Kathmandu. A Memorandum of Understanding (MoU) has been signed between Nepal Rastra Bank and the International Finance Corporation (IFC) to test a method of assessing a potential debtor based on individual capacity, behavior, style and qualifications in Nepal's financial sector. It is expected that the new system of psychometric scoring system will be made more technology friendly by promoting the disbursement of credit in the financial system and promoting easy, simple and risk free credit flow.

Suman Kumar Adhikari, Executive Director, Department of Microfinance Supervision and Babakar Sedikh Faye, Resident Representative of IFC Nepal signed the MoU today in the presence of Governor Maha Prasad Adhikari for the trial phase of the innovative method aimed at promoting digital financial services as a measure of personal ability, behavior, style and competence. The method is being tested in Nepal's financial system in partnership with the Government of Japan and the United Kingdom (UK) for a period of two years.

 As per the understanding, micro and retail borrowers and small, medium and large enterprises are expected to be brought under the purview of formal financial services through this method. It is expected to enable banks and financial institutions to create risk profiles based on a statistical analysis of the personality and psychological characteristics of the potential borrower and to attract and simplify the client to consume the loan to be included in formal financial services. It is believed that this will facilitate the expansion of financial services to the service recipients who did not have access to financial services in the past.