Lawmakers demand to save central bank autonomy

 The parliamentarian today urged the government to maintain the central bank’s autonomy.

Speaking at the lower House of parliament today, the lawmakers also asked the government to remove the clause in the proposed amendment bill of Nepal Rastra Bank (NRB) Act that will affect the autonomy of the central bank adversely.

The government is amending the NRB Act 2002. The government has tabled the amendment bill of Nepal Rastra Bank Act 2002 at the parliament. The amendment bill has a clause that the government holds discretionary power to sack the governor and deputy-governor of the central bank, on the basis of their performance. Likewise, the bill also has it that the central bank will have to invite an outsider in its internal audit system.

The lawmakers have been opposing the government’s attack on autonomy of the central bank, the regulatory authority of the banks and financial sector and also a financial advisor of the government. Opposing the amendment the lawmakers claimed that the government is trying to damage the financial system. “If the government is allowed the right to sack the topmost positions of the central bank, it will be not only a threat to work independently but also create financial instability,” said another Nepali Congress lawmaker Minendra Rijal, speaking at the lower House.

Likewise, another lawmaker from the opposition Nepali Congress Gyanendra Bahadur Karki also said that the central bank could work as a good regulator, only if it given autonomy from the intervention of the government. 

The central bank’s autonomy has helped boost the healthy financial sector in the country, he added.

It is said that incumbent finance minister Dr Yuba raj Khatiwada, who was the central bank governor before becoming minister, is one of the architects of the amendment bill. When he was ccentral bank governor, Dr Khatiwada lobbied for the central autonomy but as he became finance minister, he wants the central bank to become a lame duck.

Another Nepali Congress lawmaker Dibya Mani Rajbhandari urged the government to bar the board of directors of the central bank from taking loans from any commercial banks to prevent conflict of interest. Rajbhandari also asked the government for strict action against the defaulters. The banks and financial institutions are the custodians of the public money. The central bank autonomy – that has stopped the government interference in the banking and financial system – has not only saved many banks and financial institutions but also the depositors as it can take action according to the situation without government’s interference. However, the incumbent government is hell bent to destroy the financial system, the lawmakers blamed.

Likewise, the government – through the proposed amendment bill – has also sought to set an upper age limit of 65 years for any person to become a board director along with the minimum age requirement of 35 years. Earlier, there was no age ceiling for nomination or appointment as the board director in the central bank. The government is – through the amendment bill – trying to take control of the financial system in the country, blamed the lawmakers.

However, the finance minister Dr Yuba Raj Khatiwada claimed that the government has targeted to make the central bank more accountable along with empowering it as an autonomous body. “The autonomy without assuming accountability will give rise to anarchism,” the minister, who was the central bank governor, said, adding that the government has incorporated the age limit of the board of director to comply it with the retirement age set by the government. Likewise, answering the lawmakers, he claimed that the amendment bill has removed the cooling period of the executive director of the central bank. “The bill has sought to maintain the uniform cooling period of two years for all the executives of the central bank.”