Nepal's monarch has frozen the country's telecommunications network as part of the state of emergency he declared after losing patience with the government for its apparent inability to organise elections and clampdown on Maoist insurgents.

As a result, the monarch has crippled large parts of the banking system, from letters of credit (L/Cs) to ATM and credit card transactions.

No cash

Now that banks operate to such as large extent by telecommunicating information rather than using physical communications, the king's actions have had devastating impact on Nepal's banks and their customers.

It is impossible to encash L/Cs because banks cannot confirm the goods have been received. Credit cards cannot be accepted, because there is no way to get bank approval and since the electronic swipe system does work, ATM cards cannot be used.

Messengers

A limited number of transactions have been progressed or completed since 1 February, some of them because banks have started to use messengers to communicate.

Sources in Katmandu report cars going to and from Nepal's main banks, including Everest, Standard Chartered, Nabil and Nepal Banijya, running messages between the banks and parties to transactions.

Swift petition

Standard Chartered has reportedly petitioned the Rashtriya Nepal Bank (Nepal's central bank), asking for electronic communication through the SWIFT code system to be enabled.

Since L/Cs are not being honoured, traders are demanding payment on sight terms, which presents just one in a catalogue of problems facing them. Local exporters for example cannot send goods out of Nepal because they have no idea if their dealers need to replenish stocks.

Clampdown

On 1 February, Nepal's King Gyanendra declared a state of emergency, placing political leaders under arrest, cutting phone links, censoring the media and deploying troops on the streets.

He fired the government for failing to organise elections or to end the nine-year Maoist insurgency.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.