Three finance firms to merge

Kathmandu, July 1:

Three leading finance companies today announced that they would merge to form a national level development bank.

According to the officials of these three finance companies, the merger — of the National Finance Ltd (NAFIL) of Kathmandu, Mahalaxmi Finance Ltd of Birgunj and Narayani Finance Ltd of Narayangarh — will form a national level development bank within a year.

“This will be the first of its kind of merger in the history of the Nepali financial sector that

three different finance companies from different places and being run by different groups are

being merged,” said Ram Krishna Manandhar, chairman of NAFIL, announcing the merger, today. He informed that a memorandum of understanding (MoU) for the merger has already been signed on June 21 as per the recommendations of the merger committee headed by Bramha Lal Shrestha, director at NAFIL.

“If everything goes as per our plan, the merger process will be completed by end of the next fiscal year and a national level development bank (class ‘B’) will be formed,” Manandhar said. As per the agreement, each of these three finance companies will increase its paid up capital to Rs 215 million making a total of Rs 645 million by the time of merger. “Following the successful merger, the bank will be the largest in terms of paid up capital among the development banks,” said Babu Lal Agrawal, chairman of Mahalaxmi Finance. The bank will have nine board of directors (BoD) representing two from each finance companies and one each from public shareholders.

The existing offices of the companies will be changed into regional or regional business centre offices of the bank and a separate head office of the bank will be set up in Kathmandu. “A strong need has been felt to provide competitive banking services,” said Agrawal, adding that the merger is also equally important for the Nepali financial sector in the wake of WTO obligations.

Merger story:

• The first of its kind

• Each of these three

finance companies — NAFIL of Kathmandu, Mahalaxmi Finance Ltd of Birgunj and Narayani Finance Ltd of

Narayangarh — will

increase paid up capital to Rs 215 million each making a total of

Rs 645 million

• Will be the largest

development bank in terms of paid up capital

• Will have nine BoD

representing two from each finance companies and one each from public shareholders