Travelling Rural Nepal,,, A travellogue

The excitement initiated at my heart from the random college talks with friends was finally about to come true in real sense when I caught bus from Kathmandu to mahadevbesi of dhading district located about 50 km away from Kathmandu on highway. Getting off at mahadevbesi, the journey got more exciting as I was travelling on a tipper (according to the local accent) for the very first time in life and also because the tipper was running above the river Agra of makwanpur district. As an individual who loves travelling and adventure, what can be the better experience than this opportunity? The tipper was actually going to get stones so that it can provide raw materials to the crusher industry located at jungekhola which can be seen on the way to Kathmandu nearby nagdhunga check post. After a bit thrilling journey of 1.5 hours on tipper which takes almost 6 hours when travelled on foot, clicking some really wonderful shots, I along with my classmate sunita got off at a place named dovan situated at the bank of river Agra and started walking towards the place to rest i.e., sunita’s grandparents home. The place was Agra VDC-3, a beautiful village “CHALTI”, which is dispossessed from most of the facilities despite of being so close to Kathmandu so that the people there have to depend upon mahadevbesi (madbesi in local language) and Kathmandu for most of the trade, educational and health infrastructures.

 We weren’t exhausted at all due to the joy of being away from college stuffs and routine life that we went to explore the nearby parts of the village with camera and full enthusiasm. capturing some scenic beauties, meeting some peoples who are really humans with humanity rather than scheduled machines, watching live fishing of the schoolboys and the most attractive part of playing in the local river and waterfall along with climbing hills, the day ended in a bed with the dream of making the next day more enjoyable.

The second day got more interesting adding more unique flavors. After some light breakfast me, sunita and ganesh bro (sunita’s cousin and the most friendly person of the journey) started to walk towards a nearby village lamichaur where the local electricity terminal was located along with the crops grinding mill and probably the most interesting part of the trip “Panighatta”, the local grinding mill for grinding the flour with the power of flowing water was sited. Panighatta was the best part of my stay at village overall. I captured the operation of ghatta with the white flour covering whole body and conversed with the owner of ghatta regarding income from it and experience operating it. The day was full effective seeing the electricity terminal that generates electricity to 60 households there with the minimal capacity of the small brook flowing there. One of the lady, I met there told that they charge NRS, 40 per month from each household for its maintenance. The modern grinding mill there also used the same brook, generating electricity and consuming the same electricity for the mills operation with the efforts of local people, building canals for depositing water and using tunnels for getting the water force. The same mill was the only mill serving whole Agra VDC. I experienced the best utilization of resource gifted by nature and the unity of the rural people there for the ease of life which made me think that, what if the policy making personnel learn something from the effort of rural people towards sustainable development. This really made  that day of mine along with the fun of eating aishelu ( local berries) singing ‘aishelu ko paat’ and playing with the cold water of waterfall there along with the song ‘jharana ko chisopani’. The day got musical as my friend sunita is a very good singer. The experience of photo-session at the local school, walk along the hanging bridge (jholungepool) with sunita are those memories that gets mesmerize in my whole life.

We decided to travel to deukhel village an hour walk from home we stayed the next day, where we met few more relatives and the next best person of our journey, a frank and intelligent guy ‘surendra’, sunita’s next cousin and wonderful person overall. He took us to a very famous holy place “mahadevkharka” where kuteshwor mahadev temple showed its blessing from the top of hill. We named the day as jungle safari day as we travelled through forest to the way of temple and on return to deukhel from temple, the way through the steep hills made us feel like the end of life for certain period, specially I got more scared when I saw sunita’s reaction but after home, we realized it was adventurous.

