Third Strategic Plan 2017-2021 PDF

THIRD STRATEGIC
PLAN
(2017-2021)
NEPAL RASTRA BANK

Third Strategic Plan 2017-21
Published by:
Corporate Planning Department
Nepal Rastra Bank
Central Office
Baluwatar, Kathmandu
Nepal
Ph: 977 1 4441043
977 1 4441040
Email: corporate@nrb.org.np
Website: http://www.nrb.org.np
MESSAGE FROM THE GOVERNOR
Nepal Rastra Bank (NRB), the central bank of the Federal Democratic
Republic of Nepal, has already implemented two five-year strategic plans
which have helped to guide the Bank activities in a systematic and planned
manner as well as to deliver its services effectively to the stakeholders.
For giving continuity to this process, the Third Strategic Plan for the period
of 2017-2021 has now been formulated. In this regard, I am extremely
delighted to release the Third Strategic Plan aimed at addressing the
issues and problems pertaining to NRB through appropriate policies and
strategic actions. Through the same Plan, I would also like to declare
NRB’s vision as “A Modern, Dynamic, Credible and Effective Central
Bank” and the mission as “Maintaining Macroeconomic and Financial
Stability for Sustainable and Inclusive Economic Growth through
Proactive and Effective Monetary and Financial Policies”.
Nepal is currently witnessing significant changes in the political
environment and with the promulgation of Constitution of Nepal 2015,
federal structure is gradually being institutionalized. This will not only
impact on functioning of the financial system but also subsequently
require restructuring of organizational set up and functioning of NRB.
Besides, the massive earthquake in 2015 and repeated aftershocks
destroyed major buildings of the Bank, thereby, severely affecting
the internal working environment. This has urgently necessitated the
reconstruction of two major buildings in Kathmandu as well as other
physical infrastructures.
The domestic financial sector has also become increasingly complex
and it is necessary for NRB to address the ramifications through dynamic
and proactive policies and strategic actions. Besides, the increasing
mechanization and automation in the banking and financial system will
provide opportunities for smoothening payment and settlement system
and also pose challenges in maintaining financial stability. In order to
tackle such bottlenecks and rigidities, the Strategic Plan has laid four
core pillars which have been identified as (i) macroeconomic stability, (ii)
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financial stability and financial sector development, (iii) external sector

stability, and (iv) sound and effective payment system.
At this juncture, I would like to extend appreciation to the Strategic Plan
Formulation Committee (SPFC) for preparing this important document
with utmost dedication and perseverance. I am pleased to acknowledge
the contribution of Dr. Sri Ram Poudyal, Member of NRB Board of
Directors and the Coordinator of the Committee. I would also like to extend
my deepest gratitude to other Committee members Mr. Ramjee Regmi,
Member of NRB Board of Directors, Mr. Chinta Mani Siwakoti, Deputy
Governor, Mr. Shiba Raj Shrestha, Deputy Governor and Mr. Bhisma Raj
Dhungana, Executive Director and Member Secretary, SPFC. Likewise, I
would also like to thank Dr. Ram Hari Aryal former Member of NRB Board
of Directors and Dr. Shankar Prasad Acharya, former Executive Director
of CPD. The officials of the CPD also deserve special thanks for their
continuous efforts in the process of formulating the Plan.
I expect that all the Departments and Offices will put their sincere efforts
in making this Plan a reality. I am fully confident that the Plan will be
instrumental in achieving NRB’s objectives by ensuring effective service
delivery and thereby enhance its corporate image.
Dr. Chiranjibi Nepal

Governor
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ACKNOWLEDGEMENT
The importance of strategic plan as a roadmap to steer and direct the

activities of a corporate entity towards achieving its goals and objectives
within a specified time period hardly needs emphasis. It was with this
perspective, Nepal Rastra Bank initiated the practice of strategic planning
a decade ago with the launching of its first strategic plan in 2006 for a five
year period. This was followed by the second strategic plan that covered
the period of 2012-2016. Building on the experience of first two strategic
plans and keeping in view the NRB’s organizational requirements and the
growing global financial interdependencies and revolution in information
and communication technologies, the Third Strategic Plan (2017-2021)
is formulated to effectively respond to these changes and achieve
organizational objectives.
We would like to express our sincere gratitude to Governor Dr. Chiranjibi
Nepal for his full-fledged support and professional advice which played an
instrumental role in bringing this plan to this form. We would also like to
express our gratitude to Mr. Shankar Prasad Adhikari, Secretary, Ministry
of Finance and Member, NRB Board of Directors; Mr. Shanta Raj Subedi,
former Secretary, Ministry of Finance and former Member, NRB Board
of Directors for their support and encouragement to the Strategic Plan
Formulation Committee (SPFC). Our sincere gratitude is also due to Dr.
Ramhari Aryal, former Member, NRB Board of Directors, who served as a
member of the SPFC in the initial stage. We would like to offer our sincere
thanks to Dr. Shankar Prasad Acharya, Executive Director for his valuable
efforts in the initial stage. We would also like to take this opportunity to
extend our heartfelt thanks to Executive Directors, Directors and Officials
of NRB for their views, comments and suggestions on the content and
text of the Plan.
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We highly appreciate all the stakeholders who contributed towards

enriching the report through their valuable feedbacks. Last but not the
least; we would like to record our sincere thanks to all Officials of the
Corporate Planning Department for their dedicated work in the preparation
of the Plan.
Strategic Plan Formulation Committee:

Dr. Sri Ram Poudyal, Coordinator and Member, NRB Board of Directors
Mr. Ramjee Regmi, Member, NRB Board of Directors
Mr. Chinta Mani Siwakoti, Deputy Governor
Mr. Shiba Raj Shrestha, Deputy Governor
Mr. Bhisma Raj Dhungana, Member Secretary and Executive Director,
Corporate Planning Department
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BOARD OF DIRECTORS
Chairman: Dr. Chiranjibi Nepal

Governor
Mr. Shankar Prasad Adhikari Mr. Chinta Mani Siwakoti Mr. Shiba Raj Shrestha
Secretary, Deputy Governor Deputy Governor
Ministry of Finance Member Member
Member
Dr. Sri Ram Poudyal Mr. Ramjee Regmi Mr. Bal Krishna Man Singh
Member Member Member
(As of January 10, 2018)
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Third Strategic Plan (2017-2021)

Formulation Committee
Dr. Sri Ram Poudyal

Coordinator
Mr. Ramjee Regmi Mr. Chinta Mani Siwakoti Mr. Shiba Raj Shrestha
Member Deputy Governor Deputy Governor
Member Member
Mr. Bhisma Raj Dhungana

Executive Director
Member Secretary
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Table of Contents
CHAPTER ONE: INTRODUCTION
1.1 Background 1-2
1.2 Practice of Strategic Planning 2-3
1.3 Strategic Planning in Nepal Rastra Bank 3-4
1.4 The Third Strategic Plan 4-5
1.5 Factors Taken into Consideration in Plan Formulation 5-10
CHAPTER TWO: VISION, MISSION, CORE VALUES AND STRATEGIC

OBJECTIVES
2.1 Vision 13
2.2 Mission 13-14
2.3 Core Values 14-15
2.4 Objectives 15
CHAPTER THREE: STRATEGIC PLANNING FRAMEWORK

3.1 Conceptual Framework 17-18
3.2 Strategic Pillars 19
3.2.1 Core Pillars 19-21
3.2.2 Supporting Pillars 21-24
CHAPTER FOUR: STRATEGIC ACTION PLANS

4.1 Strategic Pillars 26
4.1.1 Core Pillars
Pillar One: Macroeconomic Stability 26-29
Pillar Two: Financial Stability and Financial Sector Development 30-37
Pillar Three: External Sector Stability 38-41
Pillar Four: Sound and Effective Payment System 42-44
4.1.2 Supporting Pillars
Pillar One: Human Resource Development and Management 45-48
Pillar Two: Organizational Management and Development 49-52
Pillar Three: Infrastructure Development 53-56
Pillar Four: Information and Communication Technology Management 57-62
Pillar Five: Strengthen National and International Relations and Cooperation 63-66
Pillar Six: Legal Compliance and Good Governance 67-71
Pillar Seven: Social Responsibility 72-74
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CHAPTER FIVE: IMPLEMENTATION FRAMEWORK

5.1 Introduction 76
5.2 Strategic Plan Monitoring and Evaluation Committee 76
5.3 Corporate Planning Department 76-77
5.4 Departments and Offices 77
5.5 Dissemination of the plan 77
5.6 Mid-term Review 77
5.7 Final Evaluation 78
ANNEXURE
Chart 1: Guiding Framework of the Third Strategic Plan 79
Chart 2: SWOT Matrix 80
Chart 3: List of Principal Officers of Nepal Rastra Bank 81-82
PHOTO GALLERY
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ABBREVIATIONS
AMC Asset Management Company
AML Anti-Money Laundering
ARM Active Reserve Management
BAFIA Bank and Financial Institutions Act
BCP Business Continuity Plan
BFIs Banks and Financial Institutions
BFIRD Banks and Financial Institutions Regulation Department
BIA Business Impact Analysis
BOP Balance of Payment
BPM Balance of Payments Manual
BSD Bank Supervision Department
BTC Bankers’ Training Center
CDGS Central Depository for Government Securities
CFT Combating the Financing of Terrorism
CMD Currency Management Department
CMS Content Management System
COBIT Control Objectives for Information and Related Technologies
CoC Code of Conduct
CPD Corporate Planning Department
CVPS Currency Verification and Processing System
DBSD Development Bank Supervision Department
DC Data Center
DCGF Deposit and Credit Guarantee Fund
DRS Disaster Recovery Site
FCSD Finance Company Supervision Department
FDI Foreign Direct Investment
FEMA Foreign Exchange Management Act
FinTech Financial Technology
FIU Financial Information Unit
FMD Financial Management Department
FOREX Foreign Exchange
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FSIs Financial Soundness Indicators

FXMD Foreign Exchange Management Department
GL General Ledger
GON Government of Nepal
GSD General Services Department
HR Human Resources
HRMD Human Resources Management Department
HRM Human Resources Management
HRMISS Human Resources Management Information System Software
IAD Internal Audit Department
ICAAP Internal Capital Adequacy Assessment Process
ICT Information and Communication Technology
IIP International Investment Position
IMF International Monetary Fund
IRC Interest Rate Corridor
IRD International Relations Division
IRMF Integrated Risk Management Framework
ISO International Organization for Standardization
IT Information and Technology
ITD Information Technology Department
ITIL Information Technology Infrastructure Library
KBO Banking Office, Kathmandu
LC Letter of Credit
LD Legal Division
LMFF Liquidity Monitoring and Forecasting Framework
MFIs Microfinance Financial Institutions
MFPSD Microfinance Promotion and Supervision Department
MIS Management Information System
MOF Ministry of Finance
MOU Memorandum of Understanding
MOV Means of Verification
NFRS Nepal Financial Reporting Standard
NMDF National Microfinance Development Fund
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NPS National Payment Switch

NRA National Risk Assessment
NRB Nepal Rastra Bank
NRPS National Retail Payment System
OFG Office of the Governor
OKVOs Outside Kathmandu Valley Offices
OMO Open Market Operation
OVI Objectively Verifiable Indicator
OKVOs Outside Kathmandu Valley Offices
PBRD Problem Bank Resolution Division
PDMD Public Debt Management Department
PSD Payment System Department
RAMP Reserve Advisory Management Program
RBS Risk Based Supervision
RD Research Department
RegTech Regulatory Technology
RTGS Real Time Gross Settlement
SAARC South Asian Association for Regional Cooperation
SBS Shredding and Briquetting System
SIBs Systematically Important Banks
SIS Supervisory Information System
SPFC Strategic Plan Formulation Committee
SPMEC Strategic Planning Monitoring and Evaluation Committee
SSSS Scripless Securities Settlement System
STI Second Tier Institution
SWIFT Society for Worldwide Interbank Financial Telecommunication
SWOT Strengths, Weaknesses, Opportunities and Threats
SWRI Salary and Wage Rate Index
TCU Technical Cooperation Unit
TPT Task Performance Test
WPI Wholesale Price Index
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CHAPTER 1 INTRODUCTION
1.1 Background
N
epal Rastra Bank (NRB) was established as the central bank of Nepal on
April 26, 1956 in accordance with the provisions of Nepal Rastra Bank Act
1955. The Act was replaced by the new Act in 2002. The preamble of NRB Act
2002 describes the role of NRB as: to formulate monetary and foreign exchange
policies, to maintain price stability, to consolidate Balance of Payments (BOP)
for sustainable development of the economy, to develop a secure, healthy and
efficient payment system, to regulate, inspect and supervise Banks and Financial
Institutions (BFIs); and to enhance public credibility towards the entire banking
and financial system of the country.” The NRB Act was further amended in 2016
with objectives and functions as follows:
Objectives:
1. To formulate monetary and foreign exchange policies and manage them
in order to maintain price and balance of payments stability for overall
economic stability and sustainable economic development ;
2. To broaden access to financial services and maintain banking and financial
sector stability in order to enhance public confidence on, and credibility of
the banking and financial system;
3. To develop a secure, healthy and efficient payment system.
Functions, Duties and Powers:

1. To issue bank notes and coins;
2. To formulate and implement monetary policy to maintain price stability;
3. To formulate and implement foreign exchange policy;
4. To determine foreign exchange rate system;
5. To manage and operate foreign exchange reserve;
6. To issue license and regulate, inspect, supervise and monitor Banks and
Financial Institutions;
7. To act as the banker, advisor and financial agent of the Government of
Nepal (GON);
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8. To act as the banker and as the lender of the last resort for BFIs;
9. To establish, promote and regulate payment system including clearing and
settlement;
10. To conduct Open Market Operation(OMO)s for liquidity management;
11. To implement any other necessary functions to achieve the objectives of
the Bank.
NRB has been focusing its activities towards the achievement of aforementioned
objectives. Nevertheless, NRB is facing increasingly difficult circumstances
in accomplishing the above mentioned objectives and functions owing to
complex and fast changing set of challenges and risks in the financial sector.
The increasing openness, growing economic interdependence and deepening
economic integration between countries of the world imply that financial waves
and shocks emanating in the major industrialized countries spill over across
national boundaries. The effects of such waves and shocks occurring in the global
financial markets present challenges and opportunities to the policy makers of
developing countries like Nepal. So it is important that NRB should enhance
its capability to face and manage the increased financial volatility and crises
by improving supervisory oversight techniques, maintaining market discipline
through good governance and greater transparency, improving risk management
practices at the BFIs, and adopting robust regulatory policies. Moreover, the fast
changing developments in information and communication technologies in the
financial markets have also posed challenges to the NRB to adapt to these for
lowering transactions and information costs and promoting efficient operation of
market-based financial system. All these reiterate the need to move in a planned
way with vision and systematic and disciplined approach.
1.2 Practice of Strategic Planning

