Nepal's central bank lets banks merge branches, but not dismiss the staff who run them
New rules allow banks to consolidate urban branches if they open rural ones, give customers 90 days' notice and transfer, not lay off, employees.
Nepal Rastra Bank has written rules for something banks were already doing. The central bank has amended its Unified Directives to set out how banks and financial institutions may consolidate branches, ShareSansar reported on 9 October. The rules allow mergers of branches but attach conditions on staff, customers and rural access.
The most direct condition concerns jobs. Banks may not dismiss employees because of a branch consolidation. Affected staff must be transferred to nearby branches, with consideration given to their preferences and consent, according to ShareSansar.
The conditions
For every four urban branches a bank closes through consolidation, it must open at least one new branch in an underserved rural ward. Rural branches cannot be closed, relocated or merged without the central bank's prior approval. Banks must announce a consolidation 90 days in advance in national newspapers, on their websites and on boards at the branch. Customers may repay loans or stop using services at the affected branch without penalty. After a consolidation, the bank must update the central bank's reporting portal within three working days.
Why now
The network is already shrinking. Commercial banks had 4,941 branches at mid-July 2026, down from 5,099 a year earlier, a fall of 158, according to Nepal Rastra Bank's banking statistics. Across all banks, development banks and finance companies, the count fell from 6,522 to 6,347. The figures include head offices and extension counters. Branchless banking centres, small outlets used mainly in remote areas, fell from 822 to 681, and ATMs from 5,263 to 5,115.
Customers have moved online. Mobile banking customers rose from 27.7m to 30.1m over the same year, while deposit accounts rose from 59.9m to 63.4m. Kantipur reported in March that banks in the Kathmandu metropolis were merging branches as ATM withdrawals declined and digital payments grew. Central bank payment data for the month to mid-August show QR payments up 77% on a year earlier, while ATM withdrawals fell 12% in number.
Mergers between banks have also played a part. The number of commercial banks fell from 30 to 20 over the past decade, as described in our account of the merger wave, and each merger combined two branch networks.
Cost pressure adds to the case. Commercial banks' net interest income barely grew in 2025/26, while their staff costs rose 4.4% to Rs 62.7bn and office operating expenses reached Rs 37.2bn, according to the central bank's statistics. Closing a branch saves rent and running costs. The new rule means it cannot also save on salaries.
The rules reflect two goals that pull in different directions. Banks want to cut costs in crowded cities, while the central bank wants to keep extending financial access to places where digital banking is still limited. The four-for-one requirement pushes some of the savings from urban consolidation into rural expansion. The ban on dismissals protects bank employees, but it also limits how much banks can save, which may slow the pace of consolidation.
What to watch
The central bank's monthly statistics will show whether the branch count falls faster now that the process has clear rules, and whether new rural branches appear in the wards the rule targets. Banks' first-quarter results, expected in November, will show whether staff and operating costs keep rising.
How this story was made: researched and written by The Standard’s desk with AI assistance, from the published reporting and official data credited below, and checked against those sources. Our standards.
