The Nepal Rastra Bank (NRB) has initiated homework to amend the Banking Offence and Punishment Act 2008 to update it as per the changed context.
Over the last five years, there has been an increase in banking offences along with the proliferation of banks and financial institutions (BFIs). As a result, a few dozen BFI officials, employees and their customers have been imprisoned on charge of banking offense.
The central bank has sought advice from stakeholders concerned, including its own departments, Nepal Bankers’ Association, Development Bankers’ Association of Nepal and Finance Companies’ Association of Nepal, Office of Attorney General and Nepal Police, according to an NRB official. “We have started getting response from the stakeholders and we will draft the Act after collecting their opinions.”
Another central bank official said the revision of the Act was necessary to address the newer ways of committing banking frauds emerging lately. The official, however, did not specify the method of crimes that the current Act could not address. “We are in the process of figuring out the new areas that the revised Act should address,” said the official.
The existing Act has identified 14 activities as banking offense. They include unauthorised demand of cash payment; obtaining/issuing cheques in an unauthorised way; unauthorised withdrawal through both manual and electronic methods; providing loans based on faulty documents with ill intention; and misuse of credit.
Other banking offense activities are misuse of financial resources of BFIs by directors and chief executives; stopping loan instalments to projects without sufficient reasons; forgery of bank documents; false valuation of collateral; and providing goods and services free of charge that causes loss to BFIs.
An NRB official said there taking action against those committing financial crime — be it director, CEO, employee or borrower — is must.
In its suggestion, the Office of the Attorney General has asked the central bank to revise the Act in such a way that the perpetrators are sentenced based on the degree of offense they are involved in, the official said.
Nepal Bankers’ Association President Rajan Singh Bhandari said the revised Act should make all those involved in the decision making responsible, not only the chief executive officer, for whatever wrong happens in the bank.
Police said the revised Act should make all stakeholders responsible in the investigation process. Chief of the Central Investigation Bureau (CIB) of Nepal Police DIG Kesh Bahadur Shai said more responsibility is being shouldered by police and NRB currently.
source: The Kathmandu Post,20 Jan 2013
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