Nepal Rastra Bank (NRB) has temporarily suspended the registration of new financial institutions including commercial banks, development banks and finance companies.
The central bank decided Tuesday not to take any more applications seeking permission to open new financial institutions until a study on the number of financial institutions, services they are delivering and the need of the economy is completed, Kantipur daily reported.
NRB will decide whether or not to allow registration of new financial institutions after the study, NRB governor Bijaya Nath Bhattarai said. We will resume registration if it is found necessary, Bhattari added.
The budget for fiscal year 2009/2010 has mentioned 'NRB will review the policies on opening new banks and expanding their branches'.
There have been wide concerns over the number banks vis-à-vis the size of the economy in Nepal. Some 240 financial institutions are serving an economy smaller than Rs 1 trillion.
At present there are 26 commercial banks, 61 development banks, 78 finance companies, 13 micro finance development bank, 16 cooperatives that have taken permission from NRB and 45 Non Governmental Organisations (NGO)s delivering financial services.
In addition, there are thousands of cooperatives operating locally without taking permission from NRB.
However, the registration of micro finance development banks has not been suspended.
Likewise, the decision will not affect the registration of six commercial banks that have already applied. The banks that have already applied for permission to operate will be granted permits, Bhattarai said.
Governor Bhattarai is for development of quality in banking sector than mere increment in the number of institutions. We want strong and few financial institutions than weak and many of them, he said.
Bhattarai informed mergers and acquisitions will be promoted. source: nepalnews.co
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