Nepal Rastra Bank Exam Preparation : Imp Question
1.Write down the objectives, functions, duties and powers of Nepal Rastra Bank as per NRB Act, 2058. (10 marks)
NRB Act, 2058 has empowered Nepal Rastra Bank as the Central Bank of Nepal. The objectives, functions, duties and powers of NRB are mentioned in Chapter 2 of the Act.
Objectives:
(a)To formulate necessary monetary and foreign exchange policies in order to maintain price stability and balance of payment for economic stability and sustainable development of economy, and manage it;
(b)To increase the access of the financial service and public confidence towards the banking and financial system by maintaining stability of the banking and financial sectors,
(c)To develop a secure, healthy and efficient system of payment.
Functions, Duties and Powers
(a)To issue bank notes and coins;
(b) To formulate necessary monetary policies in order to maintain price stability and to implement them;
(c)To formulate foreign exchange policies and to implement them; (d)To determine the system of foreign exchange rate;
(e)To manage and operate foreign exchange reserve;
(f) To issue license to BFIs to carry on banking and financial business and to regulate, inspect, supervise and monitor such transactions;
(g)To act as a banker, advisor and financial agent of Government of Nepal; (h)To act as the banker of BFIs and to function as the lender of the last resort;
(i) To establish and promote the system of payment, clearing and settlement and to regulate these activities,
(j)To operate open market transaction through necessary instruments for liquidity management,
(k)To implement or cause to implement any other necessary functions which the Bank has to carry out in order to achieve the objectives of the Bank under this Act;
Explain the formation of Board of Directors and its functions, duties and powers as per NRB Act, 2058.
: The formation of Board of Directors of NRB and its functions, duties and powers are mentioned in Chapter 3 of NRB Act, 2058.
Formation of Board of Directors:
There shall be a Board of Directors in the Bank consisting of the following members:- (a) Governor -Chairperson (b) Secretary, Ministry of Finance -Member (c) Two Deputy Governors -Member
(d)Three Directors appointed by the Government of Nepal from amongst
the persons renowned in the fields of Economics, Monetary, Banking,
Finance and
Commercial Law -Member Functions, Duties and Powers of the Board
(a)To frame monetary and foreign exchange policies;
(b)To take necessary decisions with regard to the denominations of bank notes and coins and to frame appropriate policies with regard to their issue;
(c)To frame policies for supervision and inspection of BFIs and banking and financial arrangement.
(d)To approve Rules and Bye-laws of the Bank and to frame policies for its operation and management
(e)To frame policies relating to the service of the employees of the Bank like appointment, promotion, transfer, dismissal, remuneration, pension, gratuity, provident fund, leave, code of conduct and other terms and conditions;
(f) To approve the annual programs, budget and annual auditing of accounts of the Bank, and to submit its report to Government of Nepal
(g)To approve the annual report on the activities of the Bank;
(h)To frame necessary policy for the issue and revoking of license to BFIs (i)To approve the limit of the loan to be provided to Government of Nepal by the Bank; (j)To fix the amount, limit and terms and conditions of the loan and refinance which the Bank provides to the BFIs;
(k)To make decision with regard to the Bank’s membership to international organizations, associations;
(l)To frame policy for the mobilization and investment of Bank’s financial resource; (m)To submit proposal to Government of Nepal along with the reasons there for if it is necessary to make amendment to this Act;
(n)To take decision on all other matters beyond the authority of Governor under this Act; and (o)To delegate the powers vested on the Board to the Governor or the subcommittee constituted by the