Annapurna Bikash Bank (ABB) and Suryadarshan Finance Company (SFC) on Thursday signed a memorandum of understanding (MoU) for merger.
ABB is a Kavre-based development bank with paid-up capital of Rs 672, which is well above the stipulated capital requirement. SFC, Kathmandu-based finance company, has paid-up capital of Rs 100 million, which is half of the stipulate capital requirement. Director of ABB Balkrishna Neupane and chairman of SFCL Dan Bahadur Tamang signed the agreement.
Officials said ABB that has a strong capital base chose to undergo merger with SFC mainly to expand its transaction area and formalize its major loan portfolio outside its working area.
The two institutions signed the MoU after the central bank gave its nod for the merger. “We are glad they signed merger MoU,” said a Nepal Rastra Bank (NRB) official, adding that Butwal Finance and Alpic Everest Finance too have sought NRB´s suggestion to undergo merger.
“Officials of both the institutions recently met with NRB high officials and have received positive response from them,” the source said. The paid-up capital of Butwal Finance stands at Rs 206.78 million as of third quarter of last fiscal year whereas the paid-up capital of Alpic Everest is just Rs 140.64 till second quarter of last fiscal year.
“The trend for merger is still encouraging and we are hopeful it will increase further in the upcoming months because of tax incentives offered by the government,” the official said. The source further said that although the numbers of weak FIs were showing interest in merger, central bank was not positive about it.
“Two weak institutions will make another big institution and this is not what central bank intends,” the official added.
Although Naryani Development Bank and Crystal Finance were planning to merge, they have stopped the process after they failed to get a green signal from the central bank.
On the other hand, Kasthamandap Development Bank and Shikar Finance are very close to a merger. The source said that they have completed the formalities.
NRB has strongly been pushing BFIs to undergo merger. It even unveiled merger bylaws early in May, 2011.
The government too has provided tax incentives to encourage merger.
Source: myrepublica
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