Bankers have demanded the removal of provisions that disqualify bank CEOs or directors solely on the basis of receiving a general warning. Santosh Koirala, President of the Nepal Bankers’ Association, expressed dissatisfaction with the ban on CEOs becoming governors in the proposed bill, suggesting that alternatives should remain open. Rajesh Upadhyay, Senior Vice President of the Confederation of Bankers and Financial Institutions Nepal (CBFIN), emphasized the need to classify punishments according to the nature of the offense and called for the regulation of cooperatives by the central bank.
3 Shrawan, Kathmandu – Bankers participating in discussions on the Nepal Rastra Bank Bill at the Parliamentary Finance Committee have stated that the central bank should not disqualify CEOs or directors of banks and financial institutions merely on the grounds that a warning or clarification has been issued. They suggested that the bill amending the Nepal Rastra Bank Act, 2058, should clearly define the circumstances under which CEOs and directors can be disqualified.
Recommendations include providing punishments proportional to the nature of offenses and introducing practical amendments to the banking sector regulations. Additionally, bankers expressed discontent with the proposed measure preventing commercial bank CEOs from becoming governors.
Santosh Koirala, President of the Nepal Bankers’ Association, argued that the bill should not categorically bar bank CEOs from assuming the governor’s position. Instead, he proposed keeping the option open by instituting a cooling-off period after serving as CEO before eligibility to become governor. He also indicated that bringing large cooperatives under the supervision of the central bank could help address persistent issues in the cooperative sector.
Rajesh Upadhyay, Senior Vice President of CBFIN, stressed the importance of categorizing punishments based on the severity of offenses when disciplining banks and financial institutions. He cautioned against treating matters that warrant simply warnings or advisory notices as serious offenses.
“There is a need to distinguish the classes of offenses; subjects receiving general warnings or advice should not be treated as committing serious crimes,” he stated. He further explained that since the bill’s definitions encompass all financial institutions, including cooperatives that collect deposits from the public, their regulation should also fall under the jurisdiction of the Nepal Rastra Bank. Cooperatives engaged in banking activities must be subject to constitutional and Nepal Rastra Bank Act regulations, he remarked.
Surendra Raj Regmi, Vice President of the Nepal Bankers’ Association, recommended eliminating provisions that disqualify CEOs or directors due to minor errors made by employees. He argued that holding CEOs or directors disqualified for minor mistakes of low-level staff contradicts the principles of natural justice. He pointed out that many CEOs with over three decades of service currently feel uncertain about these provisions and that the bill should address and remove these ambiguities.
Sanijiv Manandhar, CEO of Prime Commercial Bank, also urged for more flexibility in disciplinary measures. He emphasized that warnings or advisory actions should not be grounds for removal from office. Citing a writ petition before the Supreme Court in which the Nepal Rastra Bank has categorized such actions as basic administrative penalties, he recommended that the amendment to the Nepal Rastra Bank Act be adjusted accordingly.
