KATHMANDU, Jan. 11 (Xinhua) -- Nepal's parliament on Tuesday endorsed a bill on Bank and Financial Institution Act (BAFIA), barring lawmakers and other people holding constitutional posts from becoming directors of banking institutions.
Four lawmakers in the Nepalese parliament are now directors of banks in Nepal. Once the bill becomes a law, they will have to give up their posts in respective banks.
BAFIA is one of the laws introduced to bring reform in the banking sector after the country's banking sector suffered from bad corporate governance practices.
There are still 11 financial institutions declared by Nepal's central bank as crisis-ridden. They had landed in trouble due to bad banking practices with the involvement of directors and chief executives.
When the bill on the BAFIA was introduced in the Nepalese parliament last year, the lawmakers were divided over whether they should be allowed to become directors of any banking institutions.
Finally, the lawmakers agreed on barring lawmakers and other people holding constitutional posts to hold director posts of banks as long as they remain in the constitutional system.
Nepal's central bank and the Finance Ministry had proposed such provisions, considering that allowing lawmakers to hold such posts would be a conflict of interest.