[UPDATED - IMPORTANT!] NEW CONTROLS TO THE FLOW OF FUNDS TO NEPAL - MISCONCEPTIONS AND CLARIFICATIONS

By Saugat Kandel

Update:
We have recently received information that the government policy has changed, again!

Quoted from Kanak Mani Dixit:

"
Important for NGOs and voluntary groups -
The Social Welfare Council (SWC) and its parent ministry have taken a decision that for earthquake relief purposes NGOs do NOT need prior SWC approval as has been the rule for receiving foreign funds. I double-checked with the officials, that the procedure for now is this - for receiving funds for relief activities from outside the country formally notify in hard copy the District Disaster Relief Committee (headed by CDO) and also send a note to the SWC (the latter you can do by email, but you can also do it in hard copy).
"

In effect, this means that the new NGOs do not need prior government approval, but they do need to establish some accountability by formally notifying  the appropriate government agencies.

Original post:

The Government of Nepal recently introduced new regulations regarding the flow of funds to individuals and organizations in Nepal, regulations which have caused much confusion and anxiety among the local Nepali community as well as the donor community abroad. These regulations first came to light when the central bank of Nepal, Nepal Rastra Bank (NRB), sent a directive to all the local banks in Nepal asking them to provide information about all the organizations collecting funds on the ground, and even directing them to transfer the funds to the Prime Minister's Disaster Relief Fund unless the organizations met very specific but extremely confusing requirements.  We, at the One Stop Portal, have already expressed our confusions regarding these regulations in a previous blog post.
The Government of Nepal has since been working hard to clarify the misconceptions about these regulations through engagement with the local print and digital media. These misconceptions and clarifications can be summed up in three important points:

1. Flow of funds to individuals

• Misconception: There was a widespread fear that these regulations would impede the flow of funds to individuals, be they family members or relief workers. There was a general sense that banks would be forced to direct any such wire transfers to the Prime Minister's Disaster Relief Fund.
• Clarification: The article in the Annapurna Post and the interview in BBC Nepali Service both clarify that any flow of funds to individuals can proceed unimpeded. Individuals who receive the wire transfers are free to do as they wish with the funds they receive. 

2. Flow of funds to established charities

• Misconception: There was also a fear that these regulations would hamper flow of funds to established charities. This led to a lot of anger and suspicions that the government officials were apathetic to the relief efforts, and only really wanted to misappropriate the funds, even if they were earmarked for relief and recovery through the Prime Minister's Disaster Relief Fund.
• Clarification: The sources mentioned above clarify that any already established and registered charities, national or international, that already had bank accounts open before April 25, can still receive and relay the funds as before. The regulations do not hamper this flow.

3. Who is affected?

• Any funds transferred to recently opened accounts that are neither registered to individuals, nor to established and regulated charities, will be transferred to the Prime Minister's Disaster Relief Fund. Any new volunteer groups or organizations establishedafter April 25, working without proper certifications from either the Government of Nepal, or the Nepali embassy in the source country where the money transfer is conducted from, cannot receive the transferred funds. If these transactions were allowed, it would be extremely hard for the Government of Nepal to keep track of these funds, to ensure that these funds are not misappropriated. It is these funds that are directed to the Prime Minister's Disaster Relief Fund. 

Our View

After the aforementioned clarifications, it is now clear that the target of these new directives are neither individuals, nor previously established charities. Even though they were horrendously miscommunicated, these directives seem designed clearly to prevent any fraudulent collection and misappropriation of funds donated by well-meaning individuals abroad.

At this point, we urge all the organizations active in relief efforts in Nepal to get the necessary certifications from both the Government of Nepal, and from the Nepali embassy in the country where their funding originates. We also urge the Government of Nepal to very much expedite the approval process, to ensure that any well-meaning organizations do not get caught up in a bureaucratic black hole. In case there is an emergency need for funds, donors should ensure that they transfer the money directly to the persons behind the relief organizations.

Oh for a better government media strategy!


Sources:
[1] Ekantipur
[2] Annapurna Post
[3] BBC Nepali Service
[4] Prime Minister's Disaster Relief Fund