Central bank blamed for micromanaging BFIs

 Bank promoters complained the central bank for micromanaging the banks and financial institutions (BFIs).

In a meeting with finance minister Bishnu Prasad Paudel today, the office bearers of Confederation of Banks and Financial Institutions Nepal (CBFIN) complained against the central bank for micromanaging the BFIs. They also blamed the central bank for its undesired intervention in fixing banking service charge and inter-bank service fee.

The umbrella organisation of the chairpersons and directors of BFIs in the country also demanded the government to facilitate Non-Resident Nepalis (NRNs) to bring in funds through banking channels, to provide easy access to small and medium enterprises (SMEs) to get subsidised loans and to allow banks to conduct brokerage business. They also demanded the finance minister to facilitate in reducing corporate tax for banks from 30 per cent to 25 per cent and providing flexibility in spread rate for the financial institutions looking for merger and acquisition.

It’s not the first time, the Finance Ministry has been provoked to step in the central bank’s shoe. Earlier, the then finance minister Dr Yuba Raj Khatiwada was blamed for stepping into the shoes of the central bank. Khatiwada was also blamed for acting as central bank governor rather than finance minister. He tried to fix the interest rate during the interest rate war some three years ago, overtaking the jurisdiction of the central bank. But this time around the banks’ promoters are seeking Finance Ministry intervention in the functioning of autonomous central bank.