Remittance inflow up post earthquakeBanks and remittance companies have said that there has been a sudden surge in remittance inflow following the devastating earthquake on April 25.
The surge has been attributed to migrant workers sending money to rebuild their damaged houses after the quake.
They also pointed out that remittance flow through Hundi may have come down as several banks and remittance companies have given an exemption in service charge while sending remittance for a month following the earthquake.
“There has been growth of around 20 percent in remittance inflow through our company over the last week,” said Suman Pokharel, chief executive officer of International Money Express (IME).
“We used to have daily remittance inflow of $4-4.5 million. Since May 1, daily inflow increased by $1 million.”
According to Pokharel, the surge in remittance might have been due to the fact that remittance inflow had stopped for a few days after the earthquake, which in turn prompted many to send money to rebuild their damaged homes.
“On the other hand, free service charge offered by money transfer companies might have also encouraged migrant workers to send money instantly,” he added. IME is the largest remittance company in the country having extensive network within and outside the country.
Himalayan Bank CEO Ashoke Rana also said that there has been a massive increase in remittance inflow. “On one day, remittance inflow tripled than the regular inflow,” he said. He speculated that the money generally coming through Hundi might have come through formal channels this time around. Himalayan Bank has also announced no service fee for remittances for a month.
Nepal Rastra Bank (NRB) also confirmed that there has been a surge in remittance inflow following the massive earthquake. NRB Spokesperson Min Bahadur Shrestha said that the rise in remittance flow is proved with the fact that commercial banks sold foreign currency worth Rs11 billion on Wednesday and Thursday to the central bank against the usual selling of Rs2-3 billion.
He believes that the slowdown in illegal trade such as smuggling of gold in the aftermath of the disaster might have played a role in the sudden surge.
The NRB has been blaming use of remittance in gold smuggling as one of the main reasons for the slow remittance growth this year. Government agencies including the police were preparing on a crackdown on illegal trades before the earthquake.
The central bank proposed a few months ago that the government should consider subsidising service fee to encourage remittance inflow through formal channels once growth slowed.
But Shrestha said that the government could not agree on the proposal because of the immense cost it could have had. “We are currently discussing on an alternative,” Shrestha said.