Corporate governance discussed; duty of loyalty and duty of disclosure must

ShareSansar, September 17:

Nepal Rastra Bank Governor Dr Yuba Raj Khatiwada has said that the political environment outside the financial industry also determines the level of the corporate governance of the banks and financial institutions.

“This (political environment) is fundamental in ensuring the corporate governance because we are the subject of broader socio economic system. We cannot isolate ourselves from these environmental aspects upon us,” said Governor Dr Khatiwada, speaking at a seminar entitled ‘Corporate Governance-Where have we failed?’ organized by National banking Institute in capital on Wednesday.

He also underlined the need of sufficient laws and regulations to endure the corporate governance in the BFIs.

“Despite long conflict and transitions, we have not let any crisis to appear. We have seen countries where there were better governance, better political stability and more transparency also suffering from the huge financial crisis,” he said.

Governor Dr Khatiwada was, however, quick to point out the need of introspection to ensure better governance.

“We have to be a bit more futuristic based on the experiences of our past, not to repeat the mistakes, but to be a forward-looking what could be done by the regulators or other stakeholders,” he added.

Also, speaking at the program, Nepal Bankers Association president Rajan Singh Bhandari said that many public depositors have loss heavy amount of their money in the past due to the lack of corporate governance in the BFIs in the past.

“Many BFIs fails because due to non-compliance and the lack of governance,” he said. “Problem related to the corporate governance arises in the banks due to the conflict of interest or personal interest who are in the leadership, lack of internal control system and the managerial gap between top and lower managerial level,” he added.

Similarly, Sashin Joshi, CEO of NIC Asia Bank, also said that the governance of every institution has come up under scrutiny and the BFIs are no exception of that.
“Due to loyalty and duty of disclosures from the part of BFIs’ management and board is the prerequisite of the corporate governance,” said Joshi.

Lopa Rahman, Corporate Governance Specialist at IFC South Asia, Sheela Rahman, Advocate at Supreme Court of Bangladesh, K Mahmood Sattar, former CEO of The City Bank and Grand Bank Nepal’s CEO Parshuram Kunar, among other bankers, are scheduled to present their papers related to the corporate governance at an one-day long seminar held with the support of International Finance Corporation and Asian Development Bank.