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History and development of

banking in Nepal
The first commercial bank in Nepal, Nepal Bank Ltd (NBL), was established in the year 1994
B.S. This is a major milestone in the history of Nepal as the country entered into official
financial system. After the nineteen year of establishment of NBL, the Nepal Rastra Bank (NRB)
was established in the year 2013 B.S.

Rastriya Banijya and Agricultural Development Bank ltd. were established in the year 2022 and
2024 B.S. respectively. 47 years after the first bank was established in Nepal, the first privately
owned commercial bank, Nabil Bank ltd., was established in the year 2041 BS.
Seven more commercial banks were added in a decade after 2041 B.S. Only four commercial
banks were established from the period of 2051 B.S. to 2063 B.S. There are mainly two reasons
for it. In this time period the country saw the sluggish economic growth due to the maoist
insurgency. The second reason being the reluctance on issuing license by the regulatory body,
the NRB.

After the maoist insurgency came to an end in the year 2063 B.S., at least one commercial bank
was established every year till last year. The banking industry, like other sector, saw growth in
the absence of ongoing conflict. However, this sector was also not immune from poor
governance, corruptions and scandals. The government owned banks were the most effected ones
du0e to direct political interference in the banking activities.

Now again the number of commercial banks are set to decline due to the monetary policy of this
fiscal year which requires commercial banks to have paid up capital of at least Rs 8 arba by the
end of Ashad 2074. This short time frame given to quadruple the paid up capital will force banks
to merge with each other creating fewer commercial banks in coming years.
Nature of the Banking
In order to clearly differentiate banks versus other nonfinancial institutions, a bank is a financial
institution that provides banking and other financial services to their customers. A bank is
generally understood as an institution which provides fundamental banking services such as
accepting deposits and providing loans. There are also nonbanking institutions that provide
certain banking services without meeting the legal definition of a bank. Banks are a subset of the
financial services industry. Almost in any country, banks represent main pillar of financial
stability. Beside financial intermediaries, banks play an important rule as national financial
institutions which in every day of its activities deal with humans.

A banking system also referred as a system which provide and offer cash management services
for customers, reporting the transactions of their accounts and portfolios throughout the day,
trade with financial and bank's financial instruments, offer exchange of currency and disburse
different type of fund. The Banks are the main participants of the financial system in any
country. The Banking sector offers several facilities and opportunities to their customers. All the
banks safeguard the money and valuables and provide loans, credit, and payment services, such
as checking accounts, money orders, and cashier's checks. The banks also offer investment and
insurance products. As a variety of models for cooperation and integration among finance
industries have emerged, some of the traditional distinctions between banks, insurance
companies, and securities firms have diminished. In spite of these changes, banks continue to
maintain and perform their primary role accepting deposits and lending funds from these
deposits. On the other side, main advantages which differentiate bank from any other institutions,
banks are offering and deliver payment system domestically and internationally.

Banks take deposits and give the loans as financial instruments

The banks are dealing with humans
Commercial Banks (Class A)
1. Nepal Bank Limited
2. Rastriya Banijya Bank Limited
3. Agriculture Development Bank Limited
4. Nabil Bank Limited
5. Nepal Investment Bank Limited
6. Standard Chartered Bank Nepal Limited
7. Himalayan Bank Limited
8. Nepal SBI Bank Limited
9. Nepal Bangladesh Bank Limited
10. Everest Bank Limited
11. Kumari Bank Limited
12. Bank of Kathmandu Limited
13. Nepal Credit and Commerce Bank Limited
14. Laxmi Bank Limited
15. Global IME Bank Limited
16. Citizens Bank International Limited
17. Prime Commercial Bank Limited
18. Sunrise Bank Limited
19. NMB Bank Nepal Limited
20. NIC Asia Bank Limited
21. Machhapuchhre Bank Limited
22. Mega Bank Nepal Limited
23. Civil Bank Limited
24. Century Bank Limited
25. Sanima Bank Limited
26. Janata Bank Nepal Limited
27. Siddhartha Bank Limited
28. Prabhu Bank Limited