NRB told to pull out of appointment process of CEOs for RBB, NBL

KATHMANDU, JUL 07 -

The process of appointing chief executive officers (CEO) at Rastriya Banijya Bank (RBB) and Nepal Bank Limited (NBL) will be delayed further as a result of intervention by the parliamentary Finance and Labour Committee.

With the committee directing the government not to involve Nepal Rastra Bank (NRB) in the selection process, maintain a tougher criteria for CEO aspirants and extend the application deadline, the government will have to start the process afresh. The parliamentary committee endorsed its decision on Wednesday.

Following the committee’s decision, NRB deputy governor and head of the selection committee Maha Prasad Adhikari resigned on Sunday. Lawmakers of the committee argued that there would be a conflict of interest if the central bank got involved in selecting the CEO as it was the regulator of banks.

With RBB already having moved ahead with the selection process, it is now confused as to what to do next following the parliamentary committee’s decision.

“We cannot make the decision and the Finance Ministry should do it,” said Ram Prasad Adhikari, chairman and managing director of RBB. RBB’s vacancy notice had attracted nine applicants for the top executive post in the country’s largest bank.

Appointing the CEO in RBB has not been the government’s priority at the moment due to the budget making process.

“We have not got any time to think about the CEO appointment process as we are fully focused on making the new budget,” said Mahendra Man Gurung, joint secretary at the Finance Ministry. However, committee member Tilak Rawal said that the ongoing process would have to be scrapped and even those who had applied under the existing criteria should reapply under the new criteria. NBL is, however, yet to issue a vacancy notice for the top executive post.

The committee is of the view that the current criteria are inadequate to run the largest banks in the country. RBB had sought an expression of interest (EoI) from potential candidates for its top executive post on June 14. As per the EoI, the minimum academic qualification for the candidate is a Master’s degree in Business Administration/ Commerce/Banking/Economics or chartered accountancy.

Other criteria include two years’ experience as CEO in commercial banks or five years’ experience in any national level bank or financial institution or similar fiduciary financial institutions or foreign banks/financial institutions at least as a department head not less than 10th level officer or senior manager.

“It will be risky to allow incapable persons to head the largest banks,” said Hari Roka, a member of the committee.

The central bank is unhappy with the parliamentary committee’s intervention. A senior NRB official said that unnecessary intervention of the parliamentary committee only delays the work of the agency concerned. “Our stance is that the parliamentary committee should not intervene in executive rights of the agency concerned,” said the NRB official.

Earlier too, the finance committee had blocked the appointment process when two banks had formed the selection committee under their board members. The committee was of the view that the selection committee members didn’t have adequate qualification to be able to appoint the CEO.

Subsequently, the government had formed the committee under NRB deputy governor Adhikari. NRB is of the view that the new criteria was set as five successive efforts to select the CEO at NBL failed due to few applications.

With the committee’s direction, NRB will now not be involved in the CEO selection process of RBB. As it is a government-owned bank, the government can appoint its CEO or its own board can appoint a new CEO,” said an NRB official.

However, the central bank will appoint the CEO in NBL because it is being run under provision 86 of the NRB Act 2002.

This provision allows the central bank to take over the management of problematic banks and financial institutions (BFIs) and to appoint either a person or a firm to operate the BFI.

However, NRB officials will not be involved in the selection process. “We will appoint an independent selection team for NBL’s CEO,” said the NRB official.

Posted on: 2011-07-07 09:21