Economy & Policy

The Supreme Court’s ruling blocked the Government scheme of giving every lawmaker a purse of one million rupees from treasury to make a discretionary spending in their constituency.

A few lawmakers boiling with rage said, the judges are to be impeached for attempting to curb the prerogatives of the legislators. Others furious at the Judges’ decision hurled scathing remarks at them. A few more hawkish type challenged them to come and compete in the poll.

What presumably surged up their anger is - how can possibly the law keeper harness the law maker of the sovereign parliament? Isn’t that sound like putting the cart before the horse?

Had the opposition moved Judiciary crying foul play of the ruling and the Judges played referee, that could have made sense. At least, half of them whose interest the court serves would swell around in a state of euphoria calling the judge’s decisions, " A great democratic precedent", and the irritated half would shed venom and vandalize the court calling, "down with the court and judges".

But, this time the parliament is calm and congenial with the parliamentarians unprecedentedly standing hand-clasped in defense of the million rupees discretionary money.

And, when all of them agree to row the parliamentary boat together singing and dancing by themselves with no single parliamentarian voicing dissent, why should the judges enviously rock the boat?

The judiciary’s nay may be outrageously anachronistic should the whole thing be judged in the light of what our great democratic leaders staunchly call democratic norms & values that we successfully evolved over the past one decade.

They say, in democracy, precedents carry more weight than provisions. The precedents constitute values and norms.

Going by the values and norms that our lawmakers have developed over the past one decade through series of precedents, the parliamentarians demands may sound just and judicious.

Lawmakers flying into fury by the judges’ attitude have absolutely strong points to make. What if they ask the judges, ‘why did you, your honor! muzzle your mouth when we unanimously decided to import duty-free luxury vehicles depleting the country’s scarce foreign currency stock?

Unfortunately, common decency of our modest parliamentarians don’t permit them to ask this.

Or, they may also ask why the honorable judges took an ostrich-like attitude when the succeeding governments let the parliamentarians use the discretionary money of a quarter-a-million and half-a-million rupees for pork-barrel purposes.

At times, they may have committed excesses by siphoning the constituency money to Tundikhel and made Aahuti in Mahayagyas for purging themselves of the sins or attempting to make a little spiritual gains.

Giving money to one’s own constituents to curry favor is in every respect better than paying them to some foreign companies for owning luxury four-wheelers that can’t even run in their constituency.

The judiciary’s cruel no to the million rupee note purse is understandably painful to the parliamentarians. Its more so to the opposition. For the ruling parliamentarians, hopes still flicker as the wheels of their bandwagon will roll on power tracks for some more time to come. A stroke of luck may any time land them at Singhdurbar’s ministerial cabin opening door to riches and benefits. That would end their pains. No more worrying over the judges’ callous disregard!

Over hundred and ten parliamentarians with three governments gone by and couple of more in the offing before the final poll, every one can have their fingers in the pie.

The court denial may trigger catastrophe to the opposition. Bloody carnage and starvation has ravaged their constituencies. Gun toting Maoists are conserving the bullet power to unleash them possibly in the poll. Poor parliamentarians don’t have much savings in their vote bank accounts to draw on and the violent Maoists have scared them away from home. They may be no match to terror-spilling guerrillas under Maoist beret in the forthcoming poll that may look like a bullet-ballot duel.

Everyone but the judges understand the desperation of the parliamentarians fighting tooth and nail for the discretionary grant of a million rupees. Poor lawmakers are already in a tight corner and the judges are pushing them further.

Parliamentarians seem to realize that the unrestrained freedom of judges threaten to restrain their powers. Umpteen times, they have delved deep even into jurisprudence. They have pondered ways to clip wings of the intransigent judges!

Alas! in no period of a decade long democracy, the country’s legislators could tie tails together to trim the feathers of the judges.

Wise parliamentarians need not worry. As someone has already said above that the judges can be impeached. The right fully remains with the parliament.

Should the judges keep locking horns with the lawmakers, the latter can beat them in the parliament.

Nonetheless, the issue kicking too much dust is whether or not the legislators should exercise their right to move freely without anyone poking their noses? In a democratic check and balance theory, either of them- legislature, executive and judiciary- should be cautiously monitoring each other’s move.

This time the executive and legislature have placed their interests in a single basket and the judiciary has tried to blow it away.

They say, in a country where government runs by law, every one is equal. No one is above law! The law refuses to accept that there may be people who are more equal than others. Both the lawmakers and judges stresses on the supremacy of law calling each other- no one is above law!

The problem between the lawmaker and the law keeper seems to be that who should arbitrate in the dispute. In other words, who should be the interpreter of the supreme law. Undeniably, in any conventional democracy the role goes to judiciary.

On the issue of whether or not the lawmakers can decide the amount of money for their discretionary spending, the judiciary has said no.

The lawmakers don’t agree. They think, that is their internal legislative affair, and the judiciary should keep itself away from it.

If the wheel of democracy in the country should roll the way parliamentarians desire, then the judiciary and the executive may also decide things for themselves on their own, and the issue should never ever enter the parliamentary debate. They can also say, ‘ legislators, you keep yourself away from it.’

A better solution whereby every one - legislative, executive and judiciary- can live in peace is that they swear that neither would ever interfere in other’s affair.

Challenges of The Nepalese Financial System

The biggest challenge facing Nepalese financial system is the unprofessional stance and unbusinesslike behavior of the managements in the financial and non-financial institutions owned and controlled by the government. The managements are sometimes opposed to carrying out the reform programs in ways that were required for making the reforms truly successful exercise. The concerned employees unions in the respective institutions are also opposing reforms as they mistakenly believe that such reforms are unproductive for themselves and their institutions. So, the inefficient working of the government-owned financial institutions is thus the outcome of environmental, employee-related and institutional drawbacks associated with these institutions.

