The Nepal Rastra Bank was established on April 26, 1956 A.D. under the Nepal Rastra Bank Act, 1955, to discharge the central banking responsibilities including guiding the development of the embryonic domestic financial sector. The NRB is functioning under the new Nepal Rastra Bank Act, 2002. The functions of NRB are to formulate required monetary and foreign exchange policies so as to maintain the stability in market prices, to issue currency notes, to regulate and supervise the banking and financial sector, to develop efficient payment and banking systems among others. The NRB is also the economic advisor to the government of Nepal. As the central bank of Nepal, it is the monetary, supervisory and regulatory body of all the commercial banks. development banks, finance companies and micro-finances institutions.

Mahendra Bir Bikram Shah Dev, was the ninth King of Nepal from 13 March 1955 until his death in 1972, which was due to a heart attack, as told in an interview by his personal physician Dr. Mrigendra Raj Pandey. Following the 1960 coup d'état, he established the partyless Panchayat system, which governed the country for 28 years until the introduction of multi-party democracy in 1990. During his reign, Nepal experienced a period of industrial, political and economic change which opened it to the rest of the world for the first time, after the 104-year-long reign of the Rana rulers, who kept the country under an isolationist policy, came to an end in 1951.