Banks and financial institutions (BFIs) will now have to divide their shareholders into two groups only, promoters and public, and end the practice of splitting their promoters into several groups, Nepal Rastra Bank (NRB) said on Tuesday.
The central bank has directed A, B, C and D class BFIs to lump their promoter shareholders together in a bid improve corporate governance. It has also told them to amend the provision of multiple shareholder groups in their memorandum of association as per the new directive at their next annual general meeting (AGM).
NRB officials said that the move was guided by a motive to enhance corporate governance among BFIs as the current provision allowed the same people to be elected to the board repeatedly despite their bad track record.
“Shareholders having a higher stake in BFIs could depend on the same group to be elected to the board,” said Manamohan Kumar Shrestha, NRB spokesperson. “Now, the candidates will have to please all the shareholders in the promoter group to be elected, and this offers a chance to other shareholders to be elected to the board.” The central bank has been trying to remove board members having a bad track record in governance due to their influence on a section of their group.
“Even if they have to leave the board, they create an environment for their proxies to be elected to the board, and thus maintain their influence perpetually,” said Shrestha.
This situation has appeared particularly in BFIs promoted by the NB Group, namely Nepal Bangladesh Bank and Nepal Credit and Commerce Bank, among others.
NRB scraps United Dev’s licence
NRB has cancelled the licence of United Development Bank based in Jitpur, Bara after the Appellate Court, Hetauda initiated liquidation proceedings against it by appointing a liquidator.
The development bank had plunged into a crisis following misappropriation of massive amounts of money by its promoters and directors.
The central bank decided to put United Development Bank into liquidation after seeing no way for it to continue operations considering the scale of its losses. NRB said that its board meeting on September 4 had decided to take away its licence.
Last year, the Appellate Court, Hetauda had sentenced the former chairman, director and manager of United Development Bank to three years in jail each for banking fraud.
Judges Ananda Mohan Bhattarai and Bam Kumar Shrestha handed down the prison terms against former bank chairman Rabindra Bahadur Singh, director Radha Krishna Amatya and manager Rakesh Raj Shrestha.
The court also ruled that Rs 67.5 million be recovered from Singh for losses caused to the bank besides slapping him with a fine of equal amount. Amatya was ordered to pay a fine of Rs 67.5 million too.
source: the kathmandu post,24 sept 2014
LINK
The central bank has directed A, B, C and D class BFIs to lump their promoter shareholders together in a bid improve corporate governance. It has also told them to amend the provision of multiple shareholder groups in their memorandum of association as per the new directive at their next annual general meeting (AGM).
NRB officials said that the move was guided by a motive to enhance corporate governance among BFIs as the current provision allowed the same people to be elected to the board repeatedly despite their bad track record.
“Shareholders having a higher stake in BFIs could depend on the same group to be elected to the board,” said Manamohan Kumar Shrestha, NRB spokesperson. “Now, the candidates will have to please all the shareholders in the promoter group to be elected, and this offers a chance to other shareholders to be elected to the board.” The central bank has been trying to remove board members having a bad track record in governance due to their influence on a section of their group.
“Even if they have to leave the board, they create an environment for their proxies to be elected to the board, and thus maintain their influence perpetually,” said Shrestha.
This situation has appeared particularly in BFIs promoted by the NB Group, namely Nepal Bangladesh Bank and Nepal Credit and Commerce Bank, among others.
NRB scraps United Dev’s licence
NRB has cancelled the licence of United Development Bank based in Jitpur, Bara after the Appellate Court, Hetauda initiated liquidation proceedings against it by appointing a liquidator.
The development bank had plunged into a crisis following misappropriation of massive amounts of money by its promoters and directors.
The central bank decided to put United Development Bank into liquidation after seeing no way for it to continue operations considering the scale of its losses. NRB said that its board meeting on September 4 had decided to take away its licence.
Last year, the Appellate Court, Hetauda had sentenced the former chairman, director and manager of United Development Bank to three years in jail each for banking fraud.
Judges Ananda Mohan Bhattarai and Bam Kumar Shrestha handed down the prison terms against former bank chairman Rabindra Bahadur Singh, director Radha Krishna Amatya and manager Rakesh Raj Shrestha.
The court also ruled that Rs 67.5 million be recovered from Singh for losses caused to the bank besides slapping him with a fine of equal amount. Amatya was ordered to pay a fine of Rs 67.5 million too.
source: the kathmandu post,24 sept 2014
LINK
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