Origin and Development of Bank in Nepal

The growth of banking in Nepal is not so long. The history of banking sector is rather slowing evolutionary. Even now the banking system is still in the evolutionary phase. In Nepal, the origination of banks started through Sahu (Goldsmith), Mahajan (Merchant) and Sunuwars.
Even though the specific date of the beginning of money and banking deal in Nepal is not obvious, it is speculated that during the region of the Mandev, the coin “Manank” and “Gunank” during the region of the Gunkmadev were in use. Similarly evidence of minted coin of Amsuvarma in 7th century and the coin of Jishu Gupta are also found.
Towards the end of 11th century during the time of Jayasthiti Malla Tankadhari was in front in banking transaction, it gave money to the people against the fixed interest rate and other extra dues in loan advanced. Here “Tanko” is money or piece and “Dhari” means the owner of the money. People kept land and goods as pledge and utilize the money in personnel and business use.
During the tenure of the Prime Minister Ranadip Singh (1933 B.S.) an institution called “Tejarath Adda” was established for simple banking against the security of gold, silver and ornaments. However it accepted no deposits from public. For the development of commercial sector “Tejarath Adda” was converted into Nepal Bank Limited in 1994 B.S.
The modern banking system in Nepal started from the establishment of Nepal Bank Limited with paid up capital of Rs. 84,500 on November 1937. After this, development of banking sectors and monetary policies was recognized. As a result on 14th Baisakh 2013 B.S. Nepal Rastra Bank was established as a central bank. Before the establishment of NRB, Nepal Bank Limited was only the bank which controlled and conducted monetary transaction of foreign currency and other transaction within the country.
After the establishments of NRB all banks which are running in Nepal conducted according to policy, rules and direction of NRB. In 2022 as a milestone Rastriya Banijya Bank (RBB) was established. It was fully a government owned commercial bank of Nepal. After the establishment of RBB banking service spread to both urban and rural area of Nepal. In 2024 Nepal Industrial Development Corporation (NIDC) and Agricultural Development Bank were established. In order to operate all commercial banks uniformly under a single act Commercial Bank Act 2031 was enacted with several amendments. In 2041 B.S. Government of Nepal established rural development banks under the control and supervision of Nepal Rastra Bank.
In 2042 B.S. Banking sector turn to a new era due to adaption of liberal, free economy policy. Government of Nepal allowed establishing other joint venture banks under collaboration with foreign banks as well as private sector. Due to the adaption of this policy Nepal Arab Bank limited (NABIL) was established in 29th Ashadh 2041 as first joint venture bank which provided to be a milestone in the banking. It has pioneered the systematic, reliable and global banking system with professionals, skilled employees and modern technologies which have contributed for the change of classical banking arena of Nepal.
Although there were huge losses of government owned two banks Nepal Bank Limited and Rastriya Banijya Bank Ltd, the positive progress of private and collaborated bank given confidence to the banking sector of Nepalese economy, as a result, there were huge number of banks, finance companies and micro finance companies are competing in current Nepalese market. The Central banks has classified financial institutions in different categories according to their limitation of services and capital structures. At present there are 25 “A” class commercial banks, 58 “B” class development banks, 78 “C” class Finance companies, 12 “D” class micro credit development banks, 16 Saving and credit co-operative (limited banking , licensed by NRB) and 48 Non Government Organization ( Licensed by NRB). The lists of authorized