Nepal Rastra Bank (NRB) has tightened regulations following the widespread closure of branchless banking service centers by banks and financial institutions. The new provisions make it more difficult for banks to shut down these centers, which were originally set up to expand financial access in areas without traditional bank branches.

Under the revised directive, banks can only close a branchless banking center if alternative financial services—such as other banks, financial institutions, or branchless banking centers—are available within a five-kilometer radius. Previously, NRB had allowed closures only with its approval, provided the centers had been inactive for six months and financial access had expanded through other banks. Now, the requirements have been further tightened.

An official from NRB’s Payment Systems Department said the stricter rules were introduced due to the increasing number of closure of branchless banking. “Banks were citing various reasons for shutting down these centers, so the process has been clarified in the directive,” the official stated. “Our goal is to ensure the public continues to have access to financial services through alternative means when branchless banking centers close.”

NRB introduced branchless banking in 2011 to provide financial services in areas where opening full-fledged bank branches was impractical. While these services expanded steadily for nearly a decade, closures have risen since mid-June 2021.

According to NRB data, 1,065 branchless banking centers were in operation as of mid-January 2025, serving over 299,000 customers. In mid-June 2021, the number of branchless banking facilities stood at 1,700, with a customer base of more than 230,000. However, banks began closing them, and despite the number of customers surpassing 320,000 by mid- June 2023, the trend of shutdowns has continued.

The expansion of branchless banking gained momentum after the 2015 earthquake, when donor agencies provided financial support. The Saksham Project, funded by the UK’s Foreign, Commonwealth & Development Office (formerly DFID), helped establish these services in 14 earthquake-affected districts and remote areas of the Far and Mid-Western regions. However, the closure rate increased after external support ended.

Bankers argue that financial institutions are shutting down branchless banking centers due to financial losses. Bhuwan Kumar Dahal, former president of the Nepal Bankers’ Association, stated that the relevance of branchless banking has declined with the expansion of bank branches and digital transactions.

NRB introduced branchless banking to provide simple and convenient financial access in underserved areas. Under this system, banks appoint local representatives—such as traders or service providers—to offer banking services in remote locations. These representatives assist residents with opening accounts, depositing and withdrawing funds, processing remittances, and disbursing micro-loans using bank-provided devices.