Diminishing Development Banks: Six out of twenty running in profit

Kathmandu. In the midst of all the turmoil and deterioration of the economy triggered by COVID-19 and the government shutdown, the development banks in Nepal also felt a bad blow. During the lockdown, the banking sector was kept as an essential sector and the banks only took deposits and made payments.

 In the last fiscal year, development banks created a net profit of Rs. 3.78 billion, which is 21.93 percent lower than in the previous year. The main cause of the bank’s decline in profits was the reductions in interest rates.

In addition to the rescheduling and restructuring of loans, the market for loans remained at zero, impacting the earnings of the development bank. However, bank deposits have skyrocketed due to a lack of economic activity due to the lockdown.

Out of the 20 development banks that were on operation in the last fiscal year, only six had an increase in profit. While the remaining 15 development banks had to face a loss.

Among the banks that did earn profits in the last year last fiscal year Shine Resunga Development Bank had a profit of 11.28 percent, Tinau Mission Development Bank had a profit of 14.34 percent, Miteri Development Bank had a profit of 10.31 percent, Excel Development Bank had a profit of 5.04 percent, Green Development Bank had a profit of 65.81 percent and Narayani Development Bank had a profit of 167.06 percent.

Out of all the developments bank, Muktinath Development bank earned the most net profit, whereas Salpa Development Bank, has incurred the most loss in the last fiscal year

According to Nepal Rastra Bank, the existence of nine development banks has been scrapped in the last fiscal year due to mergers and acquisitions. Dev Development Bank ceased to exist after the merger of Om Development Bank and Kumari Bank with NMB Bank. Similarly, the Gandaki Development Bank and the Citizen Bank ceased to exist after the acquisition of Mega Bank.

After the acquisition of Shine Resunga, Bhargava Development Bank and Purnima Development Bank, have also ceased to exist this year. Similarly, following the creation of the Tinau Mission Development Bank, the Community Development Bank was also scrapped last year.

Similarly, since the acquisition of the Prime Commercial Bank, the Kailash Development Bank and the Kankai Development Bank has ceased to exist.