The number of former officials of Nepal Rastra Bank, the central bank of Nepal, who are joining private banks and financial institutions is increasing at an alarming rate. The list consists of former governors, executive directors, and directors. Former governors include Satyendra Pyara Shrestha, who is presently the chairman of Nabil Bank, and Ganesh Bahadur Shrestha, founder chairman of Alpic Everest Finance Limited.
Associations between Nepal Rastra Bank's former officials and private banks have turned out to be highly controversial, specially when ex-officials take up positions in financial institutions they once monitored. Many officials have also been involved in various transgressions and are putting the central bank's reputation at great risk.
According to the Rastra Bank act, governors and deputy governors are not allowed to join any financial institution within one year of their leave or retirement. However, officials rarely follow the rule. Former deputy governor, Lekhnath Bhusal, for example, joined Nepal Bangladesh Bank as its advisor less than a year after his retirement from the central bank. This violation became public only when trouble started brewing at Nepal Bangladesh Bank. Bhusal was later fined Rs 20,000.
Although it is not new for banking experts to continue working in the same sector, the recent trend of former officials joining institutions they had previously monitored does raise some serious questions. Former governor, Dipendra Purush Dhakal, says ex-officials should not be prevented from joining the private sector, rather action should be taken against them if they are involved in financial irregularities.
The central bank is now planning to amend its rules to discourage this practice and safeguard its image. Deputy governor Maha Prasad Adhikari, explains: "Former officials who are tarnishing the bank's reputation will be evaluated seriously by our leadership." He says the bank will introduce a new policy as soon as possible to put a stop to such unhealthy and unethical practices before they spiral further.