The Nepal Rastra Bank (NRB), the central bank, has directed commercial banks to extend their reach to every local body in the country to raise people’s access to banking services and facilitate transfer of grants to the lowest tier of government.
Although the NRB has been pushing Class ‘A’ financial institutions to open branches in all local bodies since the beginning of this fiscal year, this time it has mapped out locations where every commercial bank must set up new offices.
The central bank’s latest move is in line with the provision included in the current financial year’s fiscal policy, which has envisaged expanding the reach of commercial banks to every local body. Presence of at least one commercial bank in every local body will facilitate the government to transfer funds to newly-formed local bodies.
Commercial banks currently have presence in 394 out to 753 local bodies in the country. This means 359 local bodies still lack access to commercial banking services.
The central bank has directed commercial banks to open at least one branch office in each of the 243 local bodies within mid-May. It has also instructed Class ‘A’ financial institutions to open at least one branch office in each of the remaining 116 local bodies within mid-July.
“Banks must submit progress report on opening of new branch offices every fortnight,” says the directive issued by the NRB on Wednesday, adding, “The Ministry of Finance will coordinate with concerned authorities to provide security to new branches.”
As per this plan, Prabhu Bank has to expand its reach to 25 local bodies within mid-July, followed by Mega Bank, which has to open branches in at least 18 local bodies, and Kumari Bank, which has to reach out to 17 local bodies. On the other hand, Siddhartha Bank has to open branch offices in only four local bodies, while Everest Bank has to reach out to five local bodies. Standard Chartered Bank Nepal, on the other hand, does not have to open a branch office in any of the local body that lacks presence of commercial banks.
“The commercial banks agreed to expand their coverage in all local bodies on their own volition. We did not impose anything on them,” NRB Spokesperson Narayan Prasad Paudel said.
Ashok Sherchan, CEO of Prabhu Bank, which is reaching out to the largest number of local bodies, said investment of around Rs800,000 to Rs1 million would be made to open modest branch offices in local bodies. Each branch, according to Sherchan, will have three employees.
“Many areas where we are planning to expand are not economically active now,
but their future prospects are promising,” said Sherchan, referring to districts like Baglung, Myagdi, Parbat Siraha, Dhanusha and Rautahat, where Prabhu Bank is planning to expand its footprint.
From The Kathmandu post