Banking and financial institutions (BFIs) in Nepal are facing problems due to high number of financial institutions in the country.
Governor of the Nepal Rastra Bank (NRB), Yubaraj Khatiwada, at the formal inauguration of Kailash Bikash Bank stressed the need to expand the banking sector without increasing the number of BFIs.
Nepal Rastra Bank (NRB) has also been promoting and encouraging banks to undergo merger. Due to which, the banks that are affected by the realty sector investment are undergoing merger to recover the losses. Not only those banks, but other banks are also choosing the merger option to gain a competitive edge.
The governor also stressed that banks are gaining stability due to various steps taken by NRB like monitoring the effectiveness while opening new banks, discouraging impractical upgrades of the BFIs and others.
He also said that the strict stance taken by NRB in opening branches has helped to increase the reach of BFIs in the rural areas.
Although banks have not been able to remain free from credit overheating, but in general, the banks are heading towards a favorable situation, said the governor.
Nepal Bankers’ Association vice-president Rajan Singh Bhandari said that banks are ready to increase their investment in the agricultural sector, but he added that there is a need to make investment environment more favorable.
At the event, Manoj Goyal, President, Development Bankers Association of Nepal, said that banks should not be compelled to go public by issuing shares in the current uncertain political environment.
Rajendra Man Shakya, president of Nepal Finance Companies Association, said that if any institution is found being involved in any wrong activity then action should be taken against them as per the law.