BFIs network leads to expansion of financial access

By A Staff Reporter,Kathmandu, June 7: Financial access in Nepal is on the rise, with a notable increase in the number of deposit and loan accounts, mobile banking users, and an expanding branch network of banks and financial institutions, according to the latest Economic Survey.

As of mid-March 2025, the total number of deposit accounts in banks and financial institutions reached 58.399 million, while loan accounts stood at 1.937 million. 

This year, 2.54 million deposit accounts and 44,000 loan accounts were added in the first eight months of this fiscal year.

In the same period of the last fiscal year, 31,000 loan accounts and 3.223 million deposit accounts were added.

The digital banking services also showed a significant growth. According to the survey, mobile banking users reached 26.757 million, and internet banking users totaled 2.141 million, indicating an increasing adoption of digital financial services among the population.

According to the survey, electronic payment transactions are increasing due to the development of electronic payment infrastructure, the creation of policy and legal frameworks, and the access of policyholders to electronic devices, as well as the increase in promotional activities.

As of mid-March of the current fiscal year 2024/25, nine payment system operators and 25 payment service providers, including banks and financial institutions, have been operating electronic transactions.

The average population per branch based on the number of branches of banks and financial institutions (including microfinance) has reached 2,527. Such population was 2,524 in mid-July 2024 and 2,517 in mid-July 2023.

As of mid-March 2025, a total of 107 banks and financial institutions, including 20 commercial banks, 17 development banks, 17 finance companies, 52 microfinance financial institutions and 1 infrastructure development bank, are in operation. 

The branches of commercial banks have been established at all local levels of the country. The government had set a target of expanding the services of commercial banks in all 753 local levels.

On a year-on-year basis, deposits of banks and financial institutions have increased by 9.5 per cent to Rs. 6,729.62 billion as of mid-March 2025. Such deposits were Rs. 6,145.88 billion a year ago.

Similarly, loan disbursements from banks and financial institutions to the private sector have increased by 7.7 per cent to Rs. 5,378.78 billion as of mid-March of 2025. Such loans were Rs. 4,996.53 billion same period last year.

However, the survey pointed out a decline in interest rates. The weighted average interest rate on deposit dropped to 4.54 per cent from 6.74 per cent a year ago, while the interest rate on loan rate fell to 8.40 per cent from 10.78 per cent.

Despite these positive developments, the banking sector still faces rising risks. The average non-performing loan (NPL) ratio climbed to 4.92 per cent in mid-January 2025, up from 3.73 per cent in mid-January 2024, raising concerns about asset quality and credit risk.