Central bank continue to run Nepal Bank for another six months

The central bank has decided to continue running Nepal Bank for another six months till the end of the current fiscal year.

The board meeting of the central bank today decided to continue its management team at the oldest bank of the country as some of its responsibility has yet to be completed like increasing capital adequacy ratio (CAR). The central bank has planned to increase CAR to over 10 per cent – that is mandatory regulatory requirement – by selling some Rs 2 billion worth assets. The CAR is used to protect depositors and promote the stability and efficiency of financial systems around the world.
Two types of capital are measured: tier one capital, which can absorb losses without a bank being required to cease trading, and tier two capital, which can absorb losses in the event of a winding-up and so provides a lesser degree of protection to depositors. Thus, the higher the CAR, the stronger the financial institution is.

The central bank, had six months ago, also decided to continue take over until mid-January for the reforms including increase in paid up capital and selling of some of its assets. Though the bank has already increased its paid up capital, it is yet to sell assets, which has forced the central bank to continue its hold in the bank.

Nepal Bank – that has recently increased its paid up capital to over Rs 3.96 billion from earlier Rs 380 million only – is a listed commercial bank at the Nepal Stock Exchange (Nepse). The bank's shares have been traded at Rs 380 today. The public has 49.94 per cent shares in the bank. Today also the bank saw its bulk shares changing hands as Nirmal Pradhan, one of the big time investors, sold some 1.1 million units of shares at Rs 410 million, whereas Shiva Bikram Land and Industry promoted by entrepreneur Rabi Bhakta Shrestha bought the bulk units of shares.

Currently, a team led by the central bank director Maheshwor Lal Shrestha is handling the bank that was once under the financial sector reform programme, which most of the experts failed to reform the oldest financial institution of the country.