Former Central Bank Governors Defend Investment Bank’s Collateral Sale for Loan Recovery, Reject Fraud Allegations

Former governors have accused Nepal Rastra Bank of remaining silent despite allegations of fraud filed against Nepal Investment Mega Bank (NIMB) for recovering loans by selling collateral in accordance with the law. A case has been registered at Kathmandu District Court against NIMB’s directors, CEO, and staff related to the auction and loan recovery from Smart Telecom’s collateral. The former governors emphasize that the central bank should conduct preliminary investigations and provide public clarity in such cases; otherwise, morale in the banking sector could decline. (September 18, Kathmandu)

The ex-governors state that negligence by Nepal Rastra Bank forced NIMB’s management and directors to face fraud charges while recovering loans. They argue that when collateral sales occur as per legal provisions to protect depositors’ interests, the police investigation is unexpected, especially without intervention from the central bank. According to the Bank and Financial Institutions Act 2016 and the Secured Transactions Act 2006, the bank legally sold Smart Telecom’s movable assets to recover the loan.

Following the collateral auction and loan recovery, Nepal Police has launched an investigation under the Muluki Criminal Code concerning fraud, organized crime, and offenses related to banks and financial institutions, and the Office of the Government Attorney has filed a case in the district court. The former governors unanimously agree that the central bank failed to play a supervisory role when criminal charges and investigations were initiated for actions conducted in compliance with existing laws and central bank directives.