World Bank has suggested the government to offload its shares from Nepal Bank Ltd (NBL).
It will pave the way for private sector to run the oldest bank in the country, said the multilateral development partner.
The government currently owns 38.60 per cent stakes worth Rs 1.53 billion in the Nepal Bank, whereas rest of the stakes is owned by various institutions, bank staff and general public.
Though the bank has been operating under the central bank’s management since 2002 under the financial sector reform programme, Nepal Bank has not been able to improve its financial health completely.
The reform programme – supported by the World Bank and Department for International Development (DFID) of the United Kingdom – was aimed at privatising the bank after improving its financial health.
Currently, the government has lent Rs 7 billion to improve financial health of Nepal Bank and Rastriya Banijya Bank that is wholly government owned.
Though the reform process of Nepal bank and Rastriya Banijya Bank started at the same time, the central bank handed over the management of Rastriya Banijya Bank in March 2011, but still managing the Nepal Bank.
However, the central bank is still planning to hand over the management to its shareholders after annual general meeting in July.
Currently, Nepal Bank’s capital adequacy ratio (CAR) stands at one per cent, which needs to be increased to 10 per cent, according to the central bank’s regulatory requirement. “It is planning to increase its capital adequacy ratio by selling it’s assets,” the bank informed.
Nepal Bank has listed its 39,655,236 units of stakes sat the Nepal Stock Exchange (Nepse). Its stakes have been traded at around Rs 300 per unit lately.
Nepal Bank had also issued 1:9.51 rights shares six months ago to increase its paid up capital.