Kathmandu, November 21

Exactly six months after the House of Representatives send back the Banks and Financial Institutions (BAFI) Bill to the Finance Committee for necessary revisions following severe criticism aimed at the lawmakers from the public sphere, the parliamentary panel today approved the legal framework with some amendments.

The bill will now be submitted at the Parliament very soon for endorsement, according to Prakash Jwala, chairman of the Finance Committee

The bill, which was primarily drafted by the Nepal Rastra Bank (NRB), has been revised again after the parliamentary panel had drawn flak for the earlier revisions. The earlier revised bill had been severely criticised as the lawmakers who had worked in the revision process were associated with and inclined towards bank and financial institutions (BFIs).

The earlier revision of the BAFI Bill had tried to dent Nepal Rastra Bank (NRB)’s supervisory and regulatory authority. When the earlier revised provisions of the bill came to light, the lawmakers involved in the revision process were widely criticised for their motive in trying to weaken the central bank’s role.

The bill endorsed from the parliamentary panel today has reverted on the controversial provisions to its old format. The provision for the two-term service tenure (of four years each) of BFI chairpersons has been reinserted.

Earlier, the lawmakers had dealt a blow to proponents of good corporate governance by removing the provision on two-term service tenure for BFI chairpersons, allowing them to serve the institutions throughout their lives. They had also prolonged the term of chairpersons and CEOs of BFIs from four years to five years. But as per the revised provision, a CEO of a BFI can serve for two terms (each of four years).

The lock-in period to convert promoters share into public share has been extended to 10 years from seven years earlier.

More importantly, the revised bill has barred the people in constitutional posts to be associated with BFIs as board of director or hold any other position.

Likewise, the provision to allocate at least two per cent share to the staffers has been revised. As per the revised provision of the bill, only 0.5 per cent of the total share of individual BFI will be allocated for their staffers. Many experts and former governors of the central bank had strongly opposed the idea of allocating two per cent share to the staffers.

“If the volume of shares allotted to staffers is increased, chances are they will be more interested in stock market than their daily works,” explained former NRB governor Yubraj Khatiwada.

Similarly, the revised provision has also barred microfinance companies to use the term ‘bank’ in their names like many such institutions have been doing at present.