Effect of Corona Virus in Nepali Banking Sector

Effect of Corona Virus in Nepali Banking Sector

World has suffered from COVID 19, Corona Virus and it killed millions of people around the world and more than millions people suffered from the disease. Corona virus was deadly so most of country had to lockdown their nation in order to stop transfer of disease from one people to another. Due to lockdown most of people died of starvation and we are going to present some effects of corona virus.   Nepal was also highly affected by this virus and we know that banking system played a vital role in this situation now we are going to discuss how corona had effected banking sector in Nepal.

Effects of corona in banking sector can be

a) Positive Effect: Due to corona some positive effects was observed in banking sector

Technology:  The Covid- 19 had accelerated digitalization in the banking system and Banks were more digitalized and focused customers to use digital products like ATM, Mobile Banking, IPS, and Internet Banking. In this 21^st century digital products are very important to be in competitive market.  

Unity: Due to corona there were good harmony among bankers

Cost saving: As banks had operated in rotation basis so bank haad saved cost to some extend like electricity, phone and other operating cost.

b) Negative Effect

Business Slow Down: Due Covid 19 banking sector were highly affected and their business growth were slow down which led to them loss their interest earning opportunity.

High Cost: Covid 19 had accelerated digitalization in the banking system which led to increase cost of the bank

Low income: Due to more operational related cost like mask, sanitizer, and other equipment banks operating cost were high and in the other hand customer used to demand low interest rate which led to decrease income of the bank

Operational Risk: Due to lack of sufficient staff may be due to covid positive or governing authority rules (50% staff) banks were in high risk as one staff compelled   to perform task of 2,3 staff which led high challenge to bank.

High Non Performing Assets: Due to Covid 19 most of sectors were affected and they were almost shut down and employee of such organization suffered pay cut or no pay so such loan customer of bank felt difficult to pay EMI/Interest which led bank’s Non-Performing Loan in higher level

Written by: munankarmip