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Question 1General Knowledge and Nepal Rastra Bank

Nepal Rastra Bank was established as the central bank of Nepal in which year?

  1. 1956 Correct answer.
  2. 1948
  3. 1960
  4. 1972

Explanation

Nepal Rastra Bank began operations in 1956 under the Nepal Rastra Bank Act, taking over central banking functions from the earlier Nepal Bank arrangement. This date marks the formal start of a dedicated monetary authority in Nepal.

Question 2General Knowledge and Nepal Rastra Bank

Which body is responsible for issuing Nepalese currency notes in Nepal?

  1. Securities Board of Nepal
  2. Nepal Rastra Bank Correct answer.
  3. Ministry of Finance
  4. Nepal Bank Limited

Explanation

As the central bank, Nepal Rastra Bank holds the sole authority to issue currency notes and regulate the money supply. The Ministry of Finance sets fiscal policy but does not print notes, and commercial banks only circulate them.

Question 3General Knowledge and Nepal Rastra Bank

The headquarters of Nepal Rastra Bank is located in which city?

  1. Biratnagar
  2. Nepalgunj
  3. Pokhara
  4. Kathmandu Correct answer.

Explanation

Nepal Rastra Bank's central office is situated in Kathmandu, the capital, where its core policy and regulatory functions are coordinated. Regional and branch offices in other cities support its operations but do not house the head office.

Question 4General Knowledge and Nepal Rastra Bank

Which of the following is a primary function of Nepal Rastra Bank?

  1. Operating public schools
  2. Collecting income tax from citizens
  3. Managing municipal elections
  4. Conducting monetary policy Correct answer.

Explanation

Monetary policy formulation and implementation is a core mandate of a central bank, allowing it to influence inflation, credit, and liquidity. Tax collection, education, and elections fall under other government bodies.

Question 5General Knowledge and Nepal Rastra Bank

Nepal Rastra Bank acts as banker to the Government of Nepal. Which activity best illustrates this role?

  1. Holding government deposits and managing its accounts Correct answer.
  2. Issuing passports to citizens
  3. Lending to private households for housing
  4. Selling insurance policies to citizens

Explanation

As banker to the government, the central bank holds government deposits, processes payments, and may extend short-term advances. Direct lending to households is done by commercial banks, while insurance and passports belong to other institutions.

Question 6General Knowledge and Nepal Rastra Bank

Which instrument is used by Nepal Rastra Bank to absorb excess liquidity from the banking system?

  1. Printing more currency notes
  2. Reducing the cash reserve ratio to zero
  3. Issuing licenses to new banks
  4. Deposit collection through its own deposit facility Correct answer.

Explanation

When liquidity is excessive, the central bank can absorb it by accepting deposits or selling securities, thereby reducing funds available for lending. Lowering reserve requirements or printing money would add liquidity rather than absorb it.

Question 7General Knowledge and Nepal Rastra Bank

The Nepal Rastra Bank Act requires the central bank to maintain price stability. Which indicator is most directly used to gauge this objective?

  1. The stock market index
  2. The unemployment rate
  3. The consumer price index inflation rate Correct answer.
  4. The number of bank branches

Explanation

Price stability is measured through changes in the general price level, most commonly captured by consumer price index inflation. Unemployment, branch counts, and stock indices reflect other economic dimensions.

Question 8General Knowledge and Nepal Rastra Bank

Which of the following institutions is regulated and supervised by Nepal Rastra Bank?

  1. Commercial banks Correct answer.
  2. Public hospitals
  3. District courts
  4. Secondary schools

Explanation

Nepal Rastra Bank supervises banks and financial institutions to ensure soundness and depositor protection. Hospitals, schools, and courts are governed by health, education, and judicial authorities respectively.

Question 9General Knowledge and Nepal Rastra Bank

A commercial bank in Nepal faces a sudden surge in withdrawals. Which role of Nepal Rastra Bank becomes most relevant?

  1. Issuing driving licences
  2. Collecting customs duty
  3. Setting school curricula
  4. Acting as lender of last resort Correct answer.

