Nepal Rastra Bank

Nepal Rastra Bank (NRB) is the central bank of Nepal and the principal regulatory authority for the country's banking and financial system. It was established on 26 April 1956 under the Nepal Rastra Bank Act, 1955, at a time when Nepal was seeking greater monetary and foreign-exchange independence. Before the bank was created, Nepal relied heavily on the Reserve Bank of India for the custody and administration of foreign-exchange reserves, while Indian and Nepali currencies circulated alongside one another in parts of the country. The creation of a national central bank was therefore both an economic-policy measure and an important institution-building step associated with the strengthening of Nepal's monetary sovereignty. NRB's responsibilities have expanded considerably since its foundation. It issues Nepalese currency notes and manages the country's currency and coin system; formulates and implements monetary policy; manages foreign-exchange policy and reserves; and regulates and supervises commercial banks, development banks, finance companies, and microfinance institutions. It also supports the development of payment, settlement, and banking infrastructure and acts as an economic adviser to the Government of Nepal. Through these functions, the bank works to preserve monetary and financial stability while supporting the broader development of Nepal's financial sector. The bank's legal framework was substantially recast by the Nepal Rastra Bank Act, 2002. The act defines the bank's authority over the denomination, design, materials, and issuance of banknotes and coins, and provides the basis for its monetary and supervisory responsibilities. Following the introduction of this framework, NRB began publishing an annual monetary policy, starting in fiscal year 2002/03. The policy has since become a central instrument for translating the government's economic priorities and annual budget into monetary, credit, liquidity, and financial-regulatory measures. NRB also has an international and regional role. Nepal joined the International Monetary Fund and the World Bank in 1961, and NRB became a founding member of the Asian Clearing Union in 1974. The bank maintains relationships with international financial institutions and has worked with the International Finance Corporation on environmental and social risk management, sustainable banking, financial inclusion, and the development of frameworks intended to encourage responsible investment. It is also one of the principal owners of the Nepal Stock Exchange. The institution is headquartered in Baluwatar, Kathmandu, and operates eight provincial offices in Biratnagar, Janakpur, Birgunj, Pokhara, Siddharthanagar, Nepalgunj, Surkhet, and Dhangadhi. Its public-facing institutional output includes monthly macroeconomic and financial situation reports, quarterly economic bulletins, annual reports, research publications, newsletters, and the long-running Economic Review. As a central bank rather than a consumer-facing commercial brand, NRB's principal offerings are public monetary, regulatory, currency, payment-system, research, and financial-stability functions.

