Kathmandu, May 28 :

Almost after a year of colossal preparations, Nepal Rastra Bank (NRB) board has finally approved the Five-Year Strategic Plan (FYSP), last week with a view to maintain macro economic stability.

Sources in the central bank disclosed The Himalayan Times that the board had approved the the plan — that is yet to be made public — aimed at modernising the central bank in a changed competitive environment and to cope with emerging challenges in the financial sector.

The Five-Year Strategic Plan 2006-2010 had been prepared for the first time in the 50-year’s history of the bank, according to the NRB.

As per the revised and finalised Plan, there are four major objectives adopted in the strategy such as monetary policy management, financial sector management, foreign exchange management and clean note policy, sources disclosed. The re-engineering plan and making of strategic plan was finished, as per central bank’s Act 2002, which seeks for more autonomy in NRB’s functions — to be more productive in the days ahead.

The strategic plan, however, was prepared just in a macro-economic perspective and is like a road-map for the country’s monetary sector to drive central bank effectively, says a senior NRB officials on condition of anonymity. After the implementation of the strategic plan, it will focus more on technology adoption, security, disaster recovery, human resource up-gradation, streamlining rules and regulations in the financial institutions, says source.

However, there are lots of challenges NRB will have to face in the coming days as well, NRB officials think that other sectors in the country with modern techniques could be supportive.

NRB has already jumped into troubles, due to high inflation rate that stands over nine per cent currently for which it aims to focus on price stability.

Financial sector is another important area NRB has to take stock of in time. Or else, it is sure that within a few years, Nepal’s financial institutions will stand nowhere when foreign banks starts coming here with huge investment, says NRB official.

The bank’s five-year strategic plan is being implemented in the wake of Nepal being a member of World Trade Organisation (WTO) that has thrown enormous challenges to the bank.

Under the foreign exchange management, NRB has a Herculean task as India has already decided to go on for full-convertibility. Indian has already constituted a forum recently to study the procedures in this case.

After India’s entrance in the capital account convertibility, Nepal has to follow suit for which strong economic base is required and economic fundamentals should also be strong, says NRB official.

“If Nepal could follow India, it may help Nepal in a long run as in attracting investment,” experts say.

Effective exchange rate management means boosting export sector and luring foreign direct investment (FDI).

NRB also plans to develop a ‘clean note policy’ during the period of strategic plan implementation for effective note issue management.