Despite efforts of the Nepal Rastra Bank (NRB) to expand financial services to remote parts of the country, Kathmandu, the capital city, continues to dominate other parts of the country in terms of deposit mobilization and loan extension by the banks and financial institutions (BFIs), which includes commercial banks, development banks, finance companies and micro credit development banks.
According to a half-yearly report of Economic Activities Study 2013/14 conducted by the central bank in 47 districts, 29.40 percent of the total branches of the BFIs are in Kathmandu district.
BFIs in 47 districts, where the study was carried out by eight offices of the central bank in the first half of 2013/14, have a total of 3,044 branch offices. Of the 47 districts, Kathmandu has the highest number of branch offices (895), followed by Kailali (141).
Similarly, Kathmandu topped the list of 47 districts in terms of deposit mobilization and loan expansion by BFIs. Branches of BFIs in Kathmandu accounted for 68.7 percent of total deposit mobilization during the period. Similarly, they issued 58.6 of the total loan extension of BFIs.
Kaski and Morang came second in the list in terms of deposit mobilization and loan extension, respectively. Kailali (1.5 percent) and Dhanusha (2.3 percent) had the lowest contribution in total deposit mobilization and loan extensions by BFIs.
During the review period, BFIs increased deposit collection by 7.4 percent to Rs 1,290 billion while lending jumped by 8.3 percent to Rs 1,014 billion.
Realizing the need to expand financial services to those districts where there is low presence of BFIs, NRB has initiated various programs and measures through Monetary Policy for 2013/14. “Priority will be given to open micro finance institutions in districts with very limited financial access,” the policy states.
NRB Spokesperson Bhaskar Mani Gnawali said Kathmandu continues to dominate other districts in terms of financial services catered by BFIs. “As Kathmandu is the capital city and the business hub of the country, BFIs have high concentration here. Realizing the fact that the number of branches of BFIs and their services is very high here, we have introduced some measures through the monetary policy to expand banking services outside Kathmandu,” Gnawali said. “The policy of providing interest free loans for BFIs to open new branches is one of the incentives to encourage them to venture into remote districts.”
NRB has tightened the provision to open branch offices in Kathmandu Valley through the Unified Directives for BFIs issued in 2013/14. According to the provision, BFIs are eligible to establish a branch office in Kathmandu Valley only after opening three branches outside the valley.
source: republica,23 june 2014
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