Finance Minister Ram Sharan Mahat inaugurated the transactions of the merged entity, which will be known as Global IME Bank.

This is the first merger of two commercial banks promoted by different groups. In the case of NIC Bank-Bank of Asia Bank merger, the banks were promoted largely by the same group.

This is also the fifth merger carried out by Global Bank after it first merged IME Financial Institutions to years ago to become Global IME Bank.

Then, it merged Lord Buddha Finance, Social Development Bank, Gulmi Development Bank before finally merging with  Commerz and Trust.

Global IME was established seven years ago, while Commerz and Trust Bank was established three years ago.

After the merger, the capital fund of the bank has reached Rs 6 billion, while its paid-up capital rose to Rs 4.10 billion. The merged entity’s deposit mobilization stands at Rs 49 billion, while credit disbursement is at Rs 41 billion.

Global IME has also become one of Nepal’s largest banks in terms of the number of branches. The number of its branches, branchless banking services and extension counters has reached 120, the bank said in a statement, while the customer base reached 500,000.

Speaking at the programme, Finance Minister Ram Sharan Mahat said mergers among banks are necessary to reduce the cost of doing business and to attain economies of scale to be competitive in the market.

Stating the banking sector is relatively more modern compared to other sectors, the minister urged the sector to take a leadership role in the economic development. “Invest in new emerging areas and take lending policy to promote new entrepreneurs to contribute to the country’s economic growth,” he said.

Highlighting increased interest of domestic and foreign investors to investing in Nepal in the changed political context, Mahat said Nepal is in the midst of economic resurgence and the banking sector could contribute by investing in virgin sectors.

Nepal Rastra Bank Governor Yubaraj Khatiwada said bank mergers are necessary to strengthen the sector amid possibilities of entry of foreign banks.

“As a huge investment potential is emerging, foreign banks may enter the domestic market,” he said.

The governor said small banks cannot take much risk to invest in big infrastructure projects due to low capital base.

“Therefore, mergers stren-gthen such banks and make them capable to invest in a big way,” he said, informing that the central bank is in final phase of issuing the acquisition bylaw which would enable acquisition of one financial institution by another.

On the occasion, Global IME Chairman Chandra Dhakal committed to invest heavily in the retail, agriculture and energy sectors.

Gobal IME CEO Ratna Raj Bajracharya said the bank’s merger drive over the last two years has boosted the performance. “The merger has a huge role in the growth of Global IME bank over the last two years,” he said.