Kathmandu. The five-year Financial Sector Development Strategy has been implemented with the objective of contributing to overall economic prosperity by making the country’s financial system strong, strong and inclusive.

The strategy, which will be implemented from 2082÷83 to 2086÷87, aims to increase the contribution of the financial sector to the gross domestic product (GDP) from the current 6.65 percent to 7.5 percent. The strategy also aims to extend insurance coverage to 60 per cent of the total population.

The strategy prepared by the Ministry of Finance has forwarded a vision to prepare the base for economic prosperity by making the financial sector sustainable, inclusive and resilient. The Strategy defines ‘a strong, robust, inclusive and resilient financial sector for economic prosperity’ as its main vision.

The objectives of the strategy are focused on developing an efficient and efficient financial sector for sustainable and inclusive economic growth. The Strategy aims to make the financial system safe, robust, credible and stable, maintain good governance through transparency and accountability, expand environment and technology-friendly financial services, and build an inclusive financial system through financial literacy, access and customer protection.

The strategy has set out some guiding principles to achieve these objectives. The main principles of the Strategy are: maintaining healthy competition, good governance and stability in the financial sector, ensuring complementary role between the public, private and cooperative sectors, safe and efficient use of information technology, strengthening institutional capacity of financial institutions, developing inclusive and environment-friendly financial services, encouraging research, development and innovative practices and prioritizing the protection of customer interests.

Strategically, four main pillars have been determined. The first pillar is sustainable and inclusive economic development. The focus is on strengthening the real sector through financial infrastructure and capacity building. The second pillar is financial access and inclusion. It aims to bring banking, insurance, capital markets and services to rural and marginalized communities.

The third pillar is related to financial literacy and customer protection. This is expected to ensure the safe and conscious use of financial services. The fourth pillar is financial sector strengthening and financial stability. It aims to maintain long-term stability by increasing public confidence in the financial system.

As mentioned in the strategy, it is expected that various quantitative targets will be achieved once it is implemented. The government has set a target to increase agricultural credit to 15 percent of the total credit by the fiscal year 2086÷87. It is currently around 12.84 percent. The bank has set a target to increase the number of e-transactions through means such as mobile banking, internet banking, digital wallet, QR code etc.

Similarly, development and annual publication of financial access indicators, raising financial resources through the issuance of special bonds including green bonds and the implementation of Unstructured Supplementary Service Data (USSD) technology for electronic payments.

The strategy includes ensuring insurance access to 60 per cent of the total population, developing an effective regulation and supervision mechanism in saving and credit cooperatives, introducing new financial instruments such as equity derivatives, index funds and ETFs in the capital market and operating a commodity exchange market.

Similarly, the Ministry of Finance, Ministry of Land Management, Cooperatives and Poverty Alleviation and the regulatory bodies concerned will prepare a detailed action plan for the implementation of the strategy within two months. The action plan will include strategies, actions, timelines, implementation agencies, priorities and key performance indicators. In addition, a regular monitoring and reporting system will be developed clearly specifying the responsibility for implementation.

A high-level Financial Sector Reform Directive Committee will be formed to resolve the structural and policy-level problems seen in the financial sector and for effective coordination among the regulatory bodies.

The other members of the committee are the Vice-Chairman of the National Planning Commission, the Governor of the Nepal Rastra Bank, the Secretary at the Ministry of Finance, the Chairman of the Nepal Insurance Authority, the Chairman of the Securities Board of Nepal, the Registrar of the Department of Cooperatives and two experts from the financial sector.