The Reserve Bank of India (RBI) has asked the Nepal Rastra Bank (NRB) to provide details of the stock of Indian currency in denominations of 500 and 1,000 in the Nepali financial system. 

The RBI’s query comes two days after India pulled 500 and 1,000 rupee notes from circulation.

Indian Prime Minister Narendra Modi on Tuesday announced that 500 and 1,000 rupee notes would be withdrawn from circulation effective Tuesday midnight “to crack down on rampant corruption and counterfeit currency”. Following the Indian government’s surprise decision, the NRB also banned the use of those bank notes in Nepal effective from Wednesday.

 Bhisma Raj Dhungana, head of the foreign exchange management department of the NRB, said the central bank has informed the RBI that around IRs 35 million in the denominations of 500 and 1,000 is within the formal financial system in Nepal. 

“The figure is based on the details submitted by the banks and financial institutions and money changers,” said Dhungana. “It also includes the denominations that the NRB possess.” Dhungana, however, said the RBI’s query regarding the stock of Indian currency in the denominations of 500 and 1,000 had not come in response to an official letter written by the NRB to the central bank of India to provide a certain time limit for Nepalis holding those abolished bills to exchange them with legal bills here in the country. “We are yet to receive a response on that matter,” said Dhungana. 

Though the amount of banned Indian currency in Nepal’s formal financial system has been reported to be IRs 35 million, the stock of such bills with Nepalis could be much higher, say officials. 

Prior to the ban, Nepali citizens were allowed to carry Indian bank notes of 500 and 1,000 denominations worth up to IRs 25,000. So, chances of many Nepalis possessing bank notes of these denominations are quite high, said an NRB official. Also, those residing in areas bordering India usually stash Indian notes of larger denominations as they have to frequent Indian markets to buy goods. 

It is essential to exchange these bills at the earliest as the Indian government set a deadline of 50 days to deposit the scrapped notes at banks and postal offices. 

Meanwhile, some business people in the country who have trade relations in India are learnt to have met officials of the Embassy of India in Kathmandu to enquire about the ways to exchange the banned Indian bills. “We had an informal meeting with Indian embassy officials,” said a leading businessman of the country. 

On Wednesday, officials from the central bank and the Embassy of India in Kathmandu also held talks to  discuss the matter.