Kathmandu, January 27- The government has decided to merge NIDC Development Bank with Rastriya Banijya Bank (RBB). A meeting of the Council of Ministers today took this decision.

RBB had paid-up capital of nearly Rs 8.59 billion as of first quarter of this fiscal (mid-October, 2016), while NIDC’s paid-up capital stood at around Rs 416 million in the last quarter of previous fiscal (mid-July, 2016), as per the quarterly reports published by the banks.

The next steps to be taken in the merger process would depend on the direction given by the government, according to Bhupendra Pandey, the acting deputy chief executive officer of RBB.

Deputy Prime Minister and Finance Minister Krishna Bahadur Mahara had recently announced during a programme that the merger process of the two government-owned banks would begin soon. Back then, he had said that the Ministry of Finance had already given its consent for the merger of the two government banks and the proposal for the same would be submitted at the next Cabinet meeting. The government had established RBB and NIDC for different purposes.

RBB was established as a commercial bank, whereas the objective of NIDC was to support the industrial sector of the country. However, the government later developed NIDC as a development bank as the institution failed to work as per its objective and a significant amount of loans floated by NIDC were defaulted. The government has also revitalised RBB through the Financial Sector Reform Programme, as the government-owned bank was on the verge of collapse due to bad loans.

Currently, both the financial institutions are being regulated by Nepal Rastra Bank.

Source: THT