KATHMANDU, Sept 16: The Finance Committee under the House of Representatives has unanimously passed its report on the bill to amend the Nepal Rastra Bank Act, introducing several changes to the proposed legislation.
The committee, which met on Wednesday, has shortened the terms of the Nepal Rastra Bank governor, deputy governors and board members from the existing five years to three years. They may be reappointed for an additional two years based on their performance.
The committee has also revised and streamlined the objectives of Nepal Rastra Bank and updated the eligibility and experience requirements for the governor, deputy governors and independent board members. The report makes it mandatory to appoint at least one woman as an independent board member.
To address conflicts of interest, incumbent officials of commercial banks and financial institutions, as well as chief executive officers who left such positions less than two years earlier, will be barred from becoming NRB board members. The provision introduces a two-year cooling-off period.
Revised interest rate corridor system introduced
Similarly, anyone holding more than 0.5 percent shares in a commercial bank or financial institution will be ineligible to become an NRB board member.
The committee has also set a fixed date for the central bank to formulate, announce and publish its monetary policy. Under the report, monetary policy must be issued on the first day of the new fiscal year, every year.
The provision under Section 106(C), which allows the government to issue directives on matters related to currency, banking and finance, has been retained.
The committee has also directed the concerned government minister to immediately initiate the process of amending Section 18 of the Banks and Financial Institutions Act, 2017, to address problems arising from the penalty provision under Section 100(2)(A) of the Nepal Rastra Bank Act.
The committee has expanded the proposed scope of Nepal Rastra Bank’s regulation and supervision to include the Citizen Investment Trust, Employees Provident Fund and Social Security Fund.
The report also requires the Nepal Rastra Bank Management Committee to meet at least twice a month.
Under the proposed legislation, at least one woman must be appointed as an independent board member of NRB.
