Financial system of Nepal has
characterized by the excess liquidity with systematic weakness. There is sharp
remittance growth and slower deterioration of trade balance leading to a record
balance of payment (BOP) surplus. Sharp and higher than anticipated remittance
inflow has expected to drive service sector growth particularly wholesale,
retail and social services. Industrial activity is likely to remain lackluster
owning to structural constraints including irregular supply to energy,
difficult labor relations and modest level of public capital spending. Every
participants of financial sector are well aware about this type consumption and
foreign employment led growth would not be sustainable as of investment led
growth.
Financial system which represent
all market participants including service provider, receiver, regulator need to
think about the right alternative approach to manage excess liquidity to get
rid out from this type of affirmative problem. Remittance is like
anti-psychotic drug, in any day patient forgets to take drug then mental
disorder with negative effects. Same as, in any day there is discontinue on
remittance inflow in Nepalese economy the economic problems will multiply with
social unrest.
The financial sector in
particular banks must have to think alternative ways to manage anti-psychotic
drug like financial resources that banks get from abroad to maintain order in
economy. Observing current scenario innovation of financial product is extremely
essential in banking and financial sector to manage remittances. For that
purposes, especially banks must have to engage on identification of possible
productive investment sector through research and development activities.
Creativity is the art of expanding
possibility. Whereas, innovation is the ability to confine the creative ideas
and make them turn into reality to achieve successful performance. Creative
peoples and organizations must think “out of the box” while the rest of others
barely realize that they are in the box. This is right time banks must reflect
their creative approach that their function is not only accepting the deposits
and advancing the loan by innovating new products. Besides regular tasks, banks
must perform as well-built agent for change and development of the country.
Banks can play major role for nation building especially developing nation like
Nepal. In the developed economics, different types of financial products were
developed to inject and multiply the funds but Nepalese banks are still
reluctant to change from their regular tasks and even unable to utilize the collected funds in
proper way. It is not time to blame all the problems toward politics and get
out from it. If safe landing behavior continues in financial system, Nepal will
always lag behind and difficult to compete in future world market economics.
Innovation
of new financial product is difficult job where most of the population is
uneducated and depends on remittance income from abroad. Building a suitable
channel of funds and its proper utilization at identified sector needs trust
and support from all participants of financial system. For effectively and
strategically manage excess liquidity central bank of Nepal (NRB) have to
develop the new instruments with accomodative monetary stances. In the mean
time, NRB should care about the volume of private sector credit growth and its
quality. Once innovative financial product has developed and excess liquid
money utilized then creation of new jobs in the economy which will ultimately
reduces the problem of rising unemployment and foreign employment in
unproblematic way. Government should
also need to set the policy to tackle these issues. Whereas corporate houses
and banks must practice
ethical, corporate governance practices with inclusive approach. By the
effective performance of financial system only the strategic thinking of
government “Graduating to developing country status by 2022 AD” will easily
achieved.