Govt begins preparing Financial Sector Development Strategy

THE Ministry of Finance (MoF) has initiated devising the Financial Sector Development Strategy as per the budgetary provision. The budget for the current fiscal year has talked about formulating such a strategy to achieve speedy economic growth, quality development of bank and financial institutions (BFIs), strengthening of the capital market and all aspects of the insurance sector by maintaining financial stability, increasing financial access and financial sector development. The same has also been included in the monetary policy issued by the Nepal Rastra Bank (NRB). After holding talks with stakeholders, the ministry has recommended the finance minister to form two committees to prepare the strategy. “A high-level committee headed by the finance minister will monitor and supervise the preparation process, while a working committee headed by the NRB deputy governor will prepare the draft,” said Krishna Devkota, joint secretary at the ministry. He said a final decision could come within a week after holding another round of discussion with the stakeholders. “The strategy will incorporate BFIs, insurance companies, the capital market, microfinance companies and contractual saving institutions like Employees Provident Fund,” Devkota said. Despite a significant growth in the financial sector over the last two decades, there is no comprehensive policy for different subsectors. Banking and insurance sectors, despite enjoying an unprecedented growth, are facing problems related to governance putting public money at risk. There are also concerns about the domination of banks and financial institutions in the capital market, with less representation of manufacturing- and productionrelated industries, and virtually no development of the bond market. Devkota said they expect to complete the strategy document within mid-May. NRB Deputy Governor Gopal Prasad Kafle said the move to prepare the strategy was taken as there is not holistic strategy for the sector. “The strategy with a specific action plan will help develop the sector,” he said. Currently, the High-level Financial Sector Coordination Committee headed by the finance minister takes decision on issues related to the sector. Kafle said the new strategy would help in self-regulating the sector as it would incorporate the actions to be taken.