Kathmandu. KATHMANDU: The Nepal Rastra Bank (NRB) Act, 2058 BS is to be amended extensively. The Ministry of Finance has released the draft of the amended Act. The draft has proposed amendment to 73 different sections of the NRB.
The Finance Ministry has clarified that the act is being amended to maintain coherence as per the internationally accepted concept regarding the role of the central bank and to provide more autonomy in the functioning of the central bank. To make the supervisory and regulatory functions of the Rastra Bank more effective and to make the fiscal year 2082. According to the Ministry, the draft has been prepared to amend the NRB Act as per the need of revision and amendment as mentioned in the budget statement of 83 BS, the NRB’s Fourth Strategic Plan (2022-2026) and the Monetary Policy.
Through the amendment of the Act, the autonomy of the central bank will be strengthened by amending the Act in line with the current economic and financial context and the objectives and scope of the central bank will be further clarified by amending the act.
Here are the main themes that need to be updated
- Strengthening of the autonomy of the Central Bank
- More clarity on the objectives and scope of the central bank
- Concept and Regulation of Digital Banks and Digital Currencies
- Promotion of risk-based supervision system
- Strengthening of Inflation Control Mechanism
- Role adjustment of NRB under federal structure
- Modernization of balance sheet and reporting system in line with international accounting standards
- More clarity on the provisions related to the settlement of banks and financial institutions.
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Amendments to the Act to help achieve the Sustainable Development Goals
The government expects that the parallel amendment to the NRB Act will help achieve the Sustainable Development Goals (SDGs) through the following actions:
- Promotion of Inclusive Banking System
- Digital payments, digital banks and management of digital currency
- Financial Access Extension
- Adoption and regulation of modern technology
- Risk Management of Banks and Financial Institutions
- Financial Stability Strengthening.
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Impact on Good Governance
- More autonomy in the functioning of the Rastra Bank
- Strengthening of Internal Audit System
- More clarity on the appointment of Governor, Deputy Governor and Directors, qualification experience
- Improved Arrangements for the Appointment of Directors
- Audit System Improvements
- Expansion of the scope of the Credit Information Center.
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These provisions are expected to promote financial governance, transparency and accountability.
According to the ministry, the proposed amendment will not have any adverse impact on climate adaptation. According to the Ministry, the provision of digital banking and digital currency will reduce the use of cash transactions and reduce environmental impact related to paper currency printing, transportation and management. The ministry is hopeful that this will further contribute to the promotion of environment-friendly financial practices and move towards sustainable and green economy.
The ministry has asked the stakeholders to submit their comments on the proposed draft within 7 days.
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