Kathmandu. KATHMANDU: The Confederation of Bank and Financial Institutions (CBFIN) has said its serious attention has been drawn to the case filed against some key officials while conducting investigation into the bidding process of the Nepal Investment Mega Bank auction.

Cibfin said it needed a clear legal interpretation of whether or not the collateral and securitization rights created by the bank under existing law could be nullified by subsequent sectoral rules or licensing provisions. It has also raised the question of whether the revocation of the license of a business automatically goes to the state or the bank’s existing collateral rights will remain intact.

Nepal Rastra Bank (NRB) is primarily responsible for carrying out technical and regulatory audit of commercial decisions related to loan disbursement, collateral security, loan recovery and auction of BFIs. Therefore, it is of the view that there should be coordination among the bodies concerned on the basis of conclusions and opinions by conducting necessary examination by the Nepal Rastra Bank before proceeding with further investigation or action on such issues.

The CBFIN said it respects the judicial process, the independence and impartiality of the court. The CBFIN said it was confident that the dispute would be adjudicated in accordance with the constitution, existing laws, established precedents and judicial practice.

Cibfin said the legal distinction between commercial banking decisions, regulatory lapses and criminal acts should be clear. “The tendency to criminalize civil and regulatory disputes should be discouraged in the absence of a clear criminal intent or objective basis for a criminal act,” it said.

The incident also raises policy questions about the risk of credit flowing to national priority sectors based on licensing, including hydropower, telecommunications and infrastructure, Cibfin said. It is of the view that if the bank’s already created collateral rights are uncertain, then there should be clarity on how the bank will evaluate the risk in such areas.

In addition, the confidentiality of customer information, internal bank decisions, business details and personal data must be protected by law during an investigation.

“No one is above the law,” the CBFIN said in a statement. “We are committed to providing necessary coordination and support for the sustainable development of the overall banking sector, financial stability and building a strong economy while fully adhering to the rule of law,” the statement said.