The government is preparing to make Dhukuti scheme, a kind of informal financial cooperative, illegal and a punishable financial crime.
The draft amendment to Bank and Financial Institutions Act 2064 (BAFIA) registered at parliament secretariat on Thursday proposes making Dhukuti scheme a banking offence. Dhukuti is an unauthorized deposit and loan scheme that is typically run by a group of people who deposit a certain amount of money at regular intervals and use the money on rotational basis.
“No one shall be allowed to run the Dhukuti scheme,” reads article 14 (A) of the draft amendment to BAFIA. The bill also proposes one to nine-year jail term for those involved in the scheme.
Spokesperson for the Nepal Rastra Bank (NRB) Min Bahadur Shrestha told Republica that the Dhukuti scheme should be made a punishable financial crime so that financial transactions are not carried out through informal channels. “Many innocent people were duped through this informal banking practice. Thus, we are preparing to make it a punishable financial crime,” added Shrestha.
According to a report ‘Status of Dhukuti Karobar’ published by the NRB in 2011/12, transactions worth Rs 5 billion were carried out under the Dhukuti scheme.
Stricter provision to ensure corporate discipline
Similarly, the bill has also included some stricter provisions to ensure corporate discipline in banking and financial institutions. While retaining most of the provisions related to restriction and ban on unauthorized floating of loans, the amendment bill also incorporates a provision that proposes making the act of setting up a proxy borrower by promoters, board of directors, chief executive officer or other authorized officials of BFIs with an intention of misusing the loans, illegal. The bill also states that floating of loans to borrowers with whom promoters, board directors, chief executive officer or other authorized officials of the BFIs have any financial interests, will also be considered a banking offence.
The amendment bill has, however, relaxed the provision that barred defaulting or blacklisted borrowers from opening bank accounts, withdrawing money or making payments through check. The amendment bill proposes to allow such borrowers to withdraw certain amount of money from any national or international bank for their daily livelihood.
Meanwhile, the amendment bill also proposes stricter punishment to senior level officials of BFIs for misuse of banking resources, assets and means and misuse of credit.