Nepal Rastra Bank (NRB), a member of AFI, along with national stakeholders and international development partners jointly released the findings from the recent FinScope demand side survey on financial inclusion for Nepal in Kathmandu on 13 August 2015.

The findings of the survey, which is part of the United Nations Capital Development Fund’s (UNCDF) Making Access to Finance Possible (MAP) Programme, were launched at the National Conference on Financial Inclusion for Nepal: Presentation and Validation Workshop – The Demand Side Study. The objective of the conference was to present and discuss financial inclusion data for Nepal—both formal and informal—including drivers and barriers to financial access.

The survey was conducted in late 2014 and covered a representative sample of 4,014 adults in Nepal, aged 18 years and above, across 70 districts. The results indicate that 61 percent of Nepalese adults are formally banked while 21 percent use informal channels and 18 percent remain financially excluded. In line with global trends, the survey findings also show men have higher levels of access to banking services and are more financially included compared to women in Nepal, as well as higher levels of education and personal monthly income. Moreover, 57 percent of Nepalese adults claim to save and 45 percent claim to borrow money. Moneylenders feature highest as a source of formal credit in Nepal.

Dr. Binod Atreya, National Project Director and Executive Director of Nepal Rastra Bank, welcomed the delegates. He explained that in the overall process, the demand side data will be supplemented with a detailed analysis of the supply and regulatory environment in order to comprehensively understand the drivers and barriers of financial inclusion. After completion of the MAP diagnostics, a roadmap would be prepared to assist the Government of Nepal in identifying priorities, setting targets and developing policies for promoting financial inclusion in the short, medium and long-term for the country.

In his opening remarks, the Minister of Finance, Dr. Ram Sharan Mahat, pointed out that most people live in the rural areas of Nepal but only few financial institutions serve them. Therefore, financial inclusion helps to unlock the significant potential in rural areas bringing about entrepreneurship, more investment and higher incomes.

Dr.Chiranjibi Nepal, Governor of NRB, highlighted the significance of financial inclusion stating that, “access to finance is important for all members of society but particular for vulnerable and low income people, to  better withstand natural disasters.” He noted that strong coordination mechanism between banking, insurance and non-bank financial institutions along with private sector players is required to achieve universal financial access and economic growth in the country.

He stated that NRB in coordination with the government of Nepal has already taken a number of policy measures, including payments systems and financial education, to ensure reliable and affordable financial services to the poor people in the country.

Dr. Govind Raj Pokhrel, Vice Chairperson, National Planning Commission, highlighted that the availability of this new, demand-side information on financial behaviour of households and individuals would assist in addressing the causes of financial exclusion. He also pointed out the need for innovation in Nepal to further reduce poverty and inequality.

Conference participants included senior officials from the Government of Nepal, NRB, financial institutions, remittance and insurance companies, private sector entities, academics, donors and development partners and representatives from the media. In addition, international experts from AFI, UNDP and UNCDF also participated at the event.

During the panel session “Towards financial inclusion – Reflecting on the MAP Demand Side study findings” , chaired by the Deputy Governor of NRB, Mr. Maha Prasad Adhikari, representatives from Nepal Bankers Association, Central Bureau of Statistics, Federation of Nepalese Chamber of Commerce and Industries including experts from AFI and UNCDF, expressed their views on financial inclusion in Nepal.

Norbert Mumba, Deputy Executive Director of AFI, noted that the AFI network is seeing a growing practice among countries worldwide to undertake national surveys in recent years in order to produce a clearer picture of both supply and demand side data. Good data is essential for effective financial inclusion policymaking.

Analysis of World Bank’s FINDEX data and AFI’s Country Policy Profiles indicates a positive correlation between a roadmap or national financial inclusion strategy (NFIS) and the number of banked. If this is supplemented by innovation, in particularly DFS initiatives, this correlation becomes even stronger. Those countries that have good governance and coordination mechanisms as part of their NFIS, e.g. in the form of a national task force or council to coordinate FI activities, also show higher growth and levels of financial inclusion.