Kathmandu. The task force has recommended the Nepal Rastra Bank (NRB) to allow the establishment of a neo bank with the objective of making the banks and financial sector modern and competitive in Nepal.

The task force has concluded that international banks and financial institutions, including neo banks, should be encouraged to open branches in Nepal or establish banks in joint venture on the basis of transparent criteria.

According to the report of the task force, it would be appropriate to give the authority to the existing classification committee to study and decide on the application regarding the opening of branches of a neo bank or a foreign bank. It is expected to make the decision-making process simple, transparent and accountable.

The task force has also warned that if banks and financial institutions are allowed without clear standards and effective regulation, the situation of mismanagement seen in various institutions in the past may be repeated. Poor governance, inadequate regulation and lack of risk management pose a risk of causing problems for long-term institutions to become problematic in the short term, the report said.

The report has concluded that the structure and policies should be formulated so that the banks and financial institutions can operate for hundreds of years. Although technology-friendly institutions like Neo Bank are expected to increase financial inclusion, reduce costs and improve the quality of service, the NRB should implement strict but practical regulations, clear standards and continuous monitoring.