Banks Begin Merging Branches in Metropolitan Cities

Following a directive from Nepal Rastra Bank (NRB) allowing banks to close or merge branches within metropolitan city areas at their discretion, several banks have begun consolidating their operations. NRB issued guidelines last Monday permitting banks and financial institutions to adjust or merge their branches within metropolitan cities, giving them greater flexibility in managing their networks. Less than a week later, Nepal Investment Mega Bank announced that it would merge 10 branches across Kathmandu and Lalitpur.

According to NRB regulations, banks must issue a 90-day public notice before implementing branch mergers. In compliance, Nepal Investment Mega Bank stated that operations from the merged branches will begin from March 26. Under the plan, the Lazimpat branch will merge with Naxal, Khichapokhari with New Road, Teku with Tripureshwar, and New Baneshwor, Chabahil, and Kalanki branches will merge with other branches at the same locations. In Lalitpur, the Kumaripati branch will merge with Lagnkhel, and the Jawalakhel branch will merge with another branch at the same site.

Banks had previously requested NRB approval to close branches due to unhealthy competition from multiple branches in the same area and the rise of electronic transactions, which reduces the need for in-person banking. Some branches in other districts had also been operating at a loss for years, prompting requests for closures. Commercial banks alone applied to close 200 branches, citing a downturn in credit flow and rising non-performing loans that have reduced revenue and increased the need to cut operational costs.

The current fiscal year’s monetary policy included provisions for branch adjustments, which NRB operationalized through its recent directive. Earlier, a Banking Sector Reform Recommendation Committee led by Dr. Rewat Bahadur Karki had suggested allowing banks to close branches, emphasizing that financial access should not be compromised.

Bhuvan Kumar Dahal, a committee member and former president of the Nepal Bankers’ Association, noted that branch locations should be determined based on population, and closures should ensure continued access, especially in rural areas.

NRB spokesperson Guru Prasad Paudel added that urban areas with high electronic transaction volumes do not require multiple physical branches, enabling banks to merge branches safely. “Currently, the policy allows closures only within metropolitan cities. Further study is needed before implementing this in rural regions,” he said.

According to NRB data, as of mid-November 2025, commercial banks operate 5,104 branches, development banks 1,134, and finance companies 291, totaling 6,529 branches nationwide. While branch closures require NRB approval, the central bank has allowed merger of branches at the same location of banks which have merged. This has led to a gradual reduction in branch numbers and slowed expansion in recent times.