Make Promoters Responsible!

Sensing the trend of promoters being irresponsible, parliamentarians today sought the way
to make them responsible even after they leave the financial institutions. "The proposed
amendment in Banks and Financial Institutions Act (Bafia) should have a clear provision that a
promoter should not be allowed to leave the financial institution without clearing liabilities,"
said committee member and Constituent Assembly member Hari Roka during the discussion
at Parliamentary Statutory Committee here today. In the past there has been a couple of i
ncidents, when a promoter has walked out without clearing liabilities.

"Compulsory consent of the banks and financial institutions should be introduced, if promoters
want to transfer their responsibilities to other promoters," he proposed, adding that personal
guarantee should be fixed according to the banks and financial institutions rule. He presented
the instances of Cosmic Air and Necon Air. "Promoters of both the airlines fled due to unclear
provision in the existing Act," he said, criticising the trend of making low level staff and member r
esponsible. "State should come hard against defaulters," he said. However, other members
of the committee including entrepreneur Diwakar Golchha and Ramesh Lekhak said that such
provision should not be introduced in the Bafia.

"The purposed amendment is more concerned with Company Act," Golchha said. Parliamentarians
also porposed to include base rate and split rate in the proposed amendment. The committee members
demanded to fix base rate of the interest. Base rate is the rate of interest used by individual commercial
banks as a basis for their lending rates. Currently, Nepal has fixed the interest rate through Monetary
Policy. However, central bank governor Dr Yubraj Khatiwada pledged to address the rate issues t
hrough Monetary Policy. However, committee members said that the interest rate could be revised
only twice a year. If interest rate increases in short term, the cost of fund will increase and investors will
be discouraged," other committee members said.