June 7: Nepal Rastra Bank (NRB) has reduced the concessions and facilities given to encourage mergers between commercial banks. Amending the unified directives on Tuesday (June 6), the central bank reduced the facilities and exemptions given to commercial banks opting for merger and acquisition but extended the deadline. As per the new provision, banks that initiated the merger process but could not start integrated transaction can do so by the end of the current fiscal year.

They can still enjoy six types of offers given by the central bank if they start integrated transactions by mid-July 2023.

If the integrated business is started within the given timeframe, the banks will get one-year extension for providing loans in the specified areas. Likewise, the cooling period provision of directors and high-ranking employees, who cannot join another organization for at least 6 months after quitting their posts, will not be applicable to the merged entities.

Similarly, the merged banks will be provided with additional six months to fix their credit-deposit ratio if it has crossed the limit fixed by the NRB.

Likewise, arrangements have been made for such banks that the will not require the  approval of the NRB for one year to merge or close branch offices operating within one kilometer distance.

Earlier, NRB such facilities were available only if integrated transactions were done within mid-January. However, the NRB has extended the deadline for the banks that could not complete the integrated transactions within that period. However, the banks that are yet to start integrated business will not get some facilities given to banks that started integrated business by mid-January.

The relaxation given to the banks doing integrated transactions to maintain the mandatory cash balance, statutory liquidity ratio, spread rate and other indicators has been removed. Similarly, the exemption given to the chief executive officer on the age limit, the ratio of institutional deposits and the concession given on the compulsory arrangement to issue bonds have also been removed.

Among the banks that have signed an agreement for the merger, only Laxmi Bank and Sunrise Bank are yet to start integrated transaction.

Global IME Bank and Bank of Kathmandu, Prabhu Bank and Century Bank, Nepal Investment Bank and Mega Bank, and Kumari Bank and NCC Bank have started integrated business within the timeframe given by the NRB.

Himalayan Bank and Civil Bank started integrated business only in mid-January.