In a meeting of the Finance Committee, Rashtriya Swayamsevak Sangh (RSS) MP Lima Adhikari proposed to remove the Finance Secretary from the board of directors of Nepal Rastra Bank to make it truly autonomous.
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Finance Ministry officials have expressed different views on the MPs' proposal not to have a Finance Secretary on the Board of Directors of Nepal Rastra Bank.
In the Finance Committee meeting held today, the MPs had proposed not to have a Finance Secretary on the Board of Directors, saying that it would make the Rastra Bank autonomous and independent. In response, the Finance Ministry representative expressed the view that the current arrangement of having a Finance Secretary as a member of the Board of Directors of the Rastra Bank should not be removed as the monetary policy will be conducive to achieving the economic growth targets set by the budget (fiscal policy).
In the meeting, Rastriya Swatantra Party (RSWP) MP Lima Adhikari proposed to remove the Finance Secretary from the Board of Directors of Nepal Rastra Bank to make it truly autonomous. She said that Nepal's financial situation is in its initial stage, and the practice is for the Finance Secretary to sit on the board only to coordinate with the Ministry of Finance. ‘Since Nepal’s monitoring system is already the best in South Asia, the continuation of the Finance Secretary is no longer necessary,’ she said. ‘When the Finance Secretary is on the Board of Directors of the National Bank, the executive interferes in the formulation of monetary policy.’
The official has proposed a legal provision to make it mandatory to have at least one woman director on the board of the National Bank.
Finance Committee officials, however, argue that the Finance Secretary should not be removed from the Board of Directors of the National Bank. In the committee meeting, Mahesh Acharya, Joint Secretary of the Financial Sector Management and Institutions Division of the Ministry of Finance, said that the National Bank cannot work completely separately and separately from the government. ‘The idea of completely separating from the government in the name of autonomy will lead to great difficulties and inaction tomorrow,’ he said. He said that the country’s monetary policy and fiscal policy should complement each other.
He claims that the overall economic goals cannot be achieved if these two policies do not go hand in hand. He also believes that there should be effective coordination and collaboration between the National Bank and the government, in line with international practice, especially the British model (Bank of England), which is similar to Nepal's governance structure.
