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The fuel behind bank-teller
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By R.K.Regmee
The banking sector, despite experiencing frequent hiccups because of political instability and the accompanying vulnerability of economic policy, shows two encouraging trends in Nepal. Innovative packages for the urban bank-users are emerging day by day thanks to creative financial marketing. Micro-financing for grass-root farms and enterprises in villages also is making its presence felt in a noticeable manner due to the democratic sense of making economic development meaningful at people\'s level.
Both could be termed as ventures which aim at linking banks with the way people live while transacting, earning, spending, saving, investing and profiting. If they are allowed to operate normally as per the financial game-rules, they are sure to change the economic landscape of the country in not too distant future.
They possess the message that people understand. They are in a language that users are familiar with. They, however, might end up as glittering but passing shadows, if not allowed to complete their logical cycle.
Critics might argue that a discussion on the ventures of urban banks and micro-financing would lose meaning in the backdrop of the economic mess that the country is in at the moment. The pain of liquidity crisis, frustrated remittance growth, trade deficit, BOP deficit, depleting foreign exchange reserve, declining production, stagnating inflation and militancy in labour front and some other indicators do not, obviously, allow them to be optimist.
The story of banking relates to less than a third of Nepalis, and it cannot be a priority theme, they might maintain referring to the World Bank 2006 statistics of 26 % of households in Nepal having bank account. They might not show interest in the prospect of extending bank users\' club in future besides engaging ranges of other people who are not in the banking-net at present.
The multiplier effect of the competitive packages of some 240 financial bodies including 26 commercial banks, over 60 development banks, 77 finance companies and 15 micro-finance outfits would be quite substantial to generate atmosphere for engaging more Nepalis in the periphery of banks for making a difference in the economic component of their lives. This cannot be simply ignored.
Nepal has witnessed a sort of banking revolution in the past three decades. Initiated shyly by just three private banks under controlled economy of Panchayat dispensation in \'80s, the revolution got lubricated by 1990\'s liberalization. The democratic rule assisted banks in Nepal to redefine their role and scope. As a result of that banks today are able to unearth numerous loan portfolios, practice smart electric clearance and explore fresh playing fields. They are thinking about introducing reliable Nepal-wide e-payment facilities and myriad modes of straight processing system.
The 2010 - mid-February pledge by Second Micro-Finance Summit to cover three million more poor people in the next five years heralds yet a new era for social mobilization at grass root level through banking process. This aspect cannot be sidelined as people discuss banking issues in contemporary Nepal.
Yes. Unfortunately there are some failure cases of the sector that raise their ugly head from time to time. They not only provide fodder for scripting sensational headlines in media but also threaten the very trust which serves as the foundation for banking culture in the economy. The latest example of fiasco of Nepal Development Bank and series of reported malpractices of the sector dishearten all. They could darken the future prospects as well.
However, prompt response by the healers of economy could check such disappointing practices. Will those who umpire the economy as a matter of obligation to state listen to this? Or will they neglect it allowing the buoyant sector lose face and injure the economy?
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