NRB may force BFIs into merger
KATHMANDU, MAY 14 -
Nepal Rastra Bank (NRB) Governor Yub Raj Khatiwada hinted on Sunday that the central bank might force banks and financial institutions (BFIs) to go into merger if they do not take it seriously.
Giving analogy of marriage, the governor said that the NRB could enforce forced marriage if BFIs don’t want to find right partners willingly.
“There have been numerous talks about the mergers but only a few have been materialised,” said Khatiwada speaking at the ceremony organised to mark the formal inauguration of the Kailash Bikas Bank. “BFIs must be serious while selecting partners for mergers and once they initiate it they should materialise it,” he added.
Khatiwada’s statement came at a time when merger has been a tough nut to crack for the BFIs although many BFI boards have taken mandate to move ahead for merger from their annual general meeting, The governor said that the NRB was lenient in issuing license to BFIs, assuming that surge in number of BFIs would increase the financial outreach. “However, that did not happen and most of the BFIs concentrated in some selected urban areas,” said Khatiwada. “This brought various anomalies in the financial sector and merger is the only way to resolve it.”
He admitted that the BFIs might have faced some difficulties in doing business at present due to the central bank’s tough policies. However, he said that the NRB measure would give stability to the financial sector in the long run. The bankers have been complaining that NRB has taken the directed policy instead of liberal one.
However, Khatiwada defended the NRB move saying that it would help the BFIs restore public faith that has now shattered to some extent.
Kailash Bikash Bank upgraded formally
NRB Governor Yub Raj Khatiwada on Sunday formally inaugurated Kailash Bikash Bank which started its operation as national-level development bank on April 24. It was operating as Annapurna Finance Company before it upgraded to a development bank.
On March 29, it received licence from the Nepal Rastra Bank to operate as a development bank after increasing its capital to Rs 704.3 million. During the inauguration, Kailash’s Chief Executive Officer Krishna Raj Lamichhane said that the development bank would focus on corporate governance.
Source: The Kathmandu Post
