Economist Bishwo Poudel has assumed the office of the Nepal Rastra Bank (NRB) as its 18th Governor on Tuesday. His appointment, following nearly one and half months of leadership vacuum and a politically charged process, has placed him under intense scrutiny.
As a former Nepali Congress (NC) parliamentary candidate, Poudel steps into a role that demands not only economic acumen but also a clear demonstration of independence. He must now navigate a complex landscape shaped by political expectations, economic stagnation, and international obligations. The challenges ahead are significant and will require bold, balanced, and credible policy responses to restore confidence, revive growth and protect the NRB’s integrity as an autonomous institution.
Poudel’s political background has reignited concerns about the politicization of the NRB governorship—a role that, while historically influenced by political appointments, is expected to rise above party interests. The prolonged selection process reflects a troubling prioritization of political loyalty over institutional continuity. For Poudel, the first and perhaps most important test is to assert his independence. He must earn public and investor trust by making transparent, evidence-based decisions that put the country’s economic well being above political considerations. Failing to do so risks deepening skepticism about the central bank’s autonomy and complicating efforts to stabilize the economy.
One of the most urgent challenges before him is reviving credit growth. Although more than Rs 600bn in investable funds are sitting idle in the banking system and interest rates are at record lows, credit disbursement has remained weak for the past many months. This signals a deeper issue: a lack of confidence among borrowers and subdued demand for investment. The resulting liquidity trap has stifled economic activity and blunted the impact of monetary policy. To address this, Poudel will need to introduce targeted measures to stimulate lending. This could include easing regulatory barriers, supporting innovative financial products, and channeling credit into high-potential sectors such as agriculture, tourism, and small and medium enterprises (SMEs). Working closely with banks and financial institutions to better assess and manage lending risks can help mobilize this idle capital into productive use, while unlocking growth and job creation.
Another critical issue is Nepal’s inclusion on the Financial Action Task Force (FATF) greylist because of the shortcomings in anti-money laundering (AML) and counter-terrorism financing efforts. This designation will damage Nepal’s global financial standing, discourage foreign investment and hamper integration with international markets. The new governor must work closely with the Ministry of Finance and relevant regulatory bodies to strengthen the AML framework, enhance enforcement and ensure alignment with international standards. Removal from the greylist would not only restore investor confidence but also signal the NRB’s capacity to meet complex global obligations.
Despite a relatively strong external sector—marked by healthy remittance inflows, solid foreign exchange reserves and a balance of payments surplus—domestic economic activity has remained sluggish since the lifting of the post-covid stimulus. This disconnect highlights deeper structural challenges such as bureaucratic red tape, policy uncertainty and weak engagement with the private sector. Poudel must prioritize efforts to rebuild private sector confidence. Targeted incentives, such as credit guarantees for SMEs or support for green investments, could stimulate private sector involvement and energize the real economy. It is important to strike the right balance: reviving growth without stoking inflation, and implementing short-term stimulus that aligns with long-term development goals.
By promoting forward-thinking policies and fostering collaboration across institutions, Poudel has the chance to steer Nepal’s economy toward. His legacy at the central bank will be defined not just by the policies he takes, but by his ability to preserve the central bank’s independence and credibility.
