The appointment and removal procedure of the Governor of Nepal Rastra Bank (NRB) is governed by the Nepal Rastra Bank Act, 2058.
The Governor of NRB is the chief executive officer and the head of Nepal’s central bank. The main responsibility of a Governor is formulating and implementing monetary policy, maintaining financial stability, regulating banks and financial institutions, and guiding the overall economic direction of the country.
The Governor of NRB plays a vital role in maintaining the overall economic stability of the country. One of the primary responsibilities is to ensure price stability and control inflation through effective monetary policies.
The Governor also works to strengthen the financial system by regulating banks and financial institutions, ensuring their sound operation and resilience.
In addition, managing the country’s foreign exchange trade. By overseeing these efforts, the governor significantly contributes to promoting sustainable economic growth and financial discipline in Nepal.
Who Can Be Appointed as NRB Governor?
To be appointed as Governor, a person must fulfil the following qualifications under Section 20 of the Nepal Rastra Bank Act, 2058:
- Must be a Nepalese citizen.
- Should have high moral character and integrity.
- Must hold at least a master’s degree in fields such as economics, banking, finance, commerce, management, public administration, statistics, mathematics, or law.
- Should have relevant work experience in economic, monetary, banking, financial, or commercial law sectors. This includes working at senior levels such as a special class officer in the government, senior positions in the Nepal Rastra Bank, university professors, or senior executive roles in commercial banks or financial institutions.
- Must not be disqualified under any provisions (disqualifications are elaborated in Section 21, for example, on grounds such as conviction for offenses related to corruption, fraud, or moral turpitude).
How Is the NRB Governor Appointed
The Nepal Rastra Bank Act, 2058, is the primary legislative framework that regulates the central banking system of Nepal, including the appointment of the Governor, who is the chief executive of the Nepal Rastra Bank (NRB).
Section 15 has a clear provision about the procedure for appointing the NRB Governor, and the following key steps:
- Formation of a Recommendation Committee – The Government of Nepal, specifically the Council of Ministers, forms a three-member Recommendation Committee to propose suitable candidates for the Governor’s position. This committee consists of:
- The Minister of Finance acts as the Chairperson
- One former Governor of Nepal Rastra Bank
- One renowned expert from fields such as economics, banking, finance, commerce, management, or commercial law, appointed by the government
- Recommendation of Candidates – the committee evaluated qualified candidates based on experience and knowledge in economic, monetary, banking, financial, or commercial law sectors. Importantly, at least one of the recommended candidates must be among the current Deputy Governor of Nepal Rastra Bank. The committee then recommends three candidates.
- Final Appointment – The Council of Ministers selects one person from the list of three recommended candidates and formally appoints that person as the Governor of the Nepal Rastra Bank.
What Is the Tenure of Office for the Governor?
According to Section 18 of the NRB Act 2058, the tenure of office for the Governor, Deputy Governor, and Directors of the NRB is five years. They may be reappointed for subsequent terms as determined by the Government of Nepal.
This fixed five-year term ensures continuity and stability in the Bank’s leadership while allowing the government to review and renew appointments based on performance and changing needs.
What Are the Grounds for the Removal of the NRB Governor?
Section 22 of the Nepal Rastra Bank Act, 2058, outlines the specific grounds and procedures for the removal of the Governor, Deputy Governor, and Directors of the Bank.
The removal is generally carried out based on the recommendation of an inquiry committee, which investigates allegations or concerns relating to the individual’s conduct or capabilities. Once the removal process begins, the concerned official is considered suspended from the office.
The Act specifically has several clear grounds for removal, including:
- Disqualification as per the Act, such as political party membership, bankruptcy, criminal convictions, or conflicts of interest
- Inability or lack of capability to fulfil banking functions that support the Bank’s objectives
- Acts causing financial or systemic loss or damage to the banking system
- Dishonest or bad-faith conduct in Bank-related transactions
- Revocation of professional licenses due to gross misconduct
- Unjustified absence from more than three consecutive Board meetings
The Act protects officeholders from arbitrary removal by limiting removal only to these serious grounds, ensuring accountability and the integrity of the Bank’s leadership.
Conclusion
The Nepal Rastra Bank Act, 2058, clearly outlines how the Governor of NRB is appointed and removed, ensuring transparency and accountability in the central bank’s leadership. The Governor plays a key role in maintaining financial stability and guiding the country’s economic policies.
To become a Governor, a person must meet strict qualifications and go through a structured appointment process led by a recommendation committee. Likewise, removal can only happen on serious grounds and through proper legal procedures, protecting the integrity and independence of the office.
FAQs
Q. Who appoints the Governor of Nepal Rastra Bank?
A. The Government of Nepal appoints the Governor through the Council of Ministers following recommendations from a special three-member committee.
Q. What qualifications must a person have to be appointed as the Governor?
A. The candidate must be a Nepalese citizen with a master’s degree or higher in fields such as economics, finance, banking, commerce, public administration, mathematics, statistics, or law.
Q. How long is the Governor’s term?
A. The Governor is appointed for a term of five years and may be reappointed for additional terms by the Government of Nepal.
Q. What happens if the Governor’s appointment process is delayed?
A. Delays can lead to interim arrangements such as appointing an acting Governor, which may affect the Bank’s leadership stability and investor confidence.
Babita Pariyar
Babita is a law student with a keen interest in property accountancy and legal compliance. She contributes insightful, well-researched articles that reflect a fresh and analytical perspective on evolving legal matters.
