KATHMANDU, MAR 19 -
The Nepal Rastra Bank (NRB) will not allow banks to charge customers service fees on deposits collected through point of transaction (POT) machines—a type of branchless banking service.
The central bank’s decision came after some banks sought its approval to charge customers on deposits and withdrawals carried out through POT machines. However, the NRB has said nothing about the charges on withdrawals.
Mega Bank, which stared this service three months ago, had sought NRB approval to charge the service users 5 percent on deposits and 10 percent on withdrawals, according to NRB sources. “We notified Mega that it cannot charge any fees on deposit collection,” said a senior NRB official. “The same will be applicable for all other banks.”
Central bank officials said it was unusual for banks to charge fees on deposits as their earnings come from resources made available by depositors.
In its recent directive, the NRB has also barred banks and financial institutions (BFIs) from charging customers any king of service fees on deposits following complaints from depositors that banks were charging fees in the name of account maintenance. “The same principle applies to deposits collection under branchless banking service,” said the official.
Mega is running a pilot branchless banking service in Chautara, Sindhupalchwok, and plans to expand the service in other areas.
Mega Bank CEO Anil Shah said they would accept the NRB decision, adding they were, however, committed to their expansion plan. “As this service increases inclusion in the financial sector, we hope that the government will help us,” said Shah.
The central bank has allowed Mega and Siddhartha Bank, which had also sought a similar approval from the NRB, to expand the service to 15 places across the country.
With the urban market reaching saturation levels and untapped resources available in rural areas due to increased remittance, banks are seeking to expand their reach into rural areas.
Banking services are more concentrated in urban areas, with banks collecting 95.3 percent of their deposits from cities and towns, and disbursing 97.1 percent of their loans to these places, according a recent NRB report.
With remittance flowing into rural areas on a large scale and branchless banking not requiring setting up of bank branch, more banks are planning to start this service.
Citizens Bank International is one of them. The bank has applied to the central bank to launch the service. “We want to prove that there are abundant resources in villages,” said Citizens CEO Rajan Singh Bhandari.
Bhandari said they too plan to charge a certain fee on the service. The fee would be less that the amount people have to spend to travel to a bank branch, he said.
Everest Bank, the pioneer in branchless banking in Nepal, has been providing the service in 28 places across the country. It charges Rs 100 for the smart card required for carrying out transactions through POT machines, but not on deposits and withdrawals.
“There is no profit in this business, but we started to increase banking habit among rural people,” said Humnath Gurung, deputy general manager of Everest. “Instead, we have been paying a certain charge to software developer and our agents assigned for carrying out deposits and withdrawals through POT machines.”
Source: Kantipur
The Nepal Rastra Bank (NRB) will not allow banks to charge customers service fees on deposits collected through point of transaction (POT) machines—a type of branchless banking service.
The central bank’s decision came after some banks sought its approval to charge customers on deposits and withdrawals carried out through POT machines. However, the NRB has said nothing about the charges on withdrawals.
Mega Bank, which stared this service three months ago, had sought NRB approval to charge the service users 5 percent on deposits and 10 percent on withdrawals, according to NRB sources. “We notified Mega that it cannot charge any fees on deposit collection,” said a senior NRB official. “The same will be applicable for all other banks.”
Central bank officials said it was unusual for banks to charge fees on deposits as their earnings come from resources made available by depositors.
In its recent directive, the NRB has also barred banks and financial institutions (BFIs) from charging customers any king of service fees on deposits following complaints from depositors that banks were charging fees in the name of account maintenance. “The same principle applies to deposits collection under branchless banking service,” said the official.
Mega is running a pilot branchless banking service in Chautara, Sindhupalchwok, and plans to expand the service in other areas.
Mega Bank CEO Anil Shah said they would accept the NRB decision, adding they were, however, committed to their expansion plan. “As this service increases inclusion in the financial sector, we hope that the government will help us,” said Shah.
The central bank has allowed Mega and Siddhartha Bank, which had also sought a similar approval from the NRB, to expand the service to 15 places across the country.
With the urban market reaching saturation levels and untapped resources available in rural areas due to increased remittance, banks are seeking to expand their reach into rural areas.
Banking services are more concentrated in urban areas, with banks collecting 95.3 percent of their deposits from cities and towns, and disbursing 97.1 percent of their loans to these places, according a recent NRB report.
With remittance flowing into rural areas on a large scale and branchless banking not requiring setting up of bank branch, more banks are planning to start this service.
Citizens Bank International is one of them. The bank has applied to the central bank to launch the service. “We want to prove that there are abundant resources in villages,” said Citizens CEO Rajan Singh Bhandari.
Bhandari said they too plan to charge a certain fee on the service. The fee would be less that the amount people have to spend to travel to a bank branch, he said.
Everest Bank, the pioneer in branchless banking in Nepal, has been providing the service in 28 places across the country. It charges Rs 100 for the smart card required for carrying out transactions through POT machines, but not on deposits and withdrawals.
“There is no profit in this business, but we started to increase banking habit among rural people,” said Humnath Gurung, deputy general manager of Everest. “Instead, we have been paying a certain charge to software developer and our agents assigned for carrying out deposits and withdrawals through POT machines.”
Source: Kantipur
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