Financial access still eludes poor
KATHMANDU, 2 May:
The growing number of financial intermediaries has made it easier for the customer to get service from formal financial system, though rural populace still lags behind.
The average number of people that a bank and finance company branch could serve stood at 33,400 by mid-April 2010 but the number came down to 11,000 per branch this April, the central bank data revealed.
“Some 45,000 people used to get service from a branch in April 2009,” it added.
“With the expansion of banks and financial institutions, on an average 11,000 people are getting financial services from a branch of banks and financial institutions,” according to Nepal Rastra Bank (NRB) Governor Dr Yubaraj Khatiwada.
By the mid-April 2011, the numbers of licensed banks and financial institutions operating in Nepal has touched 219. “There are 31 commercial banks, 87 development banks, 80 finance companies and 21 microfinance banks that are providing financial services to the general public,” according to the central bank data.
However, the remote part of the country still has not been able to get enough service. “Balancing the number of banks and financial institutions without contracting the financial access is one of the focus areas of the central bank,” the governor said, adding that the central bank has announced financial incentives to banks and financial institutions for opening branches in designated remote districts to increase the services to the remote districts.
A bank and financial institution can open a branch in the capital only after opening a branch outside the valley, according to the Monetary Policy.
However, it will take some more time to translate as majority of the banks and financial institutions’s branches are concentrated still in urban centres.
The prosperity enjoyed by urban areas can also be accounted to easy access to credit. The rural population do not have access to formal credit system forcing them to resort to informal financial channels that charge gigantic interest rate further depleting their economic condition.
Moreover, the absence of financial intermediaries has diverted the remittance flow to informal channels that is causing the nation huge hole in its foreign reserves.
Instead of coaxing the urban-centred commercial banks to go into rural areas, the central bank can ask specialised micro credit institutions to venture into remote areas. The MFIs can fill the gap between financial services and the unbanked population as their services will be highly beneficial and suitable for providing finances to the poverty-stricken people than big-wig profit-centric commercial banks.
Source: THT
The growing number of financial intermediaries has made it easier for the customer to get service from formal financial system, though rural populace still lags behind.
The average number of people that a bank and finance company branch could serve stood at 33,400 by mid-April 2010 but the number came down to 11,000 per branch this April, the central bank data revealed.
“Some 45,000 people used to get service from a branch in April 2009,” it added.
“With the expansion of banks and financial institutions, on an average 11,000 people are getting financial services from a branch of banks and financial institutions,” according to Nepal Rastra Bank (NRB) Governor Dr Yubaraj Khatiwada.
By the mid-April 2011, the numbers of licensed banks and financial institutions operating in Nepal has touched 219. “There are 31 commercial banks, 87 development banks, 80 finance companies and 21 microfinance banks that are providing financial services to the general public,” according to the central bank data.
However, the remote part of the country still has not been able to get enough service. “Balancing the number of banks and financial institutions without contracting the financial access is one of the focus areas of the central bank,” the governor said, adding that the central bank has announced financial incentives to banks and financial institutions for opening branches in designated remote districts to increase the services to the remote districts.
A bank and financial institution can open a branch in the capital only after opening a branch outside the valley, according to the Monetary Policy.
However, it will take some more time to translate as majority of the banks and financial institutions’s branches are concentrated still in urban centres.
The prosperity enjoyed by urban areas can also be accounted to easy access to credit. The rural population do not have access to formal credit system forcing them to resort to informal financial channels that charge gigantic interest rate further depleting their economic condition.
Moreover, the absence of financial intermediaries has diverted the remittance flow to informal channels that is causing the nation huge hole in its foreign reserves.
Instead of coaxing the urban-centred commercial banks to go into rural areas, the central bank can ask specialised micro credit institutions to venture into remote areas. The MFIs can fill the gap between financial services and the unbanked population as their services will be highly beneficial and suitable for providing finances to the poverty-stricken people than big-wig profit-centric commercial banks.
Source: THT