Strategic planning has its roots in warfare. The word ‘strategy’ is derived from an
ancient Greek word “strategos” which was used to mean “the General’s art” in
the context of warfare. The Generals were expected to prepare and implement
overall plan in order to win the war through battles, negotiations, or any other
means available, according to the changing situation. From the ancient Greek
usage in the military context to the business world, the term strategic planning
retains much of its original spirit. Adoption of strategic planning in the private
business companies can be traced back to1920s, when the Harvard Policy
Model was developed as a part of the business policy course to be taught at
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the Harvard Business School. This model defines strategy as a framework

which helps a company to determine the organizational structure and business
strategies to achieve better result. Starting from 1950’s there was a shift in the
focus of strategic planning away from organizational policy and structure to risk
management, industry growth, and market share. From 1960s, strategic planning
became a standard management tool and gained wide popularity in almost
every country both in public and private sector activities including the banking
industry as a means to achieve the long-term goals with greater efficiency and
effectiveness.
Almost all the central banks around the world have adopted the practice of
developing and implementing strategic planning. This is done to set vision,
determine priorities and actions to strengthen organizational management and
operations. The ultimate goals of all the central banks are to maintain financial
stability and contribute towards achieving the growth rate set by the government.
In this regard, it is necessary for any central bank to strengthen the capability
of the organization by enhancing the quality of staff, working environment,
internal and external communication, allocation and use of resources in order to
safeguard itself against detrimental ripples emanating from domestic as well as
foreign events.
1.3 Strategic Planning in Nepal Rastra Bank

Nepal has a history of six decades in planning for the overall development of
the economy. The first five year development plan was introduced in 1956. At
present, fourteenth plan is in the second year of its implementation.
The practice of formulating and implementing strategic plan at the company level
was started very late. In the case of NRB, strategic planning was introduced only
in 2006 for a five year period to set the directions of medium term actions of the
bank in order to achieve its objectives. The First Strategic Plan was followed
by the Second Strategic Plan for a five year period from 2012 to 2016. As the
Nepalese economy differs fundamentally in terms of size, structure, level of
development, technological advancement, human resource development, and
operational practices and efficiency from those of developed countries, western
models of strategic planning cannot be replicated in exact manner for Nepal.
However, similarity in the objectives and functions of central banks in both the
developed and the developing countries implies that lessons can be learnt and
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best practices can be gradually applied in harmony with the changes in socio-
economic, financial and technological situation faced by NRB.
1.3.1. The First Strategic Plan 2006-2010

The First Strategic Plan 2006-2010 envisaged how NRB would move ahead in
attaining mandated goals of maintaining macroeconomic stability through sound
and effective monetary, foreign exchange and financial sector policies. Strategic
planning framework of the Bank was organized into (a) functional strategies, and
(b) management strategies as shown in Table 1.
Table 1: Functional and Management Strategies of First Strategic Plan

Functional Strategies Strategic Objectives
Monetary Management To maintain price and external sector stability
To accomplish efficiency in domestic debt
Domestic Debt Management management through open market operation as
an effective instrument of monetary policy
To ensure sound, prudent, accessible, and
Financial Sector Management efficient financial system and maintain stability in
financial sector
To make foreign exchange management more
Foreign Exchange Management
effective and efficient for external sector stability
To circulate quality and clean currency throughout
Currency Management
the country efficiently as per the demand
Management Strategies Strategic Objectives

To develop and manage human resources for
Human Resources Management
attaining the objectives of the Bank
To undertake research relating to NRB’s policies
Research and Statistics
and operations and develop internationally
Management
acceptable statistical database
To ensure efficient, transparent, accountable
and modern financial management system and
Financial Management
enhance financial discipline and add value to
Bank's operations
Utilize modern information and communication
Information and Communication
technology (ICT) to facilitate policy decisions and
Technology Management
enhance operational efficiency
Develop an up-to -date legal regime, enhance
Legal Affairs Management the level of legal compliance and upgrade and
strengthen legal competency
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To provide effective general services and

General Services Management strengthen the management of bank’s physical
assets
To ensure effective and efficient dissemination of
Public Affairs Management
information on policies and activities of the Bank
The First Strategic Plan of NRB paved the way for attaining organizational goals
in a planned manner. Nearly 85 percent tasks were completed and the rest were
dropped because of their irrelevance and some other technical reasons.
1.3.2. Review of the Second Strategic Plan 2012-2016

The Second Strategic Plan was initiated in 2012 and completed in December
2016. The Plan was formulated with the experience of the First Strategic Plan and
the activities included in it contributed significantly to maintaining economic and
financial stability and making NRB a credible central bank. This plan contained
seven important pillars and each pillar had various strategies to achieve the
listed tasks (Table 2).
Table 2: Strategic Pillars and Strategic Priorities of Second Strategic Plan

Strategic Pillars Strategic Priorities
1. Improve the effectiveness of monetary
policy
2. Strengthen macroeconomic surveillance
Macroeconomic Stability and enhance the quality of research studies
and policy analysis
3. Establish resource center of an international
standard
1. Strengthen the legal framework for financial
sector stability
2. Enhance regulatory and supervisory
framework against money laundering
3. Strengthen regulatory framework
4. Strengthen supervisory framework to
ensure the safety and soundness of the
Financial Sector Stability
BFIs
5. Introduce forward-looking approaches in
supervision of BFIs
6. Establish and strengthen supporting
institutions for the financial stability
7. Increase financial deepening
8. Enhance financial inclusion
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1. Make foreign exchange reserve manage-

ment more efficient and effective
Foreign Exchange Management
2. Reform foreign exchange regime to main-
tain external sector stability
1. Promote efficient and effective payment
system
Payment Systems and Mechanisms
2. Ensure timely supply of bank notes and
coins
1. Strengthen the organizational structure of
Human Resources Management NRB
and Capacity Development 2. Strengthen the human resource manage-
ment system of NRB
1. Create conducive work environment for the
delivery of quality services
Infrastructure Development,
2. Create sound corporate governance
Corporate Governance and
through the strengthening of policies and
Customer Services
programs, internal control system and
ensuring transparency and accountability
1. Promote business process automation to
improve the efficiency on bank’s operations;
Information and Communications 2. Improve data management capacity and IT
Technology (ICT) security framework
3. Implement and Upgrade IT related policies
and enhance ICT capacity building.
A total of 201 tasks were planned in the Second Strategic Plan. Of these, 58
tasks were to be completed in 2012; 61 tasks in 2013; 16 tasks in 2014; 13 tasks
in 2015 and 26 tasks in 2016. Remaining tasks were of ongoing nature.
The strategic framework of the Second Strategic Plan was framed with 22
priorities along with different sets of objectives. These priorities were further
grouped into seven important strategic pillars.
As indicated in the Chart 1 below, 78 percent of the tasks have been accomplished
fully and remaining 22 percent tasks are classified as ‘under progress’. The
tasks classified as ‘under progress’ are at various stages of implementation
and expected to be completed subsequently. Year-wise progress of the Second
Strategic Plan is shown in the Chart 2 below.
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1.3.2.1 Major Achievements

During the implementation of Second Strategic Plan, NRB was able to accomplish
significant achievements. The major achievements include: (a) review and
update of BFIs’ licensing policy, (b) submission of draft Bill to the GON for
setting up of second tier institution (STI) and National Microfinance Development
Fund, (c) formulation of a national strategy for financial literacy draft, (d)
gradual implementation of international best financial reporting system, (e)
strengthening of assets and inventory management system, (f) procurement of
goAML Software for FIU, (g) ensuring transparency in information dissemination
(h) institutionalization of risk management system, (i) establishment of IT Help
Desk, (j) development of international cooperation mechanism on anti-money
laundering, (k) initiation for risk based internal auditing system, (l) enforcement
of compliance to withdraw soiled and mutilated notes from the market, (m)
awareness raising on clean note policy and identification of counterfeit notes,
(n) implementation of Olympic Banking System (GL Software) and HRMISS, (o)
amendment of NRB Act and Banking Offence and Punishment Act, (p) submission
of Banks and Financial Institutions Act (BAFIA) Bill and Foreign Exchange
Management Act (FEMA) Bill, (q) amendment of Merger and Acquisition by-laws
(r) initiation of capital increment plan of (BFIs) and (s) submission of draft of
Financial Sector Development Strategy (FSDS) to the GON.
1.4 The Third Strategic Plan 2017-2021

The Third Strategic Plan (2017-2021) is formulated around the basic NRB
objectives and strategic pillars. Its primary focus is on addressing economic and
financial issues currently faced by NRB and the Nepalese economy in maintaining
macro-economic stability. In addition, this plan is expected to enhance the
working environment by improving physical, technological and human resources
foundations of NRB. This in turn, is expected to enhance proactive thinking in
policy issues, operational procedures and supervisory system apart from initiating
prompt actions in addressing the economic and financial challenges confronting
the Bank. In addition to making regular activities more dynamic and innovative,
new activities are proposed for the next five years in alignment with the vision,
mission, objectives and core values enunciated in the plan.
The Plan is formulated through a bottom-up participatory planning process which

involved: (i) situational analysis of current internal as well as external environment
pertaining to NRB, (ii) Analysis of Strengths, Weaknesses, Opportunities and
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Threats (SWOT) of NRB, (iii) preparation of tasks deemed important for next
five years for each department and office and (iv) gathering feedback and inputs
from department and office chiefs. The implementation plan is framed in terms of
actions that are deemed necessary to achieving the objectives under each pillar,
Objectively Verifiable Indicator (OVI), Means of Verification (MoV), time line for
accomplishment of each action and responsible Departments and Offices.

1.5 Factors Taken into Consideration in the Plan Formulation
Various internal and external factors have been taken into account in formulating
the Plan. Some of the major factors are discussed below:
1.5.1 Emerging Economic and Financial Challenges
NRB sets major policy direction through the monetary policy announcement every
year prior to the start of fiscal year keeping in view the changing economic and
financial environment in the domestic and the world economy. It formulates and
implements monetary policy for internal (i.e. growth supportive financial stability
and price stability) as well as external sector stability (i.e. stable exchange rate,
favourable BOP and maintaining desired level of foreign exchange reserve).
Hence, NRB needs to be proactive and vigilant to address short run economic
and financial problems, such as asset bubbles, liquidity crunch, fluctuations of
interest rates in the international markets etc. Without compromising the objective
of maintaining economic stability in the long run.
1.5.2 Restructuring of NRB

Nepal has adopted federal democratic structure delineated into seven provincial
federal-states. This would have implications on the organizational structure and
activities of NRB and the overall financial system. In this context, NRB needs to
restructure its organizational setup and activities to suit with the federal structure
of the country.
There is also an urgent need to adopt modern technologies for smooth operation
of NRB activities and to effectively perform monitoring and supervision of BFIs.
1.5.3 Reconstruction of Buildings

NRB suffered a huge loss of physical infrastructure due to the devastating
earthquake of April 25, 2015 and its subsequent aftershocks. The major
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historical buildings at Baluwatar, Thapathali and Sundhara which housed NRB

central office along with some departments and offices were severely destructed
causing great difficulty in managing office space to the staff and carrying out
regular activities. Furthermore, NRB office buildings outside Kathmandu, erected
long time back, though not severely affected by the earthquake, are in need of
urgent renovation and reconstruction.
1.5.4 Environmental Challenges and Opportunities

NRB’s internal environment that consists of organizational development,
system and process development, infrastructural development, human resource
development, interpersonal relations, work environment, corporate governance
and relation building was also taken into consideration in the formulation of
this plan, ensuring strong and cohesive organization with highly motivated staff
committed to work to the best of their potentials and abilities to provide prompt
services to the valued stakeholders and achieve the overall organizational goals.
All these imply that human resource plays a key role in achieving NRB’s goals
and objectives.
External environment of NRB is shaped by the interplay of the BFIs, GON,

international organizations and other concerned agencies and general public.
NRB is likely to face uncertainties in the course of rendering services owing to
changes in external environment. Thus, it is necessary for NRB to keep abreast of
changing external environment in order to cope with the changes and challenges
thereof by adopting appropriate policy tools.
1.5.5 Ensuring Good Governance

Governance refers to the state of affairs or process or act of governing any
organization. When it comes to an organized corporate sector, it is the way
by which an organization is directed and managed. The relative effectiveness
of corporate governance has a profound effect on how well an organization
performs by complying with laws, rules, regulations, guidelines, code of conduct
and best practices to minimize the associated risks and thereby enhancing
organizational credibility. NRB needs to follow the prevalent legal provisions,
regulations, guidelines, code of conduct and best practices for ensuring good
corporate governance.
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VISION, MISSION, CORE VALUES
CHAPTER AND STRATEGIC OBJECTIVES
2.1 Vision
“A Modern, Dynamic, Credible and Effective Central Bank”
NRB has set the vision statement to provide clear direction towards achieving its
goals and adopt forward looking approach in service delivery.
Modern reflects NRB’s commitment to practice best international standards,

policies, rules, regulations and carry out modern central banking functions in a
holistic manner. NRB contemplates for new ideas and technologies, workflows,
and methodologies into its service delivery that creates value for its stakeholders.
NRB is dedicated in maintaining Dynamism through embracing changes by

updating and upgrading its functions in a timely manner. It is determined to cope
up with future opportunities and challenges.
NRB is committed to maintain trustworthy relationship with its stakeholders

adhering to the highest ethical standard particularly in policy formulation,
decision making and service delivery. For this, NRB continuously strives to
reinforce Credibility through formulation of consistent policies and programs in
conjunction with the legislation and policies of the GON.
NRB has been working consistently to enhance its efficiency and Effectiveness
as a capable Central Bank by demonstrating the philosophy of “Leading by
Example”. Its focus is on utilizing its limited resources efficiently to achieve its
goals and objectives by addressing contemporary issues and challenges.
2.2 Mission
“Maintaining Macroeconomic and Financial Stability for Sustainable and
Inclusive Economic Growth through Proactive and Effective Monetary and
Financial Policies”
NRB’s primary focus is on formulating and implementing effective monetary policy

as an important tool for economic stability and growth. Owing to the importance
of internal as well as external stability, it tries to ensure efficient transmission
mechanism of policy instruments to maintain Macroeconomic Stability.
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NRB is committed to formulating appropriate regulatory framework and

implementing prudential practices in order to maintain financial stability. It
is equally concerned with executing efficient supervisory framework that is
compatible with internal regulations and Basel core principles. Simultaneously, it
has accorded high priority to implement Financial Sector Development Strategy
(FSDS) approved by the GON in January 2017. All these commitments and
initiations will help maintaining Financial Stability.
NRB gives high priority towards formulating monetary and financial policies in
order to increase credit flow in productive and priority sectors for sustainable
and equitable growth. This will help to create value addition and capital formation
through production and productivity increase; and income and employment
generation. For this, NRB aims to facilitate Sustainable and Inclusive Economic
Growth through Proactive and Effective Monetary and Financial Policies.
2.3 Core Values