The next awesome and analytical day commenced when we started to climb to reach baseri village on the opposite hill from chalti. The way passed through the dovanghat where we had started our walking journey getting off from tipper on the very first day. Dovanghat is the place where the corpses of local people are burned according to hindu tradition. The way to baseri was quite steep, rocky, and sandy and I figured out the vast difference between the soils of baseri with the rest part I travelled. As surendra was accompanying us, he took us to one of the holy temple of overall makwanpur district “kalika temple”, where a grand jatra is held on the day of kartik purnima. The most amazing part was the topography of the location of temple, it was like a cave and the deity resided there is supposed to be very powerful by the locals. I sometimes find the myths captivating. Why do god choose place like this to exist in, the place so difficult to reach, like cave and in such rocky area. It is said that the idol there has emerged in itself and the temple was built there. The village didn’t contain as dense population as the rest villages but was distinctive due to its land and cultivating structure, the terraces was made of stones unlike others there. Surendra  informed us that the population there are of magar ethnicity and Christians in the proof, we found church in village and also chatted with a woman with traditional  jewellery like Marwari(earrings) and naugedi( long necklace with beeds). With such steep and rocky structure, we didn’t forget to mention it as our trekking to rasuwa. After return to home, we went to visit the eldest woman of the village according to sunita’s dad strict restriction which gave such an immense feeling of listening a pure heart. We too went on a short walk in the evening with the best view of rivers, fields and hills which are really can’t bedescribed in terms of words. Some months ago when I came to know that the view from Monal restaurant, Islamabad was one among the top 10 views of the world, I was proud that I had viewed it but today I feel guilty that Nepal has such wonderful view but most including me are unaware of it.

 After dinner brothers had arranged dohoris but the thing worth sharing was sunita’s funny dance. Even I as a camera person couldn’t control laughing continuously. The day of wonderful holiday was getting over as we had reached the end of stay there so we decided to visit some nearby areas and found out Laligurans (rhododendron). I found out that the small groups of residential here are named after their surnames like khadka tole etc. on my way back to Kathmandu, I saw crushing areas of stones and the people of Agra VDC depend upon stone extraction from river Agra during the off-season from agriculture. Massive extraction of stones may also result in natural a calamity which is seen as a threat to residential out there.

Learning is always a part of travelling; some vital and new experiences emerged in me too. I saw the craze of nepali movies of all age groups there. I saw the real rural Nepal through life of young girl’s struggle to maintain life in their in-laws house. I found myself so lucky seeing how the youngsters here lead their life. I saw a lady ignored totally by her family just because she married against the will of family, I viewed life of a woman by forceful marriage at very young age. I got familiar to the life of elderly ladies who form a group so that they can get away from their loneliness sharing their old age experience.

It was good to see the creativity and changes in life of young peoples, their changing thinking away from superstitions and the use of technologies. The hospitality was beyond excellent,the  existence of people like ganesh, surendra and didi of  deukhel village forces to believe in truth, simplicity and goodness till today. The chance to drink water from lota (nepali glass), the first taste of dhindo and I got to use abundant amount of water unlike here which was awesome.

All what I did, I found, the food, what I saw was really new for me which fascinated to its extreme. The sense of responsibility, hard labor, patience and determination all were a inspiration factor for me to work more and better as I am lucky for better life. The natural beauty, unique topography and the adaptations of people are really appreciable. If only transportation here gets a better access, the connection to trade centers would be easier. The place is much feasible for tourism as it’s not far from the capital and tourists can get the experience of typical additional assets to tourism.


The political Economy Of Energy and Natural Resources

Throughout the history, humankind has made use of the earth’s natural resources. The amount of work that is able to be done through energy resource depends on how much energy is contained within the energy resources. Economists and experts globally are highly concerned over the sustainable use of energy and natural resources use due to the further development and growth are resulting in the degradation of natural environment.
The issue of energy and natural resources is highly emphasized due to environment unfriendly activities and the fiscal policies of short term visions which is a threat to sustainable economic development and welfare economics.GDP of most South Asian countries are highly inclined to natural resources as most are still agro based economy rather than industrialized economy.  The south Asian nations aren’t termed as developed economies yet, all are in the phase of economic development and their economic policies are focused more on the upliftment of one’s state of economic status. To meet the demand of industrial requirement of raw materials and other resources like land, forest, minerals etc, over-exploitation of natural resources is being rapidly progressive which can’t be termed as rational idea.
            It is a known fact that the development of economic sector of any nation depends upon the resources it possess. The nation’s economic models, policies and decisions rely on the amount of natural and energy resources. Government revenue in underdeveloped countries (UDC’s) like Nepal is mainly gained from the use of natural resources and from those industries that depend on energy and natural resources. Sustainable development of energy resources is the issue of burning concern in today’s world as it lays heavy emphasis on economic growth and the long term economic development.
UNEP’s report also supports the point as it says that, poorer countries dependency on natural resources is more, making resource scarcity is a challenge for ending poverty.
The main objective of most fiscal models of a state is to mould the economic status but less evidence is found giving priority on sustainable use of natural resources and focused much on industrialization. Recent research in developing countries by Environmental Economics Unit at university of Gothenburg, Sweden, examines the performance of innovative policy approaches, including public disclosures, economic incentives and voluntary programs for reducing pollution; the environmental impacts of the small firm and how to mitigate them; and the causes of deforestation and possible policy responses.

