Standard Finance Company has applied to Nepal Rastra Bank (NRB) for permission to upgrade to an A class commercial bank from its C classification. If it gets the license from the central bank, it will be the second financial institution after Kist Bank to get a double promotion to A class. Kist had been raised to a commercial bank last year.
NRB officials said although some other financial institutions had also shown interest to upgrade themselves, they have not submitted a concrete proposal. There has been a tendency on the part of financial institutions to talk more about upgrading but doing little about it. According to NRB, Standard Finance's paid-up capital stands at Rs. 1.18 billion currently which it should increase to Rs. 2 billion to become a commercial bank.
Shailesh Kumar Aryal, company secretary of the finance company, said that they would increase the capital base to the required level within this fiscal year by issuing 1:1 rights shares in February. "We have applied to NRB to get a letter of intent to upgrade our company," he said. Standard Finance was established 14 years ago.
Financial institutions now have a better chance to be upgraded after the central bank introduced the policy from this year that they could apply for upgrading before increasing their capital base. "We fix the timeline with regard to capital after the letter of intent and they must increase their capital to the level fixed by the law to get the final license," said a source at NRB. They will also have to confirm if they have a stake in other financial institutions and the number of shareholders and other details during the licensing process as per the central bank's licensing policy. "It will take at least three-four months for Standard Finance to be upgraded if it fulfils all the prerequisites on time," the NRB official said.
Source:
ekantipur.com
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