Print Edition - 2014-12-10 | MONEY
Better infra stressed to expand rural banking
Dec 9, 2014-
Financial experts have stressed the need to develop related infrastructure besides promoting financial literacy among the people in rural areas.
Speaking at a programme organised by the United Nations Capital Development Fund (UNCDF) on Tuesday, they said that mobile banking, agent banking and branchless banking could help to spread banking service in the villages. Spokesperson of Nepal Rastra Bank (NRB) Manmohan Kumar Shrestha said that the central bank had targeted promoting the banking habit among rural people. “Mobile banking could play a key role in this endeavour,” he said.
A number of banks and financial institutions have been prompted to provide banking services in rural areas. However, the system has not been able to work effectively due to lack of information among the people besides lack of related infrastructure.
Shrestha said that providing loans alone would not make the banking business sustainable in rural areas. “The banks operating in rural areas should also teach the people how to use their services,” he added.
According to a UNCDF report, only 14 percent of the people living in the least developed countries have access to banking services while mobile phone penetration has reached 42 percent of the total population. The international organisation has been promoting mobile financial services in three least developed countries including Nepal through its programme named Mobile Money for the Poor. The programme has aimed to promote coordination between the government, financial service providers, mobile network operators, retail agents and other stakeholders to offer banking services to underprivileged people.
The recent study carried out by the UNCDF in 21 districts that involved 346 people and 114 businesses found that most of the rural people preferred various types of businesses as agents or financial service providers in their neighbourhoods.
UNCDF Programme Manager Tillman Bruett said there was a need for minimum infrastructure and innovative products to expand financial services to a large number of people. “The technology and the distribution network needs to be developed to provide real time connection among the service providers and service receivers,” said Bruett, adding that the financial sector’s regulator should create an enabling environment to encourage banks to extend services to rural areas.
NRB Deputy Governor Maha Prasad Adhikari said the central bank had been aiming to lead the financial sector towards a “less cash society”. “For the purpose, NRB has prepared a payment strategy and policies related to information technology, among others,” Adhikari said.
Published: 10-12-2014 11:12