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Merger trims down BFIs, each branch covers 8475 people

Written by  Published in Banking & Finance Saturday, 17 August 2013 09:29


Kathmandu, August 17 (CNS) --  Total number of bank and financial institutions licensed by Nepal Rastra Bank (NRB) dropped to 254 in mid-July 2013 from 266 in mid-July 2012.

Though, 10 additional financial institutions comprising 3 "B" class development banks and 7 "D" class microfinance institutions came into operation in 2012/13, the reduction in the total number of BFIs is attributed to the merger of BFIs during 2012/13.

2 commercial banks merged with each other, 2 development banks merged into one commercial bank, 10 development banks and 12 finance companies merged to form 7 development banks and 2 finance companies and license of 5 non-governmental organizations was revoked.

Accordingly, the total number of commercial banks reached 31 while the number of development banks, finance companies and microfinance development banks stood at 86, 59 and 31 respectively in mid-July 2013. In addition, there are 16 cooperatives and 31 NGOs licensed from the NRB.

However, In mid-July 2013, the branch network of commercial banks, development banks, finance companies and micro finance development banks reached to 1486, 764, 242 and 634 respectively. As a result, in mid-July 2013, each branch has covered approximately 8475 population on an average.

Such branch networks were 1425, 687, 292 and 550 for commercial banks, development banks, finance companies and micro finance development banks respectively in previous year.

Deposit Mobilization of Banks and Financial Institutions

Deposit mobilization of banks and financial institutions (BFIs) increased by 17.4 percent
(Rs. 176.27 billion) in 2012/13.

Such deposit mobilization had increased by 22.9 percent (Rs. 188.59 billion) in the previous year. In
the review year, deposit mobilization of commercial banks and development banks increased by 17.9 percent and 27.1 percent respectively while deposit mobilization of finance companies decreased by 9.6 percent.

In the previous year, the deposit mobilization of commercial banks and development banks had increased by 26.7 percent and 34.0 percent respectively whereas the deposit mobilization of finance companies had decreased by 7.5 percent.
The deposit mobilization of finance companies declined due to merger of 7 finance companies with the development banks in the review year.

Credit Flow of Banks and Financial Institutions

During the review year, the loan and advances of BFIs increased by 18.6 percent (Rs. 180.20 billion) compared to a growth of 13.2 percent (Rs. 112.78 billion) in the previous year.

Loan and advances of commercial banks and development banks rose by 19.1 percent and 23.3 percent respectively whereas the loan and advances of finance companies declined by 5.8 percent the review year.

During the review year, credit to private sector increased by 20.8 percent (Rs. 161.92 billion) compared to a rise of 12.2 percent (Rs. 84.86 billion) in the previous year. Of the credit flows to private sector, credit from commercial banks registered a growth of 21.6 percent, development banks 28.3 percent and finance companies 1.3 percent.

Of the total credit from BFIs, the credit to industrial production sector surged by Rs. 34.21 billion in the review year compared to a growth of Rs. 27.29 billion in the previous year.

Similarly, credit to the agriculture sector increased by Rs. 10.99 billion in the review year compared to an increase of Rs. 10.52 billion in the previous year.

Likewise, credit to construction sector increased by Rs. 13.53 billion, to the wholesale and retail trade sector by Rs. 36.90 billion, and to transportation, communications and public services sector by Rs. 7.75 billion during the review year. Credit flows to these sectors had increased by Rs. 7.03 billion, Rs. 20.76 billion and Rs. 3.89 billion respectively in the previous year.

© Corporate News Syndicate

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