Remittances are generally thought to contribute to savings and investments thus
leading to economic growth. In 2004, officially recorded remittances flows to
developing countries were greater than US$ 125 billion. The rise in remittances,
that are less affected by economic cycles in the recipient country, are taking place
at a time of declining official development assistance which adds more
significance to the remittance debate and research. The various uses of the
remitted funds vary in their potential to reduce poverty and create economic
security for the household and community. In Nepal’s case, in more recent years,
remittances have been playing a pivotal role in the country’s economic
development by relaxing the foreign exchange constraints and strengthening the
balance of payments, among others. Although a gamut of policy measures have
been taken by the concerned authorities for encouraging remittances through the
banking channel, more needs to be done.