3. Nepalese migrants within Nepal and to India generally carried back remittances
themselves or sent it back with friends and relatives. The majority of migrants from
Western Nepal go to India, and they came and went to their villages with great
frequency. Thus migrants could either carry back the money themselves or could
send it with other returning migrants. Despite this process being the most widely
used, there were issues with security. There have been many cases where migrant
returnees had been robbed of their money on the way back home, and even of
money being confiscated by Indian police officials at the border.
EXECUTIVE SUMMARY
Every year, thousands of Nepali people migrate for employment in foreign
countries so that they can earn and send extra money – remittances – to their
home country. Nepal is now widely referred to one of the “remittance economies”;
it is the fifth largest recipient of remittances, which make up 23% of the country’s
GDP or approximately $3 billion US Dollars (Nepal Migration Year Book 2008). Not
only is the general economy improved by remittances, some studies also show
that, at the individual level more people are materially satisfied while their family
member earns money outside the neighborhood.
11/18/2014 3
4. INTRODUCTION
The Indo-Nepal Remittance Facility is a cross-border one-way remittance
scheme facilitating remittance of cash from India to Nepal. Nepal State Bank Limited
(NSBL) jointly with State Bank of India (SBI) has introduced a robust mode of
remittance facility for the Nepali migrants in India by disbursing cash from India to
Nepal.
This is a unique application by which migrant labor from Nepal can remit
money to any place in Nepal to his family/relatives/friends. Under this scheme,
individuals, firms and corporate can electronically transfer funds through NEFT from
any bank branch in India to Nepal.
It is a unique and hassle free service offered to the people of Nepalese
origin working in India. Under this scheme, even a walk-in customer to the bank in
India can deposit cash up to Rs. 50,000 INR per transaction for transfer of funds to
Nepal. This service was launched as an instant mobile remittance solution for the
Nepalese migrants working in India.
11/18/2014 4
5. NEED FOR THIS STUDY
11/18/2014 5
Labor Migration and Remittance play an important role in Nepal both socially and
economically. Nepal is one of the world’s least developed countries in South Asia.
About 85% of the population lives from subsistence agriculture in rural areas,
coping with great disparities of caste, gender, and geography. Poverty,
unemployment, declining natural resources, and more recently the Maoist
insurgency are major reasons why international labor migration is an increasingly
important source of income for Nepal. Insecurity also forced many Nepali citizens
to go to India to supplement their incomes.
The objectives of this study were to collect information on the type, volume, and
mode of transfer of remittances and, more importantly, to understand the impact
of remittances in terms of financial flows. The main objectives of this study are
to –
• Identify the wider impacts on social & financial remittances on poverty;
• Identify better institutional arrangements for sending & receiving remittances
• Identify problem areas, if any, in the Remittance Facility Scheme.
• Give recommendations at the end of this study report to enhance efficiency of
the scheme.
6. Nepalese Migration
11/18/2014 6
Nepal lies on the southern slopes of the Himalayas, with the Tibet Autonomous
Region of the People’s Republic of China to the north and India to the south, east,
and west. It had a total population in 2011 of 27 million and a land area of 147,
181 sq. km. Nepal and India share a peculiar relationship from the ancient ages.
They share the similar culture, the Hindi language of India is easy to understand
and learn to the Nepali citizen. The political ties between both the countries has
also facilitated for migration from either of the countries to the other. The Peace
and Friendship Treaty of 1950 between the two countries provide the similar
rights to the citizens of the other country in its land as is available to the citizen of
that country, except voting rights
Article 7 of the Treaty states:
“The Governments of India and Nepal agree to grant, on a reciprocal basis, to the
nationals of one country in the territories of the other the same privileges in the
matter of residence, ownership of property, participation in trade and commerce,
movement that privileges of a similar nature.”
7. Labor Migration Flows and Trends
11/18/2014 7
The census of Nepal in 2001 revealed that the number of emigrants during the
1991-2001 period were 762,181. Persons immigrating to India constituted nearly
68 percent of the total emigrants followed by Saudi Arabia with 8.9 percent.
Figures for Qatar and Hong Kong are respectively 3.2 and 1.6 percent. Other
countries accounted for nearly 18 percent. A study in 2004 reveals, there were
approx. 200 Nepalese crossing the border to India every hour.
68%
8.90%
3.20%
1.60%
18%
Nepali Migrants- 2001
India
Saudi Arabia
Qatar
Hongkong
Other Countries
8. Causes of Labor Migration
11/18/2014 8
1. Poverty
2. Impact of environmental stressors and changing agricultural production
3. High expenses
4. Conflict (Maoist insurgency)
Type of labor migration % of total labor migrants Time period Destination
Seasonal (especially for
trade)
95 6-8 months
Indian hill areas, small
cities
Temporary 4 1-3 years
Indian large cities, Gulf
countries, Western
countries
Permanent 1 Permanent
Large cities in India,
cities in Nepal &
Western countries
Forms of Labor Migration – Seasonal, Temporary and Permanent
9. Where Nepalese Work ?
11/18/2014 9
The Nepali migrants are working in India as:
1. Restaurant worker either big or roadside ‘Dhaba’
2. Factory worker
3. Watchmen
4. Driver
5. House Servant
6. Agricultural Labor
7. Porter
8. Stone pulling
9. Coalmine worker
10. Rickshaw puller
11. Indian Government Servant
It is estimated that about 5 to 7 million Nepalese are currently in India.
