18 percent of population still unbanked: Study
KATHMANDU, Aug 14:
Despite massive surge in the number of bank and financial institutions (BFIs) and cooperatives as well as saving groups, among others informal institutions, in recent years, 18 percent of the total population still do not have access to financial services, a recent study shows.
The finding of the Nepal FinScope Consumer Survey 2014 unveiled in the capital on Thursday amid National Conference on Financial Inclusion shows that only 40 percent of the population are claimed to be banked, or have/use financial products or services by the regulated BFIs.
The conference was jointly organized by Nepal Rastra Bank (NRB), UN Capital Development Fund (UNCDF), and United Nations Development Programme (UNDP).
According to the survey, 21 percent of the population is served by other regulated formal financial institutions like cooperatives, insurance companies, retail credit providers and remittance service providers, while 21 percent other have/use financial services from the informal sector that has not come under the regulatory ambit.
The survey was carried out between December 2014 to January 2015 in 460 village development committees (VDCs) of 70 districts through 4,014 face-to-face interviews that include the individual adult population aged 18 years and older.
The survey attributes affordability as the main barrier to greater use of banking services. "Using or having banking services is co-related with the income sources and level of the people," Ujjwal Pokhrel, national program coordinator at UNCDF, said.
Interestingly, the survey shows that 42 percent of the unbanked population reasoned their inability to maintain the minimum balance as the major barrier in using banking services. Similarly, 33 percent said that they do not need it, while 16 percent said that the bank is too far away to get service access.
"Those who have regular income and higher income, let's say above Rs 12,000 per month, tend to use banking services. However, people who do not have regular income do not use financial services. For example, BFIs have not largely been able to bring agriculture sector under its services because the people involved in this sector do not have regular income. So they are unbanked," he added.
Among the 45 percent of the banked population, three fourth use their bank account to save, while 45 percent use their bank account to keep their money safe. Only 25 percent of such banked population uses the bank to get credit or loan.
Binod Atreya, executive director of NRB, said that the survey findings would help the central bank to prepare a roadmap for developing policies for promoting financial inclusion.
"FINANCIAL ACCESS MUST FOR ECONOMIC DEVELOPMENT"
Meanwhile, regulators, government authorities, planners and other stakeholders have emphasized the need for increasing financial access and inclusion for economic development of the country.
Speaking at the conference, they said financial inclusion was a prerequisite for eradicating poverty, inclusive growth, and improving the living standard of rural people. "One of the potential areas for BFIs is in the export market. Cardamom, ginger and other agro products hold high export potential and their production is in the rural areas. BFIs should reach there so that the production and export gets a boost," said Minister for Finance Ram Sharan Mahat. "NRB has a challenge ahead to create enabling environment for BFIs to go to such areas and tap such opportunities."
Similarly, NRB Governor Chiranjibi Nepal said that the central bank was soon coming up with 'one bank account, one household' campaign to increase financial inclusion. "Financial services should be reliable and affordable to all people, more importantly to the disadvantaged groups. It can help to lift people from the vicious cycle of poverty," he added.
Govind Raj Pokhrel, vice chairman of Nepal Planning Commission, said new innovations should be adopted to expand financial services. Likewise, Ingrid Dahl Madsen, first secretary at the Embassy of Denmark in Kathmandu, said that financial inclusion is a key pillar for inclusive growth and essential for improving living standards of the people.
Renaud Meyer, UNDP Country Director for Nepal, underlined the need for using innovations such as mobile banking and other commercially viable pro-poor products for increasing people's access to finance.
Source: Republica
