The Nepal Rastra Bank, the banking sector regulator, has made it mandatory for banks and financial institutions (BFIs) to seek its permission prior to accepting awards from foreign agencies.

At the time of seeking the permission, BFIs must submit documents that establish the legitimacy and credibility of foreign entities that are planning to extend awards or felicitate banks and financial institutions, says a directive issued by the NRB on Tuesday.

Also, BFIs should not accept awards if they are being extended based on donations or other financial assistance extended directly or indirectly by banking institutions that are being honoured.

The regulator introduced these measures as expenses of BFIs on foreign trips, under the pretext of attending award ceremonies, started increasing, according to NRB Spokesperson Narayan Prasad Paudel. The directive has reminded BFIs to resort to austerity measures while sending their officials, chairperson and board members on foreign trips. “We are not trying to prevent banks from accepting awards extended by foreigners,” said Paudel. “We just want to regulate the sector to ensure malpractices do not take place.”

One of the international awards that BFIs in Nepal flaunt is ‘Bank of the Year’ award extended by The Banker, an English-language monthly publication on international financial owned by The Financial Times. Senior staff and board members of BFIs have been found attending many other award ceremonies throughout the year, according to the NRB.

“We do not want BFIs to unnecessarily spend money on such trips,” said Paudel.

NRB has made it mandatory for BFIs to implement a guideline on foreign trips of chairman, CEO and board members of BFIs within mid-April. The guideline should authorise board of directors to sanction foreign trips upon assessment of benefits that BFIs could derive from these visits, says the directive.

“This, however, is not an attempt to discourage bankers from going abroad even on important missions,” said Paudel.

Regulator extends recapitalisation date

KATHMANDU: The Nepal Rastra Bank, the banking sector regulator, has allowed Class ‘B’ and ‘C’ financial institutions that are operating in a single district to meet the new minimum paid-up capital requirement within mid-January 2020. The NRB had extended the deadline through a directive issued on Tuesday. Earlier, the NRB had directed Class ‘B’ financial institutions operating in a single district to raise minimum paid-up capital to Rs500 million within mid-July, 2017, while Class ‘C’ financial institutions operating in one district were asked to raise minimum paid-up capital to Rs400 million within that period. “Action will be taken against other Class ‘B’ and ‘C’ financial institutions that have failed to meet the new capital requirement within the stipulated time,” says the directive.