NRB Assistant cheat sheet

Nepal Rastra Bank was established on 14 Baisakh 2013 BS (26 April 1956) under the Nepal Rastra Bank Act 1955, and commenced operations as the central bank in 1956; it is headquartered in Baluwatar, Kathmandu.

The current legal basis of the Bank is the Nepal Rastra Bank Act, 2058 (2002), which defines its objectives: price stability, balance of payments stability, and financial sector stability, with a view to sustainable economic development.

NRB is governed by a Board of Directors chaired by the Governor; the Governor is appointed by the Government of Nepal for a five-year term, and there are Deputy Governors (currently two) heading different functions.

NRB functions include issuing currency notes (except coins, which are issued by the Government/Mint), acting as banker and advisor to the government, lender of last resort, managing foreign exchange reserves, and regulating banks and financial institutions.

Nepal's currency is the Nepalese Rupee (NPR), divided into 100 paisa; the symbol is Rs (रू), and the ISO code is NPR. The exchange rate regime is a peg to the Indian Rupee at NPR 1.6 = INR 1 (since 1993).

Nepal is a member of the IMF (since 1961), World Bank, ADB, and SAARC; it became a member of the WTO in April 2004 and joined the Belt and Road Initiative framework in 2017.

Administrative structure: Nepal has 7 provinces and 77 districts; the federal capital is Kathmandu. The Constitution of Nepal was promulgated on 20 September 2015 (3 Ashoj 2072 BS).

NRB's supervisory toolset includes CAMELS-based ratings, on-site inspection, off-site surveillance, prompt corrective action, and licensing/merger approval under the BAFIA 2073 (2017).

Key NRB publications and instruments: Monetary Policy (annual, mid-July), Monetary Policy Report, Financial Stability Report, and the NRB Directives issued annually to banks and financial institutions.

BAFIA 2073 (2017) is the umbrella law for banks and financial institutions (BFIs); it defines four classes: A (commercial banks), B (development banks), C (finance companies), and D (microfinance institutions).

Minimum paid-up capital requirements (as revised by NRB): Class A commercial banks NPR 20 billion; Class B national-level development banks NPR 5 billion (province-level NPR 2 billion); Class C national-level finance companies NPR 2.5 billion (province-level NPR 1 billion); Class D microfinance NPR 100 million.

Basel III capital adequacy: BFIs must maintain a minimum total capital to risk-weighted assets (CRAR) of 11% (NRB requirement, above the Basel 8%), with Tier 1 minimum 8.5% and CET1 minimum 6%; a capital conservation buffer of 2.5% applies.

NRB's liquidity ratios: Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) are set in the monetary policy; CRR is the balance held at NRB, SLR is held in specified liquid assets (government securities, NRB bonds, cash).

Deposit insurance: the Deposit and Credit Guarantee Fund (DCGF) insures deposits up to NPR 500,000 per depositor per institution (raised from NPR 200,000).

Priority sector lending: NRB requires commercial banks to lend a minimum share to specified sectors (agriculture, energy, tourism, MSMEs, etc.); non-compliance attracts a penalty deposited into a fund, and the current aggregate target is around 25-30% of total loans.

NRB's single obligor limit: total facilities to one borrower/group are capped as a percentage of core capital (currently 25% of core capital for fund-based and 50% for total, subject to revision), with exceptions for infrastructure.

Nepal's payment infrastructure: Nepal Clearing House Ltd (NCHL) operates NCHL-ECC, NCHL-IPS, and connectIPS; Nepal Financial Switch (NFS) enables interbank ATM switching; RTGS is operated by NRB.

BFIs must classify loans into Pass, Watchlist, Substandard, Doubtful, and Bad (loss) categories with corresponding loan loss provisions (e.g., 1.25% for pass, 25% for substandard, 50% for doubtful, 100% for bad).

Monetary aggregates in Nepal: M1 = currency in circulation + demand deposits; M2 = M1 + time deposits (broad money); NRB targets broad money growth consistent with nominal GDP and inflation.

The Quantity Theory of Money: MV = PT (or MV = PY), where M is money supply, V velocity, P price level, T/Y real output; inflation ≈ money growth − real output growth + velocity change.

