BFI promoters get one more year to offload their stake in excess of 15pc
KATHMANDU, AUG 30 -
Nepal Rastra Bank (NRB) has given one more year to banks and financial institutions (BFIs) to bring down their promoters’ stake to below 15 percent.
The central bank, issuing a new directive on Monday, asked BFI promoters to offload their stake in excess of 15 percent by mid-July 2012.
Likewise, the central bank also extended the deadline for BFI promoters, who have more than 1 percent stake in other BFIs, to bring down their stake below 1 percent. NRB in 2006 had given a five-year timeframe for BFIs to comply with these directives.
As directors cannot sell their shares within a year after the expiration of their term as board members, the central bank has sought a working procedure on how to bring down their shares below the set limit. BFIs having such directors have to submit a working procedure within mid-September, according to the new NRB directive.
A senior NRB official said the new measure was taken in order rescue BFI promoters when the country’s stock market is at its lowest ebb.
“I heard that most of the BFIs failing to comply with this provision are saying that the market did not respond well to promoters’ attempt to dispose their excess holding,” said Sashin Joshi, chief executive officer of NIC Bank. However, he maintained that the central bank should be strong enough to enforce its directive. “If NRB brings a directive, it should be able to implement it,”
As per the directive, the central bank can send BFIs failing to comply with this provision to forcible merger. Also, NRB could prohibit them from distributing cash dividends, bonus shares and prevent promoters from participating in rights share issuance.
Through the new directive, NRB has also allowed BFIs to renew margin lending (loans against shares as collateral) frequently if loanees clear all outstanding interest and pay interest regularly. Earlier, they could renew such loans only once.
Given uncertainty about whether BFIs should make provisioning of inter-bank loans, NRB has put in place a provision that allows BFIs to make loan loss provision of loans whose payment deadline exceeded at the end of the last fiscal year.
They should make provisioning of 25 percent by mid-January, 50 percent by mid-April and cent percent by the end of the current fiscal year.
Earlier, there was no provision regarding inter-bank loan defaults. Inter-bank loans of many BFIs have been stuck in some troubled banks. BFIs are also required to make provisioning of the last fiscal year if they have to distribute dividend and bonus for employees for that year, according to the new circular.
Source: Kantipur
Nepal Rastra Bank (NRB) has given one more year to banks and financial institutions (BFIs) to bring down their promoters’ stake to below 15 percent.
The central bank, issuing a new directive on Monday, asked BFI promoters to offload their stake in excess of 15 percent by mid-July 2012.
Likewise, the central bank also extended the deadline for BFI promoters, who have more than 1 percent stake in other BFIs, to bring down their stake below 1 percent. NRB in 2006 had given a five-year timeframe for BFIs to comply with these directives.
As directors cannot sell their shares within a year after the expiration of their term as board members, the central bank has sought a working procedure on how to bring down their shares below the set limit. BFIs having such directors have to submit a working procedure within mid-September, according to the new NRB directive.
A senior NRB official said the new measure was taken in order rescue BFI promoters when the country’s stock market is at its lowest ebb.
“I heard that most of the BFIs failing to comply with this provision are saying that the market did not respond well to promoters’ attempt to dispose their excess holding,” said Sashin Joshi, chief executive officer of NIC Bank. However, he maintained that the central bank should be strong enough to enforce its directive. “If NRB brings a directive, it should be able to implement it,”
As per the directive, the central bank can send BFIs failing to comply with this provision to forcible merger. Also, NRB could prohibit them from distributing cash dividends, bonus shares and prevent promoters from participating in rights share issuance.
Through the new directive, NRB has also allowed BFIs to renew margin lending (loans against shares as collateral) frequently if loanees clear all outstanding interest and pay interest regularly. Earlier, they could renew such loans only once.
Given uncertainty about whether BFIs should make provisioning of inter-bank loans, NRB has put in place a provision that allows BFIs to make loan loss provision of loans whose payment deadline exceeded at the end of the last fiscal year.
They should make provisioning of 25 percent by mid-January, 50 percent by mid-April and cent percent by the end of the current fiscal year.
Earlier, there was no provision regarding inter-bank loan defaults. Inter-bank loans of many BFIs have been stuck in some troubled banks. BFIs are also required to make provisioning of the last fiscal year if they have to distribute dividend and bonus for employees for that year, according to the new circular.
Source: Kantipur
