Nepal

Nepal’s government wants everyone to have access to a bank and has ordered a branch in each of the country’s 753 districts. Asiamoney journeys to one of the poorest and most remote parts of Asia, high in the Himalayas, to see if its grand financial-inclusion plan is working.

Chaos and upheaval in Nepal have given way to growth and stability, and investors have taken note. Capital is flowing in from India and China, while the government pushes ahead with securing its inaugural credit rating, but can the good times last?

Digital mobile banking is about to take off in a big way in Nepal. The landlocked state boasts a young and tech-savvy population, a cellphone penetration rate of roughly 130% according to state operator Nepal Telecom, and a banking system that has finally recognized the pressing need to embrace the digital age.

Nepal is the classic market for small and medium-sized enterprises. It is fair to say that for decades, SMEs have formed the backbone of the economy. Nepal had very few big companies and a large number of people who lacked access to a formal bank account.

Launched in 2010 with paid-up capital of $14.8 million, Mega Bank has cleared every obstacle placed in its way. Size is no longer an issue, thanks to five judiciously timed and priced acquisitions and mergers, and its local initial public offering, in 2013, was 22 times oversubscribed.

Nepal’s financial economy is a work in progress: the country has too many banks, and way too many bad banks. There are too few big companies, so the investment banking divisions of commercial lenders tend to be an afterthought. But there are some exceptions, and Nepal Investment Bank is the best of these.

Strong and sound, government-owned Rastriya Banijya Bank (RBB) has provided quality financial services to customers in the public and private sectors ever since it first opened its doors in 1966, and its 218 branches, which serve more than three million customers, can be found in even the most remote corners of the country.

By any measure, Standard Chartered Bank is one of the best commercial lenders in Nepal and the clear leader among the foreign banks. It has been in Nepal since 1987, when it registered as a joint venture. It has since listed on the Nepal Stock Exchange. With 12 branches dotted around the country, including four in Kathmandu, it plays an important role in the domestic financial system. In an overbanked market, its name suggests stability, safety and respectability, while its low cost of funding gives it a competitive edge.