Nepal tells India officials: It’ll take at least 10 days to exchange defunct notes

The Nepal government still remains clueless about providing exchange facility to Nepalis holding the banned Indian currency

Dec 23, 2016-Nepal has conveyed to India that at least 10 days will be required to exchange the defunct Indian banknotes of 500 and 1,000 denominations held by Nepali citizens and the country’s financial system. Nepali Ambassador to India Deep Kumar Upadhyay conveyed the message during talks with officials of the Indian Ministry of Foreign Affairs.

With only seven days left until December 30, the deadline set by the Indian government to deposit the demonitised banknotes, the Nepal government remains clueless about providing exchange facility to Nepalis holding the banned Indian currency.

However, Indian government officials have assured that they would facilitate in exchanging higher denomination Indian notes being held by Nepali citizens. “We have demanded at least 10 days to exchange the old notes. We have informed them that considerable time is needed to exchange the old notes in the rural areas where there is no banking facility,” Upadhaya told the Post. “We are waiting for a formal decision of the Indian government in this regard.”  

According to informed sources, there could be two options for exchanging the banned Indian notes held in Nepal if the Indian government does not take any decision in the remaining seven days. First, an extension of the December 30 deadline by the Indian government to allow Nepal and Bhutan to exchange the banned Indian notes into the legal tender. Secondly, New Delhi could come out with a separate arrangement for the two neighbours in case the deadline is not extended.  

However, there is no word from the Indian establishment yet on extension of December 30 deadline. It has tightened the exchange facility, imposing limits on deposits of the banned 500 and 1,000 banknotes. 

According to officials, the Indian establishment is delaying a decision on extending exchange facility to Nepal and Bhutan considering a possibility that black money in India could be laundered into Nepal through open border. However, Nepali officials are trying to convince their Indian counterparts that a strong security mechanism will be in place to check those activities.

The central bank has said the country’s banking system, including the Nepal Rastra Bank and financial institutions, has IRs33.6 million in banned 500 and 1,000 banknotes. 

But actual stock of the now-defunct Indian notes is expected to be much more because Nepalis were previously allowed to carry 500- and 1,000-rupee Indian banknotes worth up to IRs25,000. 

Also, those residing in towns bordering India usually stash Indian notes of larger denominations as they have to frequent Indian markets to buy daily essentials.

Published: 23-12-2016 09:29

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