Nepal’s financial inclusion score jumps to 0.53 as digital finance expands nationwide

KATHMANDU: Nepal’s financial inclusion landscape recorded a significant improvement in fiscal year 2024/25, with the national Financial Inclusion Index (FII) rising from 0.47 to 0.53, according to the latest report by Nepal Rastra Bank (NRB). The progress indicates broader access to financial services, increased usage, and measurable gains in service quality across the country.

The FII, developed by NRB, measures the overall level of financial inclusion using a methodology similar to the Human Development Index (HDI), where scores are normalized on a scale of 0 to 1. A higher value denotes deeper and more effective inclusion within the financial system.

The index is based on 55 indicators grouped under three core dimensions: Access (15 indicators), Usage (15 indicators), and Quality (25 indicators). These dimensions carry weights of 35 percent for Access, 45 percent for Usage, and 20 percent for Quality, reflecting the relative importance of active financial participation.

According to NRB’s Financial Inclusion and Consumer Protection Division (FICPD), all three dimensions posted encouraging results during the review year. The Access Index climbed to 0.53, highlighting the continued expansion of banks and financial institutions, branchless banking outlets, service points, and digital delivery channels throughout Nepal. This suggests that geographic and infrastructural barriers to formal finance are gradually narrowing.

The Usage Index, which carries the highest weight, reached 0.54, signaling greater engagement of individuals and households with banking services, digital payment systems, insurance products, and other financial tools. NRB attributes this to the rapid adoption of digital financial services, wider mobile banking penetration, and growing integration of formal financial products into daily economic activities.

Equally notable is the rise in the Quality Index to 0.50. This improvement reflects progress in financial literacy, stronger consumer protection mechanisms, improved transparency, and a better overall customer experience. NRB states that regulatory reforms and supervisory measures have helped strengthen trust in the financial system while promoting responsible financial behavior among service providers.

The central bank noted that the overall gains demonstrate the positive impact of policy initiatives, digital financial innovations, and regulatory measures undertaken in recent years. Programs aimed at expanding digital infrastructure, strengthening consumer rights, and promoting financial education have played a key role in driving inclusive finance.

However, NRB emphasizes that despite the progress, sustained efforts are still required. Strengthening digital connectivity in rural and remote areas, further enhancing financial literacy, and ensuring consumer-centric service delivery remain crucial for deepening inclusion and supporting inclusive economic growth. The report underlines that financial inclusion is not only about access but also about meaningful usage and quality of services that improve economic resilience and opportunity for households and small businesses.

Financial Inclusion Index – Nepal

Source: NRB