Blacklisting process in Nepal

If you would like to learn about blacklisting process in Nepal and the legal actions from the public procurement monitoring office then see the below procedures and legal aspects of blacklisting process.

What exactly is blacklisting ?

Black listing is the practice of compiling a list of debtors and those associated with financial wrongdoing in Nepal. It is a list of debtors and bankrupts whose names have been distributed and issued Credit Information Bureau  .The Credit Information Bureau was established to keep track of the black list. Blacklisting is a common method for obtaining bank loans. If a loan is obtained, the Credit Information Bureau will be notified.

Rule 6 of the “Nepal Rastra Bank Credit Information Regulations, 2059” allows for blacklisting and follow the process in accordance with it. Commercial banks and financial institutions must apply to the centre for the blacklisting or removal of their clients, debtors, and other people associated with banking violations.

What exactly is the Credit Information Bureau? What exactly does it do?

Under Article 4 of the Institution Registration Act 2034, the Credit Information Bureau was registered in the District Administration Office in Kathmandu on 2055/2/13 to regulate Nepal’s growing non-performing loans. It is essential for tracking credit information provided by banks and financial institutions.

The office collects information in three generations, including the borrower’s loan amount and the addresses of both the borrower and the witness. A debtor will be blacklisted if he or she fails to repay a loan issued by a bank or financial institution.

If a bank or financial institution is placed on the Credit Information Bureau’s blacklist, its services may be restricted in the days ahead. As a result, anyone who has been blacklisted for failing to repay a loan from one bank or financial institution will be unable to borrow from another. A person on the blacklist may be ineligible for any and all state benefits.

There is a provision for any bank or financial institution to notify the Credit Information Bureau within the specified period to blacklist the details of all loans/facilities approved by it, all loans/facilities exceeding 90 days, and all loans/facilities with a loan amount of one million rupees or more.

As a result, the Credit Information Bureau generates and distributes credit information requested by any other bank or financial institution based on the information provided to the Bureau by banks and financial institutions.

Who is in charge of blacklisting?

The bank requests that the credit information centre blacklist it. According to Article 57 of the Banking and Financial Institutions Act 2063, the bank may use its loan amount as a self-help remedy against the loan debtor. If the debt is not paid, the mortgaged or blacklisted property may be auctioned off to raise funds.

If a person, corporation, company, or institution fails to repay a bank loan within the terms of the instrument, if the loan amount is not used for the intended purpose, or if it is misappropriated or exploited by the bank during the investigation, the bank may blacklist the person, corporation, company, or institution.

How do you blacklist in the event of a check bounce?

In the event of a cheque bounce, the check must be sent for withdrawal up to three times before being blacklisted. After receiving an application from the relevant bank, the bank must apply for blacklisting in the credit information centre.

Public Procurement Monitoring Office Blacklisting

Individuals who engage in unethical behaviour in public procurement are also blacklisted. Sections 62 and 63 of the Public Procurement Act, 2063 (2007) define unethical behaviour as having a negative impact on public procurement, engaging in anti-competitive behaviour, colluding, encouraging corruption, temptation, fraud, and conflict of interest.

Article 62 of the same act creates provisions for the bidder or proposer to follow the prescribed behaviour, and if they do not, they will be blacklisted.

The Public Procurement Monitoring Office’s blacklisting:

When bids, bidders, consultants, service providers, businesses, or their operators are blacklisted in public procurement, they are barred from participating in the new procurement process for an extended period of time. The Public Procurement Monitoring Office has been granted the authority to blacklist or liquidate any individual, enterprise, organisation, or company for a period of one to three years, depending on the gravity of their work.

The Public Procurement Monitoring Office may blacklist a bidder, proponent, consultant, service provider, supplier, construction entrepreneur, or other person, firm, organisation, or company for one year to three years based on the gravity of his/her/her/her act: –

• If it is proven that s/he engaged in conduct contrary to Section 62,

• If a proponent of a proposal accepted does not appear to sign the contract in accordance with Section 38,

• If it is later demonstrated that he/she made a serious error in executing the procurement contract or did not substantially meet the contract’s obligations, or that the work performed under the procurement contract is not of the quality specified in the contract,

• The Public Procurement Monitoring Office may blacklist a bidder, proponent, consultant, service provider, supplier, construction entrepreneur, or other person, firm, organisation, or company for one year to three years based on the gravity of his/her/her/her act: –

• If found guilty in a court of law of a criminal offence, you will be disqualified from participating in a procurement contract.

