Rajesh Rai | Phuentsholing

Illegal trading of the Indian Rupee (INR) against Bhutanese currency (Nu) is still thriving across the border in Jaigaon.

INR is being traded at 7 to 7.5 percent against Ngultrum. This means additional Nu 7 to Nu 7.5 is being charged as a commission to buy INR (Rs) 100. This also means Ngultrum, which is pegged at par with Rupee is undervalued.

However, this illegal trading existed long before the Covid-19 pandemic. But the commission charged ranged from 1.5 to 4 percent per INR 100. Last year, during the peak of the pandemic, Rupee was sold at eight percent higher. But after the border gate opened on September 23, the commission hit back to 8 percent.

Due to the affordability, hundreds of Bhutanese throng markets in Jaigaon carrying Ngultrum. Kuensel sources said that there was more than Nu 1 billion (B) in Jaigaon several months before the gate opened.

“But it must have decreased now as there are many ways the Ngultrum could enter Phuentsholing,” a source said.

Observers say Bhutanese are putting themselves into a vulnerable position by going on a shopping spree with Ngultrum in hand. As per the Royal Monetary Authority (RMA), people can avail INR 25,000 a month by producing their identity card. Should there be other emergencies such as travel for medical purposes, another INR 25,000 can be availed by showing valid documents to the authority.

In addition, people can also avail the service of INR card and get INR 50,000 a month.   

An individual can avail of this facility from all banks.

If an individual has three bank accounts with INR card, he or she can get INR 150,000 a month. However, only Nu 15,000 can be withdrawn in cash from one INR card, while the remaining has to be in electronic transactions.

A businessman in Phuentsholing said that shopkeepers across the border will take Ngultrum as they have to do business.

“But if Bhutanese use cashless transactions through such facilities, there will be no need to pay in Ngultrum,” he said, adding that this will minimise the illegal buying of INR. “Ngultrum will automatically reach its real value.”

In 2020, between March and October, RMA facilitated INR 1.5B to the Jaigaon business community in exchange for Ngultrum. After that, no further transactions have been made.

Another request for such a facility couldn’t be done because parties across the border were unable to produce documents to prove the source of funds.

As per the Anti-Money Laundering and Combating the Financing of Terrorism (AML and CFT) Rules and Regulations, 2018, RMA will facilitate INR-Ngultrum exchange in Bhutan for traders across the border if the documents to show the source can be provided.