NRB's operating target is typically the weighted average interbank rate / policy rate corridor; the repo rate is the policy rate, with a standing deposit facility as floor and standing liquidity facility as ceiling.

Instruments of monetary policy: open market operations (repo, reverse repo, outright purchase/sale of securities), CRR, SLR, bank rate, and moral suasion.

Inflation measurement in Nepal: the Consumer Price Index (CPI) is compiled by the National Statistics Office (NSO), with base year 2014/15 (revised series); the National Urban Consumer Price Index is also published.

GDP and national accounts are compiled by the National Statistics Office; nominal GDP vs real GDP, GDP deflator = (nominal GDP / real GDP) × 100.

Fiscal policy: the Government of Nepal presents the annual budget in the federal parliament (typically in Jestha, around late May), with the fiscal year running from Shrawan 1 (mid-July) to Asar end (mid-July next year).

Nepal's balance of payments: remittances are the largest source of foreign exchange (around 25% of GDP), followed by tourism and exports; the current account is structurally in deficit or near balance.

Key economic concepts tested: fiscal deficit = government expenditure − revenue; debt-to-GDP ratio; GDP growth vs per capita income; purchasing power parity (PPP) and the law of one price.

The accounting equation: Assets = Liabilities + Equity (Owner's Equity). Every transaction preserves this balance (double-entry bookkeeping).

The double-entry rule: every transaction has equal debits and credits; debits increase assets and expenses, credits increase liabilities, equity, and revenue.

Trial balance: a list of ledger balances; total debits must equal total credits. Errors that don't affect the trial balance include errors of principle, compensating errors, and errors of omission (complete).

The income statement: Revenue − Expenses = Net Profit (or Loss). Gross profit = Sales − Cost of Goods Sold; COGS = Opening stock + Purchases − Closing stock.

The balance sheet: Assets = Liabilities + Equity, presented as at a specific date (a 'snapshot'), whereas the income statement covers a period.

Depreciation methods: straight-line = (Cost − Residual value) / Useful life; reducing balance = Book value × rate. Depreciation is a non-cash expense.

Accounting concepts: accrual (revenue/expense recognised when earned/incurred, not when cash moves), going concern, consistency, prudence, materiality, and matching principle.

Bank-specific accounting: interest income recognised on accrual for performing loans but on cash basis for non-performing loans (NPLs); loan loss provisions are charged to the income statement.

Key ratios: Current ratio = Current assets / Current liabilities; Debt-equity ratio = Total debt / Equity; Return on Equity = Net profit / Equity; Return on Assets = Net profit / Total assets.

Simple interest: SI = P × R × T / 100. Compound interest: A = P(1 + R/100)^T; CI = A − P. For half-yearly compounding, use R/2 and 2T.

Percentage change = (New − Old) / Old × 100. Successive percentage changes: net = a + b + ab/100 (with signs for increase/decrease).

Profit/loss: Profit% = (SP − CP)/CP × 100; Discount% = (Marked price − Selling price)/Marked price × 100.

Ratio and proportion: if a:b = c:d then ad = bc. Partnership profit sharing is proportional to capital × time.

Time, speed, distance: Distance = Speed × Time. Average speed for equal distances = 2xy/(x+y) (harmonic mean).

Mean (arithmetic) = Σx/n; Median = middle value of ordered data; Mode = most frequent value. For grouped data, use class midpoints for the mean.

Standard deviation = √(Σ(x − x̄)²/n) for population, or √(Σ(x − x̄)²/(n−1)) for sample; variance is its square. Coefficient of variation = (SD / Mean) × 100.

Probability: P(A or B) = P(A) + P(B) − P(A and B); for independent events P(A and B) = P(A) × P(B); P(not A) = 1 − P(A).

Permutations and combinations: nPr = n!/(n−r)!; nCr = n!/(r!(n−r)!). Simple and compound interest, work-rate, and mixture problems are common in NRB assistant exams.

NRB was established in 1956 (2013 BS) as Nepal's central bank; its first Governor was Himalaya Shumsher Rana.

