How You Remit Matters: A Simple Step with Outsized Impact

September 8 and September 9, 2025. In just under two days, the whole political climate shifted in Nepal. What started as a peaceful demonstration by the newly enfranchised Gen-Z demographic of Nepal devolved quickly into a bloody, violent ordeal after a disproportionate police response on the first day, and ended up razing the existing pillars of government by the end of the second. The prime minister resigned, ministers literally fled to the hills, and it ushered in a power vacuum that is being contested by numerous political actors and interest groups. Hope looms due to the way that the young generation and the interim leadership has taken the conversation forward, but a thick veil of anxiety hovers above it seeing how the big parties and their leaders are looking to weasel and strong-arm their way back into the leadership conversation.

As a Nepalese citizen living abroad, it was a hard 48 hours to endure as hope turned into horror and back. It was hard not being able to march alongside my peers and contribute to the movement by being physically present there. So, I did what many in my situation did and participated in the movement online, echoing the events on the ground, calling out against police brutality and the loss of lives and public property that followed, and espousing for a new transparent, orderly, and peaceful rebuild. In subsequent moments of introspection, I asked myself: what can I do, from afar, that truly strengthens Nepal in the long run? For me, the answer kept coming back to one thing: scrutinising the way we send remittances.

Why remittances are our strongest lever

Nepal, as it exists today, is heavily reliant on remittances. In 2023, migrant workers sent home around USD 11 billion, an amount equal to more than a quarter of the country’s GDP [1]. This figure is larger than exports and foreign investment combined, making remittances Nepal’s single biggest source of external financing. Remittances have played a huge role in maintaining household consumption, stabilizing our balance of payments, and shoring up foreign reserves at the central bank. Frankly, it is hard to overstate the importance of remittances in the current climate and the role they can play in helping build the Nepal we dream of and deserve.

This importance means that the way we send money to Nepal matters. As Non-Resident Nepalis (encompassing both citizens living abroad and those of Nepali origin), this is perhaps the most influential yet subtle way we can quietly shape Nepal’s future for the better.

The hundi system and its appeal

Hundi or hawala refers to informal money transfer networks operating outside the banking or regulated financial system. Agents abroad collect funds from senders and local agents in Nepal pay out equivalent amounts in rupees, often without foreign exchange ever officially entering Nepal’s banking reserves. Despite its risks, many still rely on hundi or hawala because the benefits are clear. Hundi operators promise better rates than banks, charge little or no fees, deliver quickly, and are often well-embedded within diaspora community networks. In recent years, they have become even more polished in their offerings by providing digital services through websites and apps, serving up advertisements directly on your social media feeds, and essentially appearing indistinguishable from legitimate businesses. For the average sender, they look professional and reliable.

So a natural question arises: if they get the money across reliably, what is the harm?

The real consequences of hundi

Using these channels is not a harmless shortcut. It carries consequences that undermine both the financial system and the wider economy, such as the follows:

Remittances through hundi never arrive as foreign exchange. Families may receive rupees in hand, but the hard currency is recycled elsewhere, leaving Nepal’s reserves weaker and making it harder for the country to pay for critical imports or maintain its exchange rate policy.
Hundi is often tied to money laundering and capital flight. The extra money you are offered above the market rate is not borne out of generosity or simply competitive forces. It is your commission “cut” for helping someone move their wealth out of the country undetected.
Hundi transactions carry hidden risks. There is no paper trail and no protection if something goes wrong. If money is shorted, delayed, or disappears entirely, you have no legal recourse.
Perhaps most importantly, hundi is explicitly illegal under Nepalese law. While prosecution of individual remitters is rare, this is nevertheless a crime, not just a convenient shortcut.

Given these risks, it is worth knowing how to tell if a service is really what it claims to be.

How to recognize hundi operators

Hundi operators often camouflage themselves as legitimate businesses, but there are patterns you can look out for. It is rarely obvious, so spotting them means asking questions and paying attention to:

exchange rates that are noticeably higher than what banks or established remittance firms are offering.
a lack of registration with Nepal Rastra Bank, even if they are licensed in your country of residence.
minimal paperwork or ID checks, and a willingness to transact entirely over messaging apps.
requests to deposit into personal bank accounts, or instructions to pick up cash from an informal location rather than a bank or money transfer office.
a predominant presence on social media, targeted to diaspora community groups, where they promise “instant transfers” and “best rates.”

If you see several of these signs, do your own research. Ask the provider directly for their NRB license details and see how they respond. In many cases, illegitimate providers change their tone or become evasive when confronted with that simple question.

What to use instead

The safest and responsible option is to stick with companies licensed by Nepal Rastra Bank. These include banks themselves and a range of authorized remittance companies such as IME, Prabhu, City Express, and eSewa Money Transfer. A complete list is publicly available on NRB’s website [2].

