Stock related news & regulations of Nepal Rastra Bank

April 21- KATHMANDU: Nepal Rastra Bank today introduced the long-awaited bylaw on acquisition, paving the way for banks and financial institutions to raise their net worth and expand balance sheet size by taking over similar players in the market.

As per the bylaw, commercial banks or Class 'A' financial institutions, development banks or Class 'B' financial institutions, and finance companies or Class 'C' financial institutions can acquire each other. However, these institutions are barred from acquiring microfinance banks or Class 'D' financial institutions. Microfinance institutions can only be acquired by other microfinance institutions, says the bylaw.

Many bankers did not want to comment on the features of the bylaw citing they still have not gone through the document.

The bylaw, which was demanded by bankers long ago, gives authority to NRB, the banking sector regulator, to instruct banks and financial institutions to acquire troubled institutions, and institutions promoted by the same person, firm or company.

In order to ease the acquisition process, the latest bylaw has also offered concessions to institutions that complete takeover process. Under this facility, NRB will give additional time for institutions that have completed acquisition process to make adjustments to the equity structure in case they exceed the regulator's limit.

Currently, investment of a single promoter in Class 'A', 'B' and 'C' institutions cannot exceed 15 per cent of the

paid-up capital. In the case of microfinance institutions, this limit has been set at 25 per cent of the paid-up capital.

Similarly, institutions that have completed acquisition process will be given additional time to bring credit-deposit ratio within the limit of 80 per cent, in case they exceed the ceiling fixed by the regulator.

Also, institutions that have completed takeover process will be given extra time to meet regulatory requirements on deprived sector lending and investment, says the bylaw, which gives priority to institutions that want to upgrade themselves or expand work area through the process of acquisition.

"NRB will also try to remove any hurdle and request the government to consider extending other concessions to facilitate the acquisition process," reads the bylaw. However, acquisitions that tend to create a monopoly, induce unfair competition or pollute the banking sector will be discouraged, adds the bylaw.

As per the bylaw, parties to the acquisition process must first get the approval from their respective general meetings and give authority to their boards of directors to take matters forward.

Then a joint acquisition committee, under the coordination of the institution intending to make the acquisition, should be formed, following which an application should be filed at NRB, says the bylaw. The application should also include a letter from Nepal Stock Exchange on suspension of trading of shares of the institution which is getting acquired.

Then within the next 15 days NRB will call the parties to the acquisition process for a meeting, following which due diligence audit of the institution which is getting acquired will be conducted.

"Based on evaluation of assets and liabilities, institutions make the acquisition by purchasing shares in cash or by offering stock option," says the bylaw. "NRB will oversee the entire process and may give suggestions or instructions to ease the process."

Source: THT

Corporate News

India makes exemption for Nepal, allows some refined palmolein imports

February 12, 2020- India, which restricted imports of refined palm oil and palmolein in January, has exempted Nepal and has started issuing licences to import some refined palmolein from the Himalayan nation, two government officials told Reuters.

Read more ...

HIDCL, Power China to build 762MW Tamor reservoir project

Kathmandu, September 16- The Hydroelectricity Investment and Development Company Ltd (HIDCL) and state-owned Power China Corporation have jointly submitted a project development proposal at the Investment Board Nepal (IBN) to build the 762-megawatt Tamor reservoir project, which will cover Panchthar, Taplejung, Terhathum and Sankhuwasabha districts.

Read more ...

Security audit of BFIs compulsory

Kathmandu, September 10- Nepal Rastra Bank (NRB) has made it mandatory for banks and financial institutions (BFIs) to conduct an audit of their information and technology (IT) system.

Read more ...

Age limit set for CEOs, directors at BFIs

KATHMANDU: Nepal Rastra Bank has set an age bar for board of directors and chief executive officers of banks and financial institutions (BFIS).

Read more ...
Symbol % Change Last Price Turnover
TPC 10.1449 532.0 1,200,368.0
NBB 10.1227 359.0 78,348,179.0
MKJC 10.0209 527.0 10,408,576.0
NIBLPF 10.0000 11.0 251,978.0
NTC 9.9914 1,277.0 164,339,250.0
Symbol % Change Last Price Turnover
VLBS -2.3669 1,650.0 11,812,950.0
SBIBD86 -2.3415 1,001.0 90,350.0
MLBBL -0.9975 1,985.0 2,583,021.0
NLG -0.9524 936.0 6,741,837.0
PBD85 -0.9288 960.0 72,000.0
Symbol % Change Last Price Turnover
MLBL 9.7333 823.0 372,688,498.0
NHPC 8.9412 463.0 304,219,800.0
API 2.7613 521.0 233,673,436.0
LBBL 1.5152 670.0 182,483,005.0
NTC 9.9914 1,277.0 164,339,250.0