Liberal banking license policy in doubt - Governor Bhattarai

KATHMANDU, July 27: Reinstated governor of Nepal Rastra Bank (NRB) Bijaya Nath Bhattarai has hinted that the ongoing liberal banking license policy might be suspended until supervision and monitoring capacity of the central bank was not strengthened.

Addressing a program organized at the central bank to welcome him, the governor said he was committed towards accelerating long-stalled financial sector reform program, which lost its pace after the he was dismissed from the post on corruption charge.

"Tremendous growth has been seen in the financial sector. But it doesn´t match with the pace of growth seen in strengthening supervision capacity of the central bank. The present pace of expansion can slow down if the central bank´s supervision capacity is not strengthened," he told the gathering.



Bhattarai, who returned to the post after 745 days, said that the growth seen in the financial sector has been above the growth seen in real sense, resulting in the expansion of only player thereby fueling unhealthy competition. "Encouragement of merger and acquisition is one of the best ways to deal with the rapid expansion of financial institutions and the negative consequences that might emerge in days to come,” he added.

Expressing concern over growing concentration of financial institutions in urban areas, Bhattarai said that the central bank would bring polices that will encourage them to expand their banking services to rural areas.

He also stressed on the need to improve the financial health of troubled-banks -- Nepal Bank Limited and Rastriya Banijya Bank. “We need to take the reform process initiated in those banks, which cost billion of rupees, to a logical end,” he said.

Bhattarai also said the central bank was fighting against poverty by expanding micro-finance in the countryside. "Policies to promote potential export sectors of the country will also be introduced," he said.

Earlier, outgoing governor Deependra Bahadur Kshetry told reporters that he could not complete some of the jobs, which he had planned, due to his unexpected removal from the post.

“I am not satisfied with the process by which I have been removed. I will consult with legal experts to explore the possibilities of challenging the decision,” he said.

No full support to Monetary Policy!

Nepal Rastra Bank Governor Bijaya Nath Bhattarai on Sunday said he broadly supports the policy adopted by the new Monetary Policy. But Bhattarai made it clear that he was not happy with the decision to reintroduce Statutory Liquidity Rate (SLR). He said necessary changes would be made in the policy -- with due endorsement of the Board of Directors -- so that it best serves the national interest.
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