Economic models must be adapted to accommodate the special features of natural resources inputs. The traditional curriculum of natural resources emphasized fisheries models, forestry models and mineral extraction which is now renewed with the addition of air, water, global climate and environmental resources which have increased importance in formulation of policy.

Political process is serving as a hindrance to the production, protection and maintenance of natural resources in South Asia. Nepal and Srilanka are in transitional phase of political change affecting the economic scenario. Incase of Nepal too, the evidences in many national dailies can be shown as the political interference in economic sector. The disputes on Foreign Direct Investment (FDI) can be the recent example of it. Economic considerations like political stability, federal structure and socio-psychological factors determine the demand-supply nexus of natural resources and energy resources. “Raising standard of living of the general people by expediting economic growth through political stability and full utilization of available resources is the prime need of today.”(Economic survey report of Nepal (20112012)).
The alternatives of bio-gas energy, entrepreneurship in the sector of energy and natural resources use, awareness for the sustainable use of natural and energy resources  (as UNESCO’s report says that nearly 26% of the world’s population are still illiterate) campaign can be operated  for the  economic use of these resources. “Because most energy resources that are used fall under the non-renewable category, energy conservation is widely promoted. The idea is that by using less of the energy resource at once, the energy resource will last longer or smaller energy portions can be given to more people. Simple ways to conserve energy include turning off lights and appliance not in use, conducting activities during daylight hours and washing laundry in cold water instead of hot.”(Wanda Thiobodeaux, eHow Contributor)
            There is strong bi-casual relationship between economic growth and prevalent energy and natural resources. UN Department of Economic and Social Affair also had decided the celebration of “International day of forest” on 21st march with the support of UN general assembly.
Literature Review
The economic literature on energy and natural resources allocation from various journals, books and reports were reviewed as a supportive agent to the research.
            UN forum on forest (2013) also highlights the importance of natural resources on economy as: It is necessary to recognize and appropriately value the outstanding economic contributions of forest resources to human welfare and development. Even if only the formally recognized, officially reported monetary contributions of forests to the economies of developing world are taken into account, they exceed US $ 250 billion easily more than almost the double the flow of total development assistance. The direct cash exchange-based contribution of forest represents approximately 1% of global output.
This data shows that if it is the case of forest resources alone then, economic welfare and development can be achieved more through other natural resources more like water, minerals etc.
            One of the studies done by Kumar and Hotchkiss(1988) using data from Nepal’s Energy’s Nutrition Survey, a yearlong survey of 120 households in three hill districts of rural Nepal examines the effects of deforestation(measured in their study by the time spent on collecting fuel) on time allocation decisions, output through agriculture and consumption.
Incase where secondary effect are deemed to be small, a simple ,testable hypothesis suggests itself, renewable resource stocks will tend to low in countries with political systems that induce insecure ownership; e.g.; where government is ineffective, unstable, autocratic and the rule of law isn’t well-established. The fact that insecure ownership due to political conditions applies to produced capital as well as natural resource stocks.
Adequate and safe use of natural resources underpins the nation’s health, economy, security and ecology (NRC, 2004). Increasing demands for energy and mineral resources, the desire to supply a greater fraction of energy to meet the demand seems ambitious project for fostering economy but can result negatively in future.Improving the sustainability of nation’s natural resource infrastructure should be the country’s top priority. (UNEP action plan, 2012-2016)
Since the 1960’s the resource-poor countries have outperformed the resource rich countries
compared by a considerable margin (Richard M. Auty,2001). It is not uncommon to find a
population that is poor, unhealthy and politically oppressed inhabiting a country that is rich in
Natural resources. This seems paradoxical as a matter of common sense and basic economic
reasoning, natural resources abundance should confer prosperity but due to weak governance
such country are typically suffering poor economic performance. (Robert T. Deacon &
Berhardo Muelter).
Natural resources are essential to meet basic needs. However, their exploitation has begun to exceed the earth’s capacity; the scale of human activities is eating into the planet’s reserves. As an analogy, it is said that today, we use the equivalent of 1.5 earth’s to provide the resource we use and to abscard waste; and till 2030’s we may need equivalent of two earth to maintain own current lifestyle(GFN,2012).
Research Problems
            Through the analysis of political economy of south asia in the sector of energy and natural resources use; the requirement of further study is seen as pivotal as many queries regarding the economy in energy use are still not addressed. Data gaps and absence of reliable information are major problem in estimitating the economic contribution of natural resources beyond what is available in official reports. Hence, the research or further study is needed to answer the queries:
·         Trend analysis of the past years showing the relationship of economy’s dependency on natural resources.
·         What is the contribution of natural resources in the environmental scenario?
Brief Methodology
            The research had been conducted through the quantitative analysis of various datas through different magazines, journals and the publications of various research of organization.
Key References
UNEP action plan (2012-2016).
Robert  T.Deacon & Bernardo Muelter. Political economy & natural resources
UN forum of forest (2013), 10th session of UN nation’s forum on forest
Wanda Thiobodeaux, eHow Contributor)
Economic survey report of Nepal (2011-2012)


