Nepal's banking industry leads the region in female representation but significant barriers remain in having more women in leadership roles: IFC Report

With 46 per cent female representation in its entry-level workforce, the banking industry in Nepal is ahead of other countries in South Asia in achieving gender parity. However, only 23 per cent of senior management roles are held by women, according to a new IFC report that examines gender diversity at six leading banks in Nepal.

The study—among the first of its kind in the region— identifies opportunities that can enable more women to advance to senior roles in the banking industry in South Asia.

This multi-country study, Women’s Advancement in Banking in Emerging South Asian Countries, focuses on commercial banks in Bangladesh, Nepal, and Sri Lanka, where women constitute 30 per cent of the banking sector’s workforce compared to the global average of 52 per cent, the report reads, underlining how several barriers—inequitable hiring, inadequate professional development, lack of fair evaluations, sociocultural constraints, and others—curtail women’s career growth prospects across the region.

“Diversity, equity, and inclusion are central to IFC’s work values," IFC country manager for Nepal, Bangladesh, and Bhutan Martin Holtmann said, adding that through nuanced, data-driven insights emerging from this new report, it is hoped to deepen the industry discourse around steps that need to be taken to improve the status of women in the banking workforce across South Asia.

In Nepal, women hold 42 per cent of all positions in surveyed commercial banks. Comparable figures for  Sri Lanka and Bangladesh are at 38 per cent and 18 per cent respectively. In senior management roles, women hold 23 per cent of executive positions in Nepali banks, compared to 20 per cent in Sri Lanka and 12 per cent in Bangladesh, the report adds.

Past studies have shown that commercial banks that have 15 per cent or more women in senior manager or higher roles, command up to 33 per cent higher return on equity than banks that do not. A growing body of evidence further links an increase in women’s representation in organizations to better performance on business metrics.

Accordingly, IFC's key findings and recommendations intended to help industry actors—executive managers in commercial banks, policymakers, industry bodies, and investors—direct their efforts to boost women’s representation in leadership in the banking industry.

The report recommends targeted efforts in four areas by banks and industry actors. These include establishing clear organisational commitments for gender diversity, the support system for women to reach leadership positions, policy changes to ensure workplace safety, and initiatives to support women's professional development and work-life balance.

“Nepal has a strong legal framework to promote women’s economic participation in the country. And these provisions are more comprehensive than other countries in South Asia,” said Holtmann. “While these progressive policies have allowed Nepal to be a leader in the region, more needs to be done to increase the number of women in leadership positions and to reach gender parity.”

IFC’s $56 million loan to Global IME Bank in February 2024 earmarked 25 per cent towards supporting women-owned small and medium enterprises (SMEs). Additionally, IFC investment in various banking and financial sector clients such as NMB Bank, Sanima Bank, and Siddhartha Bank  have been able to provide economic opportunities, and financial services to SMEs including those led by women.

