352 local units received commercial banks so far; 401 of them still bankless
The Federal government of Nepal as well as the Nepal Rastra Bank, time and again, have been reiterating their positions to equip every nook and crannies of the nation with banking facilities. As a result, it’s already been years together that commercial banks are being urged and motivated time and again to reach out to the most rural corners sooner as they could. However, the reality is still bleak as hundreds of rural municipalities “Gaupalika” have been reeling to find access to basic banking facilities even to this date.
As per the recent semi-annual review of Monitory policy released by Nepal Rastra Bank (NRB), commercial banks have opened their branch offices in only 352 local bodies as of Poush end out of the total 753 local bodies formed in the new federal structure.
According to the data, commercial banks have made commitment to open branch offices to 292 additional local bodies. None of the commercial banks has expressed interest to go to the remaining 109 local bodies yet, as reflected in the review document.
Though the central bank has been making efforts to encourage commercial banks to expand their presence in all local units of the country, the recent revelation shows that nearly one-third of the local units are going to remain unbanked. To address such a challenge, NRB has announced a new provision in the mid-term review report of the monetary policy for FY 2074/75, requiring commercial banks to open branches in two local units where none of the banks have reached so far to be eligible to open a branch office in Kathmandu and Lalitpur metropolitan cities.
The mid-term review report has also mandated the commercial banks which had made commitment to open their branches in 292 local units must do so within the current fiscal year.
As an incentive for opening branch office in the unbanked local units, the NRB has been providing interest-free loan of Rs 10 million to each branch opened in local body.
Taking the incentive policy to a step further, Commercial banks opening the first branch office in any local body can also enjoy monopoly for three years as the central bank has decided to not allow another commercial bank to go there during the period. The branch office at the local unit will not only get business from the private sector, but also handle the government transactions.
However, there are several factors which are working as bottlenecks to the proposed plan of NRB as well as the central government of Nepal to increase banking access of all the citizens. Lack of adequate infrastructure, lack of security, shortage of qualified manpower, low business volume in rural locations, etc. Are possibly the blockages which have to be overcome. It is the responsibility of both federal and provincial governments as well as the commercial banks to move ahead with collaboration so that the long-cherished dream.
According to the data, commercial banks have made commitment to open branch offices to 292 additional local bodies. None of the commercial banks has expressed interest to go to the remaining 109 local bodies yet, as reflected in the review document.
Though the central bank has been making efforts to encourage commercial banks to expand their presence in all local units of the country, the recent revelation shows that nearly one-third of the local units are going to remain unbanked. To address such a challenge, NRB has announced a new provision in the mid-term review report of the monetary policy for FY 2074/75, requiring commercial banks to open branches in two local units where none of the banks have reached so far to be eligible to open a branch office in Kathmandu and Lalitpur metropolitan cities.
The mid-term review report has also mandated the commercial banks which had made commitment to open their branches in 292 local units must do so within the current fiscal year.
As an incentive for opening branch office in the unbanked local units, the NRB has been providing interest-free loan of Rs 10 million to each branch opened in local body.
Taking the incentive policy to a step further, Commercial banks opening the first branch office in any local body can also enjoy monopoly for three years as the central bank has decided to not allow another commercial bank to go there during the period. The branch office at the local unit will not only get business from the private sector, but also handle the government transactions.
However, there are several factors which are working as bottlenecks to the proposed plan of NRB as well as the central government of Nepal to increase banking access of all the citizens. Lack of adequate infrastructure, lack of security, shortage of qualified manpower, low business volume in rural locations, etc. Are possibly the blockages which have to be overcome. It is the responsibility of both federal and provincial governments as well as the commercial banks to move ahead with collaboration so that the long-cherished dream.
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