Central bank agrees merger of CMB, Alpic and Butwal merger

The central bank has given a green signal for the merger of Butwal Finance, CMB Finance and Alpic Everest Finance.
They are going to merge into a single entity Synergy Finance Company that will have a paid-up capital of Rs 474.4 million. It is going to start its operations as Synergy Finance from next month. 
“Promoters of Butwal Finance will have majority stake of around 49 per cent, whereas current CMB investors have around 26 per cent and Alpic promoters will have around 25 per cent stake in Synergy Finance.
Under the agreement, a shareholder with 100 shares in Butwal Finance will get 120 shares in Synergy Finance, where a shareholder with 100 shares of Alpic will get 110 shares. Likewise, a shareholder with 100 shares of CMB will get 88 shares in the merged unit.
Synergy Finance will be led by chief executive of CMB Finance Rajendra Man Shakya, who is incumbent president of Nepal Finance Companies Association (NFCA).

Finance companies propose Microfinance Development Bank

Nepal Finance Companies Association (NFCA) has proposed a Rs 200 million to Rs 250 million worth Microfinance Development Bank (MFDB) that will not only help deprived borrowers get access to finance, but which will also provide technical consultation and orientation programmes, coupled with project financing for returnee migrants.

"The central bank is positive about the proposal," said the association's president Rajendra Shakya, after discussions with the central bank today.

However, Nepal Finance Companies Association is only a facilitator, he said, adding that the association has proposed a 60 per cent equity participant from commercial banks, development banks and finance companies. "Experts and technicians can also have a 10 per cent equity partnership in the proposed Microfinance Development Bank that will provide both wholesale and retail lending," added Shakya.

"The concentration of the proposed institution will be on livestock, animal husbandry and dairy, as the demand for farm, livestock and dairy products has been rising lately but the country has to import most of the products."

Central bank governor Dr Yubaraj Khatiwada is also enthusiastic on the proposed institution as the central bank has been encouraging banks and finance companies to go to rural areas to help in agriculture and livestock, he said, adding that the central bank has to, however, bring in project finance, as it currently has no such provision.