Money

India Banknote Ban: Govt clueless about IC exchange facility

  • Panel to hold talks with India
- Post Report, Kathmandu

Dec 19, 2016-

The December 30 deadline issued by the Indian government to deposit banned Indian banknotes of 500-rupee and 1,000-rupee denominations in financial institutions is fast approaching, but the government here is clueless about providing exchange facility to Nepalis holding the banned Indian currency.

To deal with this issue, the Ministry of Finance formed a four-member committee under Chintamani Siwakoti, deputy governor of the Nepal Rastra Bank (NRB), last week and gave it permission to hold talks with the Indian government and central bank officials. The committee also comprises officials of the Ministry of Finance, the Ministry of Foreign Affairs and the NRB. 

“However, the date of our visit has not been finalised yet,” Siwakoti told the Post. 

It is said that the Finance Ministry had formed the committee after holding talks with the Indian Finance Ministry. But the Indian ministry has not fixed the date for the meeting, a high-ranking Finance Ministry official said.

“In the meantime, we were recently told that Nepal’s Ambassador to India [Deep Kumar Upadhyaya] had met with Indian Foreign Secretary S Jaishankar and discussed this issue,” a high-ranking Finance Ministry official said.

“During the meeting, our ambassador was told that a solution would be made available in a few days. So, we are in a wait-and-watch mode.”

The Indian government on November 8 took a surprise decision to pull IRs500 and IRs1,000 out of circulation. A day after that NRB also banned circulation of banknotes of those denominations in Nepal.

Following this, the government had officially requested India to provide exchange facility to Nepalis holding banned currency here in the country. The Indian government had then said an inter-ministerial task force formed to scout ways to deal with the issue would come up with a solution. But nothing has happened till date.

The central bank has said the country’s banking system, including banks, financial institutions and NRB, has IRs33.6 million in the denominations of 500 and 1,000.   

But actual stock of banned Indian bank notes is expected to be much more because Nepalis were previously allowed to carry Indian 500- and 1,000-rupee bank notes worth up to IRs25,000. Also, those residing in areas bordering India usually stash Indian notes of larger denominations as they have to frequent Indian markets to buy goods.

To make exchange facility available to Nepalis holding banned Indian currency, NRB has already prepared software to keep a database of names of people who came seeking exchange facility, serial number of bills of IRs500 and IRs1,000 submitted by the people, and their identification numbers, among others.

“We have already told the Indian side that exchange facility of up to IRs25,000 should be made available to Nepalis here because they were legally permitted to carry Indian currency up to that limit,” said an NRB official.

Panel to hold talks with India

KATHMANDU: A four-member committee formed under Chintamani Siwakoti, deputy governor of the Nepal Rastra Bank (NRB), to hold talks with the Indian government and central bank officials has been given the mandate to discuss the issue of supply of Indian banknotes of 100-rupee denomination to Nepal. 

The committee was formed by the Ministry of Finance last week. After banning the circulation of currency of larger denominations, India had halted supply of banknotes of 100-rupee denomination, citing shortage of physical notes in the country. Because of this, long queues have started forming at NRB’s Thapathali office, which provides exchange facility to Nepalis visiting India. 

“We want the Indian government to resume supply of banknotes of 100-rupee denomination because Nepalis visiting India for various purposes need some cash while travelling,” a high-ranking official of the Finance Ministry said. (PR)

Published: 19-12-2016 08:59

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