Kathmandu: Nepalese lawmakers have initiated a series of significant amendment proposals to the Nepal Rastra Bank (NRB) Act, aiming to fundamentally restructure the central bank’s leadership and governance.
The proposed changes, recently registered in Parliament, advocate for expanding the executive team to include three Deputy Governors, up from the current two, and reducing the tenure of the Governor, Deputy Governors, and directors from five years to four. These amendments reflect a broader push by various political factions to modernize the bank’s administrative framework and enhance its accountability.
The amendments also place a strong emphasis on gender diversity within the central bank’s highest decision-making body. While the government bill proposes expanding the Board of Directors from seven to nine members by increasing the number of non-executive directors to five, several parliamentarians are pushing for even stricter mandates.
Proposals include a requirement that at least one Deputy Governor be a woman or that the board maintain a mandatory minimum of two female directors. Some lawmakers argue for keeping the board at its original seven members but ensuring that women hold key executive and non-executive positions.
A particularly innovative proposal seeks to break the tradition of internal promotions for all Deputy Governor positions by allowing one of the three proposed roles to be filled by an external expert. Lawmakers from the Rastriya Swatantra Party (RSP) and other groups suggest that while two Deputy Governor seats should remain reserved for internal Executive Directors, the third should be open to distinguished economists or financial experts from the wider banking and financial sector. These proposals include specific criteria, such as an age limit of 50 for external candidates and a transparent recommendation process that must begin well before a vacancy occurs.
To ensure greater independence and avoid conflicts of interest, several amendments propose strict “cooling-off” periods and eligibility barriers for private sector professionals. Lawmakers have suggested that recently retired or serving CEOs of commercial banks, as well as the Finance Secretary, should be barred from the NRB board for at least two to three years after leaving their respective posts. Additionally, a significant proposal aims to prevent any individual holding more than a 0.5 percent stake in a commercial bank or financial institution from serving as a Governor or director, aiming to shield the regulator from private sector influence.
The debate over professional qualifications has also intensified, with various amendments seeking to redefine the academic and professional prerequisites for central bank leadership. While the government bill suggests ten years of high-level experience, some lawmakers are advocating for a reduction to seven years, while others suggest raising it to fifteen years for certain roles. Furthermore, there are calls to broaden the academic requirements beyond traditional economics and law to include modern specializations such as digital banking, information technology, and environmental science, reflecting the evolving nature of the global financial landscape.
Finally, the lawmakers are scrutinizing the legal process for the removal of a Governor and the composition of the board. While the government bill proposes an inquiry committee led by a High Court judge to oversee the removal process, some parliamentarians are calling for the removal of this new provision or a return to the existing framework. These diverse and sometimes conflicting proposals indicate a robust parliamentary effort to redefine the central bank’s operational independence, technical expertise, and inclusivity for the coming years.
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