Kathmandu, September 5:

The board meeting of the Nepal Rastra Bank (NRB) continued on Monday to take stock of the reform process in the Nepal Bank Ltd (NBL), which is going on for the past three years. The NRB board meeting may decide on the continuation of the same team or restructure it to expedite the reform process.

Senior NRB officials, on conditions of anonymity, disclosed to The Himalayan Times that the World Bank (WB) is putting pressure on NRB board to renew the contract of NBL management, led by J Craig McAllister. It may be recalled that the World Bank board meeting held in Washington in March 2004 had cancelled the approval of $75 million loan for the second phase of financial sector reforms, due to the slow progress of the reform process.

Apparently, WB is using this promised loan amount as an inducement for NRB to continue with the foreign management. However, many members of NRB board are supposed to have expressed dissatisfaction with the performance of NBL management on the first day of meeting.

High level officials of the central bank disclosed that that the commitments made by the management team of Nepal Bank Ltd while signing the contract have not been fulfilled which is making it difficult for NRB board to renew its contract.

Some NRB members are of the view that the existing management should be reshuffled and local experts should be encouraged to take up the reform process. As per the NRB Act, it is against the law to influence a policy decision of the NRB board by donor agencies or the government. A total of about 7,000 shareholders have invested in NBL.