Follow the directions rather than lobbying; Governor

Kathmandu, September 25. Governor of Nepal Rastra Bank, NRB Dr. Chiranjibi Nepal requested the officials of Banks and Financial institutions to follow the orders of regulatory body other than lobbying political parties to influence the decision regarding increase of paid up capital.

In the program, held by Nepal Finance Company Ltd. to mark the 19^th annual general meeting, Governor Nepal suggested that the structure of paid up capital in Nepal is the lowest in South Asia and lacks the fund to invest in any big projects. Thus, the increase in paid up capital is justifiable. He requested the bank officials not to take the Directive as a pressuring provision but a time relevant practice. He also suggested merge as a good option to improve the efficiency of the banks and financial institution.

Due to the poor capability of Nepalese Banking sector, foreign investors are reluctant to invest in the sector. The directive will help to overcome such situation. Capital inadequacy has forced the banks to invest in groups even for a small project. A nation cannot develop with this kind of capital position. Likewise, paid up capital need to be increase in order to lure foreign investment toward our country. Thus, the banks and financial institutions should act accordingly without any doubt in mind, stated Dr. Nepal.

He also clarified the fact that the international standard time period for merger is 9-18 months whereas NRB has given comparatively more time to Nepalese Banking Sector.

In the same programme,  Mr. Shivanath Pandey executive director of NRB, reveals the fact that 10 out of 13 problematic companies are financial institution. He requested the senior officials of Banks and Financial Institutions to improve institutional efficiency of the financial institutions.

Recently elected chairman of Nepal Financial Institution Association and chief executive officer of Goodwill Finance pointed out the shortcomings of policies and directives to the Governor. He informed about the problems regarding current capital lending, credit rating, and d-mat.