Move aimed at cutting extravagant spending of banks on foreign junkets: NRB
KATHMANDU, Dec 27: Nepal Rastra Bank (NRB) has made it mandatory for bank and financial institutions (BFIs) to seek approval of the central bank before accepting any prize or award from foreign agency.
Issuing a circular on Tuesday, the central bank said that BFIs should also submit documents to prove the legality of foreign institution that provides the award or prize while seeking approval from it.
The central bank's restriction on receiving awards or prizes from foreign agency comes at a time when the number of BFIs bagging such awards and prizes abroad is on the rise. While the central bank has not provided any reason behind tightening of the rule, NRB officials say that the restriction is aimed at cutting extravagant spending that BFIs are making to receive such recognition.
“The rule aims to curb anomalies seen in the banking industry and unnecessary spending of BFIs under the pretext of foreign award, and foreign junkets,” Shiva Raj Shrestha, a deputy governor of the NRB, told Republica.
Not only are the BFIs required to seek prior approval of the regulator to receive the prize or award from foreign agency. The central bank has also prohibited them from receiving such awards or prizes that are handed solely on the basis of financial support, donation or any other fees and financial contribution that they have made.
According to the circular, officials of bank or financial institution who travel abroad for the purpose of receiving award or prize should maintain frugality in their trip and other costs.
Meanwhile, the central bank has also instructed all BFIs to come up with a working procedure to govern foreign junkets of their chairperson, board directors and CEO. BFIs should prepare and enforce the working procedure by mid-April next year, according to the central bank's ruling.
The working procedure, among others, should have provisions that make it necessary for the respective institution's board meeting's decision on the purpose of usefulness of foreign trips. There should be proper analysis on the benefits of foreign trips for the institution from the foreign trip, as well as on the cost and duration of such junkets, according to the circular.
The new rule of the central bank will discourage banks from footing the bill of unnecessary foreign junkets of their senior executives or board directors.
Nepal Bankers' Association (NBA) Vice President Gyanendra Dhungana told Republica that the central bank's rule to seek its approval for accepting awards and prizes was positive. “Since there are a lot of awards being distributed in foreign countries, this rule will help make sure that Nepali banks get only the genuine and prestigious award,” Dhungana, who is also the CEO of Nepal Bangladesh Bank Ltd, said.
He added that many banks already have their own policy to streamline foreign trips of their board chairperson, members, and staffers.