FNCCI Warns Nepal BAFIA Changes Threaten Economic Stability: Dhakal on Proposed Banking Law Impact
5th June 2025, Kathmandu
Chandra Prasad Dhakal, President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), has raised concerns about the proposed amendment to the Bank and Financial Institutions Act (BAFIA). He said the changes could directly affect Nepal’s economic stability and growth.
FNCCI Warns Nepal BAFIA Changes
He shared these views during the inaugural session of the third edition of the National Banking Discourse 2025, held in Kathmandu.
Warning Over Economic Disruption
Dhakal cautioned that the proposed law, if passed without changes, could disrupt the country’s financial system. He said the current version of the amendment, under discussion in Parliament, has flaws that would negatively affect economic activity.
“If the amendment is passed as it is, it will impact our economy,” he said. He urged lawmakers to take the issue seriously and rethink some key clauses.
Separation Of Bankers And Businesspeople
One of the most debated points in the proposed amendment is the idea of separating industrialists and bankers. The bill suggests that promoters should own 51% of a financial institution’s shares, which would give them more responsibility and control. At the same time, it also states that anyone holding more than 1% of shares would be classified as a ‘related party’ and could not take loans from that institution.
Dhakal said this would hurt both businesses and the banking sector.
“On one hand, you want to make promoters more accountable. On the other hand, you stop them from borrowing. That doesn’t work,” he said. He explained that many business owners invest in banks. If those investors are not allowed to access credit, they may be forced to close down their businesses.
Threat To Business Operations
Dhakal believes this clause would affect almost every major business in the country.
He explained that most entrepreneurs and industrialists own more than 1% of shares in banks or financial institutions. Under the new rule, these people would not qualify for loans from those institutions.
“This will push many businesses towards closure,” he warned.
He further argued that this approach is not practical in Nepal’s context. In a developing economy like Nepal, access to finance is essential. Investors need to invest in both industries and financial institutions to survive in a competitive market.
Effective Budget Implementation Is Key
Despite his concerns, Dhakal expressed hope in Nepal’s current economic strategy. He said that if the national budget is implemented effectively, the country can achieve its economic growth targets.
He urged the government to focus on execution rather than just planning. “Plans are good, but implementation matters more,” he said.
He also praised the budget for including new strategies to support economic development, especially in the use of natural resources.
Positive Step On Mineral Resource Use
Dhakal welcomed the budget’s provision to allow the use and export of Nepal’s mineral resources, as long as environmental standards are maintained. He said this was a smart move that could support both local industries and national income.
He gave the example of Middle Eastern countries that became prosperous through the export of petroleum resources.
“If they had not been allowed to export their petroleum products, they would not be where they are today,” he said.
Nepal, too, must learn from this. The country should use its natural resources in a way that helps the economy while protecting the environment.
Balance Between Regulation And Growth
According to Dhakal, the government must find a balance. On one side, it should ensure accountability and transparency in the financial sector. On the other hand, it should not block access to finance for entrepreneurs.
He said investors should be treated fairly. If they are willing to take risks and invest in both industries and banks, they should not be punished for it.
Call For Dialogue
Dhakal called for more discussions between stakeholders. He asked Parliament to consult with industry leaders, bankers, economists, and policy experts before passing the bill.
“This is not just a banking issue. It’s an economic issue,” he said.
He believes that open dialogue can lead to better laws that support both financial stability and business growth.
Strong Private Sector Needed For Recovery
He also stressed the importance of the private sector in Nepal’s post-crisis recovery. The economy has suffered in recent years due to the pandemic, inflation, and low investment. According to Dhakal, supporting private businesses is the fastest way to create jobs and income.
“A strong private sector means a strong economy,” he said.
Conclusion: A Critical Moment For Nepal
Nepal stands at a critical point. The government is making big decisions about the economy. President Dhakal’s message was clear — policies must support growth, not hinder it.
The BAFIA amendment should focus on improving governance, but not at the cost of blocking access to finance. If passed without proper revisions, it could harm business confidence and economic momentum.
At the same time, opportunities exist. The budget opens doors for responsible resource use and export. With the right balance of policy, dialogue, and action, Nepal can achieve stable and inclusive economic growth.
For more: FNCCI Warns Nepal BAFIA Changes
