Foreign partners need to offload their shares in Nepali banks
The central bank today brought a directive asking the banks and financial institutions to off load the shares of their foreign partners by one-and-a-half-year. However, they can have shares of foreign financial institutions, the central bank said.
The move will force some of the banks including Nabil Bank and NMB Bank to offload their foreign partners' shares to wither in the domestic market or rope in other foreign financial institutions.
The ownership restructuring has to be changed by the end of next fiscal year 2014-15, the central bank said, adding that the new directives is in line with the Bank and Financial Institution Act 2063 (BAFIA) that allows only foreign financial institutions to hold stake in Nepali banks.
By mid-July next year, the banks and financial institutions have to relinquish their foreign partners' shares either to domestic investors or to foreign financial institutions.
The directive will also provide the banks and financial institutions some time to get their ownership restructuring according to the law.
The move will directly hit the Nabil Bank that has 50 per cent stake of an Irish company NB International.
Earlier, in the current fiscal year, the central bank had blocked the dividend payment worth more than Rs 600 million to the Ireland-registered NB International.
Likewise, NMB Bank's 12.67 per cent share is held by a Malaysian real estate company Young Leon Real Estate.
The central bank has also asked to inform transfer of share holding as according to the law.
The directives is issued to A, B, C and D class banks and financial institutions