Kathmandu, January 16:

The central bank has got a full-fledged governor after a hiatus of almost two years. Deependra Bahadur Chhetri took charge here today as new governor of Nepal Rastra Bank (NRB). He is the 14th head of the regulatory authority of the monetary market.

Talking to scribes after assuming charge, Chhetri promised action against wilful defaulters, saying, “We’ll soul-search and go after such ones.” He opined cooperatives should be under NRB and financial institutions should be encouraged to go to rural areas.

“Cooperatives should be brought under the NRB scanner as they are into monetary transactions,” he said adding that it was NRB’s responsibility to monitor and supervise the monetary market. “There has long been a demand for a second tier institution,” added Chhetri, who began his career on Asad 1, 2034 BS from the same institution he heads.

He also vowed to take note of the price hike. The monetary policy has targetted inflation at 7.5 per cent. Though economists claim that Nepal’s inflation is imported, India’s inflation has in these past two months gone down by half.

However, according to the first five months’ data, inflation is at 14.1 per cent — double the target — and does not seem to be going down.

The present liberal monetary policy is blamed for the price hike. Chhetri, however, put the blame for the price hike on the supply system. Opining that tightening the monetary

policy could hurt the private sector, he added that the central bank was in no mood to review the present monetary policy. “A tight monetary policy at the cost of the private sector will not be suitable,” he said.

The number of financial institutions is increasing in a small economy like Nepal. Due to increasing number, on one hand there is unhealthy competition while on the other the central bank is accused of lack of monitoring system and manpower. Some economists and bankers even want the central bank to stop issuing licence to new financial institutions.

“The central bank will not stop issuing licence to new financial institutions,” he said adding that competition will help financial institutions to go to uncharted areas in the rural sector.

“The central bank will provide facilities and encourage financial institutions to go to rural areas,” said Chhetri, who was a trade union leader during the 1990s movement.

Admitting that NRB faces several national and global challenges he said that there may be weaknesses on part of NRB also. The trade unionist-turned governor was also sacked by the central bank in 1994 for anti-government publications. He was founder-president of NRB employees’ union in 1990.

He worked in National Trading Ltd and Agriculture Development Bank before being appointed a member of National Planning Commission (NPC), the government think-tank, last year. He retired from the central bank as executive director of the currency management division two years ago.

The cabinet yesterday named Chhetri the 14th governor as the CIAA had indicted former governor Bijaya Nath Bhattarai two years ago. Since then, Krishna Bahadur Manandhar had been heading the central bank as the acting governor.