The French bank  Credit Agricole Indosuez Wednesday became the second foreign bank to withdraw from Nepal, a banking source said.

The bank announced its decision to sell its 50 percent stake to a Nepali group at a meeting of the board of directors. Prithvi Pandey, a former promoter of the Himalayan Bank, bought the shares at Rs.296 million.

The French bank withdrew from Nepal citing worsening economy even as Finance Minister Dr.Ram Sharan Mahat earlier this year announced a policy change to give majority share holdings to foreigners in joint venture banks to attract foreign investments. Rashtriya Banijya Bank and Beema Sansthan own 15 percent stake each in the joint venture bank while the general public holds 20 percent stake.

The Bank of Siam became the first foreign bank to withdraw from Nepal as it sold its state in the Bank of Kathmandu to Nepalis citing internal feud amongst promoters.