I have been hearing a lot about hundi and seen some people using it. How does this really work? And why is the exchange rate higher than the banks’?
View on r/Nepal by therryComato
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I have been hearing a lot about hundi and seen some people using it. How does this really work? And why is the exchange rate higher than the banks’?
View on r/Nepal by therryComato
Prakash (in the US) wants to send his mother 10 lakh Rs. The official way of sending this is through remittance (ie: bank transfer, western union, etc) through registered organizations. Government can track the amount of money coming in, can potentially tax it if needed, and use it to factor the economic growth of the country. This also means there is a surplus of 10 lakh Rs additional in Nepal.
Now, Prakash finds out that to send 10 lakh Rupees, it costs him 10,000 Rs and he doesn’t want to pay those fees. How can he transfer the money?
Prakash finds Jitendra who is also in the US. Jitendra is studying in university and needs 10 lakh to pay his semester fees. Unfortunately he cannot get money out of Nepal (due to government regulations). Thereofre Prakash now gives 10 lakh equivalent $ to Jitendra. Then Jitendra’s family gives the money to Prakash’s family in Nepal.
This is called Hundi. Government do not want people doing this because it is hard to track how money within the country, they cannot tax such transactions, and there is no net inflow of money.
A and B are friends/partners, A is in foreign country and B is in Nepal. You give foreign currency to A in foreign country and B gives nepali currency to your family in Nepal this must be how hundi works(from what I’ve heard).
it is one of the system where money laundering also works so they have no regulation in the price.
Bidesh bata saman pathauney bela ma koi aru chineko manxe lai ghar janey bela yo ni bokera ja vanera launey system hunxa k. Normally parcel ko through pathauney vanera rule xa tara euta tariko ho tyo dodge garna lai.
Social ma padhna parthyo ali barsa agadi.
Besides the explanation given above, other is that there is rampant smuggling in Nepal and smugglers need to be paid in NPR. Especially when smuggling gold from abroad. NPR is in high demand against most foreign currency.