NRB limits IC exchange through ATM cards

KATHMANDU, June 21: Nepal Rastra Bank (NRB) has introduced new rules related to exchange facilities for Indian rupee that, among other, has limited Indian rupees withdrawals from Automated Teller Machines (ATMs) in India by using electronic cards issued by Nepali banks.

Central bank officials said the new measures were aimed at checking illegal trading of Indian currency, particularly in bordering cities, and to ensure adequate supplies of Indian currency (IC) to those who are in real need.

According to the directives issued on Friday, individuals having ATM cards issued by Nepali financial institutions can now withdraw IC worth Rs 200,000 per month from the banks based in India. Earlier the limit was Rs 25,000 per day.

The main purpose of the new directives is to discourage those who are engaged in illegal trading of IC in bordering cities.

We have noticed activities of hundreds of individuals, who deposit huge sum of Nepali rupees in Nepali banks and withdraw it from banks across the boarder to sell them at higher rates in Nepal,” said an official of the central bank.

According to media reports, IC notes are being sold at as high as Rs 165 per IRs 100 in the bordering cities of Nepal mainly after banks in the regions failed to supply IC as per the demand. NRB has fixed Rs 160 for each IRs 100 as an official exchange rate between the two currencies.

Though the central bank allows exchange facilities equivalent to IRs 25,000 to individual without stating purpose, banks have not been able to do so due to huge mismatch between demand and supply of IC.

The same directive has also authorized financial institutions in the country to cancel ATM cards of those individuals who are found engaged in such suspicious transactions. It also allows banks to provide additional IC exchange facilities to those who are studying in India.

However, those seeking such facilities are required to produce valid documents. Earlier, students were taking IC exchange on the basis of facilities provided to individuals.

The new directive allows importers from India to get IC exchange facilities from banks to pay to the transporters. The importers, however, will have to produce Customs Declaration Form along with other related documents to enjoy the facility.

Currently, NRB has an IC reserve of Rs 20 billion and the central bank has spent $1.6 billion to buy equivalent Indian currency to finance the deficit of IC in Nepal due to dwindling exports and soaring imports from the southern neighbor.

Source: http://www.myrepublica.com/portal/index.php?action=news_details&news_id=20121