Financial system of Nepal
1. Discussing the structure of Nepal’s financial system, present your opinion on what issues should be paid attention to for the development of the financial sector.
The totality of policy, legal and institutional structures related to financial activities such as demand, supply, access, transaction, payment of capital in the economy is understood as financial system. A strong financial system plays an important role in accelerating economic growth and development by channeling the limited capital available within the country to priority areas. The structure of the financial system of Nepal can be mentioned as follows:
– The financial system of Nepal has five main sectors namely banking, insurance, capital market, non-banking financial sector and cooperatives.
– The share of the banking sector in the total assets of the financial system is more than 80 percent.
– The non-banking financial sector is the second largest sector of the financial system. Employees Provident Fund and Citizen Investment Fund are the main institutions in this.
– There are three types of organizations under the insurance sector namely life, non-life and reinsurance. The insurance sector is limited to some services. The general public’s attraction towards insurance has not increased relatively.
– The capital market has not flourished. Financial institutions occupy a large part of the securities market.
– There are more than 13 thousand savings and credit cooperatives. With the adoption of the federal system, the regulatory system has been fragmented. Since the co-operatives are unable to operate according to principles, values and professional discipline, the amount of savers’ money is being put at risk recently.
– The ability and efficiency of regulatory bodies in the financial sector play an important role in strengthening the financial system. Due to the strong regulation of Nepal Rastra Bank, it seems that institutional governance in the banking sector is relatively high.
A matter to be considered for the development of the financial sector
– Strengthening the financial sector to support economic growth,
– Making the financial system healthy and capable through effective regulation and supervision,
– To accelerate the use of information technology and digital technology to make the payment and payment system efficient, secure and reliable,
– Promoting competition through policy, legal and structural reforms,
– Maintaining corporate governance in financial institutions,
– To promote transparency, accountability, good governance and adopt an accounting and auditing system that conforms to international standards,
– To develop an inclusive financial system to provide easy and accessible financial access to women, poor, people living in remote areas,
– Enhancing financial literacy about financial services and tools,
– To protect the rights and interests of financial customers and consumers,
– Bringing informal transactions into the scope of the formal financial system,
– Making the financial system competitive in a socially and environmentally responsible manner.
– In the end, for the prosperity of the country, production, investment for production and capital adequacy for investment are considered mandatory. For this, a clean, transparent, inclusive and strong financial system is needed. Policy clarity and stability of the government is also needed. Therefore, it seems necessary to formulate and implement a suitable financial strategy to convert the thought of development and prosperity taken by Nepal into practice.
2. Do state public service commissions play a consultative role? Explain with examples.
State Public Service Commissions have been formed to earn the trust of the public by establishing values such as competence, fairness and cleanliness in the personnel administration of the state and local levels. Regarding the formation, work, duties and rights of this commission, the State Public Service Commission (Determination of Basis and Standards) Act, 2075 has also been issued by the federal parliament. The Act has determined the consultative role of the State Public Service Commissions. Based on the provision in the Federal Act and State Acts, the consultative role of the State Public Service Commissions can be mentioned as follows:
a) Consulting on legal matters relating to Terms of Service
– Advising on the laws and conditions of employees in the state civil service, state other government services, state organized organization services and local government services and local level organized organization services.
b) Consultation regarding appointment, promotion, departmental punishment
– Provincial civil service, provincial other government service positions, provincial organized organization service positions, local government service positions, local organized organization service positions to be permanently appointed based on the consultation of the commission,
– Giving advice on the suitability of candidates when appointed to state civil service, state other government service positions and local government service positions for a period of more than six months,
– Advising on the principles to be adopted for appointment, promotion and departmental action in the state civil service, state other government service, state organized organization service and local government service and local level organized organization service,
– Advising on the principles to be adopted when appointing and promoting the posts of the Provincial Police Service,
– To advise on the suitability of the candidate during inter-service transfer or promotion to the state civil service post,
– Advising candidates on suitability for inter-service transfer or promotion to local government service posts,
– To give advice on the suitability of the candidate when transferring or promoting from other state government service posts to state civil service posts or local government service posts,
– To give advice on departmental punishment given to state civil service, state other government service or local government service employees.
Some examples of the work done by the state public service commissions in terms of performing the mentioned role are as follows:
– In the case of the promotion of employees from some local levels under the province by creating a law related to staff adjustment and matching, the Provincial Public Service Commission, Karnali Province instructed not to implement the promotion without consulting the commission.
– The State Public Service Commission, Lumbini Province has decided to cancel the activities related to adjustment matching, level increase, level increase and grade addition of employees from several local levels including Ghorahi Sub-Metropolitan City and to send a written notice to other local levels to refrain from doing the same.
