Nepal's banking industry leads the region in female representation but significant barriers remain in having more women in leadership roles: IFC Report

With 46 per cent female representation in its entry-level workforce, the banking industry in Nepal is ahead of other countries in South Asia in achieving gender parity. However, only 23 per cent of senior management roles are held by women, according to a new IFC report that examines gender diversity at six leading banks in Nepal.

The study—among the first of its kind in the region— identifies opportunities that can enable more women to advance to senior roles in the banking industry in South Asia.

This multi-country study, Women’s Advancement in Banking in Emerging South Asian Countries, focuses on commercial banks in Bangladesh, Nepal, and Sri Lanka, where women constitute 30 per cent of the banking sector’s workforce compared to the global average of 52 per cent, the report reads, underlining how several barriers—inequitable hiring, inadequate professional development, lack of fair evaluations, sociocultural constraints, and others—curtail women’s career growth prospects across the region.

“Diversity, equity, and inclusion are central to IFC’s work values," IFC country manager for Nepal, Bangladesh, and Bhutan Martin Holtmann said, adding that through nuanced, data-driven insights emerging from this new report, it is hoped to deepen the industry discourse around steps that need to be taken to improve the status of women in the banking workforce across South Asia.

In Nepal, women hold 42 per cent of all positions in surveyed commercial banks. Comparable figures for  Sri Lanka and Bangladesh are at 38 per cent and 18 per cent respectively. In senior management roles, women hold 23 per cent of executive positions in Nepali banks, compared to 20 per cent in Sri Lanka and 12 per cent in Bangladesh, the report adds.

Past studies have shown that commercial banks that have 15 per cent or more women in senior manager or higher roles, command up to 33 per cent higher return on equity than banks that do not. A growing body of evidence further links an increase in women’s representation in organizations to better performance on business metrics.

Accordingly, IFC's key findings and recommendations intended to help industry actors—executive managers in commercial banks, policymakers, industry bodies, and investors—direct their efforts to boost women’s representation in leadership in the banking industry.

The report recommends targeted efforts in four areas by banks and industry actors. These include establishing clear organisational commitments for gender diversity, the support system for women to reach leadership positions, policy changes to ensure workplace safety, and initiatives to support women's professional development and work-life balance.

“Nepal has a strong legal framework to promote women’s economic participation in the country. And these provisions are more comprehensive than other countries in South Asia,” said Holtmann. “While these progressive policies have allowed Nepal to be a leader in the region, more needs to be done to increase the number of women in leadership positions and to reach gender parity.”

IFC’s $56 million loan to Global IME Bank in February 2024 earmarked 25 per cent towards supporting women-owned small and medium enterprises (SMEs). Additionally, IFC investment in various banking and financial sector clients such as NMB Bank, Sanima Bank, and Siddhartha Bank  have been able to provide economic opportunities, and financial services to SMEs including those led by women.

MCA-Nepal signs contract to construct 400 kV New Butwal Substation at Nawalparasi

Though it took a long, Millennium Challenge Account-Nepal (MCA-Nepal) has awarded and signed a contract with Linxon India Pvt Ltd for the construction of the 400 kV New Butwal Substation in Nawalparasi (Bardaghat Susta West) district in Lumbini Province.

In a milestone achievement, the 400 kV Gas Insulated Switchgear (GIS) substation will be constructed within the contract duration of 39 months, according to a press note issued by the MCA Nepal.

Nepal Electricity Authority (NEA) managing director (MD) Kul Man Ghising and the US ambassador to Nepal Dean R Thompson, local authorities and elected representatives were also present at the signing ceremony in Bhumahi, Nawalparasi (Bardaghat Susta West) today.

"The US government is committed to working with the government of Nepal to ensure that the compact delivers on Nepal’s energy needs," ambassador Thompson said, addressing the event. "The 400 kV New Butwal Substation will improve Nepal’s transmission capacity contributing to reliable and affordable electricity for household consumption, expanded commercial and industrial enterprises and cross-border electricity trading."

“The 400 kV substation has been a priority for NEA and will supplement the existing 220 kV substation to significantly increase cross-border energy trade in the region,” NEA managing director Kulman Ghising said, on the occasion.

During the event, MCA-Nepal executive director Khadga Bahadur Bisht highlighted the overall progress being made in the implementation of the MCC Nepal Compact. "MCA-Nepal is expediting all works for the construction of the transmission lines and substations under the Electricity Transmission Project," he said, adding that the MCA-Nepal is at the final stages of the procurement process to sign the contract for the construction of the remaining two substations as well.

