Your brake is certainly not properly set up. Do not ride the bike in this state!
The rotor's brake track must run fully between the brake pads. The radial dimension of both match.
You rotor may be too small for the brake it its present set up, your wheel not properly inserted, or the brake caliper not mounted correctly.
Check your brake's manual for adjusting it to different rotor sizes with adapter plates. Often an adapter can be flipped to accommodate 140 mm and 160 mm rotors.
As general advise: do not fix it yourself.
Ask someone who knows what they are doing, for example, a certified mechanic. That you have to ask this question indicates you are not ready to tinker with brakes that are relevant to rider's safety.
