At a meeting with a delegation of the Nepal Bankers’ Association, NRB Governor Chiranjivi Nepal told the bankers not to expect a deadline extension.

In the Monetary Policy 2015-16, the central bank had asked A class banks to raise their paid-up capital to Rs8 billion from existing Rs2 billion. The B and C class financial institutions have also been told to hike their capital four-fold by mid July 2017-18.

“NRB said it is firm on not extending the deadline,” said Ashoke Rana, chief executive officer of Himalayan Bank, who was a member of the NBA delegation. He said the NRB Governor told them to complete the process of increasing the working capital in the next one and half years.

The NRB said the move was also aimed at diversifying the ownership of banks through merger as promoters from various backgrounds would come together post-merger which would ultimately help in ensuring good governance.

It also said that existing size of capital does not match with the increased size of the economy since the paid-up capital requirement of Rs2 billion was fixed eight years ago.

The central bank has also said it aims to open new licenses for banks with a minimum capital of Rs10 billion. Before that, NRB will ensure comparable size of capital in existing banks.

Rana said the bankers welcomed the NRB’s step to increase the paid-up capital requirement, but sought for more facilities for merger.  Quoting the NRB Governor, Rana said the NRB has expected the banks’ promoters to increase their investment to raise the paid-up capital.