Kathmandu, July 20:

Board of Directors (BoD) of Nepal Rastra Bank (NRB), the central bank, has decided to extend the management contract of Nepal Bank Ltd (NBL) by six months.

NBL has, citing not enough time for reform process, asked for extension of the management contract for 18 more months. “But the central bank has extended the management contract for only six months,” Ashwini Pudasaini, spokesperson of NBL said.

The foreign management was awarded the contract under the financial sector reform programme in 2002. Financial sector reform programme is the strategy aimed at making the financial system sound and supportive to attain the economic development objectives.

The reforms of two state-owned banks Nepal Bank Ltd (NBL) and Rastriya Banijya Bank (RBB) has started under the financial sector reform programme in 2002. The management of NBL was contracted out to ICC Consulting, Bank of Scotland (Irland) in July 2002 for three years. The contract was again extended in 2005 for two more years that is going to expire on July 21.

Restructuring of two largest banks — RBB and NBL — was one of the key measures of the financial reform programme under which automation and computerisation of the two largest commercial banks, launching the second phase of VRS, initiating massive recovery from the Non-Performing Assets (NPA), recapitalisation for improvement and meeting regulatory compliance on capital adequacy were some of the targets.