Current Status Of Banking In Nepal [Updated]

August 27, 2023 | Investopaper

As of Ashad’s end, 2080 BS (Mid-July, 2023), 5.11 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 almost 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 the end of Ashad, 2080 BS, the number of Banks and Financial Institutions has declined to 112.  The total number of BFIs (A, B & C) stood at 54. The ‘A’, ‘B’ ‘C’ and the ‘D’ class institutions are undergoing merger/acquisition aggressively.

Altogether 20 commercial banks, 17 development banks, 17 finance companies, and 57 microfinance are currently operating (as of Mid-July 2023) in Nepal. 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.

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Related: Merger/Acquisition By Commercial Banks In Nepal

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Number of BFIs And Their Branches

Until Mid-July, 2023, Commercial Banks have the highest number of branches (among A,B & C class institutions) of 5,049 while development banks and finance have 1,128 and 284 branches respectively. Similarly, microfinance institutions have 5,128 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)	20	5,049
Development Banks (B)	17	1,128
Finance (C)	17	284
Microfinance (D)	57	5,128
Infrastructure Development Bank	1
Total	112	11,589

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Net Profit of Commercial Banks in Nepal [With Ranking]

List of Banks And Financial Institutions In Nepal

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Branches Of BFIs Based On The Province

Bagmati State has the highest penetration in terms of the number of branches of BFIs. Altogether 3,025 branches of BFIs are operating in Bagmati State. However, Karnali Province has the lowest banking exposure with only 466 banking branches available. Out of which, 236 branches are of microfinance companies.

The table below shows the branches of BFIs in the different provinces (As of Mid July 2023).

Province	A	B	C	D	Total
Koshi	762	194	36	871	1,863
Madhesh	578	82	51	1,061	1,772
Bagmati	1,824	332	106	763	3,025
Gandaki	601	190	37	576	1,404
Lumbini	748	257	46	1,051	2,213
Karnali	206	21	3	236	466
Sudurpaschim	330	52	5	459	846
Total	5,049	1,128	284	5,128	11,589

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Related: Importance of Banking in Developing Countries like Nepal

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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-July 2022].

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, 5.11 crores deposit account exists in the A, B, or C class banks. Out of this, commercial banks have the largest deposit accounts of 4.39 crores. Likewise, 18.45 lakh borrowers have taken loan facilities from these BFIs.

The table below presents the number of Deposit and Loan Accounts [As of Mid-July, 2023]:

BFIs	No. of Deposit Accounts	No. of Loan Accounts
A	43,981,888	1,512,193
B	6,413,689	291,236
C	782,346	41,784
Total	51,177,923	1,845,213

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Branchless Banking Centers And Customers

At current, the BFIs are operating 1,319 branchless banking centers. There are currently 320,749 branchless banking customers in Nepal.

BFIs	Number of Branchless Banking Centers	Number of Branchless Banking customers
A	1,298	320,70
B	21	49
C	–	–
Total	1,319	320,749

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Also Read: Current Status Of Insurance In Nepal

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Mobile Banking, Internet Banking, And ATM Users

A, B, and C Class BFIs have opened in a total of 4,855 ATMs out of which commercial banks occupy 4,465 ATMs. The number of mobile banking users has surged rapidly in recent times. Altogether 2.13 crores customers are currently taking banking services through the use of mobile banking. Likewise, 18.56 lakh users are involved in the internet banking service.

See the current data (Mid-July 2023) related to mobile banking, internet banking, and ATMs in the table below:

	A	B	C	Total
No.of Mobile Banking Customers	18,438,455	2,772,852	152,682	21,363,989
No. of Internet Banking Customers	1,347,970	494,753	13,472	1,856,195
No. of ATMs	4,465	346	44	4,855

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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 Ashad’s end 2080 BS [Mid July 2023], a total of 1.22 crore customers are users of debit cards while 2.83 lakh bank customers use credit cards. Similarly, 1.37 lakh customers are involved in the usage of prepaid cards.

	A	B	C	Total
No. of Debit Cards	11,358,426	826,506	60,553	12,245,485
No. of Credit Cards	283,126	646	–	283,772
No. of Prepaid Cards	135,626	1,494	–	137,120

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