Remittance up, thanks to banking channels

KATHMANDU: The active involvement of commercial banks in the remittance business, growing number of remittance agencies and fluctuation in the rate of dollar vis-a-vis Nepali rupee have contributed to an encouraging inflow of remittance this fiscal year.

“Commercial banks have come aggressively into the remittance business over the recent months,” said Pradeep Bhattarai, assistance director at the Foreign Exchange (Forex) Department of Nepal Rastra Bank (NRB).

Unlike the remittance agencies, they do not need separate licence for remittance business. “In the past, however, they were not much involved in it,” he said adding that the increasing number of remittance agencies has also helped increase the remittance as they have helped channelise remittance through banking channels. Remittance by the end of the eleventh month of the fiscal year 2008-09 touched Rs 188.88 billion.

Earlier, Nepalis used to send money back home through illegal and non-banking channels but the entry of new remittance agencies has encouraged Nepalis in 76 countries around the world to send home money through banking channels.

According to the second Nepal Labour Force Survey (2008-09), Nepal received the largest portions of

remittance of 21.3 per cent from Qatar and 19.2 per cent from Malaysia.

“The number of remittance agecnies has doubled to 48 in the fiscal year 2008-09 from a year earlier,” said Bhattarai. Most of these agencies are focusing on Gulf countries and Malaysia. “The fluctuation in dollar vis-a-vis Nepali rupee has also contributed to inflow of remittance,” he added.

In 2007-08, the workers’ remittances increased by 42.5 per cent — in comparison to a year earlier — to Rs 142.7 billion. In 2006-07, Nepal had received Rs 100 billion remittance.

According to the International Monetary Fund (IMF), remittance is the sum of workers’ remittances, compensation to employees and migrants’ transfers. “Every remitted dollar generates an additional three dollars in economic activity in the receiving country,” according to economists. However, in Nepal remittance has been used in unproductive sectors and is fuelling a price hike. Yet, it is the top contributor to foreign exchange earnings.

Remittance has increased household investment in education, entrepreneurship and health also. According to the second Nepal Labour Force Survey, every household received Rs 65,755 in 2008. More than one quarter — 30 per cent — of the total population has gone abroad for work.

According to the Department of Labour and Employment Promotion, the number of workers going abroad for employment increased by almost 13 per cent in 2007-08 in comparison to 2006 and in the year 2008-09, the number touched 2,19,965.