Nepal's Financial System and the Central Bank
Every rupee deposited, lent or transferred in Nepal moves through an architecture supervised by Nepal Rastra Bank. Understanding that architecture — who does what, under whose licence — is the foundation every banking exam tests first and every banker uses daily.
Key Concepts
- Nepal Rastra Bank (est. 2013 BS / 1956 AD): the central bank — issues currency, sets monetary policy, regulates and supervises banks, manages foreign exchange reserves, acts as government's banker
- Licensed institutions by class: A = commercial banks, B = development banks, C = finance companies, D = microfinance financial institutions
- NRB is a regulator, not a competitor: it holds no public deposits and makes no commercial loans
- Beyond banks: insurance (regulated by Nepal Insurance Authority), capital markets (SEBON, NEPSE), cooperatives (separate regime) — know the boundaries
- Monetary policy instruments: bank rate, cash reserve ratio (CRR), statutory liquidity ratio (SLR), open market operations
- Deposit protection: deposits insured up to a prescribed limit per depositor per institution through the deposit insurance scheme
In Practice
Exam anchor: class questions are near-guaranteed — 'Which class are development banks?' (B), 'Who issues currency?' (NRB alone). Learn the architecture as a diagram: NRB on top, A-D classes below, other regulators alongside.
Try It Yourself
Draw Nepal's financial system from memory as one diagram: NRB centre-top with its five functions, the four institution classes with one example each, and the neighbouring regulators. Check against the lesson and redraw once — the diagram is worth a dozen exam marks.