NRB Governor Emphasizes International Standards for Banking System

Kathmandu. Nepal Rastra Bank Governor Dr. Bishwanath Poudel has stressed the need to make the country's banking system compatible with international standards and competition.

 Speaking at a discussion in the Finance Committee under the House of Representatives, Governor Poudel presented his views on the bill to amend the proposed Nepal Rastra Bank Act, 2058 BS.

During the discussion, Governor Poudel recalled that the recognition of central banks as autonomous bodies has been established worldwide since the 1990s. He argued that the act needs to be made time-appropriate to save Nepal from the 'Grey List' and to adopt the latest digital payment systems.

Regarding the provisions on the number and qualifications of the board of directors in the proposed bill, he stated that the existing system is appropriate. He opined that the presence of the Finance Secretary on the board effectively coordinates between the government and the bank, and this should not be seen as interference.

• Assertion: '10 years of experience' and 'cooling period' added to qualifications are not practical

Governor Poudel stated that the provision regarding '10 years of experience' added to the qualifications of the Governor and Deputy Governor needs reconsideration. He argued that the positions of Secretary, Professor, or Vice-Chairman of the Planning Commission already confirm the experience and capability of individuals, making the requirement for additional work experience impractical.

Disagreeing with the proposed 'cooling period' for senior officials retired from the bank, he said that the state should have flexibility to utilize qualified and experienced human resources as needed at any time. He mentioned that it would benefit the state when experienced officials from Rastra Bank move to other high responsibilities.

Speaking about the priorities in lawmaking, Governor Poudel said, 'When making laws, we must consider national interest as well as international standards and compatibility. Especially, an institution like Rastra Bank has to work in coordination with international relations, foreign exchange management, and the global financial system, so its laws must be accordingly.'

He added, 'Matters like the Grey List, digital payment, QR system, digital currency, etc., also confirm this need.'

Clarifying the qualifications of officials, he said, 'There is also a need for clarity in the provisions related to the qualifications of the Governor, Deputy Governor, and Directors. Since positions like Professor, Secretary, or Executive Director are obtained based on experience, making an additional 10 years of experience mandatory does not seem practical.'

• Stance: Investigation of the Governor must be conducted by a retired Supreme Court Justice

He took the stance that if an investigation into the Governor becomes necessary, the committee formed should be chaired by a retired Supreme Court Justice. Considering the protocol where the Governor takes an oath from the Chief Justice, he argued that it would not be appropriate to have an investigation conducted by a judge of a lower rank.

Similarly, Governor Poudel stated that while including subjects like 'unemployment reduction' in the bank's objectives is an international practice, the existing objectives are sufficient in the context of Nepal. He emphasized that the decision-making authority of the board of directors should be maintained rather than the proposed 'automatic' system regarding the bank's income-expenditure and profit distribution. He stated that the bank needs autonomy to make macro-level decisions on how much money to send to the government to manage inflation and liquidity in the market.