All Nepali banks and financial institutions (BFIs) carry one objective
in common: “We want to go remote areas and mobilize the small deposits
of rural Nepal”. That is at least what they say in record. However, all
the commercial banks, development banks and finance companies are
city-centred. On top of that, only around 40 per cent of Nepali citizens
have access to modern banking facilities till now. If the state-owned
banks are left aside, one can clearly see negligible presence of
commercial banks from the private sector in the remote areas. (See the
accompanying table)
The
table shows that some big banks have less than five branches in remote
areas. Nabil Bank, which is operating 47 branches across the country in
total, has only three branches in remote areas. It is the same case with
Himalayan Bank, Nepal Investment Bank and Nepal SBI bank with Standard
Chartered Bank having not even a single branch in remote as well as
hilly areas.
However number of branches of newly established banks is growing in
remote areas as well. Civil Bank, NMB Bank and Citizens’ Bank are
operating five branches each in distant parts of the country. Likewise,
Century Bank, Global IME and Prime Commercial Bank are also following
the former three institutions for opening branches in remote areas.
Despite the incentives provided by the Nepal Rastra Bank (NRB),
commercial banks are reluctant to open branches in districts such as
Rolpa, Rukum, Bhojpur, Salyan, Humla, Manang etc. The central bank has
been providing interest-free loan of between Rs. 5 million and Rs. 10
million to banks for opening branches in remote areas. Still the old and
big banks are not interested in opening branches in those areas.
This is despite the fact that the established banks have much higher
financial and human resource strength compared to the new ones. They
have low cost deposit, higher spread, higher client base, huge profit
and ability to spend. So the leading BFIs should take this as one of
their responsibilities to open branches in remote areas. They should
provide modern banking facilities to the needy people of such areas even
if profitability from such branches is difficult. One can understand
that investors ask for return, but does it mean that the remote people
have no right to expect anything from BFIs? Of course they have and
banks and financial institutions need to start thinking about it.