Is your money safe in banks?

Is your money safe in banks?

By LB Thapa

We deposit money in banks believing it is safe. However, that is not entirely true. Even when your money is in a bank, it is always at risk. 

For various reasons, even a bank that appears financially healthy can become bankrupt. In such a situation, the key question is, will depositors get a refund after the bank fails? And who is responsible for protecting public deposits? 

To answer these questions, let’s look at the provisions set by Nepal Rastra Bank (NRB). The NRB, Nepal’s central financial regulatory authority, is only responsible for paying up to Rs. 500,000 per depositor. If a bank goes bankrupt and you have deposited more than five lakh rupees, you are unlikely to receive the remaining amount. This is because banks insure only Rs. 500,000 through the Deposit and Credit Guarantee Fund. 

Although the NRB has clearly stated that public deposits are generally safe, that does not mean it guarantees to repay all your money if a bank collapses. What if you have deposited one million rupees and the bank goes bankrupt? Will the NRB return the full amount? No. The NRB is liable for only Rs. 500,000. For this reason, the money we deposit in banks is never completely risk-free. 

There are other risks as well. Bank employees can misuse deposits—for instance, transferring money into their accounts or withdrawing funds without the customer’s knowledge. If you think such things cannot happen, consider recent incidents at Citizens Bank’s Kanchanbari branch in Biratnagar and the Taulihawa branch of Nepal Investment Mega Bank in Kapilbastu. 

The fraud case at Citizens Bank, Biratnagar 

A recent incident revealed a serious financial fraud involving the embezzlement of Rs. 49.1 million from depositors' money. 

The investigation revealed that at least nine staff members had engaged in embezzling depositors' money by granting loans to fictitious borrowers. The regular payment of loan installments allowed the fraud to remain undetected for years. 

During an internal audit, suspicious activity was detected. A thorough investigation later revealed that many of the loan borrowers did not exist. 

Stealing depositors’ money at NIMB 

In another case, a bank employee named Rishav Karki, working at the NIMB branch in Taulihawa, Kapilbastu, was found to have withdrawn Rs. 1.65 crore from depositors’ accounts. 

He accessed high-balance accounts, changed the customers’ registered mobile numbers, and was thus able to withdraw money from various accounts with ease. 

How can depositors’ money be safe when bank employees themselves are involved in such crimes? Such cases are likely to undermine public trust in banks. 

It is advisable for the NRB to take even stricter action against unscrupulous bank staff involved in financial embezzlement.

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