‘How reasonable would it be for the same person to go to the Prime Minister and say to save the industry and go to the Governor and save the bank? They are looking for protection from everywhere.

Due to this, the government is also confused in implementing policies. That is why it has a negative impact on the economy.

Recently, a bill to amend the Bank and Financial Institutions Act, 2073 BS, is under discussion in the Finance Committee under the House of Representatives.

It has been made public that the Bank and Financial Institutions Act, 2073 BS (BAFIA), brought by the government to separate bankers and businessmen, is being discussed extensively in the parliamentary committee.

It seems that the bill provides that if a person has taken more than one percent of the paid-up capital of any bank, he will not be able to take loans from other banks and financial institutions.

There is opposition to this issue saying that this issue is not practical. Currently, there is an attempt to establish a narrative that businessmen and bankers both run their own banks, take loans themselves, and run their own businesses.

There are unique advantages and challenges to being both a banker and a businessman in Nepal.Here are a few:

Advantages –

Access to capital –

A banker-businessman has direct access to financial resources, making it easier to provide funding to enterprises.

Financial expertise –

A strong knowledge of banking regulations and financial management can help make good business decisions.

Networking opportunities –

Those involved in the banking sector can open doors to valuable partnerships and investments. Influence on policy decisions –

A banker-businessman can have a say in financial policies that can benefit their business.

Disadvantages

Conflicts of interest –

Managing both roles can raise ethical concerns, especially in lending and investment decisions.

Regulatory scrutiny –

Officials may closely monitor financial transactions to prevent abuse of banking privileges.

Time management issues –

Balancing both responsibilities can be overwhelming and can affect efficiency in both roles.

Public perception –

There may be doubts about impartiality, as people may question whether banking decisions are biased towards personal business interests. Nepal’s business environment is evolving, and this dual role can be beneficial, but careful monitoring is necessary and imperative to maintain transparency and integrity.

Insight into how regulations and regulators address this issue is needed. Nepal Rastra Bank, the regulator of banks and financial institutions, has been making great efforts to separate bankers from businessmen for a long time. However, so far, it has not been possible to separate businessmen from bankers in Nepal’s banking sector.This is because businessmen themselves run banks and financial institutions.

According to some entrepreneurs, if a person who owns more than one percent of a bank’s shares is not allowed to take loans in any industry, most industries will close.

In addition, Section 52 of the bill under discussion has made some new provisions on loans to bankers. According to the new provisions, while making provisions regarding the prohibition of transactions and any work, it is said that ‘a bank or financial institution shall not be allowed to provide any kind of loan or facility to a person related to it or to a person who has significant ownership in any bank.’

However, it has been said that this provision will not hinder the issuance of collateral with 100% cash margin, the provision of loans by declaring the licensed institution as a related person against its own term receipts and government or NRB bonds, or the provision of household loans specified by NRB.

Who is the representative organization of the private sector that the government is trying to introduce contractionary policies under the pretext of separating bankers and businessmen?

According to may , yes, you can be both an entrepreneur and an investor at the same time.Many successful people work in both roles, leveraging their entrepreneurial experience to identify promising investment opportunities.

But here are some points to consider:

Skill Overlap:

Both roles require a strong understanding of markets, business operations, and financial principles, which can be beneficial when pursued in both.

Time Management:

Balancing the demands of running a business and managing investments can be challenging.Effective time management and delegation are important.

Investing in Your Own Ventures:

As an entrepreneur, you can choose to invest in your own business, which can align your interests and financial incentives.

Networking:

Being an entrepreneur can expand your network, which provides access to potential investment opportunities.Similarly, as an investor, you can be exposed to innovative startups. Risk Diversification:

By investing in different ventures, you can diversify your risk.Conversely, entrepreneurial ventures can provide insight into industry trends that inform investment decisions.

Learning opportunities:

Each role can provide valuable lessons that enhance effectiveness in the other.For example, experiences gained from entrepreneurial endeavors can inform investment strategies.

Overall, being both an entrepreneur and an investor can be rewarding, but it requires careful planning and implementation.The issue is now being raised and the regulatory body must have done its homework.

The private sector says that a majority of independent directors should be in banks. The discussion on separating bankers from entrepreneurs is futile. According to some experts, separating bankers and entrepreneurs will not destroy the economy, but sufficient time should be given.

