KATHMANDU, Feb 17: Nepal Rastra Bank (NRB) has prohibited banks and financial institutions (BFIs) from giving more than two terms to their chairman, board directors and chief executive officers (CEOs).
Issuing a circular on Monday, the central regulatory bank instructed BFIs to introduce a provision in their respective bylaws for barring chairman, board directors and CEO from holding his/her tem more than two times.
NRB has directed BFIs, who do not have such provision yet, to make necessary amendment to the bylaws through their upcoming annual general meeting.
The central regulatory bank has also restricted BFIs from floating loans to any firm, company or organization in which majority shares (more than 50 percent) are held by the BFIs´ CEO or other senior level officials.
Meanwhile, NRB has also barred an individual, holding shares worth one percent of the paid-up capital of commercial banks and two percent of the paid-up capital of development banks, from assuming any post in that bank.
Banking experts told Republica that such measures will help to maintain corporate discipline in the banking industry. Some bankers, however, said such move was ´too interventionist´.