Tuesday, July 17, 2012

Experts urge financial sector to extend services to rural areas


Experts have suggested banks and financial institutions to extend banking services using technology like mobile phones and develop innovative financial products to extend financial services to the rural population.
"More than half the populace — some 54 per cent of the surveyed — still save money at home followed by 50 per cent, who deposit at banks," said a researcher Ramesh Gangol at a workshop on 'Access to Finance' organised by the Finance Ministry, Asian Development Bank's Improving Access to Finance Sector Development Programme, and National Banking Training Institute (NBTI), here today.
Similarly, some 39 per cent of the rural households surveyed among the 1,893 households in eight districts borrow from informal sources like money lenders, friends and relatives, he added.
The situation is even worse during emergencies, said Gangol. "The rural populace, in emergencies like medical emergency, borrow from informal sources, whereas the urban populace borrow more from formal sources, according to the survey conducted in Ilam, Morang, Dhanusha, Dhading, Nawalparasi, Parbat, Surkhet and Kailali. "Similarly, multiple borrowings could also become a serious problem in the long run."
The result will make the formal sector like commercial banks, development banks, finance companies and micro-finance development banks, and semi-formal sources like financial non-governmental organisations licensed by Nepal Rastra Bank to think on how to serve the unbanked market and develop a range of financial products which meets the needs of the rural population, he said.
Similarly, national team leader of Improving Access to Finance Sector Development Programme under Asian Development Bank (ADB) Dr Purushottam Shrestha opined that branchless banking could address the needs of the unbanked rural populace but it has limitations due to the difficult terrain. "Banks have to incur losses and wait for long periods to reach them raising questions of affordability," he said, adding that the operation of branchless banking is expensive.
"Regulation should allow banks to take a nominal charge for home delivery service from customers to meet their overhead costs," suggested Shrestha, asking the banks and financial institutions to raise mass awareness and educate the rural population about branchless banking facilities.

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