The Bank and Financial Institution (Bafi) Bill, which should have become a law by now, has started gathering dust at the office of Speaker Onsari Gharti, as she is hesitating to forward it to the Office of the President for authentication following complaints about inclusion of controversial provisions in the document.

The Bafi Bill, which, once signed into law, will regulate banks and financial institutions, was approved by a majority of parliamentarians on January 10. Generally, bills that are approved by the House are immediately signed by the Speaker. The bill is then forwarded to the Office of the President for authentication after which it becomes a law.

“So far, the Speaker has not put her initials on the Bafi Bill,” Babin Sharma, press advisor to Speaker Gharti, said. “She is currently holding discussions with different stakeholders after hearing complaints about inclusion of controversial provisions in the Bill.”

Sharma did not say what those “controversial provisions” were, but earlier many had said the Bill provided leeway to bank chairpersons to continue serving banks and financial institutions for unlimited period of time.

At the time when the content of the Bill was discussed at the Parliamentary Committee on Finance, lawmakers had agreed to allow chairpersons to serve banking institutions for a maximum of two terms of five years each. But by the time the Bill reached the House, the provision had been changed. 

Many suspect lawmakers, who are in the board of banks and financial institutions, used influence to tweak the content of the Bill.

Also, the Bill now contains controversial provision on appointment of executive chairperson at banking institutions. This arrangement will allow a person to play a dual role of chairman of a bank or a financial institution and the head of the management as well. This practice was abolished a few years ago to avoid conflict of interest between the board that frames policies and management that executes decisions made by the board.

Among others, the Bill approved by the House also allows promoters of a banking institution, who have stake of 50 percent or more in any firm, to acquire loans for their companies from any bank or financial institution in which they are not shareholders.

All these provisions, according to experts, will weaken governance at banking institutions and promote conflicts of interest.

Although these controversial provisions should have been noticed by lawmakers while approving the Bill, many failed to notice these changes. They were later flagged by officials of the Nepal Rastra Bank (NRB), the banking sector regulator.

Recently, a team led by NRB Governor Chiranjibi Nepal had also met with Speaker Gharti to discuss the controversial issues. Before that, Deputy Prime Minister and Finance Minister Krishna Bahadur Mahara and other officials of the ministry also met with Gharti to discuss the content of the Bill.   

“However, it may be too late to make changes to the Bill now, because the Speaker will be obliged to sign the document and forward it to the President’s Office,” a source said.

This is not the first time lawmakers had noticed controversial provisions in a bill after it was endorsed by the House. Earlier, parliamentarians had made the same mistake while approving the fourth amendment to the Education Act and later regretted.