NRB limit leads to drop in India ATM withdrawals
KATHMANDU, SEP 03 -
After Nepal Rastra Bank (NRB) reduced the limit for withdrawing Indian currency through debit cards issued by Nepali banks and financial institutions (BFIs), withdrawals from ATM counters in India have dropped sharply.
NRB officials said withdrawals had plunged more than 40 percent. Last March, the central bank lowered the withdrawal limit to IRs 10,000 per day and IRs 100,000 per month. Earlier, card holders could withdraw up to IRs 25,000 per day and IRs 200,000 per month.
The central bank’s move sought to discourage the tendency of opening accounts in Nepali banks just to withdraw IC in cash from bordering Indian towns and exchange it in Nepal by charging a high commission.
A senior NRB official said that the move had also discouraged capital flight for purchasing Indian insurance schemes and other purposes as well as cross-border smuggling of goods. Smugglers need IC notes to purchase goods in India as they don’t make payment by letter of credit (LC) like legitimate traders. An NRB investigation had revealed that around Rs 19 billion was withdrawn from Indian ATMs from the accounts of SBI, Everest, Kumari and Nepal Investment Bank (NIBL) in the last fiscal year.
Banks have also reported that there has been a sharp decline in withdrawals in the recent months compared to the past. Everest Bank Limited (EBL),which has a wide network in India for withdrawal of deposits through ATMs due to its alliance with Punjab National Bank, reported a fall of more than 50 percent in withdrawals through ATM counters in India.
EBL Deputy General Manager Hum Nath Gurung said that withdrawals had come down to IRs 25 million from more than Rs 50 million daily. “The earlier trend of massive withdrawals has been reversed,” said Gurung.
NIBL has a similar story to tell. NIBL’s card and remittance department chief Bikash Thapa said that his bank ahd been witnessing a decline in withdrawals through ATMs of more than 70 percent for the last few months after the central bank lowered the withdrawal limit. “Average daily withdrawals through ATMs have come down to IRs 7 million from Rs 20 million in the past,” said Thapa.
According to them, withdrawals from bordering Indian towns were massive in the past and that they had slowed lately. “Withdrawals from bordering areas have been largely controlled,” said Thapa. “It is also due to monitoring by security guards in Indian ATM counters of frequent ATM card users and those using multiple cards.”
NRB is of the view that currency black marketers have been using ATM cards to withdraw IC notes from ATM counters in bordering Indian towns to sell them in the local market at a higher exchange rate.
Police have arrested some persons involved in such practices. For example, police arrested Pradip Rastogi, a 22-year-old resident of Raghunathpur, Birgunj, who made 23 citizenship certificates under different names to withdraw Indian currency from bordering Indian towns.
He was also found to have opened 55 accounts in 11 branches of Nepal SBI Bank. He held 23 cheque books for 23 accounts. However, NIBL chief executive director Prithvi Bahadur Pande said that his bank had been able to control such practices.
Source: Kantipur
After Nepal Rastra Bank (NRB) reduced the limit for withdrawing Indian currency through debit cards issued by Nepali banks and financial institutions (BFIs), withdrawals from ATM counters in India have dropped sharply.
NRB officials said withdrawals had plunged more than 40 percent. Last March, the central bank lowered the withdrawal limit to IRs 10,000 per day and IRs 100,000 per month. Earlier, card holders could withdraw up to IRs 25,000 per day and IRs 200,000 per month.
The central bank’s move sought to discourage the tendency of opening accounts in Nepali banks just to withdraw IC in cash from bordering Indian towns and exchange it in Nepal by charging a high commission.
A senior NRB official said that the move had also discouraged capital flight for purchasing Indian insurance schemes and other purposes as well as cross-border smuggling of goods. Smugglers need IC notes to purchase goods in India as they don’t make payment by letter of credit (LC) like legitimate traders. An NRB investigation had revealed that around Rs 19 billion was withdrawn from Indian ATMs from the accounts of SBI, Everest, Kumari and Nepal Investment Bank (NIBL) in the last fiscal year.
Banks have also reported that there has been a sharp decline in withdrawals in the recent months compared to the past. Everest Bank Limited (EBL),which has a wide network in India for withdrawal of deposits through ATMs due to its alliance with Punjab National Bank, reported a fall of more than 50 percent in withdrawals through ATM counters in India.
EBL Deputy General Manager Hum Nath Gurung said that withdrawals had come down to IRs 25 million from more than Rs 50 million daily. “The earlier trend of massive withdrawals has been reversed,” said Gurung.
NIBL has a similar story to tell. NIBL’s card and remittance department chief Bikash Thapa said that his bank ahd been witnessing a decline in withdrawals through ATMs of more than 70 percent for the last few months after the central bank lowered the withdrawal limit. “Average daily withdrawals through ATMs have come down to IRs 7 million from Rs 20 million in the past,” said Thapa.
According to them, withdrawals from bordering Indian towns were massive in the past and that they had slowed lately. “Withdrawals from bordering areas have been largely controlled,” said Thapa. “It is also due to monitoring by security guards in Indian ATM counters of frequent ATM card users and those using multiple cards.”
NRB is of the view that currency black marketers have been using ATM cards to withdraw IC notes from ATM counters in bordering Indian towns to sell them in the local market at a higher exchange rate.
Police have arrested some persons involved in such practices. For example, police arrested Pradip Rastogi, a 22-year-old resident of Raghunathpur, Birgunj, who made 23 citizenship certificates under different names to withdraw Indian currency from bordering Indian towns.
He was also found to have opened 55 accounts in 11 branches of Nepal SBI Bank. He held 23 cheque books for 23 accounts. However, NIBL chief executive director Prithvi Bahadur Pande said that his bank had been able to control such practices.
Source: Kantipur
