Nepal is located between two huge countries in the world. The economies of those two countries are as stable as Bhimkaya Hills. While the stable economy is running on the tightrope between these two strong countries, Nepal is walking weakly. Nepal is geographically rich. It has a lot of potential. However, it is suffering heavy trade losses.

The situation of youth migration is poor. Political and party interests are the main reasons for youth migration. Due to vested interests of political parties, propaganda, debt burden increased by improper infrastructure, extreme corruption, youth are migrating abroad. And, this is the reason why Nepal's economy has become sick. It's been slow. 

The improvement of the economy is not achieved by exaggerated slogans of political parties. Prosperity does not come with rattan. Even a speech that bursts the veins of the neck cannot be the basis of prosperity. Prosperity should be seen in practice. Must be confirmed by work. This can be corrected by timely economic and monetary policies. To turn potential into reality, a deep reform in the country's capital market is necessary.

Currently, Nepal Stock Exchange (NEPSE) suffers from limited public access, low liquidity, weak technology and opaque regulatory system. According to the World Bank study, a deep and inclusive development of the capital market is indispensable to create a sustainable basis for economic growth. New ventures, especially startups, had to be able to create an environment where they could go to the stock market when they could not get loans from banks. However, the current structure cannot allow such organizations to enter. Because along with technology, Rashtra Bank's policy also seems to be an obstacle.

Europe's development took 150 years, China transformed in 40 years. And established itself as a strong competitor in the global market. What is the reason for this? Today, China, which is below the poverty line, has become the center of capital investment in the world by maintaining modern financial governance and technology-friendly banking system. However, despite that, there is a statistic that China was built by the investment of the Chinese people in proportion to the foreign investment. When Deng Xiaoping convened the third high-level political meeting in 1978, China was among the poorest countries in the world. How did China, which had a per capita income of 270 US dollars in 1979, reach 13,445 US dollars by 2024? The current economic structure of Nepal is similar to the situation in China in 1978. It is dependent on agriculture, state-dominated, private sector is weak and the financial system is immature.

There is a need for practical, development-oriented reforms in Nepal. Especially in its monetary and fiscal policy, it is necessary to maintain an inclusive and sustainable growth rate. The current leadership of Nepal Rastra Bank (NRB), especially Governor Dr. It is inevitable that Vishwa Paudel should prioritize some of these practical policy steps. For example, credit promotion and monetary discipline in the productive sector If monetary discipline cannot be maintained while promoting productive credit, the dark cloud of despair in the country will descend and drown us one day. After that, it will be difficult to get to the shore. Nepal needs to adopt a policy of sustainable economic growth while balancing inflation control. In recent years, excessive credit has been fueling the unproductive sector. While the lack of capital in agriculture and production remains the same. 

It is necessary to implement an open monetary policy for export-oriented industries, including small and medium agricultural businesses, through special loans and repeated programs with concessions and monitoring. There is a need to introduce strict guidelines on credit risk to disburse bank loans stuck in non-performing sectors and discourage excessive risk. It is necessary for the National Bank to introduce a 'macroprudential' tool as a 'countercyclical capital buffer'. This prevents banks from lending to high-risk areas. According to the "Basil Framework" third document, the defense law of the global economic crisis, it is necessary to de-risk bank loans and monitor and loosen business loans.

It is important to learn a lot from the way cooperative organizations collapsed. However, as the objective of the cooperative was to encourage small businesses. A simple loan provision cooperative was established with the aim of increasing investment in rural areas in particular. Now it is necessary to implement those objectives in all banks. For example, the Reserve Bank of India has implemented a policy requiring all banks to invest 18 percent of their total loans in the agricultural sector. It has provided loans to farmers, agricultural technology companies and agricultural cooperatives at low interest rates.

