Central Bank not to compromise on fiscal governance

18 July Kathmandu : Nepal Rastra Bank (NRB) is all set not to make any compromise in connection with maintaining good governance in banks and financial institutions. The central bank is laying special emphasis on enforcing the legal norms and values among the banks and financial institutions which is directly associated with keeping good governance.

“Zero tolerance will be adopted regarding the compliance of the directive on institutional governance issued by the central bank for the licensed banks and financial institutions”, stated a monetary policy issued on last Friday for the fiscal year 2020/21.

Keeping into consideration the austerity needs following the COVID-19, the central bank has braced up the policy for reviewing the perks and benefits of the Chief Executive Officers and other high-placed officials of the banks and financial institutions.

The central bank has mooted the measure to axe the facilities of the higher management and broad of directors of the banks and financial institutions as they were found to increase the benefits on their own.

The Rastra Bank is also set to review the matters concerning the facilities. A standard guideline is to be formulated regarding the determination of meeting allowances and facilities for the board of directors.  It is expected to end the tendency of reaping benefits on their own decision. The policy has made effort to make the banks and financial institutions more responsible for the benefits of the clients.

The central bank has envisaged an arrangement to receive the queries, concerns, grievances and suggestions concerning banking service from the clients through a separate portal in the website of the NRB.

The monetary policy has also a special provision for the implementation of all types of grievances and suggestions via the financial client protection unit established in the BFIs.Likewise, the financial literacy programmes would be made effective and the financial literacy framework prepared by the banks would be brought into implementation.

Furthermore, the service charges to be taken by the BFIs from the clients would be made more systematic and transparent and the amount of service charge is capped within a certain limit.

As per the provision, the commercial banks can charge maximum of 0.75 percent, one percent to the development banks while 1.25 per cent and 1.50 per cent respectively to the finances and micro finances.