KATHMANDU, Feb 16: The government has initiated the process of amending the Nepal Rastra Bank (NRB) Act, 2002 to introduce provisions related to digital currency and strengthen governance in the financial sector.
The Ministry of Finance (MoF) on Friday issued a public notice seeking suggestions from stakeholders by the end of this week regarding the proposed amendments.
According to the ministry, the amendment aims to make the central bank more autonomous, transparent and accountable in line with international practices. The government plans to recognize digital currency as legal tender and introduce provisions to prevent destroyed, mutilated or banned digital currency from re-entering circulation.
Two-day Huawei Digital Nepal Conclave 2022
The proposed amendments also seek to improve the monetary policy framework, promote a risk-based supervision system, strengthen financial stability and align the central bank’s structure with the federal system, the MoF notice states.
The bill proposes a provision requiring the NRB to publish its monetary policy within 15 days of the start of each fiscal year. It also seeks to clarify the central bank’s role as a macro-prudential regulator, lender of last resort and authority responsible for resolving troubled banks.
Other proposed reforms include modernizing accounting standards, strengthening the internal audit system of banks and financial institutions, and clarifying the appointment process, qualifications and removal procedures for the governor, deputy governors and board directors. The bill also proposes restructuring the NRB board, forming an audit committee and determining remuneration procedures.
While maintaining price stability remains the primary objective, the amendment seeks to ensure the stability of the banking and financial sector without undermining the price system. Provisions have also been proposed regarding banks’ capital requirements, reserve funds, financial development funds and the establishment of a special reserve fund.
An MoF official said the amendment aims to clarify the central bank’s mandate and procedures in light of the growing scope of digital currencies, green finance, emerging risks and the need for improved financial sector governance.
