In the monetary policy of the next financial year 2082/83 announced by Nepal Rastra Bank on Friday, the old announcements including the strategy of national payment system, digital lending, collection of customer identification (KYC) from national identity card, creation of regulatory sandbox to promote innovation have been repeated.

While Governor Vishwanath Paudel was mentioning that the financial system has entered a new phase due to the rapid development of technology, the live broadcast was interrupted due to technical problems while announcing the policy.

KYC details can be obtained through National Identity Card mentioned in monetary policy. The bank plans to develop an infrastructure so that after a customer updates his details in a bank or financial institution, other institutions can also receive the details electronically.

It is expected to eliminate the hassle of having to repeat the same details to the customer. But experts have pointed out that the national identity card is not only for KYC but also needs to be linked to various aspects like credit rating or digital profile preparation. "We lack the basic structure for digital payments," says financial technologist Vivek Rana,  "Not a national payment system, we need a unified payment system strategy."

The monetary policy includes plans to amend the existing arrangements related to digital transactions, secure payment systems, and digital lending through the use of technology, as well as emphasis on infrastructure development. To promote digital transactions, it is mentioned that the 'Digital Lending Guidelines' will be amended to facilitate electronic loans for micro, small and medium businessmen.

Expert Rana explained that digital lending is not possible until there is a proper system of personal credit rating. "The central bank has included the old financial instruments in its policy," he said, "The bank has not even taken a new target." New goals cannot be achieved with old tools. The time has come for the central bank to review its goals.'

Regarding digital lending, Amit Agarwal, the founder of Khalti Digital Wallet, responded that small entrepreneurs need a clear arrangement for unsecured loans. He said that there should be provision for giving loans of at least 1 to 5 lakh rupees without collateral.

"For example, such a loan can give great ease to a content creator to buy a phone or device worth 50,000," he said, "It helps to promote the creators' economy of Nepal." It also brings informal transactions into the formal realm.' He suggested that options like 'Buy Now, Pay Later' should also be included in the digital loan guidelines. 

Experts have suggested that by preparing Digital Public Infrastructure (DPI) loans can be provided to mortgage borrowers through credit scoring system. They say that it should also include the API and data exchange of the national identity card. Governor Paudel said that obtaining KYC details of banks and financial institutions and other financial service providers will be facilitated through the national identity card.  

With the rapid development and use of technology, the financial system has entered a new phase. New skills, capabilities and opportunities should be utilized in the financial sector by embracing the development of modern technology, Governor Paudel said, 'Transactions and financial access through electronic means will be enhanced by developing a strong and secure payment system.'

'Digital Finance Innovation Hub' has been established to provide necessary policy and regulatory information to innovative organizations related to banking and payment systems and to expand regulatory access. Governor Paudel said that both government and private sectors will participate in it.  

It is mentioned in the policy that it has been arranged to increase the satahi facility to 3,000 US dollars for Nepalis going on foreign tours. There is currently an arrangement to provide facilities up to USD 2,500 per trip to Nepalis visiting countries other than India. Such level facility will be increased and maintained at US$ 3,000,' said the monetary policy.  

Special concession on agricultural loans

Rastra Bank has introduced a special provision to help improve the living standards of low and middle income households. For agriculture and micro household small and medium businesses, it has made arrangements to provide agricultural or commercial loans up to 1 million. It is mentioned in the monetary policy of the financial year 2082/83 announced by Governor Vishwanath Paudel on Friday that the minimum loan loss will be arranged during the grace period of loans up to 10 lakhs.

According to the policy, arrangements will be made to include loans flowing up to 3 crores in loans flowing to small and medium enterprises and counting them as loans flowing in designated areas. This arrangement mentions in the policy to provide cheap interest rate loans to encourage small agricultural loans. 

It is stated in the policy that the provision of loans of different durations and nature to individuals or commercial firms for work related to agricultural business including food crops, livestock and fish farming will be simplified. It is mentioned in the policy that supporting industries for agriculture, production of agricultural tools, information technology, tourism and other areas related to internal production will be added. 

"In the system where the interest rate cannot be determined by adding a premium of more than 2 percentage points to the base rate for loans to small domestic small and medium enterprises, agriculture and indigenous raw material-based industries of up to two crores, it will be reviewed by adding areas related to internal production such as supporting industries for agriculture, production of agricultural tools, information technology, tourism," said the monetary policy. It is also mentioned in the policy to facilitate the flow of loans from banks and financial institutions to increase the production of agricultural produce of varieties recommended by NARC.