2.2 Legal Regime for Central Bank

2.2.1 Status of Central BankNepal Rastra Bank was established in 1956 under the Nepal Rastra Bank Act, 1955 (2012 B.S.), and now operates under the Nepal Rastra Bank Act, 2058 (2002). It is a corporate body with perpetual succession. Its primary objective under the Act is price stability, while maintaining balance of payments stability, financial stability, and development of the banking and financial system. It enjoys operational autonomy in the exercise of its powers, subject to the Act's framework.2.2.2 Formation and Composition of Central Bank• A Board of Directors headed by the Governor (the chairperson), with deputy governors and directors nominated under the Act from the government, and the secretary of the Finance Ministry or a representative in the board's deliberations.• The Governor and deputy governors are appointed by the Government of Nepal under the Act's procedure, for a fixed tenure.• Head office in Kathmandu, with offices across the country.2.2.3 Regulatory Power of Central BankNRB licenses banks and financial institutions, issues directives and prudential requirements (capital, provisioning, liquidity), inspects them, imposes corrective measures, and can recommend or direct mergers and actions including intervention and liquidation initiation under the banking laws. Its directives bind the institutions it supervises.