NRB gives final nod for Grameen Bank's merger, integrated business in few days

ShareSansar, July 1:

Nepal Rastra Bank has given the final approval for the merger of all the five state-run Grameen Bikas Banks.

According to the central bank, it gave the final approval for the merger yesterday, and that the merger entity will be named Nepal Grameen Bikas Bank, and will start the integrated
business within this fiscal year, i.e. within the next few days.

The share of the merged bank is expected to be listed by mid-August, according to the bank officials.

The class ‘D’ BFIs had jointly applied with the central bank for the integrated business on April 25.

The DDA for the merger of these banks held back in May last year had ascertained the swap ratio at 1.02 of Purbanchal, 1.18 for Madhyamanchal,  275.8 for Pashimancal,  77.78 for Madhya Pashimancal and 1.02 for Sudur Pashimancal Grameen Bikas Bank, in which  the central bank has the highest stake.

As per the DDA, Pashimanchal has the highest per share net worth of Rs 140 followed by that of Madhya Pashimanchal of Rs 77, 1.17 of Madhyamanchal and 1.2 of Sudur Paschimanchal and Purbanchal.

Talking to ShareSansar a few days back, Chief Executive Officer of Pashimanchal Grameen Bikas Bank Dharma Raj Pandey, who will be the CEO of the merged Nepal Grameen Bikas Bank Limited, said that the paid-up of the merged entity will stand at Rs 40.70, after adjusting 15 percent bonus share recently endorsed by Pashimanchal.

“In the total paid-up capital, Pashimancal alone is contributing Rs 29.08 crore,” Pandey further said, adding that immediately after the integrated business starts the government will be channeling Rs 15 crore offered by the World Bank.

Pandey also informed that plans were already afoot to further raise the paid-up by Rs 10 crore.

“Our target is to shore up the paid-up capital to Rs 65 crore and the authorized capital to Rs 1 arba in the near future,” he added.

After the merger, public holding in Nepal Grameen Bikas Bank will stand at around Rs 10 crore and the rest of the stake will be with the government, central bank and a few commercial banks.

The merged entity will have an impressive coverage of 56 districts with 183 branches, and the balance sheet-size of Rs 3.65 arba.

The five grameen bikas banks had signed a MoU for the merger back on October 11, 2012.

Planning profit within four years

When asked about major plans following the integrated business, the incumbent CEO of Pashimanchal that has been posting good profit, said that there overarching goal is to ensure that the merged entity started to make good profit within four years.

“We are planning to get chunk of the soft loan, besides executing VRS for the overstaffed bank, and setting up a regional office in the capital, inter alias for the same,” Pandey explained.

Currently the combined loss of the banks stands at 19.80 crore and quarterly loss at loss is Rs 5.70 crore.

The merger initiated by the central bank to make a strong national level development bank to serve the poor could be completed by the end of this fiscal year, according to the head of the merger committee Jagat Pokharel.