KATHMANDU, Mar 4: The World Bank has approved a US$ 100 million credit to help Nepal accelerate its medium-term reform program for the financial sector, and to reduce the vulnerability of the banking sector and increase its transparency.
The government's medium-term program for the financial sector focuses on reforms designed to place the financial sector on a sound foundation for the future, a press note issued by the World Bank stated.
"Building on past gains, the Third Financial Sector Stability Credit will support four main policy areas: enhancing financial sector development; restructuring and consolidating the financial system; strengthening the legal and regulatory framework for crisis management, banking and insurance supervision and payment systems; and enhancing the governance and transparency of the banking sector," it added.
Despite rapid growth of banking sector, two in every three Nepalis still have little or no access to formal financial services.
“Ensuring the stability of financial system is crucial for expanding financial inclusion,” said Takuya Kamata, the World Bank Country Manager for Nepal. “Participation in the financial system helps people start and expand businesses, manage risks and weather shocks. It also promotes social protection and women's empowerment,” he added.
Similarly, Gabi Afram, the World Bank Task Team Leader, said: "The credit supports a sustained focus on financial sector stability to endure broader economic recovery in the aftermath of the 2015 earthquakes and trade disruption.”
According to the World Bank, this Development Policy Credit, the third in a series, has been prepared in close collaboration with the International Monetary Fund and the United Kingdom Department for International Development (DFID). The first credit of $30 million was approved in June 2013. Similarly, the second credit of $100 million was approved in June 2015.
"The World Bank is considering a fourth credit in this series to assist the implementation of the new legislative framework," Sabin Shrestha, the World Bank Co-Task Team Leader, said.