Values are the beliefs or ideals shared by the members within the organization.
Such values are established as guiding principles for better organizational image.
Each and every staff/member in NRB is expected to exhibit these values in their
day-to-day activities. The core values identified in the first and second five-year
strategic plans have been modified in the Third Plan in line with changing context.
Core Values of the Bank are reflected by the word “CREATIVE”
C: Committed
NRB is committed to achieve the institutional objectives and goals by delivering
quality services to its stakeholders.
R: Responsible
NRB is dedicated to discharge its roles and responsibilities with best efforts and
capabilities through continually upgrading skills and knowledge, maintaining
effective system of communication and consultation for being responsible for
effective service delivery.
E: Efficient
NRB strives for high level of efficiency and effectiveness in achieving the
objectives of the Bank by embracing emerging changes in the domestic as well
as international financial markets.
14
A: Accountable
NRB is committed to ensuring accountability and transparency in its activities
through good governance and public dissemination of information. The Bank
maintains integrity in its actions and decisions.
T: Team-Spirit
NRB believes in team spirit to foster interdepartmental trust and coordination by
adopting participative and collaborative approach in decision making and service
delivery process.
I: Inclusive
NRB endeavours to adopt innovative ideas and inclusive policies to cater to the
financial needs of the different sectors of the economy. Such policies ensure
improved financial access, widened financial literacy and greater consumer
protection in order to facilitate sustainable and equitable economic growth.
V: Visionary
NRB believes in visionary and proactive policies to attain macroeconomic and
financial stability. For this purpose, NRB shall formulate appropriate policies
to address current issues and problems and suitable strategies to mitigate the
potential threats.
E: Equitable
NRB is committed to provide fair treatment to all its stakeholders. It ensures
integrity and honesty by assuring impartiality in its policies, functions and services.
2.4 Objectives
The main objective of the Third Strategic Plan is to facilitate the attainment
of macroeconomic and financial stability and enhance NRB’s credibility. The
focus of the Third Strategic Plan will be centered on restructuring of the NRB in
accordance with federal structure, constructing earthquake devastated buildings,
modernizing ICT system, adopting technological advancements, upgrading
payment system, strengthening good governance and institutional capabilities
and maintaining good relations with national as well as international entities.
15
16
3
STRATEGIC PLANNING
CHAPTER FRAMEWORK
3.1 Conceptual Framework

Strategic Planning provides a framework for defining NRB’s vision, mission,
goals, strategies, core values and objectives to be achieved in the next five years.
It involves a process of setting action plans for guiding day to day activities and
performance indicators to evaluate the implementation progress on a periodic
basis. The formulation of strategic plan requires a SWOT analysis in order to
identify NRB’s internal strengths and weaknesses as well as opportunities and
threats. Such analysis helps the NRB to find out the steps needed to capitalize
on the strengths, to minimize the weaknesses, to take advantage of opportunities
and to respond to threats.
The previous strategic plans as well as the ongoing activities were carefully
reviewed so as to assess their relevance in formulating the Third Strategic Plan.
The proposed Plan is expected to reorient the NRB’s activities to the changes
in the internal as well as external environment through appropriate policies and
programs. Moreover, action plans and responsibilities are predefined to ensure
the attainment of strategic objectives under each strategic pillar. The framework
also consists of periodic reporting, monitoring, evaluation and feedback for the
effective implementation of the Plan.
The Strategic Planning Framework is exhibited in a flow chart given below:
17
18
3.2 Strategic Pillars

The Third Strategic Plan is built on four core pillars, which are supported by
seven supporting pillars. The core pillars are set to guide the NRB on the way to
achieve the objectives of economic and financial stability. The supporting pillars
are designed for complementing the accomplishment of key strategic pillars.
These pillars are mutually reinforcing thereby influencing the overall achievement
of the Plan. Each core and supporting pillar is briefly elaborated below.
3.2.1 Core Pillars

Pillar One: Macroeconomic Stability
Macroeconomic stability is essential for achieving high levels of sustainable
economic growth by providing a more secure environment for the promotion
of private sector investment. Various empirical studies have shown that sound
macroeconomic management is associated with a higher growth rate for a given
rate of investment. It also minimizes economic vulnerability from potential internal
and external shocks. In course of the implementation of this Plan, NRB aims to
establish transparency, effectiveness, and efficiency of transmission mechanism
of monetary policy.
Pillar Two: Financial Stability and Financial Sector Development

Financial sector stability ensures resilient financial system that withstands
internal and external shocks that arise from various socio-economic factors.
Such stability is important to create public confidence on financial system and to
promote conducive environment for depositors, borrowers and investors. A stable
financial system, therefore, encourages efficient financial intermediation, which
encourages investment, facilitates effective and efficient operation of financial
markets and improves rational distribution of resources in the economy through
increased level of productive activities.
Generally, stable and well functioning financial system is maintained through

(i) monitoring and regulation and supervision of financial system, (ii) designing
and building of financial system safety nets, (iii) creating strong legal framework
and (iv) promoting financial deepening/development through proper financial
infrastructures. For this purpose, the Bank will adopt and implement global best
practices of macro prudential regulation and supervision techniques.
NRB is committed to promote financial inclusion across regions and people,

particularly focusing on providing financial services to the disadvantaged
19
segment of the population at affordable costs. NRB will also ensure prompt
availability of financial services to the general public without any discrimination in
terms of cost and access to services.
Pillar Three: External Sector Stability

External sector stability plays an important role in supporting growth and poverty
reduction. International transactions in the form of imports and exports, capital
inflows and outflows and the overall BOP are important factors in affecting
growth rate and macro-economic stability of the country. Other factors influencing
external sector stability encompass Foreign Direct Investment (FDI), external
debt, exchange rate, and foreign exchange reserve position. Foreign exchange
reserve being an important component of national assets needs to be managed
effectively by maintaining a proper balance amongst safety, liquidity, and return.
The external stability generally refers to maintaining adequate level of

international reserves as targeted by the policy for meeting international payment
obligations, strengthening foreign exchange regulatory framework and effective
management of reserve portfolio. A number of indicators are used to gauge
the state of the external sector, and monitor whether external stability is being
achieved. Maintaining stability of the exchange rate in the FOREX market,
reducing the size of the current account deficit, maintaining a favourable BOP
position, attaining stable and reasonable level of foreign debt and outflow of
principal and interest payments and pursuing effective reserve management are
key elements for maintaining external sector stability.
As effective foreign exchange management is the key element for the external
sector stability, there is a need for: (i) maintaining adequate level of reserves for
meeting convertible currency denominated payment obligation and external trade
facilitation, (ii) reserve portfolio diversification to minimize risks and optimization
of returns and (iii) gradual liberalization of capital account.
Pillar Four: Sound and Effective Payment System

The world is moving faster towards adoption of modern technologies including
electronic payments in settling financial transactions or in the purchase of goods
and services. The traditional payment system has many problems and is being
gradually replaced by electronic payment system all over the world. In line with
the global trend, NRB aims at gradually moving towards cashless society by
facilitating various instruments of electronic payments in a safe, secured and
20
efficient manner.
Effective payment system enhances the stability of the financial sector, reduces
transaction costs in the economy, promotes the efficient use of financial
resources, improves market liquidity and facilitates effective implementation of
monetary policy. NRB aims at increasing the effectiveness of payment system
through (i) strengthening payment and settlement legal framework and regulatory
mechanism, (ii) introducing Real Time Gross Settlement (RTGS) for large value
payment system, and (iii) establishing National Payment Gateway (NPG) and
National Payment Switch (NPS).
3.2.2. Supporting Pillars

Pillar One: Human Resource Development and Management
Human resources constitute of one of the key factors in the attainment of vision,
mission, goals and objectives of an organization. It is, therefore, important to
attract and retain qualified manpower and motivate them to work with high
commitment and integrity by providing attractive facilities, conducive work
environment and opportunities for career development. NRB accords high priority
to strengthen human capital through adoption of scientific performance appraisal
system, career planning, succession planning, and institutional memory system.
In this regard NRB shall (i) formulate and implement HR Plan, (ii) ensure effective
use of Human Resource Management Information System Software (HRMISS),
and (iii) ensure capacity building.
Pillar Two: Organizational Management and Development

NRB is in an urgent need to diagnose the structural rigidness, procedural hurdles
and obstacles in its operations. Considering continuous innovations in global
and domestic financial markets, NRB requires to adopt innovative practices in its
work modalities and procedures, managerial practices and operational system.
In view of the country recently moving towards the federal structure, NRB
has to restructure its organizational set-up and operational modalities. Thus,
understanding the importance of structural change and obligation to adopt new
developments, NRB has to give high priority to reorganize its set-up by ensuring
improved work environment, adequate capacity building, improved service
delivery mechanism, and strengthened stakeholders’ relation.
21
Pillar Three: Infrastructure Development

Adequate physical infrastructure supported by modern logistic is a major
prerequisite for smooth functioning of the Bank. In this context, NRB’s physical
infrastructure was immensely damaged by the devastating earthquake of 25
April, 2015, creating severe problem in smooth functioning of the Bank. It is
therefore, important to give high priority to construct modern buildings equipped
with necessary office support system. In addition, it is important to undertake
timely repair and maintenance of various assets including buildings, machinery
and equipment; and vehicles. To ensure the procurement of quality goods and
services, strong legal and procurement procedure should be developed and
enforced. NRB also has to give attention to equity consideration in providing
pecuniary and other facilities to staff. For uninterrupted operations and service
delivery, NRB has to formulate and implement Business Continuity Plan (BCP)
with high priority.
Pillar Four: Information and Communication Technology Management

Use of modern Information and Communication Technology (ICT) is indispensable
to carry out central banking functions more effectively and efficiently. As NRB
is recently exposed to modern ICT, it needs to capitalize the opportunities
available and face the challenges created by it. Increased use of ICT in business
operations and service delivery by adopting innovative ICT system, and using
emerging cloud computing services has to be encouraged. For these, NRB
needs to expedite installation and implementation of state-of-the-art ICT system
including Data Centre, Production Site and Disaster Recovery (DR) Site.
NRB’s existing ICT policy includes outsourcing the non-core ICT services,
promoting automation in the Bank, strengthening institutional memory through
digitization and safeguarding the information management system. In this
regard, NRB’s ICT policy has to be amended to accommodate the emerging
changes in the ICT system. It is important to protect the system from potential
cyber crimes, hardware breakdown, network failures, and unauthorized access
to data and information. Accordingly, existing ICT Guidelines and ICT Code of
Conduct should also be reviewed for aligning them with ICT Policy.
Pillar Five: Strengthen National and International Relations and Cooperation
NRB has been effortful to strengthening its relationship with both the national
as well as international institutions. With regard to national institutions, NRB
has been in constant dialogue and interaction with the concerned Government
22
Ministries and entities and private sector organizations on pertinent monetary

and financial issues of national importance. NRB’s associations and networking
with Central Banks and financial institutions of various countries, bilateral and
multilateral link and participation in the conferences and meetings of various
organizations have given opportunities to benefit from experience sharing and
learning from latest developments in monetary and financial policy issues.
Furthermore, NRB can also learn from the global best practices in central banking
and regulatory and supervisory mechanisms.
Pillar Six: Legal Compliance and Good Governance

Legal provisions incorporated in NRB Act and other prevalent Acts, rules,
bylaws, directives, guidelines, regulations and policies have helped to ensure
transparency and accountability among Departments and Offices. Such legal
provisions also provide guidelines to the NRB Board in overseeing major
policy thrusts and initiating corrective measures for ensuring macro-economic
and financial stability along with institutional good governance. These legal
provisions also bind the staff to perform their respective roles and carry out their
responsibilities with honestly for effective and efficient service delivery. Moreover,
legal compliance and good governance would help NRB to build its image and
reputation as a credible Central Bank.
Pillar Seven: Social Responsibility

NRB has been mindful in incorporating necessary provisions in its regulatory
and supervisory mechanisms to safeguard the concerns and rights of customers
and other concerned stakeholders. Furthermore, NRB strives for raising financial
awareness and literacy about availability of banking and financial products and
services by organizing various programs in educational institutions and different
communities. In addition, the Third Strategic Plan also propels the banks and
financial institutions to comply with NRB directive pertaining to corporate social
responsibility (CSR). Moreover, it will also strengthen and carry forward the
grievance handling mechanisms for resolving unfair practices prevailing in the
financial system. The Third Strategic Plan shall also give priority to disseminate
information for public use to ensure peoples’ right to information.
23
Table 3: Core Pillars and Supporting Pillars

S.N. Strategic Pillars Objectives
1.0 Core Pillars
1. Maintaining price stability

2. Supporting economic growth
3. Maintaining robust macroeconomic surveillance
1.1 Macroeconomic Stability
system
4. Strengthening research and forecasting
capabilities
1. Strengthening regulatory framework

2. Strengthening supervisory system
Financial Stability and Financial
1.2 3. Reforming financial sector
Sector Development
4. Enhancing financial access and financial
inclusion
1. Strengthening foreign exchange regulatory and

supervisory framework
1.3 External Sector Stability 2. Effective reserve management
3. Reviewing exchange rate policy and initiating
legislative reforms
1. Developing financial market infrastructure for

Sound and Effective Payment payment system
1.4
System 2. Strengthening payment system regulatory
mechanism
2.0 Supporting Pillars
1. Developing and implementing human resource

Human Resource Development plan
2.1
and Management 2. Strengthening the human resource management system
3. Overall capacity building
Organizational Management 1. Restructuring organizational set-up

2.2
and Development 2. Improving service delivery system
1. Building physical infrastructure

2.3 Infrastructure Development
2. Ensuring business continuity
1. Developing information and communication

technology (ICT) infrastructure
Information and Communication
2.4 2. Enhancing information and communication
Technology (ICT) Management
technology (ICT) management
3. Upgrading the level of mechanization
1. Enhancing information dissemination system

Strengthen National and Inter-
2.5 2. Strengthening cooperation and co-ordination
national Relations
with national and international stakeholders
1. Strengthening legal compliance

2. Effective planning, programming, budgeting
Legal Compliance and Good
2.6 and control
Governance
3. Strengthening risk management system
4. Strengthening good governance
1. Ensuring financial consumer protection

2.7 Social Responsibility
2. Enhancing financial awareness
24
25
CHAPTER 4 STRATEGIC ACTION PLANS
4.1 Strategic Pillars

4.1.1 Core Pillars
Bank has set four core pillars that are essential for achieving organizational goals
and objectives. The core pillars along with objectives, strategies and actions
under each pillar are presented below:
Pillar One: Macroeconomic Stability

Objective 1: Maintaining Price Stability
Maintaining price stability contributes to achieving high levels of economic
activities and employment. When the expected changes in the average price
level are small and gradual enough, business and household decisions for
investment and expenditure are not affected. This will enable more efficient
allocation of resources and avoid the likelihood of diversion of scarce resources
to hedging against inflation. Therefore, NRB needs to orient monetary policy
towards containing monetary expansion at an appropriate level. For this, it is
necessary to constantly review the monetary policy framework, revisit various
monetary targets and interest rates and adopt effective mechanism for liquidity
management. For maintaining price stability, following strategies and actions
have been set:
Strategy 1.1: Adopting forward-looking monetary policy framework
Objectively Means of Responsible

