Wider reforms including risk-based regulation to rural loan recommended for banking sector
Summary
Nepal Rastra Bank's taskforce recommends comprehensive banking reforms emphasizing risk-based regulation, increased rural loan access, credit flow improvements, and separate regulators for microfinance and non-banking institutions.
Key Points
- Nepal Rastra Bank's taskforce proposes structural reforms in the banking sector to address economic slack, high liquidity, and rising passive loans.
- The report recommends risk-based supervision, categorizing banks into three classes for regulatory purposes.
- It calls for increased credit flow to key sectors like education, health, transport, and green sectors.
- Separate regulatory frameworks are advised for microfinance institutions and non-banking entities like Employees' Provident Fund.
