The High-level Financial Sector Coordination Committee meeting chaired by Finance Minister Barsha Man Pun today decided to start merger process of two government-owned financial institutions – Rastriya Banijya Bank (RBB) and NIDC Development Bank.
The meeting also decided to seek opinion from Industry Ministry regarding the merger process. "The ministry has started the merge process of Rastriya Banijya Bank and NIDC ," a source at the ministry said.
Central bank has suggested merging the two government financial institutions almost one year ago as an alternative to the capital injection in the RBB that is the largest commercial bank in the country in terms of assets size, though it has negative net worth of Rs 10 billion.
The financial sector reform programme has brought about some structural changes, but it has failed in making it a healthy bank. After the merger of the two, Rastriya Banijya Bank (RBB) — that has a paid up capital of Rs 385.30 million and has a cumulative loss of Rs 9.37 billion — can turn its negative net worth to positive by selling the assets of NIDC that has around 99.2 per cent share of government, according to the government plan.
The NIDC has land in Kathmandu, Pokhara, Biratnagar, Bharatpur, Mahendra Nagar, Surkhet and Dhangadi worth around Rs 10 billion.
Meanwhile, the NIDC — that has a paid up capital of Rs 410 million — has 72 per cent NPL and Rs 179.4 million cumulative losses by the end of last fiscal year.