Status of commercial and development banks in Nepal

Status of commercial and development banks in Nepal

In Nepal, the financial sector has been expanding rapidly in recent years. Access to the banking sector is increasing throughout the country. Financial services are being rural-oriented and based on information technology. The share of bad loans is the lowest in South Asia. Due to the effective implementation and improvement of the policy for the development of the financial sector, access to finance has been increasing and financial transactions are also expanding rapidly. Up to mid-March 2021, a total number of 139 banks and financial institutions are in operation including 20 commercial banks, 17 development banks, 17 finance companies, 57 microfinance companies, and 1 infrastructure development bank.

The branch expansion of banks and financial institutions has progressed significantly in recent years. There are altogether 10,430 branches of banks and financial institutions. Bagmati province has the largest number of branches, i.e. 2,677, and Karnali province has the lowest number of branches, i.e. 406. The province-wise branches of commercial banks and development banks are given in the table below:-

Table: Status of commercial and development banks in Nepal

The table shows the province-wise distribution of branches of commercial banks and development banks in Nepal. There is a total of 4,632 branches of 20 commercial banks in Nepal. Among them, the highest number of branches are in the Bagmati province while the lowest number of branches are in Karnali province. In the Bagmati zone, there are 35.42 percent branches of commercial banks, while in the Karnali province, there are only 4.12 percent branches of commercial banks. It shows that there is a highly unequal distribution of branches of commercial banks in Nepal. On the other hand, there are 1,069 branches of 17 development banks in Nepal. 

The highest number of branches of development banks are also in Bagmati province. The total number of branches of development banks in Bagmati province is 293. It is 27.40 percent of the total. The lowest number of branches of development banks are also in Karnali province. It is 1.59 percent of the total. The province-wise distribution of branches of development banks is also highly unequal. It is clear that most of the branches of both commercial banks and development banks are concentrated in the Bagmati province.