Bank Mergers in Nepal: Timeline of How 27 Banks Became 20

As of mid-2025 Nepal has 20 commercial banks (locally called 'A-class' banks), down from 27 at the peak in 2016. The reduction was not caused by bank failures but by a deliberate policy of consolidation led by Nepal Rastra Bank (NRB), the central bank. Through mergers and acquisitions, seven commercial banks disappeared as independent brands between 2019 and 2023, most of them in a single dramatic burst during the 2022/23 fiscal year.

A merger combines two institutions into a new or continuing entity with a mutually agreed share-swap ratio, while an acquisition sees a larger bank absorb a smaller one, which then loses its licence and name. In practice the two terms are used loosely in Nepal, and NRB treats both as 'M&A' for regulatory purposes. The end result is the same: fewer, larger banks with bigger capital bases.

Nepal's banking system is tiered into commercial banks (A-class), development banks (B-class), finance companies (C-class) and microfinance institutions (D-class). The consolidation described here hit all four classes, but the most watched deals were among the A-class commercial banks, whose branded mergers reshaped the top of the market.

The single biggest driver was capital. In its Monetary Policy for fiscal year 2072/73 BS (2015/16 AD), NRB ordered commercial banks to raise their minimum paid-up capital roughly four-fold, from Rs 2 billion to Rs 8 billion, with development banks and finance companies facing proportionate hikes. Banks were given until mid-July 2017 to comply. Many smaller banks could not raise that much fresh equity from the market alone, so merging with a peer became the fastest way to meet the threshold.

NRB had laid the legal groundwork earlier with its Merger Bylaw of 2068 BS (2011 AD), issued under the Banks and Financial Institutions Act (BAFIA). The first-ever merger under this framework combined two finance-sector institutions into H&B Development Bank, sparking a trend that would eventually pull dozens of institutions together. NRB later reinforced the push with acquisition regulations and repeated monetary-policy incentives.

To make consolidation attractive rather than purely coercive, NRB bundled in incentives for merging BFIs (banks and financial institutions): relaxed cash-reserve-ratio (CRR) and statutory-liquidity-ratio (SLR) requirements for a transition period, eased credit-to-deposit limits, cooling-off exemptions for directors and executives, and more time to meet sectoral lending targets. The stated goal was to strengthen the risk-bearing capacity of the system, reduce unhealthy competition among too many small banks, and build institutions large enough to fund big infrastructure projects.

The list below traces the deals that removed brands from the roster of A-class commercial banks. Most of the decisive moves clustered in the second half of the 2079 BS fiscal year (December 2022 to July 2023 AD), when six A-class banks completed integration within a few months, taking the count from 26 down to 20. Dates given are when joint (integrated) transactions began, which is the point at which the acquired bank ceased to operate separately.

The 2020 Global IME Bank and Janata Bank Nepal merger created what was then one of the country's largest banks and set the template for later mega-deals. The 2022/23 cluster then reshaped the entire top tier, with Global IME, Nepal Investment, Prabhu, Kumari, Nabil, Himalayan and Laxmi all absorbing another A-class bank each.

Several of these acquirers had themselves already grown through earlier rounds of consolidation with development banks and finance companies, so the branded commercial-bank deals below are only the visible tip of a much larger BFI consolidation.

The Nabil Bank and Nepal Bangladesh Bank (NBB) deal, effective 11 July 2022, was one of the earliest of the modern mega-mergers; Nabil, the acquiring bank, retained its name and licence while NBB was dissolved. The Global IME Bank and Bank of Kathmandu integration on 9 January 2023 confirmed Global IME as one of the biggest banks in the country by branches and balance sheet, building on its earlier absorption of Janata Bank.

The Nepal Investment Bank and Mega Bank Nepal merger, effective 11 January 2023, was unusual in that both names survived in the combined brand, Nepal Investment Mega Bank Ltd (NIMB). Prabhu Bank's acquisition of Century Commercial Bank on 10 January 2023 lifted its paid-up capital to roughly Rs 23.5 billion, while Kumari Bank's absorption of NCC Bank took effect on the first day of 2023.

The Himalayan Bank and Civil Bank acquisition, effective 24 February 2023, was completed at a share-swap ratio near 100:80, with Himalayan Bank continuing as the surviving entity. The final decisive move came on 14 July 2023, when Laxmi Bank and Sunrise Bank combined to form Laxmi Sunrise Bank Ltd, with a merged paid-up capital of about Rs 21.67 billion and a branch network of roughly 284 outlets. That deal brought the commercial-bank tally to 20.

Not every commercial bank took part in the M&A wave. A handful reached or exceeded the Rs 8 billion capital threshold organically, or were structured in ways that made merging unnecessary, and so kept their names intact throughout the consolidation.

According to compiled M&A records, five commercial banks had never merged with or acquired another institution: Nepal Bank Ltd (the country's oldest bank, established 1937), Agricultural Development Bank Ltd, Everest Bank Ltd, Nepal SBI Bank Ltd and Standard Chartered Bank Nepal Ltd. The last three are foreign-partnered or joint-venture banks that could raise capital through their overseas parents. The remaining 15 of Nepal's 20 commercial banks are, directly or indirectly, products of at least one merger or acquisition.

The commercial-bank story is part of a much broader shrinking of Nepal's financial system. Around 2012 there were more than 200 BFIs across all classes, including over 30 commercial banks, dozens of development banks and finance companies, and microfinance institutions. Cumulative mergers and acquisitions have since removed well over 150 institutions, with hundreds of BFIs collapsing into a much smaller number over roughly a decade of NRB-led consolidation.

Analysts and NRB officials have repeatedly signalled that consolidation is not finished. There has been public discussion of pushing the number of commercial banks down further, toward the high-teens, to create a smaller group of very large, well-capitalised banks comparable in scale to regional peers. Whether that happens depends on future monetary policy, capital rules and market appetite, so any figure below 20 should be treated as a forward-looking expectation rather than a settled fact.

For customers, the practical effects of a merger include account and branch integration, a single unified brand, and sometimes temporary service disruption during the switchover (the merging banks typically close branches for a day or two to migrate systems). Depositors' balances and loan contracts carry over to the surviving bank, so the main change most account-holders notice is the new name over the door.