Nepali central bank to introduce new banking law
|
|
Nepal Rastra Bank (NRB) is set to introduce the Bank and Financial Institution Act with a view to facilitating mergers and acquisitions amongst financial institutions, an official of the central bank said in Kathmandu Friday. In the wake of opening up of Nepal’s financial sector as per the obligations made to the World Trade Organization, NRB is ushering in a new umbrella act governing commercial and development banks as well as finance companies, said Krishna Bahadur Manandhar, acting governor of NRB. “The new legislation could come soon,” he told reporters, adding that Nepal’s commitment to Poverty Reduction Growth Facility also requires a new law. On the existing legislation, Manandhar said that the process and legal framework for mergers and acquisitions or amalgamation of financial institutions are not clearly spelled out right now. “The forthcoming law will address the current problem and pave the path for a smooth process for mergers and acquisitions,” he added. After enactment of the new law, merger of smaller and weaker institutions or acquisition of them by bigger and stronger institutions could take place smoothly, he said. Manandhar said the central bank’s recent decision to double paid-up capital requirement for financial institutions is also part of the efforts. He said that financial institutions failing to meet the deadline to raise their capital would not be excused. “All these provisions are being made for their own sake to make financial institutions vibrant and strong, when Nepal opens up for all in 2010,” he added. |