"Nepal could mediate between India and Pakistan on the sidelines of the Summit," Pandey said during a talk show on News 24 channel.
"The Prime Ministers of both the countries were in favour of improving the deteriorating relations and Nepal will take the initiative," said the foreign minister of the host country.
Meanwhile, External Affairs Minister Sushma Swaraj said "wait till tomorrow", when asked about the possible meeting between Prime Minister Narendra Modi and his Pakistani counterpart Nawaz Sharif.
"The two prime ministers will come face-to-face at the retreat ceremony in Kathmandu," a Pakistani official was quoted as saying by Express Tribune.
As part of a tradition, the heads of state and government attending the SAARC Summit are taken for a retreat after the inauguration of the conference in order to create a conducive environment for bilateral meetings.
All SAARC leaders including from India and Pakistan are being invited for the retreat.
Nepal is hosting the SAARC Summit after an interval of 12 years.
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