Remittance No Solution: NRB GUV

emittance 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. Nepal 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 they should expand their network in the source countries.

Kshetry said remittance has not been used in productive sectors. 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 Gulf countries while there is still a huge untapped market in Europe, especially the UK,” said Rajaram Giri of Samsara Nepali Financial ServicesUK. 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 steep transfer charge discourages remittance flow from the UK,” he said adding a supportive policy at the government’s level would encourage Nepalis in European countries to remit their money through banking channels.

At present, money comes via non-banking channels Nepal Chambers 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 Nepal Liv- ing Standards Survey-IIthe 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 2003-0-4 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 total remittance from the UK, 20 per cent comes through banking channels while 80 per cent comes through non-banking channels,” said Giri.

Nepal Remitters’ Association president Chandra Dhakal said that nine years ago IME started the remittance business to send home money through banking channels. “Now all commercial banks are into the remmittance business,” he said adding that the non-banking channels should be discouraged.