Narayani Development Bank Auction Closing Today
16th February 2026, Kathmandu
Narayani Development Bank Limited is concluding a significant corporate action today, Falgun 4, 2082, as the auction for 306,597 units of promoter shares officially comes to a close. This auction, managed by Global IME Capital Limited, represents a critical effort by the bank to manage its capital structure and address unsubscribed shares from previous rights offerings. The bidding process, which originally opened on Magh 18, has invited existing promoters, interested individuals, and institutional investors to participate in a competitive sealed bid process. This event is particularly noteworthy for the banking sector as it highlights the ongoing challenges and opportunities within Nepals B Class financial institutions.
Narayani Development Bank Auction
The shares currently under auction were originally part of a larger 1 is to 1 rights issuance where 603,162 units of promoter shares remained unsubscribed by existing holders. Following a previous auction round where approximately 296,565 units were successfully picked up, the remaining 306,597 units are being re offered to a wider pool of eligible investors. By setting the minimum bid price at 100 rupees per share, the bank has created an entry point that is significantly lower than the prevailing market price for ordinary shares. This large gap between the base price and the market valuation typically triggers aggressive bidding from strategic investors who wish to secure a significant stake in the bank at a cost effective rate.
However, the investment landscape for Narayani Development Bank is marked by significant financial headwinds that bidders must carefully evaluate. According to the recently published second quarter financial report for the fiscal year 2082/83, the bank reported a net loss of 47.34 million rupees. This is an increase from the 22.1 million rupee loss reported in the first quarter, indicating that the bank is still struggling to achieve operational stability. One of the primary causes for these persistent losses is the high level of non performing loans. The bank’s non performing loan ratio has surged to approximately 57 percent, a figure that is among the highest in the development banking sector. This high ratio necessitates significant impairment charges, which directly erode the bank’s profitability and capital base.
The capital adequacy of Narayani Development Bank also remains a point of concern for regulators and investors alike. With a book value per share reported at approximately 28.90 rupees, the bank is currently trading at a high price to book ratio in the secondary market. For auction participants, the key consideration is the long term turnaround potential of the institution. Promoter shares in Nepal carry specific restrictions, including a lock in period and the requirement of regulatory approval from Nepal Rastra Bank for any future transfers. Therefore, those bidding today are likely institutional players or high net worth individuals looking for a long term strategic involvement rather than a short term speculative gain.
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Despite the negative earnings per share and the challenges with asset quality, the banks stock has remained active in the secondary market. The ordinary shares recently traded at around 1,600 rupees, suggesting that speculative interest remains high despite the underlying financial fundamentals. Market analysts often point to the small capital base of development banks as a factor that allows for significant price volatility. For auction bidders, the goal is to acquire promoter units that can eventually be converted or traded under specific regulatory conditions, often at a substantial discount compared to public shares.
Global IME Capital, acting as the issue manager, has facilitated the bidding process through various collection centers across Nepal, including branches in Biratnagar, Birgunj, Hetauda, Pokhara, and Butwal. This wide distribution ensures that regional investors have the opportunity to participate in the capital restructuring of this Chitwan based institution. The final allotment will be determined based on the highest bid prices, provided that the bidders meet all the fit and proper criteria set by the central bank. Any single entity or individual is prohibited from holding more than the maximum permitted percentage of shares in a single financial institution, ensuring that the bank’s ownership does not become overly concentrated in a few hands.
As the auction closes today, the focus will shift to the bid opening and allotment phase. The outcome will be a strong indicator of investor sentiment toward distressed assets in the banking sector. If the auction is fully subscribed at prices significantly above the 100 rupee base, it will demonstrate that investors still believe in the recovery potential of Narayani Development Bank. Conversely, if shares remain unsubscribed, it may signal a need for more aggressive restructuring or a potential merger with a stronger financial partner.
In conclusion, the Narayani Development Bank promoter share auction is a pivotal event that could redefine the bank’s future ownership and strategic direction. While the high non performing loan ratio and quarterly losses present substantial risks, the low base price of the auction offers a unique opportunity for strategic investors. As the results are finalized in the coming days, the market will gain a clearer picture of whether this capital injection will be enough to steer the bank toward a path of sustainable recovery and regulatory compliance.
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