Which two regional level development banks are in talks of merger? Will they meet the paid up capital requirement even after merging?

Two regional level development banks namely, Tinau Development Bank (TNBL) and Mission Development Bank (MIDBL), are in the final stages of discussion to merge with each other. The Board of Directors of both Butwal based development banks are currently in talks to finalize the process of merger in a formal way.

Any further information regarding the mode of the merger or the swap ratio hasn’t been disclosed yet.

The paid up capital of TNBL is Rs.56.77 Crore while that of MIDBL is Rs.57.64 Crore. The LTP of the banks as on 17^th March 2019 stood at Rs.166 and Rs.162 respectively.

This decision comes after Rastra Bank’s directive for the minimum paid up capital requirement of regional level and national level development banks. As per the notice, regional development banks were required to choose one province as their headquarters and increase the paid up capital to Rs.1.20 Arba while national level development banks were required to increase their paid up capital to Rs.2.50 Arba.

Considering the current paid up capital of both the development banks and the swap ratio to be 1:1, the paid up capital of the newly formed organization will stand at Rs.1.14 Arba. To meet NRB’s regulation, the new development bank will have to raise capital worth Rs.6 Crore to become a regional level development bank.

Citing these reasons, majority of BFIs are getting merger and acquisition approval from their respective AGM.