'Infrastructures development a must for expanding digital financial services'

KATHMANDU, Dec 10:

Officials of central bank have underscored the need for building necessary infrastructures to expand digital financial services for increasing people´s access to finance.

They also said banks and financial institutions (BFIs) should also help to raise awareness among people regarding their services, benefits and cost, among other issues, to make financial access more effective.

“If a BFI decides to start service in a new area, it should also impart knowledge to people of that locality about its services and benefits of banking habit. This will help to make banking service effective,” Manmohan Kumar Shrestha, executive director at Banks and Financial Institutions Regulation Department at Nepal Rastra Bank (NRB), said at a program in the capital on Tuesday.

He also said that the central regulatory bank had been encouraging BFIs to expand their services in remote parts of the country through branch offices, branchless banking services, agent banking, and mobile banking, among other services.

According to estimates, only 25 percent of the population is banked through formal channel, while around 40 percent are served through cooperatives and financial intermediaries NGOs. Remaining population is still unbanked. Most of the mainstream financial institutions are concentrated in urban areas and their presence in rural and remote areas is negligible.

Shrestha also said high penetration of mobile phones across the country should be tapped to provide banking services to the unbanked people. “Mobile banking is an important way to inculcate banking habit among the people. Digitization of banking service is important for us as it helps to take banking to peoples´ doorsteps," he said, adding, "There is also a need to set up infrastructures which allow basic level of technology and mobile network connection and distribution network, among others.”

NRB has been encouraging BFIs to enhance their outreach through some policy interventions like creating a rural focus branch licensing policy, introducing electronic banking guidelines and supporting creation of alternate deliver models like agent banking.

NRB Deputy Governor Maha Prasad Adhikari said long-term investment from both private and government is necessary to set up modern channels and products to enhance people´s access to financial services.

Source: Republica