– Public Service Commission, Bagmati province has issued a circular to all the local levels within the province to cancel the appointment, promotion and increment of employees without consulting the commission.
– The promotions of the employees promoted by some municipalities including Damak, Dhankuta etc. have been canceled by the Provincial Public Service Commission, Koshi Province.
– The State Public Service Commission of Gandaki Province has also canceled the promotion of several local level employees including Gorkha Municipality.
– For good governance in the country, the work carried out by all three levels of government should be clean, transparent and lawful. There is no doubt that the implementation of the consultative role of the State Public Service Commissions will promote hygiene and reliability in the work related to personnel administration carried out by the State and local levels.
3. Mention the objectives of the Local Government Operation Act, 2074.
The Constitution of Nepal mentions that the federal structure of Nepal will have three levels namely union, state and local level. The local levels of the federal structure are the governments that are close to the people, which are called local governments. The Local Government Operation Act, 2074 has been issued by the federal parliament to implement the responsibilities of the local level given by the constitution. As mentioned in the preamble of this Act, the objectives of the Act can be stated as follows:
– To implement the provisions related to the rights of the local level according to the Constitution of Nepal,
– To promote cooperation, co-existence and coordination relations between the Union, State and local levels,
– To provide accessible and quality services by ensuring public participation, accountability, transparency at the local level,
– To distribute the benefits of democracy in a proportionate and fair manner,
– To strengthen the socialist-oriented federal democratic republican governance system from the local level in accordance with the concept of the rule of law and sustainable development,
– To strengthen the local governance system by developing local leadership,
– To run the local government in order to institutionalize the legislative, executive and judicial practice at the local level.
– This Act also mentions the procedural aspect of local government operation and also aims to facilitate the operation of local government.
4. Inform about the amount to be deposited in the local reserve fund and the amount that can be spent from the fund.
The fund established as mentioned in Article 229 of the Constitution of Nepal to accumulate all types of funds received by the local government is called Local Accumulated Fund. The money collected in this fund is deposited in a bank in the name of the local level. The amount of the fund can be spent only by allocating according to the local law. The amount can be spent in full in the relevant expense account as specified by the Appropriation Law. The following amounts are deposited in this fund:
– Amounts raised from your revenue sources,
– Amount received from revenue sharing,
– Grant amount received from Nepal Government,
– Grant amount received from the state government,
– Grant amount received from other rural municipality or municipality,
– The amount provided by the Government of Nepal through foreign aid,
– Amounts received from internal loans,
– Money received from any person, association or organization,
– Any amount received from other sources.
The following amounts can be spent from this fund:
– Amount according to the annual budget approved by the Assembly,
– One-third amount of the expenditure allocated as Pesky expenses while the budget is under consideration,
– The amount to be paid or paid according to the judgment of the court,
– The amount fixed by the assembly for the contingency fund,
– Amount of loan principal and interest.
– In this way, the constitution and other laws mention matters such as the accumulated fund, the amount to be deposited in the fund and the amount to be spent from the fund to organize the economic functioning of the local level.
5. Mention the political and governance policies of the state mentioned in the Constitution of Nepal.
State policies are mentioned in Article 51 of the Constitution of Nepal. Under which the political and governance policy of the state is as follows:
– Protecting, strengthening and developing political achievements and guaranteeing the best interest and development of the people through economic, social and cultural transformation,
– Maintaining the rule of law while protecting and promoting human rights,
– Making the public administration clean, competent, fair, transparent, corruption-free, accountable and participatory, ensuring equal and easy access of the people to the services provided by the state, and guaranteeing good governance.
– Making necessary arrangements to make the mass media clean, healthy, fair, dignified, responsible and professional,
– To develop and expand harmonious and cooperative relations by sharing responsibilities, resources and administration between federal units.
6. Why is there a need for monitoring development projects? Present your opinion.
During project implementation, project monitoring is the accounting that is done continuously to improve the condition of flow of resources, the condition of operation of activities in accordance with the schedule and the condition of obtaining returns from the implementation of activities. The reasons for monitoring development projects are as follows:
– Continuously collect data on the project implementation status and within the scope, cost, quality and time frame assigned to the project
– To identify the problems encountered during the implementation and address them in a timely manner,
– To properly manage the risk aspects related to project implementation,
– To measure the performance level of the project manager based on the progress of the project and implement the provisions of penalties and punishments,
– To achieve transparency, accountability and social legitimacy in project implementation,
– To use the learning from project implementation in other projects,
– To make policy making and decision making process evidence based,
– To achieve the objective of the project and ensure change in the lives of citizens through economic and social transformation,
– Project monitoring is a continuous process. Project monitoring should be made effective in order to achieve the declared goal of the project by performing the performance in the specified cost, time, quantity and quality.
Presenter: Arjun Sharma