Arrests spark controversy: banking sector urges serious consideration by authorities

Banking Umbrella Organizations Urge Government to Ensure Fair Investigations and Preserve Employee Morale

KATHMANDU: The umbrella organizations representing commercial banks, development banks, finance companies, and microfinance institutions have collectively appealed to the government to refrain from causing distress to employees through arrests until guilt is proven.

In a joint statement issued on Wednesday, these four umbrella organizations emphasized the need for investigations to adhere to the principle of justice, advocating that wrongdoers should not escape punishment, but the innocent should not suffer.

The statement was prompted by the recent arrest of a former Century Bank employee by the police on allegations of sanctioning loans exceeding the mortgage valuation. The umbrella organizations expressed concern over the negative impact such arrests have on the mental and social well-being of banking personnel, asserting that it could lead to a decline in morale among employees and hinder the expansion of loans, consequently affecting the overall economic development.

The joint statement highlighted the importance of considering various factors, such as projects, business viability, and cash flow, alongside assets when providing loans, following guidelines issued by the regulatory body, Nepal Rastra Bank. They urged relevant agencies to ensure that employees can work without fear.

Furthermore, the banking sector raised dissatisfaction with the police’s understanding of collateral for loans provided by financial institutions. In a meeting held by the Bankers’ Association on Wednesday, the arrest of 11 employees, including the former executive officer of Century Commercial Bank, Tulsi Gautam, sparked discussions. The employees were accused of exceeding loan limits, and the meeting concluded with an expression of displeasure over police interpretations regarding collateral.

The arrested individuals include Manoj Neupane, currently serving as the Senior Deputy Chief Executive Officer of Prabhu Bank, with five of the 11 currently employed at Prabhu Bank, while the others retired a few months ago.

The arrests were linked to details related to Deurali Multi-Purpose Cooperative Organization officers and loans provided by Century Bank. The cooperative’s owner, Rabindra Choulagai, had already been arrested for failing to return the savings of common people in the cooperative.

During investigations, the CIB inquired with Nepal Rastra Bank (NRB), discovering that Century Bank had provided loans based on goodwill. The NRB confirmed that loans cannot be granted solely on goodwill, prompting the CIB to seek clarification during its investigation into the fraud committed by Deurali Cooperative.

The Bankers’ Association engaged with Home Minister Narayankaji Shrestha, Central Investigation Bureau (CIB) of Police, and Nepal Rastra Bank Governor Mahaprasad Adhikari on Wednesday to discuss the arrests and urged seriousness in handling the matter to prevent potential challenges in the banking sector.

Fiscal Nepal |
Thursday February 29, 2024, 10:47:26 AM |

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