Role of banking in economic development

The article is a winner essay of Nation wide Campus level essay competition organized by Nepal Rastra Bank, 2015.

( This article is a winner essay in the Nation wide essay competition organized by Nepal Rastra Bank in 2015)

Importance of Banking for the Economic Development


Bank: The word “Bank” derived from French word “benqua” which came from the Italian word “banca” which means bench. It is because long ago moneychangers (today often called as bankers) used to do their business at a bench out in the open air.


Banks, the institutions authorized by the government to accept deposits, pay interests, clear checks, make loans, act as an intermediary in financial transactions and provide other financial services. In general word, banks are the financial institutions licensed as the receiver of the deposits and provider of loans. Similarly, the business engaged in by banks is called banking. The types of banks depend upon the specialization in their own field. Each bank has its own and unique principles, policies and interest rate. The several types of banks include commercial/retail bank, saving banks, investment bank, Industrial development bank, land development bank, Indigenous banks, mortgage banks, exchange bank, consumer bank and so forth. In almost all of the nations there is an institutionalized and guiding system called central bank under which banks hold liquid assets equal to only a portion of their current liabilities.


Global History: A sound banking system is vital for smooth development which can play vital role in economy. Financial and banking success underpins the economic prosperity of any nation and its economy. Therefore, people searched best way for the safety and easy transactions of their belongings and property since very long. In ancient time, people wouldn’t have secured and concretized buildings as of today and there was invariably threat to their property. Therefore, most rich people held accounts at the nearby temples or church because it was the place which was supposed to be always surrounded by honest people adding sense of faith and security. In such cases, property was safe and temple would have loan facilities as well. Such traditions have been documented in the ancient history of many countries such as Greece, Rome, Egypt, and Babylon etc.

Nepalese History: It is difficult to trace the history of banking system in Nepal with correct chronological order due to the lack of well documented history and data. However, Nepal started the era of modern and formal banking after the establishment of Nepal Bank Limited in 1937 which was established as a semi government bank with the authorized capital of Rs. 10 million and paid-up capital of Rs. 892 thousands. Until then all monitory transactions were carried out by private dealers and trading centers. Until mid – 1940s, the only medium of exchange was metallic coins. Therefore, contemporary government felt the acute need of a separate and central institution to issue national currencies and promote financial organization of the nation.

