Nepal seeks to regulate money withdrawals in India

Nepal seeks to regulate money withdrawals in India
Sify.com, 22-Jun-02

Faced with a growing shortage of Indian currency, Nepal's apex bank has introduced a new regulation to govern the withdrawal of money from Indian banks.

From this week, Nepalis or people living in Nepal who have accounts with Nepali banks can withdraw up to Rs.200,000 per month in India using automated teller machines (ATM).

Earlier, they could withdraw only Rs.25,000 per visit to India.

'We introduced the regulation from June 18 to ease the shortage of Indian currency in Nepal and to facilitate things,' said Gopal Prasad Kafle, spokesman at Nepal Rastra Bank, the regulating authority.

As per the new regulation, an ATM user can withdraw a maximum of Rs.25,000 at a time or Rs.200,000 within a month.

'However, if the user submits documents with his bank in Nepal to show a valid reason as to why he needs the money - for medical treatment, education or business - then he can withdraw as much as he wants, depending on the discretion of his bank,' Kafle told IANS.

Two Nepal banks are joint ventures with Indian banks. Nepal SBI, which is a joint venture of the State Bank of India, and Everest Bank Ltd, a JV of Punjab National Bank, enable their account holders to use their ATM cards and withdraw money from the partner banks in India.

Standard Chartered Bank account holders can use their ATM cards directly while many other Nepali banks have relations, direct or indirect, with other Indian banks for the benefit of their ATM card holders.

A ballooning trade deficit with India, Nepal's biggest trading partner, has caused a dearth of Indian currency in Nepal.

On the eve of trips to India, bona fide travellers find it difficult to acquire Indian currency from their banks and there are growing allegations that unauthorised money changers have been charging exorbitant commission.

Money changers at Indian airports, who used to accept Nepali currency, have stopped doing so nearly five years ago.

The NRB regulation is also intended to stop the flight of capital from Nepal.

As per Nepal's laws, Nepalis can't invest outside Nepal. However, the law is flouted with impunity by thousands who have investments in India, often under the names of relatives or friends.