Currency: Indian Rupees (INR) are once again being illegally sold across the border.
Both Bhutanese and Indian nationals in need of INR are paying between Nu 108-112 for INR 100. The commission depends on the amount being exchanged.
With the demonitisation process coming into effect on November 8 in India, many attempted to bring the old denomination notes of INR 500 and 1,000 into Bhutan as banks here were still accepting the notes then.
People from across the border were also giving commission in exchange for Ngultrum.
However, the current situation is seasonal as many pilgrims are flocking to Phuentsholing on their way to holy sites in India such as Bodhgaya. It is also the orange export season.
As a result, pilgrims, ticketing agents, and exporters need INR.
A ticketing agent, Pema Tshering, said they are able to acquire INR only by paying commissions. “We don’t get it from financial institutions so there is no other option,” he said.
The Royal Monetary Authority (RMA) office and banks in Phuentsholing do not provide INR.
It is available only at the RMA in Thimphu. The RMA is receiving INR 130 million a week from India. Only 200 people can exchange Ngultrums for INR 5,000 each in a day.
A travel agent, who wished not be named, said they are therefore compelled to buy INR from across the border. “We pay commissions of between Nu 10 or Nu 12 to dealers,” he said.
However, the travel agent said villagers buying INR are being charged as much as Nu 20 extra for ever INR 100.
The number of pilgrims this season is expected to be higher than previous years because of the Kalachakra initiation next month.
For orange exporters, INR is needed for transportation.
An exporter, Kinley Dorji, said they paid Nu 14,000 to ferry a truckload of oranges to Burimari on the India-Bangladesh border. The normal cost is Nu 11,000.
“Transportation charges have increased for us due to higher commission we pay to buy INR,” he said. “Drivers face the direct impact but we are the ones affected.”
The availability of less INR across the border due to withdrawal limits is also contributing to the illegal practise. Indian nationals are allowed to withdraw only INR 4,000 from banks in a day and INR 2,000 from ATMs. While to what extent the cash crunch is having on the problem is yet to be determined, it is creating opportunities for those who can avail more INR and are seeking a profit.
A Phuentsholing hotelier said even people from across the border do not have INR these days because of the demonitisation process.
“They also need INR to do business,” he said.
With the onset of winter, Phuentsholing becomes a prime destination for those looking to escape the cold and shop. The town also attracts numerous organisations, both government and private, for workshops and trainings. This means the demand for INR by Bhutanese increases further boosting the illegal racket of INR transactions.
Rajesh Rai | Phuentsholing