Pokhara, Samriddhi Finance begin unified operations, Signaling fresh momentum for financial sector consolidation

KATHMANDU: Pokhara Finance Limited and Samriddhi Finance Company Limited have officially commenced their unified operations from Friday following the completion of their merger process, creating a larger national finance company with a paid-up capital of nearly Rs 1.9 billion, a network of 36 branches and around 300 employees.

The merged institution will continue its business under the name Pokhara Finance Limited, marking one of the most notable consolidation deals in Nepal’s finance company sector in recent years. Industry leaders and regulators have described the merger as a positive example for Nepal’s banking and financial industry, emphasizing that successful integration depends not only on financial indicators but also on effective management of people, corporate culture and governance.

The merger has been completed on a 1:1 share swap ratio, with shareholders of both institutions receiving equal exchange of shares. Following the integration, the company’s head office has been shifted to the former Samriddhi Finance office located at Putalisadak, Kathmandu Metropolitan City-28.

The newly merged institution now has a paid-up capital of Rs 1.90 billion (Rs 1.90 billion and 14.68 million). Prior to the merger, Pokhara Finance had a paid-up capital of Rs 1.08 billion, while Samriddhi Finance had Rs 818.9 million.

The institution will now operate through 36 branches across the country and employ approximately 300 staff members, giving it greater operational reach and lending capacity in Nepal’s increasingly competitive financial services market.

A seven-member Board of Directors has been constituted following the merger. Representing Samriddhi Finance are Ajaya Mishra, Durga Thapa, Dinesh Kumar Bartaula and Sudip Ghimire, while Pratik Gurung, Yam Bahadur Surkhali and Til Bahadur Gurung represent Pokhara Finance.

According to sources, current Samriddhi Finance Chairman Ajaya Mishra will assume the chairmanship of the merged institution, while Prakash Gurung has been agreed upon as the Chief Executive Officer (CEO).

The merger comes at a time when Nepal’s banking and financial sector is again discussing the need for consolidation after merger activity slowed considerably over the past few years. The Nepal Rastra Bank (NRB) had aggressively encouraged mergers and acquisitions during the last decade to strengthen capital adequacy, improve governance and enhance institutional resilience.

Speaking at the commencement of the unified operations, Ram Bahadur Yadav, President of the Nepal Microfinance Bankers Association, expressed confidence that the merger would open a new chapter for both institutions.

“This unified operation will provide a new direction in the coming days,” Yadav said. “The merger will generate synergy, and this should become a model for the financial sector. Other institutions should also take guidance from this successful integration.”

He said mergers should not merely be viewed as regulatory compliance but as strategic business decisions capable of creating stronger institutions that can better serve customers and the broader economy.

Echoing similar views, Rajojman Shrestha, First Vice-President of the Nepal Financial Association, stressed that mergers involve much more than combining balance sheets.

“A merger is not simply about two institutions becoming one. It also requires the integration of two different organizational cultures and working practices,” he said.

According to Shrestha, successful consolidation can substantially reduce institutional costs while improving operational efficiency and competitiveness.

He also emphasized that the management should pay particular attention to maintaining employee confidence during the transition.

“Employee morale should be strengthened throughout the integration process because motivated staff are critical to the long-term success of the merged institution,” he said.

Suyog Shrestha, President of the Development Bankers Association Nepal, recalled that mergers had once become a regular feature of Nepal’s banking industry.

“There was a time when mergers among banks and financial institutions occurred almost every month,” he said. “The merger between Pokhara Finance and Samriddhi Finance is taking place after quite a long gap.”

Although financial indicators remain important in evaluating mergers, he argued that human resource management ultimately determines whether integration succeeds.

“Employee management is the single most important aspect after a merger. Institutions must ensure that staff integration is handled smoothly and fairly,” he said.

Similar concerns were raised by Santosh Koirala, President of the Nepal Bankers’ Association.

He observed that workforce integration often emerges as one of the biggest post-merger challenges because employees from different organizations require time to adapt to new systems, colleagues and corporate culture.

“Human resource management becomes a major issue after mergers,” Koirala said. “Employees need time to adjust with one another. The senior management and board should ensure proper coordination and management.”

He urged all stakeholders to contribute toward creating a harmonious working environment capable of making the merger successful.

Meanwhile, Prachanda Bahadur Shrestha, President of the Confederation of Banks and Financial Institutions Nepal (CBFIN), acknowledged that mergers are inherently difficult processes requiring long-term institutional commitment.

“A merger is never easy. Those involved must rise above individual interests and work for the greater benefit of the institution,” he said.

Representing the regulator, Bisrut Thapa, Executive Director of Nepal Rastra Bank, said every merger should be viewed as the beginning of a new institution rather than simply the continuation of two older organizations.

“After a merger, institutions need to move forward with renewed enthusiasm and fresh energy,” he said.

Thapa noted that the central bank has accumulated extensive experience in facilitating mergers over the years.

“Some mergers have become successful examples, while others have presented significant challenges,” he said.

He cautioned that active facilitation by the regulator remains essential throughout the merger process.

“If the central bank does not provide adequate facilitation, there is a high possibility that merger processes could fail,” he remarked.

Highlighting the structural transformation of Nepal’s financial sector, Thapa recalled that the number of licensed banking and financial institutions has fallen dramatically over the years.

“The number of institutions has declined from more than 200 to around 50 today. Yet discussions have once again emerged about licensing new institutions,” he observed.

He further warned that Nepal’s financial sector is entering a new phase of challenges driven by rapid technological and economic changes.

“The banking industry is facing emerging challenges related to information technology, artificial intelligence, non-banking assets and rising non-performing loans,” he said, emphasizing that institutions must strengthen risk management and digital capabilities to remain competitive.

Another Executive Director of Nepal Rastra Bank, Ramu Paudel, said the central bank’s merger policy has played a crucial role in safeguarding Nepal’s financial stability.

“If institutions had not participated in mergers in line with Nepal Rastra Bank’s policy, today’s situation would likely have been much more fragile,” he said.

Paudel described mergers as one of several effective tools available for managing institutional risks and strengthening financial institutions.

He said visionary leadership from management teams and boards can successfully overcome most post-merger challenges.

“With farsighted policies from the management and board of directors, no challenge becomes insurmountable,” he stated.

Paudel also urged the newly merged institution to prioritize depositor protection as it enters a new phase of operations.

“The security of depositors’ savings should always remain the highest priority,” he said.

He assured that Nepal Rastra Bank remains committed to providing regulatory support whenever necessary to help resolve challenges facing the banking industry.

The merger between Pokhara Finance and Samriddhi Finance reflects a renewed focus on consolidation within Nepal’s financial sector at a time when institutions are confronting growing pressures from digital transformation, evolving regulatory requirements, rising operational costs and changing customer expectations.

For the newly merged Pokhara Finance, the immediate priority will now shift from completing the legal merger to successfully integrating systems, employees, governance structures and corporate culture—factors that industry leaders repeatedly identified as the true determinants of whether the merger ultimately delivers the expected synergies and long-term value.