- To assume office next week
- Expected to give continuity to positive steps taken by Khatiwada
Ending days of speculation, the government today appointed economist Chiranjeevi Nepal as the new governor of the central bank.
Nepal was appointed as the 16th governor of Nepal Rastra Bank by a Cabinet meeting held this afternoon. He will replace Yubaraj Khatiwada, who retired today from the post of governor upon completion of a five-year term.
Nepal, who will assume his new responsibility next week, left behind two other candidates — Gopal Prasad Kaphle and Maha Prasad Adhikari, both incumbent deputy governors of NRB — in the race to the post of the governor.
All the three candidates for the governor’s post were selected by a three-member committee formed on February 24 under Finance Minister Ram Sharan Mahat.
Nepal, who holds a PhD in labour relation and master’s degree in economics, should now give continuity to positive steps taken by Khatiwada and review those deemed unfavourable for financial sector stability.
After sitting in NRB’s driving seat, Khatiwada also gave continuity to initiatives taken by previous governor — Bijay Nath Bhattarai — to control excess amount of loans from entering the real estate sector, which was overheating the property market. Hence, the crisis seen in the real estate market a few years ago did not spill over to the financial sector and the real economy.
Because of this, Khatiwada has been successful in handing over a relatively stable financial sector to Nepal, who previously served as economic adviser to Prime Minister Sushil Koirala and the chairman of Securities Board of Nepal, the securities market regulator. It is now his responsibility to maintain fiscal discipline.
Inability to do so would unnecessarily drive up asset prices, posing a threat to the financial sector, as well as the economy.
“The new governor should introduce policies to correct the interest rates, which is negative in real terms,” Lumbini Bank CEO Shovan Dev Pant told The Himalayan Times.
In mid-February, for instance, inflation stood at seven per cent, whereas weighted average deposit rate of commercial banks stood at 3.84 per cent in the same period.
This means the value of money is eroding by seven per cent per year, while money parked at banks is providing returns of only 3.84 per cent per annum.
This trend, which has continued for quite a long time, is discouraging depositors from saving money.
“I hope the new governor will introduce new instruments to correct this trend,” Pant said.
Among others, the new governor should also try to work in collaboration with banks and financial institutions — an area where Khatiwada miserably failed.
Bankers say the governor should consider banking institutions as partners of the central bank, rather than opportunists who always look for loopholes to take undue advantage of the situation. This, they say, would narrow the gap between the central bank and banking institutions, which widened during Khatiwada’s tenure.Nepal now has five years to prove his mettle. If he performs well, his term can be extended by another five years, as per Nepal Rastra Bank Act.
source: the himalayan times,20 march 2015
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- Expected to give continuity to positive steps taken by Khatiwada
Ending days of speculation, the government today appointed economist Chiranjeevi Nepal as the new governor of the central bank.
Nepal was appointed as the 16th governor of Nepal Rastra Bank by a Cabinet meeting held this afternoon. He will replace Yubaraj Khatiwada, who retired today from the post of governor upon completion of a five-year term.
Nepal, who will assume his new responsibility next week, left behind two other candidates — Gopal Prasad Kaphle and Maha Prasad Adhikari, both incumbent deputy governors of NRB — in the race to the post of the governor.
All the three candidates for the governor’s post were selected by a three-member committee formed on February 24 under Finance Minister Ram Sharan Mahat.
Nepal, who holds a PhD in labour relation and master’s degree in economics, should now give continuity to positive steps taken by Khatiwada and review those deemed unfavourable for financial sector stability.
After sitting in NRB’s driving seat, Khatiwada also gave continuity to initiatives taken by previous governor — Bijay Nath Bhattarai — to control excess amount of loans from entering the real estate sector, which was overheating the property market. Hence, the crisis seen in the real estate market a few years ago did not spill over to the financial sector and the real economy.
Because of this, Khatiwada has been successful in handing over a relatively stable financial sector to Nepal, who previously served as economic adviser to Prime Minister Sushil Koirala and the chairman of Securities Board of Nepal, the securities market regulator. It is now his responsibility to maintain fiscal discipline.
Inability to do so would unnecessarily drive up asset prices, posing a threat to the financial sector, as well as the economy.
“The new governor should introduce policies to correct the interest rates, which is negative in real terms,” Lumbini Bank CEO Shovan Dev Pant told The Himalayan Times.
In mid-February, for instance, inflation stood at seven per cent, whereas weighted average deposit rate of commercial banks stood at 3.84 per cent in the same period.
This means the value of money is eroding by seven per cent per year, while money parked at banks is providing returns of only 3.84 per cent per annum.
This trend, which has continued for quite a long time, is discouraging depositors from saving money.
“I hope the new governor will introduce new instruments to correct this trend,” Pant said.
Among others, the new governor should also try to work in collaboration with banks and financial institutions — an area where Khatiwada miserably failed.
Bankers say the governor should consider banking institutions as partners of the central bank, rather than opportunists who always look for loopholes to take undue advantage of the situation. This, they say, would narrow the gap between the central bank and banking institutions, which widened during Khatiwada’s tenure.Nepal now has five years to prove his mettle. If he performs well, his term can be extended by another five years, as per Nepal Rastra Bank Act.
source: the himalayan times,20 march 2015
LINK
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