The Nepal Rastra Bank has come into controversy again even as the row over the choice of governor has not settled — this time over the post of deputy governor left vacant after one of its deputy governors, Bijaya Nath Bhattarai, was appointed to lead the central bank. Bhattarai has recommended two candidates, Lekhnath Bhusal and Krishna Kumar Pradhan, who do not figure at the top of the list of the possible candidates on the scale of ‘performance and capability.’ According to the Nepal Rastra Bank Act 2002, the candidates for deputy governor should be recommended from among the officers of special class on this very basis and the cabinet appoints deputy governors on the recommendation of the governor, who has to forward the names of the candidates twice the number of the vacancies.

However, governor Bhattarai has been quoted as saying that he recommended the two on the basis of seniority. But critics counter that Bhattarai has not even respected this criterion, because Bhusal and Pradhan come first and fourth in seniority respectively, those coming second and third having been sidelined. Allegations have surfaced also against the recommendations for promotion to the three vacant posts of special class made on the grounds of seniority while reportedly ignoring the major criterion of ‘performance and capability’. Towards the end of the outgoing governor Tilak Rawal’s term, efforts were made to clinch the promotions, but the finance ministry is reported to have stalled the decision, as the grounds for the recommendations were found ‘unclear’.

These allegations are likely to cast a shadow over the five-year term of Bhattarai, who became governor after the priority candidate was disqualified. Bhattarai himself was not the seniormost candidate among the deputy governors, either. As press reports had it, he was not favoured by the then prime minister or the finance minister or certain donor agencies, who lobbied for their own candidates. But in deference to the law, he was made governor. So if Bhattarai wants to make his tenure notable for good performance, he should first abide by the NRB act and the rules and regulations. The central bank has been unable to show that things have been done in the proper way. Therefore, the present controversy would reflect poorly on the NRB and exert adverse impact on its restructuring as well as on the financial sector reforms. The issue may even prove to be a small test for the government, which has pledged to provide ‘good governance’. The donors like the World Bank and the IMF could, while staying away from lobbying for certain individuals, take exception to any violations of the important criteria, which form the basis for the continuance of their assistance.