December 1: Banks of Nepal have been receiving various awards from international organizations but such awards are limited to the category of ‘best bank in Nepal’. The banks of Nepal are yet to receive international awards at the South Asian, Asian, or other international levels.
Why hasn't the banking sector of Nepal received any international recognition even after eight decades of history? What do stakeholders say?
London-based The Banker magazine has been awarding banks from around the world in various categories. Nepali banks do participate in it. The banks have received the 'Bank of the Year' award which is the best among the banks of Nepal. But they have not yet received the award for being the best bank in South Asia or the Asia-Pacific region.
So far, NMB, Investment Bank, Mega Bank, Global IME Bank, and Standard Chartered Bank of Nepal have received the Bank of the Year award from The Banker. However, the banks here have not received the award for being the best bank in South Asia or Asia, or for being at the forefront of digitization, working, or contributing in the areas of sustainable banking, environment, and social management.
When asked about the reasons why are Nepali banks deprived of such awards, bankers said that they do not want to take such awards as they have to pay fees and provide various information. Some other bankers replied that there are better banks in South Asia than Nepali banks.
According to Ratna Raj Bajracharya, Chief Executive Officer (CEO) of Global IME Bank, most of the banks of other South Asian countries look better in some aspects by the standards of The Banker because their market is larger than that of Nepal.
"Nepali banks still have a long way to go," he said.
This means that the backwardness of Nepali banks seems to be the criteria set by the organisers of the awards. The organizing bodies have set such standards and criteria that are hardly practices in Nepal.
According to Pranu Singh, head of corporate affairs, brand, and marketing at Standard Chartered Bank of Nepal, the banks of Nepal must have contributed to the regional level for being decorated with the regional award.
As the banks of Nepal are unable to show any initiative taken at the international level, they are deprived of international awards, argues Singh.
The Banker has been giving such awards by setting the standard for banks' strategic initiatives, digital initiatives, sustainable banking initiatives, sustainable banking practices, institutional good governance, and environmental and social management systems. It is said that Nepali banks do not meet some of these standards.
Especially Nepali banks have not done much in the field of environment and social management. Also, Nepali banks are not leading much in international partnerships. As a result, Nepali banks have not been able to get such an award, experts say.
Similarly, Nepali banks are lagging in strategic leadership. The Banker evaluates the diversification of funds by raising funds from local bonds and international credit markets and investing in small businesses, and the flow of green loans.
Similarly, emphasis has been laid on green investment under the Sustainable Banking Initiative. Under this category, The Banker looks at investments in projects that make the country self-sufficient in green energy.
Since Nepali banks have not started investing in hydropower and solar energy for a long time, Nepali banks may be lagging in this regard. But it can be expected to improve gradually.
Another criterion evaluates investment in the productive and real sectors. Nepali banks might be lagging behind because the major investment of Nepali banks is in the import business.
Experts opined that in the aftermath of the Covid-19 pandemic, the organizers of the international awards recognized the banks that kept their system afloat along with those able to serve their customers better at the time of crisis.