E-Kantipur

KATHMANDU, AUG 01 - Three merchant bankers are set to lose their licences for failing to establish a subsidiary company as per the directives of Nepal Rastra Bank (NRB).

Last fiscal year, the NRB had directed banks and financial institutions (BFIs) involved in merchant banking to continue only after establishing a subsidiary company.

The merchant bankers on the verge of losing the licence are United Finance Limited, DCBL Bank and Nepal Housing and Merchant Finance, who didn’t apply for transfer of their licence to their subsidiary companies.

However, officials of DCBL bank and United Finance said their board already decided to discontinue merchant banking as they didn’t establish subsidiary companies.

Niraj Giri, director of Securities Board of Nepal (SEBON), said that those failing to comply with the NRB directives would have their merchant banking licences scrapped. SEBON issues the licences to merchant bankers.

The stock market regulator, however, will let the BFIs set to lose their licence to complete the task of issuing shares of any company if they were signed before mid-July this year, according to Giri.

SEBON has extended the deadline for handing over merchant banking licences to subsidiary companies till mid-October in order to facilitate banks and financial institutions (BFIs) comply with the NRB directives.

This is the second time SEBON has extended the deadline. Initially, merchant bankers were told to complete the process by mid-June. It was postponed till mid-July and it has been extended to mid-October now.

According to SEBON, ACE Development Bank, Vibor Bikas Bank, NMB Bank and Nepal Share Market & Finance Limited have already set up their subsidiaries and are in the process of giving them a final touch.

Similarly, Nepal Finance Limited, NIDC Capital Market Limited and Nepal Sri Lanka Merchant Banking & Finance Limited are also in the process of establishing their subsidiary companies.

There are 17 BFIs registered with SEBON as merchant bankers. Six companies were already registered as full fleged merchant bankers, while Nabil Investment, a subsidiary of Nabil Bank is the newest member in the merchant banks’ club.

Laxmi Bank is also on the verge of starting a merchant banking business through it’s subsidiary Laxmi Capital Limited. Laxmi Capital has already received the Letter of Intent for merchant banking operation from SEBON. Akash Investment is also in the process of acquiring a licence for the same.

Arniko Capital, Green Investment, Capital Investment Development and National Investment Capital Limited have also applied for licence to the capital market regulator.

Posted on: 2010-08-01 08:29

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