Digital financial services driving financial inclusion and economic growth: Report

KATHMANDU, APRIL 2: Digital financial services are transforming Nepal’s financial sector, advancing financial inclusion and economic growth, according to a report jointly released by the International Finance Corporation (IFC) and Nepal Rastra Bank.

The report highlights significant progress in expanding digital financial services in Nepal, particularly through two key projects: one supported by the governments of Japan and the United Kingdom, focusing on financial service accessibility, and another backed by the Korean government, aimed at enhancing digital financial services.

It also sheds light on key milestones such as the development of the National Payment System Development Strategy (NPSDS), the implementation of retail payment strategies, and the rise of digital payment platforms that have made electronic transactions more accessible, especially for underserved communities.

“Digital finance is a dynamic and rapidly evolving sector. This report provides financial institutions and regulators with an overview of digital finance developments while offering insights to promote a sustainable and inclusive digital transformation in Nepal’s financial service industry,” said Gregory Smith, IFC’s Manager for South Asia. He added, “In partnership with Nepal Rastra Bank, our goal is to strengthen the digital financial system, expand financial access, and drive economic growth for all.”

Over the past decade, Nepal has witnessed significant progress in financial technology, driven by rapid internet expansion, technological innovations, and the growing adoption of electronic payments. These advancements have reshaped the financial landscape, creating new opportunities for both businesses and individuals.

For instance, a comparison of data from the final months of FY 2019/20 and FY 2021/22 reveals a 125% surge in digital payments, rising from NPR 280 trillion (USD 21 billion) to NPR 620 trillion (USD 47 billion).

“Digital financial services have immense potential to drive financial inclusion, reduce costs, and improve efficiency. Our long-standing partnership with IFC will help expand these essential services to more people, fostering a more equitable financial future for all Nepalese through direct initiatives and collaboration with the public and private sectors,” said Nepal Rastra Bank Governor Maha Prasad Adhikari.

The report also identifies development opportunities, emphasizing the need for increased investment in digital infrastructure, financial literacy, and cybersecurity. This progress aims to ensure that every citizen can confidently engage with digital financial services and fully benefit from them.