Kathmandu. Even though the interest rate is twice as high in Nepal as compared to India, the bankers are under stress after finding that more money has started flowing from Nepal to Indian banks. A banker said that daily deposits of crores of rupees have started to accumulate in the border Indian banks from Nepal.
Currently, 6 to 6.5 percent interest is being paid on fixed deposits in India. In Nepal, interest is 12.13 percent. The banker says that even though there are so many benefits of keeping money in the bank, the increase in Nepalese money in Indian banks does not give a positive message. It has been found that the Marwari community and some Indians who do business in Nepal are taking money to India in this way.
Many Nepali and Indian citizens doing business in the border areas have opened bank accounts on both sides of Nepal and India. The National Bank has not shown much interest in this regard. In Nepal, there is not much trade in 500 and 2000 denomination notes, but there is an open trade in smaller denomination notes. Due to the fixed exchange rate of 100 Indian Rupees to 160 Nepali Rupees, all currency notes are traded in Nepal, except the high denomination notes banned by the National Bank.
Even though it is still prohibited in the border areas, there is an open trade of high-rate gold. These things are not paid attention to when there is a daily flow of money in the market of the border area. Even in India, the border markets connected with Nepal are heavily traded in Nepali currency. In this way, because the need for currency is more for border transactions, the National Bank sometimes buys currency by selling the dollars we have.
Most of the money bought in this way is used to pay for foreign trade, but some part is kept in cash. In this way, Nepali businessmen who have relatives in India, Indians doing business in Nepal and some Nepalis from the Marwari community may also have started bringing their property from Nepal to India, the banker says.
The bankers say that even before this, a small amount of capital was going 'to and fro' from time to time in Nepal and India, but now a large amount of capital has started to flow out. Bankers believe that this will weaken Nepal's economy and monetary credibility. The banker is worried that if big businessmen start selling their property in Nepal and bring it to India, it may destroy our economy and banking system.