New NRB Act proposes prez appoint governor
KATHMANDU, APR 28 -
The proposed Nepal Rastra Bank (NRB) Act has envisaged having the president appoint the central bank's governor at the recommendation of the cabinet, giving the governor the status of a state minister and creating positions for three deputy governors.
The NRB Act has a provision for the cabinet to name the governor from among three candidates recommended by a committee headed by the finance minister. A draft of the act is now under discussion at the regulation committee of the central bank which is headed by the senior deputy governor.
"We have proposed having the president appoint the governor as this is the way it is done in 130 out of the 190 countries we studied," said a senior NRB official. "Most of them have adopted a federal system."
The central bank has also proposed raising the status of the governor to the level of a state minister. Currently, the post of the governor is ranked between an assistant minister and the chief secretary. "We found it necessary to raise the position of the governor as politicians treat the governor as if he is a bureaucrat," said the central bank official. The International Monetary Fund had also been suggesting for uplifting the status of the governor.
As per the proposed procedure for appointing the governor, a committee headed by the finance minister will recommend three candidates to the cabinet and it will choose one of them and recommend to the president to make the appointment.
NRB Act 2002 has strengthened the governor's position which is higher than that of the chiefs of other regulatory authorities such as the Securities Board of Nepal and the Insurance Board. The cabinet cannot remove the governor, deputy governors or board directors until an inquiry committee establishes a charge against them as per the current NRB Act.
The central bank has also proposed having three deputy governors compared to two presently. "The provision was inserted to reduce the hectic workload that the two deputy governors have to handle now," said the NRB official. "In India, they have four deputy governors."
The proposed act has also given more power to the central bank to liquidate any crisis-ridden bank or financial institution. It has proposed appointing an administrator to determine whether to send troubled BFIs into liquidation or let them live through mergers and acquisitions with other BFIs or through other measures.
If the administrator finds it necessary to liquidate a BFI, he or she can send it to the Appellate Court for liquidation. "The provision was proposed to streamline the long process of liquidation that is in force at present," said the NRB official. Currently, the central bank can recommend to the court to liquidate a BFI but the court has the final say on whether to do so. The International Monetary Fund has long been asking Nepal to create a provision allowing the central bank to liquidate troubled BFIs by itself.
Source: Kantipur
