Economist Nara Bahadur Thapa has recommended that Nepal Rastra Bank should formulate the upcoming monetary policy with a three to five year medium-term vision to bring structural reforms.
Speaking at a discussion on monetary policy in Finance Committee of House of Representatives on Sunday, economist Nara Bahadur Thapa said that Nepal’s financial sector is passing through structural problems. He suggested that a long-term thinking is very necessary while bringing the monetary policy. He also added that since the country has already entered fiscal federalism, big structural reforms are needed now.
Thapa emphasized that the monetary policy should not just limit to annual targets but look at medium-term timeframe. According to him, this approach will give Nepal Rastra Bank courage and basis to move forward with structural reforms. He claimed that the current financial structure of Nepal has become dysfunctional, so we must modernize the financial system according to fiscal federalism and fast technology development.
He pointed out that the process of giving licenses to new banks and financial institutions was stopped since 2065/66 B.S., and now it is already 83 B.S. He suggested that it is time to review this licensing policy. To give the young generation of entrepreneurs a chance to enter the financial sector, Nepal Rastra Bank should open the way for provincial development banks, local development banks, and digital banks. This will help to increase competition, innovation, and access in the financial market.
Thapa also mentioned that digital banks are necessary to make platform-based peer-to-peer lending successful, which government announced in the budget. He suggested that central bank should clarify the regulatory framework for P2P lending, which can be run through digital bank platforms.
Finally, he said that the upcoming monetary policy should prioritize building a digital financial structure. Although there is good progress in digital payments with the support of NCHL, he emphasized that NRB must now use artificial intelligence (AI) for inspecting and supervising banks, credit scoring, and cybersecurity. He said that the central bank should not make any more delay to establish digital banks.
AI Disclaimer: This article was originally published on https://bajarkochirfar.com. It has been translated with the help of AI. For the best understanding and accurate facts, we recommend reading the original Nepali version.
