The Role of Nepal Rastra Bank in Economic Development

-Professor Dr. Shatrughan Shrestha
The Nepal Rastra Bank (NRB) was established on April 26, 1956 AD (Nepali Date: Baishak 14, 2013 B.S.) under The Rastra Bank Act, 1955 to discharge The Central Banking responsibilities including guiding the development of the embryonic, domestic financial sector. The NRB is functioning under the new NRB Act, 2002, The function of NR bank to formulate required monetary and foreign exchange policies to issue currency notes, to regulate and supervise the banking and financial sector, to develop efficient payments and banking systems among others. The NRB is also the economic advisor to the government of Nepal. As the central bank of Nepal. It is the monetary supervisory and regulatory body of all the commercial banks, development banks, finance companies and micro-finances institutions.
The central office is located in Baluwatar, Kathmandu and it has eight provincial offices, located at Biratnagar, Janakpur Birgunj, Pokhara, Bhairahawa, Nepalgunj, Surkhet and Dhangadhi.
NRB formulates and implements monetary policy, NRB also oversees foreign exchange reserves. The NRB is one of the principal owners of the Nepse. It is member of the Asia clearing union. The acting government position is currently held by Dr. Neelam Dhungana Timsina as former government CA Mahaprasad Adhikari retired on 7th April, 2025.
Nepal Rastra Bank (NRB) as the central Bank, plays a crucial Role in Nepal’s economic development by maintaining price stability, managing the banking sector and overseeing foreign exchange. Its primary mandate is to formulate and implement monetary policies to ensure price stability and balance of payments (BOP).
The functions of NRB are to formulate required monetary and foreign exchange policies so as to maintain the stability in market prices to issue currency notes to regulate and supervise the banking and financial sector to develop efficient payment and banking systems among others.
What are the five roles of banking system in economic development?
In fact, financial systems promote economic growth through five major channels such as
1. Reducing information and transaction cost.
2. Improving the allocation of resources.
3. Increasing savings rate.
4. Promoting the development of markets and instruments.
5. Providing efficient payments mechanisms.