Birgunj Finance, Himchuli Bikas Bank to merge

This is the season of merger.
Two more financial institutions -- Kathmandu-based Birgunj Finance Ltd and Pokhara-based Himchuli Bikas Bank -- announced their proposed merger become a national level development bank.
"We are merging the two finance companies in line with the central bank's vision of consolidating the financial institutions," said executive chairman of Birgunj Finance Bijay Kumar Sarabagi, after signing the Merger Memorandum of Understanding (MoU) here in the Valley today.
The central bank and the government both encouraged the banks and financial institutions for merger in their monetary policy and fiscal policy.
"The merger is supposed to facilitate the capital requirement of the financial institutions and reduce their operational costs as well creating space in the crowded financial institutions," according to the Monetary Policy for the current fiscal year 2010-11.
Similarly, the budget for the fiscal year 2010-11 has also encouraged the merger of the banks and financial institutions by providing them incentives, though some banks and financial institutions are less inclined to mergers due to less incentives, according to them.
"In the present cut-throat competition merger will help increase area of operation too," according to chairman of Himchuli Bikas Bank Sushil Raj Parajuli.
"After the proposed merger of two financial institutions, the total paid up capital will be Rs 900 million," they said, adding that their total deposit will also be Rs 5.14 billion and lending will touch Rs 4.97 billion. "The total branch network will also be 24.
"However, they still have to get the approval from the Nepal Rastra Bank (NRB) and company registrar's office.Earlier, some of the financial institutions took wrong advantage by announcing the merger. They never get merged but unethically increased their share price by announcement of their merger forcing Nepal Stock Exchange to halt their trading.