12000 fraud incidents found in stipend fund disbursement

Faruk Ahmed: The government has asked Nagad to disburse stipend money through Sonali Bank treasury to millions of students across the country as nearly 12000 fraud incidents have been found in stipend fund disbursement through Nagad channels since February month.

A high level meeting last Thursday attended by Post and Telecom Minister Mustafa Jabbar, Md. Mahbub Hossain, Secretary of Secondary and Higher Secondary Division, Ataur Rahman Prodhan, Managing Director of Sonali Bank, Tanvir Mishuk of Nagad and other high government officials made the decision to disburse stipend funds through Nagad channel via Sonali Bank.

Md Abu yousuf Ali, Additional secretary to Education Ministry and director of the stipend project said the decision has been taken following nearly 12000 fraud incidents with stipend money disbursed through Nagad Channel which exploited poor parents of students and maligned the image of the government’s good initiative to help students as well as promote mobile banking in Bangladesh.

The disbursed stipend money will remain idle for 15 days in Nagad accounts to avoid any fraud incidents, Md Abu Yousuf Ali said.

“ We have asked Nagad to stop frauds in stipend disbursement and follow rules”, he said. 

He said the Education Ministry has asked CID police to investigate the fraud incidents and requested Nagad officials to start immediately fraud awareness campaign to stop frauds of stipend money through Nagad channel. But the operator is yet to follow the government’s instruction as such initiative is yet to visible in mass media, he said.

The government began disbursing stipends and allowances for educational accessories among 86, 452 primary school students through Nagad – the digital financial service of the postal department of Bangladesh – on February 7 last.

Students of 655 scholls in 6 districts received stipend money through their Nagad accounts, the ministry officials said.

A criminal gang embezzled stipend money from hundreds of innocent parents of the students living in remote areas collecting PIN numbers of their Nagad accounts in the names of Nagad officials and ministry officials. Mearly 12000 fraud incidents of Nagad accounts were reported to the Education Ministry over the months which has   

As most Nagad accounts were opened without compliance of KYC protocol and Nagad operation is outside the central bank’s supervision, industry experts earlier expressed their concerned that government’s fund disbursement through such unregulated mobile banking channel may jeopardies the government’s Digital Bangladesh vision.

KYC means know your customer is a mandatory rule for banks and MFS operators to ensure that financial service professionals authenticate and assess the identity, suitability and risks involved in maintaining a business relationship with a client. KYC is a combination of some programmes like Customer Identification Program (CIP), Customer Due Diligence and ongoing monitoring in the KYC process. 

Account operations by unidentified customers may allow fraudsters to steal money from others’ accounts and help criminals launder money for financing terrorists. To avoid risks of frauds, as per Bangladesh Bank guidelines, MFS operators must follow all KYC Protocols and required to periodically update the KYC records.

Nagad has violated the account opening rule in broad day light and opened millions of accounts without KYC protocol based on a 4 digit PIN number which allowed fraudsters to steal money from thousands of accounts owned by innocent parents of school students who are mostly poor illiterate and have no their own mobile phones.

The Ministry of Primary and Mass Education appointed Nagad and bkash, the leading mobile financial service provider in Bangladesh to disburse stipend money among the primary students to reduce hassles and cost of operations. bKash in partnership with state-owned Agrani Bank has been disbursing stipend to only 14 lakh students of 12,000 secondary schools across the country.

“ We maintained maintained KYC protocol in opening any accounts so, fraudsters have a little scope to exploit our customers”,  claimed Major General Sheikh Md Monirul Islam, Chief External and Corporate Affairs Officer of bKash Limited.

As the incidents of mobile banking frauds are escalating day by day, he said opening customers’ accounts in a short-cut manner ignoring regulatory compliance may erode consumers’ trust on MFS innovations affecting the financial inclusion. 

The disbursement of the stipends and allowances for educational was halted, for almost a year, because of inertia and a lack of transparency in the prior distribution system