Central Bank

Central Bank is the bank of all banks. It is the supreme body, which controls and stabilizes the economy of the country through various direct and indirect means of monetary policy. In means, it uses the selective credit control (margin requirements) while extending loans  government securities as a tool to expand  and contract the economic activies of the country an in indirect means it uses tools like issuance of treasury Bills, National Savings Bonds, bank rates, SLR, CRR etc.

Central Bank neither maintains accounts of public nor it give loans to the public. Central bank focuses on the monetary stability of the country and not on profit. Nepal Rastra Bank was established on 26^th April 1956. Central Bank is established with the motive of national welfare and not for profit generation.  It is empowered by law for the control and stability of the monetary and financial situation of the country. Central bank should not be effected by politics. It should not compete with commercial banks. The main functions of central bank is to issue notes. Central bank act as the clearing house for the commercial banks. Every commercial bank has to maintain a definite percentage of its liability (domestic deposits) with the central bank in the form of cash reserve ratio (CCR).