The World Bank's deadline to the government for initiating financial reforms expires next month, and it is uncertain whether Nepal will get another extension. If it does, it will be the fifth extension.

Employee unions of the two banks have decided to team up to protest the proposed reforms, essentially the handing over of Nepal Bank Ltd and Rastriya Banijya Bank to external management teams. The unions say that hiring highly paid consultants using a World Bank loan was not the solution. They say the ills can be addressed if there is no political interference. Reformers argue that foreign managers will have the independence to sever links between politicians, business groups and bank employees-identified as a major reason for the crisis. A study based on 1998 data had said both the banks are insolvent, even though they have substantial liquid funds. The liquidity has resulted from their nationwide reach, and is not because they have recovered their investments. Nearly half of the loans at the two banks are said to be non-performing.