The category ´C´ financial institution, which has a net worth of Rs 676.77 million, has so far formally tied up with Dhading-based Samabriddhi Development Bank and Kathmandu-based Baibhava Finance. [break]
Nepal Rastra Bank (NRB), the banking sector regulator, on Monday extended initial approval for merger of the three institutions by handing over ´letter of intent´.
Once these three institutions are consolidated, the new unit will have a paid-up capital of Rs 800.04 million.
To further strengthen its capital position and consolidate its presence on the market, the finance company has simultaneously initiated merger talks with NDEP Development Bank and Hama Merchant Bank.
“We have already signed memorandums of understanding with the two institutions,” Prabhu Finance CEO Ashok Sherchan told Republica. Once these two institutions are also included in the ongoing merger process, the consolidated unit will have a paid-up capital of Rs 1.58 billion.
But the process of bringing in NDEP and Hama in the consolidation process might take some time, as the two had previously started merger process and had acquired letter of intent from the regulator.
“This means NDEP and Hama will first have to go through demerger process prior to initiating consolidation process with Prabhu and other institutions,” a high-ranking NRB official said.
If NDEP and Hama are able to wrap up the demerger process in time, five institutions will come up with a consolidated balance sheet at the end of the fiscal year in mid-July. “If not, at least three institutions (Prabhu, Baibhava and Samabriddhi) will come up with a joint balance sheet at the end of this financial year,” Sherchan said.
To further consolidate its presence on the market, Prabhu is also scouting for other financial institutions to include in its merger process.
“We are looking for five to six more institutions from east to far-west so that the merged unit´s presence is felt throughout the country,” Sherchan said.
Once Prabhu completes its merger, the consolidated unit´s name will be Prabhu Bikas Bank. The management of the new unit will be led by Sherchan and the chairman of the bank will be Devi Prakash Bhattachan, who is currently the chairman of Prabhu Finance Company.
Lately, many financial institutions are launching merger process to meet the deadline for new minimum regulatory capital requirement in mid-July.
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