In Nepal, bankers are learning to fear the loan
Summary
Nepal’s bankers are growing fearful of arrest as police increasingly investigate loan decisions and collateral auctions, even when central bank inspections have not flagged wrongdoing. The latest dispute involves Nepal Investment Mega Bank’s recovery process for Smart Telecom, alongside other high-profile banking offence cases.
Key Points
- Police and the CIB have stepped up banking offence investigations, creating alarm among commercial bank officials who fear arrest for ordinary lending decisions.
- The Smart Telecom loan recovery case has become the latest flashpoint, with Nepal Investment Mega Bank and Ncell facing allegations of collusion in an auction process worth billions.
- Former central bank and finance officials say Nepal Rastra Bank should lead scrutiny of bank lending, not the police.
- Bankers argue that the growing criminalization of loan recovery could discourage future lending and worsen liquidity in the financial system.
