July 7: A total of 23 commercial banks have raised funds by issuing debentures in line with the Nepal Rastra Bank’s long-term policy. The central bank has made it mandatory for commercial banks to raise funds by issuing debentures.

The commercial banks have issued debentures worth Rs 85.34 billion and secured funds for the next six to 10 years.

This amount is 30.64 percent of the combined paid-up capital of the banks.

According to the central banks data, the total paid-up capital of the 23 commercial banks is Rs 278 billion as of mid-May 2021.

As per the policy of NRB, commercial banks have to issue debentures of at least 25 percent of their paid-up capital.

Such directive was issued to ensure that the banks have secured long-term resources to stabilize the interest rate, which is subject to fluctuation due to the short-term nature of deposits prevalent in the country. The banks have been ordered to issue the debentures by the end of next fiscal year. There is still one year left for the banks to fulfill the criteria.

Out of the 27 commercial banks operational in Nepal, four banks – Mega Bank, Century Bank, Civil Bank and Standard Chartered Bank – are yet to issue debentures.

The state-owned Nepal Bank Limited had issued debentures worth Rs 3.5 billion at an interest rate of 8.5 percent about two months ago. Likewise, Rastriya Banijya Bank issued debentures worth Rs 2.5 billion about a month ago.

So far, 11 commercial banks have already fulfilled the minimum requirement (25 percent of paid-up capital) of issuing debentures. Those banks include NIC Asia Bank, Siddhartha Bank, Agriculture Development Bank, Sanima Bank, Sunrise Bank, Nepal Investment Bank, Nepal SBI Bank, Nepal Credit and Commerce Bank, Prabhu Bank, Nepal Bank and Rastriya Banijya Bank.