Kathmandu-The Confederation of Banks and Financial Institutions Nepal (CBFIN) has expressed serious concern over the arrest of Nepal Investment Mega Bank CEO Jyoti Prakash Pandey and the ongoing investigation related to the case.

In a statement issued Friday, CBFIN said banks and financial institutions operate under the Banks and Financial Institutions Act (BAFIA) 2017, the Secured Transactions Act 2006, and Nepal Rastra Bank directives, which grant BFIs authority over loan recovery, collateral auction, and credit management.

CBFIN stated that the arrest of banking professionals over decisions taken under existing laws has created fear and uncertainty across the banking sector. It argued that treating professional decisions as criminal acts without objective investigation undermines confidence and threatens financial governance.

The umbrella body also raised concerns over collateral ownership following the liquidation of debtor institutions, questioning whether the first right belongs to lending institutions or the government.

It warned that uncertainty over loan recovery and collateral seizure could jeopardize depositor protection, shareholder confidence, customer service, and broader economic stability.

While supporting legal action against proven irregularities, CBFIN stressed that due process must be followed and warned that arbitrary actions could damage professionals’ reputations, disrupt banking operations, and weaken the country’s financial system.