KATHMANDU: The Finance Committee of the House of Representatives has unanimously approved amendments to the Nepal Rastra Bank Act, reducing the tenure of the governor, deputy governors, and board members from five years to three.
The revised policy allows for a potential two-year reappointment based on performance evaluations.
The committee has also mandated that at least one woman be appointed as an independent board member.
To prevent conflicts of interest, a cooling-off period has been introduced, prohibiting current officials of commercial banks and financial institutions, or those who have not completed two years since retiring as chief executive officers, from serving on the central bank’s board. Furthermore, individuals holding more than 0.5 percent shares in commercial banks or financial institutions are now ineligible to serve as board members.
Under the new provisions, the central bank is required to formulate and announce its annual monetary policy on July 17 each year. The scope of the central bank’s regulatory and supervisory authority has also been expanded to include the Citizens Investment Trust, the Employees Provident Fund, and the Social Security Fund. Additionally, the central bank’s management committee is now required to hold meetings at least twice a month.
The committee has directed the government to immediately initiate amendments to Section 18 of the Bank and Financial Institutions Act, 2016, to address issues arising from penalty provisions under Section 100 of the Nepal Rastra Bank Act. Meanwhile, the existing provision allowing the government to issue directives regarding monetary, banking, and financial matters remains unchanged.