The list, however, is long and not very user-friendly. Many of the names listed are small exchange houses with little visibility abroad, and there is no easy way to link the remittance providers we see overseas with the entities registered in Nepal. Some providers are well known, but many are still opaque. Nepal Rastra Bank could certainly do more here by maintaining a more user-friendly and updated directory, by clearly highlighting the major authorized partners, and by making it easier for individuals abroad to verify whether a service is legitimate.

For individuals, there are still some clear steps:

Ask providers for their registration details in Nepal, not just in the country where you reside.
Look for clear receipts, transparent fees, and traceable deposits into named accounts. Check to see if the deposited amount is the same as the promised amount.
If you have used a service multiple times, check to see if sender details are different each time, or seem to come from accounts of individuals rather than businesses.
Prefer providers that credit funds into bank accounts or mobile wallets rather than relying on hand-delivered cash.
Be cautious of businesses that feel too casual, undocumented, or “under the table.”

However, individual level efforts can only get us so far in dealing with this issue, and the burden cannot rest on individuals alone. Policy response and especially their implementation needs to step in helping us curb this issue collectively.

Learning from other countries

Nepal is not alone in grappling with the problem of informal remittances. Many migrant-heavy economies have struggled with hundi or similar systems, and their experiences offer lessons. While problems still persist in these countries, the evidence shows that active policymaking can make a real difference, with the success of these policies hinging squarely on their implementation.

In Bangladesh, the government introduced a 2 percent cash bonus in 2019 for remittances sent through banks, later increased to 2.5 percent. An analysis finds this had a clear effect: inflows through formal channels rose immediately by 6.68% and continued to grow 0.25% month after month [3]. The incentive worked especially well for migrants in the US and UK, where the choice between legal and informal channels was clearer. This shows that small financial rewards can tilt behavior toward official systems, though other measures may be needed in places where hundi networks are deeply entrenched.

Pakistan took another approach through its Pakistan Remittance Initiative (PRI). Rather than rewarding senders directly, it reimbursed banks and exchange companies for handling remittances, making it free for migrants to send money through official channels. Banks then competed by offering slightly better exchange rates to remitters, which undercut hawala brokers. Over time, this helped shift billions of dollars into the banking system, showing that aligning incentives for financial institutions can also move the needle [4].

Elsewhere, the Philippines responded to the issue with structural changes. By building a wide network of formal payout points, from banks to pawnshops to convenience stores, and pairing this with financial literacy campaigns, the government made it almost effortless for overseas Filipino workers to use legal channels. The result is one of the most formalized remittance systems in the world.

While no single measure is likely to be enough, if the formal route becomes cheap, easy, and trustworthy, informal systems lose their edge over time.

Recommendations to policymakers

For Nepal, the message is that small changes can add up to big results if they are part of a broader strategy. The following steps, adapted from international experience, can help make the formal channel both more attractive and more impactful:

Short run Policies

Introduce modest financial incentives. A small rebate or bonus for remittances sent through licensed providers, similar to Bangladesh’s scheme, can directly encourage migrants to avoid hundi .
Make formal remittances cheaper. Work with banks and exchange companies so that fees are minimal or waived and allow providers to pass on small exchange rate premiums to remitters.
Run awareness campaigns. Use diaspora networks and digital platforms to explain how hundi harms Nepal’s reserves, and to show people how to verify whether a provider is licensed.
Highlight licensed providers. NRB should simplify its public list of authorized companies and make it easier to match overseas agents with their Nepali counterparts. This could be done through a searchable online directory or an app.

Long run Policies

Continue expanding digital options. Support banks and fintechs to develop easy-to-use mobile remittance apps and integrate with mobile wallets in Nepal, following models seen in the Philippines.
Strengthen regional cooperation. Negotiate with countries hosting large Nepali communities to regulate providers, share data, and close down unlicensed operators.
Channel remittances into investment. Develop diaspora bonds, savings products, or matching programs that encourage families to use part of their remittances for productive purposes.
Invest in financial literacy. Offer pre-departure orientation for migrant workers and continuous outreach abroad to build trust in the formal system and awareness of available incentives.

These steps can help Nepal make formal remittances the natural choice for migrants and their families, while also turning those flows into a stronger foundation for long-term growth. While some of the above have been considered by relevant authorities, their implementation needs to improve significantly to see real results.

Conclusion

The temptation of hundi is very understandable from an individual’s perspective. They are easier to access by everyone regardless of the legality of their visa status abroad. They provide a better rate, the benefits of which can compound over time. And the service often works reliably too. But the price of complicity in this process is a severely weakened financial system in Nepal over the long run.

By choosing licensed channels, we give up a small personal advantage but create a much larger collective one. Every dollar sent home through the right channels is a dollar that strengthens Nepal’s reserves, supports imports, and bolsters the future economy. That money used prudently could build classrooms, fund hospitals, and power our infrastructure.

In moments when we feel far away from Nepal’s struggles and search for ways to contribute to its healing, this may be the simplest and most powerful act we can choose.

( I acknowledge the use of ChatGPT in this article for the purposes of light-editing, grammar-checking, and converting the article to a markdown format. I have checked and verified published content thoroughly. As such, all remaining errors are my own. )