'Banking orienation must for board directors'

Bank and financial institutions will have to bear cost of staff members’ participation in training and seminar of up to three months in domestic as well as foreign land.

KATHMANDU, Jan 23: Bank and financial institutions (BFIs) will be now required to spend at least 3 percent of their total staff expenses on their training and capacity development. 

Issuing a circular recently, the Nepal Rastra Bank (NRB) instructed the BFIs to prepare and implement a working procedure for capacity building of their staff and to ensure equal participation of all staffers in such programs.

The total staff expenses of the last fiscal year should be the basis while calculating such training and capacity development spending, according to the circular. 

BFIs will have to bear cost of staff members' participation in training and seminar of up to three months in domestic as well as foreign land. However, expenses for participation and representation by the chairman, board directors or chief executive officer in conference and seminar as well as foreign junkets would not be allowed to include under this mandatory spending heading. BFIs should select training providers on the basis of their reputation and credibility, reads the circular. 

In case a bank or financial institution fails to spend 3 percent of its total staff expenses for the current fiscal year 2016/17 on training and capacity development, it has to apportion the budget into a separate employee capacity development fund and spend it in the upcoming fiscal year 2017/18. 

Meanwhile, the central bank has also instructed the BFIs to hold an orientation session for its new board directors within a month of appointment or election. According to the circular, the session should cover issues like BFI's organizational structure, business type, corporate governance, corporate strategy and plan, duties and responsibilities of board director, strategies pursued to minimize risk, overall economic and financial situation, current legal provisions, banking system and practices and circulars issued by the NRB, among others. 

Similarly, the BFIs should organize orientation for its board directors at least once in a year. Transparency for strengthening corporate governance and risk management, disclosure, conflict of interest, compliance, collaboration with other regulatory agencies and international best practices on banking, among other, should be the content of such education program for the board directors, according to the circular. 

Every bank or financial institution will have to prepare and implement a working procedure for the director education program based on the qualification and experience of its board directors and submit a copy each at Bank and Finance Institution Regulation Department and respective supervision department of the NRB, according to the circular. 

NRB allows BIFs to open regional offices
Meanwhile, the NRB has said that bank or financial institution can now open their regional offices for monitoring, supervision and internal audit of its branch offices as well as carry out administrative functions. 

According to the circular, the regional office should have at least 10 branch offices under its jurisdiction. Out of that, 40 percent of branch offices must be operating in rural areas. 

The regional offices will not be allowed to carry out banking transactions, according to the circular. 

 
• bank and financial institutions
 
• nepal rastra bank
 
• staff expenses
 
• training