Stakeholders call for proper policy to mitigate risks

KATHMANDU, APR 20 -

Stakeholders of the banking sector on Friday called for a proper policy on recruiting human resources and strengthening technological aspects to mitigate the increased operational risk prevailing in the sector.

Operational risk is a risk incurred by an organisation’s internal activities through people, system and process. Among the recent incidents that awoke the banking sector over operational risk are frauds at H&B Development

Bank, Nabil and Himalayan Bank with the involvement of their own employees and ATM frauds in Nepal Investment Bank and Himalayan Bank.

Most of the speakers at an interaction ‘Operational Risk on Banking Sector’, organised by the Development Bankers Association Nepal (DBAN), blamed bank staff for most of the recent fraud cases while urging the authorities concerned to take such cases seriously.

 “Since chief executive officers are liable for all the good as well as bad deeds, they should be transparent in themselves and efficiently monitor their staffers,” said Nepal Rastra Bank Deputy Governor Gopal Prasad Kafle. He also urged banks and financial institutions to strengthen the safekeeping mechanism. NBB Executive Director Bishnu Nepal termed operational risk much serious than credit and governance related risks. “The growing tendency among high-ranking mangers to manipulate the system by using their power has also emerged as one of biggest factors contributing to operational risks in the sector,” he said.

Rajan Singh Bhandari, president of Nepal Bankers Association (NBA), suggested that bank should not authorise a single person to do everything in critical matters. “That’s what the recent fraud cases in the banking sector have taught us,” he said. “Even frauds from outside were found to have been carried out in collusion with bank staff.”

Stating that even the financial institutions offering a very good pay have faced frauds, Bhandari added that the top-management of the bank should keep a close eye on their employees by making provision of effective monitoring system.

Stating that frauds are being committed by using the advanced technology, immediate past president of DBAN Jhapat Bohora said that the technology has come a blessing as well as curse for them. He also stressed on strengthening their technology to mitigate the risks.  

Source: The Kathmandu Post