Illegal currency conversion continues unabated at Indo-Bhutan border

Currency conversion continues unabated as a major illegal business in Indo-Bhutan border areas while authorities are in dark about the implementation of decade old planning to open up official conversion facilities.

Not only over 5 lakh Indian citizens leaving border adjoining areas, near 50,000 Indian citizens working in Bhutan are victims of the system as they cannot utilize Bhutanese currency earned as salary or business revenue in India. Interestingly, though handling Bhutanese currency is illegal in India. Indian currency is an official tender inside Bhutan.

Despite having apparently different floating value, Bhutan currency Ngultrum (Nu) is officially pegged at per with Indian Rupee. Moreover, India is the largest trade partner of Bhutan. Eventually, maintaining as high as possible reserve of INR is always a priority for Bhutan finance department. In order to ensure that, “Bhutan authorities prefer paying all in Nu that cannot be spent in India across the open border as Indian Banks don’t accept them,” said Badal Ghosh of Jaigaon(India), working in Bumthang, Bhutan. Ghosh is just one of several thousand victims of the situation.

“As a result, we are dependent on unofficial exchange facilities those charge as high as 15% illegal fee,” he complained. “This is the source of many crime scenario in border areas,” accepted senior police officials at border districts.

“The situation has aggravated manifold after severe depletion of INR reserve in Bhutan in recent past that forced the country to impose several restriction in outflow of INR including even ATM disbursements,” said a veteran trader from Indian town Jaigaon, the largest Indo-Bhutan border trade point.

As usual, neither Indian nor Bhutan border district administration could show of any properly set plan to resolve the crisis.

To bring Bhutan out of the medieval barter system of trading (Direct exchange of commodities) during 1961, India helped it out by providing currency notes those started circulating in Bhutan economy. But even after development of Nu in 1974, circulation of Rupee continued there.

In October 2004, after Indo-Bhutan border districts coordination meet, the then Divisional Commissioner of Jalpaiguri in West Bengal Mr. B Ram and Mr. Tshering Wangda, the then Joint Secretary of Ministry of Home of Royal Government of Bhutan, proposed Indian Finance Ministry and RBI to set up official exchange facilities. But, the proposal is yet to find any reality.