No immediate plans to issue new bank licenses, says Deputy Governor Dhungana

Kathmandu: Deputy Governor of Nepal Rastra Bank, Neelam Dhungana, has stated that the central bank is not in a position to issue new banking licenses at present.

Speaking at a program held in Kathmandu on Sunday, Dhungana acknowledged discussions surrounding the establishment of new banks but clarified that licensing new institutions is not feasible at this time.

“There hasn’t been much time since we began talking about unhealthy competition in the banking sector,” she remarked. “Several banks have faced problems recently, prompting a wave of mergers rather than expansions. Just two years ago, Nepal Rastra Bank itself published a report stating the optimal number of banks should be around 15 to 18. Now, it wouldn’t be wise to abruptly change course and start approving new banks again.”

Dhungana stressed the importance of evidence-based decision-making and warned against hasty moves without thorough study or solid justification. Regarding digital banking, she noted that if the need for such specialized institutions arises, the central bank would first need to conduct comprehensive studies before considering any new openings.

She reaffirmed Nepal Rastra Bank’s continued commitment to ensuring stability in the banking sector through monetary policy regulations and other essential provisions. Dhungana emphasized that the central bank is carefully monitoring the current status and trajectory of banks and financial institutions across the country.

Highlighting the achievements in the banking system, she cited the expansion and modernization of the financial sector, increased access to financial services, modernization of payment systems, diversification of financial products, and effective implementation of capital strengthening policies as key milestones that have supported broader economic stability.

Dhungana also addressed the lingering impact of the COVID-19 pandemic and subsequent global economic disruptions, which have hindered Nepal’s economic momentum in recent years. However, she expressed cautious optimism, noting that although key economic indicators contracted last year, signs of gradual recovery are now beginning to emerge.