Coping with coup

The King8217;s clampdown on Maoists has hit card-holders of a different kind.The Nepal monarch may have intended only to deny his political...

The King8217;s clampdown on Maoists has hit card-holders of a different kind.

The Nepal monarch may have intended only to deny his political adversaries the oxygen of publicity when he froze the country8217;s telecommunications network, but he has inadvertantly crippled ATM and credit card transactions and brought banking to its knees.

At a time when banks operate more by transmitting information8212;instead of physical transactions8212;the move to paralyse the Internet, phone lines and fax machines has had a devastating fallout.

Credit cards cannot be accepted as there is no way to get bank approval. The electronic swipe system does work. ATM cards cannot be used and Letters of Credit LCs cannot be encashed as banks can8217;t confirm the goods have been received.

So post-February 1, bankers no longer push buttons on a keypad to communicate. They use runners.

Every morning, the cars parked outside Nepal8217;s main banks8212;Everest, Standard Chartered, Nabil and Nepal Banijya8212;make a strange sight. Top bank executives pass on message chits to their drivers, who flit from bank to bank and branch to branch, carrying instructions and confirming transactions.

Standard Chartered has petitioned the Rashtriya Nepal Bank8212;Nepal8217;s central bank8212;that at least electronic communication through the Swift code system should be spared the clampdown.

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And for a country whose people work elsewhere so that they can send money back home, even the lifeline of remittances is now snapping. A top banker told The Sunday Express that now there was no way to confirm what amount had been sent. 8216;8216;All we know that remittances are in the pipeline but nothing more,8217;8217; he said.

Inward remittances in Nepal are to the tune of 10-15 million every week and outward ones in the 8-10 million range. The Rashtriya Nepal Bank buys around 8 million every week to suck out liquidity from the market. 8216;8216;But with people drawing out cash and no confirmation of the quantum of remittances, there could be a serious liquidity crunch in the market,8217;8217; the banker said.

The past two days have seen local telephone lines being hesitantly restored for about 90 minutes8212;they were on for close to three hours today. This facility was used mainly for relatives to call each other up and confirm that all was well. With international and mobile calls frozen all the time and even local phones on the blink most of the time, businesses were suffering.

Local manufacturers cannot send goods out of the Valley as they have no idea if their dealers need to replenish stocks. Since LCs are not being honoured, business establishments demand 8216;8216;payment on sight8217;8217;.

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Cut to the tourism industry. Airlines cannot confirm tickets as the online reservation system is out. Tickets are being given on first come first served basis, with passengers paying in cash. Incoming tourists can8217;t make bookings over the Internet.

For some, the storm may pass. For Nepal8217;s fledgling BPO industry, this could spell the end. With ISDN lines down and broadband links cut, the mood in and around Thamel, home to some 200 BPO companies, is black. 8216;8216;Our clients will now move to India or southeast Asia,8217;8217; predicted the head of a Thamel BPO. 8216;8216;Who will want to come here now?8217;8217;

And no one seems to care. With a growth rate of three per cent and foreign reserves of just 1.7 billion, Nepal needed the business. For the moment, it8217;s politics in command.