Kathmandu. 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 under 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 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 provision of participation and coordination at some level of government in these countries as well.
Rastriya Swatantra Party lawmaker Bidushi Rana raised questions over the provisions of the bill.
She was of the view that regulation of banks and financial institutions, proposal to bring financial institutions failing deposit collection under NRB’s supervision, management of problematic banks, legal provisions of resolution process, final provisions, digital currency, qualifications of governor and cooling period should be reconsidered.
Similarly, Parshuram Tamang of the ruling Nepal Rastra Bank (NRB) questioned the possibility of ‘conflict of interest’ if the senior officials of the NRB go to the private banks after retirement and the private bank officials return to the leadership of the 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 also pointed out the need for making the monetary policy more autonomous, regulation of the cooperative sector and expanding banking access through the bill.