Explanation

When a solvent bank faces temporary liquidity shortages, the central bank can provide emergency liquidity as lender of last resort to prevent broader contagion. This function is distinct from regulatory licensing or non-financial government services.

Question 10General Knowledge and Nepal Rastra Bank

Which document issued by Nepal Rastra Bank sets out the broad direction of monetary policy for a fiscal year?

  1. The company registration certificate
  2. The land revenue notice
  3. The national budget speech
  4. The annual monetary policy statement Correct answer.

Explanation

Nepal Rastra Bank publishes a monetary policy statement each year outlining targets for money supply, credit, and inflation management. The budget speech is a fiscal document, while the other items are unrelated administrative papers.

Question 11General Knowledge and Nepal Rastra Bank

Nepal Rastra Bank grants licences to banks and financial institutions. What is the main purpose of this licensing function?

  1. To fix interest rates permanently for all borrowers
  2. To eliminate competition among banks
  3. To ensure institutions meet capital and governance standards before operating Correct answer.
  4. To guarantee every licensed bank will make a profit

Explanation

Licensing screens applicants for adequate capital, fit-and-proper management, and sound business plans to protect depositors and system stability. It cannot guarantee profits, permanently fix rates, or remove competition, which are inconsistent with a market economy.

Question 12General Knowledge and Nepal Rastra Bank

Which of these is classified as a development bank in Nepal's financial sector structure?

  1. Nabil Bank
  2. Nepal Bank Limited
  3. Standard Chartered Bank Nepal
  4. Nepal Industrial Development Bank Correct answer.

Explanation

Development banks are licensed under a separate category to support medium and long-term productive sector financing. Nepal Bank Limited, Nabil Bank, and Standard Chartered are commercial banks, not development banks.

Question 13General Knowledge and Nepal Rastra Bank

Nepal Rastra Bank requires banks to maintain a minimum share of their deposits as cash reserves. What is this requirement primarily intended to do?

  1. Increase bank profits directly
  2. Ensure liquidity and limit excessive credit expansion Correct answer.
  3. Reduce the number of bank employees
  4. Set the exchange rate of the rupee

Explanation

Cash reserve requirements keep a portion of deposits readily available for withdrawals and act as a monetary tool to restrain credit growth. They do not directly boost profits, affect staffing, or determine exchange rates.

Question 14General Knowledge and Nepal Rastra Bank

Which committee or body typically advises Nepal Rastra Bank on monetary policy decisions?

  1. The Election Commission
  2. The Commission for the Investigation of Abuse of Authority
  3. The Public Service Commission
  4. The Board of Directors of Nepal Rastra Bank Correct answer.

Explanation

The Board of Directors, as the apex governing body of Nepal Rastra Bank, approves major policy directions including monetary policy. The other bodies have constitutional or statutory mandates unrelated to monetary policy.

Question 15General Knowledge and Nepal Rastra Bank

Nepal Rastra Bank manages foreign exchange reserves. Which of the following would most likely increase these reserves?

  1. A rise in remittance inflows from abroad Correct answer.
  2. A sharp increase in imports paid in foreign currency
  3. A fall in tourist arrivals
  4. Higher domestic lending by commercial banks

Explanation

Remittances bring foreign currency into Nepal, adding to official reserves when converted through the banking system. Rising import payments and falling tourism reduce or slow reserve accumulation, while domestic lending does not directly add foreign currency.

Question 16General Knowledge and Nepal Rastra Bank

Under Nepal's foreign exchange regulations, who is authorised to determine the official exchange rate of the Nepalese rupee against foreign currencies?

  1. Individual money changers
  2. Commercial bank customers
  3. Foreign embassies in Kathmandu
  4. Nepal Rastra Bank Correct answer.

Explanation

Nepal Rastra Bank publishes the official reference exchange rates used across the financial system. Licensed money changers and banks apply these rates within permitted margins, but they do not set the official rate themselves.

