July 4 : Bankers have said that the government should offer tax incentives to them for facilitating the process of merger and acquisition (M&A).
During a meeting of Nepal Bankers’ Association (NBA) held recently in the capital, they came up with such proposition.
They asked the government to reduce income tax levied on banks by at least five percentage points for a period of five years through the budget for those banks who choose to merge with others.
“Though the plan to reduce the high number of banks and financial institutions in the country through M & A is per se positive, the Nepal Rastra Bank cannot simply impose this on us,” they argued adding,”It would be better to encourage for the merger process by incentivising them in taxes.”
In addition to tax incentives, bankers demanded that the central bank should get enough time for M&A, as choosing a partner for merger is something fraught with risks.
The central bank last week had called upon chairpersons and CEOs of all 28 commercial banks in operation to discuss possible M&A in the sector. Moreover, it had asked bankers to submit the names of banks that they sought to merge with or submit a commitment letter for merger to NRB before the Monetary Policy is announced in mid-July.
The government, through the budget for fiscal year 2019-20, had also announced to adopt policies to encourage mergers between banks and financial institutions.
