Money

Money transfer firms channeled in 58pc of forex earnings last fy

- Post Report, KATHMANDU
Money transfer firms channeled in 58pc of forex earnings last fy

Dec 6, 2014-

Money transfer agencies are still leaders when it comes to bringing in remittance despite the involvement commercial and development banks in the business, a Nepal Rastra Bank (NRB) report has shown.

With the country receiving $4.55 billion in foreign exchange in 2013-14 from different sources, remittance coming through money transfer agencies accounted for 58 percent ($2.65 billion), while commercial banks channeled in $1.62 billion (or 36 percent), according to the fourth-quarter report of the central bank on remittance.

There are 45 money

transfer agencies and 30 commercial banks. The central bank has also allowed development banks to carry out remittance transactions, but their contribution is very low.

Money transfer agencies account for 90 percent of the total foreign exchange earned by the grouping, including money changers, hotel, trekking agencies, travel agencies and others.

IME Remit CEO Suman Pokharel said the agencies’ extensive nationwide network is responsible for the big business they are getting amid tough competition from the banks. He said IME alone brings in over $1 billion a year. “Compared to banks, our core function is remittance, which is also plus point.”

The agencies brought in the largest amount of foreign exchange from Malaysia, followed by United States, Qatar, Saudi Arab and Japan. These countries account for 88 percent of the total remittance brought by the agencies, according to the NRB.

Despite relatively lower number of Nepali migrants, the US surprisingly stood second in terms of foreign exchange received through money transfer agencies. “This probably due to the fact that the amount sent by individual migrant workers from the Gulf and Malaysia is lower compared to that sent from the US,” said Pokharel.

Money transfer agencies are expected to further benefit from the latest NRB circular that has asked commercial and development banks to make remittance payments only through bank accounts, not cash, within a year. It has not barred money transfer agencies from making payment in cash. The circular will hit banks which have little presence in rural areas.

Pokharel said the NRB provision would benefit remittance companies, but added the rule seemed to be aimed at bringing more transparency in the remittance business.

As far as the remittance received through commercial banks is concerned, Saudi Arabia, United Arab Emirate, Qatar, Malaysia and Bahrain are the five contributors. Last fiscal year, money changers and trekking agencies also saw rise in foreign exchange earning, while hotels, travel agencies and others saw the earnings dive.

Published: 06-12-2014 09:06

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