10. Remittances
11/18/2014 10
One of the most defining features of Nepali labor migration to India is the inflow
of remittances. Labor migration from Nepal to India is particularly significant
because many Nepalese still cannot afford to go to newer destinations, and the
remittances they send or bring back plays a major role in raising their families’
income. In fact, bringing home money and koselee (gifts) from India is considered
a matter of pride, bravery and masculinity in Nepal.
Remittances were the single largest source of income for the Nepalese families
back home. Other sources varied with wealth, the poor gained income from wage
labor such as portering and construction, sale of non-timber forest products, and
to a small extent excess agricultural production. People with more wealth gained
income from agricultural production, and small businesses like tea houses and
cold stores.
11. Indo-Nepal Remittance
11/18/2014 11
Considering the importance of establishing a formal remittance system between India
and Nepal, the Reserve Bank of India (RBI) in consultation with Nepal Rastra Bank
(NRB) has launched a robust NEFT based remittance facility called Indo-Nepal
Remittance Facility Scheme. This scheme was launched on 15th May, 2008 to
establish a formal medium for remittance and to give Nepalese Migrants a safe and
secured channel to remit money to Nepal.
Nepal Rastra Bank (NRB) has since identified Nepal State Bank Ltd (NSBL) to handle
the Nepalese leg of the remittance and the State Bank of India (SBI) has been opted
to handle the Indian leg by Reserve Bank of India (RBI).
At the Nepal end, remittances would be distributed through all the branches of NSBL
and the money transfer agents of NSBL which are also duly approved by Nepal Rastra
Bank. At present NSBL has 17 branches and their money transfer agent Prabhu
Money Transfer Pvt. Ltd. is operational in 280 locations covering the entire geography
of Nepal.
12. Salient Features
11/18/2014 12
The salient features of the Indo-Nepal Remittance Facility Scheme are:
a) The remittances will be routed through the Payment System Group (PSG) of
State Bank of India (SBI) in India and Nepal State Bank Ltd (NSBL) in Nepal.
b) 44000 branches of Indian Banks on Core Banking Platform linked to NEFT
system of RBI are enabled to process the remittances.
c) The maximum amount of remittance under the scheme will be INR.50, 000/-
per transaction.
d) The commission on such remittances is kept very low. Up to INR 5000/- the
commission will be at INR 70.00 and above INR 5000/- the commission amount
will be at INR 95.00.
e) Commission of only INR 20.00 per remittance up to INR 50,000.00 will be
charged in case the beneficiary in Nepal maintains an account with NSBL.
f) Other than NSBL account credit the cash remittances will be handed over to
the Money Transfer Agency appointed by the NSBL (Prabhu Money Transfer).
g) There are more than 1,365 paying outlets in Nepal.
For the beneficiaries maintaining account with bank other than NSBL, 0.10% of
NPR amount with minimum of NPR 100 per remittance as handling charge is
recoverable from the beneficiary in case of payment through banker's cheque.
13. Documents/ID proofs to be produced
by Remitter
11/18/2014 13
• If the remitting customer is maintaining an account there is no further need for
additional identification.
• Otherwise, the remitter has to produce proof of identification document like
Passport/PAN/Driving License/Telephone Bill/Certificate of Identification issued
by employer with details and photographs etc. This information will be
captured in the system in compliance with KYC norms.
• The name, complete address and telephone/mobile number of the beneficiary
in Nepal will also be captured while affecting a remittance.
14. Transaction Flow
11/18/2014 14
• Remittances can be originated from any of the NEFT enabled branches in India.
(Transaction code: 51)
• The transactions would flow to the designated branch of State Bank of India.
• The branch will consolidate all such remittance information received during the
day.
• At the end of the day, the remittance information would get passed on to Nepal
State Bank Ltd, in a secured mode.
• Nepal SBI would make arrangements for either
-- credit to the bank account or
-- disburse the funds to the beneficiary through their authorized money
transfer agent.
• If the beneficiary’s account details are available, Nepal SBI would make
arrangements for credit of the account.
15. Transaction Flow
11/18/2014 15
• In other cases, Beneficiary has to get in touch with the outlet of the Money
Transfer Agency (Prabhu Money Transfer), after getting the Unique Transaction
Number (UTR) from the remitter.
• The beneficiary has to produce details of the remitter and a photo identity
document, (generally citizenship certificate) to prove his/her identity.
• If the beneficiary does not approach the money transfer agency even up to SEVEN
days, the money transfer agency would make arrangements for return of the
remittance to the originator.