S. Start End
Action (s) Verifiable Indicator Verification (s) Department
N. Date Date
(s) (OVI) (MoV) (s)
Revisit the Revisited Mid

Framework On
1 existing monetary framework Jul RD
revisited going
policy framework implemented 2017
Strategy 1.2: Adopting medium term approach to monetary management

Objectively Responsible
S. Means of Start End
Action (s) Verifiable Indicator Department
N. Verification (s) Date Date
(s) (s)
Review the alter-
Mid Mid
native nominal an- Nominal anchor Reviewed anchor
1 Jan Jul RD
chor of monetary reviewed in place
2018 2019
policy
26
Strategy 1.3: Reviewing operational target of monetary policy

(s) (s)
Revisit the opera- Revisited Mid Mid

Operational target
1 tional targets of operational Jan Jul RD
revisited
monetary policy targets in place 2018 2021
Strategy 1.4: Ensuring effective management of liquidity

(s) (s)
RD (L),
Revisit Interest Revisited interest Mid
Interest rate cor- On PDMD,
1 Rate Corridor rate corridor Jul
ridor revisited going BFIRD and
(IRC) implemented 2017
KBO
Reviewed
Liquidity
RD (L),
Improve liquid- Monitoring and Mid
Framework On PDMD,
2 ity management Forecasting Jul
reviewed going BFIRD and
framework Framework 2017
BSD
(LMFF)
implemented
Objective 2: Supporting Economic Growth
Monetary expansion and inflation need to be contained at a desirable level for
supporting the achievements of targeted growth rate. Hence, NRB needs to have
monetary policy aimed at maximum feasible output and employment. Monetary
policy, in conjunction with the fiscal policy, can contribute to sustainable and
equitable economic growth by ensuring adequate flow of credit to the private
sector, adopting credit policies that encourage the banking sector to increase
credit flows to priority sectors, providing concessional refinancing facilities and
maintaining differential interest rates. In this regard, following strategies and
actions have been set:
Strategy 2.1: Ensuring adequate credit availability to priority sectors
(s) (s)
Increased credit
Ensure adequate flows to priority Mid
Growth of credit to On RD (L) and
1 credit flows to sectors reflected Jul
priority sectors going BFIRD
priority sectors in monthly 2017
economic report
Volume of
Increase conces- Refinance in- concessional Mid RD (L),
On
2 sional refinance to creased in speci- refinance Jul BFIRD and
going
specified sectors fied sectors increased periodic 2017 MFPSD
report
27
Stable interest
Ensure stability in Mid
Interest rate sta- rates reflected in On RD (L) and
3 long term interest Jul
bility maintained monthly Economic going BFIRD
rate 2017
Report
Objective 3: Maintaining Robust Macroeconomic Surveillance System

Effective macroeconomic surveillance is essential for assessing macro-financial
situation by detecting the nature and degree of potential risks emanating from
both internal as well as external volatilities in the financial systems and markets.
This will help the policy makers to obtain early information and adopt rational
policy decisions on time and maintain sound financial system. For this, following
strategies and actions have been set:
Strategy 3.1: Maintaining up-to-date integrated database of macroeconomic
variables
(s) (s)
Improve monetary
Revised monetary
survey data based Improved Mid
survey tables gen- On
1 on revised monetary survey Dec RD
erated on monthly going
international tables used 2017
basis
standards.
Compile BOP
statistics and
International
Investment Posi-
tion (IIP)based BOP statistics Mid Mid
Statistical Report
2 on International compiled as per Jul Jul RD
in place
Monetary Fund IMF's BPM6 2018 2020
(IMF)'s sixth edi-
tion Balance of
Payments Manual
(BPM) 6
Extend the Extended
coverage and Economic Mid Mid
Coverage and fre-
3 frequency of Eco- Activities Report Jan Jul RD
quency extended
nomic Activities in line with federal 2018 2020
Report structure
Strategy 3.2: Revising and constructing different price indices

(s) (s)
Conduct second
wholesale price WPI commodity Revised Base
Mid Mid RD (L),
survey to revise basket and weight year Index,
1 Jul Jan HRMD and
existing Whole- for WPI index monthly index
2017 2019 GSD
sale Price Index constructed report in place
(WPI)
28
Conduct second
Salary and Wage SWRI basket Revised monthly Mid Mid RD (L),
2 Rate survey to and weight index index report in Jul Jan HRMD and
revise the index constructed place 2018 2020 GSD
(SWRI)
Update survey of
import and export Monthly Export/ Updated monthly Mid
On
3 goods to revise Import Price Index index report in Jul RD
going
Export/Import revised use 2017
Price Index
Mid Mid
Conduct Housing Housing Price Monthly index
4 Jul Jul RD
Price Index survey Index constructed report in place
2018 2020
Objective 4: Strengthening Research and Forecasting Capabilities

A policy decision backed by proper research is a pre-requisite for effective
implementation of monetary and financial policies. Dissemination of research
findings through collaborative workshops, interactions, and access to e-library
facilities help to develop intellectual resources to enhance research capabilities.
It is also important to construct new economic models and revise the existing
ones for better forecasting and strengthening macro-economic policy decisions.
For strengthening research and forecasting capabilities, following strategies and
Strategy 4.1: Conducting additional research studies

(s) (s)
Increase the Additional Mid

Additional study On
1 number of Special research studies Jan RD
reports published going
Research Studies conducted 2018
Strategy 4.2: Strengthening research capability and quality

(s) (s)
Enhance capabil-
ity for improved
Improved models Improved models Jul 20 On-
1 macro-economic RD
developed implemented 17 going
and forecasting
models
29
30
Pillar Two: Financial Stability and Financial Sector Development
Objective 1: Strengthening Regulatory Framework

Legal and regulatory frameworks need to be effective to ensure financial sector
stability. To make legal framework effective, NRB needs to have appropriate legal
and regulatory mechanisms. For this purpose, NRB needs to review and amend
existing laws, rules, bylaws, directives and guidelines relating to financial system.
These can be accomplished through continuous monitoring and evaluation
of developments in the financial sector and also discussion with concerned
stakeholders. To achieve this, following strategies and actions have been set:
Strategy 1.1: Strengthening regulatory framework
(s) (s)
Prepare regula- Mid Mid

Regulation pre-
1 tion for financial Regulation issued Jan Jan BFIRD
pared
derivatives 2018 2020
Prepare regulation Mid Mid

Regulation pre-
2 for trading book Regulation issued Jan Jul BFIRD
pared
activities 2018 2019
Amend relevant
directives and
BFIRD (L),
by laws as per Amended Mid Mid
Directives and LD, BSD,
3 newly amended directives and Jan Jul
bylaws amended DBSD and
NRB Act , BAFIA , bylaws in place 2018 2021
FCSD
Company Act and
other Acts
For A
class
banks
Develop report-
Mid Jul
ing formats for
Mid 2019, BFIRD (L),
implementation of Reporting formats NFRS
3.1 Jul For B BSD, DBSD
Nepal Financial developed implemented
2018 and C and FCSD
Reporting Stand-
class
ard (NFRS)
FIs
mid Jul
2021
Revised directive Mid Mid

Revise AML/CFT Existing directive BFIRD (L),
3.2 number19 Jul Jan
Provisions number19 revised FIU and LD
implemented 2017 2019
Basel II for
BFIRD (L)
Develop capabil- "B" and "C"
Gradual imple- Mid Mid and related
ity of BFIs for Class BFIs and
4 mentation of Jan Jul Supervision
implementation of Basel III for "A"
Basel standards 2018 2021 Depart-
Basel standards. Class banks
ments
implemented
31
Strategy 1.2: Strengthening the regulatory framework for Microfinance Financial

Institutions (MFIs)
(s) (s)
Mid Mid
Revisit directives Regulations Amended BFIRD (L)
1 Jan Jul
relating to MFIs amended regulation in place and MFPSD
2018 2021
Formulate direc- Mid Mid

Directives formu- BFIRD (L)
2 tives for multiple Directives issued Jan Jan
lated and MFPSD
financing by MFIs 2018 2019
Strategy 1.3: Strengthening institutional good governance and risk

management practices in the MFIs
(s) (s)
Review good Revised good
Mid Mid BFIRD (L),
governance direc- Directives up- governance
1 Jan Jul MFPSD and
tives to enhance dated/ revised directives for MFIs
2018 2018 LD
accountability in place
Introduce risk
Risk manage- Risk management Mid Mid
management BFIRD (L)
2 ment guidelines guidelines Jan Jul
guidelines for and MFPSD
introduced enforced 2018 2018
MFIs
Formulate stress Mid Mid BFIRD (L),

Directives formu- Directives
3 testing directives Jan Jul MFPSD and
lated Implemented
for MFIs 2018 2021 LD
Strategy 1.4: Reviewing the licensing policy for BFIs

(s) (s)
Mid Mid
Review existing Licensing policy Updated policy in
1 Jan Jan BFIRD
licensing policy reviewed place
2018 2019
Review the
Mid Mid
policy for domes- Policy
2 Policy reviewed Jul Jul BFIRD
tic banks to open implemented
2018 2020
branches abroad
Review the
Mid Mid
policy for opening Policy
3 Policy reviewed Jul Jul BFIRD
foreign bank implemented
2018 2019
branches in Nepal
32
Strategy 1.5: Strengthening contingency management plan and expediting

resolution process
(s) (s)
Amendment Amended Mid Mid

Resolution bylaws
1 of Resolution Resolution bylaws Jan Jul PBRD
amended
bylaws, 2071 implemented 2018 2018
Review Banks
Mid Mid BFIRD (L),
and Financial Draft bill of BAFIA Draft bill
2 Jul Jul PBRD and
Institutions Act, prepared submitted to MoF
2020 2021 LD
2017
Strategy 1.6: Strengthening mechanism for strong financial safety net

(s) (s)
Review and up-

Mid Mid
date problematic Framework Framework BFIRD (L)
1 Jan Jul
bank/FIs resolu- updated implemented and PBRD
2018 2018
tion framework
Study and estab-
lish mechanism for
"credit guarantee"
Mid Mid
for BFIs in co-or- Mechanism
2 Study conducted Jul Jan BFIRD
dination with MoF implemented
2018 2021
and Deposit and
Credit Guarantee
Fund (DCGF)
Review and up-
date lender of the Updated policy Mid Mid
Policy and mecha-
3 last resort policy and mechanism in Jan Jul BFIRD
nism reviewed
and develop place 2018 2018
mechanism
Strategy 1.7: Moving towards green financial system

(s) (s)
Formulation of di-
rective on energy
Mid Mid
efficient, resource
1 Directive drafted Directive issued Jan Jan BFIRD
efficient, environ-
2019 2020
ment friendly
green BFIs
Objective 2: Strengthening Supervisory System

One of the fundamental objectives of NRB is to supervise BFIs to ensure safety
and soundness of the financial system. NRB is making a paradigm shift from
compliance based supervision to Risk Based Supervision (RBS) to prevent
33
systemic risks and build strong and resilient financial system. Major supervisory
tasks include reviewing adequacy of relevance and policies, overseeing institutional
good governance practices, examining of regulatory compliance of directives,
ensuring the compliance of Know Your Customer and Anti-Money Laundering and
Combating Financing of Terrorism (AML/CFT) regulations, and ensuring consumer
protection. To achieve these, following strategies and actions have been set:
(s) (s)
• Related
draft Bill for
consolidated
Preparation of Related act and BSD (L),
supervision
consolidated guidelines for BFIRD,
prepared
supervision consolidated Mid LD, PSD,
• Con- On
1 and monitoring supervision Jul FXMD,
solidated going
mechanism for and monitoring 2018 DBSD,
supervision
BFIs and their mechanism in FCSD and
frame-
related entities place MFPSD
work and
guidelines
prepared
Review and
Mid Mid
update Financial FSIs reviewed BSD (L)
2 Soundness Indi- and updated
FSIs published Jul Jul
and BFIRD
2018 2019
cators (FSIs)
Develop frame-
Mid
work for Systemi- Framework Framework On BSD (L)
3 Jul
cally Important developed implemented going and BFIRD
2018
Banks (SIBs)
Review Risk
Based Supervi-
sion (RBS) Revised RBS BSD (L),
RBS manual and Mid
manual including manual and On DBSD,
4 Internal Capital
ICAAP guidelines
ICAAP guidelines
Jul
going FCSD and
reviewed 2018
Adequacy As- implemented BFIRD
sessment Process
(ICAAP)
Formulation of IT Mid Mid

Framework devel- Framework BSD (L)
5 Supervision Frame- Jul Jul
oped implemented and ITD
work for BFIs 2018 2019
Strategy 2.2: Developing comprehensive supervision framework based on

AML/CFT standards
(s) (s)
Develop super-
visory tools for Mid Mid
Supervisory tools Supervisory tools BSD (L)
1 Asset (money) Jan Jul
developed in place and FXMD
laundering pre- 2018 2021
vention activities
34
Review National Mid Mid

2 Risk Assessment Review completed Report published Jul Jan FIU
(NRA) framework 2017 2021
Formulate AML/ Mid Mid

National strategy National strategy
3 CFT National Jan Apr FIU
formulated implemented
Strategy 2018 2020
FIU (L),
BSD,
Develop AML/ Mid Mid
Framework devel- Framework in DBSD,
4 CFT compliance
oped place
Jan Apr
FCSD,
framework 2018 2020
MFPSD and
FXMD
Objective 3: Reforming Financial Sector

NRB initiated a series of financial sector reform measures since mid 1980s by
liberalizing the financial market and opening all types of financial institutions to the
private sector. This has contributed to the development of financial sector and also
enhanced competitive environment in the financial sector. NRB intends to make
the BFIs financially stronger for maintaining stability of financial system. In this
context, NRB has initiated the process of consolidation and strengthening of BFIs
through the policy of merger and acquisition. Moreover, NRB intends to facilitate
the establishment of various supportive financial institutions for effective financial
intermediation. To achieve these, following strategies and actions have been set:
Strategy 3.1: Initiating legislative reforms and institutional arrangements
(s) (s)
Prepare draft bill
for the establish- Mid Mid BFIRD (L),
Legal draft pre- Draft bill
1 ment of Second Jan Jan LD and
pared submitted
Tier Institution 2018 2019 MFPSD
(STI) for MFIs
Facilitate the
establishment of Regulatory and Mid Mid
MFPSD (L)
2 STI for regulation STI established supervisory work Jan Jan
and BFIRD
and supervision started 2019 2020
of MFIs
Prepare bylaws to
set up a National Mid MFPSD
Approved By-laws Mid Jul
3 Microfinance De- Bylaws prepared Jan (L), BFIRD
in place 2018
velopment Fund 2018 and LD
(NMDF)
Set up a National
Mid Mid
Microfinance De- NMDF in MFPSD (L)
4 velopment Fund
NMDF established
operation
Jul Jan
and BFIRD
2018 2019
(NMDF)
35
Formulate neces-
sary regulation
Mid Mid
Strengthen Credit to facilitate credit Regulations in
5 Jan Jan BFIRD
Rating System rating practices place
2018 2019
in banking and
financial systems
Prepare legal draft
for the establish- Mid Mid
Draft bill BFIRD (L)
6 ment of Asset Draft bill prepared
submitted
Jan Jan
and LD
Management 2019 2020
Company (AMC)
Facilitate for the Mid Mid

