Kathmandu, September 25

After a long debate on the retirement provision of its staffers, Nepal Rastra Bank (NRB) has proposed the Public Service Commission (PSC) — the constitutional body involved in selecting meritorious candidates required by the Nepal government — to remove the 30-year service period from the NRB Employees’ Bylaws.

The board of directors meeting of the central regulatory and monetary authority has decided to retain a single provision regarding retirement of NRB employees at the age of 58. As per the existing employees’ bylaws, NRB employees will be retired based on age factor and completion of 30-year service period, whichever comes first.

The central bank has proposed to remove the 30-year service period provision citing that a large number of high-ranking officials will be retired by next year under this provision and it wants to bring uniformity in retirement provision at par with civil servants.

According to the central bank, altogether 233 officer-level — which includes special class, first class, second class and third class — staffers will be retired by next year as they will meet the 30-year service period despite having few years before they meet the compulsory retirement age. The number of staffers to be retired by next year is one-fourth of the total staffers of the central bank, according to NRB officials.

“As the central bank is going to bid farewell to a large number of staffers from next year, the hiring process needs to be initiated from now in coordination with the PSC,” said former governor of the NRB Deependra Bahadur Kshetri. “If the commission is unable carry out the selection on time, the remaining staffers will automatically get promoted, while those who do not meet the promotion criteria may have to take on additional responsibility until the vacancy is filled and this could be disastrous for the central bank.”

According to former governor Kshetri, there are both pros and cons in the removal of 30-year service period provision.

Keeping the provision will increase pension liability of the NRB, while trained human resources will be lost. As per the employees’ bylaws of the NRB, the person who retires after completing 30 years of service will get one layer promotion and get monthly pension calculated as per the last salary scale multiplied by service period plus remaining age before turning 60, divided by 50. Currently, a total of 2,700 former NRB staffers are receiving pensions. “As the central bank has to pay a large amount as pension, why not take service from its staff till they turn 58?” Kshetri questioned.

On the other hand, there are several negative consequences in removal of the provision. “This will bar fresh blood from entering the NRB and the employees of government banks will also seek uniformity in retirement with the central bank. This, in turn, may contradict with the central bank’s initiatives of financial sector reforms,” said Kshetri.

The 30-year service period provision was introduced in the central bank as the NRB initiated the financial sector reform programmes from 2000. The aim was mainly to inject fresh blood in the central bank to strengthen its regulation and supervision capacity and to improve the quality of service in government banks — Rastriya Banijya Bank, Agricultural Development Bank and Nepal Bank.

The PSC has said that it will take a decision after receiving NRB’s proposal.