Nepalese Bank

Until the mid 1980's, NepalÐ''s financial sector was closed to foreign banks and was effectively controlled by state owned banks RBB and NBL. In 1984, policies were liberalized and banking industry was opened to private sector. After 1984 there was rapid entry of joint venture commercial banks in the Nepalese financial market. In the first phase Nabil Bank (1984), Nepal Indo-Suez Bank (1985) and Nepal standard chartered bank (1987) entered the market. In the second phase Himalayan bank, Nepal SBI Bank, Nepal Bangladesh Bank, Everest Bank, Bank of Kathmandu, Bank of Ceylon entered the market. Later 6 domestic owned banks entered the banking industry. Altogether there 17 commercial banks in the country as of mid- July 2004.The number of commercial banks branches is 423 of which 375 are branches of commercial banks and other 44 Agriculture Development Bank's branches.

In Nepalese banking industry there is a lack of product/ service differentiation. All banks are offering the same traditional banking products like deposit schemes, loans, remittances, L/C, guarantee facility to their customers. Only the big and established banks are providing new services like ATM, credit card, tele banking, networked banking and e-banking. Banks like Himalayan, Nabil and Standard Chartered are the pioneers in introducing innovative and modern banking products in the market.

Banking industry is accumulating high level of NPA. Every player in the industry is focusing on making profit and increasing market share, resulting in unhealthy competition. Banks are competing through interest rate reduction, issuing loans irrespective of borrowers' credibility and authenticity. In course of making their credit bigger and short term profits banks are becoming least visionary.

Nepalese banking industry requires innovation in quality and quantity of services being provided to the customers. But limited attempts are being made. Product differentiation is required to withstand vigorous competition. Concepts like merchant banking, inter bank