November 22: Despite the extension of deadline by Nepal Rastra Bank (NRB) to raise their paid-up capital, a total of only 13 commercial banks have raised the capital by mid-November. The central bank had directed the commercial banks to raise their paid-up capital to Rs 8 billion by July 2017. But, only five banks met the criteria set by the central bank within the deadline.

As only five banks, namely  Global IME Bank, Nepal Bank, Nepal Investment Bank Ltd, Rastriya Banijya Bank, and Agriculture Development Bank Ltd, raised the paid-up capital to Rs 8 billion, the central bank had extended the deadline by six months till December 2017. It has been more than four months since the NRB extended the deadline, but only eight additional banks have raised their paid-up capital as per the criteria set by the central bank. These banks opted to issue bonus shares, right shares as well as merger and acquisition to meet the ceiling set by NRB.

According to the Banks and Financial Institution Act-2016 (BAFIA), the banks should complete the audit work within four months after the completion of the fiscal year. If the banks fail to prepare the audit report, then it has to request the central bank to extend the deadline for two months to raise the paid-up capital. So, the banks and financial institutions (BFIs) should raise the paid-up capital by the end of December at any cost.

According to the monetary policy of NRB, it will stop BFIs from expanding their branches, collecting deposits, issuing rights and bonus shares, among others if they don’t comply with the directives of the central bank. Currently, all the commercial banks are preparing to raise the paid-up capital to Rs 8 billion within the time period set by NRB.