bank will also be forced to merge. NIC Asia Bank's main promoter is Vishal Group. The group also has investments in NMB Bank. Similarly, promoters from another business group, Shanghai, have invested in both banks.
Similarly, Nepal Bangladesh and NCC Bank also have investments of the same business group. Sunrise and Siddhartha also have investments from promoters with family ties to the Marwari community. As per the NRB directive, these banks will also have to merge with each other.
The central bank plans to merge the smaller and weaker commercial banks. Banks like Civil, Century and Mega are also preparing to merge with strong banks. Some of these banks have already started discussions to find a partner for the merger.
Similarly, mid-tier banks like Bank of Kathmandu and Kumari are also expected to merge to become strong institutions.
The monetary policy has stated that the policy of merging commercial banks has been put forward to strengthen the capital base of banks and financial institutions and strengthen risk bearing capacity.