Finance Minister suggests RBB, NIDC merger

HIMALAYAN NEWS SERVICE

KATHMANDU: Finance Minister Surendra Pandey today suggested the Rasritya Banijya Bank (RBB) to merge with the Nepal Industrial Development Corporation Ltd (NIDC).

Speaking at the 46th anniversary programme of the state-owned bank, he said, “the merger of two financial institutions will help bring the negative net-worth of RBB into positive that needs Rs 12 billion capital injection to bring its negative networth to positive.

“The government can not inject Rs 12 billion capital as it is impossible for the

government to allocate the amount,” he said, adding that it will not be not fair for

the government to manage the extra capital for RBB.

“The merger is the best way to expand bank’s capital base and enhance its competency too,” he suggested, however, also added that the merger process will not go ahead without the consent from the bank management.

The central bank governor Dr Yubraj Khatiwada also emphasized on the merger of the two banks for the long term sustainability. “Huge investment has been attracted into the banking sector,” he said, adding that the existing banks have to increase their capacity to compet with the new banks.

“At a time when private sector banks are inclining towards merging for their betterment, it is crucial to enhance the capacity of the government-owned banks too,” he added.

The governor also said that the financial institutions are increasing in Nepal in comparison to the economy. “The government has encouraged merger through the fiscal policy and monetary policy in order to keep the reasonable number of financial institutions,” he added.

According to him, the government-owned bank still lags far behind in the competition with the private banks, though it is improving.

The RBB has posted a total of Rs 11.38 billion profit in last seven years, according to CEO of the bank Janardan Acharya.

“After the reform programme, with an assistance from World Bank, International Monetary Fund (IMF) and Department for International Development (DFID) in January 2003, the bank has succeeded in reducing it Non-Performing Loan to nine per cent,” he said, adding that RBB has been providing Any Branch Banking service to its 100 branches out of the total 128 branches.

Private sector keen on AMC

KATHMANDU: Governor Dr Yubraj Khatiwada said that private sector has shown interest to establish Assets Management Company (AMC). NRB’s strategic plan 2006- 2010 mentions that initiatives will be taken to facilitate the establishment of Assets Management Company to enhance the quality of financial assets.

However, no AMC has been set up so far. “Earlier, NRB along with other government-owned banks had tried to establish AMC but financial sectors objected to the NRB’s involvement, he said.