Nepal Rastra Bank (NRB)

Introduction

Nepal Rastra Bank (NRB), the Central Bank of Nepal, was established in 1956 (2013 Baishak 14) under the Nepal Rastra Bank Act, 1955 (2012 BS), to discharge the central banking responsibilities including guiding the development of the embryonic domestic financial sector. Since inception, there has been a significant growth in both the number and the activities of the domestic financial institutions.
To reflect this dynamic environment, the functions and objectives of the Bank have been recast by the new NRB Act of 2002 (2058 enacted in 17 Magh 2058), the preamble of which lays down the primary functions of the Bank as:
The Bank is eminently aware that, for the achievement of the above objectives in the present dynamic environment, sustained progress and continued reform of the financial sector is of utmost importance. Continuously aware of this great responsibility, NRB is seriously pursuing various policies, strategies and actions, all of which are conveyed in the annual report on monetary policy.

NRB can also be deifined in following concept.

Vision

To become A modern, dynamic, credible and effective Central Bank

Mission

To maintain macro-economic stability through sound and effective monetary, foreign exchange and financial sector policies.

NRB Governors over the years

S No Governor Name Term of office (AD) Term of office (BS)
Src: Nepal Rastra Bank

Functions, Rights and Duties

  1. Bank Note Issue

    2. NRB has sole authority for issuance of currency notes putting them in circulation, withdrawing them or exchanging them. NRB has issued ad put Rs 1, 2, 5, 10, 20, 50, 100, 500, and 1000 notes and coins in circulation.

  2. Banker, Agent and Advisor to the Government
  3. Bankers' Bank
  4. Lender of Last Resort
  5. Clearing Agent

Role of Nepal Rastra Bank

  1. Measuring leading economic variables
  2. Money supply and creation
  3. Foreign currency exchange management
  4. Public debt management
  5. Maintaining relationship with international institutions
  6. Providing valuable advice to Government
  7. Managing credit policy of BFIs
  8. Monitoring, supervision and control of BFIs

According to Nepal Rastra Bank Act 2058

Functions, Rights and Duties

In order achieve the objectives of the bank the functions, duties and powers of the Bank shall be as follows:

  1. To issue bank notes and coins;
  2. To formulate necessary monetary policies in order to maintain price stability and to implement or cause to implement them;
  3. To formulate foreign exchnage policieis and to implement or cause to implement them;
  4. To determine the system of foreign exchange rate;
  5. To manage and operate foreign exchange reserve;
  6. To issue license to commercial banks and financial instituitions to carry on banking and financial buisiness and to regulate, inspect, supervise and monitor such transactions;
  7. To act as a banker, advisor and financial agent of Government of Nepal
  8. To act as a banker of commercial banks and financial instituitions and tot function as the lender of the last resort;
  9. To establish and promote the system oof payment, clearing and settlement and to regulate these activities; and
  10. To implement or cause to implement any other necessary functions which the bank has to carry out in order to achieve the objectves of the bank under this act;

Prior Right of the Bank

  1. For the purpose of recovering any loan, which the bank has given to any borrower or any other type of claim of the bank against any borrower, the bank shall have prior right of security over cash deposited in an account in the name of such borrower at the bank or any commercial bank or financial instituition or against any other movable and immovable property owned by the borrower for the purpose of recovering such loan.
  2. The bank shall recover its loan by taking into its custody the cash or movable or immovable property having its prior right and selling such property as prescribed.

Privilages and Facilities to the Nepal Rastra Bank

  1. Exemption from all types of taxes, fees and charges on the incomes, capital transactions, houses, land, assets, etc;
  2. No requirement for the payment of registration fee for registration of the deeds of loans or refinance to be given by the bank;
  3. No requirement of reveneue stamps on any of the documents relating to the bank;
  4. There would be no tax, fee, charge, duty on the export and import of bank notes, coins, gold, silver and the paper, metal, chemicals and other materials to be used for printing bank notes and minting coins.

Nepal Rastra Bank Act, 2058 (2002)

Date of authentication and Publication

17 Magh 2058 (30 january, 2002)

Ammending Act
  1. Nepal Rastra Bank (First Ammendment) Act, 2063 BS (2006) 2063.07.23 (2006.11.09 AD)
  2. Republic Strengthening and some Nepal Laws Ammendment, 2066 BS, 2066.10.07 (2010.01.21 AD)
  3. Nepal Rastra Bank (Second Amendent) Act, 2073 BS, 2073.07.29 (2016.11.14 AD)

Chapter 2

Objectives of the Bank