Nepal Rastra Bank to divest Manakamana Development Bank's promoter share

Nepal Rastra Bank (NRB) is divesting the promoters' share in Manakamana Development Bank Ltd's (formerly known as CSI Development Bank).
The central bank has, according to its own new regulation, started divesting the promoters' shares it has been holding in various financial institutions. The central bank has asked for the quotation from among the promoters of the bank to bid for the 1,60,000-units of promoters' shares within 35 days from September 24.
According to the Securities Board of Nepal (Sebon) regulation, the first priority will be given to other promoters buy the promoters' shares. But a promoter cannot hold more than 15 per cent of the total paid-up capital of a bank, according to NRB's regulation.
"Anyone wishing to buy should deposit 10 per cent of the total amount that they wish to pay for the share," NRB said adding that the bidder should not have been blacklisted and can bid for minimum 500-units and any number that is a multiple of 500 at not less Rs 100 per unit share.
However, if none of the existing promoters wish to buy promoters' shares, these can be sold to the general public.
NRB has allowed class A (commercial banks), B (development banks), C (finance companies) and D (micro-finance companies) financial institutions and banks to reduce their promoters' shares to 51 per cent. According to the new directive of the central bank, 19 per cent of the promoters' shares can be traded in the secondary market like ordinary shares.
The NRB directive states that prospective promoter shareholders should not have been blacklisted by Credit Information Bureau (CIB) and that they should disclose the source of their investment as well.
In line with NRB, Nepal Stock Exchange (Nepse) has also opened separate trading of promoters' shares since last March. Some 38 companies have listed their 61,419,028-unit promoters' shares at Nepse after the secondary market started separate trading since last March 31.
Nepse made the promoters' shares tradeable as the short supply of shares skyrocketed the Nepse index last year to around the 1000-point.
With the new practice, the capital market was expected to be more dynamic and price of the ordinary shares -- that were ballooning then -- was alo expected to stabilise as the supply of shares would increase. Nepse this year has not been able to move above the 900-point mark due to encough supply of shares.