No national treatment to foreign banks: Lawmakers

- Post Report, Kathmandu

Jan 19, 2016-

Lawmakers on Monday stressed that the government should not give national treatment to fully foreign-owned banks which have been allowed to operate in Nepal since 2010.Commenting on the bill on the Bank and Financial Institution Bill (Bafia), many lawmakers said that foreign banks should be treated

separately by categorizing the nature of the service they offer.

The Bafia Bill allows foreign banks to engage only in wholesale banking to protect domestic banks from competition from international banks with massive capital and large business operations.Speaking at a discussion on the Bafia Bill organized by the parliamentary Finance Committee, lawmaker Yagya Raj Sunuwar said it would not be appropriate to provide similar treatment to foreign banks.

Providing an example of the developed countries where banks are categorised as depository and non-depository, Sunuwar said non-depository banks can be provided a limited right to do business.The Bafia Bill has attracted 52 amendment proposals from 22 lawmakers. They include barring bank chairmen from serving more than two terms, reducing the percentage of public shares set aside for bank staff and allowing banks and financial institutions (BFIs) to have only one traded union, among others.

Sunuwar criticized the Bafia Bill for disregarding issues related to mutual funds, pension funds, investment companies and micro credit institutions.  

Lawmaker Ichchha Raj Tamang demanded that the act allow bank chairman to serve more than two terms. Tamang is also the chairman of Civil Bank and has tabled an amendment proposal in Parliament.“As it takes several years just to become familiar with the business, two terms will not provide enough time for the board chairman to improve the institution,” he added.

The bill also says a professional director may not serve more than one term. Tamang demanded that this provision should be changed too. “As there is a deficit of experts in the sector, the provision could hinder the operation of BFIs,” he said. However, Nepal Rastra Bank has maintained that allowing the chairman and chief executive officer to serve more than two terms poses increased risks because they could hide wrongdoings in banks and financial institutions. The central bank has already released these provisions through a directive, and they have been formally inserted in the bill.

Meanwhile, a few lawmakers have urged flexibility in the policy on trade unions in BFIs. The current bill says that there should not be more than one trade union at each institution. “This clearly contradicts Trade Union Act 1992 that permits the establishment of up to four unions in an institution,” said lawmaker Chudamani BK.Lawmakers have also demanded that the Bafia Bill establish a minimum wage rate for employees of BFIs and continue the practice of allocating 5 percent of the public shares to them.

Sub-committee formed

 The parliamentary Finance Committee has formed a seven-member sub-committee to deal with the amendment proposals. The panel consists of lawmakers Ichchha Raj Tamang, Udaya Shamsher Rana, Deepak Kuikel, Gopal Dahit, Kedar Prasad Sanjel, Bimal Kedia and Goma Kunwar. The sub-committee is expected to submit a final report to the Finance Committee in two weeks.

 

Published: 19-01-2016 09:17

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