End of legal complications

It is necessary to loosen the laws for investment in the financial sector for the Nepalese who are in migration. The theory that Nepal converts remittances into investment is correct, but it seems that the maximum part of remittances is used in the purchase of imported goods. If the National Bank does not relax the law, then remittances will not make the country. Therefore, there is a situation where Nepali immigrants can invest in Nepali companies either directly or through securities. By doing so, the market is also active and the traders are also excited. Currently, 60-70 percent of Nepal Securities Board's investments are focused on large projects like investment banks, insurance companies and hydropower. Keeping it stable, the new project should give priority to small and medium businesses like agriculture, IT, and tourism, and create a quick procedure to give controlled but direct investment opportunity to Nepali immigrants living abroad. It also increases the size of Nepali securities market as a whole. Adds excitement to the market as well. 

National Bank plays an indirect but important role in capital market reforms. A central bank can revolutionize financial access, regulation and financial inclusion through the use of modern technology. As the Reserve Bank of India revolutionized digital payments by introducing the 'Unified Payment Interface' (UPI). It covers the digital system from small traders to large companies. Also RBI implemented a startup-oriented regulatory sand box policy. This spurred technology-based financial innovation. China is making full use of technology in capital market regulation by adopting the 'tech-supported real time market management' system.

Strong infrastructure in the financial sector 

It ensures investment. There is a lot of discussion among politicians and economists about how to bring in big and new investors in Nepal. However, incentives for older investors and tools to sustain existing investments are rarely discussed. The Nepali investment market is preparing to bring in large investments. As such, share trading has entered the digital system from paper form. However, the stock market is said to be a mirror of the economy. The emerging and large economies of the world use the 'T One' model of stock trading. In simple language, it means that the money reaches the investor's account by the day after the shares are sold. When that happens, the next day they can choose to invest in other areas. However, it takes at least three days to receive the amount sold due to the 'T3' model in Nepal. This leads to slow trading and slows down the market.

If we want to diversify Nepal's financial instruments and deepen the capital market, we must increase the participation of investors. Foreign investors should also be given space. Financial instruments and infrastructure should be strengthened by responsibly introducing 'index funds', 'exchange traded funds' (ETFs) and 'derivatives'. And, starting with NEPSE index fund makes it easier for people to know about the instrument. Then other banks and other areas should be included. National Bank should provide freedom with regulation to fintech companies. A regulatory sandbox should be launched. Where startups can safely innovate.

long-term investment promotion 

The recent financial crisis of cooperative organizations in Nepal has given us a serious warning. We are still far from the basic structure of financial stability. Millions of people's savings are at risk. Weaknesses in financial discipline have been observed and the capacity of regulatory bodies has been questioned. It is necessary to build a 'Financial Sector Promotion and Risk Management Fund' after learning from the accident of the cooperative. 

Risky financial sector inspection and risk reduction measures should be adopted in time. In this, a fund should be created with the support of government, private sector, international and donor organizations. which can support financial technology startups. It can provide services or provide financial support to organizations that promote financial literacy. 

Long-term investment can be encouraged by providing benefits such as capital gains tax exemptions to individuals or organizations that invest in the financial sector, such as index funds or shares of a company for a period of more than three years. These tools make the capital market deep, diverse, technology-friendly and modernize NEPSE's time and become an environment for foreign investment to enter the capital market.

The People's Bank of China launches a regulatory sandbox. Which allowed fintech companies like 'Ali Pay', 'V Bank', 'JD Finance' for limited use. It encouraged high-tech innovations such as smart lending systems.

Therefore, China and India have emphasized production-based credit, government guarantees and technology-based agriculture. The National Bank can also introduce an agricultural technical loan subsidy program targeting rural banks. And, sand box policy, digital payment platform, data-protected loan disbursement system can be developed in Nepal. NRB can expand the mobile-centric digital economy by creating UPI-like systems and e-NRB wallets.

There is a need to regulate digital lending platforms like the Reserve Bank of India and make transparency, data privacy and transparency of interest rates mandatory. This makes consumer protection stronger and more reliable in the market. Therefore, the 'regulatory sand box' is an effective model to expand digital financial access. This allows startups to test for a limited period of time without risking regulation. Indian and Chinese central banks have made significant progress with this. Nepal Rastra Bank should also implement this model immediately.