One-tenth of Nepali adults take loans from banks


More than one-tenth of Nepal’s adult population has taken bank loans. According to the World Bank, 10.8 percent of the population aged above 15 years, or 1.86 million out of 17.14 million people, borrow money from formal financial institutions. Nep-al’s total population is 26.49 million as per Census 2011.
The Global Financial Development Report (GFDR) 2014 on Financial Inclusion released recently by the global development agency revealed that the tendency of taking loans from banks in Nepal is a little higher than the global average. 
The average global adult population reporting to have received loans form financial institutions is 9 percent, said the report. Fina-ncial institutions here refer to banks and financial institutions, credit unions, micro finance and cooperatives.
In South Asia, a higher percentage of Nepali adults have received loans from financial institutions compared to India. However, Sri Lanka and Bangladesh are ahead of Nepal on this score. The percentage of the adult population borrowing money from banks is 7.7 percent for India, 23.3 percent for Bangladeshi and 17.7 percent for Sri Lanka.  “Compared to other South Asian countries, the proportion of Nepalis receiving loans from financial institutions should be considered dissent,” said Nepal Rastra Bank Deputy Governor Maha Prasad Adhikari. According to the report, 25.3 percent of Nepali adults have accounts in formal financial institutions. This translates into 4.36 million account holders. 
Former deputy governor at Nepal Rastra Bank Krishna Bahadur Manandhar said that although the ratio of Nepal’s adult population receiving loans is not very high, the number of account holders in financial institutions is impressive.
Nepal is behind in terms of bank account holders compared to India, Bangladesh and Sri Lanka. Sri Lanka tops the list in financial access with 68.5 percent of its adult population having accounts in formal financial institutions.
NRB record on account holding shows 43 percent of total population has accounts in A, B and C class banks and financial institutions.“As a single person may also have accounts in different financial institutions, it may not represent the actual picture although it is based on the actual account numbers.” said Adhikari.“On the other hand, the World Bank”s report may not represent the actual picture as it is just a survey.”
Even though use of electronic payment systems has been spreading with the advent of new technology, South Asian countries have not made much headway in this sector. Only 0.5 percent Nepal’s adult population uses electronic systems to make payment. The figures are similar for Bangladesh and Sri Lanka. India has the highest rate of 2 percent, according to the GFDR 2014.
The number of debit card users is relatively low in Nepal compared to India and Sri Lanka but Nepal scores higher than Bangladesh. While 3.7 percent of Nepal’s population uses debit cards, the figure for Sri Lanka is 10 percent.
Manandhar said that the use of debit cards and electronic medium for making payment is basically an urban trend.“As the banking system is fast moving towards technology enabled services, people using this medium will definitely go up at a faster pace,” he added.
The number of Nepali firms taking loans from financial institutions looks good compared to Sri Lanka with 39.1 percent of Nepali firms doing so while the figure is 40.4 percent for Sri Lanka.
According to the report, Nepal, India, Bangladesh and Sri Lanka are far ahead in financial inclusion compared to Pakistan. Only 10.3 percent of Pakistan’s adult population reported having an account in financial institutions while only 1.6 percent reported taking bank loans.
Manandhar said that Nepal’s financial inclusion was ‘decent’. He added that due to a proliferation of financial institutions across the country, people should no longer have to depend on local money lenders.
The level of financial inclusion varies widely around the world. According to the report, about 50 percent of adults globally have a bank account, while the rest remain unbanked, meaning they do not have an account with a formal financial institution.
“Not all the 2.5 billion unbanked need financial services, but barriers such as cost, travel distance and documentation requirements are critical,” the report added.
Posted on: 2013-11-16 08:57