Nepal to let foreigners have majority bank stakes

Under the new rules, foreign players will be able to boost their stakes to up to two-thirds in joint venture banks, Finance Minister Ram Sharan Mahat told reporters.

A number of joint venture banks have been opened since Nepal allowed foreign investors to enter its banking sector in 1984 but they were not allowed to own more than 50 percent.

Mahat said management of the Himalayan kingdom's two state-owned banks would be handed over to private foreign managers to improve their efficiency. "This will be done without any delay," he said without specifying a date.

Government officials say state-owned Rastriya Banijya Bank and the Nepal Bank Ltd, 41.12 percent government-owned, were saddled by bad loans and suffered from poor management.

The two banks combined account for nearly half of the kingdom's entire banking activities, although there are over a dozen private commercial banks in Nepal.

In April, central bank governor Tilak Rawal said authorities were evaluating technical and financial offers by potential foreign managers to take over the bank's management.

Two years ago Nepal said it would allow foreign banks to open branches in the kingdom.