Last fiscal, bank saw branch boom take sock on the jaw
KTHAMANDU, AUG 02 -
The explosive growth of the branches over the last few years took a break last fiscal year as the expansion almost halved compared to the record of the prevous year. And this, despite the rise in the number of commercial banks.
The number of branches of 31 commercial banks in the country went up to 1,095 at the end of the fiscal year 2010-11, with the addition of 129 branches that year.
In the FY 2009-10, bank branches had grown from 214 to 980 while only 27 banks were operating then.
The branches expanded 197 in the FY 2008-09 when the number of operating commercial banks was just 26.
Bankers say the central bank’s policy of encouraging banks to go to rural areas while discouraging their expansion in urban centres played a key role in the sluggish branch expansion last year.
Since the last fiscal year, Nepal Rastra Bank (NRB) made a provision of requiring its approval before opening new branches.
The central bank also made it mandatory to open at least two branches outside the capital, with one in the rural area, for opening a branch in the Kathmandu valley. The NRB policy continues this fiscal year too.
“The requirement of bureaucratic procedures to get approval from the central bank discouraged the bank expansion,” said Sashin Joshi, chief executive officer of NIC Bank.
Bankers have been opposing the NRB’s policy that requires them to take approval before opening new branches.
According to Joshi, banks hardly opened new branches until the first half of the last fiscal year, while in the second half, new banks were aggressive in opening additional branches.
Among the new banks too, Janata Bank and Mega Bank are frontrunners in opening new branches with each of them opening 12 branches apart from their head office.
Other banks such as the NIC opened eight branches, Rastriya Banijya Bank five, Everest six, NMB three and Nepal Investment Bank added two branches over the year. Everest added all the new branches outside the Valley.
Deputy General Manager of Everest Bank Hum Nath Gurung said the sluggish economic activity in the country was the main reason for the slow branch expansion.
The central bank, however, does not buy the idea that the NRB policy has discouraged branch expansion.
“It could be a reflection of the current situation of difficulty in recovering loans, liquidity crunch, expansion of branchless banking, reduction of profitability and emerging trend of merger,” said Bhaskarmani Gyawali, the NRB spokesperson.
However, given the increasing proliferation of bank branches, people’s access to formal banking channel has risen.
According to the Economic Survey 2010-11, there was one bank branch for every 23,800 people as of mid-April 2011, although there was one bank branch for every 29,300 people in the last fiscal year 2009-10.
Fiscal Year>> No of branches
2006-07 >> 445
2007-08 >> 555
2008-09 >> 752
2009-10 >> 966
20010-11 >> 1095
Source: NRB
The explosive growth of the branches over the last few years took a break last fiscal year as the expansion almost halved compared to the record of the prevous year. And this, despite the rise in the number of commercial banks.
The number of branches of 31 commercial banks in the country went up to 1,095 at the end of the fiscal year 2010-11, with the addition of 129 branches that year.
In the FY 2009-10, bank branches had grown from 214 to 980 while only 27 banks were operating then.
The branches expanded 197 in the FY 2008-09 when the number of operating commercial banks was just 26.
Bankers say the central bank’s policy of encouraging banks to go to rural areas while discouraging their expansion in urban centres played a key role in the sluggish branch expansion last year.
Since the last fiscal year, Nepal Rastra Bank (NRB) made a provision of requiring its approval before opening new branches.
The central bank also made it mandatory to open at least two branches outside the capital, with one in the rural area, for opening a branch in the Kathmandu valley. The NRB policy continues this fiscal year too.
“The requirement of bureaucratic procedures to get approval from the central bank discouraged the bank expansion,” said Sashin Joshi, chief executive officer of NIC Bank.
Bankers have been opposing the NRB’s policy that requires them to take approval before opening new branches.
According to Joshi, banks hardly opened new branches until the first half of the last fiscal year, while in the second half, new banks were aggressive in opening additional branches.
Among the new banks too, Janata Bank and Mega Bank are frontrunners in opening new branches with each of them opening 12 branches apart from their head office.
Other banks such as the NIC opened eight branches, Rastriya Banijya Bank five, Everest six, NMB three and Nepal Investment Bank added two branches over the year. Everest added all the new branches outside the Valley.
Deputy General Manager of Everest Bank Hum Nath Gurung said the sluggish economic activity in the country was the main reason for the slow branch expansion.
The central bank, however, does not buy the idea that the NRB policy has discouraged branch expansion.
“It could be a reflection of the current situation of difficulty in recovering loans, liquidity crunch, expansion of branchless banking, reduction of profitability and emerging trend of merger,” said Bhaskarmani Gyawali, the NRB spokesperson.
However, given the increasing proliferation of bank branches, people’s access to formal banking channel has risen.
According to the Economic Survey 2010-11, there was one bank branch for every 23,800 people as of mid-April 2011, although there was one bank branch for every 29,300 people in the last fiscal year 2009-10.
Fiscal Year>> No of branches
2006-07 >> 445
2007-08 >> 555
2008-09 >> 752
2009-10 >> 966
20010-11 >> 1095
Source: NRB
