Over the past 30 years, banks and financial institutions have increased lending by 20%, but Nepal’s economy has only grown by 4.5%.
Bankers have gradually started to realize that our sector has not lifted our economy. But I think the NRB should guide the bank towards investment in productive sectors. It is natural for investors to seek profit, but they should not expect a high return. Otherwise, the economy will collapse. What is the meaning of such a bank that would not propel the economy forward and only benefit one group? Investments without a positive impact on society, citizens, the environment and the country will not benefit anyone.
That said, banks have also invested in productive sectors like the expansion of hotels and cement industries. But now we need to look at the energy consumed by these projects to invest in, their environmental impacts and their carbon emissions. In Europe, I came across a bank building that was not dependent on the power grid during the day. We can adopt such practices ourselves.
But banks investing in the import and real estate sectors have had a negative impact on the economy and the environment.
Both the government and the bakery industry should shift their priorities. Nepal should be self-sufficient in manufacturing and create job opportunities. Banks should invest in building such a system. High imports and unproductive investments can plunge the country into an economic crisis.
Food and energy are critical sectors for any country. The financial sector has played an important role in energy production by investing in hydroelectricity. And Nepal is now almost self-sufficient in electricity and as a banker I am proud of that. This should now be replicated in food and agricultural production which accounts for a quarter of our imports. This can be replaced by domestic production if we prioritize and invest in agriculture.
We also have huge potential for pilgrimage tourism from Janaki to Pashupati to Muktinath. If we don’t prioritize the real economy, we are likely to collapse, recent events in South Asia have taught us. By producing essential commodities, including agricultural products, exporting electricity and promoting electric transport, we can reverse the balance of payments deficit.
How will Nabil himself put these values into practice?
We created a sustainable banking service last year. We also train young people in entrepreneurship and leadership. We provide loans to emerging businesses in remote Nepal to start local agricultural businesses, but we also educate them on their responsibility to the environment.
Nabil Bank is also a member of the Global Forum on Partnership for Carbon Accountants Finance. We are committed to tracking our loans and their contribution to reducing carbon emissions.
Nepal needs to prepare a roadmap in various areas of sustainable development, finance and green economy. It must also implement its commitments, including the Paris agreement. Nabil Bank is moving in this direction, the other banks should too. Past experience, current needs and future goals must all align when we invest in the financial sectors.