Nepal’s banking and financial institutions reach 106, Branch network crosses 11,500 mark

KATHMANDU: Nepal’s banking and financial sector continues to demonstrate structural expansion and economic significance, with the total number of licensed banks and financial institutions (BFIs) reaching 106, supported by an extensive branch network of 11,519 outlets nationwide, according to the latest mid-December 2025 data.

The figures reflect the regulated landscape under Nepal Rastra Bank (NRB), comprising 20 commercial banks, 17 development banks, 17 finance companies, 51 microfinance financial institutions, and one infrastructure development bank. Together, these institutions form the backbone of Nepal’s formal financial system, channeling savings into credit, supporting businesses, facilitating remittances, and driving financial inclusion across urban and rural areas.

Commercial banks remain the dominant force in the sector, operating 5,105 branches across the country. These banks play a central role in corporate lending, trade finance, infrastructure funding, and payment systems. Development banks follow with 1,131 branches, primarily serving provincial and regional markets, while finance companies operate 291 branches, focusing on hire purchase, SME lending, and niche consumer finance.

Microfinance institutions, however, continue to represent the widest physical outreach, with 4,992 branches, underscoring their critical role in rural credit delivery, women-focused lending, and poverty reduction. The presence of a dedicated infrastructure development bank, though limited in number, reflects Nepal’s long-term push to mobilize institutional finance for large-scale national projects.

Economists say the sheer scale of the BFI network has had a positive multiplier effect on Nepal’s economy. The expansion of branches over the past decade significantly improved access to formal banking, increased deposit mobilization, reduced cash dependency, and supported the rise of digital payments. As a result, financial deepening has strengthened, contributing to economic stability and improved monetary policy transmission.

The growth of BFIs has also played a key role in channeling remittances into the formal system, a critical factor for Nepal, where remittance inflows remain a major pillar of foreign exchange reserves and household consumption. Wider branch coverage has made banking services accessible even in semi-urban and rural municipalities, supporting small businesses, agriculture, and local entrepreneurship.

However, the sector is now undergoing a structural transition. After years of aggressive branch expansion—particularly in metropolitan and sub-metropolitan cities—banks are increasingly reassessing their physical presence. Industry officials note that many BFIs that once rushed to open branches in urban centers are now struggling to rationalize or shut down underperforming outlets, amid rising operational costs and the rapid shift toward digital banking.

The proliferation of mobile banking, internet banking, QR payments, and branchless banking services has reduced customer dependence on physical branches. This has prompted banks to focus more on efficiency, technology-driven service delivery, and cost optimization, rather than sheer numerical expansion of outlets.

Despite these adjustments, analysts argue that the existing branch network continues to deliver macroeconomic benefits. A strong BFI presence supports credit growth to productive sectors such as hydropower, manufacturing, tourism, agriculture, and SMEs. It also enhances employment generation, both directly within the banking sector and indirectly through financed economic activities.

Microfinance institutions, in particular, have been instrumental in promoting inclusive growth, extending financial services to populations traditionally excluded from the formal banking system. Their role in women empowerment, self-employment, and local enterprise development is widely recognized as a social and economic gain.

Regulators say the focus going forward will be on quality rather than quantity—strengthening governance, risk management, capital adequacy, and digital resilience of BFIs. The central bank has repeatedly emphasized consolidation, improved asset quality, and responsible lending to ensure long-term stability.

As Nepal’s economy navigates slower global growth, climate risks, and evolving consumer behavior, the banking and financial sector’s scale—106 institutions and more than 11,500 branches—remains a strategic asset. The challenge now lies in aligning this infrastructure with digital transformation, sustainable finance, and productivity-driven growth.

Policy experts believe that if managed prudently, Nepal’s BFI network will continue to act as a key enabler of economic resilience, supporting investment, consumption, and inclusive development in the years ahead.