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Started 1 day ago · Updated 22 hours ago

Supreme Court Directs Nepal Rastra Bank for Good Governance in Banking Sector

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The Supreme Court has issued a directive order to the Nepal Rastra Bank (NRB) to ensure good governance within the banking sector. This ruling clarifies that actions taken by the NRB against bank directors and CEOs, even warnings, can lead to legal disqualification, rejecting arguments that such actions are merely routine.

• A writ petition was filed at the Supreme Court against Nepal Rastra Bank and the boards of directors and CEOs of nine commercial banks, including Prabhu Bank and Global IME Bank.
• The petition argued that individuals facing action from the regulatory body under specific sections of the Bank and Financial Institutions Act (BAFIA) are disqualified from holding directorial positions.
• The Nepal Rastra Bank had previously taken action against directors and executives of defendant banks and financial institutions for regulatory violations in fiscal year 2080/081.
• The court's decision addresses the legal disqualification of bank officials based on regulatory actions, creating potential confusion for CEOs and directors.
• The Supreme Court's ruling emphasizes that warnings or admonishments from the NRB can indeed result in legal disqualification.