Some 286 branchless banking points to open in underserved regions

Seven banks are opening 173 branchless banking points in 14 districts affected by the devastating earthquake of April 25.
Seven commercial banks and Sakchyam Access to Finance Program signed an agreement today to open 173 Branchless Banking (BLB) outlets in 14 districts affected most severely by the earthquake. "As part of the partnership, Citizens Bank, Global IME Bank, Nepal Investment Bank, NMB Bank, Rastriya Banijya Bank, Sanima Bank and Siddhartha Bank have already setup 55 branchless banking points with the remaining to be established by the end of November," a statement read.
The launch of these crucial financial services comes at a point when the financial sector is under pressure to provide quick access to financial services in far-flung areas of the 14 districts.
The central bank is moving aggressively to expand branchless banking outlets throughout the country in line with its monetary policy, Nepal Rastra Bank governor Dr Chiranjibi Nepal said, addressing the signing ceremony. "The central bank is committed to working with banks and the government to provide a sustainable basis for expanding its goals of financial inclusion and expediting government to people (G2P) payments in an efficient manner," he added.
"The establishment of delivery points and making them sustainable holds key in achieving financial inclusion," joint secretary at the Finance Ministry Suresh Acharya. "The government intends to establish the right incentives for banks working with the central bank to rollout G2P and other cash transfer programmes, through networks such as the ones created by banks with Sakchyam support," he added.
Likewise, director general at the Department of Civil Registration Basanta Raj Gautam said that the government was finalising pricing structure for its implementation. "We have had presentations from Sakchyam on the basis for pricing and been looking at international as well as our own experiences to date," he said, adding that government would work closely with the banks to develop a sustainable model for delivery of G2P services.
Likewsie, reiterating the Government of UK's commitment to accelerate the deepening of access to financial services in rural Nepal, Economic Development Team Leader at DfID Gareth Weir, said that the active deliberation will enable retail finance and G2P payments through the banking sector.
On the occasion, Sakchyam Team Leader Baljit Vohra briefed about Sakchyam's achievements. "Sakchyam is supporting opening of 286 branchless banking outlets in mid and far-west and in quake-affected districts," he said, adding that the transformational BLB strategy includes the use of Point of Sale (PoS) machines, mobile phones and tablets enabled through agents, extensions counter and physical branches to rollout micro-banking products, G2P payments and value chain financing models that will further deepen financial-service penetration for households and enterprises in the remotest areas of the country.

Sanima Mai Hydropower upgrades , signs a pact of around Rs 400 million as an additional financing facility

An existing consortium of 11 financial institutions led by Laxmi Bank signed a supplementary facility agreement with Sanima Mai Hydropower today to finance the capacity up-gradation of upcoming 22 MW Mai run of the river Hydropower Project being constructed at Mai Khola of Ilam district.

The project is being upgraded from 15.6 MW to 22 MW at an additional cost of around Rs 400 million, said Laxmi Bank that has led the consortium that includes Nabil Bank, Grand Bank, Bank of Asia, Janata Bank, Nepal SBI Bank, Kumari Bank, Bank of Kathmandu, Siddhartha Bank, Machhapuchchhre Bank and Ace Development Bank.

Sanima Mai Hydropower signed the Power Purchase Agreement (PPA) for upgraded capacity with Nepal Electricity Authority (NEA) on March 21 and the Rs 3.1 billion project received Generation License from the Ministry of Energy on July 6.

The company is promoted by 49 institutional and individual promoters including Sanima Group, Non-Resident Nepalese (NRNs) and hydropower experts and professionals.

The lenders have committed to finance about 75 per cent of the project cost with the remaining 25 per cent to be invested by the promoters.

Sanima Mai Hydropower — with the upgraded capacity of 22 MW — expects to contribute around 128.29 GWh of power annually to the nation and will be one of the largest independent power producers, when it comes into operation in July 2014.

Current liquidity short term phenomenon: Governor

The current liquidity surplus is a short term phenomenon, according to the central bank governor Dr Yubraj Khatiwada.
"The current liquidity is a short term phenomenon whereas there is a long term credit demand," he said, addressing the official inauguration of the youngest commercial bank, Sanima Bank, here in the Valley today.
Currently the banks and financial institutions have added around Rs 85 billion deposits, and are in the comfortable position against last year's tight liquidity situation, though the loanable liquidity is very limited.
The financial sector should move ahead with other sectors, he said, adding that the sector alone cannot sustain the economy in absence of other sectors that are performing poorly currently. "It’s time the banks and financial institutions think of long-term investment instead of short-term investment and profit maximisation."
The financial institutions should increase their capital base to invest in the long-term. Suggesting the banks and financial institutions to invest in productive sectors like agriculture, Khatiwada said that the banks and financial institutions are competing on profit maximisation in the short term, which will not support the economic growth. "Development of real sector is key in the overall economic development that will ultimately benefit the banks and financial institutions too. There may be less profit but small farmers are also bankable and the banks should look to the villages, where there is immense opportunity."
The long term investment in the productive sector, despite less benefit, is sustainable, he suggested.Sanima Bank — the 32nd bank — will also help mobilise domestic and foreign investment in the productive sectors, he said, hoping that Nepal Investment Year 2012-13 will benefit from the bank that is promoted by the Non-Resident Nepalis Association (NRNA) that would help invite foreign investment in the country. "The bank could help make Nepal Investment Year successful."
Indicating that Sanima Bank will be the last commercial bank for the time being, central bank governor also said that the paid up capital is not the measuring rod of a commercial bank. "There are other indicators like good governance."
The bank's chairman and president of the NRNA Jeeba Lamichhane promised to maintain good governance in the institution. "We have maintained good governance in our bank and will maintain it," he said, adding that the bank is providing scholarships to some 16 students of 10+2 level apart from training to 40 youth of its eight branches in the rural areas. "The bank has allocated Rs 5.3 million for such programmes," he added.

