Kathmandu: Commercial bank Chief Executive Officers (CEOs) have urged Nepal Rastra Bank (NRB) Governor Dr. Biswo Nath Poudel to ensure a well-thought-out exit plan for investors if the proposed legal separation between bankers and businesspersons is implemented. The suggestion came during a meeting held on Tuesday between Governor Poudel and the CEOs of commercial banks.
The discussion focused on the proposed amendments to the Bank and Financial Institutions Act (BAFIA), currently under revision in the Finance Committee of the House of Representatives. The draft amendment bill proposes to reduce the threshold of “significant ownership” in a bank from the current 2% to 1% and to bar such significant shareholders from obtaining business loans from the whole banking industry. It also proposes to broaden the definition of “related party.”
While there appears to be broad consensus among government officials, central bank representatives, and lawmakers on the need to separate bankers from businesspersons, all stakeholders agree that sufficient time and clarity must be provided for a smooth transition. However, questions remain regarding what kind of exit mechanism or policy would be available to promoters wishing to withdraw their investments from banks — an issue neither the Finance Minister nor the Governor has clarified yet.
In today’s meeting, some bankers questioned whether such a separation is necessary in Nepal’s specific context. However, most CEOs agreed that if the policy is enforced, a clear and viable exit plan must be offered to affected stakeholders. “At present, even promoter shareholders are unable to sell their shares. Despite share prices having fallen significantly, there are no buyers,” one participating CEO said to Clickmandu, “If promoters want to exit, a suitable environment must be created for that to happen.”
Governor Poudel reportedly expressed a positive stance on the need for such a mechanism and said that both he and the Finance Minister support allowing adequate time for a structured exit plan.
Source says, “The discussion focused on what kind of incentive structure or flexibility should be given to promoters—whether to encourage them to remain in the banking sector or to exit smoothly. The Governor even floated the idea that exit provisions could be developed for both institutional and individual shareholders without distinction. He emphasized the importance of providing time and a phased approach for the transition.”
Governor Poudel is scheduled to hold another round of discussions on this matter with the chairpersons of banks’ boards of directors on Wednesday. Some CEOs noted today that the board members’ input will be crucial, as the proposed changes relate more to ownership and governance than daily operations.
One banker shared that the Governor believes such regulatory changes should not be implemented abruptly but rather with a clearly defined timeline and strategy.
Tuesday’s meeting also briefly touched on topics related to the Second Financial Sector Development Strategy and the implementation of the current monetary policy. Governor Poudel signaled a shift in NRB’s approach to banking structure in Nepal. “We need to move beyond a one-size-fits-all universal banking model and start thinking about specialized banking,” Poudel reportedly told the CEOs.
“Currently, all banks follow a similar operational model,” one participant said. “But now the central bank wants each institution to focus on areas where they are strongest—whether that’s energy, agriculture, or MSMEs. The upcoming policies will reflect this vision.”
The idea of specialized banking, as outlined in the monetary policy, is aligned with global trends and is expected to help improve sector-specific financial access and investment.
“Universal banking is no longer sufficient in today’s environment,” a banker quoted the Governor as saying. “Across the world, banks are moving toward specialization. We must start preparing for that transition.”
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