The story of fifteen bank mergers

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The story of fifteen bank mergers

The Nepal Bank has warned the banks to go to mergers for a few days.

The bank has instructed the National Bank to go to the merger by calling the committee members and chief executive officers of the banks and financial institutions of the B and C class and the Chief Executive Authorities. The merger says that two banks are the same to mix together.

The central bank’s directive was terrorized on one side, and on the other hand, the pressure on the necessities should be merged on the basis of necessity.

After all why? From start point.

That is, the number of banks and financial institutions. According to statistics released by the Nepal National Bank, according to the statistics of the month of Nepal, there are 28 commerce commerce banks and 3,340 branches in the country.

There are 32 b development development banks and their 1,2002 branches and 24 c-class finance companies and their 2,4 branches. There are 9 small databases of microfinance organizations.

The deposit amount of Rs.20.25 billion in the bank of the bank has been collected. Similarly, a loan amount of Rs. 24 billion has been arranged by Rs. 1 lakh.

In the 43 million deposits of the development bank, the deposit amount has been collected to Rs.36 billion and net income amounting to Rs.33 billion from 3 lakh 67 thousand accounts.

The finance company has deposited Rs. 70 billion in the account of 5 million rupees and Rs. 67 billion has been flown from 41 thousand loan accounts.

Apart from the statistics above, around 40 thousand cooperatives of the country are providing financial services. Despite this, almost 50 percent of the country’s population is outside the banking service.

28 of the 7 53 municipalities in the country have not yet reached the bank or financial institutions. In addition to cooperative, around 50 thousand people have received direct employment.

Is this number more?

Only 20 percent of Nepal’s population was less than 15 percent only in the banking service. The informal currency market was in the toll toll. In this situation the government was liberal to open the bank and financial institutions. Interstitial license is delivered.

When this number was more than the country’s needs, the Nepal National Bank brought measures to increase capital number three years ago. The capital growth could significantly reduce the number of commercial banks even though the number of development banks and finance companies reduced significantly.

The current number of commercial banks is now. Even if there is no fixed number, there are about 15 number of commercial banks and its sufficient branches can be said today’s necessity.

After the capital of Commerce Banks reached Rs 8 billion from Rs 2 billion rupees, the sequence of banks opened the branches on one side. On the other hand, the capital went down to reduce depreciation in the market. The entire banking system became unhappy when the flow of money flow for profit.

On the one hand, the thinking of earning profit today and the lack of deposits started to make sense of interest. The order still continues. Not only that, in the same branch of all the Commerce Banks, the expenses reached to be unhealthy.

The reason for merging

Generally, there is no reason to merge Nepal’s bank and financial institutions. The banks of the bank are just getting to the village.

Competitive service order has just begun. Customers of the Kuna Kapcha of the country are happy with the new and quicker service. Banks are also in good standing. The partner has earned both the dividend and the value. The country has collected direct revenue of around Rs 30 billion annually.

The matter can not be so high. Banks have some major reasons for merging, which help in the economic development of the country. First, there could be no need for increasing human power and their capacity to increase the size of banks and bank branches. There has been a problem in the bank by hitting others’ staff and top positions. Most middle-level employees are not capable. This is a big threat to the banks.

Second, the board of directors of the bank and financial institutions could not be commercial. The bank’s debtor and the bank’s rich (on different bank) were the same person when he decided to make a bank. It was less when the size of the bank was smaller during the next day. Now that effect has begun much. Furthermore, lack of banking knowledge in the chairman and members of the Board of Directors began to reach their own employee’s recruitment and debt flow only.

Third, the amount of deposits of all banks went to increase the number of branches in one small place. Which finally got to add to debt and interest in debt was expensive.

Fourth, the same group developed different ways to go through different banks and reduce the risk of developing debt.

Let’s, despite this, the size of our bank has become very small to compete with foreign banks. Even today, no bank size is required to produce 20 MW of electricity or to invest in a cement industry. Banks also go to co-finance in one billion rupees loan. This is the biggest breakdown of the day.

