Prithvi Man Shrestha

Banks across the country have digitised remittance processing so that clients don’t have to come out of their homes to receive money.

Under the new arrangement in place after the lockdown, a person who has to receive money from abroad, needs to provide proof that he or she is the legitimate recipient of the remittance (such as a code number sent by the sender, and citizenship or driving license or other government documents), electronically. Until recently, the recipients had to visit the bank with the documents to receive the money.

“Of the 3,000 transactions we record on an average every day, 700 are related to remittances,” said Ashoke Rana, chief executive officer of Himalayan Bank. “While we deposit money to the accounts of recipients who hold an account at our bank, we also deposit money to accounts in other banks that are connectIPS members,” he said.

After the document proof is verified by the concerned bank, the remittance is transferred to the bank account of the receiver in any bank that is a member of connectIPS, the the single payments platform developed by the Nepal Clearing House that allows the customers to link their bank accounts to enable payment processor, fund transfer and biller payments. Almost all commercial banks are IPS members.

“Around Rs 60 million is being deposited in this manner daily without the presence of a remittance receiver at the bank’s counter,” said Rana.

According to the bankers, the new arrangement is part of an overall growth in digital transactions observed during the lockdown.

Nepal Rastra Bank has also pushed for electronic transactions during the lockdown as people haven’t been able to reach banks. On March 22, the central bank called upon the general public to prioritise electronic transactions saying that the banks and financial institutions shall not charge any fee for electronic transactions.

Most branches of banks had remained closed during the lockdown, which started on March 24. But many have now reopened since Sunday.

Bank officials have also been fearful that their employees could be infected with Covid-19 as they are in contact with customers, as the number of Covid-19 cases surges across Nepal.

Nabil Bank Chief Executive Officer Anil Shah has also seen a remarkable rise in digital transactions at his bank after the lockdown and the banks depositing remittance in the receiver’s account directly is one aspect of the growth in digital transactions.

“Besides the impact of the lockdown, banks not charging fees is another reason why people are seeking transfer of remittances in their accounts, instead of taking out cash,” he said.

“The banks are also very careful in such transactions because chances of fraud increase in electronic transactions,” said Shah.

The central bank said that it has also learnt that the rise in direct transfer of remittance to the receivers’ account has gone up, but it is yet to receive detailed reports.

Rewati Prasad Nepal, executive director at the payment system department at the central bank, said that there has not been a significant jump in electronic processing of remittances, but the trend has picked up during the lockdown. 

Officials from the central bank and commercial banks said that one advantage of the lockdown was that people were moving towards digital transactions.

“About 60 percent of the daily transactions are being done electronically,” said Nepal. “Most of the transactions are related to payment to the groceries such as department stores for food items.”

The central bank plans to promote electronic transactions even in the future. “We have increased the maximum limit of fund transfer and merchant payment to promote digital transactions, and we plan to continue to maintain the increased limits when the current pandemic is over,” said Nepal.

Published on: 16 May 2020 | The Kathmandu Post