The Apex Court lifted age limit for board of directors (BoD) and chief executive officers (CEOs) of banks and financial institutions (BFIs).
Issuing an interim order in response to a writ petition filed by CEO of Prime Commercial Bank Narayan Das Manandhar – against the central bank decision – the single bench of Chief Justice Cholendra Shumsher JB Rana today ordered the central bank not to implement its circular to the BFIs on capping the age for the CEOs immediately and put it in the status quo.
The central bank – on August 5 – has issued a circular barring BFIs from appointing or reappointing CEOs, who are above 65 years of age. Likewise, the central bank has also barred CEOs from continuing work in BFIs after crossing 69 years of age. The central bank has set age limit of 70 years for BoDs in BFIs and barred BoDs from continuing in the same capacity beyond 75 years of age.
After the central bank’s new rule on age, chief executive officer of Prime Commercial Bank Narayan Das Manandhar, chairman of Everest Bank BK Shrestha and chairman of Nabil Bank Shambhu Poudel got retirement on the basis of the age. But Prime Commercial Bank CEO Manandhar moved to the Supreme Court. He filed a writ at the Apex Court – on August 7 – seeking the annulment of the central bank move.
In response to Manandhar’s writ petition, the Apex Court has not only directed the central bank not to implement its age bar provision for CEOs and BoDs of BFIs, but also directed that Manandhar be reinstated to his earlier post.
Staying the decision of central bank, the Apex Court stated that the central bank’s decision to set age limit for CEOs at BFIs ‘seemed against the law’. The Apex Court also stated that the NRB Act 2002 – that the central bank has cited in the circular – does not provide it the authority to fix the age bar for CEOs of BFIs, as it has only fixed minimum age of 25 years only.
The Apex Court also struck down the rule citing a fundamental right in the Constitution that ensures rights to employment for every citizen of the country. “Against a provision in the constitution that only the legislative law can restrict the constitutional right to employment for citizens, it is seen that the defendant's circular has infringed the constitutional right of the petitioner to exercise the fundamental right,” reads the interim order of the Court.
While the Bank and Financial Institution Act 2017 has fixed the minimum age to become the CEO, no legislation has either fixed the age limit or made any restriction, reads the text of the interim order.
Though, the central bank said that it will continue to defend the new rule on the age bar, the Court has provided 15 days for the central bank to reply in writing why the court should not issue the order as demanded by the petitioner or any legal reasons why not to issue the order in line with the defendant.
The Banks and Financial Institutions Act 2017 and Nepal Rastra Bank Act 2002 only can have provision on minimum age limit for CEOs and Bods in BFIs. However, the central bank introduced the policy by amending the Unified Directives 2075 on August 6.
The Supreme Court in its stay order stated that the central bank’s move was against the Bank and Financial Institution Act 2017. “Article 29 of the Act has put the minimum age limit of 25 years for CEOs, but it has not imposed any maximum age limit,” reads the statement issued by the Apex Court.
Issuing an interim order in response to a writ petition filed by CEO of Prime Commercial Bank Narayan Das Manandhar – against the central bank decision – the single bench of Chief Justice Cholendra Shumsher JB Rana today ordered the central bank not to implement its circular to the BFIs on capping the age for the CEOs immediately and put it in the status quo.
The central bank – on August 5 – has issued a circular barring BFIs from appointing or reappointing CEOs, who are above 65 years of age. Likewise, the central bank has also barred CEOs from continuing work in BFIs after crossing 69 years of age. The central bank has set age limit of 70 years for BoDs in BFIs and barred BoDs from continuing in the same capacity beyond 75 years of age.
After the central bank’s new rule on age, chief executive officer of Prime Commercial Bank Narayan Das Manandhar, chairman of Everest Bank BK Shrestha and chairman of Nabil Bank Shambhu Poudel got retirement on the basis of the age. But Prime Commercial Bank CEO Manandhar moved to the Supreme Court. He filed a writ at the Apex Court – on August 7 – seeking the annulment of the central bank move.
In response to Manandhar’s writ petition, the Apex Court has not only directed the central bank not to implement its age bar provision for CEOs and BoDs of BFIs, but also directed that Manandhar be reinstated to his earlier post.
Staying the decision of central bank, the Apex Court stated that the central bank’s decision to set age limit for CEOs at BFIs ‘seemed against the law’. The Apex Court also stated that the NRB Act 2002 – that the central bank has cited in the circular – does not provide it the authority to fix the age bar for CEOs of BFIs, as it has only fixed minimum age of 25 years only.
The Apex Court also struck down the rule citing a fundamental right in the Constitution that ensures rights to employment for every citizen of the country. “Against a provision in the constitution that only the legislative law can restrict the constitutional right to employment for citizens, it is seen that the defendant's circular has infringed the constitutional right of the petitioner to exercise the fundamental right,” reads the interim order of the Court.
While the Bank and Financial Institution Act 2017 has fixed the minimum age to become the CEO, no legislation has either fixed the age limit or made any restriction, reads the text of the interim order.
Though, the central bank said that it will continue to defend the new rule on the age bar, the Court has provided 15 days for the central bank to reply in writing why the court should not issue the order as demanded by the petitioner or any legal reasons why not to issue the order in line with the defendant.
The Banks and Financial Institutions Act 2017 and Nepal Rastra Bank Act 2002 only can have provision on minimum age limit for CEOs and Bods in BFIs. However, the central bank introduced the policy by amending the Unified Directives 2075 on August 6.
The Supreme Court in its stay order stated that the central bank’s move was against the Bank and Financial Institution Act 2017. “Article 29 of the Act has put the minimum age limit of 25 years for CEOs, but it has not imposed any maximum age limit,” reads the statement issued by the Apex Court.
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