The morning after the 7.8 magnitude earthquake of April 25, 2015, Nepalese bank executive Sashin Joshi got a call from a customer asking when the bank was opening. “He said ‘I’ve got Nrs30m [$285,000] at home and I want to deposit it in the bank’,” recalls Mr Joshi, the chief executive of Nabil Bank, Nepal’s biggest private bank measured by profits.
One might wonder why a Nepali businessman would have Nrs30m stashed away at home when there are plenty of reputable banks in the country. “The reason was that the parallel economy in this country is huge,” says Mr Joshi. Nepal’s parallel economy is an estimated 30% to 40% of gross domestic product (GDP), with many business transactions kept off the books to avoid taxes and excess scrutiny.