Therefore, later in 1956 Nepal Rastra bank was established as the central bank of Nepal under the Nepal Rastra bank Act, 1955 with the objective of maintaining macro-economic stability through sound and effective monetary, foreign exchange and financial sector policies. At the very initial days of NRB, the development of monetary market in Nepal was far poor. Most of the transactions were carried out in Indian Currency including the salary provided by the government. Therefore, to overcome the existing difficulties of development and monetary market, NRB was established. NRB gathers saving from all over the country and provides liquidity for industry and trade. Later, 1957 AD stood as a corner stone when industrial development bank was firstly established to promote industrialization in Nepal, which in 1959 AD was converted into Nepal Industrial Development Corporation. NRB is the apex regulatory authority to manage and supervise the banking sector activities. Due to the dominant presence of banking sector in the capital market, the policies and regulatory approaches undertaken by the NRB heavily affect the capital market activities and hence there is a sequential complementarily between the capital market and the banking sector development in Nepal. Rastriya Banijya Bank was established later in 1965 AD as the second commercial bank of Nepal. Both the commercial banks were able to impact best in the contemporary financial and economic sphere.

Agriculture has been the backbone of Nepalese economy. Therefore, Nepalese economy can’t be boosted without boosting agricultural sectors. Hence, realizing this reality, separate Agriculture Development Bank was established in 1968 AD which is the first and still largest institution to finance on agriculture sectors. For more than decades, no more banks had been established in the country and the contemporarily those banks were highly regulated by the NRB. After declaring free economy and privatization policies, the government encouraged foreign banks for joint venture in Nepal.

Role of banks in economy:

The role of financial institutions like banks for the economic development of any economy is a widely discussed topic among economists and bankers since the early 1990s. Banks are essential for each country’s economy, since no growth can be achieved unless savings are efficiently channeled into investment

Researchers believe that financial systems play a crucial role in easing market frictions and hence influencing saving rates, investment decisions, technical innovation and therefore, long run growth rate. In addition, stable banking system fosters the proper and widely accepted distribution of income. In particular, the crucial need for a stable banking system has highlighted in the wake of the Asian Crisis of late 1990s. The rapid influx of short-term, speculative capital flows to Asian Economies was a major contributing factor to the crisis. States with stronger domestic financial sectors and particularly, robust banks, however, better absorbed the ripple effects of the external shocks.

Bank based approach helps to mobilize resources in identifying and implementing good projects and monitoring of those projects and investments. In addition, they help to mobilize and pool savings, provide payments and services that facilitate the exchange of goods and services, produce and process information about investors and investment projects to enable efficient allocation of funds and exert corporate governance after these funds are allocated, and help diversify, transform and manage risks.

Any modern financial system contributes to economic development and the improvement in living standards by providing various services to all the sectors of the economy. These include clearing and settlement systems to facilitate trade, channeling financial resources between savers and borrowers, and various products to deal with risk and uncertainty. In principle, these various functions can be provided by banks or other financial institutions or directly through capital markets. Banks and other financial intermediaries stay alive because they are an efficient response to the fact that information is costly. Banks specialize in assessing the credit worthiness of borrowers and providing an ongoing monitoring function to make sure borrowers meet their obligations. They are rewarded for these services by the spread between the rates they offer to the accumulated pool of savers, and the rates they offer to potential borrowers. This process is known as ‘maturity transformation’ and is at the heart of modern banking. Banks offer a repository for savings, and then transform them into long-lived (illiquid) assets – housing loans and lending to businesses. In addition, banks play a role in providing payment and settlement services which are necessary for households, business and other financial institutions to settle day-to-day transactions.


As a country becomes more developed, one typically sees the capital markets playing a greater role in supplying financial products and services relative to that supplied by the banks. In many advanced economies, for example, raising business debt through securities rivals or exceeds that provided though the banking system.


  • Banks and financial (in)stability – making the system safer

Transforming short term deposits into longer term lending is one of the most important functions that banks perform for the economy. It is also what makes financial systems prone to fragility. This process exposes banks to illiquidity or possibly insolvency given the possibility of bank runs from depositors and creditors, or deterioration in lending quality. Banks’ own practices and financial regulation have an important bearing in reducing or amplifying this risk. For example, banks have choices around how much debt they use to fund their lending (leverage), while the quality of that lending is influenced by a number of governance-related factors. These include the control that creditors and shareholder put forth over bank managers, as well as the internal risk management systems of the bank. Regulations also set boundaries on what banks are able to do.


Given the interconnections between a bank and the overall sectors of the economy, the effects of a bank in stress or failure can potentially spill over to the wider financial and economic system. When financial savings cannot be accessed, the credit intermediation process is disrupted or the transactional role via the payments and settlement systems is undermined, economy is affected. Governments are naturally reluctant to see such important institutions fail since economic crises that are accompanied by major banking crises are typically far worse than usual business cycle slowdowns.

