Building a backbone for the financial sector in Nepal

Nepal Rastra Bank (NRB), via its Banking and Financial Institutions Regulation Department, has upgraded its reporting system with support from United Nations Capital Development Fund (UNCDF) and the Mobile Money for the Poor (MM4P) programme. They have created an e-mapping platform based on a geographic information system (GIS) that shows all existing financial points in Nepal and enables efficient compliance control, data analysis and policy formulation.

Nepal, a landlocked central Himalayan country in South Asia with 19.2 million adults, is home to 184 banking and financial institutions.[1] Yet, only 40 percent of adults are banked, of which 73 percent reside in urban areas and 27 percent in rural areas.[2] A significant reason why 60 percent of Nepalese adults are unbanked is that they reside in areas where financial institutions do not have a formal foothold.

Establishing a branch in such areas would normally require heavy investment and manpower, but that is not the main reason banking and financial institutions shy away from expanding their services in Nepal. In fact, it is often that they merely lack access to information about the demand for financial services in remote regions.

With a vision of financial inclusion for all, NRB has deployed various policy instruments over the years to ensure that financial outreach makes in-roads to remote, rural areas. With the e-mapping system taking shape, a view of financial service points across the country will allow the NRB Banking and Financial Institutions Regulation Department to prioritize approval of new bank branches or channel points in regions that were previously excluded.

On 21 July 2017, MM4P hosted a feedback session to give department directors a first look at the e-mapping system, which was unveiled by the Governor of NRB. The system developed by Usabledata Ltd. and Smart Solutions was demonstrated in the session. This platform will be publicly available but will have different access levels for NRB, financial institutions and the public.

The main objectives of the session were the following:

- Acquainting participants with the real-time analytics and management information system and providing a system overview.

- Showcasing the GIS-based map of Nepalese financial infrastructure.

- Providing a step-by-step guide to drill down on the view of financial access to the local-body level and to track development of financial inclusion in different areas.

- Tracking deposits/loans, including amounts at different levels.

- Helping to lay the foundation for further advancement and scale-up of the e-mapping platform through recommendations.

As the session concluded and participants looked forward to the official launch of the e-mapping system, the Governor of NRB summarized its potential:

“The e-mapping system is going to change the way financial institutions function in Nepal and in the best possible way. People living in the remote corners of Nepal are a step closer towards financial inclusion. I thank UNCDF-MM4P for their guidance and support for making this a possibility, and we are enthusiastic to further build on this system and make it the backbone of Nepal’s financial sector.”

[1] NRB, ‘List of Banks and Financial Institutions,’ mid-January 2017. Available from https://www.nrb.org.np/bfr/pdffiles/List_of_BFIs_Jan_2017_English.pdf

[2] FinMark Trust and UNCDF-Making Access Possible, ‘FinScope Survey Highlights: Nepal 2014’ (n.p., n.d.). Available from https://www.unnatiprogram.org/uploads/publications/0PBlHqL1h2kifLCSLCS0Dv24xM50jBk9.pdf

August 2017. Copyright © UN Capital Development Fund. All rights reserved.

The views expressed in this publication are those of the author(s) and do not necessarily represent the views of UNCDF, the United Nations or any of its affiliated organizations or its Member States.

For more information, please contact:

Aliska Bajracharya
KM Consultant, Nepala
aliska.bajracharya@uncdf.org
https://mm4p.uncdf.org

Jaspreet Singh
Regional Technical Specialist, Digital Finance
jaspreet.singh@uncdf.org