Maha prasad Adhikari’s Leadership at Nepal Rastra Bank: Experience Overshadowed by Weak Support

Maha prasad Adhikari, Governor of Nepal Rastra Bank (NRB), brings nearly 30 years of seasoned experience to the central bank, having risen from an assistant-level entry to a key leadership role. Known for his diligence and a serious approach to policymaking, Adhikari earned the trust of then-Governor Dr. Yubaraj Khatiwada, eventually becoming Deputy Governor. A recognized expert in banking and finance, he played a pivotal role in removing Nepal from the Financial Action Task Force (FATF) grey list during his earlier tenure. However, under his current leadership as Governor, Nepal has landed on the FATF grey list for the second time, raising questions about his effectiveness amid a lack of reliable support.

Lack of Dependable Allies

During Dr. Khatiwada’s tenure, Adhikari was a steadfast ally, facilitating policy decisions and implementation. Yet, as Governor, he faces a starkly different reality— a lack of capable deputies to bolster his efforts. Analysts point to the political nature of appointing the two Deputy Governors by the government, which often results in selections that do not align with the Governor’s vision of competence. The current Deputy Governors have failed to provide the proactive policy support and result-oriented collaboration Adhikari himself offered as Deputy Governor.

In the past, Adhikari and Khatiwada fearlessly tackled market irregularities, but today’s Deputy Governors appear more inclined to sidestep bold decisions. A glaring example is their inability to manage the transition of NRB’s office to a newly constructed and handed-over building, reflecting their inefficacy.

Weak Executive Directors

Adhikari’s challenges extend to the executive director level, where key figures like Ramu Paudel, head of the Bank Supervision Department and NRB spokesperson, and Dayaram Sharma Pangeni, head of the Financial Institutions Supervision Department, have proven to be liabilities rather than assets.

Ramu Paudel’s Supervisory Shortcomings

Ramu Paudel rose to the rank of Executive Director just 16 years after joining NRB, spending much of his career in prominent departments. However, his lack of experience in regulation and supervision has rendered him ineffective. His stint at the Financial Company Supervision Department exposed his weaknesses, and subsequent roles in the Human Resource Management Department and over three-and-a-half years at the Foreign Exchange Management Department did little to bolster his credentials.

During the COVID-19 pandemic, as remittance inflows declined and foreign exchange reserves dwindled, Paudel advised imposing quantitative import restrictions and a 100% margin on letters of credit—policies now widely criticized for stifling imports and harming Nepal’s economy long-term. Currently leading the Bank Supervision Department, Paudel’s inability to make swift decisions due to limited supervisory knowledge has frustrated both staff and bankers. His aloof demeanor, favoring a select few employees while sidelining others, has drawn further criticism.

Notably, while heading the Biratnagar office, Paudel allegedly intimidated staff into silence during a currency misuse investigation, derailing the probe and preventing accountability. Despite experienced chartered accountants being available, Adhikari’s decision to entrust Paudel with critical roles has baffled NRB staff.

Dayaram Sharma’s Timidity

Dayaram Sharma Pangeni, heading the Financial Institutions Supervision Department, has become more of a hindrance than a help to the Governor due to his timid nature and difficult personality. Staff complain that Sharma fixates on reducing the number of days allowed for official inspection trips (known as "kaj"), prioritizing cost-cutting over effective supervision. He reportedly refuses to approve inspection trips unless the duration is shortened, undermining the quality of oversight and focusing solely on minimizing daily and travel allowances.

Moreover, Sharma lacks the courage to act on inspection reports prepared by staff. For instance, a long-standing dispute within the board of a troubled finance company has prevented the appointment of a CEO, with directors allegedly acting unchecked. Despite NRB’s inspection report recommending action, Sharma has failed to issue directives or enforce penalties, allowing errant operators to benefit—a situation widely discussed in the market.

Experienced Leadership, Ineffective Team

Adhikari’s 30 years of experience stand in contrast to the inexperience and inefficiency of his team. With many seasoned officers retiring after long tenures, individuals like Paudel and Sharma have risen quickly to senior roles, often lacking the depth required for effective performance. Paudel’s tendency to distance himself from staff and impose his views has hampered supervision outcomes, while Sharma’s focus on trivial cost-saving measures and reluctance to act decisively have weakened oversight.

Despite the presence of qualified supervisory experts, including chartered accountants, Adhikari has leaned on Paudel and Sharma—perhaps due to their loyalty rather than competence. However, their shortcomings have left the Governor bearing the brunt of criticism despite his own capabilities. As his tenure nears its end, Adhikari risks being remembered more for the failures of his team than for his contributions.