June 18: Governor of Nepal Rastra Bank (NRB) Chiranjivi Nepal has said that Nepali banks are getting stronger due to merger.
He made such remarks at the merger ceremony between the Pokhara-based Om Development Bank headquartered in Pokhara and Gorkha-based Manaslu Bikas Bank held at Pokhara on June 16. He mentioned that the mergers of BFIs have made an important contribution to increase the paid-up capital of the banks.
"Banks are meeting the capital requirement as specified by NRB through mergers. In the last two years of capital growth, some banks have already met the minimum paid-up capital requirement, while some are in process of achieving it," said Nepal.
“The number of banks has been decreasing due to mergers. After mergers, the number of commercial banks has come down to 28 from 31. Similarly, there are now 30 development banks from 89 earlier. Likewise, the number of finance companies has come down to 20 from 79,” he added.
NRB aims to make the banks stronger with the capital growth strategy and the banks have been successful in doing so, claimed the Governor.
He said that banks those were limited to small transactions in the past are now capable of making huge investments. Though the government has planned to open branches of banks throughout the country in the local levels, various reasons such as lack of security in remote areas is proving to be an obstacle, he added.
In the program, Man Bahadur GC, the newly elected Mayor of Pokhara Metropolitan City committed to turn Pokhara into a vibrant place for young entrepreneurs and also requested the banks to provide loans easily for the purpose.
Meanwhile, Ananda Raj Mulmi, former president of FNCCI said that banks needed to become more trustworthy by maintaining proper financial discipline.
Banks should be able to earn customer’s confidence by proper management of the mergers as well as being considerate to the investors, said Bharat Raj Dhakal, President of the Development Bankers Association Nepal (DBAN).
The merged entity has been named as Om Development Bank. The paid-up capital of the merged entity will reach to Rs 1.65 billion with deposit totaling to Rs 15.4 billion and extension of loans amounting to Rs 13.8 billion.