Financial Literacy in Nepal
How many of you know about Financial Literacy in Nepal and it’s significance in our daily lives? Or were already familiar with the term “ Financial Literacy” ? We guess most of you have never heard of this and few would have heard but were confused what actually it is? Let us break it down in a simple way.
Do you agree that Financial decision is a part of life and is important in every instance from childhood to adulthood? These decisions are to be made by everyone regardless of their age, status or profession. In this busy world, everyone is working for their own financial success. Every day they invest, save, consume and “take risks”.
According to S&P Global Finlit Survey of 2014, Nepal has a Financial Literacy score of 18 which ranks us 136th out of 144 countries surveyed. Despite different awareness programs being organized in different parts of the nation, financial services are still unheard of or are still a taboo in some parts of Nepal. NRB has made it mandatory for all commercial banks to reach all of the 753 local levels of Nepal. However, only 531 Local levels have been reached as of Baisakh 2075, and the remaining 30% of the local levels, remain unreached still.
Financial skills are the set of skills to correctly interpret sound financial information in order to take a better financial decision. Many people are contributing from their space in financial literacy. Entrepreneurs Nepal, which is working for financial literacy in Nepal, has been bringing in financial literacy program “FIN-TEACH”. Every sector whether it be science or management, every people should be working for financial stability. Today, the world is less competitive than it will be years down the line. In the time that our children walk ahead towards a future, the risks and challenges are going to increase further. So, why not we work for financial literacy in the early development of child. To bring financial literacy to life, it is important to bring it to the curriculum. It is important to make them aware regarding finance and enhance their ability to make financial decisions. Financial literacy is a must for every age group. It makes them think and plan practically and work responsibly.
To promote financial literacy in Nepal, there are many programs held by government, non-government organizations (NGOs) and private sectors. Nepal Rastra Bank launched a program ‘NRB with Students’ for enhancing the financial literacy among students (NRB, 2014). In enhancing financial literacy, NRB Strategic Plan 2012-2016 focuses on financial literacy programs for women, victims of conflict, ethnic minorities, and deprived and marginalized section of population. Similarly, since 2012 monetary policy of NRB has emphasized on the financial awareness programs stating “because of low financial literacy financial services are not effective so appropriate strategy should be developed”.
Increasingly in the Hindu Kush Himalayas, men are out of the villages, labouring elsewhere. So if floods come, it is mainly women who must cope. That’s the situation in flood-prone Assam, India, the site of action research in 2014–2016 on flood preparedness, and it’s also the situation in Udayapur, Nepal, where the Assam concept was taken up in 2015–2017 in the Koshi River basin. The project explores how remittances can be used by households to improve the ability to prepare and respond to disasters and their aftermath in ways that can be replicated elsewhere.
The total stock loss from the earthquake in Nepal stood at one third of the real GDP of 2014/15. The flow loss was Rs.36.0 billion resulting in 1.54 percent shrinkage in GDP of 2014/15. Overall financial stability has improved in advanced economies since April 2015. The progress reflects a strengthening macro-financial environment in advanced economies as the recovery has broadened, confidence in monetary policies has firmed, and deflation risks have abated somewhat in the euro area. In terms of total assets and liabilities, banks and financial institutions shared 82.0 percent of total financial system of Nepal in mid-July 2015. Total assets of BFIs increased by 18.19 percent and reached to Rs. 2183. As on mid-July 2015, the commercial banks had provided 22.5 percent of their total loan on productive sector which includes 9.2% in agriculture, 5.2% in energy sector and 4.2% in tourism sector and 3.9% in cottage and small industries respectively. The capital fund of BFIs increased by 11.7 percent to Rs.163 billion from 145.8 billion in mid –July 2014. The overall CAR of BFIs in mid-July 2015 stood at 12.9 percent which was 12.7 percent in previous year.
As of mid-July 2015, deposits of cooperatives totaled Rs.202.4 billion and total credit stood at Rs.187.8 billion. There are altogether 26 (17 non-life and 9 life) insurance companies. The data received from Insurance Board of Nepal, reveals that total assets/liabilities of insurance companies rose by 22.1 percent to Rs.124.3 billion during fiscal year 2014-15. Total assets of life insurance companies’ and non-life companies’ expanded by 23.0 percent and 22.6 percent respectively. According to unaudited figures of mid-July 2015, Employee Provident Fund (EPF) has provident fund amounting to Rs.189.7 billion, while total assets/liabilities of EPF stood at Rs.195.9 billion. Short term and long term interest rates in the financial market remained relatively higher in FY 2014/15.
Let’s aim for financially literate Nepal!