Banks and finance companies can continue interest earning accounts

The central bank today extended the timeframe for six months for the development banks and finance companies to continue their interest earning accounts in others banks and financial institutions after the class B and C financial institutions repeated requested to let them maintain the account for the time being.
The development banks and finance companies can continue their interest-earning accounts in other banks and financial institutions till mid-July 2012, irrespective of their location,” the central bank said.
Earlier, the central bank had directed the development banks and finance companies to close their interest earning accounts by mid-January. However, the central bank had allowed the development banks and finance companies with head offices outside the Kathmandu valley to close their interest-earning accounts in commercial banks within mid-July.
But, development banks and finance companies have been requesting the central bank to let them all continue their accounts until the end of the current fiscal year, irrespective of their location and the category of the accounts.
"We have been urging the central bank to give us a little more time to manage funds,” president of Finance Companies’ Association of Nepal Rajendra Man Shakya said, welcoming the central bank’s decision.
The central bank had introduced the provision to maintain financial discipline.
The banks and financial institutions had been using the deposits to manage their credit to deposit ratio, according to the central bank.
The central bank has today also allowed the chief executive officer of banks and financial institutions to get paid up to five per cent more than the second man, if the second man’s salary and allowance is higher than that of first man.