7 establishment of AMC established AMC in operation Jul Jul BFIRD
AMC 2020 2021
Objective 4: Enhancing Financial Access and Financial Inclusion

Government of Nepal has made financial inclusion as an integral part of Financial
Sector Development Strategy (FSDS) announced in 2017. Financial inclusion
requires appropriate financial services and instruments which are made available
to the poor and vulnerable groups at affordable cost. This will also enhance
access of the poor to the financial services to start micro enterprises and other
small business and pull them out of poverty through higher income and improved
education and health care. To achieve this following strategies and actions have
been set:
Strategy 4.1: Formulating financial inclusion policies and increasing access
to BFIs services
(s) (s)
Establish the Na-
tional Taskforce to
Committee consti- Mid Mid MFPSD (L),
formulate and im- Strategy
1 tuted and strategy Jan Jul BFIRD and
plement National implemented
formulated 2018 2018 PSD
Financial Inclusion
Strategy
Formulate poli-
Mid Mid
cies for increasing Policy MFPSD (L)
2 access to finance
Policy formulated
implemented
Jan Jan
and BFIRD
2018 2019
and inclusion
Develop financial Financial inclu- Mid Mid MFPSD (L),

Financial inclusion
3 inclusion indica- sion indicators Jan Jan BFIRD and
indicators in place
tors developed 2018 2019 PSD
Encourage dif- Mid Mid PSD (L)

Regulation Revised
4 ferent modes of
reviewed regulation in place
Jan Jan BFIRD and
digital financing 2018 2019 MFPSD
36
Encourage
BFIs to develop
Mid PSD (L),
people friendly Instrument devel- Instrument On
5 Jul BFIRD and
instruments for oped. launched going
2017 MFPSD
unbanked popula-
tion
Updated Mid MFPSD (L),

Update e-mapping Mechanism On
6 mechanism updated
mechanism in Jul
going
BFIRD and
place 2017 PSD
Geo-spatial
Undertake a geo- Geo-spatial map-
mapping of Mid Mid
spatial mapping of ping of financial
7 financial services Jul Jan BFIRD
financial services services access
access points 2017 2019
access points points undertaken
identified
37
38
Pillar Three: External Sector Stability
Objective 1: Strengthening Foreign Exchange Regulatory and Supervisory

Framework
External sector stability is a situation in which the adverse effects of external shocks
to the economy are minimized by effective foreign exchange management. These
efforts comprise stabilizing the exchange rate, easing trade and service payments,
maintaining favourable BOP position as well as prudent reserve management.
The foreign exchange market is expanding rapidly and becoming more complex
requiring the Bank to continuously study and monitor the trends in the foreign
exchange markets in order to gain optimum return out of its investments, while
ensuring safety and liquidity. For this Bank needs to frame and update various
rules, bylaws, directives. In addition, the Bank has to continuously review and
consolidate various regulatory and supervisory framework in consonance with
international best practices, considering changes in domestic macroeconomic
environment and ongoing development in the financial market.
In this context, the Third Strategic Plan aims at strengthening the domestic foreign
exchange market; streamlining the foreign exchange regulations; expediting
foreign direct investment process; developing real-time database; improving
data reporting system; strengthening supervision and monitoring mechanism.
Furthermore, The Plan also aims to develop proper risk management system to
mitigate foreign exchange risk. To achieve these, following strategies and actions
have been set:
Strategy 1.1: Strengthening regulatory and supervisory mechanism of
foreign exchange market
(s) (s)
Review regulatory Regulatory and Mid

Reviewed system On
1 and supervisory supervisory sys- Jul FXMD
in place going
system tem reviewed 2017
Consolidate exist-
Regulatory and Unified directives Mid Mid
ing regulatory and
2 Fx policy provi-
policy provisions and policy Jan Jul FXMD
consolidated document issued 2018 2018
sions
39
Strategy 1.2: Strengthening domestic foreign exchange market

(s) (s)
Reviewed
Review existing Intervention Mid
intervention On
1 intervention mechanism July FXMD
mechanism in going
mechanism reviewed 2017
place
Conduct feasibility
Study Mid Mid
study on foreign
2 exchange deriva-
Study Completed recommendations Jan Jul FXMD
tive market
Develop foreign
Foreign exchange Mid Mid
exchange risk Risk management
3 risk management Jan Jul FXMD
management system in place
system developed 2018 2019
system
Objective 2: Effective Reserve Management

NRB will continue its reserve management function guided by three broad
parameters of safety, liquidity and returns. For this purpose, reserve management
policies and guidelines will be formulated, portfolio analysis and dealing operation
system will be modernized and portfolio will be further diversified into new markets
and products. To achieve these, following strategies and actions have been set:
Strategy 2.1: Strengthening the reserve management practices
(s) (s)
Conduct study on
Study Mid Mid
further diversifica-
1 Study completed recommendations Jan Jan FXMD
tion of reserve
portfolio
Conduct study on
Active reserve Mid Mid
Active Reserve
2 Management
Study Completed management Jan Jul FXMD
(ARM) practices
Secured and
Restructure op- Operation areas Mid Mid
independent FXMD (L)
3 eration areas and and SWIFT sys- Jan Jul
SWIFT protocols and GSD
SWIFT system tem restructured 2018 2021
implemented
Review reserve
Policies and Reviewed policies Mid Mid
management
4 policies and
guidelines re- and guidelines in Jan Jan FXMD
viewed place 2018 2021
guidelines
Take participation
Mid Mid
in Reserve Advi- RAMP member-
5 RAMP launched Jan Jul FXMD
sory Management ship obtained
2018 2021
Program (RAMP)
40
Objective 3: Reviewing Exchange Rate Policy and Initiating Legislative

Reforms
Exchange rate policy affects the competitiveness of domestically produced
goods and services in the international market. Nepal has adopted the fixed
peg exchange rate arrangement with Indian currency (IC) and flexible exchange
rate system with other convertible currencies. The Bank will review the existing
exchange rate policy as well as FDI policies. Furthermore, the Bank will conduct
special study for gradual opening up of Nepalese investment abroad. To achieve
these, following strategies and actions have been set:
Strategy 3.1: Reviewing the existing exchange rate policy
(s) (s)
Consolidate and
Exchange rate Reviewed Mid Mid
review existing RD (L) and
1 policy consolidat- exchange rate Jan Jul
exchange rate FXMD
ed and reviewed policy in place 2018 2019
policy
Strategy 3.2: Gradual liberalization of capital account

(s) (s)
Initiate for
approval of New Mid Mid
FEMA bill LD (L) and
1 Foreign Exchange FEMA enacted Jul Jul
approved FXMD
Management Act 2017 2019
(FEMA)
Study for gradual
Study completed Mid Mid
opening up Nepa-
2 lese investment
and policy formu- Policy in place Jul Jul FXMD
lated 2019 2020
abroad
Study and
recommend Mid Mid
Study report in
3 policies for Study completed Jul Jul FXMD
place
encouraging FDI 2020 2021
in Nepal
41
42
Pillar Four: Sound and Effective Payment System
Objective 1: Developing Financial Market Infrastructure for Payment

System
There is a need for modernizing the payment system to manage the challenges
emanating from changes in the financial markets both at home and abroad.
Some of the important aspects of modernization are automation of the payment
system, use of modern financial technologies (FinTech), use of robust and
latest regulatory technologies (RegTech) and development of financial market
infrastructure. NRB strives to gradually shift from the traditional cash dominated
payment system to electronic and cashless payment system by promoting
efficient market infrastructure, such as latest financial technologies and creating
awareness to stakeholders. To achieve these, following strategies and actions
have been set:
Strategy 1.1: Developing financial market infrastructure
(s) (s)
Procure, develop/ RTGS software Mid Mid PSD (L), IT,

RTGS software
1 customize RTGS procured and Jan Jan GSD and
implemented
software installed 2018 2021 KBO
Develop the
system of Central Mid PDMD (L),
CDGS On
2 Depository for System developed Jul IT, PSD and
implemented going
Government 2018 LD
Securities (CDGS)
Establish National National Payment
Transactions Mid Mid
Payment Switch/ Switch/Gateway PSD (L), IT
3 operated through Apr Jul
Gateway (NPS/ software procured and GSD
NPS/NPG 2018 2021
NPG) and customized
Develop national National payment National payment Mid

On
4 payment system system indicators system indicators Jan PSD
going
indicators developed published 2018
Strategy 1.2: Promoting electronic payment system

(s) (s)
Formulate
Mid Mid
National Retail
1 NRPS formulated NRPS in place Jan Jul PSD
Payment Strategy
2018 2018
(NRPS)
43
Create conducive
environment for
Mid
the use of various Licensing for new Increased use of On
2 Jan PSD
FinTech (Financial FinTech products FinTech products going
2018
Technologies)
products
Number of
Increase aware-
Awareness awareness
ness and educa- Mid
activities and edu- activities and On
3 tional programs Jul PSD
cational programs educational going
on modern pay- 2017
conducted programs
ment system
increased
Objective 2: Strengthening Payment System Regulatory Mechanism

Nepal needs to strengthen national payment system for the modernization of overall
financial system of the country. In this context, it is necessary to follow international
best practices and prudential regulation as well as effective legal, regulatory
and oversight mechanisms for secured and reliable financial transactions. This
will contribute to enhance public confidence by protecting financial consumers
and other stakeholders against fraud and malpractices inherent in the payment
mechanism. An effective payment system also enhances banking access in the
far and remote areas of the country. To achieve these, following strategies and
Strategy 2.1: Regulation and oversight of payment and settlement institutions
and system
(s) (s)
Preparation of Draft bill of
Mid Mid
draft bill of Pay- Payment System PSD (L)
1 Bill drafted Jul Jan
ment and Settle- Act submitted to and LD
2017 2018
ment Act GON
Review of Pay- Mid Mid
Reviewed Bylaws PSD (L)
2 ment and Settle- Bylaws reviewed Jan Jan
implemented and LD
ment Bylaws 2018 2019
Licensing policy Reviewed Mid Mid

Review of Licens-
3 reviewed and Licensing policy Jan Jan PSD
ing Policy
amended implemented 2018 2019
Issue new direc- Mid

On
4 tives and update Directives issued Directives in place Jul PSD
going
existing directives 2017
Mid
Formulate over- Oversight frame- Framework in Mid Jul
5 Jan PSD
sight framework work formulated place 2018
2018
44
45
4.1.2 Supporting Pillars

Implementation of core pillar is an essential part of achieving the goals and
objectives of Third Strategic Plan. In order to achieve the actions set by the core
pillars, seven different supporting pillars have been envisaged for its successful
implementation. In this regard, this section outlines the actions of these supporting
pillars.
Pillar One: Human Resource Development and Management
Objective 1: Developing and Implementing Human Resource Plan

NRB is in the process of developing and implementing a human resource (HR)
plan for enhancing the organizational capability for achieving its goals. This HR
plan is expected to analyze and identify the human resource needs of the NRB
and initiate efforts for meeting these needs. The proposed HR plan will encompass
recruitment, utilization, improvement and retention of NRB’s human resources. To
achieve these, following strategies and actions have been set:
Strategy 1.1: Strengthening HR plan and related polices
(s) (s)
Mid Mid
Formulate HR HR development HR development HRMD (L)
1 Jan Jul
development plan plan formulated plan implemented and CPD
2018 2018
Mid HRMD (L),

Review HR Policies On
2 Policies Reviewed Jul CPD and
related policies implemented going
2017 LD
Mid HRMD (L),

Revise Employee Reviewed by-laws On
3 By-laws reviewed Jan CPD and
by-laws in place going
2018 LD
Objective 2: Strengthening the Human Resource Management System

NRB strives to adopt comprehensive approach for recruiting qualified manpower,
placing right man in right place, institutionalizing corporate culture and creating
conducive work environment. It also endeavors to enhance staff capability to
work efficiently and effectively, motivate staff, build team spirit, inter-departmental
coordination, inter-personal communication and scientific task performance test.
There will also be an appropriate reward and punishment system, appropriate
benefit packages and up-gradation of HRMISS to integrate all HR related data and
information to improve workflow and service delivery. To achieve these, following
46
Strategy 2.1: Improving and Strengthening Performance Management

System (PMS) and Task Performance Test (TPT)
(s) (s)
CPD (L),
Update job design Job design and Job design and Mid Mid HRMD and
1 and job descrip- job description job description in Jan Jul all Depart-
tion updated place 2018 2018 ments and
offices
Develop
performance- Mid Mid
System HRMD (L)
2 based evaluation System developed Jan Jul
implemented and CPD
and promotion 2018 2019
system
Establish proce-
dures for Task Mid Mid
Procedures for
3 Performance Test TPT implemented Jan Jul HRMD
TPT defined
(TPT) in officer 2018 2019
level
Review reward Mid Mid

System
4 and punishment System reviewed Jan Jul HRMD
implemented
system 2018 2019
Strategy 2.2: Strengthening the Human Resource Management Information

System
(s) (s)
Update all HR Integrated HR
Mid Mid
related data and related data and
1 HRMISS updated Jul Jan HRMD
information in information in
2018 2020
existing HRMISS place
Update and revise
Improved Mid Mid
circular for effec- Circular updated
2 HRMISS Jan Jan HRMD
tive implementa- and revised
Implemented 2018 2019
tion of HRMISS
Objective 3: Overall Capacity Building

Bank will adopt result oriented work culture so that capacity of the staff will
be enhanced to its maximum level. Employees’ participation in international
trainings, seminars and management development programs will be enhanced.
Employees will be provided scholarship and other opportunities for higher study
in South Asian Association of Regional Cooperation (SAARC) countries and
abroad. Initiation will be taken to benefit from knowledge, ideas and experience
of other central banks.
47
Moreover, NRB will adopt the policies in order to promote capacity building
through the investment in human capital and take initiatives to ensure attainment
of targeted objectives by adopting need, qualification and experience based
placement and transfer system. Employees’ career path will be aligned with the
performance, training and experience. To achieve these, following strategies and
Strategy 3.1: Enhancing work culture and capacity development
(s) (s)
Need assessment Various capacity Mid

