Finance minister calls for BAFIA to set BFIs director disqualification rules

KATHMANDU: Finance Minister Dr Swarnim Wagle has urged that rules on the disqualification of directors of banks and financial institutions (BFIs) be set out clearly in the Bank and Financial Institutions Act (BAFIA), warning that keeping them only in the Nepal Rastra Bank Act would create a legal contradiction.

Speaking at clause-by-clause discussions on Nepal Rastra Bank (Third Amendment) Bill, 2083 at a meeting of the Finance Committee of the House of Representatives, Dr Wagle said the Ministry of Finance has sent a proposal to the Ministry of Law, Justice and Parliamentary Affairs to amend the relevant provisions of BAFIA. He said a process has been initiated to amend Section 18(1)(m) of the Act, which deals with the disqualification of directors.

Clause (d) of sub-section (1) of Section 18 of the Bank and Financial Institution Act, 2073 (2017) states that a person is not eligible to be a director if the regulatory body has taken action against them for a bank or financial institution violating the law, or if five years have not passed since such action.

“Even if it is written in the Nepal Rastra Bank Act, it becomes ineffective if the commercial banks do not address it. So, we will have to get it written directly in the BAFIA itself,” Finance Minister Wagle said, adding that amending only the central bank act would require reconciliation with the banks later, which is why the government has moved to amend the relevant act.

Committee Chairperson Krishnahari Budhathoki and other members warned that following a Supreme Court decision, even those who received a reprimand could be deemed ineligible, a development they said could create serious problems for the banking sector. They said arrangements are needed not only through the Nepal Rastra Bank Act but also through BAFIA.

A representative from the Ministry of Law, Justice and Parliamentary Affairs told the committee that work to amend the concerned bill and include the provisions in BAFIA is underway. The committee continued its clause-by-clause review of the Nepal Rastra Bank (Third Amendment) Bill, 2083.

By RSS