National
Banks to import greenbacks amid dollar drought
Nepal Rastra Bank (NRB) is considering importing US dollar bills in cargoes in the wake of acute shortage of the greenbacks in the Nepali banking system.Nepal Rastra Bank (NRB) is considering importing US dollar bills in cargoes in the wake of acute shortage of the greenbacks in the Nepali banking system.
“We are mulling over bringing dollar bills if the shortage continues,” said NRB Deputy Governor Chintamani Siwakoti.
The central bank move coincides with commercial banks’ plan to import the greenbacks to ease the crisis. Standard Chartered Bank Nepal Limited (SCBNL), Nepal Investment Bank Limited (NIBL), Himalayan Bank and Nabil Bank have said they are exploring the possibility of importing dollar bills.
“The demand for US dollar is high. Bringing the greenbacks from internally acclaimed currency supply vendor could be one option to address the crisis,” said Diwaker Poudel, corporate affairs head of SCBNL. Poudel, however, added that the bank is yet to decide the amount and the country from which it would bring the dollar bills. “Several issues such as transportation cost, insurance and safety among others are yet to be worked out,” he added.
Himalayan Bank CEO Ashoke Rana said his bank is coordinating with SCBNL for bringing the American currency from Singapore. “With academic session in the US starting from September, demand for the greenbacks has gone up of late,” said Rana. According to bankers, the greenback shortage in the banking system started about six months ago.
Such is the crisis that commercial banks have been forced to limit the exchange facility to maximum $500 for those travelling abroad.
Of late, banks have been requesting people who approach them for US dollars to opt for dollar debit card instead of cash. While most of the banks now issue dollar debit card, Nepalis travelling abroad still prefer cash.
“On an average, around 200 people visit our branches daily for US dollar exchange,” said Rajan Amatya, deputy general manager of (NIBL). “But due to the shortage, we have not been able to provide them more than $100-$200 per person.”
Bankers attribute multiple reasons for the dollar crisis. Nepalis’ preference for US dollar in cash while travelling abroad, use of plastic money (debit card, credit card) by tourists visiting Nepal, dollar exchanged by money changers not reaching the banking system and Chinese traders opting for US dollar in cash for payment are some of the reasons that have led to the shortage of greenbacks, bankers say.
“Earlier, tourists used to carry hard cash, which made the availability of greenbacks in the banking system easier,” said Sashin Joshi, CEO of Nabil Bank. “These days, tourists are increasingly using cards for the payment while in Nepal, which has significantly lowered the dollar deposit in the banking system.”
Bankers said the central bank also has not been supplying the US dollar as demanded by the commercial banks.
“Generally, it’s the NRB that supplies the foreign currency to the banks based on their demand. These days, even the NRB is struggling,” said a banker.
According to central bank officials, the NRB decision in the second week of August to allow banks to sell five new currencies was also aimed at reducing the demand pressure of the greenbacks.
The NRB allowed banks and financial institutions (BFIs) to sell Swedish kroner, Danish kroner, Hong Kong dollar, Kuwaiti dinar and Bahrain dinar from second week of August. “This was done to encourage people to purchase the currency of the country they are travelling to instead of US dollar,” said NRB official.