BUSINESS ADMINISTRATION AND MANAGEMENT STUDIES: OBJECTIVES, FUNCTION, DUTIES AND POWER OF CENTRAL BANK OF NEPAL

Thursday, December 22, 2016

OBJECTIVES, FUNCTION, DUTIES AND POWER OF CENTRAL BANK OF NEPAL

Nepal Rastra Bank is also known as 'The Lender of the Last Resort' . This Bank has the vision to become a modern, dynamic, credible and effective Central Bank.

In order to attain its vision, the bank follows a specific mission as to maintain macro-economic stability through sound and effective monetary, foreign exchange and financial sector policies. Such mission can be achieved only if the clear objectives are set.

OBJECTIVES OF NEPAL RASTRA BANK

As we know, objectives are predefined goals.

Actually, there are five main objectives of Nepal Rastra Bank that is to be achieved. They are as follows:-

To formulate necessary monetary and foreign exchange policies in order to maintain the stability of price and balance of payment for sustainable development of economy, and manage it.

To promote stability and liquidity required in banking and financial sector.

To develop a secure, healthy and efficient system of payment.

To regulate, inspect, supervise and monitor the banking and financial system and

To promote entire banking and financial system of Nepal and to enhance its public credibility.

However, the central bank will extend its co-operation for implementing the economic policies of the Government in support to their objectives.

FUNCTIONS, DUTIES AND POWERS OF NEPAL RASTRA BANK

Functions are the ways to fulfill the purposes. Similarly, duties are the obligations to be performed and power is the ability or capacity to do something.

Nepal Rastra Bank has to attain its predetermined objectives. So, in order to achieve those above five objectives, which i have mentioned earlier, the bank will have following functions, duties and powers as follows:

To issue bank notes and coins.This is considered as the primary function of the bank.

To formulate necessary monetary policies in order to maintain price stability and to implement or cause to implement them.

To formulate foreign exchange policies and to implement or cause to implement them.

To determine the system of foreign exchange rate.

To manage and operate foreign exchange reserve.

To issue license to commercial banks and financial institutions to carry on banking and financial business and to regulate, inspect, supervise and monitor such transactions.

To act as a banker, advisor and financial agent of Government of Nepal.

To act as the banker of commercial banks and financial institutions and to function as the lender of the last resort.

To establish and promote the system of payment, clearing and settlement and to regulate these activities and

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.

NOTE:

It is to be noted that, while exercising the powers under the Nepal Rastra Bank Act, 2058 or any other prevailing law, the central Bank shall have power to carry out other functions and take actions, which are incidental thereto.