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Banks branching out too much
- 216 branches opened last FY; NRB says consider risk factor
KATHMANDU, JUL 17 -
With the stiff competition among the increasing number of banks, the banking sector saw quite an expansion.
As many as 216 new branches were opened by commercial banks in the last fiscal year, surpassing last year’s 194 branches. The total number of bank branches has now reached 968.
Sashin Joshi, president of the Nepal Bankers’ Association, said that competition among banks to increase their customer base led them to spread their wings aggressively in emerging towns.
The branch expansion drive actually took off after 2006. In the last three years, more branches have opened across the country, especially in semi-urban areas.
The last week of fiscal year 2009-10 saw some of the commercial banks opening as many as six branches a week. Lumbini Bank, which recently got Nepal Rastra Bank’s approval to expand its branches after its financial status improved significantly, opened six new branches last week.
Kumari Bank on July 11 added six more branches to its network in western Nepal.
However, it was KIST Bank that was way ahead of competitors when it came to branch expansion. The bank opened 25 new outlets this fiscal year, bringing the total to 51. Sunrise and Siddhartha Bank followed KIST with 19 and 15 branches, respectively.
B.N. Gharti Magar, chief business officer of Kist Bank, said the reason behind banks rushing to set up branch offices was to increase the customer base amid tough competition. Now, the banks are focusing more on operational risk management. Even NRB had told the KIST to halt its expansion drive, according an NRB official.
The NRB official also said
that the central bank was mulling taking measures to discourage branch expansion explosively without paying proper attention to risk management. “It is good to see more branch expansion in the rural areas especially by the strong and established banks,’ said the central bank source.
Standard Chartered and Nepal Bangladesh Bank established a branch each while Janata Bank, which commenced operations on April 28, added two branches within a month. With Janata Bank entering the financial market, the number of commercial banks in Nepal has reached 27.
Posted on: 2010-07-18 08:43
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