Why Central Bank Introduced an ‘Anti-Bribery and Corruption Policy’

KATHMANDU: Nepal Rastra Bank (NRB) has moved to introduce an ‘Anti-Bribery and Corruption Policy’ in the banking and financial sector, citing rising complaints of commission demands and the growing role of intermediaries in loan approvals.

The provision was included in the first quarterly review of the monetary policy for the current fiscal year 2082/83, signaling the central bank’s intent to curb bribery, corruption, and unethical practices in financial services delivery.

NRB officials say complaints have increased in recent years that borrowers are required to pay commissions—often through middlemen—to secure loans. The central bank believes the new policy framework will help address these concerns and strengthen governance across banks and financial institutions.

In the past, NRB had investigated allegations that board members of Nepal Bank had demanded commissions for loan approvals. Based on the central bank’s investigation report, the Commission for the Investigation of Abuse of Authority (CIAA) later filed three cases against then-director Dr. Chandra Bahadur Adhikari.

Governor Prof. Dr. Bishwanath Paudel has publicly stated that while irregularities in state-owned banks fall under government oversight mechanisms, there has been no dedicated framework to address intermediary-driven commission practices in private sector banks. This regulatory gap, he said, made the policy necessary.

Clause 39 of the monetary policy’s first quarterly review states: “Considering international best practices and evolving domestic practices, arrangements will be made to introduce an Anti-Bribery and Corruption Policy in banks and financial institutions to enhance transparency, accountability, and good governance.”

NRB spokesperson Guru Paudel said the policy will help strengthen corporate governance in the banking sector. He added that the framework will be developed in line with principles promoted by the Basel Committee on Banking Supervision and the Organisation for Economic Co-operation and Development (OECD).

“Although these institutions do not explicitly mandate an anti-bribery policy, they strongly promote such practices,” Paudel said, noting that some Nepali commercial banks have already adopted similar frameworks. He added that the policy would also help discourage financial transactions linked to criminal activities.

NRB has also linked the policy to growing risks related to the misuse of dormant bank accounts and to speculative lending practices, where loans are taken through intermediaries, commissions are offered, collateral is overvalued, gifts are exchanged, and credit is extended to unqualified borrowers.

The central bank’s position is supported by the experience of NMB Bank, which has implemented an Anti-Bribery and Corruption Policy since 2019. NMB Bank CEO Govinda Ghimire said the policy promotes integrity, ethical conduct, and regulatory compliance, while prohibiting staff and affiliated persons from accepting cash, cash equivalents, gifts, or hospitality.

He said the policy also bars false assurances to customers, restricts dealings with suspicious clients, discourages nepotism and favoritism, and clearly defines responsibilities for the board, management, and employees. The policy is reviewed annually and aligned with anti-money laundering and counter-terrorism financing standards.

NRB believes the sector-wide adoption of such policies will play a key role in improving financial discipline, reducing corruption risks, and reinforcing public trust in Nepal’s banking system.