Current Situation of Commercial and Development Banks in Nepal

In recent years, Nepal's financial sector has experienced significant growth. Access to banking services has expanded across the country, including in rural areas, with increased adoption of information technology. Notably, Nepal has the lowest share of non-performing loans (NPLs) in South Asia, reflecting a relatively healthy banking environment.

Due to effective policy implementation and continuous reforms in the financial sector, access to finance has improved significantly, and financial transactions are expanding rapidly.

As of mid-March 2025, a total of 139 banks and financial institutions (BFIs) are in operation, including:

• 20 Commercial Banks

• 17 Development Banks

• 17 Finance Companies

• 57 Microfinance Institutions

• 1 Infrastructure Development Bank

Branch Network of Banks and Financial Institutions

The branch expansion of BFIs has been notable in recent years. As of the latest data:

• Total branches of all BFIs in Nepal: 10,430

• Province with the most branches: Bagmati Province (2,677 branches)

• Province with the fewest branches: Karnali Province (406 branches)

Province-wise Distribution of Bank Branches

The distribution of commercial and development bank branches across Nepal’s provinces is presented below:

Table: Province-wise Status of Commercial and Development Bank Branches in Nepal

Analysis and Conclusion

• Bagmati Province leads with the highest number of branches for both commercial and development banks, housing 35.42% of commercial bank branches and 27.40% of development bank branches.

• Karnali Province remains the most underserved, with only 4.12% of commercial bank branches and 1.59% of development bank branches.

• This demonstrates a highly unequal geographical distribution of banking services, with the majority concentrated in urban and economically active regions like Bagmati.

To ensure inclusive economic development, efforts should be made to increase banking penetration in remote provinces, particularly in Karnali and Sudurpaschim.