Question 17General Knowledge and Nepal Rastra Bank

Which of the following best describes the Nepal Rastra Bank's role in payment systems?

  1. It operates all retail shops accepting digital payments
  2. It issues SIM cards to mobile users
  3. It oversees and promotes safe and efficient payment and settlement systems Correct answer.
  4. It sets the prices of goods sold online

Explanation

Central banks oversee payment and settlement infrastructure to maintain financial stability and public confidence. Operating retail shops, pricing goods, and issuing SIM cards are outside its mandate.

Question 18General Knowledge and Nepal Rastra Bank

Nepal Rastra Bank's 'Depositor Protection' concerns are most directly addressed by which measure?

  1. Requiring banks to close branches in rural areas
  2. Setting maximum interest rates on all loans
  3. Deposit insurance arrangements for small depositors Correct answer.
  4. Banning savings accounts

Explanation

Deposit insurance protects small depositors in the event of a bank failure, reinforcing confidence in the banking system. Interest rate caps, banning savings accounts, and closing rural branches would harm rather than protect depositors.

Question 19General Knowledge and Nepal Rastra Bank

Which of the following is an example of a 'microfinance financial institution' regulated under Nepal's banking framework?

  1. A national-level commercial bank
  2. A licensed microfinance development bank serving small borrowers Correct answer.
  3. A stock brokerage firm
  4. A foreign commercial bank branch

Explanation

Microfinance institutions are licensed in a distinct category to provide small-scale financial services to low-income households. Foreign branches and national commercial banks belong to other categories, and brokerages are capital market intermediaries.

Question 20General Knowledge and Nepal Rastra Bank

A bank wishes to open a new branch in a remote district. Which factor would Nepal Rastra Bank most likely weigh when reviewing the application?

  1. The number of employees in the head office canteen
  2. The colour scheme of the branch building
  3. Whether the branch supports financial inclusion and the bank's capacity to supervise it Correct answer.
  4. The personal wealth of the branch manager

Explanation

Branch licensing considers financial access, especially in underserved areas, along with the bank's capital adequacy and ability to operate soundly. Personal wealth, canteen staffing, and building colours are irrelevant to regulatory approval.

Question 21General Knowledge and Nepal Rastra Bank

Which of the following statements about Nepal Rastra Bank's autonomy is most accurate?

  1. It operates under its governing Act with defined independence in monetary policy while remaining accountable to the government Correct answer.
  2. It is a private company owned by shareholders
  3. It reports only to foreign central banks
  4. It is completely free from any legal framework

Explanation

The Nepal Rastra Bank Act grants the bank operational independence to pursue monetary stability, balanced with accountability and coordination with the government. It is a statutory public institution, not a private company or an entity subordinate to foreign central banks.

Question 22General Knowledge and Nepal Rastra Bank

Nepal Rastra Bank raises the policy interest rate sharply. Which chain of effects is most consistent with standard monetary transmission?

  1. Higher borrowing costs reduce credit demand, which tends to lower inflationary pressure Correct answer.
  2. Higher rates have no effect on credit or prices
  3. Higher rates immediately increase consumer spending and raise inflation
  4. Higher rates automatically increase government tax revenue

Explanation

A policy rate hike raises the cost of credit, discouraging borrowing and spending, which typically cools demand-driven inflation. The other options contradict standard transmission or confuse monetary policy with fiscal revenue.

Question 23General Knowledge and Nepal Rastra Bank

Nepal Rastra Bank imposes a higher risk weight on certain loan categories. What is the intended regulatory effect?

  1. To force banks to stop lending entirely
  2. To require banks to hold more capital against riskier exposures Correct answer.
  3. To eliminate the need for loan documentation
  4. To reduce the interest rate on all loans to zero

Explanation

Risk weights translate the riskiness of assets into capital requirements, so riskier loans attract more capital backing. They do not set interest rates to zero, halt lending, or remove documentation requirements.

Question 24General Knowledge and Nepal Rastra Bank

Nepal Rastra Bank's foreign exchange reserves are often assessed against the ability to cover imports. Why is this coverage ratio important?

