Mergers cannot be forced upon: Pun

KATHMANDU, JAN 24: 

The finance minister has expressed that merger between financial institutions cannot be forced. 

“A merger between two financial institutions cannot be undertaken with force and threat. Only a conducive environment will encourage them to merge,” said finance minister Barshaman Pun during the 48th anniversary function of Rastriya Banijya Bank (RBB), referring to the pending merger between RBB and another state-owned development bank — Nepal Industrial Development Corporation (NIDC). 

The merger process between the two state-owned financial institutions was initiated formally in September but Nepal Industrial Development Corporation is reluctant to merge with RBB.

Minister Pun also pointed out that banks should not let politics overwhelm their functions. “Since banks have money invested by Nepali citizens, it should not be wasted due to petty politics,” he said. The government injected Rs 4.32 billion in the end of last fiscal year. 

He also expressed that RBB has to expand the financing of agriculture, infrastructure development, tourism and power. 

Nepal Rastra Bank (NRB) governor Dr Yubaraj Khatiwada also expressed the need to make the bank professional and competitive instead of being involved in internal political ramblings. 

“The bank has had excess liquidity for quite some time which is not beneficial so it has to look into expanding its presence in new sectors instead of being dependent on traditional ones,” pointed out Dr Khatiwada, adding that the bank should focus in financing small and medium enterprises. 

“RBB needs to focus on further expanding its branches in viable regions and restore branches that were shut down during the conflict,” he said. 

“RBB’s financial health has finally become somewhat secure as the bank which had a negative net worth since the last 12 years has finally registered a positive net worth,” said the bank’s chief executive officer Krishna Prasad Sharma. The bank’s paid up capital has reached Rs 8.49 billion.

The bank’ non performing assets that was higher than 60 per cent a decade ago has finally come down to six per cent, which will be reduced below five per cent by the current fiscal year, pointed out Sharma. 

The bank, which has 141 branches, has collected deposits worth Rs 85 billion and floated loans worth Rs 43 billion along with investment of Rs 24 billion. It has floated loans worth Rs 4.5 billion to the agriculture sector while Rs one billion has been directed to the deprived sector.

Source: THT