SEBON Approves Kamana Sewa Bikas Bank’s NPR 350M Preference Share Issuance
Kamana Sewa Bikas Bank
1st December 2025, Kathmandu
The Nepal Securities Board (SEBON) has granted approval to Kamana Sewa Bikas Bank (KSBB) to issue non-cumulative, non-redeemable preference shares.
Kamana Sewa Bikas Bank
This is a significant move for the development bank. Kamana Sewa Bikas Bank received the go-ahead to issue 3.5 million units of preference shares, each with a face value of NPR 100.
The shares carry a fixed dividend rate of nine percent (9%). This strategic issuance will have a direct impact on the bank’s long-term financial health and growth prospects.
Understanding the Regulatory Milestone and Context
This issuance follows a clear regulatory pathway. The proposal to issue these preference shares was first approved by the development bank’s 18th Annual General Meeting (AGM).
After receiving a necessary green light from Nepal Rastra Bank (NRB), the proposal was then submitted to SEBON for final authorization.
SEBON’s recent approval confirms that all necessary regulatory compliance boxes have been ticked, allowing KSBB to proceed with the capital-raising process.
Crucially, Nepal Rastra Bank (NRB) paved the way for this instrument. NRB introduced a circular allowing banks and financial institutions (BFIs) to issue non-cumulative, non-redeemable preference shares as an alternative to rights shares.
This actively supports the strengthening of their capital funds without relying solely on existing shareholders. This demonstrates the central bank’s commitment to robust financial oversight and providing flexible capital options.
Strengthening Bank Capital Structure
The primary objective behind issuing these preference shares is to significantly enhance the development bank’s capital structure. Preference shares, especially those classified as non-redeemable, often count towards the regulatory capital base.
Consequently, issuing these 3.5 million units will directly boost the bank’s core capital. A stronger capital base not only assures regulators but also enhances public trust. This move actively reinforces the bank’s stability against potential economic downturns.
The Dynamics of Preference Shares and Investor Interest
It is important for investors and stakeholders to understand the specific characteristics of these shares.
Advertisement
Fixed Dividend: The nine percent (9%) dividend rate provides a predictable income stream for investors, contrasting with the variable dividends of common equity.
Attractive Return: Considering the current market liquidity and return rates, these preference shares—offering a 9% fixed dividend—will be an attractive investment medium for institutional investors. This yield offers a compelling, lower-risk alternative compared to highly volatile common stocks.
Non-Cumulative: If the bank cannot pay the 9% dividend in a given year, the dividend does not accumulate. Investors are only entitled to the dividend declared in that specific year.
Non-Redeemable: The bank is not obliged to buy back these shares from the investors. They represent permanent capital, which is highly favorable for the bank’s balance sheet strength.
Future Outlook for KSBB and Business Expansion
A direct outcome of increased capital is a greater capacity for business expansion. The bank has clearly stated that the issuance will provide more opportunities for growth. With a higher capital adequacy ratio, Kamana Sewa Bikas Bank can aggressively pursue new lending opportunities.
They can undertake larger credit exposures while still maintaining regulatory compliance. This opens doors for increased loan portfolio diversification and geographical expansion into untapped markets. A robust bank capital structure is essential for sustained operational scale.
By successfully executing this preference share issuance, Kamana Sewa Bikas Bank actively positions itself for future stability and growth.
The capital injection will allow the bank to invest more confidently in technology upgrades and digital services, a crucial factor in the competitive banking landscape. This is a strategic financial maneuver expected to strengthen its competitive edge in the development banking sector.
The Next Steps: Issuance Details Pending
Following the official approval from SEBON on December 1, 2025, Kamana Sewa Bikas Bank has successfully cleared the final regulatory hurdle. The focus now shifts to the market issuance.
While the bank has not yet specified the exact start date or whether the shares will be offered via a public offering or private placement to institutional investors, the market anticipates this crucial information soon.
The bank is working to announce the details, including the book closure date and subscription procedure, in the near future. This historic capital augmentation move is poised to strengthen the development bank’s position and accelerate its business trajectory.
For more: Kamana Sewa Bikas Bank
