Challenges of Banking Sector in Nepal

17th December 2020, Kathmandu

The banking sector in Nepal has achieved a new height with the passing of time. With the advancement of technology, the working mechanism of the banks has evolved. The trust and confidence of the people in the banking sector have increased with time. However, With the changing dynamics, many problems, and challenges of the banking sector in Nepal have been encountered.

Without any further ado, let’s move to some of the problems/ challenges of the banking sector.

Problems/Challenges of the Banking Sector

Weak corporate governance

Corporate governance is a collection of rules, practices, and processes by which the whole company is directed and controlled. Good corporate governance helps companies build trust and promote financial stability. Most of the banks in Nepal lack corporate governance.

Every bank has its own board of directors whose main duty is to make policy and check whether these policies are being properly implemented or not. The lack of proper supervision and monitoring by the top-level management has led to the manipulation of financial statements and fraud from the employees of the bank in Nepal.

The top-level management should monitor the activities happening in the bank to prevent unethical works and fraud. They should create and implement good corporate governance which most of the banks in Nepal are lacking.

Lack of adequate and skilled manpower

In the context of Nepal, banks and other financial institutions are growing day by day. New branches of the bank are being established in every nook and corner of the country. Due to which skilled manpower is lacking.

All the banks do vacancy announcements every now and then. Many candidates are selected for the branches of the bank. But it is not necessary that all the selected candidates are skilled. Many of them are unknown to the banking environment and working procedures. So, this manpower needs proper training to work effectively and efficiently.

But it is found that the banks are not providing the required sufficient training. According to Nepal Rastra Bank, 3% of staff expenses should be mobilized for the skill enhancement of the employees. However, rarely some banks follow this rule. Also, many banks are suffering the lack of manpower due to which the customers of the banks are facing problems.

Difficulty in rural access

There are common challenges of the banking sector in Nepal. We all are well known that many banks are still not able to reach the rural areas of Nepal. in rural areas, there is a lack of infrastructure. Many employees do not want to work in rural areas because of a lack of facilities and services.

Lack of infrastructures leads to problems in monitoring. Similarly, people in rural areas are not aware of banking. They have no concept of banking or depositing their money in banks. As a result, they are afraid to deposit the money in the banks. So, establishing a bank in rural areas is one of the biggest challenges of the banking sector in Nepal.


In this era of the internet, it has become the backbone of every bank. This brings the threat of cyber-attacks with it. Time and again we hear the news of cyber-attacks on the bank’s system. Most banks use pirated software which makes hacking easy for hackers.

Likewise, Nepal lacks cyber laws and strong security mechanisms. Due to all these weaknesses, cyber threats have become a big challenge of the banking sector in Nepal.

Lack of maintenance and improvement of equipment

All the banks in Nepal lack the maintenance and improvement of equipment used in banks like ATM machines, note counting machines, etc. In many places, ATM machines do not work time and often. And the broken machines are not maintained on time.

Many banks in Nepal are using old machines which are causing trouble. But still, instead of replacing them, they are using the same ones. Even the software used in banks is not updated on time.


Please enter your comment!
Please enter your name here