Coping with coup

At a time when banks operate more by transmitting information—instead of physical transactions—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 can’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 Nepal’s main banks—Everest, Standard Chartered, Nabil and Nepal Banijya—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 Bank—Nepal’s central bank—that at least electronic communication through the Swift code system should be spared the clampdown.

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. ‘‘All we know that remittances are in the pipeline but nothing more,’’ 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. ‘‘But with people drawing out cash and no confirmation of the quantum of remittances, there could be a serious liquidity crunch in the market,’’ the banker said.

The past two days have seen local telephone lines being hesitantly restored for about 90 minutes—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 ‘‘payment on sight’’.

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 can’t make bookings over the Internet.

For some, the storm may pass. For Nepal’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. ‘‘Our clients will now move to India or southeast Asia,’’ predicted the head of a Thamel BPO. ‘‘Who will want to come here now?’’

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, it’s politics in command.