POKHARA, June 17: Nepal Rastra Bank (NRB) Governor Chiranjibi Nepal has said that commercial banks won't go to local units unless necessary infrastructure is set up there.
"Bank and financial institutions need to go to the local levels. But the government should first ensure their security. Banks will open their branch offices in local units only after necessary infrastructure is put in place," he said, following inauguration of Om Development Bank in Pokhara on Friday. "Establishing branch offices of banks is not like opening a post office."
The government has already announced a plan to send at least one commercial bank in each local unit from the coming fiscal year.
"Banking is a very sensitive sector," he said, adding: "That is why the government should first build infrastructure. Banks can go to local units only if there are good roads and telecommunication facilities."
State-owned banks -- Nepal Bank Ltd, Agricultural Development Bank Ltd and Rastriya Banijya Bank Ltd -- have branch offices in only 240 of the 744 local units. "The government has said private banks will open their branch offices in the remaining units. But that won't happen unless the government builds needful infrastructure," he added.
Governor Nepal also said that the central bank was regularly holding discussions on the issue with the executives of the commercial banks.
"The central bank tells banks to branch out to rural areas. But the central bank also takes action if they go out of track," he said, adding: "As banking is a very sensitive sector, we should take decision only after studying its long-term results."
Om Development Bank and Manaslu Development Bank started operation as a joint entity, Om Development Bank, from Friday, after the central bank increased the minimum capital of development banks to Rs 2.50 billion.