Nepal is one of the least developed countries under the rank of
Poverty line. Agriculture plays a crucial role in the Nepalese economy. The
development of Bank in Nepal is in infant stage. So, bank plays a primitive
role for the economic development of Nepal under which no other organizations
are likely to be substitute at all.
Nepal. Tejarath Adda established during
the tenure of Prime Minoster Ranoddip Sing (1933 B.S / 1877 A.D.) was the first
step towards the institutional development of banking in Nepal. Tejarath Adda
did not collect deposits from the public but gave loans to the employees and
the public against the bullion and it was not able to facilitate the growing
trade with Tibet and India. Thus, there was a “Treaty of peace and Friendship”
between the Government of Britain and Government of Nepal in 1923 A.D.(1979/80
B.S.) later, ‘Tejarath’ was replaced by the first commercial bank, Nepal Bank
Limited during the time of Juddha Shamsher in 1937 A.D.
However, the trend of modern banking
started in Nepal with the inception of Nepal Bank Limited on 1994 B.S. (1937
A.D.). Nepal Bank Limited had a herculean responsibility of attracting people
towards banking sector from pre-dominant money lenders’ net and expanding
banking services. Nepal Bank Limited was addressed by the Nepal Bank Limited
Act.
Nepal Bank Ltd. remained the only
financial institution of the country until the foundation of Nepal Rastra Bank
is 1956 A.D. Due to the absence of the central bank, Nepal Bank has to play the
role of central bank and operate the function of central bank. Hence, Nepal
Rastra Bank was established in 1956 A.D. as the central bank of Nepal. Nepal
Rastra Bank makes various guidelines for the banking sector of the country.
Nepal Rastra Bank(NRB) the Central Bank
of Nepal, was established in 1956 A.D. under the Nepal Rastra Bank Act, 1955,
to discharge the central banking responsibilities including guiding the
development of the embryonic domestic financial sector. Since inception, there
has been a significant growth in both the number and the activities of the domestic’s
financial institutions.
To reflect the dynamic environment, the
functions and objectives of the NRB have been recast by the Nepal Rastra Bank
Act 2002, the preamble of which lays down the primary functions of the Bank as;
To formulate necessary monetary and
foreign exchange policies to maintain the stability in price and consolidate
the balance of payments for sustainable development of the economy of Nepal;
·
To
develop a secure, healthy and efficient system of payments;
·
To
make appropriate supervision of the banking and financial system in order to
maintain its stability and
Similarly, Rastriya Banijya Banijya Bank
was established in 2022 B.S. as a fully government owned commercial bank. It
was established with the view that integrated and speedy development of the
country was possible only when competitive banking service reaches nooks and
corners of the country. It provides finance for agriculture productivity could
be enhanced by introducing modern agriculture techniques.
Until the mid 1908s, Nepal’s financial
sector was closed to foreign banks and was effectively controlled by state
owned banks Rastriya Banijya Bank (RBB) and Nepal Bank Limited (NBL). In 1984
A.D. policies was liberalized and banking industry was opened to private
sector. After 1984 A.D., there was a rapid entry of joint venture commercial
banks in the Nepalese financial market. In the first phase; Nabil Bank (1984
A.D.), Nepal indo –Suez Bank (1985 A.D.), and Nepal Grindlays Bank (1987 A.D.)
entered the market. In the second phase; Himalayan Bank, Nepal SBI Bank, Nepal
Bangladesh Bank, Everest Bank, Bank of Kathmandu, and Bank of Ceylon entered
the market.
Today, the banking sector is more
liberalized and modernized and systematic managed. There are various types of
bank working in modern banking system in Nepal. It includes central,
development, commercial, financial,cooperative and Micro Credit (Grameen)
banks. Technology is changing day by day. And changed technology affects the
traditional method of the service of the bank.
Banking software, ATM, E-banking, Mobile
Banking, Debit Card, Credit card, Prepaid Card etc services are available in
the banking system of Nepal. It helps both customers and banks to operate and
conduct activities more efficiently and effectively.
For the development of banking system in
Nepal, NRB refresh and change its financial sector policies, regulations and
institutional developments in 1908 A.D. government emphasized the role of the
private sector for the investment in the financial sector. These policies opened
the doors for foreigners to enter into banking sector in Nepal under joint
venture.
The NRB has classified the institutions
into “A” “B” “C” “D” groups on the basis of the minimum paid-up capital and
provide the suitable license to the bank of financial institution. Group ‘A’ is
for commercial bank, ‘B’ for the development bank, ‘C’ for the financial
institution and ‘D’ for the Micro Finance Development Banks.