HBL to increase paid-up capital

KATHMANDU, FEB 23 -

 Himalayan Bank Limited (HBL) has decided to increase its paid-up capital to Rs 4 billion within the next two years amid rising competition. Its paid-up capital currently stands at Rs 2.76 billion.

“Our board meeting last week decided to increase the paid-up capital to Rs 4 billion by mid-July 2015,” said HBL CEO Ashoke Rana. “The board has also directed the management to find out a proper method for increasing the capital.”

According to Rana, the bank will carry out homework on three possible methods of raising the capital—merger, rights shares issuance, and both rights shares issuance and sales of fixed

property in Durbar Marg, Kathmandu, and Pokhara.

As bank s like NIC Asia and Global IME became bigger through mergers, the HBL board took the decision to put HBL among top three bank s in terms of capital base.

Rana said the Nepal Rastra Bank has also been urging HBL to increase its capital, stating it would help the bank grow further amid rising competition.

“A few days ago, we received the central bank ’s approval for holding annual general meeting (AGM),” said Rana.

After the HBL board decided to go for raising capital, the bank has written to the Nepal Rastra Bank (NRB) about its plan.

The central bank has long also been asking BFIs to increase their capital although no formal provisions have been put in place on this front.

The central bank is particularly focused on ensuring compliance of the existing provision, which requires commercial bank s to increase their paid-up capital to Rs 2 billion, national-level development bank Rs 640 million and national-level finance companies Rs 200 million within  the current fiscal year.

However, the monetary policy for the current fiscal year has indicated that it would put in place a provision asking all types of the bank s and financial institutions (BFIs) to raise their paid-up capital. Besides paid-up capital, the central bank has also

provisioned allowing BFIs to use other types of instruments and measures as part of capital.

Following the central bank ’s approval to hold AGM, the HBL is planning to issue a notice on the planned AGM next week. After the HBL deposited the amount equivalent to the counter guarantee they gave to China’s China Railway 15 Bureau Group—former contractor of Melamchi Drinking Water Project—on non-deductable condition, the NRB allowed the bank to hold the AGM.

Source: Kantipur