Lack of innovation and variety in product features to serve different income structures and customer requirements is one of the major constraints to increasing financial access in Nepal, a report prepared by Making Access Possible (MAP), Nepal, has said.

MAP Nepal is an initiative under the Access to Finance programme implemented by the Nepal Rastra Bank (NRB) and funded by the Danish government, Department for International Development (DFID) of the United Kingdom and the United Nations Capital Development Fund (UNCDF).

“The country has a large number of financial service providers but their financial product offerings are homogeneous,” the report entitled “Financial inclusion Roadmap 2017-22” states. 

According to the report, existing financial services and products are skewed in favour of salaried workers and micro, small and medium enterprises (MSMEs)—the population segments that are more urbanised and have the highest income and education levels.

Those who are on average poorer, based in rural areas, and moderately educated—farmers, dependants and irregular earners—are under served. “This is largely due to the absence of appropriate products and access points to suit their needs,” it said.

Mentioning the finding of the “Financial Inclusion Country Report of Nepal 2014”, the report said the country fares better than other MAP countries in terms of financial access, with 61 percent of the adult population having access to formal finance, and only around 18 percent of the adult population completely excluded from financial services (both formal and informal).

MAP Nepal officials said at a press meet here on Friday most of the many people have just been using financial institutions for saving or receiving payout from the government. “The trend of taking credit for economic activities has remained lower,” they said.

Judith Karl, executive secretary of UNCDF, suggested the need for using digital technology in order to reach out to the rural population as it would be cost effective amid complaints that interest rate of micro-finance institutions in Nepal is higher.

While comparing with other countries where the MAP initiative has been implemented, she said Nepal is in the middle when it comes to financial inclusion.

“Financial inclusion helps create self-employment and increase people’s income enabling them improve their living standards while reducing their vulnerability,” she said.