KATHMANDU, NOV 11 - 2012
A board meeting of the Nepal Rastra Bank (NRB) on Saturday decided to issue the letter of intent (LoI) for the merger of five Grameen Bikas Banks. These regional rural banks had decided to merge in order to address operational ineffectiveness felt while operating separately.
Of the five banks—Purbanchal, Sudur Pashchimancal, Pashchimanchal, Madhya Pashchiman-chal and Madhyamanchal Grameen Bikas banks—only Paschimanchal is making profits. According to NRB, these banks have a combined negative net worth of Rs 130 million despite good performance of Paschimanchal.
After receiving the LoI, the banks have to conduct separate due diligence audit studies and complete the merger within the next six months. They had signed a memorandum of understanding on October 11 for the merger. Following the merger, the merged entity’s paid-up capital will be Rs 380 million. The central bank is planning to finance and conduct their DDA itself so as to ensure fair valuation of shares.
However, the central bank, which has shares in Sudur Pashimanchal and Paschimanchal banks, said the banks plan to maintain the paid up-capital of the merged entity at Rs 500 million. NRB officials say shareholders may have to put in some money to increase the capital. NRB has also asked the Finance Ministry to arrange Rs 500 million to increase the paid-up capital of merged bank. “As we are not sure about the actual capital status of these banks, we have sought budget allocation of Rs 500 million from the government,’ said a senior NRB official.
Other shareholders of the Grameen banks include the government (in four of the five banks) and commercial banks including Standard Chartered, Nabil, Himalayan, Bank of Kathmandu, Nepal Bangladesh Bank and Agriculture Development Bank. All of them will retain their stakes in the merged entity.
Following the footsteps of the exemplary Grameen Bank of Bangladesh, the five banks were established during the period of 1992-1996 to provide micro credit facility to micro-industries, agro business es and trading, among others, in rural areas.
Source: The Kathmandu Post
A board meeting of the Nepal Rastra Bank (NRB) on Saturday decided to issue the letter of intent (LoI) for the merger of five Grameen Bikas Banks. These regional rural banks had decided to merge in order to address operational ineffectiveness felt while operating separately.
Of the five banks—Purbanchal, Sudur Pashchimancal, Pashchimanchal, Madhya Pashchiman-chal and Madhyamanchal Grameen Bikas banks—only Paschimanchal is making profits. According to NRB, these banks have a combined negative net worth of Rs 130 million despite good performance of Paschimanchal.
After receiving the LoI, the banks have to conduct separate due diligence audit studies and complete the merger within the next six months. They had signed a memorandum of understanding on October 11 for the merger. Following the merger, the merged entity’s paid-up capital will be Rs 380 million. The central bank is planning to finance and conduct their DDA itself so as to ensure fair valuation of shares.
However, the central bank, which has shares in Sudur Pashimanchal and Paschimanchal banks, said the banks plan to maintain the paid up-capital of the merged entity at Rs 500 million. NRB officials say shareholders may have to put in some money to increase the capital. NRB has also asked the Finance Ministry to arrange Rs 500 million to increase the paid-up capital of merged bank. “As we are not sure about the actual capital status of these banks, we have sought budget allocation of Rs 500 million from the government,’ said a senior NRB official.
Other shareholders of the Grameen banks include the government (in four of the five banks) and commercial banks including Standard Chartered, Nabil, Himalayan, Bank of Kathmandu, Nepal Bangladesh Bank and Agriculture Development Bank. All of them will retain their stakes in the merged entity.
Following the footsteps of the exemplary Grameen Bank of Bangladesh, the five banks were established during the period of 1992-1996 to provide micro credit facility to micro-industries, agro business es and trading, among others, in rural areas.
Source: The Kathmandu Post
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