Finance Minister for specifying disqualification of BFIs’ directors in BAFIA itself

KATHMANDU:- Finance Minister Dr Swarnim Wagle has said that if the rules about the disqualification of directors of banks and financial institutions are kept only in the Nepal Rastra Bank Act, it would create a legal contradiction, so there should be clear provisions about the matter in the Bank and Financial Institution Act (BAFIA) itself.

During the clause-wise discussions on the Nepal Rastra Bank (Third Amendment) Bill, 2083 in today’s meeting of the Finance Committee, the House of Representatives, Finance Minister Wagle mentioned that the related issues should be addressed in the relevant act itself.

He stated that the Ministry of Finance has sent a proposal to the Ministry of Law, Justice, and Parliamentary Affairs to amend the relevant provisions of the BAFIA. The Finance Minister mentioned that a process has been initiated to make the necessary amendments to Section 18(1) (m) of BAFFIA through a bill to amend certain Nepal acts.

Section 18 of the Bank and Financial Institutions Act, 2073 (BAFFIA) deals with the disqualification of directors. Clause (d) of sub-section (1) of Section 18 of the Bank and Financial Institutions Act, 2073 states that a person is not eligible to be a director if the regulatory body has taken action against them for the bank or financial institution violating the law, or if five years have not passed since such action.

“Even if it is written in the Nepal Rastra Bank Act, it becomes ineffective if the commercial banks do not address it. So, we will have to get it written directly in the BAFIA itself,” Finance Minister Wagle said, explaining that if amendments are made only in the central bank act, there will be a need to reconcile it again with the banks, which is why the government has moved forward with the amendment process in the relevant act itself.

The committee’s chairman Krishnahari Budhathoki and other committee members pointed out that after the Supreme Court’s decision, even those who were issued reprimand could be considered ineligible, and this could create serious problems in the banking sector.

They felt that it is necessary to make the required arrangements not only through the Central Bank Act but also through BAFIA.

The representative from the Ministry of Law, Justice, and Parliamentary Affairs also informed that the process of amending the concerned bill and arranging provisions in BAFIA is moving forward.

The committee is holding clause-by-clause discussions on the Nepal Rastra Bank (Third Amendment) Bill, 2083. RSS