Non-resident foreigners’ bank accounts in country is money laundering: RMA Governor

He added that closing the accounts was always a priority


Earlier this week, the RoyalMonetary Authority(RMA) Governor, duringa meeting with about 150 representatives from the private sector, made it clear that Indian businessmen across the border holding bank accounts in Bhutan was not legal and closing these accounts had remained a priority ever since the central bank learnt about it more than seven years ago.

Governor Daw Tenzin said a foreigner who holds an account in another country, even if it is for business is subject to taxation but the Indian businessmen were not imposed any kind of taxes by Bhutan therefore their business was “not legal” and fell under “money laundering”.

“The problem arising from trade at the border town was foreseen but we couldn’t just take actions at once. We had waited some eight years to close these accounts as we needed to prepare,” he said. The central bank, Daw Tenzin said, focused on improving payment systems in the country by introducing debit cards, credit cards, electronic fund transfers and prepaid cards which took years.

Last month, following RMA’s directive, commercial banks in the country closed all types of accounts held in the name of Indians which drew complaints from businessmen especially in Jaigon, India who had accounts with Bhutanese banks for years.

Daw Tenzin said, while the government-initiated task force delayed its report, traders along the border started playing with the Bhutanese Ngultrum (BTN) leading to informal currency exchange, distorting the value of the BTN.

On 8 March, RMA issued a circular to close all non-resident foreigners’ savings, current, recurrent and fixed deposit accounts by 9 March except for fixed deposit accounts.

However, for those depositers opting for full maturity, payments would be made only in BTN. The directive was issued as part of the austerity measures taken by RMA to curb the Indian Rupee(INR) shortage.

The Governor, during the meeting said, this has caused businessmen in Jaigon to complain to such an extent that an Indian MP (Lok Sabha) wrote to the economic affairs minister, Lyonpo Khandu Wangchuk through the Indian Ambassador claiming that the Indian businessmen earned money through trade and not through illegal business. The matter was discussed by the Cabinet and Lyonchen instructed the Governor to hold a meeting with the Indian Ambassador.

The Governor said he made a presentation to the Ambassador who was “shocked” on learning the details of the banking activities that businessmen across the border engaged in Bhutan.

“They have understood that there is a problem but had no idea of how the problem arose”, he said.

The Governor was notified by the Indian businessmen that they had more BTN which was not a legal tender in India. The RMA made another announcement instructing all the businessmen to deposit their remaining BTN with banks in Bhutan, so that the exchange payment could be made on availability of INR. The surplus BTN thus collected by banks from Indian businessmen amounted to Nu 355 mn.

The Governor said his main intention was to close all bank accounts in the name of Indians when he adopted the overdraft facility (ODF).

He said Bhutan has no intention of disrupting trade between the two nations but choose to comply with policies while conducting trade and do it through proper banking channel.

“To ensure good friendship, the game needs to be played according to the rule”, he said.

RMA agreed to continue trade with the Indian traders at the border but through improved payment systems. However, traders said they had no accounts in Jaigaon and opted for cash payments. The governor replied, questioning the possibility for them to have an account in Bhutan when they did not have an account on their own soil. He said, the same question was asked to the Indian ambassador.

Daw Tenzin said he has informed a Deputy Governor of Reserve Bank of India and other leaders who opposed the RMA circular that a clear presentation on the issue will be made to them in a meeting.

State Bank of India (SBI) and Government of India (GoI) is currently examining the possibilities of considering the government’s request to enhance the ODF and increasing the limit on the standby credit line fromINR 3bn to INR 10 bn.The Governor has requested the Indian Ambassador to speed up the process so that RMA can pay off the existing accounts.

The existence of these accounts actually drained major amount of the INR injected into commercial banks by RMA which actually is borrowed money SBI.

The borrowings at an interest rate of 10% by RMA were actually going back to India through the accounts of Indian businessmen.

