Banking Exam Question - What are the Categorization and Minimum Capital Requirements of Banks & Financial Institutions by NRB? Explain

Introduction - NRB Categorization & Minimum Capital Requirement of Banks & Financial Institutions 

Commercial Bank: 

A commercial bank is an organization that gives administrations, for example, tolerating stores, giving business advances, and offering fundamental venture items. Business bank can likewise allude to a bank, or a division of an extensive bank, which all the more particularly manages store and credit administrations gave to organizations or huge/moderate estimated business - instead of individual individuals from people in general/independent company - retail saving money, or vendor banks. 

Development Bank: 

A development bank is a bank that gives cash to ventures in poor nations or areas.Development banks are particular money related organizations. They give medium and long haul back to the modern and farming part. They give fund to both private and open division. Improvement banks are multipurpose money related establishments. 

Finance Companies: 

A Finance Company is an association that begins credits for the two organizations and buyers. Much like a bank, an average back organization goes about as a loaning substance by expanding credit.Financial association that acknowledges stores (and pays out enthusiasm on them) and loans to shoppers as well as organizations. 

Micro-finance Institution: 

Micro-finance, likewise called micro-credit​, is a sort of managing an account benefit that is given to jobless or low-salary people or gatherings who generally have no different access to monetary administrations. Smaller scale back at first had a restricted definition - the arrangement of microloans to poor business visionaries and private ventures lacking access to keeping money and related administrations.

The classification of banks and banks which has allowed the Nepalese banks to make financial transactions have done this:

1. 'A' class Commerce Bank

2. 'B' class development bank

3. 'C' class finance company

4. 'D' class micro finance institution

5. Limited banking will be cooperative

6. Non-profit organizations will be traded.

Here is the Minimum Capital requirement of Banks & Financial Institution by Nepal Rastra Bank:

• 'A' Class Commercial Bank = Rs. 800 million or Rs. 8 Billion
• 'B' Class Development Bank = Rs. 250 crore or Rs. 2.5 Billion
• 'C' Class Finance Companies = Rs. 80 crore