The country’s economy needs structural reforms, for which the system that has been gradually implemented to mobilize the financial resources of the banking sector towards the productive sector should be continued. Nepal’s economy has been focusing on remittances, imports and import-based consumption for a long time.
As a result, the demand for credit has also been mainly for imports and trade. Only if the country’s economic activities can be directed towards the productive sector through structural reforms, will the demand for credit also increase in those sectors, and on the basis that the financial sector can contribute more to economic growth and employment creation, it has been arranged to gradually increase credit investment in the specified productive sectors. Its effective implementation is necessary.
The role of the recently implemented Monetary Policy Advisory Committee should be further strengthened, while the existing monetary policy, which is becoming more data-based, should be modernized and the transmission mechanism should be further strengthened.
If stakeholders can be made aware of the legal responsibilities assigned to monetary policy and the limitations of monetary policy in meeting growing public expectations, it will be easier for monetary policy to fulfill its main responsibility. Efforts have been made to gradually separate the regulatory policy, foreign exchange policy, and other provisions currently included in monetary policy from monetary policy and issue them separately. These issues should be gradually Separately, the central bank communication should be made more effective and the general stakeholders should be made aware of the policy arrangements and activities of the bank.
The Nepalese currency has a fixed exchange rate with the Indian currency and the current exchange rate has not changed for a long time. It would be appropriate to conduct a detailed study on the existing foreign exchange arrangements and fixed exchange rates in line with the changes in the economic structure of Nepal and India.
In view of the increasing impact of climate change, the necessary initiatives to implement the Green Finance Taxonomy (GFT) for the green transitioning of the economy and to obtain national recognition of the document should be continued.
To make the regulation and supervision of the financial sector more effective, priority should be given to information-based risk-focused supervision by making full use of the Supervisory Information System of the SupTech nature. In addition to the implementation of AML Supervision and Working Capital Guidelines, Macro Stress Testing, arrangements should be made for specialized monitoring of institutions that may be problematic.
In recent years, as a result of the increasing use of electronic payments, the amount of notes in circulation has been decreasing. However, this year, it has been decided to conduct a detailed study in the context of an increase in circulation again. Among the large-denomination notes, the printing of Rs. 1000 notes has been canceled earlier, so since the printing of notes of that denomination will be done only after deciding on a completely new design.
The following actions should be taken regarding electronic payments:
(a) The expansion of electronic payments should be further promoted and encouraged.
(b) To make electronic payments more secure, it is necessary to continuously emphasize investment in infrastructure, cyber security, financial literacy and customer protection.
(c) While NCHL is being developed as a Digital Public Infrastructure institution, it should be strategically developed as a public institution for electronic payments.
(d) By making full use of the Retail Payment Switch that has been in operation for a few years and the recently launched National Payment Switch, a system should be implemented where all payments are routed through the switch.
(e) All retail payments, including QR payments, should be interconnected gradually.
(f) Based on the progress made so far regarding CBDC, it should be launched within a few years.
(g) The recently launched cross-border electronic payment service should be further promoted.
In view of the increasing use of artificial intelligence, its use should be managed in Nepal’s financial sector. If additional policy arrangements and regular monitoring can be implemented in banks and financial institutions by implementing the guidelines on the use of artificial intelligence, which are in the process of being formulated, Nepal’s financial sector will benefit from the use of artificial intelligence. The central bank itself should also use artificial intelligence in its work of continuously monitoring financial institutions and payment systems, analyzing micro-data and making forecasts more effective. For this, it is necessary to invest in necessary policy arrangements and employee capacity development.
Direct loan investment by banks and financial institutions in the securities market should be gradually The concept of margin trading should be encouraged by reducing the margin. For this, Nepal Rastra Bank has already agreed to provide margin trading facilities to securities brokerage companies. The effective implementation of this arrangement should be prioritized in coordination with other stakeholders in the capital market.
The role of the central bank should be made more effective in line with the federal structure. In the context of the decrease in currency management and banking-related work in provincial offices due to the increasing use of electronic payments, provincial offices should be focused on issues such as study, research, supervision and monitoring of financial institutions, financial awareness and customer protection. For this, additional physical infrastructure should be built in provincial offices and the capacity of human resources should be developed by upgrading the existing infrastructure.
The construction of the bank’s physical infrastructure should be further accelerated. The buildings at Baluwatar and Thapathali have been reconstructed and handed over. The interior decoration of the buildings should be completed and the departments outside the bank premises should be transferred as soon as possible. An office building will be constructed as per the approved master plan on land located in Sanothimi of Bhaktapur and Surkhet of Karnali Province. In addition, the work of constructing modern buildings as per the strategic plan should be taken forward in view of the dilapidated office buildings of the bank in Biratnagar, Birgunj and Nepalgunj.
Some specialized structures should be established to make the bank’s operations more effective. The bank should form a statistics department by integrating all the data collection, processing and publication activities. In this regard, the work of establishing a statistics division has reached the final stage, and the division should be brought into operation in the near future as planned. Similarly, it has been seen that a separate mechanism needs to be established within the bank to manage the increasing risks related to information technology and cyber security.
प्रतिक्रिया दिनुहोस्