Banks across the border getting merged; Will this actually happen in Nepal as well?

Recently it was announced that three state-run, Indian banks- Bank of Baroda, Vijaya Bank and Dena Bank will be merged. Although, this came as a total surprise for the top executives of the said banks, analysts had predicted such move looking at the inadequate capital and diminishing asset quality of smaller PSU banks. As per the reports, the financials of the merged entity will be as follows:

In terms of Advances, Bank of Baroda holds 5.3% of the total market share while Vijaya Bank holds 1.4% and Dena Bank holds 0.8% of the total market share. Post-merger, the merged entity’s market share in terms of advances will stand at 7.5% making it India’s third largest lender. Similarly, it will be the second largest entity in terms of deposit after consolidation of Bank of Baroda’s 5.4% market share, Vijaya Bank’s 1.4% market share and Dena Bank’s 1% market share adding up to total market share of 7.8%.

In this three way merger, Bank of Baroda is referred to as the base, Vijaya Bank as the kicker and Dena Bank as ‘bad bank’. The bankers of the said banks, who didn’t seem very happy with this decision, had no choice but to accept it after the dictate of the government.

Coming to the scenario in Nepal, there have been continual rumors about the government looking to reduce the number of financial institutions to such extent that the number of commercial banks in the country will be half of what they are now. Clear indicators of preference of wide-spread but less number of institutions over high number of financial institutions were seen after the increase in minimum paid up capital requirement for commercial banks. The question rising now is that in the near future, will Nepal see such a move of forcing bank’s into merger?