• If it is proven that he/she/it signed the procurement contract 54 by falsifying or misrepresenting his/her qualifications,
• Any other prescribed conditions

Inform the office in writing

If a public body needs to blacklist a bidder, proposer, consultant, service provider, supplier, construction contractor, or any other person, firm, organisation, or corporation, the information should be sent to the Public Procurement Monitoring Office along with the relevant documents.

Prohibition Notice

After receiving such a letter from a public body, the Public Procurement Monitoring Office, after reviewing the relevant details, basis, reasons, and related documents, may decide to prohibit participation in the purchase of the relevant bidder, proposer, consultant, service provider, supplier, construction businessman, or other person, firm, institution, or company.

A prohibition notice must be published

If the Public Procurement Monitoring Office decides to suspend, the relevant bidder, proposer, consultant, service provider, supplier, construction contractor, or other person, firm, institution, or corporation must be publicly notified within seven days of the decision.

Written notice to submit a clarification

The Public Procurement Monitoring Office shall submit a written notice stating the grounds and explanations for not blacklisting the relevant bidders, proposers, consultants, service providers, suppliers, construction businessmen, or other persons, firms, institutions, or companies, along with a copy of the details, reasons, and documents provided to the blacklist, and shall be delivered to the concerned party’s office or home.

Publication of the written clarification notice

If a written notice is sent to his office or home for submission of explanation and he is not found, a public notice should be published in a national level newspaper in this regard, and such notice shall be assumed to have been lawfully delivered.

Explanation required to be submitted

After receiving the notification to submit explanation, the concerned bidder, proposer, consultant, service provider, supplier, construction practitioner, or other person, firm, organisation, or company must submit your explanation to the Public Procurement Monitoring Office along with the related documents and evidence claiming it should not be blacklisted by enclosing a copy of the details, reasons, and documents obtained for blacklisting.

Notice of hearing

If the Public Procurement Monitoring Office determines that a joint hearing is appropriate, it shall notify the concerned bidder, proposer, consultant, service provider, supplier, construction businessman, or other person, firm, institution, or company in writing of the time and place of such hearing.

Decision be made to blacklist

The Public Procurement Monitoring Office should decide whether to blacklist the public body and the concerned bidders, proposers, consultants, service providers, suppliers, construction businessmen, or other persons, firms, institutions, or companies based on the documents submitted, both during the hearing and in the absence of the hearing.

If the Public Procurement Monitoring Office decides to blacklist, the decision should be communicated in writing to the appropriate public authorities and bidders, bidders, consultants, service providers, suppliers, construction enterprises, or other individuals, firms, organisations, or companies. If the Monitoring Office does not choose to blacklist If a procurement ban exists prior to the decision being revoked, it should be automatically lifted, and the transaction should be made public.

Calculation of the time to be blacklisted

If the prohibited bidding bidder, proposer, consultant, service provider, supplier, construction businessman, or other person, firm, organisation, or company is decided to be blacklisted, the time of blacklisting should be calculated from the time of prohibition.

To be taken off the blacklist

The Public Procurement Monitoring Office has developed criteria for removing blacklisted bidders, proposers, consultants, service providers, suppliers, construction businessmen, and other individuals, firms, institutions, or corporations from the blacklist.

Records to be kept

The Public Procurement Monitoring Office must keep records of bidders, bidders, consultants, service providers, suppliers, construction businessmen, or other individuals, firms, institutions, or companies who have been barred from participating in the procurement process, or who have been automatically removed, blacklisted, and removed from the blacklist, and these records must be uploaded to its website.

CONCLUSION

A lack of professionalism among construction businessmen and suppliers, ineffective adherence to expected rules of conduct, and a lack of specialised procurement knowledge and capacity all contribute to the rise of the blacklisting process and increasing recommendations to blacklist in Nepal. Adherence to prescribed purchase values and behaviour, as well as proper utilisation, are required to maximise the return on public investment through improved procurement management.

Should you have any questions, please do not hesitate to contact us at +977-9849517735 info@corporatelawyernepal.com

Note: Author Prama Singh Maharjan- Intern at Prime Legal Consultants and Research Center

Supervisor- Alpana Bhandari, Founding Partner & CEO at Prime Legal Consultants and Research Center