NRB struggles to merge Rural Development Banks

ShareSansar, Sept 15:

Despite its own policy to promote the merger of banks and financial institutions as per the need, Nepal Rastra Bank has not been able to conduct a merger of all five Gramin Bikash Banks, which are directly under its control.

The central bank had directed all the five rural development banks to merge by completing all necessary procedures in the last fiscal year. But the merger could not take place due to various hassles created by these banks.

The employees of the Western Regional Rural Development Bank have been padlocking the bank to oppose the merger. They have been arguing that since only the Western Regional Rural Development Bank has been making profit, the merger will not be beneficial to them.

The central bank, however, has not been able to make the agitating employees accountable for their protest against its decision.
The NRB had decided to merge all the five regional development banks as most of them on the verge of bankruptcy.

The rural development banks were jointly established by the government, the central bank and various BFIs, including most of the leading commercial banks, to assist economically marginalized farmers in the rural areas.

Central bank officials, nonetheless, maintain that they are firmly committed to ensure that the rural development banks merge. They informed that they have already completed the DDA for the merger and were awaiting final government approval.

“Since the management of the Western Regional Rural Development Bank has not opposed the merger, what the employees say is insignificant,” a NRB source added.

The central bank is gearing up for the merger after the Supreme Court recently quashed a writ filed by the agitating employees of the Western Regional Rural Development Bank to stop the merger process.

In its verdict the apex court had ruled that since the merger was aimed at improving the financial health of all the rural development banks, it should not be opposed.