NRB conducts study on BFIs' resource mobilisation under federal structure

This undated image shows the building of Nepal Rastra Bank in Kathmandu. Photo courtesy: NRB

  • Access, resource mobilisation of class ‘A’, ‘B’ and ‘C’ BFIs more concentrated in Bagmati
  • Compared to Bagmati, mobilisation of resources gradually expanding in other provinces

KATHMANDU: Nepal Rastra Bank has conducted a study on the financial sector’s resource mobilisation under the federal structure of Nepal.

The study was undertaken with the objective to identify the situation of mobilisation of financial resources as the central bank has been prioritising to make the financial sector’s resource mobilisation effective by increasing financial access and the presence of financial institutions on a geographical and provincial basis.

The study has mainly analysed the access of financial institutions on a provincial base, deposit mobilisation and credit flow situation.

In addition to this, the study has also province-wise analysed concessional loans and refinancing facilities implemented to promote businesses operated by the poor, destitute, unemployed and various women’s groups.

All banks and financial institutions (BFIs), non-banking financial institutions and cooperatives are included in the analysis of financial access and resource mobilisation. However, this study focuses on commercial banks, development banks and finance companies’ branch expansion and business transactions.

The present study based on the analysis of various indicators shows that the access and resource mobilisation of class ‘A’, ‘B’ and ‘C’ banks and financial institutions licensed by the central bank are seen to be more concentrated in Bagmati Province while Karnali and Sudurpaschim provinces have shown less concentration. Of the total number of branches of BFIs, most of the branches are in Bagmati and the least in Karnali in the fiscal year 2077/78. Bagmati alone has 34 per cent of the total number of branches of BFIs while Karnali covers only four per cent of the total branches of the BFIS.

Bagmati accounted for 68.1 per cent of the total deposits and 56.6 per cent of the total loans mobilised by the BFIs across the country. Likewise, deposit mobilisation and credit flow are seen to be the lowest in Karnali.

In the study, financial access and mobilisation of financial resources in microfinance financial institutions are found to be more balanced province-wise in comparison to class ‘A’, ‘B’ and ‘C’ BFIs.

Moreover, the study shows that in recent years, compared to Bagmati, the mobilisation of resources have been gradually expanding in other provinces.

Likewise, access to concessional loans and refinancing have enthusiastically grown in the provinces except for Bagmati. Industrial production, agriculture and other prioritised sector and distribution of credit are becoming more balanced. However, it is seen that the demand side needs to be improved to increase the resource mobilisation in the provinces with low financial access

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