Remittance agencies to be managed

Remittance contributes to one-fifth of the gross domestic product (GDP) but it is a temporary phenomenon only, said Nepal Rastra Bank governor Dipendra Bahadur Kshetry at an interaction, 'Remittance from UK to Nepal (formal and informal),' organised jointly by Link Nepal in association with Kumari Bank, Samsara Pvt Ltd and Samsara Financial Services-UK. "The country cannot depend on remittance for economic development in the long run," he added, "Thus it needs to be managed."
Nepal has received Rs 154 billion in remittance in the first nine months of the current fiscal year. "Remittance agencies need to be more transparent," Kshetry said adding that they also need to expand their network to more places in the source countries.
The governor was of the view that the remittance has not been used in productive sectors and has been mostly spent in unproductive areas. However, the rise in number of white-collar and blue-collar job-holding Nepalis in foreign lands has pushed the remittance flow up.
"Most of the remittance agencies are concentrating on the Gulf countries while there is still a huge untapped market for remittance from Europe, especially in the UK," said Rajaram Giri of Samsara Nepali Financial Services-UK. Remittance from Gulf countries is higher than from any other countries. For instance, remittance from Qatar contributes to about 40 per cent of the total remittance.
"The high steep transfer charge is discouraging remittance flow to Nepal from the UK," he said adding that a supportive policy at the government's level can encourage Nepalis in European countries to remit their money through banking channels. At present, the money comes through non-banking channels.
Nepal Chamber of Commerce president Surendra Bir Malakar supported Giri. "Remittance kept the economy afloat during the conflict era and also helped reduce poverty," he added.
According to the Nepal Living Standards Survey-II the remittance has had a positive impact on economy through various channels like savings, investment, growth, consumption, poverty alleviation and income distribution. Remittance has also surpassed exports to become the top contributor to foreign exchange earnings. The share of remittance in the total foreign exchange earnings increased from 36.6 per cent in 2003-04 to 47.7 per cent in 2005-06. "However, surveys show that the unrecorded flow through informal channels is very high," Giri added.
There are 1,00,000 Nepalis in the UK. Of the total Nepali populace there, 15 per cent send home money regularly. Of them, 35 per cent send only during festivals, 25 per cent send once in a while and 25 per cent do not send at all
"Of the total remittance from the UK, only 20 per cent comes through banking channels while a whopping 80 per cent comes through non-banking channels," said Giri.
Speaking on the occasion, Nepal Remitters' Association president Chandra Dhakal said that nine years ago IME -- the first remittance agency -- started the remittance business to send home money through banking channels. "Now all commercial banks are into the remmittance business," he said adding that non-banking channels should be discouraged.

Probe into Rs 1m+ transactions
KATHMANDU: NRB governor Dipendra Bahadur Kshetry said that the Money Laundering Act -- which is in the offing -- has a provision that banks have to notify about transactions over Rs 1 million in order to check money laundering. Despite popular dislike of investigation into their transactions it essential to save the economy, he said. "Money laundering will increase illegal activities and hamper the national economy," he said adding that the NRB Anti-Money Laundering Unit is all set to check irregularities as the social cost of monery laundering is very high in the long run.