Kathmandu. Banking history of Nepal is long. During this period, the number of banks and financial institutions has reached 271. Before the 2040s, banking practices in Nepal were minimal. However, after the government adopted the policy of financial liberalization in the 2040s, the private sector entered the banking sector. And, the order of opening one bank after another increased.

Since the 2040s By the year 2074, 271 banks and financial institutions had reached. During that period, 32 commercial banks, 95 development banks, 87 finance companies and 57 microfinance financial institutions received licenses from the National Bank.

However, due to the large number of banks and financial institutions, it became difficult for the National Bank to regulate and supervise, so the National Bank started to reduce the number. In the meantime, the National Bank has put forward various tools to reduce the number.

As the number of banks and financial institutions increased with the investment of the private sector, due to unhealthy competition and lack of institutional governance, some institutions would become problematic, their licenses would have to be revoked, and related officers would have to be prosecuted.

In order to prevent and control such activities, the National Bank realized the need of competent and small banks and financial institutions by increasing capital and moved forward the policy of merger/amalgamation and acquisition process.

The number of banks and financial institutions has been drastically reduced as per the National Bank's wishes, and currently only 126 banks and financial institutions are operating. According to the statistics of National Bank, 26 commercial banks, 17 development banks, 17 finance companies and 65 microfinance financial institutions are operating. This number seems to decrease further. In order to reduce the number, the Rastra Bank has also arranged concessions for the organizations going for mergers and acquisitions. The National Bank is currently emphasizing on reducing the number of commercial banks and microfinance.

At one time there were 32 commercial banks, but now they are limited to 26. As some banks are in the process of merger and acquisition, this number is sure to decrease further. So far, 20 commercial banks have participated in mergers and acquisitions. According to the National Bank, these banks have merged and acquired 67 different banks and financial institutions.