Business beckons banks to Biratnagar

The proliferation of billboards advertising banks and financial institutions (BFIs) in downtown Biratnagar, the country’s largest industrial city, points to its expanding role as a financial center. 
Biratnagar not only hosts branch offices of 90 percent of the BFIs and insurance companies headquartered in Kathmandu, but is also the home of regional development banks and financial institutions.      
The increasing footprint of BFIs has been followed by rising investment in industry. As Biratnagar is the focal point of economic activities in the east, BFIs have been going to industrialists planning to start new ventures to provide information about their services. 
According to the Biratnagar branch of Nepal Rastra Bank (NRB), the number of 
branch offices of commercial banks in Sunsari, Morang, Dhankuta, Jhapa, Ilam, Udaypur and Saptari districts has reached 170 as of the end of the last fiscal year. Likewise, the number of development bank branches reached 62, finance companies 22 and micro finance development banks 37 during the same period. Half a dozen financial institutions have opened in Biratnagar during the first six months of the current fiscal year. 
Bankers said that economic activities were relatively greater in the country’s eastern region which entices BFIs to open branches here. “Also, the demographic density in the east is higher than in the west which means more clients,” said Ajay Shrestha, CEO of the Bank of Kathmandu.  
Similarly, better infrastructural development in the cities in the east is another reason behind the proliferation of BFI branches in the region. Nepal Bankers Association President Ashoke Rana says, high remittance inflow in the eastern region is another reason why BFIs are more concentrated here. The banking industry has a lot of promoters from Biratnagar, and this is one of the reasons behind the expansion here. 
According Nar Bahadur Thapa, chief of the NRB Biratnagar Branch, the central bank conducts six-monthly economic studies in the aforesaid seven districts as they are major business centres. Those districts saw a deposit growth of 13 percent and lending growth of 30 percent during the last fiscal year. Deposit mobilization in the seven districts was Rs 47 billion while credit flow amounted to Rs 58 billion. 
A majority of industrialists in the east are based in Morang, and they operate factories in the Sunsari-Morang corridor and in Jhapa and Ilam. “The factories located in the industrial corridor provide lending opportunities to banks,” said Shrestha.  Out of the total lending worth Rs 18.27 billion extended to these districts, the manufacturing industry received Rs 12.96 billion, and construction received Rs 4.15 billion.  
Statistics show that Morang received the major chunk of the credit amounting to Rs 13.51 billion issued by banks. “The number of banks has increased, and so have their areas of service,” said Thapa.
(Published at The Kathmandu Post Daily on 18th Jan 2012)