'Do not expect dividend soon'
KATHMANDU: Central bank governor Dr Yubraj Khatiwada requested the investors not to expect dividend immediately. "The banks and financial institutions should have patient and increase their capital base instead of immediate profit and dividends," he said, suggesting them to maintain capital adequacy more than the central bank's prescription to cushion the future risks. "The country is passing through the transition and the banks and financial institutions and investors should change their tendency of immediate dividend rather think of long-term strong capital base," he warned.

Nepse resumes Sanima share trading

Nepse resumed the share trading of the youngest commercial bank from today."Sanima Bank has been allowed to resume share trading from today," according to the Nepal Stock Exchange (Nepse).
"Though there was no transaction of Sanima's shares today, there were sellers offering the bank's shares at Rs 254 per unit," a broker said, adding that the trading of then Sanima Bikas Bank had been suspended since June 12, 2010 when it had formally started the process to upgrade to avoid any manipulation in the prices.
Share holders of the newly upgraded commercial bank — Sanima Bank — will now be able to trade their shares at the stock exchange, according to Nepse that has been recently blamed for stopping the trading of shares without providing any reason which had hurt investor sentiment.
Investors blamed the front line regulator Nepse — during an interaction at the Finance Ministry — of being ineffective in making the listed companies play by the rules, which has discouraged investors.
The last share price of the bank stood at Rs 497 per share before trading was halted someone and a half years back.

Sanima Bank's share trading to resume soon

Share holders of the newly upgraded commercial bank - Sanima Bank - will be able to trade their shares at the stock exchange within the next two weeks.
Trading of then Sanima Bikas Bank had been suspended since 12 June, 2010 when it had formally started the process to upgrade as per Nepal Rastra Bank (NRB)'s order to avoid any plausible manipulation in share prices.
NRB stamped the final approval on the transformation of the national level development bank to the 32nd commercial bank, Sanima Bank, last week.
"We have already written a letter to Nepal Stock Exchange (Nepse) to start the process for the resumption of share trading which will resume within the next couple of weeks," said chief executive of Sanima Bank Kumar Lamsal.
The stock exchange has a listing committee that will determine the come back price of the bank's shares as it has asked for the resumption of trading, said an official at Nepse, adding that the price will be fixed according to Nepse' calculation mechanism.
The last share price of the bank stood at Rs 497 per share before closing of its trading. Since then the bank has issued rights shares that tend to bring down share prices, so we can expect the opening price to be lower than the last traded price, said Lamsal.
The central bank regulation requires financial institutions seeking to upgrade or merge to suspend their share trading at Nepse.
Earlier, when NMB Bank, DCBL Bank and Kist Bank were still finance companies and looking to upgrade to commercial banks, share prices of these institutions were manipulated, pushing prices unnaturally high.
Sanima was established as a national level development bank in 2004 and is promoted by Non Resident Nepalis. The bank's annual general meeting had decided to upgrade the development bank to a commercial bank in December 2009. In order to increase the capital to Rs two billion, it had issued rights shares on the basis of 1:1.5 ratio.
The bank then had a paid up capital of Rs 806 million. Subsequent bonus and rights issues have raised the bank's paid up capital to Rs 2.02 billion as per the requirement set by the central bank for a class 'A' financial institution.