Along with this substation, MCA-Nepal is constructing two other substations in Ratmate, Nuwakot district and Damauli, Tanahun district under the Electricity Transmission Project funded by the US government’s Millennium Challenge Corporation (MCC) and the government of Nepal. The contractors for the remaining two substations are being selected.

The MCA-Nepal Board, chaired by the finance secretary, decided in its March board meeting to advance the 18-km Nepal portion of the New Butwal-Gorakhpur power transmission line to facilitate timely initiation of cross-border power trade as outlined in the agreement with India.

However, it took a long time due to technical problem in contract, and also tug-of-war between the NEA and MCA-Nepal. The tug of war has, according to the sources, created doubt on the successful completion of the MCC project within 5-year timeline, which is a fixed time period of the project.

World Bank approves $80 million to strengthen financial sector, increase access to financial services

May 6

The World Bank’s Board of Executive Directors today approved an $80 million development policy credit for Nepal to strengthen the stability of the financial sector, diversify financial solutions, and increase access to financial services.

The third Finance for Growth Development Policy Credit aims to improve the functioning of the financial sector to support private sector-led growth. The operation will strengthen the supervision of the banking and insurance sectors in Nepal and foster financial product innovations in capital, insurance, and disaster risk markets, claims a press note issued by the World Bank.

The operation will also increase financial inclusion through digitalisation, enhanced credit infrastructure and improved financial literacy, with a focus on women entrepreneurs, it adds.

“This project supports Nepal’s green, resilient, and inclusive development and will help create an enabling environment for private investment to contribute to Nepal’s economic growth, particularly benefiting the poor and vulnerable,” said World Bank country director for Maldives, Nepal, and Sri Lanka Faris Hadad-Zervos.

The operation also supports Nepal's climate agenda by, for example, enhancing supervision of climate risks by requiring disclosures of climate-related risks and impacts of the banking sector portfolio; introducing risk-informed pricing for insurance products, including climate risks; establishing a framework for the issuance of green bonds; and integrating climate-related mitigation and adaptation commitments into credit guarantee products.

"This operation supports the government’s transformative financial sector reform agenda to promote private sector-led growth," World Bank task team leader for the project Tatsiana Kliatskova said, adding that the reforms in banking, insurance, and capital markets are instrumental for the sector’s resilience and the critical role it plays to enable private capital mobilisation.

Economy to grow by 3.87 per cent, per capita income reaches $1456

The economy is going to grow by only 3.87 per cent at the consumer's price, in the current fiscal year.

According to National Statistics Office (NSO), the gross domestic production (GDP) is estimated to grow by 3.87 per cent despite the government's target of 6 per cent.

The economy will grow by 3.54 per cent at constant price in the current fiscal year, the report launched today reads.

Earlier, the government has projected the economy to grow by 4 per cent, whereas the World Bank (WB) has estimated it to grow by 3.3 per cent, the International Monetary Fund (IMF) by 3.1 per cent and Asian Development Bank (ADB) by 3.6 per cent due to slowdown in the economy.

Nepal’s economy will be the size of Rs 5.704 trillion by the end of the current fiscal year from Rs 5.348 in the last fiscal year, the report reads, adding that the per capita income is also expected to increase by $51 to $1456 in the current fiscal year from last fiscal year's $1405.

The increase in income is too low as Nepal is graduating to Developing Country (DC) status by 2026 from current Least Developed Country (LDC) status.

Due to the contraction in some sectors of the economy and the low capital expenditure has pulled the economic growth rate downwards, the report exposes.

Likewise, the report also shows that the share of service sector in the economy has reached 62.9 per cent. "The contribution of the secondary sector (industry-construction) is 12.5 per cent and the share of the primary sector (agriculture) is 24.6 per cent," it claims, adding that this fiscal year, the contribution of agriculture has increased slightly compared to last year, though the increase in agriculture sector alone cannot push the economic growth upwards.

Agriculture sector will grow by 3.05 per cent, while the non-agriculture sector will grow by 3.75 per cent, it adds.

The industrial sector has also contracted for the second year in a row due to the inability to increase production, according to the report. "This year, the industrial sector has contracted by 1.60 per cent, wheras last year there was a contraction of 1.98 per cent."

In 2021-22, the growth of the industry was 6.70 per cent, the report added estimating that there will be a contraction in the production of industries as there has been no significant improvement in the economy globally due to various adverse factors created in the economy in recent times.

Government, development partners launch Public Expenditure and Financial Accountability Assessments

Nepal has a robust legislative and institutional framework for public financial management, but further reforms are needed to strengthen fiscal and budget outcomes to support green, resilient, and inclusive development, says the third Public Expenditure and Financial Accountability (PEFA) Performance Assessment Reports.

