India to legalise all IC notes in Nepal

- POST REPORT, Kathmandu
India to legalise all IC notes in Nepal

Nov 8, 2014-

India is ready to legalise the use of 500- and 1,000-rupee Indian currency (IC) notes in Nepal, The Hindustan Times reported in its online edition on Friday.  Such a move would help Nepali migrant workers to bring the Indian banknotes to Nepal without any fear.

Although Nepal has long been demanding such a provision, India has  been reluctant to do so stating it could encourage the smuggling of fake IC notes. At the Indian government’s request, Nepal Rastra Bank (NRB) has prohibited the use of 500- and 1000-ruppe IC notes in the country.

According to the report, the issue was agreed upon in principle at a meeting of the Directorate of Revenue Intelligence (DRI), Reserve Bank of India and the Finance Ministry.

Quoting sources, the newspaper reported: “For all practical purposes, the issue was agreed upon in principle. After the PM (Prime Minister Narendra Modi) clears it, the government will soon make an announcement to that effect.”

India’s Department of Economic Affairs had hosted the meeting last Monday to discuss the matter.

Although the DRI raised concern about further proliferation of fake IC notes, the meeting ended with assurance such concerns would be taken care of, according to the report.

Nepal Rastra Bank (NRB) officials said India has not yet informed them about the development in written, but had told in informal communication that a process was underway to change the existing legal provision that bars the use of the IC notes in Nepal.

“Officials of the Reserve Bank of India have informed the amendment in the existing law is likely to allow only Indian nationals visiting Nepal to use IC notes denominated 500 and 1,000,” said the a senior NRB official. “It may not be a full-fledged legalisation.”

Nepal has long been asking the Indian side to relax the current provision as Nepali migrant workers have to return back Nepal with IC notes with smaller denominations, which makes it difficult for them to keep their earnings away from thieves and pickpocketers en route.

Nepal’s central bank has been raising the issue time and again with its Indian counterpart. “We have also asked the Indian embassy to take necessary initiative on this front,” said the NRB official.

Besides, NRB has also asked the Indian side to arrange an exchange facility for Nepali migrant workers along the Nepal-India border, according to NRB Deputy Governor Gopal Kafle.

“We have also talked with State Bank of India for the same,” another NRB official said.

Published: 09-11-2014 09:22

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