KATHMANDU: The World Bank has approved a USD 100 million credit to help Nepal accelerate its medium-term reform programme for the financial sector and to reduce the vulnerability of the banking sector and increase its transparency.

The programme focuses on reforms designed to place the financial sector on a sound foundation for the future.

Officially called Third Financial Sector Stability Credit, the financial assistance will support four main policy areas -- enhancing financial sector development; restructuring and consolidating the financial system; strengthening the legal and regulatory framework for crisis management, banking and insurance supervision and payment systems; and enhancing the governance and transparency of the banking sector -- based on the past achievements, the international bank for reconstruction and development said.

Despite the rapid growth of the banking sector, two in every three Nepalis still have little or no access to formal financial services, a statement issued by the World Bank read.

“Ensuring the stability of the financial system is crucial to expanding financial inclusion,” the statement quoted Takuya Kamata, World Bank Country Manager for Nepal, as saying.

“Participation in the financial system helps people start and expand businesses, manage risks and weather shocks. It also promotes social protection and women’s empowerment” he said.

“The credit supports a sustained focus on financial sector stability to endure broader economic recovery in the aftermath of the 2015 earthquakes and trade disruption,” said Gabi Afram, World Bank Task Team Leader.

The World Bank informed that this Development Policy Credit, the third in a series, was prepared in close collaboration with the International Monetary Fund and the United Kingdom Department for International Development (DFID). The first credit of USD 30 million was approved in June 2013 and the second credit of USD 100 million in June 2015.

The credit will mature in 38 years and it has grace for six years.