In what will be welcome news for many Bhutanese, the Royal Monetary Authority (RMA) is proposing to lift the current INR 10,000 ceiling for Bhutanese who are travelling outside.
As per RMA’s plan there will be no limit at all, and those availing rupee can get any reasonable amount that they want for their travel needs like pilgrimage etc.
However, to ensure there is no misuse of rupee the rupee exchange counters will have a ‘know your customer’ system whereby customers will have to sign an undertaking stating the rupee is for genuine purposes. The counter will also enter the customer’s details like CID card details etc in the system to keep track next time the person comes for rupee again.
So if a person is seen coming time and again and is found to be using the rupee for illegal purposes like rupee trading etc, then the person will be held accountable as per RMA’s laws and the signed undertaking.
To start with, as per the RMA proposal, such rupees will be made available at one rupee counter at RMA in Thimphu and another RMA rupee counter in Phuentsholing by mid January 2016.
In the next stage rupee exchange counters will also be made available at all exist points near the border like Samtse, Gelephu and Samdrup Jongkhar.
RMA Governor Dasho Penjore said, “Just now there is a rupee shortage situation in the market and this enhancement will solve the problem at a modest level.”
The governor clarified that on 30th December 2015 the RMA will be having a board meeting where this proposal will be put up to the RMA Board for approval. Once final approval is given implementation will start from January 2016 itself.
To start with, the rupee will be available at RMA run counters only and the banks will carry on with its current practice and limitations. If all goes well and people are not misusing the facility then the facility maybe extended to the banks as well.
“The rupee is for only legitimate purposes but if people are misusing it then it will not be acceptable and tolerable,” said the Governor.
The main motivation behind removing the restriction is to remove the perception and feeling that there is rupee shortage and restriction in the country. This perception has lead to hoarding of rupees and also various other illegal activities to get and trade rupees, as uncovered in some recent Anti Corruption Commission Investigations in Thimphu and Phuentsholing.
The rupee restrictions apart from making life difficult for ordinary Bhutanese and encouraging illegal activities has also lead to an informal fall in the value of the Ngultrum versus the Indian Rupee in the border areas. This different was as high as 10 percent and has currently come down to around five percent.
Another reason is also to reduce the long lines at rupee counters in the banks especially for religious pilgrims.
Such exchange counters are not only expected to make life easier for Bhutanese travelers but also help in strengthening the Ngultrum to its original position of parity with the rupee before the rupee crisis struck from late 2011 onwards.
The RMA also has a separate plan to tackle with this informal fall in the value of the Ngultrum in the border regions by absorbing the Ngultrums that are in circulation in borders areas like Jaigaon etc.
A few years ago before the rupee crisis started a person could withdraw INR 60,000 a day by just showing the CID card but after the rupee crisis it was reduced and is currently INR 10,000 and that too only after showing an airplane or bus tickets.
Bhutan currently has around INR 20 bn in reserves and another USD 833 mn in convertible currency reserves.
The dollar limit of around USD 3,000 a year will remain in place given that it is a convertible currency.