Acting Governor of the Nepal Rastra Bank, Dr. Nilam Dhungana Timsina, has said that the financial and monetary sectors in Nepal are still facing challenges adding that the possibility of external pressure in the economy couldn’t be undermined.
“Due to the ongoing impact of the Russia-Ukraine war and the complex global economic and political situation, there looms a risk of continued external pressure on the economy,” said Dhungana addressing a programme organised in Kathmandu on Sunday to observe the 70th anniversary of the central bank.
The NRB has been making sincere efforts to maintain macroeconomic stability in the country amidst the challenges posed by the external and internal economic environment.
“Improved supply system, foreign exchange reserves, and remittances may have contributed to the improvement of economic activities,” remarked the acting governor. “Although the rate of inflation has been somewhat high, there is an expectation of improvement in economic activity subsequent gradual reduction in the interest rate.”
She said that to promote access to credit for domestic, small, and medium enterprises, the limit for the Regulatory Retail Portfolio (RRP) has been increased from a maximum of Rs. 2 million to a maximum of Rs. 3 million per borrower.
Dr. Dhungana informed that the Nepal Green Finance Taxonomy, announced by the central bank this year will be used as a guiding framework for issuing green bonds and similar financial instruments which will make the banking sector more resilient to manage potential risks.
Similarly, to enhance the efficiency and innovation of the payment system, a regulatory sandbox related to digital banking services will be operated with the support of the International Finance Corporation (IFC). Furthermore, with the support of IFC, the Fintech Strategy is also being formulated.
She informed that the framework for operating the Systemically Important Payment System (SIPS) within the payment system is in the final stages of preparation.
Likewise, for the pilot operation of Wholesale CBDC (Central Bank Digital Currency), the Use Cases and Design Characteristics are being finalised, and the development of the NRB wCBDC Version 1.0.0 system is in its final phase.
With the objective of promoting innovation and expanding access to financial services through digital payment, a Digital Finance Innovation Hub will be established within the payment system.
Meanwhile, the NRB has made arrangements for Nepali citizens going abroad for various purposes to withdraw foreign currency up to the prescribed limit from their own foreign currency accounts held with Nepali banks and financial institutions through internet banking, mobile banking, and Quick Response code via international payment cards issued by Nepali banks and national-level payment system operators.
“Banking and financial institutions will be encouraged to hedge foreign currency risk, considering the potential risks arising from fluctuations in foreign exchange rates. Necessary arrangements are being made for this in the coming days,” she added.
The central bank has also made arrangements to continuously monitor and analyze the activities of various threat actors by establishing a centralised log management system and using Security Information and Event Management (SIEM) systems. It is expected to help in identifying potential cyber-attacks on information technology systems.
“Remarkable achievements have been made lately in the expansion of financial reach and digital economy, “ she pointed out. The number of local units in the country where branches of commercial banks have expanded reached 753, she informed. On the occasion, President of NRB’s National Employee Association, Krishna KC expressed dissatisfaction over the delay by the government to appoint new governor of the central bank. “We have heard rumours about deals involving tens of millions of rupees for the appointment of the new governor. This is a matter of serious concern,” he said and demanded for the earliest appointment of the Governor.
