WB extends $30m credit to strengthen financial sector
KATHMANDU, June 29:
The World Bank (WB) is extending a loan of US$ 30 million to Nepal to expedite financial sector reform program, reduce vulnerability of the banking sector and increase its transparency.
The loan amount will help Nepal´s financial sector meet its mid-term goal of placing the sector on a sound foundation.The development policy credit package called Nepal Financial Sector Stability Credit was prepared in close collaboration with the International Monetary Fund and the UK´s Department for International Development, which has recently approved a long term technical assistance package to support financial sector reforms in Nepal. The credit carries a 0.75 percent service charge, a 10 year grace period and a maturity of 40 years.
The Nepal Financial Sector Stability Credit will support six main policy areas, namely, formulation of a financial sector development strategy, restructuring of Nepal Bank Limited and Rastriya Banijya Bank, assessment of the condition of Class A, B and C financial institutions and potential restructuring, strengthening institutional arrangements to support the bank restructuring process, strengthening the legal and regulatory framework for effective bank resolution and increasing the transparency of the financial system, a WB statement issued on Friday says.
“The proposed credit recognizes the important progress made so far by Nepali authorities to tackle financial sector vulnerability and supports the acceleration of a medium term reform strategy introduced in 2011,” the statement quotes Johannes Zutt, WB country director for Nepal and Bangladesh, as saying
Says Guillemette Jaffrin, WB task team leader: “The preparation of a comprehensive financial sector development strategy would help the authorities look beyond the short-term need to stabilize the financial sector. Such a strategy would also help Nepalis develop a vision for an inclusive financial sector in five to ten years and build consensus on the steps required to transform this vision into reality.”
Source: Republica
