Concept of Commercial Banks of Nepal

The commercial banks are those banks, which are

established to accept deposits and grant loan to the
industries, individual and traders with a view to earn
profit. Apart from financing, they also render services
like collection of bills and cheques, safekeeping of
valuables, financial advising etc. to their customer
S.no Head Office
Commercial Banks
1 Nepal Bank Limited Dharmapath
2 Rastriya Banijya Bank Singhadurbar Plaza
3 NABIL Bank Ltd. Nabil house, Kamaladi
4 Nepal Investment Bank Ltd. Durbar Marg
5 Standard Chartered Bank Nepal Ltd. New Baneswor
6 Himalayan Bank Ltd. Tridevi Marg
7 Nepal SBI Bank Ltd. Hattisar
8 Nepal Bangladesh Bank Ltd. New Baneswor
9 Everest Bank Ltd. Lazimpat
10 Bank of Kathmandu Ltd. Kamaladi
11 Nepal Credit and Commerce Bank Ltd. Siddhartha nagar
12 Lumbini Bank Ltd. Narayangadh
13 Nepal Industrial and Commercial Bank Ltd. Biratnagar
14 Machhapuchhre Bank Ltd. Pokhara
15 Kumari Bank Ltd. Putalisadak
16 Laxmi Bank Ltd. Birgunj
17 Siddhartha Bank Ltd. Kathmandu
18 Agriculture Development Bank Ltd. Kathmandu
19 Global Bank Ltd. Birgunj
20 Citizens Bank International Ltd. Kamaladi
21 Prime Commercial Bank Ltd. Newroad
22 Bank of Asia Nepal Ltd. Tripureshwor
23 Sunrise Bank Ltd. Gairidhara
24 Development Credit Bank Ltd. Kamaladi
25 NMB Bank Ltd. Babarmahal
26 KIST Bank Ltd. Anamnagar
 Although bank can be categorized into different types on the basic of its function, objectives
etc, World Bank always refers to the commercial bank.1 Basically the functions of commercial
bank all over the world are same of Basic functions are various types of deposits facility namely
currently save and fixed safety of public money remittance of money guarantee locker facilities,
letter of credit, loans serving as agent of credit, foreign exchange, etc. The commercial banks of
Nepal also do all these functions
Mainstream function of commercial bank remains the mobilization rigid and scattered saving of public
for providing credit to needy firm industry or people to get productive use. All other function can be
said as auxiliary function. Commercial banks are a profit oriented financial service institution where
certain amount of interest is given to the deposits and a certain rate of interest is charge by the bank
in the loan facility. The second charge interest rate is higher than the first. It is the main earning of
the bank.

According to Nepal Company Act 2031 B.S, a commercial bank refers to such type of bank
which deals in money exchange accepting deposit advance loan and commercial transaction
except specific banking related to co-operative agriculture industry and other objective. Basic
source of funds of commercial bank are capital reserve, undistributed profit and several of
deposits. Basic uses of the funds are loans advance and investment
Posted by cusine at 5:29 AM

Home » Business » 21 Function of Commercial Banks in Nepal with Role and Authority

21 Function of Commercial Banks in

Nepal with Role and Authority
by Jitendra Sahayogee 2 Comments

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21 Function of Commercial Banks in Nepal

with Role and Authority
This post is about Function of Commercial Banks in Nepal. This post also includes functions,
role, and authority of commercial bank in Nepal.

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Before going to the topic function of Commercial Banks in Nepal, Let’s discuss first what is a
bank?
Introduction of bank
A bank is an organization, which deals with money and credit. The bank may be a company,
firm, business, organization or person, which is involved in lending and borrowing activities. In
modern term, we can not say that bank activities are limited to just borrowing and lending. This
is a very primitive concept. In modern concept, the bank is an institution that deals in monetary
transactions. Monetary transactions mean dealing in money and credit. It accepts the deposits
from different sectors in different accounts and provides loans of different types to the needed
sector.

Some definitions of
the bank from experts:
According to R.S. Sayers, “a bank is an institution whose whole debts are widely accepted in
settlement of other people’s debts.”

In the words of Crowthese, “the banker business is to take debts of other people to offer his own
in exchange and thereby create money.”

According to Horace white, ‘bank is manufacturer of credit and money so facilitating exchange.”

Origin of the word “bank’

The word bank is derived from the Italian word ‘Banco’ that means bench. The early years,
people transacted their business at benches in the market place in Italy. When people failed in
business their benches, (Banco) was broken up and the word bankrupt derived. The word bench,
which was termed as “Banco” in Italy, was used, as Back” in the German language, “banke” in
French and “bank” is England So, the word bank derived to this world.
See Also: Central banking system in Nepal

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Summary of Bank Introduction

Therefore, bank means ‘a financial institution which accepts deposits gives a loan, exchange or
issue money, performs financial functions, control credit and perform agency functions.

