Banking & Finance

Nepal’s banking and financial sector, overseen by Nepal Rastra Bank (NRB), plays a vital role in the country’s economic landscape. NRB licenses and regulates various institutions, including commercial banks, development banks, finance companies, micro-credit development banks, cooperatives, and financial non-government organizations (NGOs), facilitating limited banking transactions.

Diverse Institutional Landscape

NRB’s licensing authority encompasses a range of institutions, such as commercial banks, development banks, finance companies, micro-credit development banks, cooperatives, and financial NGOs. These entities contribute to the financial services available to Nepalese citizens.

Recent Trends

Recent growth in the banking and financial sector has been influenced by NRB’s policies. A moratorium on new BFI licenses, except for micro-credit development banks, has slowed sector expansion. In mid-May 2016, there were a total of 229 licensed financial institutions, with 187 falling under “A,” “B,” “C,” and “D” categories. Notably, mergers prompted by the “Bank and Financial Institutions Merger By-law, 2011” resulted in the formation of 33 BFIs by mid-May 2016, while the number of higher-category BFIs decreased due to these mergers.

Nepal’s banking and financial sector, regulated by NRB, encompasses a diverse array of institutions that provide essential financial services. Recent trends, including a moratorium and mergers, have shaped the sector’s growth and composition. As Nepal’s economy evolves, the sector’s dynamic landscape is poised to adapt and respond to changing needs and opportunities.

Nepal’s financial sector is evolving to meet the needs of a dynamic economy. Sampanna Capital guides investors through opportunities in commercial banking, development banking, microfinance, and cooperatives, enabling financial progress for businesses and individuals.

The activities of commercial banks in Nepal encompass a wide range of financial services. These include accepting deposits, providing loans and advances, facilitating domestic and international trade transactions, issuing letters of credit, and offering various types of banking products such as savings accounts, current accounts, fixed deposit accounts, and foreign currency accounts. Commercial banks also provide services such as remittance, payment transfers, foreign exchange transactions, and investment advisory services. Additionally, they play a pivotal role in the economic development of Nepal by channeling funds towards productive sectors, supporting entrepreneurship, and promoting financial inclusion.

Development banks play a crucial role in Nepal’s economic development by providing financial support and resources to various sectors. These banks facilitate the flow of funds to promote infrastructure development, agriculture, tourism, and small and medium enterprises. They offer loans, grants, and technical assistance to businesses and individuals, helping them achieve their developmental goals. Additionally, development banks play a vital role in mobilizing savings and channeling them towards productive investments. By promoting economic growth and employment opportunities, these banks contribute to poverty reduction and overall socio-economic development in Nepal.

Microfinance Institutions (MFIs) in Nepal play a crucial role in serving microentrepreneurs who are running or planning to start small enterprises known as microenterprises. By providing access to microfinance services, these MFIs empower microentrepreneurs to enhance their efficiency, productivity, and overall welfare. Additionally, microfinance services help mitigate risks associated with operating microenterprises. Through these services, MFIs contribute to the economic growth and development of microentrepreneurs in Nepal, allowing them to thrive and contribute to the overall well-being of the society.