NRB to expand banking to rural areas: Governor

KATHMANDU, April 4: Newly appointed governor of Nepal Rastra Bank Dr Yuva Raj Khatiwoda has said that the central bank would put efforts for the expansion of financial services in the areas where modern banking is still not available.



Speaking at a program organized by The Banker magazine on ´Challenges of Central Bank on Present Context and Future Strategies of Newly Appointed Governor´, Dr Khatiwoda, however, was quick to add that the central bank is having consultations with the stakeholders to fix necessary strategies to achieve the objective. [break]



The purpose of expanding financial services to rural areas should be continued until two-thirds of the total population come into banking network, he said and added that the expansion of financial services will also help ease service pressure that the banks at the urban areas are facing.



Dr Khatiwoda also expressed concern over the high spread rate of some of the financial institutions and urged for more transparency while dealing with spread rates. He added that the financial institutions that are offering single-digit interest on deposits at a time when inflation is in double-digit will not be able to attract desired volume of deposits.



Governor Khatiwoda reiterated that the central bank would focus on management of liquidity, strengthening of monitoring and supervision capacities, expansion of financial services and raising central bank´s credibility and playing an effective role as a government´s financial advisor.



Speaking at the same program Sujit Mundul, chief executive officer of Standard Chartered Bank Nepal, expressed reservation over the recent decision of NRB to allow more financial institutions to come into operation and urged the central bank to review the policy as excessive number of financial institutions is creating unhealthy competition.



Former president of Nepal Bankers´ Association Radhesh Pant welcomed the number of policies that the recent mid-term review of monetary policy has adopted and stressed upon the need to implement a long-term strategy to mobilize additional deposits into the banking system.



Former governor of NRB Deependra Bahadur Kshetry underlined the need to regulate both inflow and outflow of Indian currency, while another former governor Dipendra Purush Dhakal said operation of financial institutions should not be barred for those who have both knowledge and capacity to run such institutions.



Founding governor of NRB Himalayan Shamsher JB Rana said that the banks should be not forced to go into rural areas in the name of expanding financial services and urged the central bank to promote micro-finance institutions in rural areas.

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