Infrastructure banks will get licence: NRB

Nepal Rastra Bank (NRB) has clarified that it has not stopped issuing licenses to open infrastructure banks and micro-finance development banks although it has stopped giving permits to new financial institutions.

NRB governor Bijaya Nath Bhattarai said on Sunday that the central bank would cooperate in every way possible with promoters wishing to establish such banks. The budget for the current fiscal year has provisioned that such banks would be established by mid-December with the participation of the government and private commercial banks. At a meeting with the newly elected executive committee of the Society of Economic Journalists, the governor also said that the central bank would call back its officials from Nepal Bank Limited which is currently under NRB control.
"We will withdraw after arranging professional management in the bank soon," he added. However, NRB has failed to find appropriate candidates to run the country's second largest bank in three earlier attempts. The central bank had sought applications for chief executive officer to be appointed on a competitive basis but could not find a candidate with the right qualifications. Bhattarai, however, expressed confidence that NRB was moving ahead with a new process and would not fail this time.

"Being a regulator, we should not run the bank," he said. "It will invite conflict of interest." He stressed the need to change the status of the negative capital fund and provisioning on the part of Nepal Bank and Rastriya Banijya Bank to positive for transforming them into a healthy environment.

"For this, the promoters must put in capital to change their status," he said. The government fully owns Rastriya Banijya Bank while it has a 41 percent stake in Nepal Bank. Bhattarai said that NRB would strengthen the Deposit Insurance and Credit Guarantee Corporation to make it capable of insuring deposits to the minimum level.
The government has made a provision that saving and fixed deposits up to Rs. 200,000 would be insured. "There is no possibility of opening a new deposit insurer immediately," he said. "So we are going to strengthen the existing institution."
He added that NRB would accelerate the process for a sound financial system as the financial reforms process had stagnated in the last two years.
Source: Kantipur