Kathmandu, Nov. 2 -- The ruling Rastriya Swatantra Party's senior leaders have agreed that Jigyan Kumar Thapa should not become Nepal's ambassador to Japan, citing potential conflicts of interest arising from his family's residency status, financial interests and other ties to the country.

The understanding was reached during a meeting between party chair Rabi Lamichhane and Prime Minister Balendra Shah, according to sources familiar with the discussions. Under the agreement, Thapa could be considered for an ambassadorial posting in another country, but the party will not back his appointment to Japan.

"We have agreed that Thapa should not be appointed ambassador to Japan. Given the potential conflict of interest, the understanding with...