Summary of Key Financial Highlights of Development Banks and Finance Companies as of Mid October 2022

Without a doubt, the Bank and Financial Institutions during the month of Asoj were experiencing economic instability as a result of market swings, given the increasing interest rates, inflation, and overall worldwide recession. Financial institutions' primary business revenue also gets affected as a result of the monetary policy's higher interest rate bar, which may be advantageous for some financial institutions and detrimental to others. In 2021, we saw the effects of dropping interest rate bars, greater provisions, and a halt in economic activity. Let's examine how the scenario for financial institutions has changed this year.

There are different classes of BFI's in Nepal. However, we will be analyzing the financial performance of “B” and “C” class financial institutions; Development Banks, and Finance Companies as of Ashoj end, 2079 ( Mid October 2022) as published by Nepal Rastra Bank (NRB).

Development Banks:

As per the NRB’s report till Ashoj end, 2079, Muktinath Bikas Bank Limited (MNBBL) has the highest paid-up capital amounting to Rs. 5.67 Arba among all the development banks. Garima Bikas Bank Limited (GBBL) has the second-highest paid-up capital amounting to Rs. 4.59 Arba.

On the other hand, the Capital Adequacy Ratio (CAR) which signifies the ratio of a bank's capital in relation to its risk-weighted assets and current liabilities of a development bank ranges from a lower than 73.02% to as high as 121.60%.   

Muktinath Bikas Bank Limited (MNBBL) has topped the list with a total deposit of Rs. 1.07 Kharba. This list is followed by Garima Bikas Bank Limited (GBBL) with a total deposit of Rs. 71.33 Arba.

Also, Muktinath Bikas Bank Limited (MNBBL) has disbursed the highest amount of loans which amounts to Rs. 91.28 Arba. Narayani Development Bank Limited, which was also released from the list of problematic institutions on 2077/04/22, had the highest level (81.92%) of lending in Agriculture, Micro, Cottage and small industry/enterprise, Energy and Tourism.

Finance Companies:

Among 15 non-problematic finance companies, Manjushree Finance Limited (MFIL) has the highest paid-up capital of Rs. 1.35 Arba followed by ICFC Finance Limited (ICFC) and Reliance Finance Limited(RLFL) with Rs. 1.27 Arba and Rs. 1.05 Arba respectively.

As of the NRB report, ICFC Finance Limited (ICFC) has been able to collect the highest deposit from its customers of Rs. 18.41 Arba. Similarly, Manjushree Finance Limited (MFIL) has been able to collect Rs. 11.82 Arba in a deposit.

In terms of Loans and advances, ICFC Finance Limited (ICFC) has provided loans and advances of Rs. 14.30 Arba followed by Manjushree Finance Limited (MFIL) and Pokhara Finance Limited (PFL) of Rs. 10.98 Arba and Rs. 10.14 Arba respectively.

On the other hand, Nepal Rastra Bank has announced two finance companies - Nepal Share Markets and Finance Ltd and Capital Merchant Banking and Finance Ltd as Problematic Finance Companies with a paid-up capital of Rs. 23.33 Crores and Rs. 93.50 Crores, respectively.