  1. It measures the number of tourists visiting Nepal
  2. It indicates the economy's capacity to pay for essential imports during external shocks Correct answer.
  3. It sets the salary of central bank governors
  4. It determines the number of bank branches in Kathmandu

Explanation

Import cover shows how many months of imports the reserves can finance, signalling resilience to external shocks and currency pressure. It is unrelated to tourism counts, branch numbers, or staff salaries.

Question 25General Knowledge and Nepal Rastra Bank

Nepal Rastra Bank identifies a build-up of non-performing loans in a commercial bank. Which supervisory response is most consistent with its mandate?

  1. Transferring the bank's loans to a foreign government
  2. Requiring corrective action such as provisioning and tighter loan monitoring Correct answer.
  3. Immediately printing new currency to cover the losses
  4. Ignoring the issue to preserve bank reputation

Explanation

Supervisors respond to asset quality deterioration by requiring adequate provisioning, closer monitoring, and corrective plans to restore soundness. Printing money, ignoring the problem, or transferring loans abroad are not appropriate supervisory actions.

Question 26General Knowledge and Nepal Rastra Bank

Which body is the supreme policy-making authority of Nepal Rastra Bank, responsible for approving its annual monetary policy and budget?

  1. The Board of Directors Correct answer.
  2. The Public Accounts Committee
  3. The Nepal Bankers' Association
  4. The Securities Board of Nepal

Explanation

The Nepal Rastra Bank Act vests general direction and policy approval in the Board of Directors, which is chaired by the Governor and includes Deputy Governors and government-nominated members. The Board approves monetary policy, budgets and major regulations. Other listed bodies are outside the central bank's internal governance.

Question 27General Knowledge and Nepal Rastra Bank

Who chairs the Board of Directors of Nepal Rastra Bank?

  1. The Finance Secretary
  2. The Governor Correct answer.
  3. The Deputy Governor
  4. The Auditor General

Explanation

The Governor is the chief executive and chairs the Board of Directors of Nepal Rastra Bank. Deputy Governors serve as members and often head specific departments. The Finance Secretary may be associated with coordination but does not chair the central bank board.

Question 28General Knowledge and Nepal Rastra Bank

The Nepalese rupee's exchange rate against convertible currencies is officially described as which type of arrangement?

  1. A hard peg to the US dollar
  2. A managed float with the Indian rupee pegged at a fixed rate Correct answer.
  3. A fully free float determined only by market forces
  4. A currency board backed entirely by gold

Explanation

Nepal operates a managed floating exchange rate for convertible currencies while maintaining a fixed peg of the Nepalese rupee to the Indian rupee. The peg to the Indian rupee is a long-standing structural feature of the regime. Nepal does not use a currency board or a pure free float.

Question 29General Knowledge and Nepal Rastra Bank

Nepal Rastra Bank publishes a monetary policy for each fiscal year. Which fiscal year convention does Nepal use for its annual budget and monetary policy?

  1. July to June Correct answer.
  2. April to March
  3. January to December
  4. October to September

Explanation

Nepal's fiscal year runs from mid-July (Shrawan 1 in the Bikram Sambat calendar) to mid-June. Monetary policy and the national budget are both framed for this period. Other calendar conventions belong to different jurisdictions.

Question 30General Knowledge and Nepal Rastra Bank

Which of the following is the primary objective assigned to Nepal Rastra Bank under its enabling Act?

  1. Maintaining price stability and balance of payments stability Correct answer.
  2. Financing political party activities
  3. Maximising government tax revenue
  4. Ensuring full employment in the private sector

Explanation

The Nepal Rastra Bank Act mandates the central bank to maintain price stability and balance of payments stability, and to support sustainable economic development. Tax collection is a Ministry of Finance function. Employment and political financing are not statutory objectives of the central bank.

Question 31General Knowledge and Nepal Rastra Bank

Which of the following is the correct expansion of the abbreviation 'BFI' as used in Nepal's financial sector regulation?

