E-Kantipur

KATHMANDU, MAR 12 -

Nepal Rastra Bank (NRB) has initiated a study on perceived rising financial transactions in the informal sector with the banking sector struggling to collect deposits.

The central bank will examine the status of financial transactions such as “dhukuti” and “hundi” which have been cited as major informal markets absorbing the general public’s money. The central bank started the study as the banking system has been facing a persistent liquidity crunch for more than a year.

A central bank team began an investigation of such transactions in Biratnagar on Thursday. The central bank is also preparing to send another team to the Western Region to study such transactions.

NRB has already initiated a study of informal transactions in the Kathmandu Valley. The central bank seeks to examine informal transactions in all the areas where it maintains branches. It has eight branches in different parts of the country.

A senior NRB official said that action could be taken against those involved in informal financial transactions with the help of other concerned authorities.

The central bank has said that despite a growing number of migrant workers, remittance inflow has not risen as expected. Hundi has been considered to be one of the major reasons behind the poor growth in remittance inflow.

The central bank has collaborated with the Department of Revenue Investigation to study and tackle suspected growing use of hundi for money transfer. “We are collaborating with NRB to investigate whether hundi might have been used for money laundering too,” said Mahesh Dahal, director general of the DRI, which is set to become an anti-money laundering department too.

A senior NRB official said that they were studying illegal use of Indian and other foreign currencies besides hundi. “We have serious suspicions that cooperatives might even be involved in foreign exchange transactions,” said the NRB official. Cooperatives cannot conduct foreign exchange transactions as per the existing laws.

“We are also studying how IC notes worth IRs 500 and IRs 1,000 are being used in the country although they cannot be used here,” said the NRB official. The central bank is also studying the modus operandi of capital flight. “The main concern is how it is happening,” said the NRB source.

“Even big businessmen have been found to be involved in informal financial transactions,” said the NRB official.  “We will take the initiative to discourage such tendencies.” NRB suspects that the liquidity crisis has continued as even big businessmen have given up doing transactions through banking channels. “Financial transactions are happening not through banks but through sacks,” said a senior NRB official. Businessmen and bankers have been complaining that people are not depositing money in banks as they have to show source of income for deposits above Rs 1 million.

Posted on: 2011-03-12 08:28

Post Your Comment

Please note that all the fields marked * are mandatory.
* Full Name
* Address
* Email Address
* Comment
* Captcha	Get another CAPTCHA code
Note:	Comments containing abusive words or slander shall not be published.