MPs seek amendments to new bill on BafiaA group of lawmakers have tabled an amendment proposal in the Parliament seeking limits in the constitutional posts to which the provision is applicable.
With the bill on Bank and Financial Institution Act (Bafia) barring those occupying any constitutional post from becoming board members of banks and financial institutions (BFIs) at the same time, a group of lawmakers have tabled an amendment proposal in the Parliament seeking limits in the constitutional posts to which the provision is applicable.
In their proposal, the lawmakers — Ichha Raj Tamang, Bhisma Nath Adhikari, Prem Bahadur Ale, Ganesh Kumar Pahadi, Umesh Shrestha, Baburam Pokharel and Yagya Raj Sunuwar — have demanded only the chiefs and members of constitutional bodies be barred from becoming board members of BFIs.
Nepal Rastra Bank (NRB) had included such a provision in the bill arguing those occupying constitutional posts, such as lawmakers, could mount unnecessary pressure on the NRB, leading to possible compromise of banking norms.
“The logic behind the provision is the NRB should not be forced to regulate lawmakers and other individuals enjoying constitutional posts,” said Maha Prasad Adhikari, recently retired deputy governor. “Instead of directly stating ‘lawmakers’ the bill stated ‘occupants of constitutional posts’ to address the issue indirectly.”
Among the lawmakers tabling the amendment proposal, Tamang is the chairman of Civil Bank, while Umesh Shrestha chairs Prime Bank’s board.
According to the bill, the term a chief executive officer of a BFI would be four years, which could be extended by another four-year term. It has limited the total tenure of the CEO in a BFI to just two terms.
However, the lawmakers have also sought scrapping the term limit.
NRB is of the view a same person holding the top executive post for a long poses risk to the BFIs concerned, given the CEOs could hide bad governances.
The lawmakers have also demanded annulment of the provision that seeks to make the board more responsible for risk management and internal control system. It has made a provision that the central bank could impose fine on BFIs for failing to provide details within the set deadline. It can impose a fine of Rs100,000 per day if the details are not made available within one week from the expiry of the deadline.
The fine goes up to Rs125,000 per day within two weeks since the deadline expiry and Rs150,000 per day after two weeks. The lawmakers have sought a blanket fine of Rs500,000 for disobeying the central bank.
With the bill preventing anybody having more than 0.1 percent of share ownership in a BFI from becoming a professional director, the amendment seeks to hike the cap to 1 percent.