“The unhealthy competition among the mushrooming banks and financial institutions and inadequate supervision by the central bank are the root cause on the growing irregularities and corruption in this sector” the economists, politicians and high level government officials said on Monday, at a program organized at the capital.
They said that the private banks were providing easy and reliable banking to the people but some of them failed to promote transparency while they accumulated wealth. This, they added, could constrain growth and investment prospects in Nepal.
They claimed that irregularities could significantly impact the country’s development strategy.
Similarly Finance Minister, Surendra Pandey on the same program said that if Nepal Rastra Bank (NRB), the central bank of Nepal, monitored these sectors more effectively, the rampant irregularities would be mitigated.
He said that there was no investment friendly environment in the real estate sector. If this sector improved, banking sectors could flourish as well, he added.
Dr. Prakash Sharan Mahat, Minister without portfolio, said that the central bank should monitor the fiscal discipline of the banking sector in order to curb irregularities.
“Distributing the operating license will not be enough for the NRB to do, it must monitor every activity in order to keep the banking sector sound,” he said.
Dr. Narayan Manandhar, corruption expert, pointed out that the banking and financial sectors were being driven towards corruption due to money laundering.
A number of banking and financial institutions were encouraging land sharks to convert their black money into white, giving them favorable environment, which is increasing the corruption level, Dr. Manandhar said.
“The Nepalese banks and financial institutions, despite being the productive sector, were also in a high risk due to the lack of proper monitoring and supervision, in the funds used and misused,” he said.
This trend could lead the banking sector into a total collapse, Dr. Manandhar said, adding that corruption in the banking and financial sectors were evident right from the service delivery stage of the banks.
Mr. Sashin Joshi, President of Nepal Bankers’ Association, said that there were a lot of challenges emerging in the banking sector, making this sector a high risk area.
Lack of accountability, systematic governance and monitoring mechanism in the banking sector should go away, Joshi said.
The government should be stern in its legal action against the bank defaulters and the bank owners, he added.
Source: arthakoartha.com
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Tuesday, June 9, 2009
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