16. Other Conditions
11/18/2014 16
• Any remitter is allowed to remit maximum of 12 remittances in a year under this
Scheme.
• In case the funds are not delivered to the beneficiary :
-- The amount of remittance will flow back to the originating branch through
NEFT.
-- The bank to communicate to the remitter about the return of the remittance.
• In case of cash remittance :
-- Remittance has to produce some evidence as a proof of remittance like the
counterfoil of the remittance application form and receive it.
• In case of remittance from account :
-- credit will flow to the concerned account.
17. Charges at a Glance
11/18/2014 17
In order to make the remittance service affordable, concessional rates are structured
for Indo-Nepal remittances since the target group is the migrant laborers. :
• Originating Bank Branch in India – Max Rs. 5.00 per transaction.
• SBI in India – Rs. 20.00 per transaction if beneficiary is an A/C holder with NSBL.
• The SBI shares this amount equally with NSBL. No additional amount is charged to
the beneficiary by NSBL.
• In case the beneficiary does not hold an account with NSBL, all remittance up to Rs.
5,000/- per transaction will attract an additional charge of Rs. 50.00 inclusive of
service tax. Remittances above Rs. 5,000/- and up to Rs. 50,000/- will attract an
additional charge of Rs. 75.00 per transaction inclusive of service tax.
The charges would, thus, be a minimum of Rs. 25 or a maximum of Rs. 100
depending on the value of transaction and the manner in which credit is afforded to
the beneficiary.
Originating bank branches in India would recover the entire charges from the
remitter as per the structure detailed above and pass on the appropriate amount to
SBI after retaining their share (of Rs. 5.00).
These charges will be passed on to NSBL who in turn will share the same with the
affiliated Money Transfer Agency.
18. Complaints and Grievance Redressal
11/18/2014 18
In case of complaints relating to non-credit or delay in credit to the beneficiary
account or for complaints of any other nature, the NEFT Customer Facilitation Centre
(CFC) of the respective bank (the originating bank and/or SBI) can be contacted.
Details of NEFT Customer Facilitation Centre CFC of banks are available on the
websites of respective banks.
In case the issue is not resolved satisfactorily, the NEFT Help Desk (or Customer
Facilitation Centre of RBI) may be contacted at:
The General Manager,
Reserve Bank of India,
National Clearing Cell,
1st Floor, Free Press House,
Nariman Point,
Mumbai – 400 021
19. Measures to Enhance Usage
11/18/2014 19
In view of the importance accorded at the highest levels in both the countries to the
issue of workers’ remittances to Nepal through banking channels, it is imperative that
the Scheme functions effectively and serves the purpose for which it is intended
necessitating concerted efforts at all levels. Banks are, therefore, advised to ensure the
following with immediate effect:
• Create awareness among the branch officials about the Scheme so as to enable them
to guide the target customers, many of whom may be illiterate. The branch officials
should be able to explain the features of the Scheme and guide them in filling up the
Remittance Form.
• Provide necessary training to the dealing officials at branch level so that they are
aware of the operating procedures of the Scheme, its message structures and
contents etc.
• To enhance its usage, it is necessary that target customers are made aware of the
Scheme. To ensure this, branches, especially those situated in areas with sizeable
migrant Nepalese population, may be advised to organize periodic workshops and
awareness campaigns about the Scheme. Help of Nepalese worker’s associations may
be solicited for wider disseminations of information about the Scheme.
20. Conclusion
11/18/2014 20
The “Indo-Nepal Remittance Facility Scheme” has proved to be a boon to the Nepalese
migrants in India. It has shown a great deal of significance for the migrant Nepali
workers who always wanted to remit money back to their families in Nepal. The migrant
Nepalese earlier were unaware of any such remittance scheme authorized and
facilitated by the respective governments. Earlier they used informal mediums to remit
money to their families in Nepal.
Hence, Indo-Nepal Remittance Facility Scheme, an authorized channel of remittance
initiated by the Reserve Bank of India and Nepal Rastra Bank was introduced in the year
2008. The aim was to reduce/minimize the flow of fake currency and more importantly
make the life of migrant Nepalese easier. Also the outflow/inflow of fake currency was
reduced and minimized because of NEFT remittance scheme.
This scheme can be fully exploited if more and more Nepali migrants in India are made
aware of and encouraged to make use of this easy remittance. The banking staff in India
may be trained properly so that they can facilitate the NEFT based remittance scheme
effectively.
21. BIBLIOGRAPHY
11/18/2014 21
BOOKS:
State of Migration in Nepal – Research Paper.
Nepal India Open Border: Prospects, Problems and Challenge.
The Marginal Migrants: A Study of Nepali Emigrants in India – Kalinga
Publications.
Migration and Remittances Factbook – World Bank Review.
WEBSITES:
www.rbi.gov.in
www.ceslam.org
www.indianembassy.org.np
www.censusindia.gov.in
www.timesofindia.com
