Nepal is a newcomer to the Digital Financial Service (DFS) space, with most efforts small with branchless banking deployments. Most banks simply lack a long term vision to create alternate distribution channels to reach last mile and a large part of their efforts to date are driven by interventions from development agencies.
Nepal’s economy has been affected largely by the earthquake in May 2015 as well as the political unrest during most of the second half of the year. Immediately after the earthquake the government expressed interest in digital payments for reconstruction grants. MoFALD now intends to develop a fixed pricing system for social security payments, based on geography and cost.
The Ministry o Finance has formed a multi-stakeholder committee as part of its commitment to BTCA. At the same time, the NRB dedicated a department for payments systems which recently released its by-laws on payment and settlements and called on institutions to apply for license. This opens the door to non-banks (i.e. MNOs, MTOs) to operate wallet services in market.
There is tremendous opportunity in Nepal linked to remittances as a gateway to financial inclusion which remains to be tapped.
Where We Are
- Payments system by-laws passed by NRB, paving way for non-bank payment service providers to be licensed
- NRB working on licensing procedure and guidelines for allowing payment service provider operations, with applications invited from potential players
- Largest MNO and remittance companies applied for licence to operate with NRB and planning the launch of DFS
- Department of Civil Registration adopted pricing principles for G2P payments
- Two largest remittance companies put in place limited pilots on remittance cards
What We Did So Far
- Placement of a fulltime DFS expert
- DFS market coordination
- Demand side need assessment and agent network research
- Technical workshops around building and strengthening of strategy and agent networks
- User experience research
- Supported Nepal Rastra Bank (NRB, the central bank) on a regulatory study tour to Tanzania
- Provide internal training for Nepal Rastra Bank
- Support Nepal Rastra Bank on data collection refinement and processes
- Organize public workshop on Digital Financial Services
- Supported strategy and pilot development for bank and non-bank institutions
What We Plan for 2019
- 10% active registered DFS users as percentage of adult population (total 2,100,600)
- Support the launch of on-ground services for NCell, IME and Prabhu
- Develop and pilot test use case with focus on agriculture and clean energy with key players in the sector
- Support DCOR in launching the procurement for 5 districts on transferring SSA payments
- Support DOCR in completing the strategy for digital payments for SSA benefits in a phased manner for all 75 districts. With 25 districts covered in next 5 years.
- Support NRB in setting and launching data analytics system with a pubic interface
- Undertake the agriculture digital linkage study for specific value chains
- Support the MoF committee on digitisation to function and guide the market movement from a government perspective