KATHMANDU, April 3: Nepal Rastra Bank (NRB) Governor Chiranjibi Nepal has urged bankers to shed the mentality that the central regulatory bank will take care of bank and financial institutions (BFIs) if they fall into crisis.
The newly appointed governor's remark has come at a time when takeover of crisis-ridden BFIs is rising. The central bank has been able to improve financial health of such BFIs following their takeover. Addressing the 9th Annual General Meeting (AGM) of Development Bankers Association, Nepal (DBAN) on Friday, Governor Nepal also advised bankers to frame self-regulations to not let the problems plague the BFIs. "If the board of directors and the management moves ahead with precautions, the institution may not encounter major problems," said Nepal.
He also urged development banks to reduce their non-performing loans (NPL) which is at around 4 percent. "Development banks are doing well. The central bank is ready to unlock any obstacles and challenges if they have any," he added.
Stating that he does not want to hear any case of BFIs landing into trouble, he urged bankers not to create environment which forces the central bank to act as a dictator. "Since every borrower may not have fixed collateral, the bank should be willing to extend their loans on the basis of prospective borrower's feasible project," he added.