15th October 2025, Kathmandu
In a significant move that holds immediate relevance for its existing promoter base, Narayani Development Bank Limited (NABBC) has officially announced the sale of a substantial block of founder shares.
NDBL Founder Shares Up for Sale
The bank is offering 192,777 units of founder shares, a process that is strictly governed by the comprehensive directives issued by the central bank, the Nepal Rastra Bank (NRB). This move represents a vital opportunity for existing promoter shareholders to consolidate their positions and is a routine yet critical part of financial institutions adhering to regulatory mandates regarding shareholding structure and capital management.
The announcement specifies a defined window, marking 29th Ashwin, 2082 B.S. (which corresponds to October 15, 2025, in the Gregorian calendar, based on current search information), as the date the sale process was initiated. The bank has mandated a 35-day period for the existing founder shareholders to submit their applications. This exclusive first-right-of-refusal period is a direct adherence to the rules established by the Nepal Rastra Bank for the divestment of promoter shares within the financial sector.
Understanding the NRB’s Founder Share Guidelines
The structure of share ownership in Nepalese Banks and Financial Institutions (BFIs), including development banks like Narayani Development Bank, is meticulously regulated by the Nepal Rastra Bank, primarily through the Bank and Financial Institution Act (BAFIA) and various unified directives. The central bank’s guidelines are designed to ensure financial stability, maintain the integrity of the banking system, and prevent excessive concentration of ownership.
The Mandatory First-Right-of-Refusal
A key component of the NRB’s regulatory framework governing the sale of founder (or promoter) shares is the mandatory provision for offering the shares first to existing founder shareholders. This step is crucial for maintaining the initial promoter structure and allowing existing major investors to adjust or increase their stake before the shares are released to a wider market. The current sale by Narayani Development Bank is proceeding precisely along this line, giving its current promoters a 35-day exclusive window. This practice ensures that any change in the promoter shareholding is managed internally first, providing a level of control and predictability in the BFI’s ownership structure.
The Transition to Public Auction
The announcement from Narayani Development Bank clearly outlines the next phase: if the entire block of 192,777 founder shares is not subscribed by the existing founder shareholders within the initial 35-day deadline, the remaining, unsold shares will then be offered to the general public through a public auction.
This subsequent public auction is also strictly governed. When promoter shares are opened to the public, they are often subjected to a minimum price—a common practice in such auctions to protect the interests of the existing shareholders and the market’s perceived value of the stock. While the minimum price for this specific sale of 192,777 founder shares was not detailed in the initial announcement, a previous auction by Narayani Development Bank of its unsold right shares in the past had set the floor price at Rs 100 per share, indicating the typical market entry point for such offerings. The successful completion of this second phase ensures that the shares are fully divested, improving the bank’s capital structure and adherence to regulatory requirements.
Narayani Development Bank’s Recent Financial Context
The sale of founder shares comes amidst a period of strategic repositioning for Narayani Development Bank. Notably, the bank has recently been engaged in a 1:1 ratio right share issuance to its shareholders, a significant effort aimed at meeting the minimum paid-up capital and Capital Adequacy Requirement (CAR) as mandated by the Nepal Rastra Bank. This capital-raising exercise, which involved the issuance of 2,624,676 units of right shares at a par value of Rs 100, highlights the bank’s commitment to strengthening its financial base.
The strategic importance of increasing paid-up capital is directly tied to the NRB’s prudential norms. By raising capital, the development bank aims to:
- Maintain Capital Fund Adequacy: Aligning with the central bank’s directives is paramount, especially for institutions that have been under regulatory scrutiny or are focused on recovery.
- Expand Operations: The capital infusion from both the recent right share issue and the current founder share sale is intended to support the bank’s operational expansion, including the opening of new branches and increasing investment in safe securities like government bonds and mutual funds.
- Improve Financial Health: Reports indicate that the bank has faced net losses in recent fiscal years, largely due to high non-performing loans. The capital raising efforts are crucial steps toward stabilizing the balance sheet and moving toward profitability, with projections anticipating a return to profit in the upcoming fiscal years (2083/84 B.S. and beyond).
The Investment Opportunity for Existing Promoters
For the current founder shareholders of Narayani Development Bank, this 35-day window is a critical opportunity. The price at which founder shares are sold internally is typically determined by the bank’s internal valuation and is often lower or distinct from the public market trading price (which, as of a recent date, was in the vicinity of Rs. 734.00 per share). While the current market price (NABBC is trading around Rs. 730 per share as of the provided timeframe, though this value fluctuates daily) may make the acquisition of shares at a lower base price attractive, the decision is often guided by the long-term strategic vision of the founder group.
Application Process Highlights:
- Eligibility: Must be an existing founder (promoter) shareholder of Narayani Development Bank Limited.
- Deadline: Applications must be submitted within 35 days from the date of the announcement (29th Ashwin 2082 B.S.).
- Submission Location: The bank’s central office in Bharatpur, Chitwan.
This sale is more than a simple transaction; it is a clear execution of the Nepal Rastra Bank’s directives, ensuring that the development bank adheres to the prescribed rules for divestiture of promoter holdings and continues its journey towards achieving greater financial stability and capital adequacy. The coming weeks will determine how much of the block is absorbed by the existing promoters and how many shares will eventually be released to the general public via auction, a move that will be closely watched by the broader Nepalese secondary market.
For More: NDBL Founder Shares Up for Sale