Saturday, September 03, 2005

Judiciary vital in strengthening financial sector: Experts

Kathmandu Sept 3-National and international experts have said that judiciary could play a crucial role in strengthening the reform process of the financial sector on a sustainable basis.
The experts said this at a program on the “Role of Judiciary in Financial Sector Reform”, organized by the Supreme Court and Nepal Rastra Bank (NRB) in the capital on Friday.
Chief Justice (CJ) Dilip Kumar Poudel said that with the expansion of the financial system and advent of new, faster technologies like electronic transfer of funds, rise in financial crimes like money laundering, tax evasion and large scale forgeries have also become more evident. “In such a context, timely improvement and enactment of new laws are absolute imperatives,” Poudel said.
Stressing on professional and vigilant financial actors for effective functioning of the financial system, the CJ opined that the judiciary and the financial sector have to be more pragmatic in placing their expectations on each other. He suggested that banking practices must become more professional and merit based.
Governor of Nepal Rastra Bank (NRB), Bijay Nath Bhattarai, said that non-performing assets of the two largest public sector banks – Nepal Bank Ltd and Rastriya Banijya Bank (RBB) remains the biggest challenges.
Bhattrai said that to prevent our financial system from disaster, there is no alternative but to rescue these two banks from becoming dysfunctional.
“The entire mechanism should be geared to make willful defaulters pay back the amount they have borrowed from our banking system,” governor Bhattarai stressed. As the money taken by willful defaulters is the public money, it must be paid back at any cost, the governor strongly reiterated.
He added that the role played by the different judicial and quasi-judicial bodies in recent years has facilitated the process of reforms and to control financial irregularities. Management reforms in two public sector banks (RBB and NBL) and the central bank have helped us to redirect the banking culture towards more professional, technology-based and free market oriented practices, said governor Bhattarai.
Mudassir Khan, a Pakistani expert presenting a paper on ‘Judicial Support in Financial Sector Reform: A Pakistani Experience’ said that effective regulations from central bank, good corporate governance, effective implementation of rules are needed for effective financial reforms. After the successful financial sector reform in Pakistan , the financial sector there is getting vibrant and effective, said Khan while talking about Pakistani experience.

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