The Parliament's Public Accounts Committee (PAC) has decided what it believes should be done with the ailing Nepal Bank Limited (NBL) and Rastriya Banijya Bank (RBB) although the decision remains largely unclear. Some government officials we spoke to had no clue as to what the report said. A sub-committee report adopted by PAC last week says there have been procedural lapses in actions taken by the central bank, which Nepal Rastra Bank (NRB) officials admitted to at hearings. The final word is that NRB's efforts at bank reforms have so far been illegal and that reforms should henceforth be carried out in accordance with the law.
The report does not mention "handing over banks to foreigners", the over-arching theme at its hearings, nor does it instruct the government not to do that. The rather verbose, five-page sub-committee report, says everything but how the government should proceed with its plan to hand over management of the banks to professionals.

One prescription says former officials and directors were responsible for the mess (no mention of politicians though)-which we all knew-and recommends action against wrongdoers who it does not name. Unlike previous decisions, when lapses were pinpointed and specific suggestions made, this time it remains unclear. All those responsible for what happened should have been punished in accordance with the law, the report says. The report goes on to add that both NRB and the Ministry of Finance are responsible for the mess-not a revelation though-and instructs them to be aware of the law and act responsibly. The PAC also found fault with NRB for not employing a clause (29 a) in the law that gives it authority to take-over banks and dismiss their management. NRB says it took a consultative approach instead, after slipping once by calling for proposals for managing the banks without seeking their concurrence-especially in the case of NBL in which the government has a minority shareholding.

PAC also says that no study was undertaken to assess the impact of the "serious" work before initiating it, despite admission by government officials at hearings that the banks could collapse if left as they were. PAC adds that it is unclear who would be responsible for the consequences after new management teams were hired-NRB, MoF or the directors of the
two banks?