Rastra Bank flexible on branch adjustment, but prohibits staff removal
Nepal Rastra Bank has introduced a flexible provision for banks and financial institutions to adjust and merge branches. However, it has prohibited staff removal due to adjustment and made prior approval mandatory for closing branches in rural areas.
Kathmandu. Nepal Rastra Bank has introduced a new provision regarding branch adjustment and relocation of banks and financial institutions. The central bank amended the unified directive to bring this provision in the context of increasing electronic payment transactions and the significant number of branches of financial institutions.
According to the new provision, banks and financial institutions can now adjust or merge their branches located in metropolitan cities. Similarly, branches located within sub-metropolitan cities and municipalities can also be adjusted or merged subject to specified conditions. Branches located in urban and semi-urban areas can also be adjusted or merged.
While adjusting or merging, among branches operating within a distance of one kilometer, only other branches within the same distance can be adjusted or merged, ensuring that at least one branch remains.
Similarly, after adjusting or merging and closing every four branches, a new branch must be opened in a ward of a rural area where no branch of any bank or financial institution exists. Details of this must be submitted to the Bank and Financial Institution Regulation Department and the concerned Supervision Department of Rastra Bank.
Banks and financial institutions cannot close, relocate, or merge branches or any type of office located in rural municipalities and rural areas without prior approval from Rastra Bank.
Adjustment or merger means a situation where two or more branches of a licensed institution are merged into one branch. For the purpose of classifying branches during adjustment and merger, the urban, semi-urban, and rural areas mentioned in Schedule-3 of the latest report on the hierarchical classification of rural and urban areas in Nepal published by the National Statistics Office shall be considered.
Importantly, staff working at the concerned branch cannot be removed from service due to branch adjustment or merger. After such adjustment or merger, staff must be transferred to the nearest branch or to another branch based on preference and consent.
While adjusting branches, it must be ensured that the financial access of the area is not adversely affected. Within 3 working days of branch adjustment, it must be updated on the reporting portal of Rastra Bank, and details as per Schedule 14.2 must be submitted to the Bank and Financial Institution Regulation Department and the concerned Supervision Department of Rastra Bank.