New NRB guv vows to solve liquidity crunch
KATHMANDU: Newly-appointed governor of Nepal Rastra Bank (NRB), the central bank, Dr Yubaraj Khatiwada thinks there is enough liquidity in the market, but added, “There seems to be some problem as cash is out of the banking system. We’ll look into it.”
“The central bank will try to find the reasons why banks have failed to attract liquidity,” said the 15th governor of the central bank after assuming office here today. He also urged entreprenuers not to advise the central bank how to use monetary tools. “NRB itself is competent enough to use those tools as and when necessary,” said the governor who did his PhD in monetary economics from Delhi University in 1991. “The central bank will also improve efficiency and supervision capacity.”
There has been a positive expansion of the banking system but still one-third of the population has no access to of the banking system, he said, “that price hike can also be tamed.”
The cabinet on Friday appointed Khatiwada the 15th governor of the central bank that had remained without a governor for almost two months after governor Vijaya Nath Bhattarai’s retirement on January 31. Dr Khatiwada was vice-chairman of National Planning Commission (NPC). But he has to work hard to meet the challenges facing the economy that is not in a good shape since recent months. The challenges include not only the depleting forex reserve, negative Balance of Payment, double-digit inflation and exposure of financial instituions to riskier sectors but also implementating strict regulations and supervising mushrooming financial institutions.
Although it might not be very hard for him to face these challenges as he has had a long career in the central bank and retired as executive director from the central bank only a year ago, Khatiwada sure has a long list of problems that needs his immediate attention.
In absence of a governor, the central bank has not been able to publish the mid-term evaluation of the Monetary Policy that needs a serious rethink.
The government had formed a committee to recommend names for a possible governor, according to the Nepal Rastra Bank Act. It had recommended three names including his.