“This is not the first time we are making such a request. Sadly, however, the demand for IC in hard cash is only growing, instead of going down,” said Nara Bahadur Thapa, chief manager of NRB in Biratnagar. [break]
The uncontrolled rise in demand of IC is troubling the central bank mainly as it manages the supply by selling the hard-earned US dollar to the Reserve Bank of India. “Unfortunately for the country, a significant chunk of such hard-earned IC is getting siphoned off to finance illicit trade,” said Thapa.
According to a presentation made by senior NRB officials at a function on Thursday, demand for IC is on the rise mainly to finance smuggling and make savings in the Indian banks.
A significant portion of IC is also getting siphoned off to India because a large number of Nepalis residing along the bordering cities use it to pay insurance premium to the Indian insurers, travel to India and fulfill basic needs.
“Payments for all genuine causes can always be made through electronic transfers. But people are always pushing for hard cash,” said Thapa, adding that the central bank has stopped receiving IC from the market in recent years.
Currently, the central bank has Indian Rs 90 billion in its reserve, and to maintain that it had sold 1.62 billion US dollars to the Reserve Bank of India over the first seven months of the current fiscal. In a bid to manage the demand, it had procured IRs 124 billion by paying US dollar 2.74 billion in the last fiscal year.
“It is not that we do not have inadequate IC in reserve. But what is worrying us is the misuse of currency, something which is creating aberrations in the market,” clarified Thapa.
Dr Bhubaneshwar Pant, director of NRB, also asked the entrepreneurs not to demand IC in cash. “This trend must be discouraged. Hence, we request you to pay through demand drafts and electronic transfers, among others,” he stated.
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