NIC Asia Bank Plans 50% Rights Share Issue, Seeks NRB Approval

kathmandu : NIC Asia Bank Limited has announced plans to issue a 50 percent rights share to strengthen its capital base. The bank has sought approval from Nepal Rastra Bank (NRB) to issue rights shares in the ratio of 2:1, meaning shareholders will be entitled to purchase one additional share for every two shares they currently hold.

The decision was made at a meeting of the bank’s Board of Directors held on Poush 20 (early January). Following the decision, the bank has formally submitted an application to the central bank for regulatory approval.

Currently, NIC Asia Bank’s paid-up capital stands at Rs 14.91 billion. Under the proposed plan, the bank will issue rights shares worth Rs 7.45 billion, equivalent to approximately 74.59 million units.

The bank stated that the rights issue process will move forward only after receiving approval from Nepal Rastra Bank and endorsement from the upcoming Annual General Meeting (AGM).

NIC Asia Bank has been considering a rights share issue for several years to ease pressure on its capital adequacy ratio. However, the plan could not be implemented earlier due to strict regulatory restrictions imposed by the central bank on commercial banks issuing rights shares.

As capital pressure intensified, the bank had also explored the option of issuing preference shares. In previous years, NRB had even restricted the bank from distributing dividends after it failed to maintain the minimum required primary capital adequacy ratio.

Following the recent appointment of a new NRB Governor and the adoption of a more flexible monetary policy aimed at facilitating capital enhancement, the central bank has shown a more accommodative stance. Taking advantage of this policy shift, NIC Asia Bank has renewed its effort to raise capital through a rights share issuance.