"We have received a letter from the finance ministry stating the fund has been released," Bhola Prasad Sharma Adhikari, general manager of DICGC, told Republica. This additional amount has pushed up the paid-up capital of the corporation to Rs 980 million.[break]
The company is now all set to call a shareholders´ meet to discuss the equity structure and future course, Adhikari said.
The government currently holds 74.12 percent share in the corporation, followed by Nepal Rastra Bank´s 22.58 percent stake. The remaining shares are held by two state-owned banks, Nepal Bank Limited and Rastriya Banijya Bank.
However, with the injection of fresh capital, the government´s stake in the company is going to swell, leaving behind the central bank and the two state-owned banks as minor shareholders. These minor shareholders will now be given an option to raise their ownership in the company by adding fresh capital, Adhikari said.
Nepal Rastra Bank may be interested in the offer but since the law does not allow it to invest more than 10 percent of the total paid-up capital in any company, it will have to make adjustments accordingly. The two state-owned banks are already in the red and are most likely to reject the corporation´s proposal.
"Eventually, the two banks may leave the company, with the government ending up owning 90 percent stake in the company and the remaining stake staying with the central bank," Adhikari disclosed.
The corporation is more interested in roping in the central bank than the other two banks, largely because it expects the central bank to assist it in effective deployment of ´deposit insurance´ scheme.
The company has just started scratching the surface of huge business opportunity called deposit insurance, under which DICGC has been given the sole authority to insure deposits up to Rs 200,000 of individual depositors.
Taking advantage of this facility given by the central bank, it has recently started providing coverage to money parked by individual depositors at all financial institutions, such as development banks, finance companies and select microfinance companies. So far, deposits of around Rs 57 billion belonging to over 1.7 million individual depositors have been insured.
These institutions are charged a premium of 20 paisa every year on every Rs 100 insulated by DICGC.
With the addition of fresh capital, the corporation is now planning to bring commercial banks into this net, which hold around Rs 100 billion of individual depositors´ money. But these big banks are resisting the move of the DICGC for which it needs central bank´s help.
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