  1. Bond and Futures Index
  2. Bank Fund Insurance
  3. Banking and Financial Institution Correct answer.
  4. Basic Financial Instrument

Explanation

BFI stands for Banking and Financial Institution, a general term covering commercial banks, development banks, finance companies and microfinance institutions. Nepal Rastra Bank regulates and supervises these entities. The other expansions are not used in Nepali financial regulation.

Question 32General Knowledge and Nepal Rastra Bank

Which of the following is authorised to issue currency notes in Nepal?

  1. The Nepal Bankers' Association
  2. Commercial banks
  3. The Ministry of Finance
  4. Nepal Rastra Bank Correct answer.

Explanation

Nepal Rastra Bank holds the sole statutory authority to issue currency notes and coins in Nepal. The Ministry of Finance does not print notes for circulation. Commercial banks distribute notes but do not issue them.

Question 33General Knowledge and Nepal Rastra Bank

Which of the following is the correct name of Nepal's deposit insurance body that protects small depositors of banks and financial institutions?

  1. Citizen Investment Trust
  2. Employees Provident Fund
  3. Deposit and Credit Guarantee Fund Correct answer.
  4. Nepal Stock Exchange

Explanation

The Deposit and Credit Guarantee Fund provides deposit insurance and credit guarantee services in Nepal, protecting small depositors up to a prescribed ceiling. The other institutions perform different functions in the financial system.

Question 34General Knowledge and Nepal Rastra Bank

Which of the following best describes the role of a 'Class A' bank in Nepal's classification of banks and financial institutions?

  1. A development bank focused on agriculture
  2. A microfinance institution serving rural clients
  3. A cooperative savings and credit society
  4. A commercial bank licensed to conduct full commercial banking Correct answer.

Explanation

Nepal's classification uses Class A for commercial banks, Class B for development banks, Class C for finance companies and Class D for microfinance institutions. Class A banks may offer the full range of commercial banking services. The other options describe classes B, D or unregulated cooperatives.

Question 35General Knowledge and Nepal Rastra Bank

Which of the following is the principal objective of Nepal Rastra Bank's foreign exchange intervention in the market?

  1. To eliminate all foreign currency transactions
  2. To set the Indian rupee peg at a new rate each week
  3. To raise revenue for the government
  4. To smooth excessive volatility in the exchange rate and support the peg Correct answer.

Explanation

Intervention aims to smooth excessive volatility and defend the fixed peg to the Indian rupee. Nepal Rastra Bank buys or sells foreign currency to influence market conditions. It does not reset the peg weekly or eliminate foreign currency transactions.

Question 36General Knowledge and Nepal Rastra Bank

A commercial bank has excess liquidity and wishes to park it with Nepal Rastra Bank for a short period. Which facility is most appropriate?

  1. A long-term development loan from the Ministry of Finance
  2. A foreign currency swap with a private dealer
  3. A deposit under the Standing Deposit Facility or similar liquidity absorption window Correct answer.
  4. An equity investment in the Nepal Stock Exchange

Explanation

Nepal Rastra Bank offers deposit facilities that allow banks to place surplus funds with the central bank for short periods. These facilities absorb excess liquidity from the banking system. Equity investment or ministry loans are not liquidity parking tools.

Question 37General Knowledge and Nepal Rastra Bank

Which of the following is the correct meaning of 'CRR' in Nepal's monetary operations?

  1. Capital Return Requirement
  2. Currency Redemption Rate
  3. Cash Reserve Ratio Correct answer.
  4. Credit Risk Ratio

Explanation

CRR stands for Cash Reserve Ratio, the share of deposits that banks must hold as cash balances with Nepal Rastra Bank. It is a direct instrument of monetary control. The other expansions are not used in Nepali banking regulation.

Question 38General Knowledge and Nepal Rastra Bank

A bank in Nepal wishes to raise additional Tier 1 capital by issuing instruments that absorb losses before depositors. Which instrument is most consistent with Basel III requirements adopted by Nepal Rastra Bank?

