The Nepalese government approved a proposed merger of Rastriya Banijya Bank Ltd. and NIDC Development Bank, Republica reported Jan. 28.

Deputy Prime Minister and Minister for Finance Krishna Bahadur Mahara tabled the proposal to merge the two state banks in the cabinet.

The merger is expected to create a stronger bank. Both the banks have huge bad loans. While Rastriya Banijya Bank recovered under a financial reform program, NIDC Development Bank failed to do so in the face of stiff competition from privately owned development banks.

A merger committee will be formed to finalize the process, said Kiran Kumar Shrestha, CEO of Rastriya Banijya Bank. It may take around six months to complete the merger process, Shrestha added.