The PEFA Performance Assessment Reports were jointly launched today by the government  with support from the Multi-Donor Trust Fund. The assessment is based on the internationally recognised PEFA Framework to assess the progress of Public Financial Management (PFM) across the government. Based on the assessments, the government will prepare a medium-term PFM Reform Strategy and Action Plan.

“Public financial management has the power to change people's lives and livelihoods,” finance minister Barsha Man Pun said, adding that Nepal is committed to establishing a strong and robust public finance system and transforming the public financial management landscape through rigorous reforms and adoption of digital governance.

The government partnered with the Nepal Public Financial Management Multi-Donor Trust Fund supported by Australia; European Union; the United Kingdom’s Foreign, Commonwealth, and Development Office; Norway; Switzerland; and U.S. Agency for International Development and administered by the World Bank to conduct the assessments. The reports consist of the PFM Performance Assessment, Climate Responsive PFM Performance Assessment, and Gender Responsive PFM Performance Assessment. Nepal is the second country after Bhutan in South Asia to undertake PEFA Climate and PEFA Gender Assessments. 

According to the PFM performance assessment, the government has deployed a range of information systems to enhance the efficiency of PFM. The adherence to international standards in the budget and accounts classification ensures comparability, accuracy, comprehensiveness, and transparency in financial information. Budgets are designed with a medium-term outlook, and the predictability of resource availability for spending units is at a high level. The fiscal transfers allocated to subnational governments exhibit transparency and adherence to established rules while the scope and coverage of both the internal and external audits are extensive. 

“Nepal’s successful completion of the PEFA assessment demonstrates its commitment to sound financial management practices,”  World Bank country director for Maldives, Nepal, and Sri Lanka Faris Hadad-Zervos said, adding that development partners, including the World Bank, are committed to supporting the next generation of public financial management reforms for Nepal’s green, resilient, and inclusive development. 

The assessment highlights the following areas for potential PFM reforms to achieve better fiscal and budgetary outcomes in the future:

• Restoring fiscal credibility through a sustainable medium-term expenditure framework, recalibration of fiscal rules, expenditure reprioritization, and risk management. 

• Improving public investment efficiency by reducing inefficiencies and building climate-resilient infrastructure. 

• Applying a climate and gender lens to fiscal decision-making to mainstream climate and gender considerations. 

• Enhancing fiscal transparency and accountability by enforcing fiscal rules and promoting accountability.

“As the PEFA assessment demonstrates, some crucial elements center on fiscal discipline and its impact on service delivery. Better fiscal discipline is needed for more effective, inclusive, and accountable delivery of services,” said acting mission director of USAID Nepal Karen Welch. “We, the development partners, bring assistance that supports the government’s efforts across many sectors, like health and education, environmental preservation, and attention to marginalised groups. Sound PFM allows us to work together to better benefit the people of Nepal.”

The programme was chaired by the finance secretary Madhu Kumar Marasini. chief secretary. Dr Baikuntha Aryal, revenue secretary Dr Ram Prasad Ghimire, and financial comptroller general Hari Prasad Mainali expressed their views and reiterated their commitment for PFM reforms as indicated by this assessment. The event also included a panel discussion on the topic: “How can Nepal improve capital expenditure to achieve development outcomes?”.

The event was attended by high-level government officials, accountability institutions, and development partners involved in PFM, including climate and gender agencies. 

Basant Chaudhary's BLC Holdings and Hiranandani Group's Yotta to build a Tier 3 data center in Nepal

Basant K Chaudhary led BLC Holdings and India's Yotta Data Services Pvt Ltd today signed an agreement to build the first-ever super cloud data center in Ramkot.

BLC managing director (MD) Megha Chaudhary and chief executive officer (CEO) of Yotta Sunil Gupta signed the agreement on behalf of their respective companies during the opening session of the Nepal Investment Summit 2024.

Under the agreement, the two will jointly build a data center in Ramkot at the estimated cost of around Rs 3 billion.

This is a crucial forward leap for Nepal in the data center space, according to the information of the BLC Holdings. "It also presents a solid opportunity for the Indian company to tap into the Nepali market."

BLC Holdings is owned by Basant K Chaudhary whereas Yotta Digital Services is a subsidiary of Indian conglomerate Hiranandani Group.

Hiranandani Group -- owned by billionaire brothers Surendra Hiranandani and Niranajan Hiranandani -- is one of the reputed real estate company in India, who has investments in health and service sectors also. 

