No Need for More than 15 Commercial Banks in Nepal : Nepal Rastra Bank

Nepal Rastra Bank (NRB) has concluded that there is no need for more than 15 commercial banks in Nepal. A study by the central bank of Nepal and the majority of the participants in this process agreed that the minimum number of 11 is ideal, and that if it is expanded, it can be kept up to 15.

The survey discovered that even in South Asian countries with stronger economies than Nepal have fewer commercial banks than in Nepal. Eighty-one percent of survey respondents and 78 percent of bank and financial institution professionals agreed that Nepal has more banks than it needs.

Nepal Rastra Bank has placed a strong emphasis on mergers in order to minimize the number of commercial banks in the country. A survey was done at the same time by Nepal Rastra Bank. A total of 230 people, including 140 bank and financial institution CEOs and 90 specialists participated in the study.

Moreover half of those surveyed estimated that Nepal would have 11 to 15 commercial banks and believes that Nepal now does not require more than that, whereas 5% have suggested that there should be 5 to 10 banks. Likewise, 15% believe that 16 to 20 banks are required while the rest of them suggested that there should be more than 20-25 banks.

57% of those polled believed that the incentives should be integrated, while 20% of those surveyed said the force should be consolidated. Sixty-one percent of respondents emphasized the importance of merging weak and strong banks and financial institutions.

Participants also agreed that the central bank's policy of reducing the number of banks was very successful and timely. According to the research report, there has been a significant boost in credit growth, deposit size, earning capacity, and risk management ability as a result of the merger. The operating capacity, on the other hand, has not increased significantly.