Banking in Nepal

Banks are institution which collect deposits, provide loans, issue credit and handle various kinds of transaction in money and monetary instrument.


In Nepal bank is started in 1937 by Nepal bank limited which is the oldest bank in Nepal. From this the people of the country are started to save the money in bank and various kinds of payment and received are made through the bank and which help to keep their money safe. Banks are provided interest on the deposit amount. They are providing loan facility which help people to start their business. In our country Nepal all the banks are generated with the Central Bank. There are 298 banks in Nepal other are financial institution. There are different types of bank in Nepal and the some rule of the bank in Nepal is as:

A) Central Bank:
Central banks are the head of the every bank there is one central bank in every country. Central bank is the guardian of the entire banking system. All other banks are required to follow the instruction of central bank. It holds foreign exchange, issue note and control credit creation.
Functions of Central Bank:
-Banker to the Government
-Bankers to banks
-Note issue
-Custedian of foreign exchange and precious metals

B) Commercial Bank:
The institution which collect deposit, issue short term loan provide necessary facilities for trade and payments and various kinds of commercial services are called commercial banks.
Functions of Commercial Bank:
1) The excess of income over consumption is called saving. Such saving amounts are deposited in commercial banks. Payments for goods and services are drawn by cheques. Commercial banks pay interest on such deposits. In context of Nepal there are three kinds of deposits are mainly followed they are:
-Current deposit
Depositers can draw such deposit at any time partly or wholly. Banks are not paid interest for these deposits.
-Saving deposit
Depositers cannot draw saving deposit they need. Only limited amount can be drawn at a time. It earns interest.
-Fixed deposit
Amounts deposited for a fixed time is called fixed deposit. It is not promisible to draw any amount before fixed period expires. It earns higher interest it is because commercial banks can invest such deposits to earn profit.
Commercial banks are providing loans on interest. They are providing education, housing, vehicle, industry, business and other many more loan facility are providing to the Nepalese people which help to promote the life of illiterate people from destroy their assets.

C) Development Bank
Development banks are the specialized financial institutions that are sit up to provide loans for developmental purpose in the various sectors like agriculture, industry, service etc. The development banks also perform almost the same functions as commercial banks but they mainly focus on developmental activities. According to the data of 2007 there are 33 development banks but they are increasing in Nepal.

D) Finance Company
Finance companies are those financial institutions particularly engaged in small and short term consumer financing. The finance companies can accept deposits and extend short-term consumer loans with limited amount specified by central bank directives. The finance companies are small in size of capital and assets so that they can be established in regional (sub-regional level) where other banking institutions are not available.

The banks in Nepal are categorized in the system of Nepal Rastra Bank(NRB) they are mainly in three methods they are KA, KHA, GHA, 'ka' means the bank, 'kha' means the development bank and 'gha' means the finance company which are established with the authorization of Nepal Rastra Bank(NRB).

Important of banking in Nepal
Banking sector is the major institutional system in Nepal which carries out the financial flow within the economy. It can also be understood with the emergence of e-banking in the recent years. Banking sector is the lead economic of country. In the developing country most of people are under the poverty line. The banks should provide good and trustable facility. Now banking sector has been going to internet banking. So it is very important things are security and easiness and everywhere available facility is getting by Nepalese people. Now a day's people are getting easy facility through the internet. Banking system in Nepal are now a days in their competition and they are providing different facility to the customer like SMS banking, online banking and other many more. Due to such facility banking knowledge are forwarding to all the Nepalese people and now a days they are saving their money in bank. People of Nepal can exchange their banking work in any place due to the facility of e-banking. Banking is providing credit cards since 1990. ATM facility also famous in Nepal now a day which help to the customer it works 24 hours daily it was started in 1995. Due to the introduction of technology banking facility are popular to all the Nepalese people and they are keep their money safe for future purpose.

Banking are providing remittances facility where people from one place can send their money to his/her family members through banking safely due to the e-banking. Now a day the insurance are also very famous to Nepali and they are doing insurance. Such policy also invented by the banking of Nepal. Due to establishment of banking many people are getting job in banking sector.