The State of Coercion: Banking Sector Under the Shadow of ‘Nero Culture’  

On the thirteenth day of his premiership, Prime Minister Balendra Shah convened with foreign diplomats, articulating a vision for Nepal’s prosperity rooted in mutual cooperation and the principles of Panchsheel. Both the Prime Minister and the Finance Minister have repeatedly assured a conducive environment for domestic and international investment. However, the subsequent actions of the state suggest a stark departure from these promised. The government has not only begun treating private sector irregularities as inherent criminal acts but has resorted to preemptive punishment, turning the banking sector into a target of state-sponsored intimidation.

The Nepal Rastra Bank, as the regulator of commercial banks, has presided over a volatile two-decade cycle – first granting licenses in excessive numbers and now mandating mergers, creating a climate of deep uncertainty. There is a glaring lack of clarity regarding policy consistency between the central bank and the government concerning ‘bad loans’ and their recovery. The autonomy of banking institutions remains under threat, yet transparency and credibility in this sector are the very prerequisites for encouraging private investment.

While the government remains preoccupied with bypassing parliamentary scrutiny, a ‘Nero culture’—fiddling while the economy burns—seems to be taking root. The police visibility in the scene lead loan recovery specifically in  the recent actions against Nepal Investment Mega Bank (NIMB), reveals a troubling politicization of the security forces. The arrest of CEO Jyoti Prakash Pandey, framed by the narrative that his ‘switched-off mobile’ indicated an intent to flee, reeks of institutional malice. For the Central Investigation Bureau (CIB) to suggest that the head of a nationwide banking network was absconding simply by moving between locations is not just logical frailty; it is a display of bad faith and high handedness.

While the government remains preoccupied with bypassing parliamentary scrutiny, a ‘Nero culture’—fiddling while the economy burns—seems to be taking root.

The recurring ordeals faced by Prabhu Bank and now NIMB signal a harrowing trend that could befall any financial institution. If the state continues to treat the banking sector with such administrative levity and retaliatory zeal, it risks triggering an economic collapse and widespread anarchy. Saving the state from loss or recovering its dues must occur within a lawful framework, rather than through terrorizing of financial pillars.

The path forward demands a fundamental shift: the banking sector and the government must converge on a platform of mutual resolution rather than confrontation. It is imperative that the central bank, rather than the CIB, takes the lead as the primary, expert arbiter in addressing banking complexities. The current reliance on police intervention betrays a lack of technical expertise and risks sinking the very institutions that safeguard public deposits. As of now, the government’s policies remain shrouded in ambiguity; however, governing is an act of stewardship, not an exercise in “grabbing the collar” of the private sector. If the Prime Minister and Finance Minister continue to bypass the legislature while the police act as the state’s arms twisting agency, the resulting ‘Nero culture’ will only ensure that the foundations of Nepal’s economy are charred beyond recognition.