Current Status of Banking in Nepal [Updated]

September 17, 2021 | Investopaper

As of Shrawan’s end, 2078 BS (Mid-August, 2021), 3.77 crores deposit accounts have been opened in banks and financial institutions. This is the number of accounts opened only in commercial banks, development banks, and finance companies. This number will be higher if the accounts opened in the MFI are also included. The number of bank accounts is more than the total population of Nepal. According to the Central Statistics Office, the total population of Nepal is just over 3 crores.

Just because there are more bank accounts than the population does not mean that all Nepalis have access to bank accounts. An individual can also open an account in more than one bank and financial institution. That is why there are more bank accounts than the population.

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Banks & Financial Institutions (BFIs) In Nepal

With the introduction of the merger by-laws, the number of banks and financial institutions (BFIs) has gradually declined in Nepal. Until now, the number of Banks and Financial Institutions has declined to 133. The total number of BFIs (A, B & C) stood at 62 at the end of Shrawan, 2078 BS (Mid-August 2021). The ‘B’ class development banks and ‘C’ class finance companies are in danger of extinction. Likewise, the ‘D’ class microfinance companies are also undergoing merger/acquisition aggressively.

Altogether 27 commercial banks, 18 development banks, 17 finance companies, and 70 microfinance are currently operating (as of Mid-August 2021) in Nepal. Several development banks and finance companies have entered into a merger/acquisition agreement with commercial banks. Therefore, the number of BFIs is expected to decline. The central bank’s initiative to induce a big merger (merger of commercial banks) is likely to bring the number of financial institutions further down.

Number of BFIs And Their Branches

Until Mid-August, 2021, Commercial Banks have the highest number of branches of 4,766 while development banks and finance have 1,023 and 226 branches respectively. Similarly, there are currently 70 microfinance institutions in Nepal. Microfinance has 4,705 total branches.

The table below shows the number of BFIs including the ‘D’ class microfinance and their branches.

Banks/BFI Class	No. Of BFIs	No. Of Branches
Commercial Banks (A)	27	4,766
Development Banks (B)	18	1,023
Finance (C)	17	226
Microfinance (D)	70	4,705
Infrastructure Development Bank	1
Total	133	10,720

Also Read:

Net Profit of Commercial Banks in Nepal [With Ranking]

List of Banks And Financial Institutions In Nepal

Branches Of BFIs Based On The Province

Bagmati State has the highest penetration in terms of the number of branches of BFIs. Altogether 2,756 branches of BFIs are operating in Bagmati State. However, Karnali Province has the lowest banking exposure with only 409 banking branches available. Out of which, 198 branches are of microfinance companies.

The table below shows the branches of BFIs in the different provinces (As of Mid August 2021).

Province	A	B	C	D	Total
1	727	177	26	794	1,724
2	548	80	27	959	1,614
Bagmati	1,678	294	95	689	2,756
Gandaki	581	182	33	560	1,356
Lumbini	722	227	36	1,097	2,082
Karnali	191	17	3	198	409
Sudurpaschim	319	46	6	408	779

Total	4,766	1,023	226	4,705	10,720

Presence Of Commercial Banks at Local Level

Commercial banks have reached 750 out of 753 local levels formed after the country’s transition to federalism. After the launch of a program called ‘Bank Account for All Nepalis’, the number of bank accounts has increased due to increased financial literacy. In four states, banks have reached all local levels.

The table below shows the presence of commercial banks at the local level [ As of Mid-August 2021].

Province	Number of Local Levels	Local Levels Having Bank Branches
1	137	137
2	136	136
Bagmati	119	118
Gandaki	85	85
Lumbini	109	109
Karnali	79	78
Sudurpaschim	88	87

Total	753	750

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Deposit And Loan Accounts On BFIs

Altogether, 3.77 crores deposit account exists in the A, B, or C class banks. Out of this, commercial banks have the largest deposit accounts of 3.29 crores. Likewise, 17.02 lakh borrowers have taken loan facilities from these BFIs.

The table below presents the number of Deposit and Loan Accounts [As of Mid-August, 2021]:

BFIs	No. of Deposit Accounts	No. of Loan Accounts
A	32,927,622	1,366,442
B	4,332,374	300,631
C	510,989	35,122

Total	37,770,985	1,702,195

Branchless Banking Centers And Customers

Only commercial banks have opened 1,706 branchless banking centers. There are currently 230,154 branchless banking customers in Nepal.

BFIs	Number of Branchless Banking Centers	Number of Branchless Banking customers
A	1,706	230,154
B	–	–
C	–	–

Total	1,706	230,154

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Mobile Banking, Internet Banking, And ATM Users

A, B, and C Class BFIs have opened in a total of 4,329 ATMs out of which commercial banks occupy 3,982 ATMs. The number of mobile banking users has surged rapidly in recent times. Altogether 1.41 crores customers are currently taking banking services through the use of mobile banking. Likewise, 111.60 lakh users are involved in the internet banking service.

See the current data (Mid-August 2021) related to mobile banking, internet banking, and ATMs in the table below:

	A	B	C	Total
No.of Mobile Banking Customers	12,638,366	1,500,050	56,423	14,194,839
No. of Internet Banking Customers	1,115,532	37,063	7,726	1,160,321
No. of ATMs	3,982	304	43	4,329

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Debit Cards, Credit Cards, And Prepaid Cards

With the banks creating awareness and providing various discounts on the use of cards for day to day transactions, there is decent growth in the number of cardholders. As of Shrawan’s end 2078 BS [Mid August 2021], a total of 88.39 lakh customers are users of debit cards while 1.92 lakh bank customers use credit cards. Similarly, 65,786 customers are involved in the usage of prepaid cards.