Banking industry was booming until a decade back. But, economic slowdown during that period started affecting their performance of commercial banks. This led to consolidation of banking industry resulting into merger between banks and merger of development banks and finance companies with commercial banks and development banks.
Nepal needs to have large banks that can support the investment needs of economy and sustain economic growth. To meet the growing credit demand of the economy, Nepalese Banks need to be well capitalized. Also, banks need to enhance their capacity to lend to larger companies and larger projects. Consolidation of banks would create larger banks with capacity to fund larger size projects of economic importance.