  1. Ordinary shares and qualifying perpetual non-cumulative preference shares Correct answer.
  2. Subordinated debt with no loss-absorption feature
  3. Interbank borrowings
  4. Fully secured long-term debentures

Explanation

Tier 1 capital under Basel III consists mainly of common equity and qualifying perpetual non-cumulative instruments that can absorb losses on a going-concern basis. Secured debentures and plain subordinated debt are not Tier 1. Interbank borrowings are liabilities, not capital.

Question 39General Knowledge and Nepal Rastra Bank

Nepal Rastra Bank raises the cash reserve ratio from 4 percent to 5 percent. Which effect on the banking system is most likely in the short run?

  1. An automatic fall in the policy interest rate
  2. A rise in the exchange rate peg to the Indian rupee
  3. An increase in the money multiplier and credit expansion
  4. A reduction in lendable funds and a tightening of credit conditions Correct answer.

Explanation

A higher CRR locks up a larger share of deposits with the central bank, reducing lendable funds and tightening credit conditions. It lowers the money multiplier rather than raising it. It does not change the policy rate or the peg directly.

Question 40General Knowledge and Nepal Rastra Bank

Which of the following is the standard measure Nepal Rastra Bank uses to assess the adequacy of foreign exchange reserves relative to imports?

  1. Debt-to-GDP ratio
  2. Fiscal deficit as a share of GDP
  3. Non-performing loan ratio
  4. Months of import cover Correct answer.

Explanation

Import cover, expressed in months of imports that reserves can finance, is a standard reserve adequacy measure. It is widely reported alongside reserve figures. Debt-to-GDP, fiscal deficit and NPL ratios measure other aspects of the economy.

Question 41General Knowledge and Nepal Rastra Bank

A commercial bank in Nepal reports a sharp rise in non-performing loans in its retail portfolio. Which supervisory action is most consistent with Nepal Rastra Bank's prudential approach?

  1. Immediately revoking the bank's licence without further review
  2. Transferring the loans to the Ministry of Finance
  3. Requiring a remedial action plan and closer monitoring of asset quality Correct answer.
  4. Ignoring the issue if the bank remains profitable

Explanation

Prudential supervision typically involves requiring a remedial plan, closer monitoring and possibly provisioning or capital actions. Immediate licence revocation is a last resort, not a first response. Ignoring the issue or shifting loans to the ministry is not standard practice.

Question 42General Knowledge and Nepal Rastra Bank

Which of the following is the main function of the Nepal Rastra Bank's 'Financial Stability Report'?

  1. To publish the annual government budget
  2. To set the exchange rate for the day
  3. To list the names of defaulting borrowers
  4. To assess risks to the financial system and identify vulnerabilities Correct answer.

Explanation

The Financial Stability Report assesses risks and vulnerabilities across the financial system and highlights potential threats. It is a diagnostic and analytical publication. It does not publish the budget, set exchange rates or list defaulters.

Question 43General Knowledge and Nepal Rastra Bank

Which of the following is the correct sequence for a bank customer who has a complaint about a bank's service and wishes to escalate it after the bank's internal grievance mechanism fails?

  1. Contact the Nepal Stock Exchange
  2. File a case directly in the Supreme Court
  3. Approach the Nepal Rastra Bank's complaint-handling mechanism or the designated banking ombudsman Correct answer.
  4. Approach the Securities Board of Nepal

Explanation

After exhausting the bank's internal grievance process, customers can escalate to Nepal Rastra Bank's complaint-handling mechanism or a designated ombudsman. The Supreme Court is not the first port of call, and the securities regulator and stock exchange handle capital market matters.

Question 44General Knowledge and Nepal Rastra Bank

Which of the following best describes the 'know your customer' (KYC) obligation of banks in Nepal?

