Long wait for banks at 116 rural local units to be over within 3 months; Find out if you will have one at your area
Tue, Apr 3, 2018 4:05 PM on Latest, Featured, Stock Market,
The class “A” banks will have no pretense of this or that kind after Nepal Rastra Bank has adopted an iron-fist policy over them, thereby making mandatory to provide banking access to all remaining 359 local units by the coming 3 months. After witnessing the procrastinating attitude of commercial banks for quite some time, the banking regulator finally realized that it is by hook or by crook these banks should be forced to reach out to all local units in order to fulfill the agenda of financial decentralization envisioned by the fiscal budget 2074-75.
The banks had previously shown commitment to open their branches to many of those local units which most of them have actually been pursuing with sincerity. However, 116 most rural of the areas have long been cornered since not even a single commercial bank wanted to expand to those nooks of the nation. To break such a centralized mindset of the banks, NRB recently came up with strict measures where it had instructed all the commercial banks except Standard Charter Bank to mobilize their network in all the remaining areas within 3 remaining months of the current Fiscal Year.
However, these coercive measures from the central bank didn’t come without any incentives and motivational elements. In fact, the central bank has been providing commitment for a long to provide credit facility of up to Rs 1 crore free of mortgage for every newly opened branches to the banks. Besides, the central bank had even made provision that the commercial bank establishing its branches at those inaccessible areas would enjoy complete monopoly there for upcoming 3 years as no other banks would be licensed to expand there. In addition, these banks are also eligible to carry out all the transactions of local government.
Since the central bank could find no commitments from the commercial banks to move out to some 116 local units, it has sent a strong message that these banks now need to reach out to all remaining areas in short 3 months anyhow and at any cost; failure of which would attract a punitive action as per the NRB Act 2058. With this latest decision, the banks such Everest, Nabil etc. which were earlier having limited banking coverage would need to expand their branch network in a cutthroat pace.
However, these coercive measures from the central bank didn’t come without any incentives and motivational elements. In fact, the central bank has been providing commitment for a long to provide credit facility of up to Rs 1 crore free of mortgage for every newly opened branches to the banks. Besides, the central bank had even made provision that the commercial bank establishing its branches at those inaccessible areas would enjoy complete monopoly there for upcoming 3 years as no other banks would be licensed to expand there. In addition, these banks are also eligible to carry out all the transactions of local government.
Since the central bank could find no commitments from the commercial banks to move out to some 116 local units, it has sent a strong message that these banks now need to reach out to all remaining areas in short 3 months anyhow and at any cost; failure of which would attract a punitive action as per the NRB Act 2058. With this latest decision, the banks such Everest, Nabil etc. which were earlier having limited banking coverage would need to expand their branch network in a cutthroat pace.
