Banking Crisis: CEO Arrest Over Loan Recovery Sparks Fear of Institutional Paralysis

The core of this dispute lies in the conflicting interpretation of ownership following the cancellation of Smart Telecom’s license. While the CIB claims the assets in question are now state property, the Bank and Financial Institutions Act (BAFIA) 2073 grants banks the authority to auction collateral to recover principal and interest, regardless of other conflicting laws. Analysts warn that treating legitimate financial recovery actions as criminal offenses could paralyze the banking sector, discouraging banks from financing large-scale projects and potentially destabilizing the financial system. For the sake of economic stability, experts argue that the government and the central bank must urgently resolve the ambiguity between telecommunications regulations and banking laws to ensure that protecting depositors’ money does not lead to the criminalization of professional banking practices.