… remitters offered up to 10 percent incentive
Sending money home from abroad has become more attractive after the Royal Monetary Authority (RMA) revamped the incentive on inward remittance from 2 to 10 percent from yesterday until December this year.
The incentive will be facilitated as an additional value on the prevailing exchange rate receivable by non-resident Bhutanese (NRB) at the time of conversion of their remittances into Ngultrum.
Bhutanese who live and work overseas can avail the incentives to offset the transaction costs while sending money to their personal accounts or to their family members in Bhutan, according to RMA.
The beneficiaries will receive the enhanced incentive amount upon converting the remitted amount into Bhutanese Ngultrum using the prevailing exchange rates through the banking channels and the international money transfer operators.
By sending remittances through formal channels, an RMA official said that Bhutanese residing abroad can play a pivotal role in helping build the country’s foreign reserves.
Beyond mere financial transactions, he added that inward remittances and the incentives help in uplifting the economic conditions of the lower and middle-income families in urban and rural pockets as these constitute the majority of beneficiaries living in 20 dzongkhags.
At the same time, an official said that remittance has become an important contributor to the country’s external reserves in the last two years, and the incentive scheme will help boost the country’s reserves and enhance the awareness of formal remittance channels among Bhutanese residing abroad.
Inward remittances help boost the foreign currency reserves and to meet the balance of payments obligations whereby Bhutan being an import-dependent country, foreign currency reserves are a must to meet import payment obligations.
The country’s foreign currency reserves have declined by about 30 percent to USD 698.3 million as of March this year from USD 984.8 million in March last year.
An RMA official said, “The initiative will not only encourage more inward remittance but is also aimed at increasing the value of remittance.”
Remitting through formal channels has many benefits. He said that the remitter benefits not only from incentives but will also allow Bhutanese residing abroad to avail various financial services such as RemitBhutan foreign currency accounts and other deposit schemes, among others.
There is also a perception that the transaction cost might offset the 10 percent incentives. However, an official said that assuming an AUD’s exchange rate through informal channels is Nu 59 and the bank exchange rate is Nu 55.6, the effective exchange rate with 10 percent incentive will be Nu 61.2 which is much higher.
“This will encourage remittances through formal channels,” an official said, adding that the higher the value of the remitted amount, the more advantage in offsetting the transaction cost among other benefits.
He added that the channel of remittance has become very efficient in the past two years because of the various initiatives implemented by the RMA in collaboration with financial institutions.
The number of channels of remittance to Bhutan has significantly increased from six in 2016 to 10 as of 2023 whereby Bhutanese abroad can send their money through Western Union (Bhutan Post), TPayRemit (T Bank), MoneyGram (Bhutan National Bank), Rai Money Transfer (Bank of Bhutan), Prabhu Money Transfer (T Bank), Rai Money Transfer (Bhutan National Bank), BoBit (BoB), EuroGiro (Bhutan Post), Aman Exchange (T Bank) and Bank Transfer (SWIFT).
Figures from the RMA show that the remittance spiked during the Covid-19 recording a high of Nu 8.27 billion or USD 111.2 million in 2020. It decreased marginally to Nu 8.06 billion (USD 108.74 million) in 2021 and fell to Nu 6.38 billion (USD 82.58 million) in 2022.
The 10 percent incentive is directly facilitated by the commercial banks and money transfer operators upon conversion of the NRB inward remittance amount into Ngultrum whereby in case the NRB or beneficiary does not receive the incentive, they can contact their respective commercial bank or money transfer operator.
Further, NRBs can open bank accounts in Bhutan through the RemitBhutan platform, an online web-based system, which allows NRBs to open RemitBhutan Ngultrum and foreign currency giving them the option to choose to open such accounts with Bank of Bhutan, Bhutan National Bank, Druk PNB, and T Bank.
The incentive will not be applicable on the remittances received for the purpose of foreign direct investments, donation, and trade, including remittances received in favour of non-governmental organisations, civil society organisations and companies.
