Government sets lofty target of 8 percent by 2020
- Financial sector’s contribution to GDP
Dec 30, 2014-The government has set a target of increasing financial sector’s contribution to the country’s GDP to 8 percent by 2020 by implementing a Financial Sector Development Strategy. The sector currently contributes a mere 3.8 percent to the GDP.
The proposed strategy also aims to maintain daily turnover in the stock market at Rs 2 billion over that period.
The Financial Sector Development Strategy, being prepared by the Ministry of Finance (MoF) and Nepal Rastra Bank with support of the World Bank, aims to increase the financial outreach significantly to boost the sector’s contribution to the economy. The proposed strategy has a total of 67 strategies and 212 action plans to meet the financial sector growth target, financial access and inclusion, and financial stability.
It talks about orienting banking system to universal banking and enable productive sectors to get longer term loans for the sectoral growth. Likewise, it wtalks about increasing access of financial system to rural areas for inclusion monitoring and financial market and early warning system for financial stability. The strategy covered seven areas of financial system that include banking, insurance, capital market, non banking financial institutions and cooperatives.
Joint-Secretary at Finance Ministry Nawaraj Bhandari said improvement in financial system’s efficiency, modernisation of payment systems and improvement in the credit rating of the domestic banks by the international agencies are major targets of the strategy. The strategy has different sets of measures for five sectors of financial system. On the banking sector, it has talked about strengthening governance policies and to update the legal framework. On the insurance sector, it has envisioned to adopt an integrated approach along with formulating appropriate legislation and policy to grow reinsurance activity within the country. It has also talked about giving more autonomy to Insurance Board as the regulatory body. The strategy has envisioned about endorsing a new Cooperative Act in compliance to the strengthen governance standards and installation of Credit Information Bureau to find the credit history of borrowers from the cooperatives.
With non-banking financial institutions such as Employees Provident Fund and Citizen Investment Trust sitting on huge resources to invest, the strategy talks about increased productive investment of their resources and expansion of personal pension plans.
Published: 30-12-2014 07:05