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Buddding bank gets pre-debut cold feet
KATHMANDU, JUL 18 -
Amid complaints of overcrowding of the banks and financial institutions (BFIs) in the country, an upcoming bank under process of getting license from Nepal Rastra Bank (NRB) has decided not to open.
The promoters of the proposed State Bank of Nepal last week applied to the central for withdrawal from licensing process although they already deposited 5 percent of paid up capital as per the licensing policy. “The promoters have also asked the NRB to withdraw the deposited amount that they can get back,” said a senior NRB official. As per the bank licensing policy, the promoters should deposit 5 percent of paid up capital in the central bank before they get principle nod to establish a bank. The new bank’s promoters had applied to NRB in 2008 to open the new bank. One of the promoters of the proposed bank also confirmed their withdrawal decision saying that they didn’t see the viability of additional bank amid current economic situation
of the country. “With cost of fund of the banking going up, we didn’t see viability to establishing the bank,” said one of the promoters.
The proposed bank has 141 promoters inlcuding businessmen Kamal Kumar Begani, Karma Ghale, Kumud Dugar, Naresh Dugar, Shekhar Golchha, Pashupati Murarka and Prakash Mundada. There are already 27 commercial banks under operation and other three Century Bank, Commerze and Trust and Civil Bank have already received letter of intent to open the banks and fourth under process was this bank.
The NRB has been holding up the new licensing until new decision is taken and the new monetary policy to be released soon is expected make certain new provisions regarding the bank license.
The NRB official has termed the decision of the promoters of the proposed State Bank of Nepal as bold and correct one, saying that they could not expect profits at for initial five years and the profits also would not be as big as big they could earn from other businesses. “The decision of a professional group to backtrack from opening new bank will also discourage those seeking to open new BFI,” said the NRB official.
The NRB is under pressure from international institutions such as International Monetary Fund (IMF) to adopt stringent provisions while awarding bank license.
“The larger number of financial institutions is straining the NRB’s regulatory capacity that contributes to excessive risk taking,” latest report of the IMF said.
Posted on: 2010-07-19 08:28
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