Shift of deadline to November 30 will leave less room for misuse: RMA

Currency: Since the demonitisation of INR 500 and 1,000 notes by the Indian government, as of November 15, a total of INR 827M high-denomination notes have been collected from the Bhutanese public.

An equivalent amount of Ngultrum will be deposited in the respective accounts of the clients. The RMA will send the demonitised notes to the Reserve Bank of India (RBI) in return for new notes.

The governor of the Royal Monetary Authority (RMA), Dasho Penjore said this is not an alarming situation as the country has an INR reserve of 28B, of which INR 1.622B (less than 1 percent of the reserve) is held in cash by the RMA.

Sources said that Indian tourists have started to bring the new INR 2,000 note into the country. Some shops in the capital have been accepting the new INR notes.

Dasho Penjore said the RMA has written to the RBI asking whether the country can accept new INR 2,000 notes because INR is a foreign currency. “But there shouldn’t be a problem,” he said.

In the past, INR 500 and 1,000 notes were not allowed in the country. It was only recently that these high denomination notes were allowed, upon the RMA’s request. This was necessary because transporting huge amounts of INR in the 100 denomination became an issue.

The governor said RMA will have to accept INR 2,000 notes for the same reason and to ease transportation.

There are also reports in the Indian media stating that some areas in the neighboring states of India have begun to treat the Ngultrum as legal tender and most transactions are being carried out using the Ngultrum.

“It is natural when there is a shortage of INR in bordering states,” the governor said. “Even in Bhutan we allow INR.”

This, he said, is convenient for the people in India as a temporary measure because the two currencies are freely convertible given the one-to-one exchange rate parity. “This reflects the confidence in Ngultrum by neighboring states in India.”

Amidst rumours and reports in the media indicating possible deflection of black money into Bhutan, the governor said that the RMA’s financial intelligence unit is closely monitoring the situation in the southern belt.

There are reports in the Indian media claiming that a section of traders from Siliguri, Alipurduar, Jalpaiguri and Cooch Behar are driving to border towns in Bhutan to offload money. It is also claimed that Bhutanese are involved in facilitating the transactions for commission.

Dasho Penjore said that if these reports are true, people receiving the cash would either take their money to a bank or hold the money with them. “If people are trying to hold the cash with them, it is stupidity.”

Should the people take huge sums of money to the bank, the governor said that banks are instructed to extract the personal details of the depositors with the serial number of the notes. “We have also asked the banks to not facilitate the exchange if the depositor has held the cash after midnight of November 8,” he said.

Dasho Penjore claimed that there is a deterrent factor in the system to discourage such practices. “If a driver comes with INR 1M for exchange with Ngultrum, definitely he will be called for investigation,” he said, adding for the companies depositing huge sums, their books of accounts are there to verify the date of receipt of payment.

The shifting of the last date of depositing the demonitised notes to November 30 is one of strategies to leave less room for misuse of the facility, according to the governor.

However, the governor said that so far the operation has been smooth and large-scale awareness has been conducted involving the Dzongdags and local leaders.

“We have to respect Indian law just as they do with our law,” Dasho Penjore said.

The implication of the demonitisation of high denomination INR notes will have negligible impact on the country’s economy, the governor claimed.

“There is only the issue of inconvenience for the cash economy,” he said. But almost 95 percent of the transactions are done through various banking channels and there is no impact on overall trade.

Tshering Dorji