From the Nepali Press
Ashish Gyawali in Annapurna Post, 25 February
With Nepal Rashtra Bank (NRB)'s governor Yubaraj Khatiwada's five-year tenure coming to an end next month, the government has announced its search for a new candidate. On Tuesday, the cabinet formed a three-member panel led by Finance Minister Ram Sharan Mahat to recommend two names for the post.
Many aspirants, from bank CEOs to former finance secretaries, have begun lobbying for their candidacy. A host of challenges awaits the new governor.
Immediately after assuming office, the new governor will have to decide whether to release controversial businessman Ajeya Raj Sumargi's money which is currently withheld by NRB. After news that Sumargi’s company has not been registered with the Department of Industry came to light, the NRB withheld around Rs 3.5 billion, which was deposited in Sumargi's bank accounts by unknown sources in the British Virginia Islands.
How the new governor deals with Sumargi's case will be an early indicator of his character.
Another decision that the new governor needs to make is whether to allow Ncell from repatriating dividends to its foreign promoters which has so far been barred by NRB. How the new governor acts on this issue will partly determine the future of foreign investment in Nepal.
During Khatiwada's tenure, nearly a dozen financial institutes were declared 'problematic'. Khatiwada had also stopped issuing licenses to new banks and financial institutes. But, there are many development banks and financial companies still sailing through rough water. Will the new government introduce stringent policies to save problematic financial institutes?
CEOs of some private banks are already lobbying for issuance of new licenses. It will be a challenge for the new governor to withstand this pressure, apart from continuing with the NRB's bank merger policy. Bankers will also exert pressure on the new governor to withdraw his predecessor's decision to restrict chiefs of banks and financial institutes from serving more than a certain period
The NRB is now in the process of revising some key acts, including NRB Act-2002. But, bankers are opposed to some provisions in the revised acts. Whether the new governor will defend revisions of acts or give in to pressure by bankers will define Nepal's future financial policies.