Jagdish Dahal is a member of the Supreme Court Bar and has been practicing corporate law for around three decades. He has a wide experience in insurance, tax, banking, labor and corporate laws. Besides, he has also worked as a legal consultant in various projects of UNDP, USAID, ADB, EU and commercial banks.
ApEx talked to Dahal regarding Nepal’s economic and legal situation from a corporate lawyer’s eye.
How do you see our banking sector?
Nepal has a good banking human resource. Yet, there are a few issues with them. Nepali banks are town-centered, and the state has also not been able to make banks village-centered.
Also, banks enjoyed investment in quick profit-oriented ventures like trade, automobiles, real estate, housing, hydro, tourism and other service sectors rather than in production-oriented firms. The states meanwhile failed to regulate these things.
The same investors started to invest in both banks and trades which had many conflicts of interest. Due to a lack of direction in political leadership, these problems arose which ultimately impacted the banking sector and national economy.
However, their regulator, Nepal Rastra Bank (NRB), has played a good role in improving the Nepali banking sector. Maybe this is because the World Bank and International Monetary Fund (IMF) regularly suggests and supervises NRB’s work.
What is the condition of insurance companies?
The history of the insurance business is not too old. It was initially started to help and support banks. And till today, things seem the same. Banks and insurance companies have a cordial relation and if banking business gets down, the insurance companies also see a plunge in businesses.
Over the time, the insurance business has been expanded and there are over 40 life and general insurance companies in Nepal. But their condition is not exciting.
The indexes of the economy show that we are already in a crisis. At this point, I feel that this is the time to downsize banks and insurance companies. And the government should formulate plans to battle the recession so that everyone can sustain the period.
Does Nepal have good laws?
Not a single law or plans and policies in Nepal has been made by the experts. They are made by bureaucrats. What bureaucrats do is make the laws in their favor so that it will be easy for them to work. No governmental programs and packages help general people because they are not meant for the public, but the bureaucrats.
Moreover, the laws in Nepal are copied and translated from the foreign countries. Many of them have no Nepali taste. For instance, the Income Tax Act is so vast and undefined that the act itself hinders revenue generation. For a better revenue collection and involvement of every Nepali to strengthen national treasure, laws, acts and provisions should attract taxpayers. The legislature should work to incorporate public demands in the laws.
Similarly, there are also many issues with banking, insurance, security market and corporate acts. Not only with their laws, but many of them need a complete restructuring of the organization. They too need experts in the leadership of the organization.
How do you see the labor situation in Nepal?
The labor situation is terrible here. Nepal has many daily wage workers, and it is difficult for them to sustain with the wages they get. So, the laborers are not in a good situation in Nepal. There are many issues of overwork and less salary.
The state must conduct a study on how much money a person needs to sustain for a month comfortably and the minimum wage cap should be strictly maintained. It must be regulated, and such studies should be conducted regularly as inflation plays a major role in it. The minimum wage cap should be updated regularly.
The government should also maintain an updated list of its people, how many of them are employed, how many are unemployed and all. And then, the government should provide them with employment and generate income for the expenses of non-working age groups too.
What types of corporate issues are in larger numbers in the court?
Banking offenses, issues between banks and loan receivers, revenue issues and trade disputes are the major lawsuits.
Lately, these issues have increased because the poor economic situation has vacuumed the gap between banks and customers. There have been issues of loans as the entrepreneurs have not been able to pay back due to lack of business.
How do you rate the banking and financial literacy of Nepalis?
Financial literacy has grown in Nepal. The Constitution of Nepal 2015 compelled the banks and financial institutions to open its branches in each local government. Hence banks were spread to rural areas of Nepal. The banks have helped people know the importance of saving and have taught how to deposit and withdraw money.
However, the banks are yet to help people start their own venture. The banks should help other businesses to flourish so that there will be employment opportunities in every place. It will ultimately help every sector of Nepal.
What are your suggestions for all these issues?
If the political leadership realizes their responsibility toward the nation, we have issues that could be fixed. But we have not seen the government and concerned parties in a rush even if we are in crisis. So, my suggestion and solution are that the leadership should correct itself and help businesses with better entrepreneurial environments. Experts should be brought to power, and they should be allowed to make plans to fight the crisis.
We should also be able to learn from the good deeds of our neighboring countries—the two major economies in the world.
Bureaucracy has a similar problem. They have a problem of superiority complex. They believe that their abilities or accomplishments are somehow dramatically better than others and without them, this country would not have existed. They too need a serious correction on their work and behavior.