Governor Daw Tenzin said, a Bhutanese citizen withdrawing say more than USD 10,000 in any foreign country could be questioned out of suspicion but people use sacks in Bhutan to carry money from bank counters.

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  1. What a pathetic situation Bhutan is currently facing.Seems India is trying to bulldoze Bhutan and pay interest for those filthy rich Jaigaon Indians for their black money deposited in Bhutan and NO tax at all.O Bhutan has turned  out to be a safe  heaven for these people but very sad we cannot do anything.

    Same thing happening with fronting involving Indians from across the boarder.Bhutan will not be able to shake their pubic hair also and we already know the Kashi story case where Indian involved now and requested Bhutan.Very sad infact.We have to dance at the tune of India

  2. Of course, we have to dance to the tune of India. We need to accept that we are dependent on India. If India Government doesn’t give us billions of rupees in grant and assistance how are we going to survive. We need rupees to buy our basic needs like food and shelter. However, we as an independent nation have the right to frame our Banking regulation keeping our country’s economy in mind.

  3. Can the RMA governor please explain why people like us who earn less than Nu. 50000/- a month are allowed to withdraw 50000/- in INR through indian ATM’s? Knowing fully well that the unofficial exchange rate for INR is 20%, are we not encouraging illegal transactions? If i can manage around 10 ATM cards, i can easily make Nu. 1 lakh in a month. Should i leave my job and start earning easy money this way? At the same time, people who are in genuine need of INR cannot get it as it would mean competing with the seemingly jobless people who can afford to stand in line at the ATM kiosks throughout the day so that they can earn their easy commission!!!

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  5. It seems, RMA has known either that this financial situation would occur or let it happen, in both the case, the stupid governer has to be punished… This the most cowardice and foolish act i have ever come across. Or it is just that the governer is trying to save his butt by fabricating this story of knowing this situation would happen,,, in either case, the governer is stupid in front of public, as we already know his real intention, hahaha, the moral of story is dont think u r too smart,,, even monkey thinks same..

  6. Dear Governor, is it true that for all your astuteness, 40 crore worth of CGI sheets have SUPPOSEDLY entered the country within the past 2-3 weeks and that equivalent in Indian Currency has been sent outside? If true, that would mean enough CGI sheets to roof atleast 3000+ houses. How did customs officials verify the import of such a MIND NUMBING QUANTITY of CGI sheets? Or did someone get PAID OFF? Atleast that’s the rumour doing the rounds in Jaigaon these days!!!

  7. Bhutanese students are in Universities abroad on private finance. Till last month, they could withdraw Dollars from  ATMs, I heard they haven’t been able to withdraw Dollars for a month or so. What will happen to them ??? I suppose they could exchange Dollars with the Bhutanese working in the States who regularly send money home. Dollar remmitance from the States is certainly going to slow down now. 

  8. I think the governer should be held responsible for this worsen situation….. But I know DPT wont touch him,, coz 2013 is election and they want money from governer… I think governer must have taken bribe from Indian embassy to suspend the accounts of indian….

  9. The only governer of a Central Bank in the world who doesn’t want customers depositing money in the banks of his country. The only governor who wants Indian accounts to take out Rupee out of Bhutan while the country is facing Rupee shortage. Do you expect Indians to take home Ngultrums? Nu./Rs. 2 billion was the whole amount the Indian businesses had in Bhutanese banks, which is about US$ 40 million only. Most of those money were hard earned honest money. Out of it assuming even if 20% was black money, it would amount to US$ 8 million only. Such amount is thrown away by big business families and big politicians in India on marriages/weddings of their childrens. Indian doesn’t give a shit about such a small amount of black money…(they are after billions of dollars). Governor, you have caused so much pain to both Bhutanese as well as Indian traders…you have shaken the very foundation of Indo-Bhutanese friendship in border towns (the business/traders were powerful force that counter-balanced the rise of the Gurkhas along the Bhutanese borders) …and you have undermined the security of the country because of your abrupt actions and one track-mind policies.

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