First Business News Portal in English from Nepal
KATHMANDU: The Nepal Rastra Bank has taken the decision to reopen internal remittance services, which had been suspended seven months ago. Individuals who have been eagerly awaiting the resumption of this service have welcomed this move.
The decision to reopen internal remittance services follows significant pressure from various quarters, including the Ministry of Finance and the Nepal Rastra Bank itself.
The suspension of internal remittance services had hindered the convenience of sending money from one location within the country to another. A source familiar with the matter revealed, “Previously, under the guise of internal remittances, funds were being transferred from one place to another within Nepal.
The Nepal Rastra Bank had closed this channel. At that time, about 70 percent of the total business of some remittance companies was related to internal remittances. Now, these remittance companies and hundi operators can resume their operations.”
Payments for various informal businesses, including hundi transactions, were also being conducted through internal remittances. With the suspension of internal remittances, these payments were also affected. Sources claim that continuous pressure from the affected parties led to the decision to reopen this channel.
It’s worth noting that under the hundi system, money received from abroad, known as ‘black money,’ was being converted into ‘white money’ in Nepal, effectively legalizing it as internal remittance. However, the Nepal Rastra Bank had put an end to this practice in Magh (January-February). Following this directive, remittance companies were unable to transfer funds from one location to another within Nepal. According to the remittance companies, they had been able to transfer up to NPR 25,000 in one day before the ban. Afterward, they had reduced the daily limit to NPR 1 lakh in Falgun (February-March).
The Nepal Rastra Bank’s directive affected many remittance companies as well. Some of these companies had been conducting 70 percent of their total business in internal remittances. The Nepal Rastra Bank’s authorities had justified their decision by arguing that hundi transactions were disrupting the main function of remittance companies (sending money from abroad to Nepal).
Under the hundi system, money from abroad was entering Nepal, and foreign currencies were being converted into Nepalese rupees in various parts of the country. The hundi operators were then depositing cash in the bank accounts of the concerned individuals.
To facilitate this process, hundi operators provided a ‘pin code’ to the individuals to withdraw the money from the bank. This practice allowed families to access funds sent from abroad without any complications. It is believed that the Nepal Rastra Bank’s move to lift the ban on such informal remittances will benefit not only the affected families but also the remittance companies involved.
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