Three government banks have not been able to reinstate 157 branch offices out of a total of 284 branches displaced even nine years after the end of the conflict.
According to data of Nepal Rastra Bank (NRB), Nepal Bank Ltd (NBL), Rastriya Banijya Bank Ltd (RBBL) and Agricultural Development Bank Ltd (ADBL) are yet to reinstate 94, 50 and 13 branch offices, respectively, as at October, 2015.
NRB has been piling pressure on the government-owned banks to reinstate their branch offices as soon as possible to provide banking and financial services in remote parts of the country.
The banks had either relocated most of their branches to the cities from the rural areas or shut completely during the conflict period amid security concerns.
Though the banks owned by the government are yet to reinstate their majority of the displaced branches during the conflict, many private banks as well as cooperatives are already stepping into the rural market to work as financial intermediaries.
Earlier in a discussion held in September by the Finance Committee of the parliament, members of the committee have also urged the government to immediately reopen the branches in rural parts of the country that were withdrawn during the conflict period. Arguing that the people of rural areas were not getting affordable banking and financial services in the absence of government-owned banks, they have demanded immediate reinstatement of the branch offices.
The central bank has also included a provision in its Monetary Policy for last fiscal year 2014/15 to make all three state-owned banks reopen their branch offices in the conflict-hit areas. “Provision will be made to reopen the branches which were closed during the conflict by the end of this fiscal year (2014/15),” reads the monetary policy of the last fiscal year.
NRB Spokesperson Trilochan Pangeni said that the government-owned banks were encouraged to reestablish their branches in line with the central bank's aim to increase financial access and penetration in an affordable cost.
Though banks had submitted their plans to the NRB to reestablish their branches by the end of the last fiscal year 2014/15, they have told the central bank that they will be able to do so by the end of the current fiscal year.
“We have planned to reinstate all remaining branch offices by the end of the current fiscal year. Our branch offices are being reinstated as per the plan. However, the recent earthquake and Tarai unrest has affected our plan to some extent,” Krishna Prasad Sharma, CEO of RBBL, told Republica. “We plan to reinstate 35 branch offices this year. Reinstatement of all 50 branch offices may not be feasible from business point of view as some of human settlement that the branches had served might be no more there,” he added.
According to Sharma, the reinstated branches are doing good business despite competition with other financial intermediaries there. “Most of the branches have gone into break even within one or two year of reinstatement. We have developed new business model for the reinstated branches. We begin from two or three staff and gradually increase the capacity as per the growth of the business,” he added.
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