KATHMANDU, Mar 1: The Finance Committee of the parliament has formed a sub-committee to look into the problems in the banking and financial system including the ongoing shortage of lendable funds in bank and financial institutions (BFIs).
Following a meeting on Tuesday about the current problem seen in the financial system, the committee decided to form a seven-member panel to submit a report for addressing problems in the banking system.
Prakash Jwala, chairman of the committee, told Republica that the parliamentary panel formed the sub-committee to recommend solutions for addressing the current problems faced by the banking industry in general and general public in particular. “There were some issues brought forward in the discussion by members of the committee ranging from shortage of lendable funds in the banking system to exorbitant interest rates that bank and financial institutions are charging on credits,” said Jwala. “The committee will study the broader problems and recommend solutions to address them,” he added.
Lharkyal Lama, CP Mainali, Gopal Dahit, Deepak Kuinkel, Rewati Raman Bhandari, Omdevi Malla and Bimal Kedia are the members of the sub-committee that is authorized to prepare its own terms of reference and select a coordinator, according to Jwala.
The sub-committee has been given a deadline of three weeks to submit its report.
Amid concerns that some parliamentarians, who are also promoters and board directors in bank or financial institutions, were lobbying to extend the deadline for the BFIs to raise their minimum paid-up capital as required by the NRB, the sub-committee has been formed without any specific mandate.
Jwala, however, refuted such allegation.
“Of course, there were some concerns raised by some members that the decision taken hastily to raise paid-up capital could be behind the current credit crunch problem. But this sub-committee will be looking into broader issue of banking and financial sector and present its report,” said Jwala, adding that the report will again be discussed in the Finance Committee before endorsement. He also said that the committee will issue required instructions to the government for implementation.
Earlier speaking at the meeting, Ichha Raj Tamang, a parliamentarian who is also the chairman of Civil Bank Ltd, expressed dissatisfaction over the decision of the NRB to raise the paid-up capital.
He said that the current problem was a result of the requirement to raise the paid-up capital. Bimal Kedia, who is affiliated with Kedia Organization that has considerable stake in Siddhartha Bank Ltd and Gorkha Finance Ltd, also echoed Tamang.
“The paid-up capital is the reason for the current problem. It seems that BFIs will not be able to meet the deadline to raise the minimum paid-up capital. They should be provided additional time to meet the deadline,” he added.