Financial institutions planning for merger
KATHMANDU:
Swastik Merchant Finance Company is opting to get merged with Infrastructure Development Bank. The Memorandum of Understanding (MoU) regarding the merger was signed by Infrastructure Development Bank’s chairman Prof Khem Nath Dallakoti and Swa-stik Merchant’s Iman Sin-gh Lama on behalf of their respective institutions.
However, both the financial institutions have to get approval from the regulator — Nepal Rastra Bank (NRB).
The decision also needs to be endorsed by the financial institutions’ shareholders on its Special General Meeting, then only can they materialise the merger process and emerge as a single banking entity.
Infrastructure Development Bank is a national level development bank with a paid up capital of Rs 660 million and Swastik Merchant is a national level finance company with Rs 100 million paid up capital.
The merger among class ‘C’ and ‘D’ financial institutions have gained quite a momentum in recent times as the central bank is prescribing merger as the solution to most of the financial institutions that are in difficulty.
Merger has been encouraged not only for those financial institutions that are in difficulty but also to consolidate the mushrooming financial institutions for their own long term financial health. Recently, Vibor Bikas Bank and Bhajuratna Finance Company have signed a MoU for merger, though it is yet to get official status from the central bank.
Himchuli Bikas Bank and Birgunj Finance also got merged two months back into national level H and B Development Bank making it the only merged entity in the last fiscal year.
“Though there are about 30 financial institutions holding talks about getting marged with each other, they are still to come to central bank with formal application,” said NRB spokesperson Bhaskar Mani Gyanwali.
Though encouraging merger has been recognised as the solution for overcrowded financial system and making the financial system more prudent, both annual budget and monetary policy have failed to bring more incentives to push the mergers, according to the bankers.
The budget did not exempt the merging entities from any kind of tax as demanded by bankers and monetary policy also did not give much heed to this issues, they said.
Source: THT
Swastik Merchant Finance Company is opting to get merged with Infrastructure Development Bank. The Memorandum of Understanding (MoU) regarding the merger was signed by Infrastructure Development Bank’s chairman Prof Khem Nath Dallakoti and Swa-stik Merchant’s Iman Sin-gh Lama on behalf of their respective institutions.
However, both the financial institutions have to get approval from the regulator — Nepal Rastra Bank (NRB).
The decision also needs to be endorsed by the financial institutions’ shareholders on its Special General Meeting, then only can they materialise the merger process and emerge as a single banking entity.
Infrastructure Development Bank is a national level development bank with a paid up capital of Rs 660 million and Swastik Merchant is a national level finance company with Rs 100 million paid up capital.
The merger among class ‘C’ and ‘D’ financial institutions have gained quite a momentum in recent times as the central bank is prescribing merger as the solution to most of the financial institutions that are in difficulty.
Merger has been encouraged not only for those financial institutions that are in difficulty but also to consolidate the mushrooming financial institutions for their own long term financial health. Recently, Vibor Bikas Bank and Bhajuratna Finance Company have signed a MoU for merger, though it is yet to get official status from the central bank.
Himchuli Bikas Bank and Birgunj Finance also got merged two months back into national level H and B Development Bank making it the only merged entity in the last fiscal year.
“Though there are about 30 financial institutions holding talks about getting marged with each other, they are still to come to central bank with formal application,” said NRB spokesperson Bhaskar Mani Gyanwali.
Though encouraging merger has been recognised as the solution for overcrowded financial system and making the financial system more prudent, both annual budget and monetary policy have failed to bring more incentives to push the mergers, according to the bankers.
The budget did not exempt the merging entities from any kind of tax as demanded by bankers and monetary policy also did not give much heed to this issues, they said.
Source: THT
