Kathmandu, July 29:

Effective regulation and supervision are key elements in preventing financial system from any systemic risk. “Thus, Nepal Rastra Bank (NRB) has in recent years adopted multi-pronged strategy to consolidate the regulatory and supervisory functions,” said Krishna Bahadur Manandhar, acting governor of the NRB, inaugurating the first SEACEN-CTCBC/Deutsche Bundesbank Intermediate Course on ‘Banking Supervision and Financial Stability’, organised by NRB-Bank and Financial Institution Regulation Department in collaboration with SEACEN Centre, here in the valley today.

The SEACEN seminar series have been instrumental in providing an excellent opportunity for central banks to foster ties amongst themselves to exchange knowledge and experiences, and to enhance the capacity of their employees.

Centre for Technical Central Bank Cooperation (CTCBC), Deutsche Bundesbank, the organisation of international has significant contribution to develop the capabilities of financial regulators throughout the world.

“It will benefit to us as well,” he said, adding that problems of the banking sector tend to have significant effect across the wider economy hence it becomes the matter of interest for the regulators to make bank able to manage their risk and respond to challenges.

“Although, risk management and mitigation are the responsibilities of the concerned banks themselves, supervisors also have an important role to play in ensuring that banks are prudently managed for the stable financial system,” he said. “Efforts have been made to enhance central bank staff’s capacity to carryout both on-site and off-site supervisory functions.”

The problems faced by regulators in the developing countries are similar. “Poor culture of corporate governance in banking organisations has become serious concern to the supervisors,” he added. Manandhar also showed concern over the practice of public disclosure that is yet to be effective to the desired extent.

“Accounting, financial reporting and auditing practices still need massive fine tuning to make them compatible to the international norms,” he said, adding that bank supervisors are the key custodians of the overall financial stability. “Technical skills on related fields have to be drawn from information technology, accounting, international financial activities and central banking practices.”

The participants from Bangladesh Bank, National Bank of Cambodia, Reserve Bank of India, Bank Indonesia, Financial Supervisory Service Korea, Bank Negara Malaysia, Bangko Sentral ng Pilipinas, Bank of Thailand, State Bank of Vietnam and Nepal Rastra Bank are taking part in the seminar.