Development Banks in Nepal
Development Banks in Nepal: Banks are an important part of a country’s economy. There are distinct types of bank and each has its own purpose, commitments, and aims. The development bank in Nepal is one such financial institute that takes a lot of effort and commitment to push the country’s economy to the next level.
The development banks of Nepal come under the class B category whereas the Commercial banks are the class A financial institute in Nepal.
We also know development banks as DFI (Development Finance Institution) or DFC (finance company). The sole purpose of these banks is to provide risk capital to economic development projects. These banks are owned and controlled by governments or charitable institutions.
There are lots of projects coming up in Nepal both public and private. And the fact is every project needs a starting capital. That’s where development banks come into play. In short, development banks are development-oriented banks.
Types of Development Banks & The Areas It Covers
National Level Development Banks
National level development banks are those banks that operate at a national level. It provides and promotes loans and financial help to those projects operating at a national level.
They mainly invest in large-scale industry, real estate, enormous housing projects, and more. As per the latest update from NRB, Nepal has 10 national-level development banks.
NRB also announce the minimum capital requirement to start a development bank in Nepal is 2.5 Arba which equals over $20 million US dollar. Below is the list of national-level development banks in Nepal.
National Level Development Banks List & Their Interest Rates
| Banks | Interest on Savings | Interest on Fixed Deposites | ||
|---|---|---|---|---|
| Minimum | Maximum | Indivuduals | Instutationals | |
| Muktinath Bikas Bank Ltd | 4.5 | 5.25 | 9 | 8 |
| Garima Bikash Bank Ltd | 5 | 5.5 | 9 | 8 |
| Mahalaxmi Bikas Bank | 5 | 6 | 9 | 8 |
| Jyoti Bikash Bank Ltd | 5 | 6 | 9 | 8 |
| Gandaki Bikas Bank Ltd | 4.5 | 5.5 | 9 | 8 |
| Shine Resunga Development Bank Ltd | 4 | 5 | 9 | 8 |
| Kamana Sewa Bikas bank Ltd | 5.5 | 6 | 9 | 8 |
| Lumbini Bikas Bank Ltd | 5.75 | 6 | 9 | 8 |
| Deva Bikas Bank Ltd | 5 | 6 | 9 | 8 |
| Shangri-la development Bank Ltd | 5 | 6 | 9 | 8 |
| Om Development bank Ltd | 7 | 7 | 9 | 8 |
Regional Level Development Banks
Regional banks are those banks that function in a regional area. Today we have 11 regional development banks in Nepal. And the minimum capital requirement to start a regional level development bank is 50 crores to 1.20 Arba.
Below is the list of regional level development banks in Nepal.
- Tinau Mission Development Bank (TMDBL).
- Excel Development Bank (EDBL).
- Kanchan Development Bank (KADBL).
- Miteri Development Bank (MDB).
- Sahayogi Bikas Bank (SBBLJ).
- Saptakoshi Development Bank (SKDBL).
- Sindhu Bikas Bank (SINDU).
- Green Development Bank (GRDBL).
- Sahara Bikas Bank (SHBL).
- Corporate Development Bank (CORBL).
- Karnali Development Bank (KRBL).
Most banks will be added to the list in the coming future because Nepal is a growing economy. The country needs lots of investment and those financial gaps can only be filled by development banks.
Objective & Function of Development Banks
Development banks are the multi-purpose financial institution that has a broad development outlook.
Objectives – The aim of Development banks in Nepal
- Promote the industrial growth of the country.
- Make an investment to develop backward areas.
- Encourage self-employment projects.
- Increase employment opportunities by decreasing the unemployment rate.
- Encourage modernization by investing in project upgradations.
- Promote education to new areas by providing risk capital.
- Improve the capital market of the country.
Functions – The functions of Development banks are similar to other banks but there are features that make it distinct from the rest of the banks.
- Unlike any other banks, development banks do not accept deposits from the public.
- It provides short, medium, and long-term loans to public and private business units.
- Promote investment for economic development and entrepreneurial activity.
- Maintain balanced regional growth.
- It promotes saving and investment habits in the community.
- Development banks in Nepal act as a financial gap filler.
- It functions to serve the public interest rather than to make profits.
Comparison Between Commercial Bank and Development Banks
There is always confusion between commercial banks and development for the public. People who are actively involved in business and bank assistants know about the types of banks our country has and the service it offers.
Most of the people, who are only involved in normal bank transactions have no idea about development banks and other banks. Learning and understanding the country’s banking system is as important as normal education.
Understanding the banking system gives people lots of business opportunities. Lots of ideas to generate revenue and to improve the economy of the country.