BFIs fail to appoint chiefs within given timeframe
KATHMANDU, July 11
It is mandatory for banks and financial institutions (BFIs) to appoint a chief executive officer (CEO) within three months of the post being vacant as per a directive of Nepal Rastra Bank (NRB) — the central regulatory and monetary authority. However, some commercial and development banks have failed to do so.
Some commercial banks — class ‘A’ financial institutions — have only managed to appoint acting CEOs instead of appointing a full-time chief executive. Century Commercial Bank, for example, has not appointed a CEO since last 15 months and the bank’s management is under the responsibility of Acting CEO Anuj Mani Timilsina. Acting CEO Timilsina was appointed after then CEO Ganesh Kumar Shrestha had stepped down. Shrestha had to resign following NRB’s instruction that barred promoters of a bank to hold senior management positions in the respective institution.
Kumari Bank, another class ‘A’ financial institution, also has yet to appoint a CEO though the post has been vacant for four months after then CEO Udaya Upadhyay resigned.
Though CEO’s post is vacant at Grand Bank as well, NRB’s directive is not applicable in this particular case because the bank is in the process of being acquired by Prabhu Bank. Grand Bank’s Acting CEO Sachin Jung Rayamajhi has informed that the bank’s annual general meeting, slated for July 23, will approve the acquisition proposal of the board.
Besides special cases like Grand Bank, other BFIs must appoint a CEO within three months of the post being vacant and NRB has sought clarifications from board of directors of the concerned banks. NRB has sought clarification from BFIs that have not appointed a CEO yet, according to Manmohan Kumar Shrestha, executive director at BFIs Regulation Department of NRB. “NRB will penalise the non-compliant BFIs.”
Manmohan added that the clarification provided by the concerned banks to the central bank’s supervisory team on reasons why a chief executive had not been appointed was not satisfactory.
Not only commercial banks, even some development banks — class ‘B’ financial institutions — have not followed the central bank’s instruction. Some national level development banks also have yet to appoint a chief executive.
NRB has sought clarifications from the board of Ace Development Bank, Business Universal Development Bank, Yeti Development Bank and Clean Energy Development Bank as to why they have failed to appoint a CEO for more than a year. Clean Energy Development Bank has given a clarification stating that it is in the process of merging with NMB Bank — class ‘A’ bank — but the clarifications provided by the three remaining development banks are not satisfactory, said Manmohan.