Assessment On HRMD (L)
1 for capacity devel- development Jan
report prepared going and BTC
opment programs programs in place 2018
Number of Mid
Overall HR capac- Various trainings On HRMD (L)
2 trainings Jul
ity development conducted going and BTC
increased 2017
Effective pre-
Redesign effective Pre-service train- Mid
service training On HRMD (L)
2.1 pre-service training mechanism Jul
mechanism going and BTC
ing mechanism redesigned 2018
established
Enhance HR
Number of Mid
capacity in Various trainings On HRMD (L)
2.2 trainings Jul
automation and conducted going and BTC
increased 2018
mechanization
Improve training Mid

Mechanism Mechanism On HRMD (L)
3 result analysis Jan
improved implemented going and BTC
mechanism 2018
Strategy 3.2: Strengthening training center for capacity enhancement

(s) (s)
Strengthen the ca- Capacity devel- Mid Mid BTC (L),

Plan in place and
1 pacity of Bankers opment Plan Jul Jul HRMD and
implemented
Training Center prepared 2018 2021 GSD
Study on training
Study report
delivery mecha- Mid
in place and On
2 nism (TOT, case Study conducted July BTC
mechanism going
study, simulation, 2018
implemented
visits etc.)
48
49
Pillar Two: Organizational Management and Development
Objective 1: Restructuring Organizational Setup

NRB has to follow statutory and regulatory provisions while providing services
to its stakeholders. Based on the principles of learning organization, NRB needs
to be dynamic with focus on innovative methods and practices for attaining
organizational excellence. With the changes in the socioeconomic structure of the
country, NRB has to restructure its activities in commensuration with the changes
in the political, economic, financial, legal, environmental and other factors. As
Nepal has adopted federal political system, NRB needs to restructure its Offices
and their functions accordingly. In this context, NRB is planning to restructure
its organogram in general and departmental or functional set-up in particular. To
Strategy 1.1: Developing the organizational structure of NRB based on

the federal system
(s) (s)
Review existing
organizational Study conducted Mid Mid CPD (L),
Report and plan
1 structure of NRB and plan of action Jan Jul HRMD and
in place
in line with the developed 2018 2018 GSD
federal system
Mid Mid
Develop new Organogram Organogram CPD (L)
2 Jul Jan
organogram developed implemented and HRMD
2018 2019
Roles and
Review and define
responsibilities of Redefined
the roles and Mid Mid
the Departments, roles and CPD (L)
3 responsibilities of Jul Jan
divisions and responsibilities and HRMD
the Departments 2018 2019
Offices reviewed implemented
and Offices.
and developed
Strategy 1.2: Restructuring functional units within Departments for smooth

operation
(s) (s)
Conduct study on Recommendation
restructuring the Detail study in place and Mid Mid
CPD (L)
1 Departments and conducted, work necessary Jul Jan
and HRMD
Offices and review scope defined restructuring 2019 2021
its work scope completed
50
Updated
Review the
Authority and delegation of Mid Mid
delegation of CPD (L)
2 responsibilities authority and Jan Jan
authority and and LD
reviewed responsibilities in 2018 2019
responsibilities
place
Objective 2: Improving Service Delivery System

NRB has to provide standard quality service corresponding to the needs and
expectation of its stakeholders. It has to supply adequate quantity of clean note
with international standard security features. Public needs to be constantly made
aware of the existing policies and changes thereon and also be informed about the
recent monetary and financial data and information. To achieve these, following
Strategy 2.1: Adequate supply of clean and quality bank notes
(s) (s)
Maintain adequate Adequate stock Smooth and
stock of bank of bank notes in uninterrupted Mid CMD (L),
On
1 notes in NRB NRB vault and circulation of Jul KBO and
going
vault and currency currency chests notes as per 2017 OKVOs
chests maintained public demand
Volume of de-
Effective imple- struction of soiled Increased volume Mid CMD (L),
On
2 mentation of the notes increased of new notes in Jul KBO and
going
Clean Note Policy and clean notes circulation 2017 OKVOs
issued
Introduce new
and modern
security features Reduced
in new notes and instances of
Control the possi- Mid CMD (L),
use of Currency counterfeit notes On
3 bility of counterfeit Jul KBO and
Verification and in the market and going
notes 2017 OKVOs
Processing increased use of
System (CVPS) CVPS machine
machine in note
sorting
Bank notes
Improve the secu- Security features
with improved Mid
rity features and and quality of On
4 security features Jan CMD
quality of bank bank notes im- going
and quality in 2018
notes proved
circulation
Conduct feasibil-
Mid
ity study for out- Feasibility study Mid Jul
5 Report in place Jan CMD
sourcing of cash completed 2018
2018
management
51
Strategy 2.2: Increasing the quality of customer service

(s) (s)
Formulation of Service Delivery Service Delivery Mid Mid CPD (L),

1 Service Delivery Guideline formu- Guideline Jan Jan HRMD and
Guideline lated implemented 2018 2019 GSD
Strategy 2.3: Strengthening financial management and reporting

(s) (s)
Reporting in place
Strengthen the as per the Interna-
Compliance Mid
financial manage- tional Accounting On
1 of standard Jul FMD
ment and report- Standard and going
maintained 2017
ing system Nepal Accounting
Standard
Ensure timely
dissemination of OFG (L),
Monetary and Information Mid
report related to On RD and
2 financial informa- disseminated in Jan
monetary and going related De-
tion disseminated time 2018
financial informa- partments
tion
Strategy 2.4: Divesting NRB’s excess equity holdings in companies

(s) (s)
Divest NRB’s Compliance with Mid Mid

Divestment pro- FMD (L)
1 excess equity the NRB Act Jan Jan
cess initiated and CPD
investment maintained 2018 2019
Strategy 2.5: Preserving legal, policy and other important documents

(s) (s)
Blueprints, land
Safeguard records Original as well
certificates and Mid
of all physical as digitized On GSD (L)
1 other documents Jul
properties of the documents in going and LD
preserved and 2017
bank place
kept up-to date
ITD (L) and
Establish digitized Digitized filing Mid Mid
System All Depart-
2 filing system and system estab- Jan Jan
implemented ments and
process lay-out lished 2018 2019
Offices
52
53
Pillar Three: Infrastructure Development
Objective 1: Building Physical Infrastructure

There is an urgent need to reconstruct physical infrastructure for the Central office,
Banking office and the mint department which were severely damaged by devastating
earthquake of April 2015. Likewise the offices outside Kathmandu valley are also in
need of construction, renovation and /or restructure as necessary. While constructing
these infrastructures attention needs to be given to ensure energy efficient, resource
efficient, environment friendly green offices for contributing towards sustainable
development. Efforts will be made to encourage banking and financial sector to
follow this approach in reconstructing their physical infrastructure. Moreover, needs
to provide adequate office space equipped with modern physical facilities and
necessary logistics for motivating the staff to perform their duties effectively and
efficiently. To achieve these, following strategies and actions have been set:
Strategy 1.1: Developing physical infrastructure
(s) (s)
Formulate short,
Mid Mid
medium and long- CPD (L)
1 Plan developed Plan implemented Jan Jul
term Infrastructure and GSD
2018 2018
Development Plan
Mid Mid
Land Acquisition Procurement Land acquired
2 Jul Jan GSD
as required process initiated and developed
2018 2019
Master plan with

detailed engineer- Bid awarded Mid Mid
Reconstruction of ing design and to construction Jan Jul GSD
modern buildings tender process company 2018 2018
3 at Baluwatar completed
and Thapathali
premises Building recon- Buildings Mid Mid
struction as per reconstruction Jul Jul GSD
master plan completed 2018 2021
Construction Master plan with

of modern detailed engineer- Bid awarded Mid Mid
buildings at Thimi ing design and to construction Jan Jul GSD
(Residential tender process company 2018 2018
Training and completed
Knowledge
Management
4 Department,
Recreation
Centre, Mint, Buildings con- Buildings Mid Mid
Governor’s struction as per construction Jul Jul GSD
and Deputy master plan completed 2018 2021
Governors’
residential
Building, etc)
54
Master plan with

detailed engineer- Bid awarded Mid Mid
Construction of GSD (L)
ing design and to construction Jan Jul
modern buildings and OKVOs
tender process company 2018 2018
at existing and
5 completed
new places out-
side Kathmandu Buildings con- Buildings Mid Mid GSD (L)
valley struction as per construction Jul Jul and OKV
master plan completed 2018 2021 Os
Strategy 1.2: Enhancing existing physical facilities and create conducive

work environment
(s) (s)
Infrastructure
Establish Knowledge
for e-library Mid Mid
knowledge shar- sharing center RD (L) and
1 and knowledge Jan Jul
ing center and and e-library in GSD
sharing center 2018 2018
e-library operation
established
Develop Individual
and Departmental
Logistic Plan
(such as logistic Mid GSD (L),
On
2 to be provided as Plan developed Plan implemented Jan HRMD and
going
per designation, 2018 CPD
vehicles in pool,
vending machine,
micro wave etc.)
Policy formula-
tion on energy
efficient, resource Mid Mid
Policy drafted and Policy CPD (L),
3 efficient, environ- Jan Jan
issued implemented and GSD
ment friendly 2018 2019
green offices in
Central Bank
Objective 2: Ensuring Business Continuity

NRB needs to ensure business continuity for uninterrupted operation of its
mission-critical activities in the events of disaster that may be natural, man-made
and technology related. In this context, NRB has already initiated the process of
formulating robust and sound Business Continuity Plan (BCP). BCP will lay the
blueprint that establishes the procedures and systems necessary to prevent the
damage of disaster and ensure continuity of business-as-usual. Furthermore,
BCP will also recognize possible threats and risks existing in Bank’s operations
to ensure that human capital and physical assets are protected to the possible
extent and increase the Bank’s resilience. Moreover, NRB also needs to expedite
the implementation of reliable and safe Disaster Recovery Site (DRS) to ensure
55
continuity of sound and effective payment system. To achieve these, following

Strategy 2.1 Developing and implementing business continuity plan
(s) (s)
Conduct Business
CPD (L),
Impact Analysis Mid Mid
Mission critical ITD, GSD,
1 (BIA) to identify BIA conducted Jan Jul
activities identified HRMD and
mission-critical- 2018 2018
KBO
activities
CPD (L),
Develop Business Plan in place Mid Mid
ITD, LD,
2 Continuity Plan Plan developed and BCP drill Jul Jan
HRMD and
(BCP) conducted 2018 2020
GSD
Implement and BCP implement BCP implemented Mid CPD (L),

On
3 periodic review with necessary and reviewed Jan ITD, HRMD
going
of BCP logistics. periodically 2020 and GSD
Conduct learning
Participation of all Mid CPD (L),
programs on BCP Learning pro- On
4 staff in learning Jan ITD, HRMD
strategy and its grams conducted going
programs 2020 and GSD
components
Procurement of DRS developed
DRS established Mid Mid
required license and implemented GSD (L)
5 and made Jan Jul
and infrastruc- with necessary and ITD
functional 2018 2018
tures for DRS infrastructures
56
57
Pillar Four: Information and Communication Technology Management
Objective 1: Developing Information and Communication Technology (ICT)

Infrastructure
Information and communication strategy is essential for boosting growth and

improve service delivery with greater cost effectiveness and efficiency. In this
context, NRB has already put in place IT Policy, IT Guidelines and IT Code of
Conduct (CoC). All these components need to be integrated into a consolidated
ICT strategy including policies and action plans. Use of state-of-art ICT
infrastructure is necessary to develop NRB as a technologically-savvy institution
so as to ensure efficient service delivery to its stakeholders. For this, NRB will
establish industry standard Data Centre (DC), Hot Site and Disaster Recovery
Site (DRS) to operate uninterrupted functioning of information and communication
system in NRB. Similarly, NRB needs to establish secure ICT system for financial
networking with banks and financial institutions (BFIs), develop database access
monitoring system and strengthen its security arrangements of ICT infrastructure.
Strategy 1.1: Strengthening IT policy and governance

(s) (s)
Review, update
Policies Mid
and implement Updated policies On ITD (L) and
1 reviewed and Jul
IT Policy, IT guide- implemented going HRMD
updated 2017
lines, IT CoC
Formulate and
implement Infor-
mation Security
Mid Mid
Policy, Outsourcing Policies formu- Policies ITD (L) and
2 Jan Jul
Policy, Data Migra- lated implemented CPD
2018 2019
tion Policy and
Disaster Recovery
Plan and Policy
Study and
Implementation of
Information Technol-
ogy Infrastructure
Library(ITIL), Inter-
national Organization
Study reports sub- Policies and Mid Mid
for standardization
3 mitted and poli- set standards Jan Jan ITD
(ISO), Control objec-
cies formulated implemented 2018 2019
tives for information
& related technol-
ogy (COBIT) and
other relevant and
necessary industry
standards
58
Strategy 1.2: Improving ICT infrastructure

(s) (s)
Establish industry
standard Data
Mid Mid
Center (DC), Hot DC, DR and Hot DC, DR and Hot
1 Jan Jul ITD
site and DR (Data site established site used
2018 2018
Recovery) site
(Mirror site),
Install and migrate Mid Mid

System installed System in
2 the system to DC Oct Jan ITD
and data migrated operation
and DR 2018 2019
Reduced number
of unauthorized
database access,
Information secu-
Reduced number
rity control meas-
of security
ures (User access
breaches from
control system,
insiders and
system
contract person-
monitoring tools,
nel and process
audit trail and
implementation
transaction log
Enhance and Mid
monitoring system Reduced number On
3 strengthen cyber
implemented,
Jan
going ITD
security of security inci- 2018
enhanced Fire- dents
wall, Anti-virus,
routers, manage- Quarterly reports
able switches on system admin-
and networking, istrators’ activities
etc.) Implemented submitted.
and regularly
monitored Reduced num-
ber of secu-
rity incidents and
downtime due to
security breaches
Study on minimi-
zation of platforms Study Mid Mid
4 (Operating Study completed recommendations Jan Jul ITD
System, Software, implemented 2018 2019
Hardware)
Suitable solution Mid Mid

Establish single Solutions identi-
5 is procured and Jul Jul ITD
backup solution fied
Upgrade website
Mid Mid
with Content Man- System
6 System upgraded Jul Jan ITD
agement System implemented
2017 2018
(CMS)
Mid Mid
Upgrade email System
7 System upgraded Jul Jan ITD
System implemented
2017 2018
59
Mid Mid
Installation of System
8 System installed Jul Jul ITD
domain controller implemented
2017 2018
Objective 2: Enhancing Information and Communication Technology (ICT)

