Kathmandu : The main target of NRB through Monetary Policy seems to be to reduce the number of Commercial Banks.
The government has provided discounts on mergers with incentives to reduce the number of commercial banks. The government has made arrangements for tax exemption in the budget of the coming Fiscal Year 2078-079 BS only after the merger of banks and financial institutions of the same class. Accordingly, Nepal Rastra Bank has given priority to the merger of commercial banks in the monetary policy of the coming Fiscal Year.
NRB, which is preparing its monetary policy for the coming fiscal year, is preparing to make some concessions in mergers to reduce the number of commercial banks. Earlier, NRB had increased the paid-up capital of banks and financial institutions by four times with the objective of reducing the number of commercial banks. Although the scheme reduced the number of finance and development banks, the number of commercial banks did not decrease significantly. Therefore, NRB will now bring a new strategy to reduce the number of target commercial banks.
In order to reduce the number of banks, the Research Department of NRB has asked the directors and CEOs of banks and financial institutions as well as experts about the number of banks in Nepal. Which model is suitable for merger? What are the improvements in the merger? The survey is conducted with questions such as. Based on the survey conducted in the last week of May, the number of banks will be determined in the coming monetary policy. The monetary policy will be based on the strategy to merge the banks.
NRB spokesperson Dev Kumar Dhakal said that the survey was conducted to determine the number of banks and financial institutions according to the size of Nepal’s economy. Spokesperson Dhakal said that the merger will be arranged in the monetary policy on the basis of the survey. According to Dhakal, NRB will encourage those who can do merger to increase their capital as per the business expansion. Two years ago, NRB had made arrangements to increase capital to reduce the number. Therefore, NRB is not in favor of increasing capital to reduce the number of banks. Therefore, the NRB has decided to reduce the number of commercial banks by making other arrangements besides capital increase.
Meanwhile, Chairman of Nepal Bankers Association and Chief Executive Officer of Sanima Bank Bhuvan Dahal said that it would be better if the NRB sets the time for merger or improvement for those who are below the standard set on the basis of financial health and good governance. He said that the organization which could not improve even within the stipulated time and did not go for merger should be scrapped.
A total of 216 banks and financial institutions have participated in the merger process from the earlier merger arrangement made by NRB till mid-April 2077 BS. Of which, the licenses of 164 organizations have been revoked and 52 organizations have been established. As of mid-April last year, there are 140 banks and financial institutions including 27 commercial banks, 18 development banks, 20 finance companies, 74 microfinance and 1 infrastructure development bank.
Earlier, there were 32 commercial banks. Of these, five commercial banks have declined, while Nepal Investment and Himalayan Bank are in the process of merging.
Out of the offered 19,77,300 units; 0.5% of the total capital i.e. 30,420 units have been set aside for the employees of the company and 5% i.e. 98,865 units for the mutual funds. Whereas, the remaining 18,48,015 units are for the general public.
NMB Capital Limited has been appointed as the issue manager for the IPO issuance of Jeevan Bikas Laghubitta. According to the issue manager, as many as 12.5 million applications have been received for the IPO of Jeevan Bikas Microfinance till Sunday evening, which is 12.47 times more than the shares sold by the company.