10 Effectiveness of Central Bank Supervisory Role in Nepal

10 Effectiveness of Central Bank Supervisory Role in Nepal

Find here 10 effectiveness of central bank supervisory role on commercial banking in Nepal. We have posted in this page about effectiveness of central bank of Nepal (Nepal Rastra Bank) supervisory role on commercial banking (commercial, development, financial, co-operative etc) in Nepal.  Find here 5 Functions of a bank are regulated by Nepal Rastra Bank. We have posted in this page about 5 areas or functions of a bank (commercial, development, financial, co-operative etc) are regulated by central bank of Nepal – Nepal Rastra Bank.

Nepal Rastra Bank central banking system
Nepal Rastra Bank

5 functions of bank are regulated of Nepal Rastra Bank

Nepal Rastra Banks have various functions but some functions regarded with commercial banks are regulated by Nepal Rastra Bank. They are:

Advertisement
  1. Custodian of commercial banks: Commercial banks are opened with permission from central bank. Commercial banks must open an account in the central bank because as required by law commercial banks need to keep reserve to certain percentage of collected deposit as cash reserves. They are no interest for such type of deposit.Commercial bank must deposit 7% of the daily deposit as cash reserve and this rate changes according to condition of country.
  2. Regulate, inspect and supervise over the commercial banks and financial institutions: It is an important function of Nepal Rastra Bank to regulate, inspect and supervise over commercial banks and financial institutions. Such regulation inspection and supervision may be carried out by the deputed official of the bank or an expert designated by bank.
  3. Bank as a lender of last resort: Commercial banks deposit some portion of their cash in Nepal Rastra Bank. If commercial banks could not return the deposits of deposit holders as wanted by them, Nepal Rastra Bank act as lender of last resort to provide loan.
  4. Acting as clearing house: The central bank acts as a clearing house for transfer and settlement of mutual claims of commercial banks. It transfers funds from one bank to another bank to facilitate clearing of cheques, drafts etc. This is done by making transfer entries in their accounts on the principle of book-keeping. This function is called as clearing house function of Nepal Rastra bank, for this all the financial institution must be member of clearing house if these financial institutions provide this facility to customers.
  5. Development of extension banking: Nepal Rastra Bank is central bank. It has the right about what kind of bank shall be given permission to establish in which place. It had established banking development committee for this. This committee has given a great contribution to extend the branches of the commercial bank in all districts of Nepal.

Nepal Rastra Bank regulates commercial banks and financial institutions on following grounds:

C – Capital Adequacy
A – Asset Quality
M – Management Quality (competency)
E – Earning
L – Liquidity
S – System and control.

So, the Nepal Rastra Bank can make regulation inspection, supervision and inspection to financial institution. The regulations are not only effective for bank and financial institutions but for economy also.

10 Effectiveness of central bank supervisory role on commercial banking in Nepal

Here are 10 effective of Nepal Rastra Bank Regulations over the other banks of Nepal. 10 effectiveness of central bank supervisory role on commercial banking in Nepal are given below. Therefore, the effectiveness of Nepal Rastra Bank regulations are:

  1. The regulation from Nepal Rastra Bank maintains healthy, strong and fair banking and financial system.
  2. The effective regulation from Nepal Rastra Bank will help to grow public faith on banks and financial institutions.
  3. Effective regulation will protect interest of depositor and customer.
  4. Regulation develop strong and credible financial system in the nation.
  5. Regulations maintain stability of currency.
  6. Regulations helps to develop policies and programs.
  7. Regulations will help to speculate the coming problems and the profitability of the financial sector.
  8. Regulations help to provide qualitative services to the customer by fair computation.
  9. Regulations help to analyse financial condition and situation and also help to recommend task.
  10. Regulations investigate how much the bank and financial institutions are effective to fulfill the objectives of economy aimed by the nation.

 10 Effectiveness of Central Bank Supervisory Role in Nepal

photos.imnepal.com

  • regulatory function of central bank of Nepal
  • regulatory function of Nepal Rastra Bank
  • Nepal Rastra Bank Regulations
  • Effectiveness of Central Bank Supervisory Role in Nepal
  • functions of bank are regulated of Nepal Rastra Bank

Advertisement

Add a Comment

Your email address will not be published. Required fields are marked *