Stringent Measures to Open Branches

Nepal Rastra Bank has tightened the provision to expand the branch offices of the banking and financial institutions (BFIs). 

 

Bhaskar Mani Gnawali, spokesperson of the NRB, informed that the new measures to open branches of the BFIs have been brought in a bid to curb the flow of banks in the urban areas and increase the quality of their banking services. 

 

According to the new provision, a bank or financial institution must establish three branches outside the Kathmandu valley to open a branch inside Kathmandu valley. Earlier, a bank or financial institution was allowed to open a branch inside Kathmandu by establishing two outside the valley. 

 

A bank can apply for opening a branch inside Kathmandu valley after establishing at least one branch among 14 districts designated by the NRB, where there is low presence of the BFIs, one outside any district headquarter or  municipality and one as per the bank’s own interest outside the Kathmandu valley. 

 

The new provision requires a Bank and Financial institution to provide details of branches established outside the Kathmandu valley to apply for opening branch offices. Likewise, the NRB will accord a priority to open branches outside the Ringroad or in the VDCs inside Kathmandu valley. 

 

NRB has also decreased the number of districts to 14 from 17, listed as districts where there is a low presence of BFIs. These districts are Bhojpur, Okhaldhunga, Manang, Rukum, Salyan, Jumla, Mugu, Humla, Kalikot, Dolpa, Jajarkot, Bajhang, Bajura and Darchula.

 

Meanwhile, the NRB has also made the ‘Kha’ and ‘Ga’ class licensed financial institutions mandatory to extend lending on the productive sectors. Agriculture, energy, tourism and small and cottage industries are identified as the productive sectors by the NRB. Earlier, it was mandatory for the commercial banks only. According to the new directives of the NRB, ‘Kha’ and ‘Ga’ class BFIs should prepare a work-plan to extend the loans within three years towards agriculture, tourism, energy and cottage industries.  ‘Kha’ class BFIs should extend a loan of 10 per cent of the total loan, while ‘Ga’ class BFIs is required to extend 10 per cent.