Nepal Rastra Bank (NRB ) on Monday directed commercial banks and remittance companies to maintain uniform exchange rates while making remittance payments. The central bank issued the directive following complaints that some institutions were maintaining different exchange rates at source country and here, NRB officials said.

The move is also aimed at discouraging money transfer agencies to engage in Hundi by offering exchange rate benefits to migrant workers.

The central bank has suspected money transfer agencies’ role in the decline in remittance in recent months.

As per the directive, Foreign Exchange Dealers Association of Nepal (Fedan) will fix the average exchange rate based on different exchange rates maintained by banks for their “documents purpose” twice (at 10:00am and 2:00pm) a day. Such a rate will be called “remittance exchange rate”, which should be followed by both banks and remittance companies while making remittance transactions.

The Fedan should make available the exchange rate to banks and financial institutions and remittance companies as well as to the central bank.

Meanwhile, the central bank has revised its previous guideline to make it easier for commercial and development banks to do remittance transactions. It has allowed banks and remittance companies to make payment of less than Rs 100,000 in cash.

Earlier, the central bank had asked banks to make remittance payment only through cheque or bank accounts. But it had not imposed any such restriction on remittance companies. Bankers had complained the restriction, only on banks, would affect their business badly.

A senior NRB official said the new directive has treated both banks and remittance companies equally. “The previous directive was seen affecting the banks’ businesses,” he said.

Published on: 10 February 2015 | The Kathmandu Post