NRB gears up for the licensing era transforming Nepal’s banking sector

KATHMANDU: In a significant policy shift, Nepal is set to introduce mandatory licensing requirements for individuals seeking employment in the banking sector. While various professions, including doctors, engineers, lawyers, and teachers, have long required compulsory licenses, banks have traditionally hired employees based on internal regulations.

However, a pivotal change is on the horizon as aspiring bank employees will soon need to obtain a license before they can secure a job in the industry.

This transformation is being driven by the imperative to enhance the management and performance of the banking system by ensuring a pool of highly competent professionals. To achieve this goal, a comprehensive study is underway to explore the holistic development and management of human resources within the banking industry.

Additionally, the forthcoming adjustments will give preference to candidates who have successfully completed an entrance examination and certification program, in collaboration with organizations like the National Banking Institute.

This significant shift in policy is encapsulated in point number 105 of Nepal Rastra Bank’s monetary policy for the fiscal year 2080/81. It signifies that the National Bank will prioritize candidates who have successfully completed the entrance examination for banking positions.

The rationale behind this move is the expanding scope of Nepal’s banking industry. Officials at the National Bank of India believe that as the sector broadens its horizons, it is imperative for its workforce to be highly qualified. In pursuit of a robust and stable banking system, the Rashtra Bank is gearing up to study and formulate essential strategies for human resource development and management.

Dr. Prakash Kumar Shrestha, the Executive Director of Rashtra Bank and Head of the Economic Research Department, emphasizes that the mandatory entrance exam is aimed at enhancing competitiveness within the banking sector. “In times when the banking sector faces increasing challenges, regulatory foresight is crucial,” Shrestha explained to ClickMandu. “We have already commenced the necessary work.”

Shrestha also highlighted the importance of aspiring banking professionals having a deep understanding of investment areas, limits, challenges, and more. “Given the distinct benchmarks for entry into various sectors, establishing a benchmark for entry into such a vital sector as banking is equally vital,” he added.

Beyond entry requirements, the National Bank is also taking steps to set a benchmark for the ethical development of its workforce. They intend to formulate a policy that will favor those who have completed certification courses when it comes to promotions.

Bankers have warmly welcomed the prospect of prioritizing candidates who have passed the entrance exam to join the banking workforce. They argue that it would be more advantageous for individuals to undergo training before entering banking services directly.

Sunil KC, the President of Nepal Bankers Association and CEO of NMB Bank, believes that having prior knowledge of banking services can accelerate an individual’s progress within the organization. “In the current expansive landscape of the banking sector, selecting the right talent is imperative,” KC stated. “The National Bank should make this provision through the current year’s monetary policy because entering with skills is vastly different from entering without them.”

He pointed out that such practices are prevalent in foreign countries, emphasizing the need for Nepali human resources to be well-prepared, especially in the face of potential foreign banks entering Nepal and Nepali banks expanding abroad.

KC argued that the banking sector worldwide is undergoing significant changes, and it requires skilled and capable professionals to adapt to this evolving landscape. With rapid technological advancements, digitization is sweeping through the banking sector, and only high-caliber professionals can enhance productivity.

“In a bank, employees need to be multifaceted, from managing customer interactions to understanding consumer behavior. Skilled personnel are the key to reducing risks in the banking sector,” KC remarked.

He also stressed the importance of favoring those who have completed certification courses for career development, highlighting that employees who receive these certifications are better equipped for promotions.

“When hiring new employees, it is as crucial as hiring qualified ones. Preparing employees for promotions is equally important,” KC concluded.

officials of the National Banking Institute, shared that the institute’s concept is to introduce an aptitude test for individuals seeking employment in the banking sector. “Currently, banks have their own methods for recruiting employees. However, after the implementation of this policy, only those who pass the qualification test will be eligible to apply for banking positions.”  NBI officials added that further details and actions would proceed upon receiving additional directives from the National Bank. Currently, there are approximately 50,000 employees in Nepal’s banking sector, and careers in banking remain highly sought after.