In neighboring India, it seems that an independent director should be the chairman of a bank and 50 percent of the directors representing the board of directors should be independent.The Basel Committee has also proposed the same.

Entrepreneurs have expressed their disagreement with the proposal to separate bankers and entrepreneurs through the Banking and Financial Institutions Act (BFI) Amendment Bill. Its strengths and weaknesses should be seen in this. Sufficient time should be given to distinguish between large investors and large borrowers of banks. In this context, it seems that it is necessary to draft a bill by looking at international practice.

There is much debate about whether or not to separate banks and businesses, and one group has even raised the question of whether it is practical at this time. Who says that separation is necessary?Because interests conflict.

Some argue in favor of this, arguing that as the monopoly of businesses in banks increases, they seem to be dominating.

Government-funded or subsidized banks, which are often called public or state-owned banks, can have both advantages and disadvantages.

Here is a breakdown of the advantages and disadvantages: Advantages

Banking Increased access to services: - Subsidized banks can increase financial inclusion, providing financial services in areas where private banks do not operate.

Low interest rates: -

With government support, these banks can offer low interest rates on loans, which makes it more affordable for individuals and businesses to borrow.

Stability in times of crisis: - Government-backed banks can provide stability in times of financial crisis by providing liquidity and support, helping to prevent bank runs, and maintaining public confidence. Support for economic development: - These banks can focus on financing infrastructure projects and small businesses, creating economic growth and jobs in specific sectors or areas. Focus on public interest: -

Unlike private banks that prioritize profits, subsidized banks can prioritize social objectives such as affordable housing and sustainable development. Reduced risk of banking monopolies: - Government involvement can help create a competitive banking environment, reducing the risk of monopolistic practices by private banks.

Disadvantages Inefficiency: - Government banks can suffer from bureaucratic inefficiency that can lead to poor customer service and misallocation of resources.

Political influence: -

Decisions can be influenced by political agendas rather than good banking practices, which can lead to risky lending and financial instability. Taxpayer burden: -

If a subsidized bank fails, taxpayers may bear the financial burden, which can lead to public discontent and potential economic stress.

Crowding out private banks: -

The presence of government-subsidized banks can reduce competition in the banking sector, leading to a less dynamic financial environment.

Limited innovation: -

Publicly funded banks may be less encouraged to innovate than private banks, leading to outdated services and technologies.

Potential for corruption: -

Increased government involvement can create opportunities for corruption and mismanagement, especially if oversight is lacking. The effectiveness of government-subsidized banks depends largely on the regulatory framework, governance structure, and the specific economic context in which they operate. Balancing the benefits of increased access and stability with the risks of inefficiency and political influence is critical to their success.

It is commonly said that when the banking sector is dominated by businessmen, they lend in their own interests.This has a direct impact on production, distribution, and consumption, and is more likely to misdirect the economy.

The analysis of the National Bank is that since the banks of businessmen only give loans to their own circle, the rich get richer and the poor get poorer, and the gap between the haves and have-nots in society is getting wider.

There are those who believe that this is the opposite of an economic system oriented towards socialism. According to the argument of those who believe that bankers and businessmen should be separated, if businessmen become bank operators, the capital of the banking sector will theoretically drop to zero.

The first condition is that the strong pillar of banks and financial institutions is capital, and the second is deposits.

Capital is dynamic.How much has been loaned?How much is the risk?Based on that, how much capital is needed.

If the founder himself starts taking loans, he will have to reduce the capital he has invested and the bank will end up without capital.

In addition, if businessmen run the bank, there is a possibility of problems in institutional governance.

Some time ago, Nepal Rastra Bank has made a provision that founding shareholders cannot take loans from their banks.By circumventing this provision, businessmen have taken loans from their banks and from other banks and kept the bank loans in the hands of businessmen.

Most of the banks and financial institutions currently operating in Nepal are in the hands of businessmen and businessmen.They are investing in their own businesses. Businessmen are increasing imports through business. By investing money in business rather than in new industries, there will be no industries in the country, no production, and only imports.

This will further help increase the country's balance of payments deficit. Disadvantages of having businessmen and businessmen as bank directors:

A wide gap arises between the rich and the poor, entrepreneurship does not develop, capital falls to zero, imports increase, trade deficit increases, deposits of the general public are at stake, institutional good governance is at risk, etc.