Fraud increasing in microfinance institutions

Fraud has increased in microfinance institutions due to weak monitoring and internal control, according to a senior microfinance expert.
Fraud has increased in microfinance institutions due to weak monitoring and internal control, said chair of the CSD Shankar Man Shrestha during the inaugural session of ‘Symposium on Fraud Control and Management’ organised by Centre for Self-help Development (CSD) here today.
“Fraud was unheard in microfinance till a couple of years back but risen to epidemic level in recent years,” he said, adding that the MFIs leader should be vigilant and make regular interaction with the client and field staff.
CSD – one of the pioneer institutions to launch microfinance in Nepal – organised the symposium, which saw various speakers in the panel session. In the panel discussions, experienced and senior chief executives of microfinance institutions focused on the steps to tackle fraud in microfinance. The panelist outlined that monitoring and supervision is a key towards eradicating fraud. The CEO’s should have both KYC of clients and staff. They further said that CEO’s should be aware of the lifestyle of their staff to prevent the fraud in microfinance.
An expert Shyam Khatri presented on legal remedies to tackle the problems endemic in microfinance sector. He mentioned that the bank and financial institutions can themselves formulate bylaws in conjunction with relevant acts of the government to tackle banking fraud in their particular organisation and such bylaws will have legal repercussions.
Discussion was also carried out on concept of internal control and good practices seen in different organisations. Traits and qualities of good management styles were also shared among the participants. There was consensus among the staff that the MFI’s should enact preventive measures such as right and well-motivated human resources and devising strong audit control practice in the organisation.

Nepal should take benefit from BRI

Preoccupation with avoiding debt-trap has dominated the discourse on China’s Belt and Road Initiative (BRI) preventing Nepal from developing concrete plans, experts pointed out during a roundtable discussion organised by SAWTEE-Centre for Sustainable Development (CSD), here, today.
The event was organised to add to the discourse on how to align Nepal’s development plans with the China’s multi-regional connectivity initiative; the Belt and Road Initiative (BRI). The BRI basically is an infrastructure investment programme creating a web of transportation system including roads, railways, telecommunications, energy pipelines, and ports across regions.
Making a presentation on the BRI and its implication for Nepal, former vice chairman of National Planning Commission (NPC) Dr Shankar Prasad Sharma called attention to the ambiguities present in the project financing modality for the projects to be included in the BRI. "Whether the financial support will be in the form of loan or grant, if it is loan then what would be the interest rate and what would be the terms and period," Sharma asked, adding that the BRI is an evolving process, onus is on Nepal to negotiate terms that are beneficial to us.
Likewise, former under-secretary general at the United Nations (UN) and head of SAWTEE-CSD Gyan Chandra Acharya pointed out that it is evident that Nepal till date does not have clear vision on how best to proceed with the BRI, hence, discussions like these could be instrumental in shaping the future courses.
Chairman of South Asia Watch on Trade, Economics and Environment (SAWTEE) Dr Posh Raj Pandey, on the occasion, pointed out that much of the BRI discourse is only dominated by infrastructure issues, but there should also be focus on towards being integrated to Chinese value chain through investment.
Similarly, infrastructure expert Dr Surya Raj Acharya cautioned that Nepal is stuck in perpetual policy-trap that is preventing discourse on the BRI modality from gaining momentum.
Former ambassador to China Dr Mahesh Kumar Maskey said that instead of vying for viable projects like cross-border Special Economic Zones (SEZ), Nepal is more focused on dubious projects such as railways, which has become counterproductive.
The participants present in the discussion programme had a consensus view that Nepal should have a clear agenda for its national interest so as not to be swayed by peripheral issues. The round table brought together a cross-section of stakeholders, including policy makers, diplomats, scholars, and private-sector.