Finance Minister Ram Sharan Mahat urged banks and the financial institutions (BFIs) to invest in high-potential markets of rural areas.

The minister said investment in high-value exportable agro products like cardamom, ginger and tea among others could help boost the country’s exports.

“The BFIs should penetrate mainly the high-potential export market of the rural areas,” he said at a programme on “National Conference on Financial Inclusion for Nepal: Presentation and Validation Workshop-The Demand Side Study” organised jointly by the Nepal Rastra Bank (NRB) and the United Nation Capital Development Fund (UNCDF).

In most of the cases, capital flows from rural to urban areas. Mahat stressed on the need for reversing the trend to develop the rural areas. “There must be the flow of capital from urban to rural areas, for which the financial sector’s efforts are needed,” he said.

Govinda Raj Pokharel, vice-chairman of the National Planning Commission, said the BFIs should focus on developing innovative products to expand rural financial access. “The financial access is effective only when the capabilities of the rural people are supported,” he said.

NRB Governor Chiranjivi Nepal stressed on the need for promoting financial inclusion. “It is key to reducing the inequality,” he said, urging the BFIs to introduce reliable and affordable financial services targeted especially at the disadvantaged people.

Expressing the rationale behind the “one bank account to one household” programme the NRB launched recently, Nepal said an increase in the poor’s financial access could help them get out of the vicious circle of poverty.

Ingrid Dahl Madsen, first secretary at the Danish Embassy, Nepal, praised the government’s initiative to increase financial access. “It is key to reducing poverty by ensuring employment opportunities,” he said.

According to a survey carried out jointly by the NRB, UNCDF and United Nation Development Programme (UNDP), 61 percent of the Nepali adults are financially included.

The survey shows men have higher level of banking access and are more financially included compared to women. According to the study, 57 percent of the Nepali adults save, while 45 percent borrow money from the BFIs.

Binod Atreya, executive director at Microfinance Promotion and Supervision Department of NRB, said the survey covered 4,014 adults (18 years and above) from 70 districts.

He said they considered three intervention areas for the purpose. “The study was based on the BFIs’ role to support the micro finance institutions investing in major agricultural products in hilly districts, availability of digital financial services including the technology based banking products and diagnostic study and survey,” he said.

Atreya said they were also planning to conduct a supply side study on financial inclusion.