April 7: Maha Prasad Adhikari has been appointed as the Governor of Nepal Rastra Bank (NRB). A meeting of council of ministers on Monday appointed Adhikari, who was working as CEO of Investment Board Nepal (IBN), to the post. A meeting of recommendation committee on the same day prior to the cabinet meeting, had recommended the names of Adhikari, Deputy NRB Governor Chintamani Shiwakoti and former finance secretary Rajan Khanal for the post.
With the appointment, Adhikari has returned to NRB after four years. He was deputy governor of the central bank before joining IBN as CEO in June 2016. He actively participated in the financial sector reform measures initiated during the governorship of the current finance minister Dr Yuba Raj Khatiwada. Chartered Accountant Adhikari led some key reform initiatives including supervision of financial sector, strict controlling of troubled banks and financial institutions and separating bankers and businesspersons. Similarly, he also played an active role in formulating and getting parliamentary endorsement of policy arrangements related to anti-money laundering in a bid to avoid blacklisting of Nepal by the Financial Action Task Force.
Adhikari, who joined NRB as deputy director in 1994, is returning to central bank at a time when the country’s economy has been surrounded by several headwinds. He will take over the reins of the country’s monetary authority amid the coronavirus pandemic which has created huge challenges to the Nepali economy and the financial sector.
Former NRB governor Deependra Bahadur Kshetry expects that the good level of harmonization between Dr Khatiwada and Adhikari can yield positive results. “There was good level of harmonization between the two from the beginning. There were several problems in the financial sector when Adhikari became deputy governor and he put his efforts in the reform initiatives,” said Kshetry.
Experts say that maintaining financial stability, attaining higher economic growth, taming inflation and managing forex reserve at good level are the major challenges for the newly appointed NRB governor. “The loan repayment has been deferred by a month on the request of industrialists and business persons. The central bank could be pressurized for cancellation of debts if the situation worsens in the coming days. Similarly, inflation can rise if the government increases its spending to become popular and the central bank has to shoulder the responsibility to tame the inflation,” said Khsetry, adding, “The biggest challenge right now is to safeguard the country’s economy from pandemic-induced crisis. The success of the newly appointed governor will depend on the environment he works to avert the looming crisis.”
Kshetry mentioned that the central bank will have to face challenges in implementing monetary policy if the government comes up with an expansionary budget. “Besides, it is also important to preserve the autonomy of the central bank,” he points out.
Former banker Analraj Bhattarai says that the governor needs to have multidimensional viewpoint at a time when the slowdown has hit the country’s economy. “There are several challenges in front of the new governor. He has been shouldered with the responsibility of efficient management of the problems,” opined Bhattarai.
Bhuvan Kumar Dahal, president of Nepal Bankers’ Association sees appointment of an NRB cadre who is well-versed in the overall financial sector as the central bank’s governor as positive. “Managing the challenges created by the coronavirus pandemic, he should work on making the payment system fully digitalised,” he commented.
Parshuram Kunwar Chhetri, CEO of Global IME Bank Limited notes that management of economic impacts of the COVID-19 pandemic is the foremost challenge for Adhikari. “The newly appointed governor should focus his efforts in areas including interest rate stability and liquidity management. As the governor is also the economic advisor to the finance minister, he has an important role to play in the managing the overall economy of the country,” he said.
