Kathmandu. KATHMANDU: The Supreme Court (SC) has issued an order barring a person who has been fined by the Nepal Rastra Bank (NRB) from becoming a director or chief executive officer (CEO) of any bank or financial institution.

Advocate Madhu Kumar Chaulagain filed a writ petition at the Supreme Court. A division bench of Justices Nahakul Subedi and Nripa Dhwaj Niraula issued the verdict. “A directive order has been issued in the name of the defendant Nepal Rastra Bank to write to the concerned banks and financial institutions to compulsorily comply with the legal provisions regarding the disqualification of directors and officials of the banks and financial institutions and to carry out effective monitoring of whether or not the directives are followed,” reads the verdict.

Advocate Chaulagain is disqualified as per clause (e) of sub-section (1) of Section 18 of the Bank and Financial Institutions Act, 2073 and cannot continue as a director pursuant to Section 19 of the Act. A petition had been filed on May 30, 2081 seeking the removal of directors and chief executives of banks and financial institutions from their posts as they were against the existing constitution and legal provisions.

The order of certiorari also quashed the decision of the Nepal Rastra Bank (NRB) that the Nepal Rastra Bank has not shown any interest in the implementation of Clauses 18, 19 and 29 of the Bank and Financial Institutions Act, 2073 BS and that the decision made by the opposition central bank to remove the directors and chief executives of the opposition banks who have been taken action under such legal provisions should not be removed from their posts. The writ petition was filed demanding the removal of directors and executives of the opposition banks and financial institutions who have been disqualified as per Clause 18, 19 and 29 (d) of the Act 2073 BS.

“Section 18 (1) (e) of the Bank and Financial Institutions Act, 2073 (2016) regarding the appointment of directors and office bearers of banks and financial institutions has stipulated the disqualification of a person who has taken action against the regulatory body for acting against the law or has not elapsed five years since such action was taken,” the apex court said in the writ petition. The disqualification would also be attracted in the case of the Chief Executive under Section 29 (5) (d). Sub-section (2) of Section 100 of the Nepal Rastra Bank Act, 2001 reads, “If a director or office bearer or employee of a commercial bank or financial institution licensed by the bank violates the said Act or the rules or by-laws framed under the Act or the orders or directives issued by the subordinate bank or the general public…” The bank can punish such directors, office bearers or employees. Section 18(1)(d) of the Bank and Financial Institutions Act, 2073 states that the punishment imposed by the Nepal Rastra Bank pursuant to sub-section (2) is “the regulatory body has taken action for acting contrary to the law…” I couldn’t believe that the situation wasn’t there. “The punishment imposed by Nepal Rastra Bank as per Section 100 (2) of the Nepal Rastra Bank Act, 2058 would create disqualification as per Section 18 (1)(e) of the Bank and Financial Institutions Act, 2016,” reads the verdict.