Wednesday, January 12, 2011

Mergers can help expand financial service

Complicated geo-political environment has posed a threat to the access to finance, according to the expert.
Inadequate commercialisation and slow prefessionalism coupled with low technical competency of human resources and reliability of management information are also some of the challenges to the access to finance, said Narahari Dhakal, consultant at the Finance Ministry presenting his paper at the 'Access to finance: Challenges and Opportunities, organised by the Finance Ministry, here in the Valley today.
"Despite mushrooming financial institutions in the country, only one fourth of the population has the access to finance," said senior advisor of the ministry Keshav Acharya. "There is still the problem of how to balance demand and supply contrary to the economic theory," he said, adding that not only the real sector has contracted but also 75 per cent of the finance is in informal sector that needs to be formalised.
"The money is in informal sector," agreed the central bank governor Dr Yubraj Khatiwad. "The large informal sector is growing in the forms of Dhukuti, which will be a chronic problem, if not addressed in time," he said, questioning the non-formal and semi-formal sector's contribtuion at the time when the formal sector's contribution is negligible.
In recent years, the number of financial institutions increased but their service has not yet expanded, according to him. The governor also blamed the geographic and social stigma for the delay in service expansion. "The central bank has pushed for the mergers to increase the efficiency and affordability of the credit," he said, adding that after merger, the banks and financial institutions can help sustainable development of the economy in low spread also.
The government has given incentives for the merger for the consolidation of the financial institutions, said finance minister Surendra Pandey. "Service expansion and consolidation of the banks and financial institutions is the need of the day," he said, adding that technology could be boon to the financial institutions in increasing the access to finance and formalise the informal economy.

Government fails in creating jobs
KATHMANDU: Finance Ministry Surendra Pandey admitted that the government has failed in generating employment in the country. He, however, blamed the energy crisis for not being able to create jobs. Pandey opined that the liquidity problem could be solved, if private sector could be invited to invest on some big infrastructure projects. "We can identify some highly saleble 10 projects and handover to the private sector that could ease the liquidity crunch," he said, admitting that the government can create investment room and open new window.

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