The Issues I Have With NRs. 19 Crores Worth of Banking Credit Fraud

The author claims sole credit and responsibility for the opinions presented in this article. This article was submitted by a guest writer (navigate to the bottom for details).

The Nepalese banking sector came to know about a major event of banking credit fraud of NRs. 19 crores at one of the reputed A-Class banks last week. The fraud was related to fake documents of land ownership, mortgage, and rokka.

As per various news articles published on reliable media sources, the masterminds of the fraud game are under investigation (custody). An engineer who was involved in the evaluation of collateral has been taken into custody, along with a bank staff (Junior Assistant) deputed at Malpot Office. This event has once again triggered fear and discussion among all levels of personnel involved in the banking industry.

Issue 1

It has been reported in the news that the related Bank has already made the borrower settle the loan after getting to know that the loan was disbursed against fake collateral and fake mortgage documents. This is a praise-worthy task done by the bank's management that has safe-guarded the sweat and toil of the general people in time.

However, it is still unknown whether the bank has informed government authorities regarding the people involved in the production of such fake security documents. It is still not up to light whether the bank reported complaints to the Police or other concerned authority against the related borrower as the production of fake governmental seals and documents is a critical crime against the state.

It has been reported that the issue came to light only after some months when the reputed singer and owner of the property filed complaints at CIB. Now a simple question arises in the mind of an honest citizen: is only settling the loan adequate for a serious crime involving the production of fake government documents?

For an instance, bankers regularly torture innocent account holders for KYC, Customer Due Diligence, and related terminologies of AML and CFT at deposit/ withdrawal of a few thousands of rupees in accounts and file Suspicious Transactions Report against money laundering. But isn’t it a serious issue if they have done nothing in case of credit fraud of crores of rupees involving fake governmental documents, but rather tried to conceal the issue after settlement of the loan?

The silent settlement of the issue puts thousands of innocent bankers at risk of being trapped by ill-minded people and may encourage wrong-doers to dig a wide hole in the banking system- ultimately risking the integrity and trust of the financial system.

Issue 2

There is no online way of checking and tracking mortgage deeds and rokka paper at the Malpot Office in Nepal. Even to get a copy of one's own land ownership documents, one has to route oneself with “agents” around malpot offices and waste thousands of rupees. Multiple studies and reports published by organizations working on governance have already revealed Malpot offices being negatively reputed as corruption centers.

Had there been an online way of tracking authenticity available to banks about whether a mortgage deed/Rokka of the property was legally registered on the respective Malpot office, no one could easily fake mortgage and rokka letters issued by Malpot Office. The same type of online tracking system needs to be implemented in the case of “Pragyanpatra” to check its reliability and originality to curb illegal money transfers outside the national border.

Issue 3

The association of evaluators has already gone on strike against the imprisonment of the valuator involved in the valuation of the property related to the case. However, no one has even uttered a word of public sympathy for a Junior Level bank staff caught by CIB for investigation. If the top officials of the banks already knew about the counterfeit Mortgage Documents and settled the credit transaction, how does it sound just to only have a junior-level bank staff being in police custody for investigation purposes? The related staff irrespective of hierarchy- needs to be punished if found guilty, acting irresponsibly, and being involved with fraudsters. However, does it make any sense to imprison only the lowest level staff as the approval and disbursement process of a loan of Rs. 19 crores encompasses multiple levels of checks including the documents being duly scrutinized by various levels of risk and legal officers?

Issue 4

In a similar type of fraud at another bank some years ago, the banking fraternity was raged when one of the CEO was taken under police custody. However, we can now observe- in the case of lower-level bank staff, queer silence exists everywhere, almost as if it is an ambush formed by fraudsters to honey trap the bank for credit fraud.

Upon review of reliable news on reputed media, the matter is clear and requires no further explanations: the borrower of the case has forged fake documents. And if any staff of the bank is not involved in the scam and not associated with fraudsters, the victimized staff must be compensated against reputational damage. The life and career of the concerned staff, if found innocent, should not be made a scapegoat to save other culprits of the case.

The truth of the case will be revealed sooner or later after the completion of the investigation. However, it is too pathetic to be realized by a banker that- had there been any type of attacks either physical or reputational on other professionals, the situation would have been different. Protest and defense by related associations/ unions in writing would be staged. But in the event of a fraud scheme of crores of rupees, the related bank staff unions/ federations are silent. Not even a press release has been made by a bank-staff union seeking a truthful investigation of the case. If a similar situation prevails in the future, is it not pitiful that innocent bankers working in good faith can be easily trapped by mastermind fraudsters? At such grave incidents, do they deserve to remain voiceless and alone in the darkroom of prison?

This article was submitted by an author who chooses to remain anonymous. The author wants to be acknowledged only as "Just a small investor of Nepse."