Thursday, July 25, 2024

Why Do Banks Merge In Nepal?

From time again and again commercial banks that are successful on their own are merging one by one. From NIC and Bank of Asia to NIC Asia Bank in 2013, or Sunrise Bank limited and Laxmi Bank Limited in 2023. Why do banks merge in Nepal?

There are many point of view on why do banks merge in Nepal. For economic, banking and public sector point of view banks do merge in Nepal.

The Nepal Rastra Bank (NRB) launched a ‘pressure policy’ to force commercial banks to merge. As a result, these banks are open to merging, with almost a half-dozen joining forces this week. The central bank’s strategy has accelerated the merging of major commercial banks. Previously, Nepal had a total of 32 commercial banks. However, as a result of the NRB’s requirement to boost their paid-up capital, this number has shrunk to 27.

The number of commercial banks is expected to fall to 18 as a result of recent and pending mergers. In accordance with international standards, the central bank has strongly supported mergers as a means of promoting the growth of competitive and investment-ready banks.

The bank merger work is motivated by the country’s excessive number of banks in relation to its population and GDP. Notably, the merger of banks and financial institutions has increased their paid-up capital while also improving risk management capability and capital growth. Furthermore, the merger led to in lower management costs.

Appsha Digital

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