Finance Minister Swarnim Wagle Sees Need To Amend Nepal Rastra Bank Act To Make Central Bank More Proactive, Accountable And Effective

Finance Minister Dr. Swarnim Wagle has said the Nepal Rastra Bank Act needs to be amended to make the country’s central bank more proactive, effective and accountable. Speaking at a meeting of the Finance Committee under the House of Representatives, Wagle said the proposed legal changes should strengthen the way Nepal Rastra Bank operates and improve its accountability. The committee is holding a clause by clause discussion on the bill to amend the Nepal Rastra Bank Act, 2058.

Fiscal And Monetary Policy Must Work Together

Wagle said coordination between the Ministry of Finance and Nepal Rastra Bank is especially important for an economy like Nepal’s. The Finance Ministry manages fiscal policy, including government spending and revenue, while Nepal Rastra Bank manages monetary policy, including interest rates, liquidity and other financial measures. According to Wagle, both policies need to work together because they directly affect economic growth, inflation and financial stability. He also supported the proposal to have at least seven members on the central bank’s board of directors. He said the presence of the finance secretary could become even more important if the provision allowing the Nepal government to give direct instructions to the central bank is removed.

Nepal Has Limited Monetary Policy Freedom

The Finance Minister said Nepal cannot fully operate an independent monetary policy because the Nepali rupee maintains a fixed exchange rate with the Indian currency. He also noted that a large part of Nepal’s inflation comes from external markets, which limits how much the central bank can control prices through its own monetary tools. Referring to the economic concept known as the Impossible Trinity, Wagle explained that a country cannot maintain a stable exchange rate, free capital movement and fully independent monetary policy at the same time. Nepal currently maintains a stable exchange rate while regulating capital movement, giving the central bank only limited freedom in monetary policy.

Two Deputy Governors Are Enough

Wagle also questioned the need for three deputy governors at Nepal Rastra Bank. He said two deputy governors are enough because the central bank already has a separate structure of executive directors. According to him, creating an additional deputy governor position is unnecessary when senior executive responsibilities are already distributed within the existing management structure.

Clearer Rules Needed For Board Members

The Finance Minister also called for changes to the qualifications required for members of the Nepal Rastra Bank board. He said people who have worked at the executive level in international financial institutions should have a clear opportunity to serve on the board. However, he noted that the term executive level is not clearly defined and could create confusion when the law is applied. He said the amended law should clearly explain what level of international experience would qualify a person for board membership.

Wider Expert Representation Proposed

Wagle said Nepal Rastra Bank is a specialized institution and its board should include professionals with knowledge from different fields. He called for representation from areas including economics, monetary policy, banking, finance, management, public administration, law, statistics and mathematics. According to the Finance Minister, wider professional expertise on the board could help the central bank make stronger and better informed decisions.

The proposed amendments remain under discussion at the Finance Committee as lawmakers review the bill clause by clause before it moves through further stages of the legislative process.