|
KATHMANDU, July 18 (Xinhua) -- Nepal's 96 commercial banks and other financial institutions were merged to 35 as of mid-June over the past five years, the country's central bank has said.
In its latest report unveiled by the Nepal Rastra Bank (NRB), the central bank said the number of banks and financial institutions opting for merger has been increasing after it introduced a merger policy in 2011.
The policy has encouraged merger with incentives as the central bank is trying to regulate and supervise the mushrooming financial institutions across the country.
Nepal still has 29 A class commercial banks, 71 B class development banks, 46 C class finance companies and 187 D class micro-finance and non-government organizations licensed to carry out banking transactions as of mid-May.
In the absence of proper supervision from the central bank amid large number of banks and other financial institutions, bad governance practices flourished in financial institutions, pushing several of them in crisis.
There are still 11 financial institutions declared as crisis ridden by the central bank. They are struggling to recover bad loans largely embezzled by the promoters of those financial institutions.
About 31 million U.S. dollar deposits of the public have been stuck in those financial institutions, according to the NRB.
Upendra Poudel, president of Nepal Bankers' Association, a grouping of commercial bankers, said the merger policy adopted by the central bank has eased the central bank to regulate and supervise because of decreased number of banks and other financial institutions.
"The move has also helped banks to strengthen themselves," he said.
Poudel, whose NMB Bank took over other four smaller financial institutions, said the merger has helped them to be confident in lending because of the increased capital and expanded penetration of the banks.
As per the new policy, minimum paid-up capital has been hiked to 74 million U.S. dollar (8 billion Nepalese rupees) from 18 million U.S dollar (2 billion Nepalese rupees) for commercial banks. They should increase the capital at the end of current fiscal year in mid-July 2017. Enditem
