Print Edition - 2014-11-26 | MONEY
India okays use of 500, 1000 IC notes
Nov 25, 2014-
India will soon withdraw the ban on the use of Rs 500 and Rs 1,000 Indian currency (IC) notes in Nepal, said Indian Prime Minister Narendra Modi on Tuesday. The southern neighbour will allow travellers to Nepal to carry these high denomination notes up to a maximum of IRs 25,000.
The move will make it convenient for people who need to bring large sums of cash to Nepal, he added. The relaxation in the rule is expected to benefit particularly Nepali migrant workers returning from India as they will be saved the hassle of carrying large amounts of notes. Presently, the highest denomination travellers are allowed to carry with them is Rs 100.
Modi, who is on a visit to Nepal to attend the Saarc Summit, also announced at a programme that the trauma centre which was built with Indian aid would be handed over to Nepal.
Nepal Rastra Bank (NRB) Deputy Governor Gopal Kafle said the removal of the ban on the use of IC, provided it also applies to Nepali citizens, would help mainly Nepal-bound Nepali migrant workers from India as they have been facing safety problems when bringing back money with them.
He added that it could help boost the inflow of Indian tourists to the country. “As there is poor banking access in many rural areas of the country, the provision will eliminate the compulsion of carrying a huge amount of small denomination IC notes,” he said. Kafle added that it could also help prevent black marketing in IC in rural areas. “It could discourage those who hold high denomination notes to sell them on the black market.”
According to NRB, the Indian ban on the use of high denomination IC notes has existed since 2001. India imposed the ban on the use of Rs 500 and Rs 1,000 denomination notes due to concerns over the possible circulation of counterfeit notes.
Kafle ruled out the possibility of counterfeit notes being circulated if vigilance is maintained in the bordering areas and at the airport customs.
“If the administration in the areas enforce a strict mechanism, the circulation of fake IC can be controlled to a large extent,” said Kafle, adding that banks could also use machines that detect fake notes to remove them from circulation.
Similarly, Suman Pokharel, chief executive officer at International Money Express (IME), said that the removal of the ban would facilitate remittance inflow mainly from India. “Since transferring money is yet to be done entirely through banking channels, allowing the use of high denomination IC notes could help simplify transactions.” Pokharel, however, expressed doubts over the ability of the authorities to control the possible circulation of fake IC notes.
Published: 26-11-2014 13:01