Talks on to bring co-op, dhukuti frauds under banking offence


Jun 2, 2014-

The government has initiated discussions to bring frauds committed through cooperatives and Dhukuti (a type of informal banking) under the the Banking Offense Act.

Currently, officials of the Finance and Law Ministries and the Nepal Rastra Bank (NRB) are holding talks on an amendment proposal to the Banking Offense Act, which talks about bringing cooperatives and Dhukuti under the Act’s purview.

Due to feeble penalty provisions against wrongdoers in the Cooperatives Act and lack of legal provision on Dhukuti, duping people through these structures has flourished in the recent years. And, government agencies have been unable to take stern action against the fraudsters.

As per the proposed Act, officials of cooperatives will face penalty if they are found involved in misappropriation of public money or holding transactions with non-members against the cooperative norms. It has also provisioned penalty against Dhukuti fraudsters. The proposed Act has also increased the jail term against offenders to a maximum of 10 years from the current five years.

According to the proposed amendment, those embezzling more than Rs 100 million will be slapped with up to 10-year jail term, confiscation of the embezzled amount and fine equivalent to that amount.

If the embezzled amount is Rs 1 million, the offender will face a jail term of up to one year, confiscation of the embezzled amount and equivalent fine. As per the existing Act, if the embezzled amount is more than Rs 10 million, the offender would face 3-5 years’ imprisonment. And if the suit amount is up to Rs 1 million, jail term would be one year.

A government official involved in the discussions said the penalty provision would be applicable to banks and financial institutions, cooperatives and Dhukuti equally.

“As huge amount of the general people’s money has been embezzled from cooperatives and Dhukuti, bringing them under the Act has become necessary,” said the official.

Currently, the police investigate misappropriation of funds through cooperatives and Dhukuti under fraud case. The inclusion of the offenses by cooperatives and Dhukuti operators in the Banking Offense Act will pave the way for the police’s Central Investigation Bureau to investigate and punish the wrongdoers as per the Act.

According to a high-level commission formed to investigate troubled cooperatives, promoters of 130 troubled cooperative have embezzled Rs 11.41 billion. And, the police say there is a huge amount of fraud committed through Dhukuti too.

The proposed Act has also incorporated frauds committed through electronic means such as debit/credit cards.

Published: 03-06-2014 09:00

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