Nepali migrant workers having the valid work permit can now open the Remittance Saving Account and can send their hard earned money through formal channels in their designated bank account in Nepal. It has provided a legal channel and a kind of security to the migrant workers. As a result, they no longer need to depend on illegal channels like ‘hundi’ to send home their earnings from abroad. Facilitating to send home the remittance income through bank accounts makes it easy for Nepal Rastra Bank to keep reliable record of the remittance inflow and the data can be useful in economic analysis, trend identification and even planning. In addition, the remittance senders are less prone to fall into the trap of the money transfer agents who may be operating illegally. Sending money through individual agents sometimes result in fraud and recovering the money from such people can be difficult due to lack of written or computerised evidences.

Remittance inflow has become one of the major sources of foreign currency and it has played an important role in maintaining the country’s economic health. It is more so in the present context of pandemic impact and the effect of Ukraine war in which the country has witnessed the critical dwindling of foreign exchange reserves. In the post-pandemic situation, the trend of remittance earning has started to pick up but there is a long way to go to arrive at a situation that used to exist before the outbreak of the COVID-19 pandemic. Nepal’s remittance earning totaled Rs.1.11 trillion in the first 11 months of the previous fiscal year. The earning might be higher because many migrant workers send home their earnings through informal channels. Bringing those people under formal channel of sending money can not only encourage them to make investments in shares and other financial markets but also contribute in revenue earning of the country.

Remittance Saving Account offers one per cent more interest than other saving accounts. Now the migrant workers can apply for Initial Public Offering (IPO) of various companies. Investments in prospective companies can prove fruitful worth their money. Investing in productive sectors can help in economic development of the country rather than wasting their money in unproductive consumer items. The Securities Board of Nepal (SEBON) has formulated the policy to set 10 per cent quota for migrant workers to all IPO announced in Nepal. They are rightly facilitated to open Demat accounts and Mero Share accounts to encourage them to invest in shares. Such an encouragement and stimulus are highly desirable at a time when it is being complained that largest chunk of remittance money has ended up in unproductive sectors. Squandering the money in the imported luxury consumer items ultimately sends the money out of the country.

However, there is a matter of concern that Nepali students, many of whom also make income more than they spend, are not able to benefit from the remittance saving account. So far, such facility is not available for Nepali students studying abroad. Many of the students studying abroad can legally work for 22 to 28 hours a week depending on the countries they are in and are earning good amount of money. If they are allowed to have the remittance saving account it would greatly benefit both the students and the country as well. This prospect has come to attention lately and in this context, President of Nepali Banker’s Association Sunil KC says that although remittance account is exclusively designed for migrant workers Nepali students too should be included into the scheme so that they will be able to send their earnings home through the formal channel.

Published on: 7 August 2023 | The Rising Nepal