Following its merger with four other financial institutions (FIs), NMB Bank formally started its operations on Sunday.

This is the first time in the country’s banking history that five FIs have merged. They are NMB Bank Bhrikuti Development Bank, Pathibhara Development Bank, Clean Energy Development Bank and Prudential Finance. The total capital and reserves of the merged entity (NMB Bank) has reached Rs6.2 billion.

Speaking at a programme to launch the operations of the merged entity, Deputy Prime Minister Bijaya Kumar Gachchhadar said the bank would be able to mobilise large capital, while reducing risks in the banking industry.

He said the bank should focus on investing in the productive sectors, particularly energy and agriculture. “Increased investment in these sectors could lead the country towards self-reliance,” he said.

Gachchhadar said the banking sector needs to focus on inclusive and equal prosperity among the people. He said the main priority of the government is to improve the investment environment.

NMB Bank, through a special general meeting on June 8, had approved the merger plan. The merger is expected to enhance the bank’s competitiveness and market access.

NMB Chairman Pawan Kumar Golyan said the merger would increase the bank’s risk-taking ability, while leading the entire financial sector towards stability in the long run.

Established in 1996 as Nepal Merchant Banking, a finance company, it was upgraded into a commercial bank in 2008.

After the Nepal Rastra Bank asked commercial banks to raise their paid-up capital to Rs8 billion from Rs2 billion within the next two years, many banks have been considering merger as an option for meeting the capital requirement.

NRB Deputy Governor Maha Prasad Adhikari said the central bank focussed on consolidation of the banking sector to ensure stability. He said 90 BFIs have merged to form 34 companies in the last four years.

Stating the merger would enable banks to invest more. “BFIs have now started to consider the merger as an opportunity for growth,” Adhikari said.

Before the merger, NMB’s paid-up capital stood at Rs2 billion, Prudential’s Rs483 million, Clean Energy Rs1.14 billion, Bhrikuti Rs423.78 million, and Pathibhara Rs115 million.

After the unification, the bank’s total deposits and loan and advances have reached Rs54 billion and Rs41 billion, respectively.

The bank will be providing its service through 69 branches, 7 extension counters, including a representative office in Malaysia, and 42 ATM centres across the country.