To stem the exodus of senior officials of the central bank to join private bank and financial institutions (BFIs), the central bank has introduced a new provision in the amendment bill of Nepal Rastra Bank (NRB) Act, 2006.
The amendment bill tabled in the parliament on Sunday restricts governor, deputy governor and executive director of NRB from joining any BFIs following their retirement or leaving their post from the central bank.
The new development has come at a time when the trend of central bankers rushing to join BFIs that they regulate, monitor or supervise themselves while at the central bank is on the rise.
As NRB does not keep tabs on what its officials are doing following their retirement, it is difficult to find out how many former NRB employees are currently working with BFIs. But a snap survey conducted by Republica shows that over two dozen BFIs have retained former NRB officials in senior executive posts. Many former officials of NRB have secured lucrative posts in the boardroom of the BFIs.
ALSO READ: Banking sector faces ethical question as ex-regulators rush to join private banks
Joining BFIs immediately after retirement or relinquishing the central bank's post raises the issue of 'conflict of interest', says experts on corporate governance. In the lack of clear provisions in the law, joining private BFIs has become an ethical rather than legal issue for central bankers.
Banks and Financial Institutions Act 2006 (BAFIA) bars NRB Governor, Deputy Governor or Special Class employees from taking a job in the board of BFIs within a year of their retirement. The law, however, does not bar them from assuming the post of CEO in BFIs.
According to the new measure included in the draft bill, central bank governor will not be allowed to take up any jobs in any BFI after leaving the central bank. Similarly, deputy governors will be prohibited from joining the BFIs in any posts for seven years after the retirement or leaving the central bank. However, such restriction for executive directors of NRB is five years.
“Since it (working with other BFIs after the central bank) compromises conflict of interest and makes adverse impact in the corporate governance of the BFI, the new measure has been included,” reads the amendment bill.
source:republica,3 jan 2015
LINK
The amendment bill tabled in the parliament on Sunday restricts governor, deputy governor and executive director of NRB from joining any BFIs following their retirement or leaving their post from the central bank.
The new development has come at a time when the trend of central bankers rushing to join BFIs that they regulate, monitor or supervise themselves while at the central bank is on the rise.
As NRB does not keep tabs on what its officials are doing following their retirement, it is difficult to find out how many former NRB employees are currently working with BFIs. But a snap survey conducted by Republica shows that over two dozen BFIs have retained former NRB officials in senior executive posts. Many former officials of NRB have secured lucrative posts in the boardroom of the BFIs.
ALSO READ: Banking sector faces ethical question as ex-regulators rush to join private banks
Joining BFIs immediately after retirement or relinquishing the central bank's post raises the issue of 'conflict of interest', says experts on corporate governance. In the lack of clear provisions in the law, joining private BFIs has become an ethical rather than legal issue for central bankers.
Banks and Financial Institutions Act 2006 (BAFIA) bars NRB Governor, Deputy Governor or Special Class employees from taking a job in the board of BFIs within a year of their retirement. The law, however, does not bar them from assuming the post of CEO in BFIs.
According to the new measure included in the draft bill, central bank governor will not be allowed to take up any jobs in any BFI after leaving the central bank. Similarly, deputy governors will be prohibited from joining the BFIs in any posts for seven years after the retirement or leaving the central bank. However, such restriction for executive directors of NRB is five years.
“Since it (working with other BFIs after the central bank) compromises conflict of interest and makes adverse impact in the corporate governance of the BFI, the new measure has been included,” reads the amendment bill.
source:republica,3 jan 2015
LINK
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