NRB gives one more year to BFIs to raise paid-up capital

Kathmandu, Sep, 10, 2013

Reviewing a recent directive it had issued to banks to compulsorily increase their paid-up capital within the current fiscal year, the Nepal Rastra Bank (NRB) has now said that the capital can be increased by the end of the next fiscal year.

As per the fiscal policy, the central bank had directed the commercial banks on August 11 to raise their paid-up capital by the end of this fiscal year.

The policy change that the central bank announced issuing a notice to them a few days back has come as a relief to eight commercial banks as well as 40 development banks and 38 finance companies of the country.

Prior to the latest NRB decree, two out of the eight commercial banks were not in a position to distribute bonus shares from the net profit they had posted in the last fiscal year.

Nepal Credit and Commerce Bank (NCC) and Lumbini Bank would have been compelled to either issue right shares or go for a merger had the central bank not reviewed its directive. Similar was the predicament of the development banks and finance companies.

Now these BFIs can issue bonus shares from the profit they post in the current fiscal year as the central bank’s latest directive states that once it approves the proposed bonus shares, the BFIs can count them as their paid-up capital.

As the NRB policy, commercial banks must raise their paid-up capital to Rs 2 arba. The target set by the central bank is Rs 64 crore for the national level development banks, Rs 10 crore for the regional development banks, and Rs 20 crore for the finance companies.