Fintech: IFC Commits to Fostering Financial Inclusion through Digital Services in Nepal

International Finance Corporation (IFC), a member of the World Bank Group, and Nepal Rastra Bank (NRB) formalized an agreement to strengthen the fintech ecosystem in Nepal, focusing on increasing the adoption of electronic payments and fostering innovation in digital financial services.

This collaboration is part of the Nepal Digital Financial Services Project by NRB and IFC, which aims to reinforce fintech reforms by working closely with Nepal’s central bank and fintech market players over the next three years.

As of February 2022, only 70 fintech firms were registered in Nepal, indicating the industry’s infancy. Babacar S Faye, IFC’s Country Representative in Nepal, stated, “We are committed to supporting a strong fintech ecosystem to stimulate investments within the sector.”

He added that the initiative aligns with Nepal’s development priorities, which include addressing developmental gaps like financial inclusion through a blend of investment and advisory initiatives.

The Nepal Financial Inclusion Report 2023 by IFC revealed that while 90 percent of Nepal’s 30 million population used formal financial services, only 29 percent actively engaged in digital payments, lagging behind the South Asian average of 34 percent, as indicated in the Global Findex Report 2021.

However, the IFC’s A2F 2021-22 survey reported a mobile penetration rate of 94 percent in Nepal, demonstrating significant potential for the digital adoption of financial products and services.

The partnership aims to fortify the digital payments ecosystem by engaging with key payment service providers and payment system operators, thereby catalyzing momentum for other digital players in the market.

This collaboration underscores the commitment of both organizations to bolster financial inclusion in Nepal by leveraging digital technology.

The initiative aims to bridge the gap between the high usage of formal financial services and the relatively low engagement in digital payments, ultimately contributing to the overall development of Nepal’s fintech sector.

In a world increasingly relying on digital financial services, this partnership is a critical step towards ensuring that Nepal does not lag behind, providing a much-needed boost to the country’s fintech ecosystem and enabling its population to actively engage in the digital economy.

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