KATHMANDU, OCT 15, 2012
Due to the increased outreach of financial institutions in the designated remote districts, the central bank will now provide interest free loans to set up branches in only 17 districts instead of 30.
Issuing a circular, Nepal Rastra Bank (NRB) has announced that banks and financial institutions opting to open branches in Bhojpur, Khotang, Okhaldhunga, Rasuwa, Manang, Rolpa, Rukum, Salyan, Jumla, Mugu, Humla, Kalikot, Dolpa, Jajarkot, Bajhang and Darchula districts only will be eligible for interest free loans from the central bank.
“The number of districts with a minimal existence of financial institutions has gone down in the last couple of years, as financial access in the 13 districts that have been left out is satisfactory following the interest free loan provision,” said spokesperson for NRB Bhaskar Mani Gyanwali.
NRB had, in December 2010, decided to extend interest free loans to commercial and development banks to encourage them to venture into remote areas to improve financial accessibility. The financial institutions could avail interest free loans for up to Rs five million to open branches in the 30 designated districts.
If banks opt to open branches outside the district headquarters they are entitled for loans of up to Rs 10 million. Under this provision, Rs 60.65 million has been provided to financial institutions, comprising of Rs 40 million to five commercial banks for their seven newly opened branches, Rs 2.5 million to two development banks for their three branches, and Rs 1.5 million to one microfinance development bank for a new branch, in the last fiscal year.
In fiscal year 2010-11, Rs 150 million was loaned to six commercial banks and five development banks. A provision of interest free loan was made to enhance financial inclusion through expansion of financial institutions in areas with limited access to organised finance.
According to Nepal Living Standard Survey-III, 39.9 per cent households have access to a commercial bank’s branch within 30 minutes walk radius at present, whereas 15 years back, only 20.7 per cent households had access to banks within the radius. According to International Monetary Fund’s Financial Access survey, there are two branches of commercial banks per 100,000 adults in Nepal.
The same circular has also forbidden financial institutions from opening microfinance institutions providing subsidy headquartered outside nine districts that are devoid of banking facility only.
Such microfinance institutions can start operations only in Manang, Humla, Dolpa, Kalikot, Mugu, Jajarkot, Bajhang, Bajura and Darchula districts. Likewise, microfinance institutions operating in those nine districts only can collect deposits that are five times their primary capital.
New cheque standards
Nepal Rastra Bank (NRB) has introduced Cheque Standards and Specifications guidelines to bring uniformity in cheques issued by financial institutions. “For electronic cheque clearance system to work effectively, cheques issued by different financial institutions need to be uniform, so NRB has amended the cheque specifications to suit electronic clearance,” said spokesperson for NRB Bhaskar Mani Gyanwali. Nepal Clearing House started operations from February 2012, providing automated cheque clearing service which used to earlier be performed manually at NRB. “Moreover, these specifications will also strengthen the security features of the cheques to avoid any instances of fraud,” added Gyanwali.
Source: THT
Due to the increased outreach of financial institutions in the designated remote districts, the central bank will now provide interest free loans to set up branches in only 17 districts instead of 30.
Issuing a circular, Nepal Rastra Bank (NRB) has announced that banks and financial institutions opting to open branches in Bhojpur, Khotang, Okhaldhunga, Rasuwa, Manang, Rolpa, Rukum, Salyan, Jumla, Mugu, Humla, Kalikot, Dolpa, Jajarkot, Bajhang and Darchula districts only will be eligible for interest free loans from the central bank.
“The number of districts with a minimal existence of financial institutions has gone down in the last couple of years, as financial access in the 13 districts that have been left out is satisfactory following the interest free loan provision,” said spokesperson for NRB Bhaskar Mani Gyanwali.
NRB had, in December 2010, decided to extend interest free loans to commercial and development banks to encourage them to venture into remote areas to improve financial accessibility. The financial institutions could avail interest free loans for up to Rs five million to open branches in the 30 designated districts.
If banks opt to open branches outside the district headquarters they are entitled for loans of up to Rs 10 million. Under this provision, Rs 60.65 million has been provided to financial institutions, comprising of Rs 40 million to five commercial banks for their seven newly opened branches, Rs 2.5 million to two development banks for their three branches, and Rs 1.5 million to one microfinance development bank for a new branch, in the last fiscal year.
In fiscal year 2010-11, Rs 150 million was loaned to six commercial banks and five development banks. A provision of interest free loan was made to enhance financial inclusion through expansion of financial institutions in areas with limited access to organised finance.
According to Nepal Living Standard Survey-III, 39.9 per cent households have access to a commercial bank’s branch within 30 minutes walk radius at present, whereas 15 years back, only 20.7 per cent households had access to banks within the radius. According to International Monetary Fund’s Financial Access survey, there are two branches of commercial banks per 100,000 adults in Nepal.
The same circular has also forbidden financial institutions from opening microfinance institutions providing subsidy headquartered outside nine districts that are devoid of banking facility only.
Such microfinance institutions can start operations only in Manang, Humla, Dolpa, Kalikot, Mugu, Jajarkot, Bajhang, Bajura and Darchula districts. Likewise, microfinance institutions operating in those nine districts only can collect deposits that are five times their primary capital.
New cheque standards
Nepal Rastra Bank (NRB) has introduced Cheque Standards and Specifications guidelines to bring uniformity in cheques issued by financial institutions. “For electronic cheque clearance system to work effectively, cheques issued by different financial institutions need to be uniform, so NRB has amended the cheque specifications to suit electronic clearance,” said spokesperson for NRB Bhaskar Mani Gyanwali. Nepal Clearing House started operations from February 2012, providing automated cheque clearing service which used to earlier be performed manually at NRB. “Moreover, these specifications will also strengthen the security features of the cheques to avoid any instances of fraud,” added Gyanwali.
Source: THT
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