Projects encouraging and stimulating financial integration and inclusion will receive priority, says Indian Ambassador

Whenever the economy is mired in bottlenecks pertaining to availability of Indian Rupees, negative sentiments are generated towards the Indo-Bhutan friendship, Indian Ambassador Jaideep Sarker said during the signing of a Memorandum of Understanding (MoU) between the Royal Monetary Authority and the Reserve Bank of India on cross border supervision yesterday.

SInce the Indian Rupee is legal tender in Bhutan and given the economy’s dependence on rupees, he said availability of Indian currency is a major issue in Bhutan.

“So the Government of India does assume an obligation to see the bottlenecks are addressed quickly and make INR available for legitimate transactions,” he said.

However, he said that virtuous relation between the two Central Banks has been able to handle the demonetisation issue successfully. “It is now reaching a final resolution and issues will get resolved very soon,” he said.

Bank accounts of people who deposited the demonetised notes have been frozen. They are yet to receive the counter value notes.

Excellent communication with the RMA, he said has played an important role in coming solving the problems.

“We were able to reflect clearly what the problems are at the highest level,” he said. “It is vitally important for governments to be in touch on that matter.”

The RBI deputy governor, SS Mundra who is in the country for the MoU on cross border supervision and exchange of information said, another team led by a senior official from the currency department of the RBI will visit the country today to finalise the resolution on demonitisation.

“It doesn’t matter how far and near, how big or small we are but the mutual cooperation between RBI and RMA has always been greater than any other parameter.”

The RMA governor Dasho Penjore said there is relatively a large amount of INR held in cash by Bhutanese owing to the growing transactions. He said that the RMA and RBI have handled the situation very well even during times of short supply of cash resulting in minimising the impact of demonetisation in Bhutan.

He also said that there has been a huge grant assistant from Indian government for the budgetary needs of the country and also huge investment in the hydropower sector.

The Indian Ambassador to Bhutan said that there had been a disruption in the supply of INR in the past. However he said that it has quickly been addressed through the economic stimulus plan package of Rs 5 billion and extension of the  standby credit facility.

“We should also keep track of what possibility may come up in the future. We should not be caught napping,” he said, adding that even though the outlook seems favorable for a few years, the central bank should keep track of it.

He said any projects that encourage and stimulate financial integration and financial inclusion will receive priority in terms of funding. He cited an example of the recently launched G2C project the Government of India funded to facilitate payment system.

He also agreed that the silver lining of the demonsation process is that it will encourage digitalisation.  A large number of Bhutanese travel to India with huge amounts of cash. This, he said is a task that needs to be addressed by making state of art facilities available to travellers.

Meanwhile, the MoU on cross border supervision and exchange of information would facilitate cooperation in cross-border supervision and in the surveillance field.

This is the 41st MoU between the RMA and the RBI.

Tshering Dorji