Financial Sector Policies in Nepal
- Financial Sector policies have been driven towards long term and sustainable economic development of the country. In this direction, incorporation of infrastructure development bank has been conceptualized, which will provide enough capital to big infrastructural projects that will be carried out in the country during the economic development. In the initial phase, the bank is supposed to fulfill the capital gap of huge infrastructural projects and support smooth operation and timely completion of those projects.
- In order to ensure financial stability, focus of policy has been driven to identification of systemically important banks in the country as well as big branches of the banks, which require close monitoring and pose major threat to the health of the system. In this direction, identification of domestically systemically important banks is in process and regulatory and supervisory amendments required for those institutions is also being studied.
- Merger between the financial Institutions is also being encouraged by the central bank in order to strengthen the capacity of BFIs. The policy has not been successful enough as per expectation of the central bank, nevertheless, it has been able to reduce the number of institutions. NRB is always open for the institutions to go into merger or acquisition, however has not forced any institutions to go for them.
- With the implementation of BASEL III, credit rating of institutions has been essential. Thus, credit rating agencies now have scope in Nepalese banking. However, only two credit rating agencies have been registered in Nepal as of mid-July 2018 and they are under regulatory jurisdiction of SEBON.
- “B” and “C” Class Financial Institutions are required to follow Nepalese financial Reporting Standards (NFRS) in their financial statements from Mid July, 2019. “A” class banks have been following the standard since Mid July, 2018.