Four commercial banks in Nepse’s ‘Z’ group

Even the commercial banks, which are regarded as financially transparent, follow regulatory guidelines to the letter, and are considered excellent in corporate governance, have been included in the list of worst performers in terms of their financial standing, performance, and governance by Nepal Stock Exchange (Nepse).

Four commercial banks—Agricultural Development Bank Ltd, Nepal Investment Mega Bank Ltd, Kumari Bank Ltd, and Prabhu Bank Ltd—have been classified in Group ‘Z’ by Nepse. Out of 20 commercial banks in the country, only eight have been included in Group ‘A’ by Nepse.

A total of 31 companies listed on the bourse have been classified in Group ‘A’. The list includes eight commercial banks, seven development banks, one finance company, six microfinance institutions, and three hydropower companies. Nepal Reinsurance Company Ltd, Himalayan Distillery, Shivam Cements, Nepal Telecom, Hydropower Investment and Development Company, and Nepal Infrastructure Bank have also been included in Group ‘A’. 

Garima, Lumbini, Mahalaxmi, Miteri, Muktinath, Shangrila, and Shine Resunga are the seven development banks that have made it to Nepse’s ‘A’ list. Likewise, Chhimek, First, Jiwan Biwaks, Sana Kisan, NIC Asia, and Swabalamban are the microfinance institutions included in Group ‘A’. Three hydropower companies—Butwal Power, Chilime Hydropower, and Sanima Hydropower—and one finance company—ICFC Finance are also in Group ‘A’.

Nepse has classified 35 companies in Class ‘B’, 70 in Class ‘G’, and 135 in Class ‘Z’.

Nepse has said that listed companies can ask for a review of the classification by furnishing proofs within 35 days. The stock exchange company has been classifying companies as per Rule 11 of the Securities Listing and Trading Rules, 2018.

As per Nepse, companies with a paid-up capital above Rs 1bn, that have been listed for a minimum of two years, consistently demonstrated profitability over the past three fiscal years, have a credit rating above average, distributed dividends, and conducted their annual general meetings within six months of the fiscal year-end have been classified in Group ‘A’.

Similarly, companies with a paid-up capital of at least Rs 500m, that have been listed for a minimum of three years, recorded profits in two out of the past three fiscal years, and held annual general meetings within six months of the fiscal year-end have been categorized in Class ‘B’.

Companies that have been listed for two years but have not met the criteria for either A or B groups have been classified in Group ‘G’. Companies that are not in either of the three groups have been classified in Group ‘Z’.