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Commercial banks say they cannot expand to 38 local units

2018-05-20

Though Nepal Rastra Bank (NRB) had given a deadline of this fiscal to commercial banks to expand their branch network to all the local bodies in the country, the commercial banks have said that it will not be possible to expand branch network to 38 local units citing lack of basic infrastructure and the dispute related to location of the headquarters of the local bodies.

According to Nepal Bankers’ Association (NBA), banks are reluctant to establish branches in two municipalities and 36 rural municipalities as they have been facing challenges like lack of suitable houses, internet and telephone connectivity, electricity and security. On the other hand, banks are facing shortage of skilled manpower to deploy them to the new branches.

Banks have already opened branches in 507 local bodies and another 208 local bodies will be covered within the end of this fiscal, as per Gyanendra Dhungana, president of NBA.

Of the 38 local bodies where the banks say they cannot establish branches, 11 are located in Province 1, seven each are in Province 3 and Province 6, nine are in Province 7, three in Province 2 and one in Province 5. Banks have opened branches in all the local bodies of Province 4.

Narayan Prasad Paudel, spokesperson for NRB, said that the central bank has already allocated the banks to establish branches in local bodies. The monetary policy of this fiscal has also announced some incentives to encourage banks to open branches in rural areas.

Banks have complained that the lack of internet services is the major challenge for them and many of the branches depend on VSAT internet. Nepal Telecommunications Authority has said that it will take one more year to provide access of broadband internet in each local unit.

The government has asked banks to set up branches in the local units as the government’s payments, including social security, will be done at the local level through banks.

Meanwhile, the Sakchyam Project funded by the UK Aid has provided grant to 14 commercial banks to set up bank branches in 57 local units of 19 districts today.

Source: The Himalayan Times