Management
NRB needs to focus on improving ICT management for efficient and effective
communication, information security and adaptation of changes emerging in ICT
sector. As ICT management in NRB is evolving towards better practices, there
is still a scope for adopting better standards in having online system and data
centre, backup solutions, and system monitoring mechanism among others. To
Strategy 2.1: Developing integrated database
(s) (s)
Develop automat-
Online reporting
ed online system Online reporting Mid Mid RD (L), ITD,
system installed
1 for macroeconom- system in Jul Jul BFIRD and
and database
ic and financial operation 2018 2019 GSD
prepared
statistics
Develop and Document man- Digital document
Mid
implement digital agement system management On ITD (L) and
2 Jul
document man- and its archive system in going GSD
2018
agement system established operation
Strategy 2.2: Strengthening data management for effective reserve

management system
(s) (s)
Develop Portfolio
Pre-trade and
Analytics Solu- Mid Mid FXMD (L),
post trade analy-
1 tion Software to Software operated Jan Jul GSD and
sis solution soft-
strengthen middle 2018 2020 ITD
ware developed
office
Develop/Pro-
cure software
for portfolio Mid Mid FXMD (L),
Software devel-
2 operation system Software operated Jul Jul GSD and
oped/procured
to automate trade 2018 2019 ITD
(dealing), capture
and settlement
60
Strategy 2.3: Strengthening supervisory and monitoring mechanism of

foreign exchange market through IT platform
(s) (s)
Develop FOREX Mid Mid FXMD (L),

Software devel- Software in
1 license recording Jan Jul ITD and
oped and installed operation
software 2018 2018 GSD
Software built and

Automate FOREX Mid Mid
establish web Software in FXMD (L)
2 transaction report- Jul Jul
based data report- operation and ITD
ing system 2018 2021
ing system
Automate Letter
LC online data Mid Mid
of Credit (LC) System in FXMD (L)
3 reporting system Jan Jul
transaction report- operation and ITD
established 2018 2019
ing system
Automate FDI
Mid Mid
(FOREX inflow FDI software Software FXMD (L)
4 Jan Jul
and outflow) re- installed implemented and ITD
2018 2019
cording system
Develop Data
Mid Mid FXMD (L),
Management Software devel-
5 DMS implemented Jan Jul ITD and
System (DMS) for oped/procured
2018 2020 GSD
FXMD
Develop customer Online customer
Mid Mid FXMD (L),
service applica- application track-
6 System operated Jan Jan ITD and
tion tracking ing system devel-
2018 2019 GSD
system oped/procured
Strategy 2.4: Upgrading and enhancing the financial analysis architecture

(s) (s)
Develop and
SIS used by Mid Mid
Implement Super- SIS developed BSD (L)
1 concerned Jan Jul
visory Information and implemented and ITD
departments 2018 2019
System (SIS)
Strategy 2.5: Improving operational system and software

(s) (s)
Additional Mid Mid HRMD (L),

Upgrade modules Additional
1 modules Jan Jul GSD and
in HRMISS modules in use
upgraded 2017 2018 ITD
Upgrade ac-
counting software Upgraded Mid Mid FMD (L),
Software
2 for managing Software Jul Jul ITD and
upgraded
retirement fund implemented 2017 2018 GSD
activities
61
Develop and im-

Individual tax Mid Mid FMD (L),
plement personnel
3 System developed payment record Jan Jul ITD and
tax payment
available 2018 2018 HRMD
record system
Upgraded imple- Existing system Mid Mid

System GSD (L)
4 ment e-procure- customized and Jan Jan
implemented and ITD
ment system upgraded 2018 2019
Mid Mid
Implement goAML goAML software ITD (L), FIU
5 goAML installed Jan Jul
software in operation and GSD
2018 2018
Objective 3: Upgrading the Level of Mechanization

Mechanization of certain operational activities of NRB is a growing imperative
for improving productivity of staff, making work safer, and ensuring optimal use
of materials, better product quality and protecting environment. In this context,
NRB intends to benefit from technological advancements that are relevant for its
certain operational activities. To achieve these, following strategies and actions
have been set:
Strategy 3.1: Mechanizing and modernizing cash processing cycle

(s) (s)
Procure Currency
CVPS installed at Mid Mid
Verification and CVPS put in CMD (L)
1 various offices of Jan Jan
Processing Sys- operation and GSD
NRB 2018 2020
tem (CVPS)
Procure Shred- SBS installed at Mid Mid

SBS put in CMD (L)
2 ding and Briquet- various offices of Jan Jan
operation and GSD
ting System (SBS) NRB 2018 2020
Procure coin
Mid Mid
sorting, counting Machine installed Machine put in CMD (L)
3 Jan Jan
and packaging at Mint Division operatio n and GSD
2018 2020
machine
Procure modern
Mid Mid
commemorative Machine installed Machine put in CMD (L)
4 Jan Jan
and gold coin at Mint Division operation and GSD
2018 2020
minting machine
62
63
Pillar Five: Strengthen National and International Relations and Cooperation
Objective 1: Enhancing Information Dissemination System

NRB considers dissemination of information about monetary and financial
policy changes and disclosure of statistical data to the concerned public and
organizations at home and abroad as an important medium to enhance its
credibility and relationship. While disseminating the information, NRB has
to maintain secrecy of certain confidential information and adopt effective
dissemination channel. To achieve these, following strategies and actions have
been set:
Strategy 1.1: Strengthening transparency and dissemination system
(s) (s)
Data consistency
Improve data Data quality Mid
improved and time On
1 quality and publi- and publication Jul OFG
lag of publication going
cation standards improved 2017
reduced
Streamline distri- Complaints about
Dissemina-
bution of informa- access to data Mid
tion channels On OFG (L),
2 tion/ publication and availability Jan
identified and going ITD
through specified of publications 2018
strengthened
channels reduced
Objective 2: Strengthening Cooperation and Coordination with National

and International Stakeholders
NRB needs to enhance cooperation and coordination with governmental as
well as non governmental bodies and BFIs at home and relevant international
organizations abroad. NRB maintains regular interactions on important monetary
and financial policy issues with the various government bodies to have a
coordinated approach on important policy matters. Similarly, NRB also carries
out regular interactions with private sector organizations to obtain their views,
inputs and feedbacks on monetary and financial issues of concern to the private
sector. In this context, joint task forces are also constituted to have effective
interactions for consensus on various policy issues with relevant stakeholders
and authorities. It is also imperative to enhance and make effective, the existing
mechanism of cooperation and coordination with these bodies.
Globalization has made NRB increasingly dependent requiring cooperation

and coordination with bilateral, regional, multilateral organizations and various
Central Banks in order to keep it abreast of emerging developments in various
64
Central Banks in order to keep it abreast of emerging developments in various

policy issues and explore the support that could be made available to Nepal
from these organizations. Besides, participation in such organizations and
international forums would enable NRB to present Nepal’s economic issues,
strengthen networking with international institutions and learn from the world’s
best practices. To achieve these, following strategies and actions have been set:
Strategy 2.1: Strengthening relationship with relevant international

organizations
(s) (s)
Number of
Establish mecha- participation in
nism for interna- Cooperation international Mid
On
1 tional cooperation mechanism estab- forums and Jul BFIRD
going
on regulatory lished technical 2017
issues assistances
increased
Increase interna- Numbers of
Mid
tional cooperation Level of coopera- information On
2 Jul FIU
to combat for tion increased exchange and going
2017
AML/CFT issue MOU increased
Systematize and Number of
strengthen Inter- exchange visits,
national Relations knowledge Mid On
IRD and TCU OFG (L)
3 Division (IRD) sharing programs Jul going
strengthened and CPD
and Technical and technical 2017
Cooperation Unit assistance
(TCU) increased
Number of
research papers
Enhance research presented in
works to build International international Mid
On RD (L) /
4 intellectual rapport standard research Forums and Jul
going OFG
at international papers prepared published in 2017
level national and
international
journals
Strategy 2.2: Developing coordination framework at national level
(s) (s)
Strengthen Number of
Co-ordination Mid
co-ordination interconnected On
1 mechanism Jan BFIRD
amongst financial issues identified going
strengthened 2018
sector regulators and resolved
65
Strengthen coordi-
nation framework
with relevant
Coordination Coordination Mid
stakeholders On
2 framework devel- framework Jan FIU
(law enforcement going
oped implemented 2018
agencies, regula-
tors and other
related agencies)
Progress report
Facilitate the
on FSDS
implementation of Sub-committee Mid
submitted On
3 Financial Sector for FSDS estab- Jul CPD
to FSDS going
Development lished 2017
implementation
Strategy (FSDS)
committee
Strategy 2.3: Strengthening National and International coordination for effective

payment system
(s) (s)
National payment
Enhance national Number of issues Mid
coordination On
1 payment coordi- identified and Jul PSD
mechanism going
nation mechanism resolved 2017
strengthened
Strengthen International pay-
Number of issues Mid
international payment coordina- On
2 identified and Jul PSD
ment coordination tion mechanism going
resolved 2017
mechanism strengthened
66
67
Pillar Six: Legal Compliance and Good Governance
Objective 1: Strengthening Legal Compliance

NRB’s needs to strengthen internal audit system to ensure operation of its activities
in compliance with prevailing statues, laws, rules and regulations for maintaining
good governance in thze Bank. For this, NRB applies and enforces the highest
standards and practices to provide assurance of mandatory compliance while
discharging its activities. Furthermore, NRB has to periodically review compliance
status of different Departments and Offices through appropriate measures. To
Strategy 1.1: Strengthening internal rules and regulations
(s) (s)
Required by-laws,
Formulate/review By-laws, rules
rules and regula- LD (L) and
by-laws, rules and regulations, Mid
tions, directives, On related
1 and regulations, directives, code Jul
code of conduct, going tDepart-
directives, code of of conduct, etc in 2017
etc formulated ments
conduct, etc place
and reviewed
Strategy 1.2: Developing and updating operational frameworks and manuals

(s) (s)
Relevant
Departments and
Collected opera- CPD (L)
Review existence Offices instructed
tional frameworks Mid Mid and related
of various opera- to develop
1 and manuals Jan Jan Depart-
tional frameworks and/update
listed and re- 2018 2019 ments and
and manuals operational
viewed Offices
frameworks and
manuals
Develop/update Operational Number of Related
Mid
operational frameworks and operational On Depart-
2 Jan
frameworks and manuals devel- frameworks and going ments and
2019
manuals oped/updated manuals in place Offices
Objective 2: Effective Planning, Programming, Budgeting and Control

NRB has given high priority to institute the proper system of planning, programming,
budgeting and control to achieve its goals and establish benchmarks and standards
to enable comparison of actual performance with set goals and take necessary
corrective actions to ensure that goals are achieved. In this context, annual plans
and budgets are formulated by each Department and ffice following the principle of
planning, programming, budgeting and control. Departmental annual plans are tied up
with the Strategic Plan and also coordinated by CPD. Periodic performance reviews
68
are also made to compare the budgeted targets with actual results and incorporate
unforeseen development in the planned activities. There is still some scope for
improvement in the planning and the budgetary control for efficient attainment of
organizational vision, mission, objectives and goals. To achieve these, following
Strategy 2.1: Enhancing planning capacity
(s) (s)
Recommenda-
Enhance Existing plan
tions of reviewed Mid
organizational formulation On
1 plan formulation Jan CPD
Plan formulating policy/ guidelines going
policy/ guidelines 2018
capacity reviewed
implemented
Monitoring
Strengthen moni-
and evaluation Mid Mid
toring and evalua- Reviewed
2 framework of Jul Jul CPD
tion mechanism of mechanism
annual work plan 2018 2019
annual work plan
reviewed
Strategy 2.2: Strengthening budgetary and control system

(s) (s)
Existing budget
formulation and Revised policy/ Mid
Strengthen budg- On
1 implementation guidelines Jan CPD
eting system going
policy guidelines implemented 2018
reviewed
Develop and Mid Mid CPD (L),

Budget software Software
2 implement budget Jan Jul ITD and
developed implemented
software 2018 2018 FMD
Budgetary
Strengthen Mid CPD (L),
control directives Updated On
3 budgetary control Jul IAD and
reviewed and directives issued going
system 2017 FMD
updated
Objective 3: Strengthening Risk Management System

Even though risk management in NRB has improved substantially, increasing
exposure to and consequences of volatility from both internal as well as external
factors have made the task of risk management more challenging. Therefore,
NRB needs to develop a strong, accountable and proactive risk management
framework for its own internal purpose. NRB has already developed integrated
risk management framework for providing broad guidelines for identifying,
69
monitoring, evaluating and mitigating inherent risks associated with various

activities of its Departments and Offices. NRB has also been adopting international
standard of risk management practices. Moreover, NRB is in the process of
preparing Business Continuity Plan (BCP) as well as advancing towards risk
based auditing. The ultimate objective of all these practices is to enhance the
reputation of the bank by mitigating various types of risks. In this regard, following
Strategy 3.1: Strengthening risks management practices
(s) (s)
Revise composite
Update and up- risk rating mecha-
grade Integrated nism and develop Mid Mid
Revised IMRF
1 Risks Manage- risk mitigation Jan Jul CPD
implemented
ment Framework toolkit for 2018 2019
(IRMF) incorporation in
IRMF
Harmonize BCP Relevant risks Mid

Identified risks On CPD (L)
2 with risk manage- identified for incor- Jan
incorporated going and IAD
ment framework poration in BCP 2018
Formulate Risk Mid Mid

Manual formu- Manual
3 Based Internal Jan Jul IAD
lated implemented
Audit Manual 2018 2019
Objective 4: Strengthening Good Governance

NRB intends to enhance good governance practices by improving existing legal,
regulatory and institutional framework governing its activities. As NRB activities
are subject to scrutiny of civil society, elected representatives and intellectuals, it
is of an utmost importance to maintain clear governance rules, transparency and
accountability in its decisions and actions. In this regard, NRB needs to foster integrity
and consistency in its decision so as to build its image as a trend setter in the area of
good governance. To achieve these, following strategies and actions have been set:
Strategy 4.1: Strengthening institutional governance
(s) (s)
CPD (L),
Policy formulated Policy and Mid Mid
Prepare NRB gov- HRMD,
1 and guidelines guidelines Jan Jan
ernance policy OFG and
prepared implemented 2018 2019
LD
70
Strategy 4.2: Strengthening internal control system

(s) (s)
Mid Mid
Review Internal Manual IAD (L) and
1 Manual reviewed Jan Jan
Audit manual implemented LD
2018 2019
Mid
Conduct system System audit System audit On IAD( L), IT
2 Jul
audit conducted report in place going and FMD
2017
71
72
Pillar Seven: Social Responsibility
Objective 1: Ensuring Financial Consumer Protection

NRB gives high priority to protecting consumers from the repercussions of the
sophisticated and complex financial market. In this regard, NRB has already
formulated and implemented various policies as well as supervisory framework
in order to ensure safe and secure financial services to the consumers. It has
also made arrangements for redressal of complaints and grievances from the
consumers on various issues associated with the use of financial services,
such as terms and conditions, pricing, risks, addressing customers’ queries
and complaints, and settlement of disputes etc. For further strengthening the
consumer protection mechanism, following strategies and actions have been set:
Strategy 1.1 Safeguarding interests of the financial service users
(s) (s)
Prepare legal
Draft bill prepared Implementation Mid Mid
draft of Financial BFIRD (L)
1 and submitted to after promulgation Jan Jul
Consumer and LD
MoF of Act 2018 2019
Protection Act
Prepare Financial
Mid Mid
Services Con- By-laws BFIRD (L)
2 By-laws prepared Jul Jan
sumer Protection implemented and LD
2019 2020
by-laws
Enhance griev-
Number of Mid
ance Mechanism On
3 grievances Jul BFIRD
redressal mecha- enhanced going
reduced 2017
nism
Objective 2: Enhancing Financial Awareness

