The Bhutanese Leading the way.
The Royal Monetary Authority (RMA) recently came out with a public notification stating that Bhutanese Exporters as per Section 24 of the Foreign Exchange Rules and Regulations (FERR) 2020, have to receive money from residents in India as INR and that too through the banking channel.
In this regard the RMA introduced a mandatory Bank Export Registration Form (BER) for all exporters to streamline the export process through banking channels prior to processing the export declaration at the customs point of exit as of 5 September, 2022.
However, this notification has not gone done well with the vegetable and fruit importers in Jaigaon who are the main buyers of Bhutanese potatoes, vegetables, fruits and other cash crops.
23 such major importers have all come together to sign a letter which says that ‘all members of the fruits and vegetables group’ has decided that any party or parties cannot purchase potatoes or cash crops from Bhutan from 5 September 2022. They say anybody buying such potatoes will have their potatoes ‘seized’.
The group’s letter says, ‘If Bhutan government will agree to accept Bhutan currency then the whole members will arrange a meeting and then the decision will be taken. The members cannot purchase any cash crop from any gate after 5 September 2022.”
The Jaigaon traders are miffed as they used to pay Bhutanese exporters with Ngultrum in cash that was circulating in Jaigaon.
Jaigaon has a thriving informal INR and Nu exchange market where the rate fluctuates anywhere from three percent to even as high as 10 percent in favor of the INR.
This is a lucrative but illegal business and a chunk of such Ngultrums usually ends up in the hands of such traders who benefit from it and use the Ngultrums to make payments in Bhutan. This is also a major route of how Ngultrums in Jaigaon from all kinds of sources, known and unknown, makes its way back into Bhutan.
Payment through the banking channels from India to Bhutan in INR would bring a halt to this.
The ban from the Jaigaon importers has been announced just when the potatoes export season in Bhutan has started, and is an attempt to apply maximum pressure on Bhutan to reverse the RMA order.