The loan defaulters are the biggest hindrance in the process of financial sector reforms. These defaulters would like the government to continue its ownership and control in the financial institutions as such a situation would facilitate them to continue with their defaulting behavior without any let or hindrance. If these institutions were run professionally, then these defaulters would be deprived of the financial misdeeds and irregularities that they are presently indulging in collusion with the dishonest employees under the protecting umbrella of political favoritism. As the charm of pocketing borrowed money without necessity or compulsion to pay back is quite big, trying to discipline and regularize the financial dealings of the government financial institutions would be opposed by the concerned vested interests to the best of their capacity. Being big defaulters without the need to repay the loans, their clout and reach are far beyond the corridors of the financial institutions. As a result, there is even the danger of the whole financial sector reform initiative being derailed and blocked by these defaulting.

Although Nepalese financial institutions in the government sector were started with the genuine purpose of expediting the financial development and pursuing the financial intermediation process to fulfill the development requirements of the nation, what made these institutions unsound, inefficient, ineffective, bureaucratic, irregularized and weak is their defective ways of working and their scant regard to the considerations of competence, quality, service delivery, productivity and efficiency that are the inherent hallmarks of any economic institution in general and sound financial institutions/processes in particular. While looking at the rampant disregard to the discipline, norms and other fundamentals of financial soundness that these institutions in Nepal characterized, it is but impossible that such institutions could be transformed into the strong pillars of financial and economic development that the nation and the economy so much valued and sought for. Instead, what has been found is that these institutions have become a big burden to the economy as they are not only accumulating huge negative networth but also providing most inefficient and unprofitable business dealings for the genuine borrowers and the thousands of depositors that have placed their hard-earned money in these institutions. The biggest beneficiaries from these institutions, therefore, are only the dishonest vested interests like the loan defaulters, employees that promote such defaults, and other irresponsible elements associated with the institutions in general and financial dealings in particular. Such situation in the government institutions has also encouraged the joint venture banks to become complacent in their current financial practices and also motivated them to indulge in activities that are not in consonance with the requirements of sound business dealings and decision-making.

It is not only a situation of Nepal that these government financial institutions are suffering from the malaise of economic inefficiencies and financial weaknesses. It should be realized that such institutions throughout the world have suffered similar misdeeds, irregularities, inefficiencies and financial shortcomings. The difference, therefore, is only the relative level of weaknesses and financial burdens that these institutions characterize across the nations. These institutions in Nepal are really uneconomic, unviable and big economic loss-makers. Despite such situation, it is pathetic to observe that the different vested interests are found vehemently opposing Nepalese financial sector reform process as the reform comes under the direct conflict of such interests including the dishonest employees, unaccountable management and the defaulting borrowers.

Those who approach the government-owned banks for loans are not provided efficient and prompt delivery of services. Insider lending and lending, at times, ignoring the projects of commercial viability, country’s priorities and the significance of the productive sector in the nation’s economy has not only led to the unprofessional environment in the institutions but also impeded the development process of the country. Political involvement and pressure in the appointment of the top management team and loan extension/re-scheduling has been a major contributor to the drastically reduced institutional health of these banks. Most of the NPA has arisen from such practice. Good and genuine borrowers who would make the optimal utilization of loans are discouraged as they face a risk of cumbersome and difficult processes along the way. Rather, those who are clever and expert in manipulating the procedures and processes are found to be obtaining loans, which are mostly used for purposes other than those formally sought for and are also defaulted. Some such loans are found to be misutilized for social activities and festivities, too. Compliance with the collateral requirements and other procedures being the prime factor for the extension of the loan, productive and bankable enterprises are often found ignored for lending. Despite the preponderance of such practice, the bank management is not found to be responsible enough to make strict monitoring and follow-up, and take stock of the situation for appropriate and timely corrections and improvements. The involvement of certain insincere employees at the behest of commission agents who indulge in commissionocracy for their mutual benefits at the cost of the organization has also worsened the financial health of these institutions. Hence the non-business considerations including the external influences in the financial transactions of these institutions have become pronounced, with the norms and practices of proper evaluation, assessment and implementation issues as well as the sound decision-making process in the institutions getting scant attention.

Nepal has a proliferation of both laws and regulations, which tend to be very institution-specific rather than function-specific. This has created a fragmented legal environment. The Nepal Rastra Bank Act passed in 1955 has been amended nine times, most recently in 1992. The law is in many ways out of date and lacks adequate provisions relating to autonomy, accountability, and governance. The Commercial Bank Act was passed and promulgated in 1974 but does not cover all financial deposit taking institutions. Other non-bank deposit taking financial institutions are governed by their own laws; for example, the Development Bank Act of 1996, the Agricultural Development Bank Act of 1967, and so on. Legal reforms in the banking sector are currently being articulated around two main themes. The first theme is the redrafting and modernization of the central banking act which is n now in the process of being enacted by the parliament and the financial institutions act - the latter act covers all the deposit taking institutions in a single piece of legislation. The second theme which is also being developed is the establishment of an appropriate body of lending legislation, with laws pertaining; in particular, to collateral, credit activity, and bankruptcy. A weak accounting and auditing tradition has further meant that the timeliness and reliability of financial data, particularly from the largest of the banks are extremely poor. Accounting is also weak in the corporate sector, making lending decision difficult for the banks. Significant accounting and auditing strengthening is required - if the financial system is to operate in a prudentially sound and efficient manner.

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Judiciary Vs. Legislature

Challenges of The Nepalese Financial System