These are common reasons for the bank to merge. Apart from these, if the internal data of the bank and the financial institutions is to be reviewed and their audit reports, the situation of many banks seems to be problematic. This is the main reason for the Nepal National Bank to go to the merger process with such a hurry.

Sixth, the Nepal National Bank does not have the ability to monitor many of these banks and financial institutions. That is the root cause of the problem of banking system.

What are the banks of Nepal?

Bank of Nepal can be divided into different parts. First, Nepal Bank, National Commerce Bank and Agricultural Development Bank with government investment. Second, Stanford Chartered, Everest and Nepal SBI Bank, with the foreign investment and foreign directors, are the main executive officials.

Third, initially and stayed in the market Jam, Naveed, Himalayan and Nepal Investment Bank.

Fourth, later, also made himself bigger than the merger process and recently seen the aggressive markets of the NIC Asia, Lord and the Global IME Bank.

A good impression in fifth market, Sanaama and NMB Bank. Sixth, except the above mentioned 14 banks.

Even if the Nepal National Bank has not opened its mouth, its objective is to merge with the sixth type of four banks, besides the first type of three banks, with eleven banks above it. It can be the goal of keeping only 15 banks in the country, not only so much, in the next three years, fifty billion rupees, 5 rupees rupees deposits, 4 crores of rupees, five branches and 5 thousand employees.

What to do with the Development Bank and the Finance Company?

Nepal was with the National Bank of India on the occasion of opening the development bank and the finance company in the small capital. Because the banks were urbanized.

The accessibility of cooperative and microfinance institutions was small. Today there are more than 40,000 cooperatives. There are shortages in village villages. Now the bank branch reaches the smallest sector, and they do not have any need for the two countries.

Even if the numbers are visible, their total deposits and debt are lower than the two commerce banks. Thus, such institutions that increase the cost of capital must be merged or taken.

Even when looking at the above numbers, two mergers of 32 development banks have gone into the process. Of the 24 finance companies, 2 are in the process of dismissal. Within the next two years, these institutions have no doubt about the history.

What happens to the market?

After the process started, there was some gameplay in the share market. That was wrong. The merger is not like yesterday, where the official shares came. This is not the case at all. Instead, it takes time to mix everything in two organizations, branches are matched, deposits and debt can decrease both.

There may be some reduction in share market. All stakeholders should be ready for this. It’s just a matter of time to take someone to the market. But if small companies are taking large numbers, the partners of small organizations can benefit some benefits.

Why do not the government banks merge?

If the government and the national bank will be sensitive to the merg process, first of all, three government-owned banks should start merging process. For this, the government should sell all its shares in the public sector.

National Commerce Bank and Agriculture Development Bank should integrate. This is the most appropriate option. Otherwise, they are not likely to merge with anyone. While going to the era of economic liberation, still the total deposits and 50 percent of the banking system should be with government owned banks and those banks are in political interest to adverse financial health of the country.

The risks shown in the merger

First, the process of polarizing in this process is seen. Here, there are a risk of government bank, bank of foreign investment, bank accounts of old skull and aggressive bank, while seeing only 15 banks remaining in Bholika.

To avoid this problem, the Nepal National Bank should divide the difference between the operators and other entrepreneurs today. We hope that this monetary policy will come up next week.

Second, the risk of this process is the marriage between poor poor. Merge process should add 2 and 2 to 5 or more. But if there are mergers between the two financial institutions which are badly damaged, it can be 3 or 2 times adding. Nepal national bank must be cautious to avoid that.

Merges

In fact, the agreement made by Jan Bank and the Global IMI should have given a lot of pressure to others. Some other banks have increased the process for mergers. Now the board’s boardrooms are busy in negotiations.

If only one merger went on in the next few weeks, then the number of banks within 15 years of the next two years could be sure to be in the hall.

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