Dr Yubraj Khatiwada
When Dr Khatiwada joined the office as a governor, most of the macroeconomic indicators were forced people to ask whether Nepal is going to be a failed economy. The credit crunch, high inflation and low economic growth were the major challenges in front of him. At the end of his tenure, he gained faith from the people that he protected the economy through micro-monetary management. He framed the monetary system of the country. He introduced Merger and Acquisition aiming to minimise the cross holding in different banks. Later on, it became the best tool to stabilise the banking system of the country.
His best effort was found in real estate investment, in which he caps the banking lending, which becomes a turning point for protecting this industry from an accident. His practices towards using monetary instrument were significant. His personality worked on implementing the monetary policy throughout his tenure. Unfortunately, he was unable to bring the inflation under control during his business period.
He made deprived sector lending mandatory. Financial inclusion, financial literacy, financial access were the most important initiation he took, which helped to expand the banking services to the rural area.
He introduced base rate but unable to make functional of "interest rate corridor". Every monetary policy he introduced had great value for the economy, though his approach to grip the activities of BAFIs were criticised by Banking Pundits saying that it was against the free market economy.
Dr. Chranjibi Nepal
When Dr Nepal joined governor office, there was a big challenge in front of him maintaining the legacy that has been created by his predecessor. But non-economic factors like the earthquake, border blockage prejudiced on Nepalese economy, distorted the effective functioning of monetary policy.
His first monetary policy introduced the new ceiling on paid-up capital to all Bank and Financial Institutions. It led to introduce different instruments in the monetary sector without evaluating its impact. He has introduced three monetary policy, and each was found to be more mature than the previous. In his previous monetary policies, he tried to implement interest rate corridor, but lower and upper bound was supposed to use as a policy rate, which may not be more effective in attaining the objectives of the monetary policy. His big jump was increasing the paid up capital of the Bank and Financial Institutions (BAFIs), in order to increase the capacity of the banks, which is still ongoing. Monetary policy presented by Dr Nepal in the case of foreign exchange is flexible and we can guess same will be in upcoming days.
He is lucky enough too. In this fiscal 2073/74 economy measures more than 6.5 % of economic growth whereas inflation remains below 5%. This credit goes to him as well, but at the same fiscal capital expenditure remains less than 45% only. It doubts the robustness of the transmission channel of monetary policy to attain the high and sustainability in the growth.
He is trying to adjust the monetary system of the country in the federal structure. In the monetary policy of fiscal 2074/75, planned to establish at least one branch of a bank in each local government that counts 744. Moreover, there will be is a re-lending fund with capital Rs 20 Billion and planning to invest on prioritised as well as deprived sectors, which should be recognised as a continuation of the initiation made by his predecessor.
