Self regulation is key to healthy financial sector

The banks and financial institutions have been advised to follow self regulation along with abiding by the central bank's regulations for the better financial stability.
"It is not possible for the central bank to examine details of creditors, detect discrepancies and take action so directors and management of the banks and financial institutions need to manage the risk by themselves," said governor of Nepal Rastra Bank (NRB) Dr Yubaraj Khatiwada addressing a workshop here in the central bank today.
Lately, the good corporate governance has been a serious issue with many a banks and financial institutions leading some of them to failure.
He also opined that banks and financial institutions have to strengthen their internal risk management capacity to tackle the possible threats in the future.
"The promoters, directors and managers of the banks and financial institutions must follow proper governance ethics for a better future that could attribute to the good corporate governance as basis of financial stability," he said, adding that the real sectors like manufacturing are though not in a good shape at present due to transitional period, banks and financial institutions should support the sector by extending loans.
The governor also advised the banks and financial institutions not to hasten the lowering of deposit interest rate based on the recent liquidity easing but they should try to attract more deposits from the informal channels for long-term sustainability.