The Bank and Financial Institution Act, 2073 classifies Banks and Financial Institutions into A, B, C, and D classes. According to this act, Nepal Rastra Bank shall make provision for the minimum capital required for each class of Banks and Financial Institutions in Nepal.
According to the directive published by Nepal Rastra Bank, the following is the detail of the minimum capital required for Commercial Bank, Development Bank, Finance Companies, and Micro Finance Financial Institutions.
Minimum Capital Required for (A- Class) Commercial Banks
The commercial Banks (A-Class) have to maintain at least Rs. 8,000,000,000.00 as paid up capital.
| Types of Banks or Financial Institution | Operation Level | Class | Minimum paid-up Capital (NPR) |
|---|---|---|---|
| 1. Commercial Bank | National Level | A Class | 8,000,000,000 |
Minimum Capital Required for (B- Class) Development Banks
The Development Banks (B-Class) have to maintain the following minimum paid-up capital depending upon the level of operation.
| Types of Banks or Financial Institution | Operation Level | Class | Minimum paid-up Capital (NPR) |
|---|---|---|---|
| 2. Development Bank | National Level | B Class | 2,500,000,000 |
| 3. Development Bank (Operating in 4 to 10 districts) | District Level | B Class | 1,200,000,000 |
| 4. Development Bank (Operating in maximum 3 districts) | District Level | B Class | 500,000,000 |
Minimum Capital Required for (C- Class) Finance Companies in Nepal
The Finance Companies have to maintain at least the following amount of paid-up capital depending upon the area of operations.
| Types of Banks or Financial Institution | Operation Level | Class | Minimum paid-up Capital (NPR) |
|---|---|---|---|
| 1. Finance Company (National Level) | National Level | C Class | 800,000,000 |
| 2. Finance Company (Operating at least in 4 districts) | District Level | C Class | 800,000,000 |
| 3. Finance Company (Operating in maximum 3 districts) | District Level | C Class | 400,000,000 |
Minimum Capital Required for (D- Class) Micro Finance Financial Institutions in Nepal
The micro-finance financial institutions shall maintain the following minimum paid-up capital.
| Types of Banks or Financial Institution | Operation Level | Class | Minimum paid-up Capital (NPR) |
|---|---|---|---|
| 1. Microfinance Company | National Level | D Class | 100,000,000 |
| 2. Microfinance Company (Operating in certain development region) | Regional Level | D Class | 60,000,000 |
| 3. Microfinance Company (Operating in 4 to 10 districts) | District Level | D Class | 20,000,000 |
| 4. Microfinance Company (Operating in maximum 3 districts) | District Level | D Class | 10,000,000 |
In addition to that, Commercial banks have to also consider the directives related to compliance with BASEL-III directives. According to it, the commercial banks must maintain the regulatory minimum paid-up capital and then the minimum paid-up capital required under BASEL adjusting the risk exposure of the assets.