NRB has been initiating efforts to create financial awareness through financial
literacy programs to enable poorest segment of the society to avail formal
financial services for meeting their financial needs. NRB’s efforts in this direction
are expected to support and complement certain components related to financial
awareness under the Financial Sector Development Strategy (FSDS) 2017
launched by the Government of Nepal. In this context, NRB has to further
intensify financial awareness programs through sound and proactive plans and
programs. To achieve these, following strategies and actions have been set:
73
Strategy 2.1: Enhancing financial literacy and financial education
(s) (s)
Formulate Mid Mid

Strategy draft
1 National Financial Strategy in place Jul Jul OFG
submitted to MoF
Literacy Strategy 2017 2018
Conduct base-line Mid Mid

Survey report
2 survey on finan- Survey conducted Jul Jan OFG
prepared
cial literacy 2018 2019
Formulate
financial literacy Implementation Increased number Mid Mid
3 strategy imple- plans/programs of plans/programs Jan Jul OFG
mentation plans/ formulated implemented 2019 2019
programs
Financial Website updated,
Mid
Review financial literacy materials updated materials On
4 Jul OFG
literacy materials reviewed and prepared and going
2018
updated distributed
Increase public
OFG (L)
awareness about Awareness pro- Various Mid Mid
and all De-
5 bank policies, grams increased awareness Jan Jul
partments
rules and regula- by various means programs in place 2018 2021
and Offices
tions
Conduct impact
Review and Mid Mid
study of financial
6 Study conducted implement study Oct Jul OFG
awareness pro-
findings 2020 2021
grams
74
75
5
IMPLEMENTATION
CHAPTER FRAMEWORK
5.1 Introduction
Implementation is a critical factor for obtaining intended outcomes in the NRB and
the broader financial system, as envisaged by the Plan. Implementation process
involves various steps and is a shared responsibility of each Departments and
Offices. It also requires active collaboration and coordination between top
management and line staff. The following aspects are involved in the process of
implementation of the Plan.
5.2 Strategic Planning Monitoring and Evaluation Committee

The Strategic Plan Monitoring and Evaluation Committee (SPMEC) is
responsible for review, monitoring and evaluation of the Plan. SPMEC is made
up of a Member of Board of Directors as the Convenor, two Deputy Governors
and Executive Director of the CPD as the members and member secretary
respectively. It functions as the top authority to issue directives to the concerned
Departments and Offices through the CPD for needful corrective actions. The
Committee, among others, has the following responsibilities:
a. Bi-annual and annual review of implementation progress and submission of
annual report to the Board;
b. Revision and amendment of the Plan in the light of problems identified by
the Departments and Offices as well as the changing needs and conditions
in the NRB and the financial system;
c. Recommend for additional resources, if needed by the Departments and
Offices;
d. Oversee linkages between the Strategic Plan and Annual Action Plan of the
Departments and Offices.
5.3 Corporate Planning Department

The CPD is responsible for coordinating with the Departments and Offices in
overseeing the implementation process and also functions as the secretariat to
the SPMEC. It is also responsible for collecting and consolidating information
from the Departments and Offices and preparing periodic overall progress report
for submission to the SPMEC.
76
CPD will also play crucial role to organize and conduct interaction programs,
workshops and seminars for skill enhancement, obtaining feedbacks and inputs
from the Departments and Offices for accomplishing the goals and targets of the
Plan.
5.4 Departments and Offices

All the Departments and Offices are required to be proactive and act independently
or jointly to accomplish the specified tasks with the shared mission. They are also
required to integrate the strategic actions mentioned in the Plan into their Annual
Action Plan along with required budget in order to make the annual activities
consistent with the Strategic Plan.
It is imperative that the Departments and Offices follow the implementation matrix
and prepare detailed time frame for the accomplishment of each specified action.
All Departments and Offices are responsible to submit periodic progress report
along with problems faced in the implementation process to the CPD.
The lead Department is responsible to initiate the joint action and coordinate with
concerned Departments. Supporting Departments and Offices are required to
support the lead department to carryout such actions. The lead Department is
responsible to submit progress report of the actions concerning them to the CPD.
5.5 Dissemination of the Plan

Effective implementation of the Plan requires all Departments and Offices know
what activities are expected of them in the next five years. The Plan will be made
known to the Departments and Offices through printed plan document, intranet
and website. This is expected to foster the sense of ownership of the Plan among
the Departments and Offices which will help them for proper understanding,
planning and timely implementation of the actions required of them. NRB will also
communicate the Third Strategic Plan with the concerned stakeholders through
both printed document and electronic media.
5.6 Mid-term Review
Mid-term review of the Plan will be conducted by the end of third year of the Plan
implementation to assess the continuing relevance, efficiency and effectiveness
of planned activities and programs. The mid-term review is expected to assist
policy/decision makers to make any needed adjustment of the objectives,
strategies, actions and implementation process.
77
5.7 Final Evaluation

The final evaluation of the Plan will be carried out within three months after the
completion of the Plan to assess the overall achievement of planned actions and
programs in terms of efficiency, output, effects and impact. The final evaluation is
expected to provide lessons for better formulation, implementation and appraisal/
evaluation of the next Strategic Plan.
78
ANNEXURE
Annex - 1
Guiding Framework of Third Strategic Plan in NRB
79
Annex - 2
SWOT Matrix
STRENGTHS WEAKNESSES
• Conducive legal framework and • Lack of business continuity plan
operational autonomy • Lack of HR plan
• Strong regulatory and supervisory • Weak institutional memory
system • Inadequate IT infrastructure and
• Stable and supportive leadership automation
• Collective decision making • Inadequate Management
process Information System (MIS)
• Committed towards good • Inadequate system audit
governance • Cumbersome procurement
• Adequate financial resources process
• Competent and motivated human • Inadequate physical infrastructure
resource
• Adoption of functional software
backed up by advanced hardware
and equipments
• Physical presence covering major
geographical areas
• Good international relations
OPPORTUNITIES THREATS
• Increasing public trust and • Volatility in domestic and global
confidence financial market
• Inter-linkage with various national • Informal financial market and
and international organizations Shadow banking
• Conducive environment for • Inadequate financial market
adopting global best practices infrastructure
• Restructuring organizational set- • Multiple banking
up in line with the federal system • Financial and cyber crimes
• Enhanced financial access and • Ever changing technologies
inclusion • Pressure groups in internal
• Increasing use of FinTech/ functioning and management
RegTech
• Scope for constructing modern
building
Note: After discussion at different stages of the Plan Formulation above SWOT
matrix has been derived.
80
Annex - 3
List of Principal Officers of Nepal Rastra Bank
Executive Directors
1 Mr. Narayan Prasad Paudel Banks and Financial Inst. Regulation Dept.
2 Mr. Nara Bahadur Thapa Research Department
3 Mr. Janak Bahadur Adhikari Banking Office, Thapathali
4 Mr. Bhisma Raj Dhungana Corporate Planning Department
5 Mr. Laxmi Prapanna Niraula Currency Management Department
6 Dr. Shankar Prashad Acharya Payment Systems Department
7 Mr. Maheshwor Lal Shrestha Bank Supervision Department
8 Mr. Bhuban Kadel Development Bank Supervision Department
9 Mr. Ramesh Kumar Pokharel Foreign Exchange Management Department
Executive Directors (Acting)

1 Dr. Nephil Matangi Maskay Office of the Governor
2 Mr. Upendra Kumar Paudel Micro-Finance Promotion & Supervision Dept.
3 Mr. Ejendra Prasad Luitel General Services Department
4 Dr. Bhubanesh Prasad Pant Public Debt Management Department
5 Mr. Basudev Adhikari Finance Company Supervision Department
6 Dr. Gopal Prasad Bhatta Human Resources Management Department
7 Mrs. Nilam Dhungana Internal Audit Department
Directors
1 Mr. Jhalak Sharma Acharya Problem Bank Resolution Division
2 Mr. Dev Kumar Dhakal Micro-Finance Promotion & Supervision Dept.
3 Mr. Mukunda Kumar Chhetri Bank Supervision Department
4 Mr. Harisharan K.c. Banks and Financial Inst. Regulation Dept.
5 Mr. Pitambar Bhandari Research Department
6 Mr. Rajendra Pandit Office of the Governor
7 Mr. Sunil Udash Foreign Exchange Management Department
8 Mr. Rishikesh Bhatta Bank Supervision Department
9 Mr. Mukunda Mahat Human Resources Management Department
10 Mr. Pradeep Raj Poudyal Research Department
11 Dr. Gunakar Bhatta Research Department
12 Mr. Naresh Shakya Development Bank Supervision Department
13 Mr. Suman Kumar Adhikari Corporate Planning Department
14 Mr. Raman Nepal Banks and Financial Inst. Regulation Dept.
15 Mr. Bam Bahadur Mishra Banks and Financial Inst. Regulation Dept.
81
16 Dr. Prakash Kumar Shrestha Research Department

17 Mrs. Sita Ghimire Public Debt Management Department
18 Mr. Bhisma Prasad Upreti Currency Management Department
19 Mrs. Sarita Bhatta (Adhikari) Banking Office, Thapathali
20 Mr. Revati Prasad Nepal Payment Systems Department
21 Mr. Ramu Poudel Financial Information Unit
22 Mr. Vishrut Thapa Finance Company Supervision Department
23 Mr. Ram Bahadur Manandhar Payment Systems Department
24 Mr. Binod Kumar Tandukar Development Bank Supervision Department
25 Mr. Chiranjibi Chapagain Office of the Governor
26 Mr. Tej Bahadur Rana Magar Financial Management Department
27 Mr. Ramhari Neupane Legal Division
28 Mr. Dhananjaya Sharma Nepal Rastra Bank, Dhangadhi
29 Mr. Daya Ram Sharma Micro-Finance Promotion & Supervision Dept.
30 Mr. Tulasi Prasad Ghimire Banking Office, Thapathali
31 Mr. Guru Prasad Poudel Nepal Rastra Bank, Nepalgunj
32 Mr. Ashok Kumar Poudel Nepal Rastra Bank, Siddharthanagar
33 Mr. Rabindra Maharjan Nepal Rastra Bank, Birgunj
34 Mr. Bimal Raj Khanal Development Bank Supervision Department
35 Mr. Binod Raj Acharya Nepal Rastra Bank, Biratnagar
36 Mr. Pom Nath Gautam Nepal Rastra Bank, Pokhara
37 Mr. Ram Prasad Gautam Nepal Rastra Bank, Janakpur
38 Mr. Shiva Ram Dawadi Information Technology Department
39 Mr. Kiran Pandit Bank Supervision Department
40 Mr. Satyendra Timilsina Currency Management Department
Directors (Acting)
1 Mrs. Binita Bista Banking Office, Thapathali
2 Mr. Prahlad Thapa Financial Management Department
3 Mr. Uddhab Lal Ranjitkar Bankers Training Center
4 Mr. Chet Prasad Uprety Foreign Exchange Management Department
5 Mr. Balaram Paudel Human Resources Management Department
6 Mr. Prem Prasad Neupane Currency Management Department
7 Mr. Ishwori Prasad Neupane Finance Company Supervision Department
8 Mr. Ananda Poudyal General Services Department
9 Mr. Roshan Kumar Sigdel Internal Audit Department
10 Mr. Krishna Murari Ghimire General Services Department
11 Mr. Keshav Thapa Human Resources Management Department
82
Photo Gallery
SWOT Analysis Seminar

January 25, 2017
Strategic Planning Seminar

March 28, 2017
Interaction on Final Draft of Third Strategic Plan

June 30, 2017

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THIRD STRATEGIC

NEPAL RASTRA BANK

financial stability and financial sector development, (iii) external sector

Dr. Chiranjibi Nepal

The importance of strategic plan as a roadmap to steer and direct the

We highly appreciate all the stakeholders who contributed towards

Strategic Plan Formulation Committee:

Chairman: Dr. Chiranjibi Nepal

(As of January 10, 2018)

Third Strategic Plan (2017-2021)

Dr. Sri Ram Poudyal

Mr. Bhisma Raj Dhungana

CHAPTER TWO: VISION, MISSION, CORE VALUES AND STRATEGIC

CHAPTER THREE: STRATEGIC PLANNING FRAMEWORK

CHAPTER FOUR: STRATEGIC ACTION PLANS

CHAPTER FIVE: IMPLEMENTATION FRAMEWORK

Chart 1: Guiding Framework of the Third Strategic Plan 79

Chart 2: SWOT Matrix 80

Chart 3: List of Principal Officers of Nepal Rastra Bank 81-82

FSIs Financial Soundness Indicators

NPS National Payment Switch

Functions, Duties and Powers:

1.2 Practice of Strategic Planning

the Harvard Business School. This model defines strategy as a framework

1.3 Strategic Planning in Nepal Rastra Bank

1.3.1. The First Strategic Plan 2006-2010

Table 1: Functional and Management Strategies of First Strategic Plan

Management Strategies Strategic Objectives

To provide effective general services and

1.3.2. Review of the Second Strategic Plan 2012-2016

Table 2: Strategic Pillars and Strategic Priorities of Second Strategic Plan

1. Make foreign exchange reserve manage-

1.3.2.1 Major Achievements

1.4 The Third Strategic Plan 2017-2021

The Plan is formulated through a bottom-up participatory planning process which

1.5.2 Restructuring of NRB

1.5.3 Reconstruction of Buildings

historical buildings at Baluwatar, Thapathali and Sundhara which housed NRB

1.5.4 Environmental Challenges and Opportunities

External environment of NRB is shaped by the interplay of the BFIs, GON,

1.5.5 Ensuring Good Governance

Modern reflects NRB’s commitment to practice best international standards,

NRB is dedicated in maintaining Dynamism through embracing changes by

NRB is committed to maintain trustworthy relationship with its stakeholders

NRB’s primary focus is on formulating and implementing effective monetary policy

NRB is committed to formulating appropriate regulatory framework and

2.3 Core Values

Core Values of the Bank are reflected by the word “CREATIVE”

3.1 Conceptual Framework

The Strategic Planning Framework is exhibited in a flow chart given below:

3.2 Strategic Pillars

3.2.1 Core Pillars

Pillar Two: Financial Stability and Financial Sector Development

Generally, stable and well functioning financial system is maintained through

NRB is committed to promote financial inclusion across regions and people,

Pillar Three: External Sector Stability

The external stability generally refers to maintaining adequate level of

Pillar Four: Sound and Effective Payment System

3.2.2. Supporting Pillars

Pillar Two: Organizational Management and Development

Pillar Three: Infrastructure Development

Pillar Four: Information and Communication Technology Management

Ministries and entities and private sector organizations on pertinent monetary