Banking History in Nepal: When were the commercial banks established in Nepal ?

The first commercial bank in Nepal, Nepal Bank Ltd (NBL), was established in the year 1994 B.S. This is a major milestone in the the history of Nepal as the country entered into official financial system. After the nineteen year of establishment of NBL, the Nepal Rastra Bank (NRB) was established in the year 2013 B.S.

Rastriya Banijya and Agricultural Development Bank ltd. were established in the year 2022 and 2024 B.S. respectively. 47 years after the first bank was established in Nepal, the first privately owned commercial bank, Nabil Bank ltd., was established in the year 2041 BS.

Seven more commercial banks were added in a decade after 2041 B.S. Only four commercial banks were established from the period of  2051 B.S. to 2063 B.S. There are mainly two reasons for it. In this time period the country saw the sluggish economic growth due to the maoist insurgency. The second reason being the reluctance on issuing license by the regulatory body, the NRB.

After the maoist insurgency came to an end in the year 2063 B.S., at least one commercial bank was established every year till last year. The banking industry, like other sector, saw growth in the absence of ongoing conflict. However, this sector was also not immune from poor governance, corruptions and scandals. The government owned banks were the most effected ones du0e to direct political interference in the banking activities.

Now again the number of commercial banks are set to decline due to the monetary policy of this fiscal year which requires commercial banks to have paid up capital of at least Rs 8 arba by the end of Ashad 2074. This short time frame given to quadruple the paid up capital will force banks to merge with each other creating fewer commercial banks in coming years.