NRB for reimbursing remittance commission
KATHMANDU, FEB 15 - Nepal Rastra Bank ( NRB ) has suggested the government to consider reimbursing the commission that migrant workers pay to banks and remittance companies for remittance transactions to encourage them to send money home through formal channels.
The central bank made such a suggestion, suspecting increasing inflows through illegal channels could be a reason for sluggish remittance growth in the first five months of the fiscal year.
Remittance has been the largest source for financing surging imports as income from exports and tourism is limited.
“We have suggested the government must think how migrant workers can be encouraged to send maximum remittance through formal channels,” said a senior NRB official. “Reimbursement of commission could be an important measure.”
According to Nepal Bankers’ Association President Upendra Poudyal, exchange houses in Gulf countries charge around 15 dirham (UAE currency) per transaction, while the rate is at 15 ringgit in Malaysia.
The banks share half of that fee for remitting amount to Nepal. “In some cases, exchange houses and banks also share Rs 100-150 each per transaction,” he said.
The central bank also suggested the government intensify administrative measures to discourage funds transfers through illegal means such as Hundi, the NRB official said.
Finance Secretary Suman Sharma said there had been informal talks about reimbursing the commission, but they have not received such a suggestion from the central bank formally. “It is a good idea, but the government has not yet held further discussions on the matter,” he said.
In the first five months of the fiscal year, Nepal received remittance worth Rs 227.20 billion through formal channels. But the growth of the inflow remained sluggish at just 2.7 percent compared to 35.3 percent in the same period a year ago.
Following a decrease in remittance inflow (for the first time in several years) in the first three months of the fiscal year, NRB Governor Yubaraj Khatiwada had called bankers, money changers and companies working in the area and warned them against involvement in Hundi transactions. The central bank had suspected money transfer agencies’ involvement in Hundi as well.
Five days ago, the central bank had directed commercial banks and remittance companies to maintain uniform exchange rates while making remittance payments. The move was also aimed at discouraging the agencies to engage in Hundi by offering exchange rate benefits to migrant workers.
The central bank has also suspected the use of remittance in the smuggling of gold as the market has been flooded by smuggled gold while the metal imported by the banks has remained unsold.
Recently, the NRB allowed banks to sell gold directly to traders without recommendation from gold traders’ umbrella bodies.
Source: eKantipur
