Hundi operators doing brisk business in Birgunj

BIRGUNJ, APR 05 -

Unscrupulous importers have been resorting to hundi to transfer money as the government and banks have begun cracking down on customers submitting fake customs documents to make demand drafts, said traders.

And with demand for hundi rising, operators of the illegal money transfer service have ramped up their charges four-fold. The rate for transferring a sum of up to Rs 100,000 has jumped from Rs 2,000 to Rs 8,000. Importers use the unofficial money transfer network to pay their suppliers who dispatch under-invoiced goods.

Importers involved in under-invoicing used to produce falsified customs clearance documents to obtain demand drafts from banks to make payment. With the authorities clamping down on the practice, the traders have turned to hundi. 

“The number of importers making demands drafts has dropped 40 percent after the banks increased vigilance on fake customs clearance documents,” said Jeevan Babu Subedi, manager at the Birgunj branch of Nepal SBI Bank. According to him, only genuine traders come to the bank to make demand drafts.

Large scale misappropriation of Indian currency by using fake customs clearance documents came to light after the Parsa police arrested five Indians on August 29, 2011 with IRs 7.52 million along with a deposit vouchers and nine fake customs clearance documents.

The Department of Revenue Investigation has already established that five firms alone had misappropriated more than IRs 1 billion by using fake customs clearance documents.

“Importers who bring under-invoiced goods pay the amount stated on the customs form through a letter of credit (LC) and the rest by hundi,” said a trader.

Merchants said that the local administration was not doing enough to control the illegal hundi business although they know well how it is being run. “Both the District Administration Office and the police know how the hundi business is thriving, but they are not taking action against those involved in it,” said a trader.

According to the Foreign Exchange Regulation Act, people who want to conduct foreign exchange transactions need to obtain Nepal Rastra Bank’s okay.

Traders sending money by hundi say that they it is an easier way of doing business. A textile importer who sends huge amounts of money to New Delhi twice a week said that the money reaches the destination within two-four hours after it is given to the hundi operator.

A person from Adarshanagar, Birgunj who is involved in the hundi business said that about Rs 100 million is sent to major Indian cities including New Delhi, Kolkata and Meerut on a daily basis. “The amount of money transferred through hundi is equal to that transferred through banks.”

There are three big names involved in the hundi business in Birgunj. They are Santoj Raja of Muzaffarpur, Kailash Agrawal and Mukesh Agrawal of Rajasthan.

Traders say they have been collecting money through their local agents here. Merchants dealing in gold, textiles, food, motor parts and hardware have been sending money through hundi, according to traders.

As Birgunj is a key point for exports and imports, the hundi business is thriving here, according to traders.

Source: The Kathmandu Post