Retired staff of Nepal Rastra Bank (NRB) will be barred from joining banks and financial institutions (BFIs) for up to three years after leaving their jobs.

The parliamentary Finance Committee on Tuesday inserted the restriction in the bill to amend the Nepal Rastra Bank Act in a bid to avoid conflict of interest.

The governor, deputy governor and executive directors of the central bank are already subject to such a provision, and the House panel has extended the restriction to junior level staff.

However, the Finance Committee has reduced the prohibitory period for deputy governors and executive directors to three years from the proposed seven and five years respectively in the original bill.

The governor, however, has been banned for life from working in BFIs after leaving the central bank. Former staff will need to get NRB’s okay to join any BFI at the end of the prohibitory period.

The Finance Committee decided to insert the provision in the bill following a request by NRB Governor Chiranjeevi Nepal to the House committee on Tuesday even though lawmakers had submitted no proposals.

During the meeting, Governor Nepal said that even officer-level employees of the central bank had become CEOs of BFIs right after retirement. “So it is necessary to fix a certain prohibitory period for them too to avoid conflict of interest,” he told lawmakers.

The prohibitory provisions were inserted in the bill due to concerns that central bank officials could work in the interest of the BFIs which they planned to join after retirement.

As per the current NRB Act, central bank officials can work in other BFIs one year after their retirement.

During Tuesday’s meeting, the governor had asked lawmakers to reduce the prohibitory period for deputy governors and executive directors arguing that the central bank possessed the cream of the country’s manpower in the banking sector, and a long prohibitory period may prompt them to go abroad which would deprive the nation of vital talent.

After listening to the lawmakers, Finance Minister Bishnu Poudel suggested making the latest revisions in the bill although Finance Ministry officials seemed to be reluctant to cut the prohibitory period for deputy governors and executive directors. In fact, the

Finance Ministry had jacked up the prohibitory period for deputy governors and executive directors from the original limit proposed by NRB.

Former NRB deputy governor Gopal Kafle said that the central bank had proposed limits of five and three years respectively.

Talking to the Post, Kafle lauded the latest revision. “The provision requiring former staff to get the central bank’s approval before joining BFIs will allow it to examine whether their actions have favoured potential future employers,” he said.

• Governors banned from joining any BFI in any capacity for life.
• Deputy governors and executive directors prohibited from joining BFIs for three years after retirement.
• Directors and officers banned from joining BFIs for two years after retirement.
• Central bank’s approval necessary to join BFIs even after prohibitory period expires.
• NRB board directors free to join BFIs after leaving the central bank