Money transfer cos seek access to Indian market
KATHMANDU, July 21:
Remittance companies have urged the government to initiate diplomatic negotiations with India to facilitate their entry into the Indian market for providing remittance services to Nepali migrant workers.
At present, remittance companies are not allowed to open their office in the southern neighbor. Though there is no exact data, it is estimated that India hosts around five million Nepali workers.
Saying that the restriction to open offices of Nepali remittance companies in India has promoted the use of informal channel to send money, remittance companies have urged for diplomatic initiatives to lift such restriction.
“Though there is some arrangements for Nepali workers in India to remit their money through the banking system, such arrangements have proven to be inconvenient and less effective in attracting workers. That is why Nepali money transfer companies should be allowed to open offices in India to facilitate remittance flow between the two countries,”
Kusum Lama, vice president of Prabhu Money Transfer, said, presenting a working paper on ´National Consultation on Migration and Remittance´ organized by Pravasi Nepali Coordination Committee (PNCC).
According to Bhisma Raj Dhungana, director of Nepal Rastra Bank (NRB), there are two models for Nepali migrant workers to remit their money to Nepal through the banking system. Under the first model, which is called Reserve Bank of India (RBI) Model, workers can transfer their money from 27,000 branches of 60 Indian banks. The money can be withdrawn from Prabhu Money Transfer or deposited into accounts in any banks.
Similarly, under another model, named commercial bank to commercial bank model, workers can send money from selected Indian banks and receive the amount from Nepali banks that have tie-up with those banks.
“As the first model offers low margin for Indian banks, they hesitate to provide service to Nepali workers. In the other model, there are some pitfalls like requirement of ID card or passport for deposit mobilization and language barrier which keep Nepali workers away,” Lama said, adding, “The entry of Nepali remittance companies could overcome such hassles and bring more remittance through formal channel.”
According to NRB, only 8.5 percent of the total remittance from India comes through the banking channel. Workers bring 53 percent of the total remittance with themselves, 27.4 percent is sent via friends, 1.8 percent is sent through Hundi and remaining 2.7 percent from other sources.
Nepal received total remittance of Rs 48.03 billion of India in the first 11 months of 2013/14, according to NRB. Remittance in Indian currency has been growing at an average of 21 percent for the past six years, according to NRB.
Daniel D Shrestha, marketing executive at International Money Express, agrees with Lama. “There is a limit for Nepali workers to send the money to Nepal through banking channel. One can send only IRs 50,000 at a time. Also, they cannot send more than 12 times a year,” Shrestha said, adding that Nepalis are required to furnish ID card or passport for money transfer. He also called upon the government to start necessary diplomatic negotiations for allowing Nepali remittance companies to open offices in India.
NRB Director Dhungana said Nepalis are not getting easy money transfer facilities in India because of the absence of Nepali money transfer companies. He also said NRB was taking up the issue with the Indian central bank.
Remittance flow to Nepal
Fiscal Year India Other Countries Total Remittance
2007/08 Rs 18,371 million Rs 124,311 million Rs 142,682 million
2008/09 Rs 27,000 million Rs 182,699 million Rs 209,699 million
2009/10 Rs 25,645 million Rs 206,080 million Rs 231,725 million
2010/11 Rs 28,815 million Rs 224,736 million Rs 253,551 million
2011/12 Rs 24,280 million Rs 335,274 million Rs 359,554 million
2012/13 Rs 40,233 million Rs 394,348 million Rs 434,582 million
2013/14
(11 months) Rs 48,037 million Rs 442,916 million Rs 490,954 million
Source: Nepal Rastra Bank
Source: Republica