Introduction of Commercial bank

Commercial banks are an institution which accepts deposits, makes business loans,
and offers related services. Commercial banks also allow for a variety of deposit accounts, such
as checking, savings, and time deposit. These institutions are run to make a profit and owned by
a group of individuals. In Nepal, Nepal Rastra Bank is the central bank of Nepal. Nepal Rastra
Bank, the governing body of banking and financial institution has categorized the bank and
financial institution in four distinct categories. i.e. ‘A’ Class, ‘B’ Class, ‘C’ class and ‘D’ class
institutions. Commercial banks are categorized under A class banks in Nepal. These categories
of banks in Nepal differ according to capital and service provided by them.

Commercial bank are taken as the backbone of eth nationas well as the helping hands of
National bank. When we talk about the commercial banks of Nepal, there are all together many
banks having many branches. Commercial bank mostly plays the role of supporting the economy
by investing the huge amount through their different function they gives the services of various
helps to the person of nation for promoting their living standard. When people get connect with
commercial bank,they get the chance of improving their standard of life. Commercial banks are
also the moving parts of nation that stands out in every remote to Urban places for facilitating
the customer by their services.in Nepal also, the government always come ahead for opening
the branches in remote to urban area. Cash revolution is only possible by the establishment and
opening of bank everywhere. Cash can be only collectedin huge amount by the people of nation
through its channel. Country can only step up their growth with its help becauseit takes more
courage and concuss about their growth.

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That is why,, the commercial bank are always in the search of beat places to expand their
network or branch. Commercial banks mostly deals with all types of customer and always is
always inclines to provides their best services to customer. It have also the special features of
clasping all the customer without analyzing and evaluating by dress up and faces. It does the full
advocacy of national growth. As we know that the nations runs and forms theireconomic
collection by the help of banks and their services. Government also plays role to grasp the
economic condition ofnation by its fluxion of money and creating scarcity. Commercial banks
are the main pillar for making the economic growth increment and improvement that effects the
national economic growth by its services, many people get chance to channel their condition
and misery of life. That is why commercial bank is commonly known as the financial institution
which deals with motto of accepting deposits, announcing loans, granting welfare services if
needed and other relevant services too.

According to Culbertson,—“Commercial Banks are the institutions that make short make short
term bans to business and in the process create money.” If we highlights the other role of
commercial bank then we can see that it is mostly based on profit motives. The commercial
bank are organized and opened with the themes of earning the profit least for welfare and
socialization objectives. Commercial banks in Nepal mostly highlights their earning from
providing the loans to small businessman, merchant and industrialist and other class of people
for various purposes. There also exist government commercial banks which explores the reason
of establishment for national growth and people welfare but working mostly for collecting the
higher profits which is exposed by their financial statement.Commercial bank in Nepal are
operating their services w by many channels from urban to rural by their different services.

Total number of commercial banks in Nepal

There are 28 commercial banks in Nepal. Here are the list of agrade commercial bank of Nepal
which are operating its luxurious services through their networks and channel to lower to higher
class people.

1. Nepal Bank (ननननननननननननननननन)

2. Rastriya Banijya Bank Limited (नननननननननननननननननननननननननननन)
3. Agriculture Development Bank Limited (ननननननननननननननननननननन)
4. Nabil Bank Limited (नननननननननननननननन)
5. Nepal Investment Bank Limited
(नननननननननननननननननननननननननननननन)
6. Standard Chartered Bank Nepal Limited
(ननननननननननननननननननननननननननननननननननननन)
7. Himalayan Bank Limited (ननननननननननननननननननन)
8. Nepal SBI Bank Limited (ननननननन.नन.नन. नननननननननननन)
9. Nepal Bangladesh Bank Limited (ननननननननननननननननननननननननननन)
10. Everest Bank Limited (ननननननननननननननननननन)
11. Kumari Bank Limited (नननननननननननननननननन)
12. Bank of Kathmandu Limited (ननननननननननननननननननननननन)
13. Nepal Credit and Commerce Bank Limited
(नननननननननननननननननननननननननननननननन)
14. Laxmi Bank Limited (ननननननननननननननननननन)
15. Global IME Bank Limited (ननननननननननननननननननननननन)
16. Citizens Bank International Limited
(नननननननननननननननननननननननननननननननन)
17. Prime Commercial Bank Limited (ननननननननननननननननननननननननननन)
18. Sunrise Bank Limited (नननननननननननननननननन)
19. NMB Bank Nepal Limited (ननननननननननननननननननननननन)
 20. NIC Asia Bank Limited (नन.नन.नन. ननननननननननननननननन)
21. Machhapuchhre Bank Limited (नननननननननननननननननननननननन)
22. Mega Bank Nepal Limited (ननननननननननननननननननननन)
23. Civil Bank Limited (ननननननननननननननननन)
24. Century Bank Limited (नननननननननननननननननननन)
25. Sanima Bank Limited (नननननननननननननननननन)
26. Janata Bank Nepal Limited (ननननननननननननननननननननन)
27. Siddhartha Bank Limited (ननननननननननननननननननननन)
28. Prabhu Bank Limited (ननननननननननननननननन)

Click here to see the total name list and detail of all the commercial banks in Nepal.

