Merger Of Online Payment Service Providers Possible

June 16, 2020 | Investopaper

Non-banking institutions such as Nepal Clearing House, E-Sewa, IME Pay and other payment related institutions will also be able to go for mergers and acquisitions. There is such a provision in the ‘Payment and Settlement Bylaws 2077’ recently issued by the Nepal Rastra Bank.

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Nepal Rastra Bank (NRB), which has been encouraging banks and financial institutions for mergers and acquisitions, has also made a provision for non-banking payment service providers and operators to merge. At present, NRB has given permission to 9 payment service operators and 14 payment service providers.

Issuing Shares To The Public

The regulation also stipulates that an organization working in the field of payment can issue shares to the public and change into a public company. This is not a mandatory provision. The institution will have to decide whether to go for public limited or private limited at the time of obtaining business operation permission from NRB. There is a provision that a company that wants to go public should issue 20 percent shares of the total capital to the public within three years of starting the service.

Of the companies currently in operation, only IME has shown interest in going public. According to the new provision,  the managing director or executive chairman will not run these organizations. A separate board of directors and professional chief executive officer (CEO) shall be appointed to run the organization.

Also Read: What is Connect IPS? How To Link Bank Account Through ConnectIPS?

In order to become the director of such an organization, one should have at least a bachelor’s degree. To become a CEO, he/she should pass at least a master’s degree. Just as NRB removed the provision of managing director and executive chairman in banks and financial institutions, same will apply to the payment service provides. The NRB has stated that the managing director and executive chairman cannot be present in order to reduce the problems such as conflict of interest and abuse of office when the same person is at the policy making and implementation level.

To read the ‘Payment and Settlement Bylaws 2077’, Click on the link below:

Payment and Settlement Bylaws 2077

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