Global IME Bank, BoK start joint operation as Global IME Bank

Global IME Bank and Bank of Kathmandu (BoK) today started the integrated operation as Global IME Bank.

Following the merger, the bank's capital fund totaled Rs57 billion, deposit reached Rs 410 billion and loans Rs 400 billion with assets of Rs 500 billion and a network of 1,100 branches, according to a press note issued by the bank.

With a total of 365 branch offices, 367 ATMs, 286 branchless banking services, 61 extended branch offices, and 3 contact offices located abroad, Global IME Bank has more than 4 million customers, the press note reads, adding that the board of directors of the merged bank will consist of five directors including chair Chandra Prasad Dhakal from erstwhile Global IME Bank and two directors from erstwhile Bank of Kathmandu. The chief executive officer (CEO) of Global IME Bank Ratnaraj Bajracharya will continue as the CEO of merged bank.

Inaugurating the programme, Prime Minister Pushpa Kamal Dahal ‘Prachanda’ reetariated the government main agenda as sustainable economic development and strengthening of the economy. “Understanding the need of the hour, we have decided to implement a balanced financial, industrial and monetary policy to make the economy dynamic and to objectively intensify cooperation and cooperation with the private sector to solve the problems seen in the economy,” he said, claiming that the country’s economy will accelerate, if the opportunities provided by the expansion and improvement of the banking sector can be properly utilised. Emphasising that the banking sector has a great role in making remittance transactions reliable and secure, the premier said that it is necessary for the banking sector to contribute not only to big projects but also in the areas of access to finance, financial literacy and self-employment by using the latest banking and financing products. “It would be easier to invest in big projects, if banks and other financial institutions merged and worked together but such mergers should boost financial efficiency and minimise unhealthy competition.”

On the occasion, chief secretary Shanker Das Bairagi said that the government is serious and will take effective steps in increasing their morale. “There have been positive indications in the country's economy lately,” he said, consoling the private sector not to fear. He also said that mergers will make it easier to raise resources for large projects and increase efficiency.

Likewise, central bank governor Maha Prasad Adhikari said that the merger process was pursued following increasing unhealthy competition and rising operating expenditures of financial institutions.

Urging the banks and financial institutions (BFIs) to focuse on self-regulation and invest in productive sector including small and medium enterprises (SMEs), he claimed that the merger policy will make the financial system more secure. “Due to increasing numbers of BFIs that led to the unhealthy competition, Nepal Rastra Bank (NRB) has adopted the merger and acquisition (M&A) strategy a decade ago.”

Though the NRB has brought merger bylaw in 2011 and revised it in 2012, the Monetary Policy of the fiscal year 2015-16 has encouraged mergers and acquisitions by increasing the paid-up capital of the BFIs. The Monetary Policy has increased the paid up capital of the commercial banks (Class A financial institutions) to Rs 8 billion, development banks (Class B financial institutions) to Rs 2.50 billion, and finance companies (Class C financial institutions) to Rs 800 million. 

Speaking on the occasion, president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Shekhar Golchha asked the government and central bank to address three concerns to improve economy. “First, increase government spending; second make monetary policy restrictive but flexible too given the investment risks, and third, create an investment-friendly environment for private sector.”

“The economy will be strong only if the banks are strong,” he said, adding that the bigger banks after merger will also lead to bigger challenges. “To provide reasonable interest to the depositors and subsidised interest to the borrowers is also a huge challenge.”

Stating that BFIs are the backbone of the economy, Golchha said the profit of banks should also be seen, linking it with their investments.

Saying that reducing interest rates will boost the morale of industrialists and businessmen, Confederation of Nepalese Industries (CNI) president Vishnu Kumar Agrawal asked the government and central bank to decrease interest rate and ease liquidity. “Big banks should have bigger responsibility as well,” he said, urging the BFIs to lower the interest rate. “Encouraging to invest in productive sectors will not only contribute to national capital formation but also help government achieve revenue target.”

Informing about the merger, chair of the Global IME Bank Chandra Prasad Dhakal, on the occasion, said that the Global IME has merged and acquired a total of 21 BFIs to become the largest bank in the country. "This institution has been formed with the merger of five commercial banks and 10 development banks, apart from six financial institutions,” he informed, claiming the merged Global IME Bank as the first bank in terms of higest paid up capital. He also pointing out the risk involved as a big bank. “Being a big bank, there are risks and managerial challenges but we will be able to address them with our experience.”

Started his banking business from bringing remittances back home as a remitter, Dhakal said he will still gives high priority to remittance service. “We will give priority to bringing back money earned by the Nepalis in the Gulf and other countries.”