The government on Sunday announced a nationwide campaign to ensure one bank account for each household to expand financial access.
Replicating Indian Prime Minister Narendra Modi’s campaign, the government said expansion of financial access would help expand economic activities. In the budget for 2015-16, the government said it would transfer cash only through bank accounts.
Upendra Poudel, president of Nepal Bankers’ Association, praised the government move. Stressing on the need for addressing excess liquidity in the banking sector, Poudel said implementation of development projects would help absorb the liquidity.
To promote banking habit among the people, the government will impose a ceiling on cash transaction. It has made a provision, under which banks and financial institutions (BFIs) can submit tax of more than Rs500,000 only through cheques. It is expected to reduce the BFIs’ operation costs.
To reform the financial sector, the government has announced implementing the “Financial Sector Development Strategy”. Priority to mergers and acquisitions in the banking sector will be continued. The government also plans to facilitate insurance companies to go for merger.
Poudel expressed hope the strategy would give clear directives for the sector’s reform in both short- and long-term.
For the financial sector regulation, a system would be devised to make banking transactions transparent. The budget also talks about promoting branchless banking and mobile banking to increase people’s access to financial services. Introduction of an Act to regulate foreign exchange and amendment of the Act that curbs foreign investment by Nepalis are also in the government’s priority.
The government said it would promote the involvement of the Citizen Investment Trust in the development of the secondary market. In an effort to regulate the cooperatives sector, saving and credit cooperatives in particular, the government will devise proper legal and policy provisions. Currently, the Ministry of Cooperatives and the Poverty Alleviation is drafting a new Cooperative Act.
As per recommendation of high-level commission led by Gauri Bahadur Karki, the government recently amended the existing Cooperative Act 1992.
The amendment has enabled the government to set up a rehabilitation commission with powers to even confiscate property of cooperative operators involved in misappropriation.
A seven year jail term has also been provisioned for such operators.
The budget also talks about installing cooperatives and poverty management information system for effective monitoring and regulation of the sector. Besides, the government plans to facilitate cooperatives in generating employment, increasing income and poverty alleviation.