Nepal is now successfully a federal country with 7 provinces and 753 local level bodies. However, the dawn of federalism doesn’t only limit to change in the government structure; it also significantly brings about change in all other sectors. In keeping up with the change the nation is going through, Nepal Rastra Bank (NRB), the central bank of the country, brought along a policy to expand the network of the commercial banks to all the local levels. The prime motive behind it was to provide an equal opportunity to all the citizens of the country to acquire banking and financial services.
Recently. NRB published its review of Current Macroeconomic and Financial Situation based on seven month’s data of 2017/18. According to the report of the total 753 local levels formed, only 374 have the presence of bank or branch of a bank. You can see the data below:
| Province |
No. of local bodies |
No. of banks/branches |
Districts |
Population |
Number of people per bank/branches |
Local bodies to banks/branches ratio |
| Province No. 1 |
137 |
71 |
14 |
4,534,943 |
63,872.44 |
1.93 |
| Province No. 2 |
136 |
63 |
8 |
5,404,145 |
85,780.08 |
2.16 |
| Province No. 3 |
119 |
71 |
13 |
5,529,452 |
77,879.61 |
1.68 |
| Province No. 4 |
85 |
45 |
11 |
2,413,907 |
53,642.38 |
1.88 |
| Province No. 5 |
109 |
66 |
12 |
4,891,025 |
74,106.44 |
1.65 |
| Province No. 6 |
79 |
25 |
10 |
1,168,515 |
46,740.6 |
3.16 |
| Province No. 7 |
88 |
33 |
9 |
2,552,517 |
77,349 |
2.67 |
| Total |
753 |
374 |
77 |
26,494,504 |
|
2.01 |
The above table gives a bird’s eye view of how the policy implementation of NRB is going so far. For a total of 753 local bodies, we now have only 374 branches of commercial bank, and that we can’t say is evenly distributed. The column headed “Number of people per bank” shows the amount of customers each branch in that province would have to handle given the assumption that all of them will have access to financial services. Even if we consider the minimum value i.e of Province 6, it has a whopping average of 46,740.6 per branch. This figure gives a real picture of how far we are in terms of expanding banking and financial services to all nook and corner of our country.
Similarly the final column shows the ratio of number of local bodies to the number of banks/branches available. As per the plan, the ratio we are seeking is 1:1, where each local body will have access to at least one bank’s facilities. In this column too, even if we consider the lowest value, which is 1.65 for Province 5, it doesn’t depict a very good picture. In average we can say that one branch is serving at least 2 local bodies in the entire country.
Of course, these calculations also has limitation because we still haven’t checked the degree of dispersion of the location of these branches. It’s a general knowledge that most banks and their branches are concentrated in big cities and urban areas. 374 branches for 753 local bodies doesn’t even cover 50% of the intended target.
But the good news is, it’s not late yet. We have just marched into federalism and changes are going on rapidly so it might be too soon to make any snap judgments. We here at Sharesansar receive an average of 3 to 4 new branch opening news on daily basis. So, maybe next time we see the Macroeconomic report of NRB we’ll be seeing a tremendous changes in these figures.