However, as we have seen from the experience of Ireland and Iceland, supporting stressed banks can create major fiscal problems, particularly if the banking system is very large relative to the size of the economy. A banking crisis can evolve into a sovereign debt crisis, which itself can have cross-border contagion effects.


  • Making the financial system more efficient – the role of banks

The banks’ role as financial intermediaries has a major bearing on how efficiently the economy allocates its resources between competing uses. In considering efficiency, we are interested in whether lending activity helps resources flow to their ‘best use’ or whether some sectors get too little or too much credit relative to what is needed for the economy to perform at its best. We are also interested in whether lending and other financial activities are provided in a cost effective manner from the point of view of consumers and the degree to which the banks improve and innovate their financial products and services over time.

All else equal, a well-managed bank acting carefully and operating in a reasonably competitive market will be making credit available at an appropriate price to creditworthy borrowers. However, in intensed banking systems dominated by a handful of large banks, competition may be lacking. Households and firms may end up paying more to access credit (and other bank services) than in a more competitive system.


Financial sector efficiency can also be compromised by boom-bust cycles, which is why there has been a resurgence of interest in how we might avoid or reduce these. During booms, lending standards may fall significantly and lenders may under price hazard with too much credit being allocated to any one sector (such as the rural sector or property development


International evidence suggests what might be more important for competition and efficiency is how ‘contestable’ the banking system (or individual banking product markets) is, rather than simply how many banks operate (i.e. market structure). Contestability is influenced by both the actions of incumbent banks, and by various formal and informal barriers to entry and exit.



  • GDP and Banking:

With the beginning of economic liberation in the mid – 1980s and increasing private sector investment in the financial sector from 1990s, the number of banks and financial institutions including commercial banks, development banks and other financial companies mushroomed from 38 in 1994 to 1997 in 2011. Consequently, the ratio of total banking assets to GDP went up to 78% from 35% during the period. Similarly, the ratio of private sector credit went to GDP from 20% in 1994 to 64% in 2011


Importance of Banks in Nepalese context


It has been known from prior research that there is a significant and strong relationship between country’s financial sector and overall country’s economic growth. The country can develop its

Economy quickly if the country has well financial system. Likewise, the regulatory bodies regularly monitor the banking sector for economic growth. In Nepal, Nepal Rastra Bank i.e. central bank reforms regulatory financial sectors, which indicate to the banking, sector. These sectors contribute to the economy in two fold. First they play a primary role in the economy through development activities and second they provide capital to general public and development organizations for improving through funded and non-funded credit facilities.


In Nepal, the common resource of supplies fund and the main source of financing to support national

Economic performances are commercial banks, development banks, finance companies and micro-development banks. However, other savings and cooperative institutions and non-government organizations are also providing limited banking facilities. Over the past decade, substantial interest focused on the link between the financial sector and economic growth. Endogenous growth theory emerged in the late 1980s and paved the way for new theories exploring the link.


Till the July end 2011, the number of banks and financial institutions are: 31 commercial banks, 87

Development banks, 79 finance companies and 21 micro-credit development banks, and all these institutes are licensed by central bank. Similarly, other non-banking institutes such as 16 saving and credit co-operative and 38 non-government organizations (NGOs) that are also providing limited banking facilities allowed by central bank. Till 1956, there was only one commercial bank, Nepal Bank Limited, with the number of all other financial institution being zero. At the end of the 1984 three more commercial banks and one development bank were established. By the end of 2002, there were altogether 140 banks and financial institutions (18 commercial banks, 9 development banks, and 51 finance companies with the establishment of saving and credit cooperatives and NGOs). The growth scenario in terms of number has reached 272 banks and financial institutions with 31 commercial banks and 87 development banks and 79 finance companies with the establishment of savings and credit cooperatives and NGOs as shown in as end of July 2011. As the result of greater financial reform by (the) Government of Nepal, such as ease of licensing policies, statutory requirements, foreign exchange exposure, and cash reserve ratios; liberalization of the interest rates; full convertibility of current account and other prudential rules and regulatory reforms have accelerated the growth of banking industry in Nepal.