NRB's head office is in Baluwatar, Kathmandu; it has regional offices in Biratnagar, Janakpur, Birgunj, Pokhara, Siddharthanagar, Nepalgunj, Dhangadhi, and other cities.

The Governor of NRB is appointed for five years; the Deputy Governors assist in monetary policy, supervision, and management.

NRB issues currency notes in denominations up to NPR 1,000; coins are issued by the Government of Nepal.

The Nepalese Rupee is pegged to the Indian Rupee at NPR 1.6 = INR 1, a fixed exchange rate regime since 1993.

Nepal joined the IMF in 1961 and the WTO in 2004; it is also a member of ADB and SAARC.

Nepal has 7 provinces and 77 districts; the Constitution was promulgated in 2015 (2072 BS).

NRB's key publications include the Monetary Policy, Financial Stability Report, and annual NRB Directives.

BAFIA 2073 (2017) classifies BFIs into A (commercial banks), B (development banks), C (finance companies), and D (microfinance).

Minimum paid-up capital: Class A NPR 20 billion; Class B national NPR 5 billion; Class C national NPR 2.5 billion; Class D NPR 100 million.

Basel III CRAR minimum is 11% (NRB), with Tier 1 at 8.5% and CET1 at 6%, plus a 2.5% capital conservation buffer.

DCGF insures deposits up to NPR 500,000 per depositor per institution.

Loan classification categories: Pass, Watchlist, Substandard, Doubtful, and Bad, with corresponding provisioning rates.

Priority sector lending target for commercial banks is around 25-30% of total loans, with penalties for shortfalls.

NCHL operates NCHL-ECC, NCHL-IPS, and connectIPS; NRB operates RTGS.

Single obligor limit: fund-based facilities capped at 25% of core capital and total facilities at 50%.

M1 = currency in circulation + demand deposits; M2 = M1 + time deposits (broad money).

Quantity theory: MV = PT; inflation ≈ money growth − real output growth + velocity change.

NRB's policy rate is the repo rate, with a standing deposit facility as floor and standing liquidity facility as ceiling.

Monetary instruments: OMO (repo/reverse repo), CRR, SLR, bank rate, and moral suasion.

CPI is compiled by the National Statistics Office; base year 2014/15.

GDP deflator = (nominal GDP / real GDP) × 100.

Fiscal year in Nepal runs from Shrawan 1 (mid-July) to Asar end (mid-July next year).

Remittances are Nepal's largest source of foreign exchange, around 25% of GDP.

Fiscal deficit = government expenditure − revenue; debt-to-GDP ratio measures public debt burden.

Accounting equation: Assets = Liabilities + Equity.

Double-entry rule: debits increase assets and expenses; credits increase liabilities, equity, and revenue.

Trial balance errors not affecting equality: errors of principle, compensating errors, complete omission.

Gross profit = Sales − COGS; COGS = Opening stock + Purchases − Closing stock.

Depreciation: straight-line = (Cost − Residual)/Useful life; reducing balance = Book value × rate.

Accrual concept: revenue/expense recognised when earned/incurred, not when cash moves.

Current ratio = Current assets / Current liabilities; Debt-equity = Total debt / Equity.

ROE = Net profit / Equity; ROA = Net profit / Total assets.

NPL interest is recognised on cash basis; loan loss provisions are charged to the income statement.

SI = P × R × T / 100; CI: A = P(1 + R/100)^T.

Percentage change = (New − Old)/Old × 100; successive change = a + b + ab/100.

Profit% = (SP − CP)/CP × 100; Discount% = (MP − SP)/MP × 100.

Ratio: a:b = c:d implies ad = bc.

Distance = Speed × Time; average speed for equal distances = 2xy/(x+y).

Mean = Σx/n; Median = middle ordered value; Mode = most frequent value.

SD = √(Σ(x − x̄)²/n); CV = (SD/Mean) × 100.

P(A or B) = P(A) + P(B) − P(A and B); independent: P(A and B) = P(A) × P(B).

nPr = n!/(n−r)!; nCr = n!/(r!(n−r)!).