Bad Corporate Governance: Major

challenge facing Nepali Banking

Presented by:
Ashish Tamang
Rupesh Sah
Smita Sainju
Instances
• Liquidated
• Nepal Development Bank
• Samjhana Finance Company
• Crisis Declared
• Gurkha Development Bank
• United Development Bank
Why they face problem?
Corporate Governance
• Mechanism to direct and control the entire
company
• Appeared as one of the biggest challenge
• BFIs have been declared as crisis ridden by
NRB
• Bad corporate governance is the reason
behind crisis
Reasons- Bad CG
• Involvement of directors in insider trading
• Promoters and Directors’ vested financial
interest
• Easy Licensing Policies
• Low supervisory capacity of NRB
Involvement of directors in insider
trading
• Insider trading : The buying or selling of a
security by someone who has access to
material, nonpublic information about the
security.
• Nepal development Bank and Samjhana
Finance, promoters collected deposit and
provide loans by maintaining hidden accounts
• Such loans were used for family support which
were never repaid
 Promoters and Directors’ vested
financial interest
• Tussle between promoters
• Directors take loans for personal use
 Easy Licensing Policies
• Liberal policy to open BFIs
• Number of BFIs increased but low supervisory
capacity
• BFIs involved in fraudulent activities
Remedies
• Proper implementation of rules and
regulations
• Develop culture of good governance
• Track BFIs activity frequently
Any Queries ?
Thank you