Financial Inclusion initiatives in Nepal
Dibakar Bashistha, PhD
Introduction
The financial inclusion ensuring that every individual has access to quality, affordable financial services . Thus, many governments in developing economies are promoting financial inclusion as a policy goal.
However, ensuring financial inclusion is an arduous task as addressing it requires a holistic approach encompassing effective approaches to provision of affordable credit services, awareness raising, financial education, saving mobilization, and research and development, among others. It refers to the provision of accessible, affordable and usable financial services to all segments of society particularly the underserved and marginalized populations.
It aims to ensure that every one has access to a range of financial services, including saving accounts, credit facilities, payment services, insurance products. Financial inclusion seeks to address the barriers that prevent people from accessing financial services such as geographical constraints, social economic factors like poverty and lack of education, regulatory or institutional barriers.
By promoting financial inclusion governments, financial institutions and other stakeholders aim to reduce poverty and inequality, increase economic growth and development, improve financial stability and security, enhance access to opportunities and services.
So, it is essential for building and more equitable and prosperous society, where everyone has access to the financial resources they need to thrive. Nepal has been actively working on financial inclusion initiatives to increase access to financial services for its citizens. The government has implemented various policies and programs to promote financial inclusion, including the microfinance policy 2008 and the Bank and Financial Institutions Act 2062 B.S. with amendment 2073 B.S.
History
The history of financial inclusion in Nepal dates back to the mid-1950s. Since then, the country has made significant progress in promoting financial inclusion.
The government of Nepal introduced the first financial inclusion initiatives in the 1950s, aiming to provide access to financial services for the underserved population. In the 1990s, microfinance programs were introduced in Nepal, focusing on providing small loans to low-income individuals and households.
In 2017 the government of Nepal launched the National Financial inclusion strategy which aimed to increase access to financial services for the underserved population.
In recent years, Nepal has promoted digital financial services such as mobile banking and online payment systems to increase access to financial services especially in rural areas. Today, Nepal continues to work towards increasing financial inclusion with a focus on promoting digital financial services improving financial literacy and increasing access to financial services for the underserved population. Banks conducted financial literacy programs to educate customers about financial products and services as well as workshops and seminars to educate customers about financial management and planning. Banks have introduced digital payment systems such as online payment gateways and mobile payment apps.
Some banks have introduced QR code payments systems, allowing customers to make payments using their mobile phones. Banks have joined hands with microfinance institutions to expand their reach and offer financial services to low-income individuals and collaborate with fintech companies to develop new financial products and services. So, these initiatives demonstrate the banking sector’s commitments to promoting financial inclusion in Nepal.
Government and Central Bank Initiatives
The Government of Nepal and Central Bank, have implemented various initiatives to promote financial inclusion in the country. The government launched a national strategy 2017 to increase access to financial services for the underserved population. The government developed financial inclusion action plan 2019 to implement the national financial inclusion strategy as well as micro finance policy 2008 to promote micro finance service in the country. The government launched a social security scheme to provide financial protection to low-income individuals.
In the context of Central Bank Initiatives NRB established a national payment system to facilitate digital transactions and introduced guidelines for mobile financial services to promote digital financial inclusion. NRB conducts financial literacy programs to educate people about financial service and management as well regulates microfinance institutions to ensure their stability and soundness. The government and central bank’s commitment to promoting financial inclusion in Nepal and they conduct research and development activities to identify areas for improvement and develop new financial inclusion initiatives.
Banking Sectors Initiatives
The Banking sector in Nepal has taken various initiatives to promote financial inclusion. Many banks have introduced branchless banking services, allowing customers to access banking services through abets or mobile devices. Most banks in Nepal offer mobile banking ser ices, enabling customers to perform transactions, check balances and access other banking services through their mobile phones.
Many banks offer internet banking services, allowing customers to access banking services. Banks have expanded their ATM networks, making it easier for customers to access cash and perform other transaction. Many banks offer microfinance loans to low-income individuals and small businesses as well as banks have introduced micro savings products, allowing low-income individuals to same small amounts of money. Some banks offer microinsurance products, providing insurance coverage to low-income individuals.
Social Impacts
The impact of financial inclusion on society is multifaceted and far reaching. Some significant effects are reducing poverty by providing access to financial services, economic growth by increasing access to credit, promoting entrepreneurship and stimulating economic activity. Financial inclusion can lead to job creation, as access to financial services enables entrepreneurs to start their business. Empowers women by providing them with access to financial services. It can lead to improved health and education outcomes as access to financial services enables people to invest in their health and education.
It can help to reduce inequality by providing access to financial services for underserved populations. It encourages saving, enables people to manage their finances more effectively, provides access to credit and promote financial literacy as well as it helps to reduce crime and corruption by providing a safe and secure way to manage finance. It helps to build resilience to financial stocks such as natural disasters or economic downturns.
In conclusion, financial inclusion is essential for promoting economic development, reducing poverty and improving livelihoods. By increasing access to financial services, promoting financial literacy and leveraging digital financial services, countries can make significant progress in achieving financial inclusion. Financial inclusion is a global priority and various countries have implemented innovative practices to promote access to financial services. International practices demonstrate the diversity of approaches to promoting financial inclusion. By learning form these experiences, Nepal can develop effective strategies to increase access to financial service for underserved populations.
Dr Bashistha is an expert of Bank and Financial Institutions