 |
Kathmandu Thursday November 23, 2000 Mangshir 08, 2057.
|
NRB
adopts major reforms strategy
Move set to infuse life in banking sector
Post Report
KATHMANDU, Nov 22 - Nepal Rastra Bank, the
central bank of the country, has come up with an 18-point strategy with the core objective
of speeding up the process of financial sector reforms, which was introduced in the mid
eighties.
The strategy includes amending the Nepal
Rastra Bank Act, 2012, with a view to overcoming emerging challenges in the financial
sector and to provide a greater autonomy in its operations.
According to a press statement issued by the
bank here today, the newly-announced strategy includes implementing an effective monetary
policy, strengthening the monitoring capabilities of financial institutions, enhancing
security to depositors, encouraging investment into productive sectors, boosting an
efficient flow of financial information, promoting transparency in transactions, adopting
a modern and well-managed auditing system, developing money market and encouraging the
flow of export credit.
Furthermore, the establishment of cooperative
banks, export/import banks, investment bank and a credit-rating agency in the near future,
in addition to amending the existing acts related with financial institutions are some of
the other points of the strategy. NRB also plans to introduce other necessary acts
including the Merger and Acquisition Act.
As per the announced strategy, NRB would
improve its monitoring and inspection capabilities and during its first phase, special
priority would be given to Nepal Bank Limited (NBL) and Rastriya Banijya Bank (RBB). The
central bank would also evaluate credit rating and risk rating of financial institutions,
the release says.
Since a recently-conducted study on the
financial condition of NBL and RBB revealed dismal performance with a substantial decrease
in gross assets, special attention would be paid to restructuring and privatizing NBL and
RBB, the release adds.
In the same way, stimulation of competition
in the banking sector is another strategy that the central bank has tailored. In this
regard, the existing limitation of 50 per cent equity participation for joint venture
banks would be extended with the aim of attracting more foreign investment into the
banking sector. Besides this, opening of branches of renowned foreign banks in Nepal would
be encouraged.
In view of the failure of NBL, RBB and Nepal
Industrial Development Corporation to maintain financial transparency and up-to-date
auditing, the central bank will also improve its present accounting and auditing system
and enhance transparency of financial institutions by regularly disseminating information
regarding their financial status.
Similarly, various financial instruments and
banking services would also be introduced to extend banking services into different
sectors of the economy. In this regard, subsidies can also be granted through annual
budget of the government, the release says.
In order to solve the present problem of
capital ownership, the central bank would make necessary arrangements to limit the control
over a financial institution to a single person or group or institution. However, in the
case of financial institutions with weak management, NRB will allow proper investors to
hold controlling shares. The existing cross-holding ownership of commercial banks would be
abolished.
The central bank would also establish a
Banking Training Centre and make structural changes in Credit Information Centre.
Similarly, the Assets Reconstruction Company would also be established to reduce the ratio
of bad loans and improve Central Banking Research and Financial Monitoring Mechanism.
Finally, necessary steps would be taken to
improve the financial as well as the institutional capacity of the Rural Development
Banks, which were instituted to promote micro-credit with the core objective of reducing
rural poverty through income generation, the release concludes.
Other Stories
|
