. KATHMANDU: The Ministry of Finance has said that the monetary policy and fiscal policy should complement each other, saying the Nepal Rastra Bank cannot work completely separately from the government.
During a meeting of the Finance Committee of the House of Representatives on Sunday, Amrit Lamsal, Joint Secretary at the Ministry of Finance, said that although the autonomy of the NRB is necessary, coordination with the government should not be broken.
He said, “We are talking about the autonomy of the Nepal Rastra Bank. But it is important to understand that the Nepal Rastra Bank cannot work in an ‘ivory tower’ or ‘silo’. If the monetary policy and fiscal policy do not go together, the goal set by the overall economic policy will not be achieved. Lamsal warned that the concept of keeping the NRB completely separate from the government could lead to lack of coordination and inaction in the future.
Citing the central bank practices of the UK, India, Japan and Bangladesh as an example, he said that there is a system of participation and coordination at some level of government in these countries. In the meeting, Rastriya Swatantra Party lawmaker Bidushi Rana raised questions on various provisions of the bill. She expressed the view that the regulation of banks and financial institutions, the proposal to bring the financial institutions that do not collect deposits under the supervision of the Rastra Bank, the management of the problematic banks, the legal provisions of the resolution process, the final provisions, digital currency, the qualifications of the governor and the ‘cooling period’ should be reconsidered. Similarly, Parshuram Tamang, a lawmaker from the Communist Party of Nepal (CPN), questioned the risk of creating ‘conflict of interest’ due to the practice of senior officials of Nepal Rastra Bank going to private banks after retirement and private bank officials coming back under the leadership of NRB.
He said, “There is a situation where the special category officers of the Rastra Bank will go to the private banks after retirement, and then come back to the leadership of the Rastra Bank from the private sector.” Is this a “conflict of interest”? My curiosity is how this issue can be addressed while amending the Act. “
Tamang needs to make clear provisions through the bill regarding the formulation of monetary policy in a more autonomous manner, regulation of the cooperative sector and expansion of banking access pointed out.
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