No legal basis for freezing bank accounts of industries as suggested by NEA

KATHMANDU: The Nepal Electricity Authority (NEA) recently sent a letter to the Nepal Rastra Bank (NRB), requesting it freeze the bank accounts of industries with outstanding arrears related to the dedicated trunkline.

However, NRB has clarified that there is no legal basis to take such action.

The letter, sent by NEA Managing Director Kulman Ghising on Wednesday, highlighted the challenges the authority faces in recovering these arrears.

However, according to NRB’s regulations on the freezing and unfreezing of bank accounts (2081), such an action cannot be taken based solely on the NEA’s request.

Under the regulations, an authorized officer must provide clear legal grounds for freezing an account.

This includes presenting a valid reason and details of the account holder, such as name, address, registration number, and permanent account number.

If an account is to be frozen, NRB may act upon an official request from government agencies or law enforcement bodies, such as the Commission for the Investigation of Abuse of Authority (CIAA), Nepal Police, the Department of Money Laundering, or the Department of Revenue Investigation.

There is no provision for freezing accounts based solely on a request from the NEA.

The laws governing account freezes involve actions by law enforcement or government agencies and include the Commission for the Investigation of Abuse of Authority Act, the Nepal Rastra Bank Act, the Banks and Financial Institutions Act, the Money Laundering Act, and the Revenue Investigation Act.

According to NRB’s regulations, an authorized agency may directly freeze or release an account, but only if it provides formal correspondence citing the legal authority under which the action is being taken.

Since the NEA is not authorized by its own regulations to request such a freeze, Ghising’s letter has been deemed inappropriate.

Furthermore, NRB spokesperson Ramu Poudel confirmed that the central bank has not yet received the letter from the NEA.

He added that any further action will depend on the content of the letter once it arrives.

It is worth noting that NRB introduced regulations governing account blocking and unfreezing in August of the previous year.