‘Government setting legal grounds to oust Shiba Raj Shrestha as central bank’s deputy governor’
KATHMANDU, Nov 4: The government has instructed Nepal Rastra Bank (NRB) to start an inquiry into Shiba Raj Shrestha, a deputy governor of the central bank, accusing him of ‘working in a way that threatens the financial stability’ of the country.
Following a recent cabinet decision, the finance ministry has already sent a letter to the NRB to look into his involvement in jeopardizing financial stability.
While the specific allegations that led the government to conclude his involvement in jeopardizing financial stability are not clear immediately, the decision is likely to oust him from his post if the NRB board forms a committee to investigate into the charges made by the government.
Shrestha confirmed to Republica that the ministry has sent a letter to the NRB instructing the central bank to start investigation against him.
Revised interest rate corridor system introduced
“The finance ministry has sent a letter asking the NRB to probe into allegation of my involvement in jeopardizing financial stability. The ministry has asked the central bank to form a probe committee and submit a report within 30 days,” Shrestha said, refuting allegations made by the government against him.
While a meeting of the NRB’s board of directors was convened Sunday itself, it did not discuss the ministry’s letter as it was not on the agenda set earlier, he said.
“It was a regular board meeting. Since the issue of the investigation was not in the agenda, it was not discussed. But, I left the meeting when the board started to discuss the matter in an informal manner,” he said, adding that the board meeting is scheduled to convene again on Monday with the matter on the agenda.
He also said that he will recuse himself from the board meeting that will discuss allegations made against him.
Shrestha termed the initiative a ploy to remove him from the race to become the next NRB Governor.
A high-level source at the central bank also told Republica that the government was setting a legal ground for removal of Shrestha.
“The allegations range from involvement to threaten financial stability to acting dishonestly or with mala fide intention for personal gains to protect financial wrongdoers,” added the high-level source.
According to the NRB Act, 2002, the government shall remove deputy governor from the office on the basis of recommendation made by an inquiry committee formed under the chair of a retired justice of the Supreme Court. Once the committee is formed and the investigation is initiated, the deputy governor is automatically suspended.
Shrestha’s five-year term is expiring in 16 months. A deputy governor is also considered a contender for the governor. The incumbent governor, Chiranjibi Nepal, is retiring after five months.
‘A ploy against me’
Most of the decisions are made in the NRB on a collective basis. Some of the charges leveled against me like allowing repatriation of Ncell’s dividend and releasing money of Ajaya Sumargi, as have been speculated, are not true because the decisions made by those departments are not under me. The accusation that I worked in a way that threatened financial stability is also not credible. None of the banking institution has gone into problem in past few years. Rather, the report of the committee led by myself to look into interest rate and stock market volatility is resolving those problems now. I think the inquiry process is a ploy to remove me from the race of becoming the next governor. I hope the inquiry committee going to be formed will be fair in its investigation.
