Parliament proposes cutting Nepal Rastra Bank governor's term, sparking independence concerns

Lawmakers in Nepal's parliamentary Finance Committee have introduced a bill to amend the Nepal Rastra Bank Act, notably reducing the governor's tenure from five years to three, with a discretionary two-year extension tied to performance. The proposal also shortens terms for deputy governors and independent directors, tightens eligibility criteria, lowers the shareholding threshold for candidates, and keeps the provision allowing the cabinet to issue monetary directives.

Former governors such as Yubaraj Khatiwada, Bijaya Nath Bhattarai, and Chiranjibi Nepal warn that the changes could erode the central bank's independence and invite political meddling, recalling earlier court rulings that protected the bank's autonomy. Critics suggest that improving the selection process would better safeguard the institution than altering term lengths. Finance Committee chair Krishna Hari Budhathoki argues the reform links tenure to effectiveness rather than weakening the bank. Senior central bank officials share concerns that the amendments may compromise policy continuity and the bank's core mandate.