Nepal Rastra Bank was established on 26 April 1956 under the Nepal Rastra Bank Act, 1955. Its creation followed a period in which Nepal lacked an autonomous central-bank institution and depended substantially on Indian financial infrastructure for the custody of foreign-exchange reserves. Indian rupees also circulated widely alongside Nepalese currency, and exchange arrangements were often shaped by local trading practices. The new bank was intended to give Nepal a dedicated institution for currency issuance, reserve management, and monetary administration, while reducing the country's dependence on external monetary arrangements. In its early period, NRB had to establish its own links with overseas financial institutions. Its first account was opened with the Reserve Bank of India, following correspondence involving the bank's first governor, Himalaya Shumsher Jang Bahadur Rana. Accounts were subsequently established with another Indian bank and with a bank in London. These arrangements reflected the practical requirements of a newly created central bank operating in an economy whose international financial relationships had previously been administered through other institutions. The bank gradually assumed responsibility for Nepal's banknote system. Before NRB took over, notes were held and administered by the government treasury, known as the Sadar Muluki Khana, and were signed by the treasury's head, the Kajanchi. NRB created a Note Department in September 1956. That department was later renamed the Currency Management Department in November 2002. On 19 February 1960, NRB issued its first banknotes, including a one-mohru denomination, and central-bank governors thereafter replaced the treasury head as the signing authority on notes issued in Nepal. The Foreign Exchange Regulation Act, 1963 further defined NRB's role as custodian of Nepal's foreign-exchange reserves. During the 1960s, the country's fixed exchange-rate relationship with the Indian currency, combined with supporting public policy, helped stabilize confidence in the Nepalese currency and exchange arrangements. NRB also supported the gradual expansion of Nepal's independent monetary institutions. The circulation of the Nepalese rupee became more firmly established in the Terai, where Indian currency had previously been especially prominent, and the dual-currency period was substantially eliminated by 1964. Nepal joined the International Monetary Fund and the World Bank in 1961, giving the country a stronger connection to the international financial system. In 1974, NRB became a founding member of the Asian Clearing Union, a regional payment and settlement arrangement. This membership formed part of the bank's broader role in facilitating cross-border payments and maintaining institutional relationships with regional and international financial organizations. A later phase of reform followed the Financial Sector Strategy Paper publicly announced by the Government of Nepal on 22 November 2000. The Nepal Rastra Bank Act, 2002 became the bank's principal modern legal framework and continues to define its core authority. The act formalized powers relating to banknote and coin denominations, designs, sizes, metals, printing materials, and issuance, alongside the bank's monetary, supervisory, and regulatory responsibilities. NRB formulated its first monetary policy in fiscal year 2002/03 and has continued to publish monetary policy annually. In the modern period, NRB has developed into a broad financial-sector authority. It supervises commercial banks, development banks, finance companies, and microfinance institutions; oversees foreign-exchange policy and reserves; contributes to payment-system development; and publishes regular macroeconomic, financial, and research material. Its work with the International Finance Corporation has included environmental and social risk-management frameworks and sustainable-finance initiatives. Through these activities, the bank has supported financial inclusion, risk-management capacity, responsible investment, and the resilience of Nepal's financial institutions. The central office remains in Kathmandu, supported by eight provincial offices across the country.

• 2002

  Nepal Rastra Bank Act, 2002 takes effect

  [1]Nepal Rastra Banken.wikipedia.org

  The 2002 act established the legal basis under which NRB currently exercises its central-banking, currency, monetary-policy, and supervisory functions.

• 2002

  Note Department becomes Currency Management Department

  [1]Nepal Rastra Banken.wikipedia.org

  NRB renamed its Note Department as the Currency Management Department in November 2002.

• 2002

  Annual monetary-policy cycle begins

  [1]Nepal Rastra Banken.wikipedia.org

  NRB formulated its first monetary policy in fiscal year 2002/03 and has continued the annual policy process since then.

• 2000

  Financial-sector reform strategy is announced

  [1]Nepal Rastra Banken.wikipedia.org

  The Government of Nepal publicly announced a Financial Sector Strategy Paper on 22 November 2000, preceding the bank's modern statutory framework.

• 1974

  NRB joins the Asian Clearing Union

  [1]Nepal Rastra Banken.wikipedia.org

  Nepal Rastra Bank became a founding member of the Asian Clearing Union, a regional payment and settlement organization.

• 1964

  Dual-currency circulation is substantially ended

  [1]Nepal Rastra Banken.wikipedia.org

  The Nepalese rupee became more firmly established as legal tender, helping end the period in which Indian and Nepalese currencies circulated together across the country.

• 1963

  Foreign-exchange authority is reinforced

  [1]Nepal Rastra Banken.wikipedia.org

  The Foreign Exchange Regulation Act made NRB the custodian of Nepal's foreign-exchange reserves.

• 1961

  Nepal joins the IMF and World Bank

  [1]Nepal Rastra Banken.wikipedia.org

  Nepal's membership in the International Monetary Fund and World Bank strengthened its connection to international financial institutions.

• 1960

  NRB issues its first banknotes

  [1]Nepal Rastra Banken.wikipedia.org

  On 19 February 1960, the bank issued its first notes, including a one-mohru denomination, replacing the earlier treasury-based signing arrangement.

