Government Charges Reveal: Smart Cell Collateral Auctioned Under Pressure from Nepal Rastra Bank; Legal Action Taken Against Auctioneers
The government’s charge sheet reveals that Nepal Investment Mega Bank (NIMBMB) auctioned Smart Cell’s collateral and recovered loans under the directive of the regulatory authority, Nepal Rastra Bank, and in accordance with prevailing laws. Former governors state that, as per the Bank and Financial Institution Act and the Secured Transactions Act, the bank sold mortgaged assets to protect depositors’ interests. Concerns have been raised by stakeholders over police actions against those involved in the auction after the Nepal Telecommunications Authority failed to manage the assets promptly, prompting the Rastra Bank to exercise its legal rights.
Dated 31st Shrawan in Kathmandu, the report by Nepal Police’s Central Investigation Bureau (CIB) and the charge sheet submitted by the government prosecutor’s office to the district court clearly state that Nepal Investment Mega Bank auctioned Smart Cell’s towers and equipment to recover loans under pressure from Nepal Rastra Bank. The charge sheet cites that Rastra Bank exerted pressure to write off Smart Cell’s long-defaulted loans.
It is evident that NIMBMB conducted the collateral auction following the Central Bank’s recommendations and in accordance with the Secured Transactions Act and the Bank and Financial Institutions Act. However, despite following regulatory directives and Nepali law, the government has filed cases against the bank’s chairman, directors, CEO, and some employees involved in the collateral auction. They are accused of fraud, organized crime, and offenses related to banks and financial institutions, alleging unauthorized sale of public assets. The bank, however, asserts that following the loan default, it sold the collateral to recover the loans.
Regarding the auction of collateral due to Smart Cell’s failure to pay installments on time, former Nepal Rastra Bank governor Dipendra Bahadur Kshetri commented, “The funds loaned by banks are actually the deposits of the general public. To safeguard depositors’ money, the bank took necessary actions and is not at fault. Even if the collateral belongs to the government, since the government failed to manage it within the stipulated time, the bank acted within the law to protect depositors.”
A management committee was also formed under the coordination of the Nepal Telecommunications Authority, including representatives from the Communications, Finance, and Law Ministries. This committee was tasked with evaluating assets and liabilities and devising a plan to settle accounts within six months; however, the charge sheet states that this was not accomplished.
