Kathmandu. Most of the ambitious financial sector reforms included in the budget for the current fiscal year have been in limbo due to lack of implementation. As in the past years, the tendency of announcing plans in the budget but not implementing them in practice has continued this time as well.
The then Finance Minister Bishnu Poudel had promised to enhance the capacity of the regulatory bodies of the financial sector and make timely reforms in the laws related to Nepal Rastra Bank and Nepal Insurance Authority. In particular, the institutional strengthening of the Securities Board of Nepal (SEBON) and restructuring of the Nepal Stock Exchange (NEPSE) could not take any concrete initiatives. As a result, these announcements have been limited only to speeches and papers.
On the other hand, the goal of expanding credit to the private sector to boost the economy has also been very disappointing. Even as the fiscal year is coming to an end, it has not been able to reach even half of the loan expansion target. As a result, the morale of the private sector has not yet improved.
The government has not been able to establish an ‘Asset Management Company’ to manage the growing number of non-banking assets in the banking sector. The plan has been stalled after the Nepal Rastra Bank, which was drafting it, was confused. In fact, this program has been limited to paper since the past.
Similarly, the government has not taken forward any preliminary work on new programs such as the operation of ‘Neo Bank’ within the next year. Despite the adoption of a flexible monetary policy by the Nepal Rastra Bank, entrepreneurs and entrepreneurs are not willing to take loans due to lack of investment environment in the market.
Similarly, the government’s performance in the insurance sector is also weak. Although it has been said that the scope of insurance will be expanded and cyber security insurance will be introduced to protect government property from natural disasters and accidents, these plans have not been implemented yet. The state has suffered a huge financial loss due to the recent agitations and vandalism due to lack of insurance of government property.
The main reasons for this failure are political tug-of-war, self-interest games and recent instability. The reform process of the entire financial sector has been overshadowed by the government’s failure to create an environment to encourage the private sector.
How will the new government take these plans forward? The budget to be presented today will determine its direction. Finance Minister Swarnim Wagle has said that reform of the financial sector is the need of the hour. How has he drawn up a blueprint for improvement in this area? Experts say that this can give a new direction to the banking and financial sector.
