BFIs urged to flow credit to productive sectors

KATHMANDU, MARCH 17: In the ‘RBBL Management Conference 2024’ held yesterday in Kathmandu, concerns were raised about the effectiveness of credit flow from banks and financial institutions (BFIs) in driving economic growth despite its substantial volume relative to the GDP.

Revenue Secretary Dr. Ram Prasad Ghimire highlighted the challenges of increasing production, productivity, and employment, stressing the importance of capital formation for economic development. He emphasized the need to shift from a trade-based to a production-based economy and urged the government to foster a conducive environment for private sector growth.

Nepal Rastra Bank (NRB) Director Dr. Prakash Kumar Shrestha expressed concerns about the complexities of government finances under the federal structure and highlighted the impact of excess funds in government accounts on market demand. He also noted the negative perception surrounding banks and financial institutions and highlighted challenges in the cooperative sector affecting the broader financial landscape. Despite improvements in the liquidity and foreign exchange reserves, private sector confidence remains subdued due to various factors including declining internal demand and productivity.

Former FNCCI President Bhawani Rana stressed the need for increased investment in key sectors like agriculture, tourism, and hydropower, urging the government to engage with the private sector in budget planning.

Ex-banker Parshuram Kunwa emphasized professionalism and customer service quality improvement in the banking sector, advocating for the adoption of international best practices and technological innovation.

Fin-tech expert Sanjeev Subba highlighted the growing cybersecurity challenges in the banking sector and called for investment in IT infrastructure for better public service delivery. The conference aimed to address economic and banking sector challenges and provide guidance for sustainable banking development in the future, as organized by Rastriya Banijya Bank.