South Asia Leaders’ Roundtable – Opening remarks by Governor Maha Prasad Adhikari, Nepal Rastra Bank

Warm good afternoon to all!

 It is my pleasure to deliver opening remarks at the semi-annual event of ‘South Asia Leaders Roundtable’.

I would like to express my thanks to the Management of Alliance for Financial Inclusion (AFI) for organizing this important meeting and welcome to leaders to this valuable discussion.

The essence of financial inclusion is pertinent for calibrating and attaining the common objective of poverty alleviations. Such aspiration for poverty alleviation has been take up in many regional declarations of South Asia. In this regard, we South Asian Central Bank policy makers have taken the mandate of financial inclusion very seriously and implemented various policies over the years, namely in providing access to the unbanked and the under-bank segment of the population. We have also made the promotion of financial inclusion as one of the major agendas in the discussion in the recent 42nd SAARCFINANCE Governors Group Meeting held on November 15, 2021.

This success is reflected in South Asian countries having done significantly well in providing access to financial inclusion over the last decade – as per the Findex numbers the financial inclusion levels have gone up from 30% (2011) to ~50% (2017),

Most of the South Asian countries are either developing or have already developed their national financial inclusion initiatives/policy/strategies and are now in the implementation phase. These countries have also established or in the process of establishing dedicated organizational structure for consolidating and implementing financial inclusion endeavors. These show commitment from all the stakeholders within our respective countries to further advance financial inclusion.

Despite the devastating impact of the COVID-19 pandemic in public health and economic crisis, the regional regulatory bodies have embraced digital transformation as one of the key response to build a resilient, inclusive and a sustainable recovery.

I would focus on the context of Nepal. The pandemic had catalytically altered the mode of payments, from physical to digital, which had not only changed the structure of the pie but had also increased its shape. This has been verified by the significant increment in the digital indicators on Y-o-Y basis viz. from July 2019/2020 to July 2020/2021 the mobile banking customers increased by 26%, the Internet banking customers by 13.7% and the number of RTGS transactions by more than 56% among others.

The use of digital payments has expanded rapidly in the recent period owing to the policy of this bank to promote electronic transactions and the need for less cash transactions to minimize the potential risk of COVID-19 infection. Digital payments have been widely used in retail shops, wholesale businesses, departmental stores, and capital market transactions. It has also supported the development and modernization of payment system as well as access to financial services. In addition Nepal Rastra Bank is promoting domestic financial education and inclusion emphasizing digital payments and also have declared FY 2022/23 as ‘E-Payment Transactions Promotion Year’.

Despite of all the efforts that we have done so far, a significant number of people are still beyond the formal financial access. There are a number of challenges from inadequate access to formal financial services, such as related to gender gap, MSME financing, financial education and literacy; but these challenges present interesting opportunities to build a green recovery from the pandemic such as through green and sustainable finance. Above all a lot needs to be done on-ground to implement these policies and national strategies that have been developed in the South Asian region.

As a board member of AFI, I see AFI could act as a catalyst to further advance our work in the region on financial inclusion by sharing regional knowledge, experiences and translating global financial inclusion issues into practical implementation at the regional and national level. We can focus common efforts in sharing our successes to each other by prioritizing research based, localized and innovative ideas for achieving inclusive finance and growth.

I firmly believe AFIs DNA of Peer to Peer knowledge exchange of practical solutions between regulators and capacity building will facilitate the implementation of impactful policy changes that will benefit fellow regulators and provide further impetus to the good work which is already happening in the region.

We member institutions as the owners of AFI could reflect and consider deeper regional engagement and explore the potential of taking this initiative forward based on our national priorities and regional ambitions in achieving inclusive finance.

I hope as an outcome of this Round Table, the leaders and AFI together chart a new direction for the next phase of accelerated growth through effective implementation of financial inclusion related envisioned initiatives, policies, strategies, programs to achieve the pre-determined goals in the South Asia region.

Thank you for your kind attention.