Nepal Rastra Bank (NRB) has prohibited banks and financial institutions from dismissing employees due to branch closures, mergers, or consolidation. The central bank has revised its Unified Directives to regulate branch adjustments while protecting employees, customers, and access to banking services.

Under the revised provisions, Class A, B, and C banks and financial institutions that close four branches in metropolitan cities, sub-metropolitan cities, or municipalities must establish at least one new branch in a rural ward without existing banking services. The measure aims to reduce overlapping urban branches while expanding financial access in underserved communities.

The revised rules also address branches located close to one another. When banks consolidate branches operating within a one-kilometre radius in sub-metropolitan cities and municipalities, at least one branch must remain operational, subject to the prescribed conditions. Meanwhile, rural branches cannot be closed, relocated, or merged without prior approval from NRB.

NRB has directed financial institutions to transfer employees affected by branch consolidation to nearby branches instead of terminating their employment. Employee preferences and consent must be considered when arranging transfers, providing job protection during institutional restructuring.

Banks must also publish a public notice at least 90 days before consolidating a branch. The notice must appear in a national daily newspaper, on the institution’s website, and on the notice board of the branch concerned. This requirement gives customers time to prepare for changes affecting deposits, withdrawals, loan repayments, and other banking services.

The directive includes additional safeguards for customers. Customers of branches being consolidated must be allowed to repay loans or discontinue services without additional charges. Banks must also ensure that branch adjustments do not negatively affect access to financial services in the affected areas.

If a branch was established specifically to serve a government agency or public institution, the bank must obtain written consent from the concerned institution before consolidating it.

After completing a branch consolidation, the financial institution must update the relevant information on NRB’s reporting portal within three working days. It must also submit the required details to the Bank and Financial Institution Regulation Department and the relevant supervision department.

The revised provisions come as digital banking and electronic payments encourage financial institutions to reassess their physical branch networks, particularly in urban areas where multiple branches operate close together. While consolidation can help reduce operating costs, physical branches remain important in rural communities where digital access and internet connectivity may be limited.

By linking urban branch consolidation with rural expansion and introducing safeguards for employees and customers, NRB aims to improve banking efficiency without compromising financial inclusion.