NRB clips directors wings
KATHMANDU:
The directors of the bank and financial institutions from now on have to disclose the loans taken by them and their family members.
Issuing a circular today, the central bank has directed the bank and financial institutions’ directors to publish the details of the loans taken by them and their family members in the annual report.
“The directors have to furnish the details of the loans borrowed by the firms and companies that is owned by them and their families,” according to the directive of the central bank that has made the directors disclose their total borrowing including their families and companies to avoid instances of misappropriation of funds by the directors.
The recent failures of bank and financial institutions were the result of bad corporate corporate governance.
All of the seven cases of failure of financial institutions including Samjhana Finance and Nepal Development Bank that are in liquidation process, the financial institutions had crashed as chairmen and directors have been embezzling the bank’s fund.
Most of them were found to be involved in taking loans from their own financial institution in the name of their family members and also in the name of fake companies.
The regulation is supposed to keep the directors in check so that they will not indulge in such borrowing and lending.
The measure will also prevent directors from taking the decisions that will give the companies owned by them or family members any undue advantage, according to the central bank.
In its bid to improve corporate governance of bank and financial institutions, the central bank has recently forbidden the executive chairman to undertake the position of chief executive officers.
In the bank and financial institutions that went through solvency crisis in the recent times had chief executive as the executive chairman who wielded enormous power over the company.
Meanwhile, the central bank has also directed the commercial banks to get their small deposits up to Rs 200,000 by Deposit and Credit Guarantee Corporation (DCGC), issuing a circular.
The class ‘A’ financial institutions also have to insure the saving and fixed deposits held by individual depositors. Earlier, class ‘B’, ‘C’ and ‘D’ financial institutions were directed to get their small deposits insured.
Source: THT
The directors of the bank and financial institutions from now on have to disclose the loans taken by them and their family members.
Issuing a circular today, the central bank has directed the bank and financial institutions’ directors to publish the details of the loans taken by them and their family members in the annual report.
“The directors have to furnish the details of the loans borrowed by the firms and companies that is owned by them and their families,” according to the directive of the central bank that has made the directors disclose their total borrowing including their families and companies to avoid instances of misappropriation of funds by the directors.
The recent failures of bank and financial institutions were the result of bad corporate corporate governance.
All of the seven cases of failure of financial institutions including Samjhana Finance and Nepal Development Bank that are in liquidation process, the financial institutions had crashed as chairmen and directors have been embezzling the bank’s fund.
Most of them were found to be involved in taking loans from their own financial institution in the name of their family members and also in the name of fake companies.
The regulation is supposed to keep the directors in check so that they will not indulge in such borrowing and lending.
The measure will also prevent directors from taking the decisions that will give the companies owned by them or family members any undue advantage, according to the central bank.
In its bid to improve corporate governance of bank and financial institutions, the central bank has recently forbidden the executive chairman to undertake the position of chief executive officers.
In the bank and financial institutions that went through solvency crisis in the recent times had chief executive as the executive chairman who wielded enormous power over the company.
Meanwhile, the central bank has also directed the commercial banks to get their small deposits up to Rs 200,000 by Deposit and Credit Guarantee Corporation (DCGC), issuing a circular.
The class ‘A’ financial institutions also have to insure the saving and fixed deposits held by individual depositors. Earlier, class ‘B’, ‘C’ and ‘D’ financial institutions were directed to get their small deposits insured.
Source: THT
