The expansion of the economy as a whole is shrinking due to the slowdown in economic activity seen in recent times. The government’s efforts to address this situation have not proved to be fruitful. Even as deposits collected from banks and financial institutions have crossed the historic mark, both the loan investment numbers and the investment expansion are shrinking.
A series of demonstrations from different sides and the state’s helplessness in front of the protesters amid confusion have increased frustration among the general public. It is sad that the government, as a guardian, should be able to spread hope to the citizens, but the main ruling party is focused on the power lipsa. The appointment of people who do not have qualifications in regulatory bodies that directly affect the financial sector and are preferred by a certain corporate has increased the risk of distortion.
The World Bank’s Nepal Development Report 2025 has pointed out that Nepal’s economy is facing various potential risks. It warned that challenges ranging from the risk of investment contraction to increasing bad loans of banks and instability in government policies in the absence of expected profits could affect the country’s economic growth.
The World Bank has projected nepal’s economy to grow by 4.5 percent in the current fiscal year. The Central Bureau of Statistics (CSO) has projected the growth rate of the banking and insurance sector to be above 6 percent in the current fiscal year.
Life insurance business has started getting some benefits after the interest rate on fixed deposits in banks and financial institutions was limited to 5 to 6 percent. Sales of single insurance policies have doubled. Although this is an opportunity for those who have enough savings, the ability to invest in life insurance is weakening due to lack of adequate savings for the common people. There is an increasing risk that this will hamper the goal of expanding insurance benefits.
The demand for property insurance and commercial goods insurance has been shrinking with the contraction in the activities of industry and trade, and the non-life insurance business has started showing distortions. In the race to attract business, non-life insurers are offering ‘cash back offers’ to commercial customers.
In the midst of disappointment, the insurance sector has started to adopt the adoption of information technology significantly in recent times. Satellite seasonal information-based agricultural crop insurance, digital technology-based discount cards and digital wallets have been introduced to use insurance loans. There is no doubt that the use of technology will contribute to expanding the benefits of insurance among the general public in a faster and easier way.
Statistics have confirmed that the risk of money laundering through the life insurance business has increased in recent times. During the investigation against the corrupt accused officers of banks and financial institutions or any public body, it has been found that life insurance has been used to legalize the money earned from illegal sources. At a time when Nepal is on the ‘grey list’ for not being serious about preventing money laundering, negligence in the insurance sector further promotes it. Therefore, it is necessary for everyone working in the insurance sector to be responsible to prevent money laundering through insurance.
