Indian embassy in Nepal assuages concerns about demonetised notes

Kathmandu, Nov 24 (IANS) Amid worry over India’s move to demonetise 500 and 1,000 rupee notes, that has affected tens of thousands of Nepalese who work in India, the Indian embassy here held an informal meeting with Nepali businesspersons to assuage concerns.

During the unofficial meeting with Nepali businesspersons on Wednesday, officials of the Embassy of India in Kathmandu said their government was positive about allowing each Nepali citizen to exchange Rs 500 and Rs 1,000 worth up to Rs 25,000 with legal bills here, the Kathmandu Post reported.

The Nepal Rastra Bank (NRB) had suggested that exchange facility should be provided to Nepalese holding the banned Indian banknotes of 500 and 1,000 here in Nepal.

Indian Prime Minister Narendra Modi on November 8 announced scrapping of the high value currency notes to curb the black money menace and terror finance.

“We have forwarded the modality prepared by the NRB to our central government and have received positive response,” a leading businessperson quoted an embassy official as saying, according to the Post.

India is cautious about providing exchange facility to citizens of a foreign country, as it could be used as “a clearing house” to convert counterfeit currency into legal tenders, the businessperson said on the condition of anonymity.

“But we tried to convince Indian officials that there was very little chance of Nepal being used for that purpose because the payment is made in Nepali currency, which is of no use in India,” he said. “Also, the embassy looks convinced with the modality prepared by the central bank.”

The central bank in its modality forwarded to the Indian government had said it planned to collect recently banned Indian 500 and 1,000 rupee notes from Nepali citizens and send them to the Reserve Bank of India (RBI) for verification before offering equivalent exchange in Nepali currency.

The NRB has clearly stated that it will not provide over-the-counter exchange facility for Nepalese holding banned Indian currency, saying it lacks expertise and technology to identify counterfeit Indian currency.

As per the NRB’s modality, Nepalese citizens have to open accounts at banks and financial institutions and deposit the demonetised Indian currency to receive the equivalent exchange directly in their bank accounts.

The modality was prepared by a technical committee formed under the leadership of its Deputy Governor Chintamani Siwakoti last week as per the request made by Indian Embassy of India in Kathmandu.

The Indian government has also formed a task force under the leadership of the RBI to come up with a modality to address the problems being faced by people of Nepal and Bhutan where the circulation of the banned Indian notes is high.

Earlier, Prime Minister Pushpa Kamal Dahal ‘Prachanda’ and Finance Minister Krishna Bahadur Mahara through telephonic conversation had urged their Indian counterparts to arrange exchange facilities in Nepal as Nepalese have a large stock of Indian 500 and 1,000 bank notes.

The NRB has said that Nepal’s financial system holds Rs 33.6 million in the denominations of Rs 500 and 1,000. The amount includes cash kept in the vaults of banks, financial institutions and the central bank.

The actual amount of the banned Indian bank notes in Nepal is expected to be much higher as Nepalese were previously allowed to carry up to Rs 25,000.