Nepal Rastra Bank Revises Merger Rules for Microfinance Institutions

Kathmandu, Nepal — Nepal Rastra Bank (NRB) has amended its Unified Directive 2082 for licensed Class ‘D’ microfinance institutions, introducing changes related to mergers and acquisitions between wholesale and retail microfinance companies.

Under the revised provision, when a wholesale lending microfinance institution merges with or acquires a retail microfinance institution and begins integrated operations, the merged entity must operate as a retail microfinance institution. However, NRB has allowed such institutions to continue wholesale lending activities for up to five years from the date of integration.

Previously, merged entities could operate as retail microfinance institutions while continuing to recover loans issued before the merger under existing repayment schedules. The new amendment provides a clear transition period for wholesale lending operations following a merger.

The central bank stated that the revised directive has been issued under the authority granted by the Nepal Rastra Bank Act, 2002, and is aimed at ensuring a smoother integration process and strengthening the microfinance sector.