Seven pairs of BFIs receive NRB nod for merger
Kathmandu, December 22
In line with the merger and acquisition policy of banks and financial institutions (BFIs) adopted by the government, seven pairs of BFIs have received letter of intent (LoI) from Nepal Rastra Bank (NRB) to start the consolidation process. Similarly, four pairs of BFIs are in the process of getting LoI from the central bank for merger.
As per NRB, NESDO Microfinance and Nepal Agro Laghubitta Bittya Sanstha; Jeevan Bikas Microfinance and Salva Lagubittia Bittiya Sanstha; Manakamana Laghubitta Bittiya Sanstha and Smart Laghubitta Bittiya Sanstha; and Mega Bank and Gandaki Bikas Bank have presented a merger proposal at the central bank.
Among those BFIs that have already acquired LoI from NRB to enter into the merger and acquisition process, Prime Commercial Bank and Kailash Bikas Bank; Bijaya Laghubitta and Sweda Laghubitta; and Citizens Bank and Sahayogi Bikas Bank have started the process to get merged officially.
The other four pairs of BFIs that have received LoI are Suryodaya Laghubitta and Trilochan Laghubitta; Aarambha Laghubitta and Chautari Laghubitta; Mirmire Nagbeli Laghubitta and Kisan Laghubitta; and Unnati Microfinance and Sahakarya Laghubitta.
As per NRB, those BFIs that have taken LoI from the central bank for merger and acquisition should submit the details of their consolidation plan within three months.
“BFIs are increasingly showing their interest for merger and acquisition. We expect a few more mega mergers in the near future,” informed Laxmi Prapanna Niraula, spokesperson for NRB.
Global IME Bank and Janata Bank have already begun integrated transactions from December 7, becoming the country’s largest commercial bank.
Global IME Bank and Janata Bank had completed the merger process and the merged entity started integrated transactions under the name of Global IME Bank.
The merger and acquisition policy of the government primarily intends to bring down the number of banks in the country and raise their capital, thereby enhancing their lending capacity.
Meanwhile, in order to encourage BFIs to opt for merger and acquisition, for banks that merge and start unified transactions by mid-July 2020, NRB has extended the deadline for such banks to float the required loans in the agriculture, energy and tourism sectors till mid-July 2021.
Similarly, banks that go for merger have also been given up to mid-July 2021 to reach the 4.4 per cent spread rate provision.
Along with this, NRB has also said merged banks will not have to take its approval to expand their branches across the country while the cooling off period of six months for board of directors of merged banks and their chief executive officers and deputy CEOs will not be applicable.