Kathmandu, November 20:

In an attempt to provide secure, efficient and cost effective payments and settlement services, Nepal Rastra Bank (NRB) is soon developing a new IT-empowered payment and clearing system.

A project in support of Asian Development Bank (ADB) has been already started with a view of developing a national payments and clearing systems in the country, informed Bijaya Nath Bhattarai, governor of NRB during a consultation meeting in the capital today.

The new system will provide secure, efficient and cost effective payments and settlement services to both the financial service providers and users.

“Following the introduction of this system, it will increase the use of non-cash payment services such as electronic payment and settlement services,” Bhattarai added. It will also reduce the NRB’s costs of printing and management of currency notes, decrease the cash handling and holding costs of banks, government offices and public utilities as well as minimise the risk of ca-sh losses through theft or fraud.

Reduction in money laundering opportunities and errors in reconciliation, invoicing and payment records are some other benefits of the system, which is being widely used in Western Europe and Asia Pacific regions.

According to Bhattarai, the new initiative will pave the way for development of Real Time Gross Settlement System, Scripless Securities Settlement System, Central Depository System and Cross-boarder Payments and Settlement in foreign currency transactions in future.

Explaining the need of developing vibrant and dynamic ban-king norms, Bhattarai also stated that the next five years would be very crucial for the Nepali banking and financial sector under the WTO and other regional trade agreements. “We have to prepare appropriate laws and by-laws related to the payments and settlement systems,” he added.

He also informed that the government is in the process of promulgating the Money Laundering Ordinance, while amendments in some acts and laws have been sought to make banking and financial system at par with international practices.

Lachlan Fleming, ADB consultant made a presentation on development of national payment system. He noted ‘sunk in investment in IT, inefficiency in cash handling, excessive payment reconciliation delays, high data re-entry requirement and limited NRB processing capacity as som-e of the challenges. To meet the challenges, he suggested to set up a multi-purpose core network with a generic clearing engine and a new payment instrument.

Krishna Bahadur Manandhar, deputy governor and Ganesh Kumar Shrestha, executive director at NRB, Radhesh Pant, president of Nepal Bankers’ Association also expressed their views on the occasion.