Directors are not entitled to extra privilege but they have to bear extra responsibility, said central bank governor Dr Yubraj Khatiwada inaugurating corporate governance workshop on ‘International best practices: Towards leadership in the boardroom’ jointly organised by National Banking Training Institute (NBTI), IFC (World Bank) here in the Valley.
He also called for regrouping of directors on the basis of financial capability.
“Banking and businesses
of directors should be different,” he said, adding that conflict of interest will exist while taking any decision, if they mix the both.
Lately, the issue of good governance has become more important as some of the financial institutions were hit by the crisis purely due to lack of good governance. “The director of the banks and financial institutions should also disclose their loan portfolio,” said the governor of the central bank that has recently brought regulation to clip their wings.
The directors of the bank and financial institutions from now on have to disclose the loans taken not only by them and but also their family members, according to the directives that directed the bank and financial institutions to publish the details of the loans taken by directors and their family members in the annual report.
All of the seven cases of failure of financial institutions — including Samjhana Finance and Nepal Development Bank that are in liquidation process — were the results of bad corporate governance.
National Banking Training Institute organised the workshop to educate the directors of their roles and responsibilities, said NBTI chief executive Sanjeeb Subba.
The IFC consultant presented a paper on role of directors with examples of foreign banks and popular global practices in the workshop, where NBTI chairman Sashin Joshi was also present.
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