September 10: The number of branchless banking service centers has started to decline. The branchless banking units were started to provide financial access to places where banks and financial institutions do not have branches. Branchless banking has started to decline after banks stepped up efforts to establish branches in rural areas.

According to the data of Nepal Rastra Bank (NRB), altogether 1,319 branchless banking service centers used to serve more than 320,000 people as of mid-July this year. The number of branchless banking service centers is less than the corresponding period of last fiscal year. In mid-July 2022, more than 283,000 customers received services through 1,548 branchless banking centers. Compared to last year, the number of customers of branchless banking has increased, but the number of service centers has decreased.

After the central bank introduced the concept of branchless banking service 16 years ago, this service was implemented from 2011. Although branchless banking service expanded for a decade, it has started to decline since mid-July 2021.

After the mega earthquakes of 2015, donors helped to expand branchless banking services. At that time, the Saksham project, which was run with the help of the British aid, helped to expand branchless banking services in 14 districts affected by the earthquake and also in the remote areas of mid-western region. Branchless banking service centers have started to decline after this support was stopped.

Recently, the central bank has been strict in closing branchless banking services. The NRB has made arrangements for closing branchless banking service center only if it has not been in operation for six months and the branches of other banks have expanded financial access in those areas. To close branchless banking service, banks need to take the approval of the central bank.

Bhuwan Kumar Dahal, former president of Nepal Bankers Association, said that branchless banking has decreased recently due to the expansion of branches of banks and financial institutions. He says that the expansion of electronic transactions has also reduced the dependence on branchless banking.

The central bank introduced the concept of branchless banking services to provide financial access in a simple and convenient manner in places where there are no banks. Under this service, the bank appoints a representative after making an agreement with the local merchants or customers in the places where there are no branches. The representative provides services such as account opening, depositing, withdrawal, remittance payment and small loan investment to the locals through the machine provided by the bank.

According to the instructions of the central bank, there is a provision that banks and financial institutions can extend branchless services in areas where there are no branches except for metropolitan cities, sub-metropolitan cities and municipalities.