Kathmandu, March 16: The contribution of credit flow of the banks and financial institutions to the economic growth of the country has not been spectacular despite its volume is equivalent to the gross domestic product (GDP).
At the ‘RBBL Management Conference 2024’ held here today, speakers noted that the credit flow from banks and financial institutions should go to the productive sector in a way to contribute to the economic growth.
Revenue Secretary Dr Ram Prasad Ghimire said the country was facing big challenges of increasing production and productivity and creating employment. According to him, economic development could not take place as per the target set due to low spending in capital formation.
Secretary Ghimire said although revenue collection was satisfactory compared to the country’s GDP, more resources were needed to realize Nepal’s higher development needs.
He also underlined the need to transform the existing trade-based economy into a production-based economy. He stressed the need for the government to create an environment of trust for the private sector so that Nepal’s domestic production would increase and go competitive.
Also speaking on the occasion, Nepal Rastra Bank (NRB) Director Dr Prakash Kumar Shrestha said it was further difficult to understand government finances after the country moved to the federal structure.
A huge sum of money has been dumped in the government fund, he said, adding it has contributed to bring contraction in the market demand. He expressed concern over increasing negativity towards banks and financial institutions in recent times.
Director Shrestha claimed that the problem in the cooperative sector has affected the banks and financial institutions.
He went on saying that the private sector has not become optimistic despite gradual improvements, including positive liquidity situation, good foreign exchange reserves and lowering interest rates.
The economy has not witnessed anticipated reforms due to shrinking internal demand, short of workforce and fall in productivity, he added.
Former President of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Bhawani Rana empathized on increasing investment in agriculture, tourism, herbs and hydropower sectors, calling for the government to bring private sector friendly policy environment.
Rana urged the government to hold adequate discussions with the private sector in determining plans in the next fiscal year’s budget.
Ex-banker Parshuram Kunwa said increasing competition has helped banking sector to nurture professionalism. He pointed out the need to think more about enhancing the quality of service to the customers.
Kunwar said good practices at home and abroad should be adopted in addressing challenges surfaced in the banking sector. He recommended the banks and financial institutions adopting information technology and expanding investment in the field of innovation.
Fin-tech expert Sanjeev Subba said cyber security challenges are increasing in the banking sector so investment should be mulled to avert such issues.
He pointed out the need to develop infrastructure for information technology in public service delivery.
According to the organizer Rastriya Banijya Bank, the conference has been organized to discuss the challenges facing the national economy and the banking sector among economists, banking experts and entrepreneurs and guide for sustainable banking development in the coming days. #Nepal