Types of commercial banks

There are many commercial banks in Nepal but have their capital right to specific person only
and they runs the banks in their personal decision. But there also exist some of the banks which
have other systems and man to circulate it. There are three types of commercial banks and they
are:

Private sectors:
Commercial banks also run under the instruction of particular person because they have their
capital investment. So in that commercial organization, only particularperson runs the whole
bank because of their more percentage of investment.Individual and private business hold the
large percent of share due to that, they do saw their sway in the institution. In Nepal also, there
are many private sector commercial banks like as Sanima bank, Prabhu bank, NIC bank, NCC
bank, Everest bank and many other else. In all these banks, large amount of capital investment is
hold by any individual and particular groups.The recruitment and selection of employee for
vacant post are acted by nepotism rather to select the best candidates. These banks mostly
registers the banks as limited company to collect the more capital by announcing the share.
Although, the decision making is done by some particular person.

Public sectors:
Public sectors is the combination of capital by both party that is government and private sectors
too. It is taken as the formationof both capital which helps to stands in giants size.Government
also invest their amount and capital to operate the banking sectors. In some sectors government
self invest eth huge amount to makes the bank full in their own rights. This is also taken as
governmental commercial banks due to large part of amount is invested by government. Mainly
it is seen that the government hold the equity of 51% or more and rest percentage of equity is
hold by private sectors. In it all the systems are operated by the coordination and cooperation of
both sectors through mutual meeting and suggestion or discussion. Such public sectors or
governmental commercial banks are Agricultural development bank, Rastriya Banijaya bank,
Nepal bank and other too.
Foreign sectors:
It also defines the commercial banks which are established and operates under the instruction of
foreign investors. The banks is operated under the investment of commercial banks because its
investor are from outside the country Nepal.The decision and system is also operated according
to them. It has its head office in some other country and operating its banking channel in other
countries as multination companies. This is also taken as the foreign investment in Nepal.The
foreign sectors commercial banks are Everest bank, SBI bank, Standard chartered bank,Nabil
bank and other too. All the commercial banks deals for fulfilling the financial requirement of
public.

Functions of commercial bank in Nepal

Commercial banks deserves their role in more portion to conduct their system.There are many
function of commercial bank which are furnished below:

Primary function:
1. Accepting the deposit:
It deals with the collection of deposit which is its first function. The banks also does not have the
entire amount as it also collection the amounts for further purpose.The amount collected are
deposited into their personal accounts by giving the guarantees. In today time, person do not
want to keep the huger amount in their pocket or in their cupboard because of many offending
expectation. People do not want tosee anyone success and stepping upward.Commercial banks
provides the trust to them and convince to deposit their amount in daily, monthly and weekly
basis however you get easy.

The amount are deposited into three accounts having three objectives and three features: Fixed
account,Current account, Saving account. All the account have their different features. Bank
provides interest of their depositing amount according the account. Fixed account get high rates
of interest than other, then saving account and current account. Current account have not any
barriers of depositing and withdrawing of amount because banks does not provide them interest
in high portion. But in fixed account, there is barriers of time forwithdrawing the deposited
amount according to agreement because it provides you large percentage of interest. Many
people earn and deposit their amount portion in their personal account according to their earning
portion.

2. Providing the loans:

The next function of commercial banks is providing the loans to needy people it provides the
loans to businessman, merchant, farmers and other too who demands. As bank collects the
deposit, they are invested as loans into the market to gain profit.The difference between the
interest rate that they pay in depositing amount and providing loans amount is taken as profit of
bank including all the expenses. Loans are also provided in term wise that is short term, medium
term loan and long term loan.

The term of loan is classified according to the amount that he takes as loan. When there is bound
made for paying the loan within or less that one years then it taken as short term loan. If the
contraction is done for paying the loan in less than 3 years then it is medium loans. It loan
amount is higher than short term loan. And the high terms loan is repayed in and above 5 years.
The amount and portion of loan defines the period of time for repayment. Mostly the industrialist
and merchant takes the long term loan because of their large network business and short term
loan is taken by small businessman. Where the short term loan is mostly taken by Macro
industrialist, farmers and handicraft industry. loan are given on the base of mortgage . Mortgage
is evaluated first and then only on the base of it, the loan is provided. Mostly it is estimated that
bank provideonly 40% of loan after evaluating the value of assets for giving mortgage loan.
Loan are given after the analysis of property of loan taken taking some days for analyzing.