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Kathmandu Saturday February 23, 2002 Falgun 11, 2058.
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NRB warns of dissolving NBL board
Decision affects lending
Post Report
KATHMANDU, Feb 22: Nepal Rastra Bank (NRB), the
central bank, Thursday summoned the Board of Directors of Nepal Bank Limited (NBL) to
submit explanation why not to dissolve the Board of Director of the ailing bank.
The notice issued as per the Nepal Rastra Bank
Act Section 86 sub-section 6 has given 15 days’ time to the NBL board of director to
furnish their explanation on the issue.
Following the issuance of the notice, the loans
that have to be approved by board have been stopped, according to a highly placed source
in the bank. The bank has made a total of over Rs 23 billion up to now.
The central bank, in a latter sent to the NBL,
has also said that if the board fails either to submit its explanation or the explanation
submitted is not satisfactory to the central bank, it would dissolve the board.
The notice to dissolve the board of director has
come at a time when preparations are underway to hand over the management contract of the
bank to a private party.
According to an NBL source, the central bank has
issued the notice to the semi-government owned commercial bank raising question over the
efficiency of the board of director of the bank.
Rajendra Kumar Khetan, one of the enfluential
board members, commenting on the issuance of the notice said, "The decision of the
central bank has come very surprisingly and suddenly. However, being a regulatory body, I
think, NRB must have done this in keeping with the future of NBL in mind".
NBL is going to submit the reason why the board
of directors should not be dissolved, and the explanation will also include various
efforts that the board has done to rescue the bank, he added.
Experts say that dissolution of the board of
directors of NBL will have negative impact on the privatization process of the state-owned
enterprises (SOEs) as NRB itself has private representative in its board.
Similarly, it will send wrong signal to the
entire private-public partnership approach supported by the international donor agencies
during the Nepal Development Forum (NDF) meeting and the National Development Council
(NDC) say experts.
The board has one member each from the finance
ministry and the central bank and the rest five positions are filled from the private
sector. The incumbent board of director was constituted on April 23, 1999.
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