NRB extends deadline by nine more months

KATHMANDU, APR 02 -

The Nepal Rastra Bank (NRB) extended the deadline for its takeover of Nepal Bank Limited (NBL) management by another nine months. The earlier extended deadline expired in Mid-April.

The country’s oldest bank has been under central bank’s control and recapitalisation plan. A central bank Director Maheshwor Lal Shrestha is currently leading the NBL management team.

The central bank board decided on Monday to extend the takeover deadline as the current management needs time to implement recapitalisation plan to revive the sick bank, according to a board member.

The recapitalisation plan is being implemented to improve the bank’s financial health, whose net worth is still negative. Under the recapitalisation plan, the bank will issue rights shares at 1:9.5 ratio to increase its paid-up capital to Rs 4 billion from the current Rs 380 million. The bank is expecting to raise around Rs 2 billion through the sales of its fixed assets.

“As the NBL alone does not have power to decide when these tasks will be completed, it was necessary to extend the takeover deadline,” said the board member.

The central bank has given the NBL to complete the rights issue within the current fiscal year. The bank said it has already prepared all necessary documents to be submitted to the Securities Board of Nepal to get approval for the rights issue.

The government, the largest shareholder of NBL, has already injected Rs 1.39 billion into rights shares, while other shareholders are expected to raise the remaining amount after the rights issue.“After rights shares issuance, the NRB will step down from the NBL management role and hand over the job to a new board,” said the board member.

The NBL is also struggling to sell its fixed assets as the government agencies are not keen to purchase them. The government has around 36 percent stake in the bank, while the general public, including corporate houses, hold 49.94 percent. Business groups like Khetan and Golchha, and individuals such as Pashupati Sumsher Rana, Niranjan Kumar Tibdewala, Gajendra Bahadur Shrestha, Niraj Rajbhandari, Ramesh Raj Aryal, Nabin Narshing Rana, Indira Khatri, Kedar Narayan Manandhar and Bal Krishna Shrestha have sizeable shares in the NBL.

Source: The Kathmandu Post