Top NRB officials could be barred from joining BFIs

KATHMANDU, JUN 04 -

Governor and deputy governors of the Nepal Rastra Bank (NRB) could be barred from joining any banks and financial institutions (BFIs) after their retirement.

Officials from the Finance Ministry, Law Ministry and NRB, in their ongoing consultations on the draft of the new Bank and Financial Institution Act (Bafia), have proposed this provision.

The officials have also proposed a ban on executive directors and directors of the NRB for seven and five years, respectively, after their retirement from getting involved in BFIs.

The officials said there has been a “general consensus” to include such provisions in the new Bank and Financial Institution Act (Bafia) to avoid any conflict of interest. “As many top NRB officials joined BFIs after their retirement in the past, such a provision has been necessary to avoid conflict of interests,” said a government official.

As per the existing provision in the Bafia, the governor, deputy governors and special-class employees (executive directors) are allowed to become director of BFIs one year after their retirement, or one year after they are relieved, from the central bank. There are several instances of top NRB officials holding higher positions in BFIs and insurance companies after their retirement.

Former governor Satyandra Pyara Shrestha worked as chairman of Nabil Bank, while former deputy governor Krishna Bahadur Manandhar is the bank’s current chairman.

Some of the former NRB officials have also promoted commercial banks, where they assumed the role of chief executive.

Former NRB executive director Rajan Singh Bhandari is now chief executive officer of Citizens Bank, while another former NRB executive director Ganesh Kumar Shrestha ran Century Bank until recently. The first NRB governor, Himalaya Shumsher Rana, opened the Himalayan Bank.

Meanwhile, the draft Act has also provisioned banning the convicts of banking offense from promoting BFIs for life. Same ban has proposed for individuals convicted by the court for corruption.

A Finance Ministry official said that they were holding discussions on each of the provisions of the proposed Bafia. The NRB board has asked the officials to end the discussions and submit the final version of the draft within mid-June. “We plan to complete the discussions within a week,” said the official.

Source: The Kathmandu Post