The Bhutanese Leading the way.
One of the hotly discussed topics these days both in the social media and media is the deteriorating Ngultrum and INR parity rate in Jaigaon reaching around 7% against the Nu which means Nu 107 is equivalent to around INR 100.
There have been constant requests from traders in Jaigaon to both the governments to solve the issue, but so far while the Royal Monetary Authority (RMA) has been more than willing to facilitate the exchange the opposition has come from banks and agencies in India.
Prior to the border closing in March 2020 the RMA had opened INR counters in Phuentsholing where Indian traders could come with Nu and take INR on a daily basis.
After the border closed then the RMA facilitated seven such exchanges coming to Nu 1.5 bn till October 2020 by taking in Nu and sending the INR through the banking route known as RTGS.
However, despite this the Nu kept growing mysteriously despite a closed border and so to honor the Nu the RMA in 2021 agreed to another Nu 1 bn of exchange.
However, at the time the problem first came from in the form of enquiries by the corresponding bank of the Bank of Bhutan and Druk PNB which is the Standard Chartered Bank (SCB) in India through which the banks have to deposit and remit the INR to the Indian accounts across the border.
SCB was not ready to allow such large amounts of money to go through it again without proper paperwork to show the source of the money being deposited into Bhutan.
The fear of the SCB and also the BoB and Druk PNB is that they could be blacklisted by the international banking system for allowing large amounts of money to flow across borders without proper paperwork.
With the problem and Nu building up the traders in Jaigaon approached the Indian Consul General in Phuentsholing and through it the Indian Embassy.
Based on the request of the Indian Embassy the RMA collected a list of Nu 1.4 bn meant for exchange as a last one-time measure. With the banking channel not possible the plan was to exchange cash for cash in June 2022 and RMA prepared the money.
However, this time the SSB force of India objected to the cash exchange citing their rule book that allows people to only carry cash of INR 25,000 on them. In addition to the SSB the Indian customs also joined the fray asking the source of such large amounts.
RMA asked the Indian Embassy and the CG to sort out the internal issues within India before the RMA can carry out the exchange.
Recently another request was made to the RMA to facilitate the exchange and a week ago the RMA wrote to the CG asking if the issues on the Indian side have been sorted and there has been no response so far.
RMA has also informed the merchants in Jaigaon that while RMA is willing the issues are coming from the SSB and Customs on their side.
A RMA official said that Jaigaon merchants should not accept the Nu and Bhutanese on their part have to be more disciplined.
He said that Bhutanese can use RuPay cards from BNB, BoB and Druk PNB that gives 15,000 per month each and then Bhutanese can get INR 25,000 per month against their ID card. He said Bhutanese can get INR 70,000 a month through such facilities.
The official said if Bhutanese do not use cards or pay digital and use Nu then they will end up paying the hidden exchange rate costs.
A source in Jaigaon said while the rate is 7 percent Bhutanese end up paying rates of even 10 to 20 percent while buying goods as businessmen put the hidden costs and Bhutanese do not bother to find out.