Both the companies called the collaboration an important milestone.

According to Yotta, it will leverage local resources, regulatory capacity and local relationships, as well as BLC’s customer network, apart from strengthening Nepal’s access to its major platform, which will enable Nepal to access global expertise, international standards, and advanced technologies.

The data center will spread over 11 ropani of land in Ramkot, according to the BLC Holdings. "It produces an IT load of up to 4 megawatts. It will be a modern and advanced infrastructure, equipped with modern safety protocols."

In addition, it will also offer services to both enterprise and hyperscale customers, the company added.

Nepal’s first-ever 'super cloud' tier 3 data center is named 'K One'.

BLC MD Chaudhary, after signing the agreement, said that the K one data center in Ramkot will develop an IT ecosystem in Nepal. "It will be designed by Global Hyper Scalers," she said, adding that it will significantly boost Nepal’s profile in the data center industry and help create employment opportunities in the construction and IT industries.

The agreement includes cooperation for the establishment of world-class data centers, cloud services and artificial intelligence platform services in Nepal, Chaudhary added.

Yotta has two operational data centers, Yotta NM1 in Navi Mumbai and Yotta D1 in Greater Noida, Delhi.

Development Finance Institutions commit increment in investments in Nepal

The Second Development Finance Institutions (DFI) Mission, that started on Tuesday in Nepal, concluded today with a commitment to explore investment opportunities in Class B Banks, Micro-Finance Institutions (MFIs), and Digital Financial Service Providers, following productive deal facilitation sessions held during the three-day mission.

During a meeting with finance minister Barsha Man Pun yesterday, DFI representatives received assurance of the government’s commitment to facilitating foreign investments. In this regard, the finance minister highlighted several amendments made earlier this week to laws aimed at simplifying foreign investments.

“The agendas linked to challenges to ease investments by Development Finance Institutions are gradually being addressed by the government, which is a positive sign to mobilise local saving and attract foreign investments," chairman of the Board of the Swiss Investment Fund for Emerging Markets (SIFEM) Jörg Frieden said, adding that the recognition of DFIs as development and economic growth partners by the government is very encouraging for our investments.

The DFI Mission, organised by Invest for Impact Nepal (IIN), was attended by 14 Development Finance Institutions and Impact Investors from the United States, Europe, and the United Kingdom and Multilateral Agencies such as the IFC.

The mission’s primary focus was on accelerating DFI investments in Nepal's financial service industry beyond Class A Banks. During the mission, DFIs delegates also had meetings with the finance secretary Madhu Kumar Marasini and Nepal Rastra Bank’s governor Maha Prasad Adhikari and the deputy governor Bam Bahadur Mishra, to discuss on the execution of the Memorandum of Understanding (MoU) between the Nepal Government and Development Finance Institutions signed in October 2023 and the issues related to easing entry and exits for DFI investments, respectively.

Representatives of the Nepal Bankers’ Association (NBA) and DFIs also explored opportunities to scale up Nepal’s Financial Service Industry and the role of DFIs to promote sustainable financing.

The First Development Finance Institutions (DFI) Mission in Nepal was held in April 2023.

The Government of Nepal, Finance Ministry and Development Finance Institutions (DFIs) signed a Memorandum of Understanding on October 31, 2023.

The MoU outlines an agreement to enhance the inflow of private capital investment from DFIs into Nepal, the need for transformative investments to achieve UN SDG goals, to foster favourable investment climate, and transfer of technical know-how and knowledge to enhance Nepal’s competitiveness.

Nepal Rastra Bank in its amendment to the Foreign Investment and Foreign Loan Management Bylaws -2080 (February 2024), has recognised DFIs as a category of investors (government/inter-government owned institutions).

The DFI Investments in Nepal from 2008-2023 has amounted to $1.1 billion with the financial sector comprising for 59 per cent of the total.

Remarkably, between 2021 and 2023, the financial sector attracted $629.9 million investments from DFIs.

Attendees of the second DFI Mission included Asian Development Bank (ADB), British International Investment plc (BII), Société Belge d’Investissement pour les Pays en Developpement (BIO), Nederlandse Financierings Maatschappij voor Ontwikkelingslanden nv (FMO), Swiss Investment Fund for Emerging Markets (SIFEM), Deutsche Investitions- und Entwicklungsgesellschaft (DEG), Finnish Fund for Industrial Cooperation (FINNFUND), International Finance Corporation (IFC), US International Development Finance Corporation (DFC), Japan International Cooperation Agency (JICA), MicroVest, DAI Capital, responsibility and Symbiotics, according to a press note issued by the IIN.