Types of Development Bank

In Nepal, development banks are established under the provision of Development Bank Act, 2052. Nepal Industrial Development Corporation (NIDC), Agriculture Development Bank Ltd., Rural Development Bank and a number of private development banks have already been established as development banks in Nepal under this Act.

Agriculture Development Bank Ltd.

The bank, which is established to develop the agricultural sector of the country, is called Agriculture Development Bank (ADB). It is established with the objective of providing institutional credit and enhancing the production and productivity of the agricultural sector in the country. This helps to improve the living standard of the farmers. Small farmers can have easy access for bank loans to finance their small projects with the help of agriculture development bank. It also provides financial assistance for short-term and mid-term.

At present, Agriculture Development Bank performs banking functions as well. It was converted into the commercial bank from development bank since 2062/12/02. It accepts deposits from individuals and organizations, grants loans to business houses. It act as the agency functions on behalf of them.

Industrial Development Bank

Industrial development bank is the bank that provides financial and technical assistance for the promotion and development of the industrial sector of the country. To develop the industrial sector of the country, the industrial development bank was established. It is established with the objective of ensuring industrial credit to industrialist for the overall development of the industrial sector.

In Nepal, Nepal Industrial Development Corporation (NIDC) was established in 2016 B.S. under NIDC Act, 2016 as the industrial development bank. It has got authorized capital of Rs. 250 millions.

Rural Development Bank

The bank which is established to help the people of rural areas to generate income by providing micro credit services under group guarantee without collateral is known as a rural development bank. These bank provides financial assistance as well as organizes different types of training programs for carrying out different types of jobs. The main objectives of establishing rural development bank are to provide micro-credit to the poor, encourage the poor to save, empower women and develop their leadership skills and create ample opportunities for self-employment. It was established through a joint collaboration of the government, Nepal Rastra Bank, and Commercial Banks.

In Nepal, such banks are established under the provision of Banks and Financial Institutions Act, 2004. Rural development bank has already been established in each development region of the country. It accepts deposits as group saving as well as personal saving. It has got authorized capital of Rs. 300 millions.

List of Rural Development Banks in Nepal

Private Development Bank

Private development banks are incorporated as public limited companies and operated under the Development Bank Act, 2052. The private development banks mobilizes more financial resources and provide technology know-how needed for the establishment and expansion for private enterprises. These banks help in the increment of capacity and productivity of these private enterprises. They are allowed to collect deposits as per the instruction issued by Nepal Rastriya Bank. These banks grant loans to the individuals as well as corporations in the private sector against the security place.

The private development bank mobilizes their resources for the promotion and development of industrial, agricultural and tourism areas. In Nepal, 33 private development banks have already been established.