KATHMANDU: Standard Chartered Bank Nepal Limited (SCBNL) appears to be in no hurry to hike its paid-up capital with its board on Monday proposing to distribute just 15 percent as bonus shares out of the total dividend distribution of 42.11 percent.
Issuing bonus shares is one of the methods of raising the paid-up capital. The central bank has directed banks and financial institutions to give priority to providing shares instead of cash while distributing dividends so that they can boost their paid-up capital to Rs8 billion in the next two years. Currently, the paid-up capital requirement is just Rs2 billion, which is the lowest in South Asia. Other BFIs have been conducting mergers and acquisitions, distributing more bonus shares or issuing shares to raise their paid-up capital.
Diwakar Poudel, head of Brand and Marketing and Corp-orate Affairs at SCBNL, said that the board had decided to propose distributing 27.11 percent as cash dividend and the rest as bonus shares. “The decision was reached by giving due consideration to the bank’s business appetite in the current business environment of the country.”
There has been a massive slump in economic activities in the country as a result of the long-running banda and Indian embargo. Lending by banks has also shrunk as a result. Poudel said that SCBNL was heading towards fulfilling the regulatory requirement for capital increment by the deadline set by the central bank. Currently, the bank’s paid-up capital amounts to Rs2.24 billion.
Earlier, SCBNL had asked for more time to submit its capital increment plan to the central bank arguing that it had to conduct discussions at the global level. A bank official said that the latest decision also reflected the wider global level perception of Standard Chartered’s business in Nepal.