• 1956

  Nepal Rastra Bank is established

  [1]Nepal Rastra Banken.wikipedia.org

  Nepal Rastra Bank was created on 26 April 1956 under the Nepal Rastra Bank Act, 1955, to provide Nepal with an autonomous central-bank institution.

• 1956

  Note Department is created

  [1]Nepal Rastra Banken.wikipedia.org

  NRB established a Note Department in September 1956 to assume responsibility for the country's banknote administration.

Nepal's sovereign monetary authority and central regulator for banks and financial institutions

• Central-bank policy · 2002

  Monetary policy

  NRB formulates and implements monetary policy to support monetary and financial stability and to coordinate the monetary environment with Nepal's annual government policy and budget. Since fiscal year 2002/03, it has published monetary policy annually, using the process to communicate policy priorities and guide credit, liquidity, and financial-sector conditions.

• Currency management · 1960

  Nepalese rupee currency issuance

  NRB is responsible for issuing Nepalese banknotes and managing the country's currency system. Its currency responsibilities include decisions concerning denominations, designs, sizes, materials, printing, and issuance of notes and coins. The bank issued its first notes in 1960 after taking over functions previously handled by the government treasury.

• Financial regulation · 1956

  Banking and financial-institution supervision

  NRB regulates and supervises Nepal's commercial banks, development banks, finance companies, and microfinance institutions. This role makes it the principal prudential and regulatory authority for the country's formal banking and financial system.

• Foreign exchange · 1963

  Foreign-exchange and reserve management

  The bank formulates foreign-exchange policy, oversees exchange-rate matters, and acts as custodian of Nepal's foreign-exchange reserves. These responsibilities were reinforced by the Foreign Exchange Regulation Act of 1963.

• Research and reporting · 1987

  Economic and financial publications

  NRB publishes monthly macroeconomic and financial situation reports, quarterly Economic Bulletins, annual reports, newsletters, and research material. It has also published the Economic Review since 1987, providing analysis of Nepal's economic and financial conditions.

• Sustainable banking and environmental-social risk management

  Nepal

  NRB worked with the International Finance Corporation and related sustainable-banking initiatives to encourage financial institutions to establish environmental and social risk-management systems. The work was intended to improve risk assessment, support responsible and environmentally oriented investment, and expand access to finance for socially and environmentally beneficial activity.

  Outcome. The collaboration supported discussion, guidance, and capacity building among government officials, financial institutions, and international organizations, with the stated aim of strengthening sustainable-finance practices.

  Source

• 2002

  Adopt the Nepal Rastra Bank Act, 2002 frameworkStrategy

  Background

  The act followed a government financial-sector reform strategy announced in 2000 and replaced the earlier statutory framework as the principal modern legal basis for the bank.

  Action taken

  NRB began operating under the 2002 act, with defined authority over currency issuance, monetary policy, foreign exchange, and financial-sector supervision.

  Aftermath

  The act remains the central legal foundation for NRB's institutional mandate and annual monetary-policy process.

  Source

• 1960

  Issue Nepal Rastra Bank banknotesProduct launch

  Background

  Before NRB assumed the function, Nepalese banknotes were administered through the government treasury and signed by the treasury head.

  Action taken

  NRB issued its first banknotes on 19 February 1960, including a one-mohru denomination, and shifted the signing authority to central-bank governors.

  Aftermath

  Currency issuance became a formal central-bank function and a visible expression of Nepal's monetary sovereignty.

  Source

• 1956

  Create an autonomous central bankStrategy

  Background

  Nepal faced dependence on external monetary infrastructure, limited domestic foreign-exchange administration, and widespread circulation of both Indian and Nepalese currency.

  Action taken

  The government established Nepal Rastra Bank under the Nepal Rastra Bank Act, 1955, giving the country a dedicated institution for currency, reserves, and monetary administration.

  Aftermath

  NRB became the foundation of Nepal's modern monetary and financial-regulatory system.

  Source

1. 1Nepal Rastra Banken.wikipedia.org