BFIs Merger to be done in a fast track procedure

To resolve the merger process in time, the Nepal Rastra Bank (NRB) will now be using the fast track procedure. There were complaints regarding the  long term merger process between Banks and Financial Institution (BFI). NRB has come up with the fast track procedure with an intention to decrease the number of BFIs.  Monetary policy of 2015/16 unveiled by  NRB has made it mandatory for the  BFIs to hike the paid up capital by four times within a period of two years. The new provision will compel many  BFIs to undergo merger and acquisitions in order to increase paid up capital in such a short time. The monetary policy unveiled by the NRB is aimed at decreasing the number of financial institutions. At present there are 30 commercial banks, 76 Development Banks, 48 Finance companies. As per the  NRB source, NRB is looking forward to decrease the numbers of BFIs to 30. If the monetary policy is implemented, number of BFIs is predicted to drop down to around 15 commercial banks, 8-10 Development Banks and 9 Finance Companies. Mr. Trilochan Pageni, the spokesperson of NRB, said  “we want to have financial institutions that provide quality service rather than focusing on numbers.” NRB has already made internal preparation to make the merger process smooth, added Mr. Pageni. When BFIs enter merger or acquisition the trading of BFIs in secondary market were halted for a longer time but there is preparation going on for halting  the trading of scrips for shorter time.  Preparation for Internal agreement between  Nepal Stock Excahge and NRB regarding the trading issue, has already been done. As per the president of Nepal Development  Bankers Association, Mr. Krishna Raj Lamichhane, “Merger process takes time of 6 months to a year.” It is important to make the merger process shorter, he added. He further added that merger is a difficult and time taking process as it's been a year that  NMB Bank, Pathibhara Bikas Bank, Bhrikuti development Bank, Prudential finance has entered the merger process. Some time ago when the position holders of Nepal Development Bankers Association met Governer Dr. Chiranjibi Nepal to request regarding some  additional time to increase the paid up capital, Governor had replied saying additional time cannot be provided but rather we would shorten the merger process. Source: Nagarik Daily