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The Role of Financial Inclusion in Policy Making for Money Transfers to Nepal

05 Aug 2023

The incidence of migration in developing countries like Nepal is on the rise. Nepalese travel to other countries to earn a living and to send money to Nepal to support their family to lead a financially decent life.

Do you know what is one of the primary reasons for this rising migration? Why do people leave their loved ones behind and undertake the hazards of expatriation? After all, whatever the incentive, leaving your family will always remain a challenge for you.

Well, if you have been wondering about these questions and have always wanted to get answers, then you are in the right place at the right time.

The one reason this can be attributed to is the lack of financial inclusion.

Most developing counties share this challenge of almost non-existent financial inclusion, which leads to myriad other economic challenges.

This blog will throw light on what financial inclusion is and how it can help Nepalese become financially independent.

According to a report by MIDEQ, about 14% of Nepal’s total population, totalling around 2.3 million Nepalese, reside in different counties to earn a living. These migrants have been contributing to the country’s economy through inward remittances, whose quantum reached $8.23 billion in 2021, according to a World Bank report.

One of the primary reasons Nepalese migrate abroad is the lack of financial viability which results from the non-existent financial inclusion.

Let’s try to scratch the surface and understand what financial inclusion is.


What Is Financial Inclusion?

Financial inclusion is based on a plan to provide affordable and quality financial services across all levels of society regardless of the financial health of individuals.

These financial services include but are not limited to payments, transfers, insurance, credit, bank accounts, etc.

Take any country as a case study, and what better case study than Nepal? You will not take long to conclude that the lack of financial inclusion has hampered the economic growth of the country.

That is the reason why you find millions of Nepalese struggling to find jobs abroad to earn a living and support their family back home through a money transfer to Nepal.


How Can Financial Inclusion Lead To Better Policy Making For Money Transfers To Nepal?

Think about it.

Keep the definition of financial inclusion in sight and read the following.

If, in a society, a large segment of the people does not have access to insurance, bank accounts, and other associated financial services, what would it simply mean?

It would mean that they are not registered with the concerned government departments. And if they are not registered, the government does not know the needs and requirements of the people because it is not aware of them in the first place.

Can you, then, expect a government to create policies accordingly?


Policies are created based on needs ascertained through counting people and demographic studies. It is based on such studies that governments create people-friendly economic policies and, in the case of Nepal, facilitate the flow of inward remittances.


A Hypothetical Scenario

Imagine you are told to prepare a meal because guests are coming.

What time do the guests arrive? Do they come to have breakfast, lunch, supper, or dinner? How many are they, and consisting of how many women, men, adults, children, etc.? What meal to cook? For how many people to cook, whatever it is? What about the seating arrangement? What is the purpose of the visit? If these and other associated questions remain unanswered, what will you do? How good will your preparations be?

Well, any guess to this effect is as good as it gets!

Therefore, the importance of financial inclusion cannot be overemphasised.

Where financial inclusion supports the flow of inward remittances, you need to Ensure Your Online Safety while so doing in the wake of rising financial scams.


Is Non-Existent Financial Inclusion The Only Reason Behind Migrating From Nepal?

No. The Nepali economy is also another major factor. Take a look below.


The Nepali Economy

  • In 2021, Nepal had a GDP of $36.29 billion, the World Bank said.
  • In the same year, the country had a GDP per capita income of $1,208.2, the same institution said.

Nepal is, at best, a weak economy that is struggling to provide for its entire population of employable age. It leads several people to migrate abroad to earn a living and send money to Nepal online to offer financial aid back home.

Let’s now take a look at the objectives of financial inclusion.


Objectives Of Financial Inclusion

A few prime objectives of financial inclusion are as follows.


Provision Of Basic Services To All

Through financial inclusion, all the basic financial services are provided to all the people in a society. Since these services are to reach all, they have to be affordable and easily accessible.


Growth Of Financial Institutions

Since more and more people enter the economic fold, their needs surge that can outweigh the existing financial paraphernalia to cater to. Therefore, more financial institutions are birthed.


Strengthening The Economy

With financial inclusion, the economy begins to grow as trade and commerce activities spike. As more people have access to financial services and products, they create a positive impact on the economy.


More Investment Opportunities

Financial inclusion leads to the creation of more investment opportunities that can go far beyond the typical investment options like property and fixed deposits, etc. Most people in developing countries find these investment options safe and reliable owing to the lack of financial inclusion, whose existence will open several other investment opportunities.


Enhanced Financial Awareness

It will promote financial literacy and education, which will help people make sound financial decisions. Most financial decisions turn out to be wrong because decision-makers have little financial knowledge.


Realising Optimal Market Potential

Financial inclusion ensures tapping the full potential of a country’s economy. This can lead to the creation of customised financial solutions at par with the new, emerging and existing economic trends in the increasingly globalised world economy.

This is the impact financial inclusion can create for the people of Nepal and Nepali migrants.


The Way Forward

Since it remains to be seen when the Nepali government initiates the process of financial inclusion for its people and migrants, here’s how you can enjoy speed, safety, live and competitive exchange rates, and much more from one window for a low fee in your online money transfer to Nepal with ACE Money Transfer.


What is financial inclusion, and why is it important for policymaking in money transfers to Nepal?

Financial inclusion refers to the accessibility and availability of affordable financial services, such as bank accounts, insurance, loans, and money transfer mechanisms, to all individuals and businesses, regardless of their income level. It is crucial for policymaking in money transfers to Nepal because it can help reduce the cost of remittances, improve transparency, enhance the security of transactions, and contribute to economic development by increasing the financial resources available to individuals and businesses.

How does financial inclusion impact the costs of money transfers to Nepal?

Financial inclusion can significantly reduce the costs of money transfers to Nepal. By encouraging competition and innovation in the financial sector, policies that promote financial inclusion can lead to lower transaction fees. This is particularly important for Nepalese migrant workers abroad who send remittances home, as it means a larger portion of their earnings can reach their families.

How does policymaking facilitate financial inclusion in the context of money transfers to Nepal?

Policymaking can facilitate financial inclusion through a variety of measures. For example, policies can incentivise financial institutions to offer low-cost remittance services, promote the use of digital technology for money transfers, and ensure a regulatory environment that is conducive to the entry and operation of diverse financial service providers. Policymakers can also prioritise financial literacy initiatives to ensure consumers are equipped to use these services effectively and safely.

What is the role of digital technology in promoting financial inclusion and facilitating money transfers to Nepal?

Digital technology plays a key role in promoting financial inclusion and facilitating money transfers to Nepal. It provides a platform for cost-effective, fast, and secure money transfer services. Furthermore, digital technology allows for the provision of these services to rural and remote areas of Nepal, where access to traditional banking infrastructure may be limited. Policy initiatives encouraging the use of such technology can significantly boost financial inclusion.

What challenges does Nepal face in implementing policies for financial inclusion related to money transfers?

Nepal faces a few challenges in implementing financial inclusion policies. First, there's a need to expand and upgrade the financial infrastructure, particularly in rural areas. Second, a large segment of the population lacks basic financial literacy, which hinders their effective use of financial services. Lastly, regulatory challenges may also exist, such as ensuring the security of digital transactions and protecting consumers' data privacy. Policymaking should aim to address these challenges to achieve broader financial inclusion.



  • Nepalese diaspora

(MIDEQ - Migration for development and equality)

  • Inward remittances

(Personal remittances, received (current US$) - Nepal | Data (

  • Nepali GDP

(GDP (current US$) - Nepal | Data (

  • Nepali GDP per capita

(GDP per capita (current US$) - Nepal | Data (


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