maha prasad adhikari : special address - asian banker's association annual general meeting and conference special address by mr maha prasad adhikari, governor of the central bank of nepal ( nepal rastra bank ), at the 39th asian banker's association annual general meeting and conference " asian banking : roadmap for recovery and sustained growth ", kathmandu, 9 november 2023. * * * honourable finance minister, government of nepal, and chief guest of the program dr. prakash sharan mahat mr. eugene s acevedo, chairman, asian bankers association mr sunil kc, president, nepal banker's association distinguished speakers, moderators, and presenters of the conference distinguished foreign delegates, guests, ladies and gentlemen! warm good morning and namaste, it is my great privilege to have the opportunity to address this 39th agm of the asian banker's association and conference, organized with the theme of " asian banking : roadmap for recovery and sustained growth ". this conference is being organised at a time when the global banking system has been facing immense challenges from a global uncertain environment while recovering from the covid - 19 pandemic. the nepalese banking system is also no exception. therefore, this type of event for discussing such issues would be highly beneficial for all of us. my sincere thanks to the asian bankers association for choosing nepal for its 39th agm and also to the nepal banker's association for organizing the conference while hosting the annual general meeting of the asian banker's association. distinguished guests, ladies and gentlemen the global financial system remained resilient even during the covid - 19 crisis but is now facing challenges. the symptoms were seen earlier this year when some banks faced turmoil in advanced economies. data and statistics showed that asian banks were able to show a high degree of resilience during those periods, though the vulnerabilities still exist. since the banking business is directly related to the economic conditions, the banking community faces similar challenges as the global economy. presently the global economy is still'limping along, with growing divergences'as mentioned by the imf's recent world economic outlook. this indicates that the risk of spillover from the global financial to the domestic market is still prevalent. 1 / 4 bis - central bankers'speeches inflation is now moderated in most of the advanced economies but still well above the central bank's targeted level. some emerging markets and developing economies are still facing a higher inflation spiral.

the growing tension recently emerged in the middle east from the israel - hamas war and the prolonged russia - ukraine crisis, which has been creating challenges to maintaining price stability. as a result, many central banks have been continuing their tight monetary policy stance, and this has led to a continuing situation of higher interest rates. when the interest rate remains relatively high for a longer term, naturally the demand for credit goes down, resulting in an economic slowdown ; on the other hand, the economic slowdown would result in increased credit defaults in the financial system posing a risk in the financial stability. therefore, asian banks need to be vigilant and cautious to observe and manage these risks. this type of discussion forum provides a platform to share the changing banking landscape and discuss the ways forward in this uncertain global environment. considering the impact on economic activities, nepal rastra bank, has already started lowering its policy rate. rapid technological changes have also brought many benefits to the banking system. new fintech development has been transforming the banking business, but at the same creating several risks for maintaining stability in the banking system. thus a very important question to many asian countries and a crucial question to policymakers is " how to promote and sustain the growth of the banking system along with encouraging economic growth by using latest fintech? ". ladies and gentleman nepal's growth performance has been sluggish, averaging around 5 percent per annum during the last 10 years. 1 the economic growth that was picking up in higher single digits after the post - earthquake recovery and perceived political stability after the state restructuring and new constitution, was severely affected by the outburst of covid - 19 and the subsequent pandemic in 2020. this was immediately followed by the russiaukraine war which had adversely affected domestic conditions : the economic growth in fy 2022 / 23 is estimated to lower to 1. 9 percent ( at purchaser price ) which is below potential growth. 2 to uplift such low economic growth, higher investment and hence higher savings, is necessary. but, nepal's saving remains below 10 percent on average, which is not sufficient to boost economic growth. 3 in this regard, the role of banks are key to boosting savings which will contribute to higher capital formation, a necessity for economic growth. distinguished participants, the nepalese banking system has witnessed rapid expansion and development in the last three decades in line with the financial liberalization policy. as a result, access to finance and financial deepening has substaint