How Many Classes of Banks Are There in Nepal? A, B, C & D Explained

How many classes of banks are there in Nepal?

Nepal has four classes of banks and financial institutions (BFIs), classified and licensed by Nepal Rastra Bank (NRB) — the central bank — under the Banks and Financial Institutions Act (BAFIA). They are labelled simply Class A, Class B, Class C and Class D, in descending order of paid-up capital requirement and range of permitted activities. Every legally operating bank or finance company in Nepal falls into exactly one of these four classes.

Class A — Commercial banks

Class A institutions are the commercial banks — the largest, best-capitalised and most fully licensed. They offer the widest range of services: savings and current accounts, fixed deposits, loans, trade finance, foreign exchange, cards, remittance and full digital banking. There are around 20 Class A commercial banks in Nepal, including names like Nabil Bank, Global IME Bank, NIC Asia Bank and Nepal Investment Mega Bank, plus the state-owned Rastriya Banijya Bank and Nepal Bank Limited. Because of their scale, they typically pay slightly lower deposit interest than smaller institutions.

Class B — Development banks

Class B institutions are development banks. They provide most core banking services — deposits, loans and FDs — but with a smaller capital base and, historically, a more regional or sector focus. Many are strong in particular provinces or in areas like SME and agricultural lending. To attract deposits against the larger commercial banks, development banks frequently offer higher savings and FD rates.

Class C — Finance companies

Class C institutions are finance companies. They are smaller still, focused mainly on deposit-taking and lending (including hire-purchase and consumer finance). Finance companies often sit at the top of the interest-rate tables — both savings and fixed deposit — precisely because they must compete for deposits without the scale and brand of the big banks. If you are chasing the highest FD rate in Nepal, the leader on any given day is frequently a Class C finance company.

Class D — Microfinance financial institutions

Class D institutions are microfinance financial institutions (often called "laghubitta"). Their purpose is financial inclusion: small loans and savings services for low-income households, rural communities and micro-entrepreneurs, frequently through group-lending models. They are not general-purpose banks for everyday deposit customers in the way A, B and C are, and their deposit-taking is more restricted.

How the four classes differ — at a glance

• Class A (Commercial banks): largest capital, full services, widest branch/ATM network, usually the lowest deposit rates but the most convenience.
• Class B (Development banks): mid-sized, core banking, often regional; competitive deposit rates.
• Class C (Finance companies): smaller, deposit-and-lending focused; frequently the highest interest rates.
• Class D (Microfinance): financial inclusion for low-income and rural customers; not a general deposit bank.

Does the class affect how safe my deposit is?

Less than people assume. Every NRB-licensed Class A, B and C institution participates in the Deposit & Credit Guarantee Corporation (DCGC) scheme, which protects deposits up to NPR 5 lakh per depositor per institution. That guarantee is the same whether your money sits in a giant commercial bank or a small finance company. So within that limit, choosing a higher-paying Class B or C institution carries little extra risk — a key reason it's worth comparing rates across all classes rather than defaulting to the biggest bank. Spread larger balances across institutions to stay fully covered.

Which class should I bank with?

• Want the highest interest? Look at Class C finance companies and Class B development banks first — start from the top of the live savings and FD tables.
• Want the most services, branches and the best app? A Class A commercial bank is usually the practical choice.
• Best of both: keep everyday banking at a Class A bank and park fixed deposits at a higher-paying Class B/C institution — each within the NPR 5 lakh guarantee.

For more on picking the right institution, see our guide to the best banks in Nepal.

Frequently asked questions

How many classes of banks are there in Nepal?

Four. Nepal Rastra Bank licenses banks and financial institutions in four classes: Class A (commercial banks), Class B (development banks), Class C (finance companies), and Class D (microfinance financial institutions).

What is the difference between Class A, B, C and D banks in Nepal?

Class A are commercial banks — the largest, with the widest services. Class B are development banks, mid-sized and often regional. Class C are finance companies, smaller and deposit/lending focused. Class D are microfinance institutions serving low-income and rural customers. Capital requirements and permitted activities decrease from A to D.

Which class of bank gives the highest interest rate in Nepal?

Class C finance companies and Class B development banks usually offer the highest savings and fixed deposit rates, because they compete for deposits against the larger Class A commercial banks. The single highest rate on any day shows at the top of the Byajdar FD and savings tables.

Are Class B and C banks in Nepal safe?

Every NRB-licensed Class A, B and C institution is covered by the Deposit & Credit Guarantee Corporation up to NPR 5 lakh per depositor per institution. Within that limit a finance company is as guaranteed as the largest commercial bank, so its higher rate carries little added risk. Spread larger amounts across institutions to stay fully covered.

How many commercial banks (Class A) are there in Nepal?

There are around 20 Class A commercial banks in Nepal following recent mergers, including Nabil Bank, Global IME Bank, NIC Asia Bank and Nepal Investment Mega Bank, alongside the state-owned Rastriya Banijya Bank and Nepal Bank Limited.