IC shortage hits traders, public
BIRGUNJ, MAR 30 -
The Nepal Rastra Bank’s ( NRB ) policy to discourage cash transactions of Indian currency (IC)—adopted to discourage smuggling—has created difficulties for people in getting IC for non-trade activities too.
Jaya Prakas Sarraf, a resident of Ghadiarwa, Birgunj, had to visit his bank for three consecutive days just to get a draft to pay school fees of his daughter studying in Ajmer, India. “I prepared the draft by paying an additional Rs 200 above the market rate,” complained Sarraf.
Sushil Kumar, a resident of Adarshanagar, Birgunj, could not withdraw money from Indian banks using his ATM card when he made a pilgrimage to the Southern neighbour. “Had my son not sent the money through hundi, I would have landed in a big trouble,” said Kumar who returned home last week.
Scarcity of IC has resulted in a flourishing black market where the currency is traded at rates much higher than the NRB -fixed rate. What black marketers do is they deposit Nepali currency at Nepali banks and withdraw IC from Indian ATMs. They then sell the IC to the general public at rates as high as Rs 168 per IRs 100. The NRB -fixed exchange rate is Rs 160 per IRs 100.
Against this backdrop, the central bank drastically lowered the ATM withdrawal limit from India. Currently, people can withdraw up to IRs 10,000 a day and IRs 100,000 a month from ATM counters of Indian banks.
However, the general people in border areas have complained that they are facing difficulties in getting IC for non-trade activities too and are forced to pay hefty commission for acquiring IC.
As per the NRB estimation, transactions worth around IRs 30 million take place in Birgunj alone daily.
Traders said increased under-invoicing of imported goods has also created IC shortage. “Importers under-invoice when they import through letter of credit,” said a trader. “And, the exact bill is paid through hundi in cash later.” He said importers use hundi to pay import bills of goods like, sugar, chemical fertilisers and pulses and that the demand for IC notes is huge.
On top of that, shortage of IC notes has send hundi rates soaring, traders say. Six months ago, hundi operators charged Rs 3,800 in commission for sending Rs 100,000 to India, but the commission reached Rs 6,300 on Friday.
Subodh Gupta, vice president of Birgunj Chambers of Commerce and Industry said importers using formal banking channel to pay import bills are not facing much trouble. “But the hardest hit are those leaving for India for education, treatment and pilgrimage,” he said. “We’ve written to stakeholders concerned to solve the problem.”
Availability of IC in Nepal decreased due to increased trade deficit with India. Moreover, Nepalis paying a huge amount to Indian insurance companies in premiums also contributed to teh problem, according to traders.
Source: The Kathmandu Post
