Himalayan News Service

Kathmandu, June 1:

Despite the government having liberalised the financial sector several years

back, it has not been producing the expected outcome and does not seem to be moving successfully, due to various anomalies besetting the sector.

A high-level committee was constituted under the chairmanship of Dr Shankar Sharma, vice-chairman of the National Planning Commission (NPC) to identify the problems seen in the sector. The committee recently submitted its report, which was formed to identify problems related to financial institutions and borrowers’ position.

The financial sector had been facing problems of deteriorating financial institutions’ health, worsening financial discipline, decreasing efficiency of financial intermediaries and lack of access for general people in getting banking facilities for long, according to the report produced by Dr Sharma’s team.

For sustenance of industrial and business enterprises, workable policies are a must, stated the report and further suggested improvement in the health of financial institutions to back up country’s economic sectors, said the committee’s report.

“Serious problems are seen in loan recovery and payment of loans by borrowers over the last few years,” said the report. Those who do not pay loans intentionally should be requested to pay loans immediately.

Otherwise, they need to be punished, suggested the report.

Unless there are effective reforms in Rastriya Banijya Bank (RBB) and Nepal Bank Ltd (NBL), there can not be sound reforms in the banking sector, stated the report.

The report suggested that there should be a coordinated approach between industrialists and businessmen, bankers and other financial institutions in order to improve financial sector’s health and sustain it in the long run.

The survival of financial institutions depends upon ‘disciplined borrowers’. If the financial institutions are sound, they can also support the nation’s business sector, thereby supporting the whole economy, concluded the report.

Other members in Sharma’s committee were governor of Nepal Rastra Bank, Bijaya Nath Bhattarai, finance secretary Bhanu Prasad Acharya, industry secretary Bharat Bahadur Thapa, tourism secretary Sushil Jung Rana and secretary at the ministry of law and parliamentary affairs.