October 14: Nepal Rastra Bank (NRB) has authorized the Securities Board of Nepal (SEBON) to decide on the suspension of share trading of banks and financial institutions opting for merger and acquisition.

The central bank amended the Regulation for Merger and Acquisition of Banks and Financial Institutions 2073 on Thursday to make arrangements for the suspension and release of share transactions to be done in accordance to the provisions made by the SEBON.

At present, the share transaction of banks and financial institutions gets suspended after signing an agreement for merger or acquisition and remains in force until the merging institutions start integrated transactions. The central bank has taken a flexible approach after increasing complaints that the suspension of share trading in the secondary market for a long time during merger or acquisition adversely affects the investors.

In the monetary policy of the current fiscal year, NRB has mentioned that the existing provision of suspending share trading during merger or acquisition will be cancelled, and provision will be made as prescribed by SEBON. NRB has amended the regulation to implement the arrangements made by the monetary policy.

Although NRB has given the right to decide on the suspension of share trading to SEBON, the board has yet to decide on this matter. In the draft of the guidelines for mergers and acquisitions of organized organizations published by the board in July, it has been proposed to suspend share transactions of BFIs opting for merger and acquisition for a maximum of 15 working days. Although the board said that the guidelines will be finalized based on the suggestions of the stakeholders, the guidelines have not been passed yet.