December 19: Individuals involved in criminal activities will now only be allowed to become founders and chief executive officers (CEOs) in banks and financial institutions five years after serving their sentence.

Nepal Rastra Bank last week amended the 'Policy and Procedural Provisions on Licensing of Banks, Financial Institutions and Financial Transactions 2063' and the ‘Unified Directives 2078' and tightened the qualifications of founders and CEOs. 

Amending the qualification of the founder, NRB has added a provision that if a person has a criminal background mentioned in the police report, the person cannot be a founder or a CEO of a bank until five years after completing his/her sentence.

Previously, there was such a restrictive arrangement only in the case of persons who were blacklisted by the Credit Information Center.

In the amended procedure, if any of the proposed founders who have applied for the establishment of a bank or financial institution is blacklisted or has a criminal background in the police report, the registration process will be carried out only after the removal of such founders or the addition of new founders.

Similarly, in the context of appointing a CEO in a bank or financial institution, the individual can only take the responsibility after five years of finishing the criminal sentence. Similarly, individuals aspiring to become a CEO must not have been convicted for dishonesty or fraud.

According to the directive, a person who has been convicted of corruption charges will be disqualified from holding the position of chief executive officer of banks and financial institutions. Similarly, there is a provision that founders of banks and financial institutions cannot sell their ownership to persons with criminal backgrounds. A provision has been added in the directive that a person with a criminal record in the police report can buy founder shares only after five years of acquittal.