Similarly, Shiddhartha Finance and Imperial Finance are also making final preparation for merger.
All the five financial institutions have already applied at the Nepal Rastra Bank (NRB), seeking the approval of the central bank to undergo merger within six months.
“We will grant permission for merger once necessary procedure is completed,” Bhaskar Mani Gyawali, spokesperson for NRB, told Republica.[break]
According to NRB, 43 banks and financial institutions have undergone merger so far to form 18 institutions. Similarly, another one and half a dozen BFIs are waiting for the central bank nod for merger.
Pacific, Reliable and Shuvalaxmi together have paid-up capital of Rs 501.9 million. Reliable is operating with a paid-up capital of Rs 241.9 million, while Pacific and Shuvalaxmi have paid-up capital of Rs 200 million and Rs 60 million respectively.
As minimum paid-up capital requirement for a national level development bank is Rs 640 million, promoters of all the three institutions are planning to raise additional fund by issuing bonus shares.
Once the merger is complete, the merged entity will have total deposits worth Rs 3.6 billion and lending and investment worth Rs 2.78 billion.
Similarly, the new entity to be formed after the merger of Siddhartha Finance and Imperial Finance will have paid-up capital of Rs 330 million. Currently, Siddhartha Finance and Imperial Finance have paid-up capital of Rs 181 million and Rs 149.7 million respectively.
The central bank has been encouraging BFIs to undergo merger in a bid to ensure better management at financial institutions and make sure that they are not capital-strapped.
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