The central bank has set an age bar for chief executive officers (CEOs) and board of directors (BoD) of banks and financial institutions (BFIs).
Nepal Rastra Bank (NRB) – issuing a circular – has barred BFIs from appointing or reappointing CEOs, who are above 65 years of age. According to the new rule, the chief executive officer will not be allowed to continue to work in any bank or financial institution after crossing the age of 69.
Likewise, the central bank has set 70 years age limit for board of directors, though the banks and financial institutions have reservation over the central bank decision. The board director will not be allowed to continue in the same capacity after crossing the age of 75, the circular reads.
The circular has, however, not made it clear whether the age bar will affect those who have already got the appointment. The central bank will, however, decided about enforcement of age bar for those who have already got appointment later before the new rule came into force.
Likewise, the central bank has also issued a new circular on the basis of Monetary Policy for the fiscal year 2019-20. The new circular has directed commercial banks to lower their average interest rates spread below 4.4 per cent by mid-July next year. The maximum difference between the average interest rates on loans and deposits was capped at 4.5 per cent earlier. However, commercial banks that go for merger and acquisition (M&A) and start joint operation by mid-July next year will get a relaxation on the deadline for meeting the interest rates spread cap.
The central bank has also barred banks from charging more than two percentage points in premium on their base rate as interest rates on loans of up to Rs 1.5 million on agricultural, entrepreneurial and business promotion. As per Monetary Policy, the central bank has also directed commercial banks to issue debentures/corporate bonds amounting to 25 per cent of their paid-up capital by end of the fiscal year. The BFIs failing to abide by the new requirement will face actions like a ban on the expansion of their branches and no refinance facility, according to the central bank.
The circular has also lowered the maximum limit that a BFI can collect deposits from a single institutional investor. A BFI, at present, will not be allowed to mobilise more than 10 per cent of deposits from a firm, company or organised institution, down from earlier ceiling of 15 per cent. While reducing the general refinance rate for bank loans to small and medium enterprises, it has also lowered the maximum interest rates that BFIs can charge from them. Under the new arrangement, the central bank will provide refinance facility for loans up to Rs 1 million to BFIs at 3 per cent. The banks are not allowed to charge more than 7 per cent interest rates for loans floated under refinance facility. Earlier, such refinance rate was 5 per cent while the ceiling on lending rate was 10 per cent.
Likewise, the central bank has also allowed BFIs to float loans against the collateral of arable land even without road access. The central bank has made it mandatory for BFIs to provide decision about such loans within seven days with clear reasons.
Nepal Rastra Bank (NRB) – issuing a circular – has barred BFIs from appointing or reappointing CEOs, who are above 65 years of age. According to the new rule, the chief executive officer will not be allowed to continue to work in any bank or financial institution after crossing the age of 69.
Likewise, the central bank has set 70 years age limit for board of directors, though the banks and financial institutions have reservation over the central bank decision. The board director will not be allowed to continue in the same capacity after crossing the age of 75, the circular reads.
The circular has, however, not made it clear whether the age bar will affect those who have already got the appointment. The central bank will, however, decided about enforcement of age bar for those who have already got appointment later before the new rule came into force.
Likewise, the central bank has also issued a new circular on the basis of Monetary Policy for the fiscal year 2019-20. The new circular has directed commercial banks to lower their average interest rates spread below 4.4 per cent by mid-July next year. The maximum difference between the average interest rates on loans and deposits was capped at 4.5 per cent earlier. However, commercial banks that go for merger and acquisition (M&A) and start joint operation by mid-July next year will get a relaxation on the deadline for meeting the interest rates spread cap.
The central bank has also barred banks from charging more than two percentage points in premium on their base rate as interest rates on loans of up to Rs 1.5 million on agricultural, entrepreneurial and business promotion. As per Monetary Policy, the central bank has also directed commercial banks to issue debentures/corporate bonds amounting to 25 per cent of their paid-up capital by end of the fiscal year. The BFIs failing to abide by the new requirement will face actions like a ban on the expansion of their branches and no refinance facility, according to the central bank.
The circular has also lowered the maximum limit that a BFI can collect deposits from a single institutional investor. A BFI, at present, will not be allowed to mobilise more than 10 per cent of deposits from a firm, company or organised institution, down from earlier ceiling of 15 per cent. While reducing the general refinance rate for bank loans to small and medium enterprises, it has also lowered the maximum interest rates that BFIs can charge from them. Under the new arrangement, the central bank will provide refinance facility for loans up to Rs 1 million to BFIs at 3 per cent. The banks are not allowed to charge more than 7 per cent interest rates for loans floated under refinance facility. Earlier, such refinance rate was 5 per cent while the ceiling on lending rate was 10 per cent.
Likewise, the central bank has also allowed BFIs to float loans against the collateral of arable land even without road access. The central bank has made it mandatory for BFIs to provide decision about such loans within seven days with clear reasons.
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