Government plans policy to promote banking habitThe government plans to introduce a financial literacy policy shortly in a bid to promote financial access to remote communities and develop the habit of conducting financial transactions through banks.
The government plans to introduce a financial literacy policy shortly in a bid to promote financial access to remote communities and develop the habit of conducting financial transactions through banks.
A recent Nepal Rastra Bank (NRB) study shows that 18 percent of the Nepali people have absolutely no access to financial services while more than 21 percent take loans from money lenders.
“Considering that people in remote areas and minority groups lack financial literacy and access to finance, the planned policy aims to take a targeted approach for their inclusion,” said Surya Prasad Acharya, joint secretary at the Finance Ministry. The ministry has prepared a draft of the policy which will be discussed among the stakeholders.
The Finance Ministry aims to launch an integrated financial literacy programme to ensure secured financial transactions and access to finance. As per the proposed policy, the necessary infrastructure will be made available to support the financial literacy campaign such as access to the internet, roads, markets, power supply and capable human resources.
The financial literacy campaign will focus on spreading awareness about banking and non-banking institutions such as the Employees Provident Fund, Citizen Investment Trust, insurance companies, cooperatives, capital market and infrastructure related to capital market such as the Credit Information Bureau and Clearing House.
The campaign will also educate communities about the informal financial sector such as dhukuti, hundi and networking business.
The policy aims to promote the inflow of remittance through the banking sector and use this money in the productive sector. Currently, most of the remittance sent home by migrant workers is being spent on consumption.
Nepal Living Standard Survey 2011 shows that 55.8 percent of the households receive remittance with each household receiving an average of Rs80,436 a year. However, the authorities are concerned that despite the high amount of remittance, the money is not being used in the productive sector.
A large chunk, or 78.9 percent, of the money sent home is being spent on daily consumption and loan repayment. Only 2.9 percent of the total remittance is used for capital formation, according to the survey.
The ministry has proposed two types of structures, a High Level National Financial Literacy Council headed by the finance minister and a Financial Literacy Committee headed by the deputy governor of Nepal Rastra Bank, to implement the policy.