  1. A voluntary practice recommended only for large accounts
  2. A requirement to disclose customer data to the public
  3. A mandatory requirement to identify and verify customers and monitor transactions Correct answer.
  4. A rule that applies only to foreign currency accounts

Explanation

KYC is a mandatory anti-money-laundering requirement under Nepal Rastra Bank directives. Banks must identify and verify customers, monitor transactions and report suspicious activity. It is not voluntary, not limited to foreign currency accounts and does not involve public disclosure of customer data.

Question 45General Knowledge and Nepal Rastra Bank

Which of the following is the primary purpose of Nepal Rastra Bank's 'prompt corrective action' framework for weak banks?

  1. To approve bank advertising campaigns
  2. To set the interest rate on government securities
  3. To intervene early when capital or asset quality deteriorates Correct answer.
  4. To reward banks with additional branch licences

Explanation

Prompt corrective action enables early intervention when a bank's capital or asset quality deteriorates, before problems become severe. It uses graduated restrictions and requirements. It is not a reward system, nor does it set securities rates or approve advertising.

Question 46General Knowledge and Nepal Rastra Bank

Which of the following is the correct order of Nepal's currency denominations currently issued as banknotes?

  1. 10, 25, 50, 75 and 100 rupees
  2. 1, 2, 5, 10, 20 and 50 rupees only
  3. 5, 10, 20, 50, 100, 500 and 1,000 rupees Correct answer.
  4. 100, 200, 500 and 2,000 rupees

Explanation

Nepal issues banknotes in denominations including 5, 10, 20, 50, 100, 500 and 1,000 rupees. Smaller values such as 1 and 2 rupees are issued as coins. The other sequences do not match Nepal's current note series.

Question 47General Knowledge and Nepal Rastra Bank

Which of the following is the main purpose of Nepal Rastra Bank's 'unified directives' issued to banks and financial institutions?

  1. To set the annual government budget
  2. To replace the Nepal Rastra Bank Act
  3. To determine the salary of bank employees
  4. To consolidate regulatory instructions on capital, liquidity, lending and governance into a single reference Correct answer.

Explanation

Unified directives consolidate regulatory instructions across areas such as capital adequacy, liquidity, lending and governance into a single reference for BFIs. They do not replace the Act, set the budget or fix employee salaries.

Question 48General Knowledge and Nepal Rastra Bank

Which of the following best describes the role of Nepal Rastra Bank in the interbank market?

  1. It prohibits all interbank lending
  2. It only regulates foreign banks
  3. It acts as a participant that sets every interbank rate by decree
  4. It facilitates and oversees interbank transactions and may act as lender of last resort Correct answer.

Explanation

Nepal Rastra Bank facilitates and oversees the interbank market and can act as lender of last resort to solvent but illiquid banks. It does not dictate every rate by decree or prohibit interbank lending. Its role is not limited to foreign banks.

Question 49General Knowledge and Nepal Rastra Bank

Which of the following is the most appropriate description of 'financial inclusion' as pursued by Nepal Rastra Bank?

  1. Expanding access to affordable financial services for underserved populations Correct answer.
  2. Restricting banking services to urban customers
  3. Eliminating all microfinance institutions
  4. Requiring every citizen to hold a fixed deposit

Explanation

Financial inclusion aims to expand access to affordable and appropriate financial services for underserved and rural populations. Nepal Rastra Bank promotes branch expansion, digital finance and priority sector lending. It does not restrict services to urban areas or eliminate microfinance.

Question 50General Knowledge and Nepal Rastra Bank

A bank wants to introduce a new digital wallet product. Which step is most consistent with Nepal Rastra Bank's regulatory process?

  1. Launch the product and inform the central bank afterwards
  2. Apply to the Ministry of Finance for a tax exemption
  3. Register with the Nepal Stock Exchange
  4. Obtain prior approval or licensing from Nepal Rastra Bank for the payment service Correct answer.

Explanation

Payment service providers and digital wallet operators require prior approval or licensing from Nepal Rastra Bank. Launching first and informing later is inconsistent with the regulatory process. The Ministry of Finance and the stock exchange are not the relevant licensing authorities.