CIAA interference concerns pvt sector

KATHMANDU, NOV 26 -

A private sector delegation met Nepal Rastra Bank (NRB) Governor Yubaraj Khatiwada on Monday and expressed their concerns over the Commission for Investigation of Abuse of Authority (CIAA) demanding details about borrowers of banks and financial institutions.

The delegation, which included a few bankers and department chiefs of various banks, told the governor that the CIAA move could affect the domestic and foreign investment in the country, an official of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) said after the meeting. The CIAA has been studying the details of about a dozen commercial banks. The anti-graft body had sought details on loans, share ownership, foreign investment and exemption of penalty and interest amount to recover the loans. The bankers have expressed grave concern over the CIAA interference in certain works which had been carried with central bank’s approval. Although the Bank and Financial Institution (BFIs) have provisioned that the banks should maintain the customers’ information secret, the bankers complain, the central bank has failed to resist the CIAA despite a clear legal provision.  

Clause 79 of the Bank and Financial Institution Act 2006  allows the BFIs to provide the details about accounts of a person, firm, company and institution and licensed institutions if the Finance Ministry and the NRB direct them for any specific investigation by disclosing the reasons for demanding the information.

However, the bankers said they have been asked to provide the details without any specific reason for the investigation. Another representative in the delegation said that they urged the governor to ensure that the banks should not disclose details about customers as it does not fall under the CIAA’s jurisdiction.

The bankers maintain that no one except the central bank has the right to take customers’ details. “The CIAA seeking details and police making arrests of bank customers is making banking a dangerous business,” said a bank chief executive officer on condition of anonymity. “The central bank must create conducive environment where the bankers can work without fear.”

The CIAA has been seeking details from the government-owned banks directly, while it has sought details from the private sector banks through the central bank about the borrowers that received loans in excess of Rs 10 million.

Lately, the anti-graft body sought balance sheet, details that are published under appendix of the balance sheet and share transactions of the banks. “If an investigation is at all required, the central bank is capable of doing conducting on its own,” said a bank director. CIAA sources said that the anti-graft body has formed a team of experts to look into possible irregularities related to the banking sector. The panel comprises retired bureaucrats, chartered accountants and management experts. The sources said even an investigation officer assigned to look into the banking and financial sector has been bypassed.

Meanwhile, the Nepal Bankers Association on Monday consulted with legal experts if they are liable to give away details to the CIAA directly as per BAFIA. “There is an increased tendency among the investigation authorities of seeking details from banks directly instead of coming through the NRB,” complained another banker.

Source: The Kathmandu Post