Some specific sectors benefitted from financial institute, especially bank for development are:


  1. Infrastructure Development

Investment in infrastructural development by the banks and ease of finance in local development have shown positive effects in the development of infrastructural facilities in global scenario. Citing the examples of such cases, Nepalese banking sector can play a major role in imparting and facilitating the development process.


  1. Agriculture and Livelihood

As Nepal is an agrarian economy yet relying on traditional approach in agricultural production, the financial approach such as effective policies and strategies for the enhancement of livelihood in rural areas as well as professional farming practices in urban, by any financial institute will be beneficiary not only for overall GDP contribution of agriculture sector but also the livelihood enhancement of the people. Only a single industry in birgunj operates producing modern machineries and agricultural tools, investment in agrarian industry will also undoubtedly benefit the dependent, with the major roles for economy.


  1. Green Energy

The new concept of green economy and green energy are at a good pace globally these days as along with the development, nature is given high importance. Clean energy development bank, as one of the example for finance in the energy sector.


  1. Sustainable Cities

The investments in the sustainable development through the effective mobilization of the financial resources and knowledge through the financial sectors, better manages the development with the major responsibilities in it.


  1. Education and so on

ASEAN invest in education and human capital building whereas SAARC doesn’t which is also one of the major cause of south asean countries, lagging in development as human capital is the best form for the overall efficient and effective management of other resources. Banks can provide educational loans and other forms like entrepreneurship, human capital building trainings and so on.


  1. Remittance

Before the remittance through banking, hundi and other measures existed resulting in low revenue from remittance sector. Banking has regulated black money somehow and can encourage more access to banking through the free and legalize flow of remittance.


Recommendations: Nepal is a Least Developed Country (LDC) having GDP less than US $ 500. Therefore, banking sectors of Nepal has a great responsibility to lead Nepal toward more advanced and modern era. Therefore, following things have been recommended for the betterment of the National economy.

  1. Studies shows that increase in security in market development actually tends to increase the use of bank finance in developing countries. Therefore, both systems are complement to each other during development process. Therefore, financial and related other sorts of securities should be made reliable to the general people.
  2. Higher stock market liquidity or greater bank development leads to higher growth, irrespective of development of the other. Therefore, development of banks should be promoted up to carrying capacity.
  3. Quality of financial institutions and their services needs to be fostered to robust economic growth of nation.
  4. Many literatures suggest that countries with better developed financial systems experience faster economic growth and enjoy lower level of poverty and income inequality. Therefore, concerned authorities should be focused on making financial environment more healthy, productive and advanced.
  5. The government plays an important role in building effective and inclusive financial systems and discusses policies to make effective financial activities for development. Therefore, the government needs to do whatever it should do.
  6. Evidence suggests that human capital development contributes heavily to the stability of financial institutions and banks. In underdeveloped and developing countries, both pre-and pro-liberalization, often suffer from an inadequate supply of capable professionals. Therefore, policies should be put forwarded to enhance the academic as well as other professional skills of the professionals.
  7. Public-private partnership should be massively implemented to boost banking sectors which is the most efficient and effective approach of development. This approach has been widely adopted by recent government of India and can be fruitful in Nepal also. Financial liberalization boosts economic growth by improving allocation of resources and the investment rate.
  8. Better feasibility study of the investments relating to human and allround development should be undertaken for the effective result of investment by the banks and also promote rural banking in case of Nepal.
  9. Nepalese market as dominated by commercial banks, developmental investment opportunities can be fostered.

Therefore, ample opportunities lie in the banking sector, especially in Nepal as the market is yet to be penetrated and the better the effective ratio of saving and spending occur in any economy, the more well-organized economy maintains.


The Financial Sector and Economic Development: Banking on the Role of Human Capital ,Manuela W. Armenta


Relationship between Financial Development and Economy: A Case of Nepal, OanhThiVuong


The role of banks in the economy – improving the performance of the New Zealand banking system after the global financial crisis, Dr Alan Bollard, Chris Hunt and Bernard Hodgetts


The banking industry in the emerging market economies: competition, consolidation and systemic stability – an overview, John Hawkins and Dubravko Mihaljek


Contributions of banking sector in economic growth: A Case of Pakistan , Dr. Aurangzeb