Kathmandu, September 25

In less than 10 days since the Nepal Rastra Bank (NRB) launched the real time gross settlement (RTGS) system in the banking sector, the new payment system has stopped functioning.

Bankers have said that the new system became dysfunctional within a few days after it was launched on September 16.

“As the new payment system is not working, we are have been adopting the previous (old) payment system. Though customers have been choosing RTGS system for payment, we are unable to make payments from the newly adopted system,” said a banker, asking not to be named.

NRB Governor Chiranjibi Nepal and Lord Mayor of London (UK) Peter Estlin had jointly inaugurated the high-value cheque payment system in real-time in Nepal. UK Aid is technically supporting Nepal for implementation of the RTGS.

While only Machhapuchchhre Bank and Nepal Investment Bank have adopted this system for now, the central bank has inked agreements with all 28 commercial banks to adopt the RTGS.

NRB Governor Nepal had claimed that the RTGS system would ensure clearance and settlement of high-value cheques within seconds and that it would also help minimise the risks of money laundering and terrorist financing. However, the effectiveness of RTGS is now being questioned after it could not function properly.

“Probably, the system was introduced without enough groundwork,” said the banker.

Implementation of the system would ensure payments without issuing cheques. RTGS had been made voluntary for transactions of above Rs 200,000, while transactions of above Rs two million was mandatory through the RTGS.

Meanwhile, the NRB has acknowledged that RTGS system is not functioning currently. “RTGS is a new system and the problem has been witnessed probably due to some technical error,” said Laxmi Prapanna Niraula, spokesperson for NRB, adding the central bank is working to rectify the error.

Niraula said RTGS will be implemented in full-fledged manner after Dashain.