Why are the banks merging?

Most of the banks have gone or going through the merger. Global IME and BOKL, Mega, and NIBL, Prabhu Bank acquired Century Bank. NCC Bank and Kumari, Himalayan and Civil Bank. Why so? Any regulatory requirement?

Banks are merging all in pursuit of merger related benefits. NRB has stated that it will provide numerous incentives to banks that start joint transactions within Poush end this year.
NRB has been on a mission to reduce the number of banks since 2011. It is doing so to create more stronger & stable banking systems, reduce operation cost of banks , to carry out its supervisory role more smoothly & many more.


Can you list the major merger related benefits or incentives?

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NRB has been providing a number of incentives to promote mergers & acquisition related activities in Nepal. In order to entice the mergers, a relaxation in maintaining Credit to Deposit Ratio(CD Ratio) is offered. This will provide merged institutions with the access to additional liquidity, enabling them to not only boost their lending capabilities but also pave the way for business growth and expansion.

NRB has also eased restrictions on sectoral lending targets allowing banks to concentrate their lending efforts on more lucrative sectors.

The central bank has provided other benefits like waiver in cooling period for the members of board of directors and top level management of the BFIs,tax benefits,1% point interest discount in general refinance facility by NRB and many more as mentioned in[ Merger-Acquisition Bylaw,2016]([https://www.nrb.org.np/contents/uploads/2022/11/Merger-Acquisition-Bylaw-2073-5th-Revision.pdf] to the BFIs that go for merger & acquisitions.

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Check this: FinGuff on LinkedIn: Commercial Banks Merger And Acquisition

This may provide you some insight.

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