INR 258.51M released to 4,334 individuals as of yesterday, excluding the amount released by five banks

Central Bank: Despite the opening of three Indian Rupee (INR) exchange counters in Thimphu and Phuentsholing last month by the central bank, the actual outflow of INR cash remained almost the same around INR 400 million (M).

Officials from the Royal Monetary Authority (RMA), however, said the exchange counters opened on January 12 this year have largely substituted the exchange counters of five commercial banks, bringing in more efficiency and organization

“With the same amount of exchange, the RMA has been able to restore the confidence of public in our national currency, Ngultrum, and its one-to-one parity with the INR,” Governor Dasho Penjore said.

A total of INR 258.51M was released to 4,334 individuals through the RMA exchange counters alone as of yesterday. Of this, INR 225.91M were exchanged by Bhutanese proceeding on pilgrimage and remaining INR 32.60M were on account of cash exchanged by small retailers from the bordering town of Jaigaon, India.

The five commercial banks, which continue their usual service of remitting and exchanging INR, also released INR 140M as of yesterday bringing the total cash outflow to INR 398M after RMA opened its counters.

The maximum exchange of INR 166.98M was from the counters in Thimphu.

A RMA press release stated that the group comprising of monks, farmers and retired civil servants represented the majority of the customers, constituting 27 percent of the total 4,334 people who availed the exchange facility, followed by civil servants at 23 percent. Business owners and housewives availed INR 16 percent each, followed by corporate employees and unemployed individuals at 12 percent and six percent respectively.

Bodhgaya and Varanasi, India, were the two most popular destinations for pilgrimage.

RMA officials said that two INR exchange counters in Thimphu and Phuentsholing were opened specifically to facilitate the need of Bhutanese pilgrims visiting India. Each individual was given up to INR 50,000 on production of his or her citizenship identity card.

On an average, about 300 people visit RMA counters every day to avail INR.

Additional counters were opened in Phuentsholing on February 1 to allow small retailers from the Indian border town to exchange Ngultrum for INR notes and to ease the inconvenience faced in accessing INR by the general public.

Dasho Penjore said that the initiative was taken to re-enforce the national policy of maintaining one-to-one parity between Ngultrum and INR and to make it freely accessible to Bhutanese citizens for all legitimate transactions.

He said that while RMA is trying its best to make INR available to every Bhutanese, individual, and business entity, exporters or earners of INR must also use the banking channel to remit INR earnings within the stipulated time period and in accordance with rules and regulations to build the national INR reserves.

While the convertible currency reserve today stands at USD 800M, the rupee reserve was recorded at INR 14 billion.

The Governor also said that opening of INR exchange counters is a temporary measure and it is not going to work permanently as the outflow of INR cash would always be more than the inflow.

The central bank, therefore, recommends the government to initiate a structural reform and emphasis on non-hydro growth to narrow down trade deficit and outflow and inflow of INR.

Meanwhile, RMA’s financial intelligence unit (FIU) is closely monitoring the exchanges. RMA warned that any person found misusing the facility will be penalized.

Rinzin Wangchuk