Demonetized Indian banknotes

India agrees to provide Nepalis exchange facility up to IRs 4,500

Published On: March 27, 2017 12:10 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Mar 27: India has agreed to provide Nepalis exchange facility of up to IRs 4,500 per person.

In a discussion with Nepal Rastra Bank (NRB) officials in Kathmandu on Sunday, the visiting Indian Reserve Bank (RBI) delegation has agreed to provide exchange facility of up to IRs 4,500 per person, a higher official of the central bank told Republica. "But the final talks will be held on Monday," the official said, adding that the figure could increase or decrease after negotiations.

The RBI delegation, which arrived in Kathmandu on Saturday, held discussions on extending exchange facility to Nepalis. Nepalis have been in confusion on whether they will get exchange facility for the banned Indian banknotes of 500 and 1,000 denominations in their possession. The three-member delegation led by a RBI director held discussion with the NRB team led by Deputy Governor Chintamani Siwakoti. 

The delegation told the NRB officials that they provided exchange facility of up to IRs 4,000 in India. The Nepali side proposed India to provide exchange facility of up to IRs 25,000 per person which the Indian team rejected outright.

This is the second time that the Indian team visited Nepal to hold talks on providing exchange facility to Nepalis holding demonetized Indian banknotes. A Nepali team led by Siwakoti also had visited India to discuss the issue. 

India fears that Nepal could be used as 'a clearing house' to channel illegally amassed demonetized banknotes into its financial system.

The Indian government had demonetized its largest currency notes from December 31 last year to combat black money. However, India's move has hit Nepalis hard as they have been holding the Indian currency for various purposes. According to the central bank, Nepal's financial system holds demonetized Indian banknotes worth IRs 33.6 million. The figure includes only cash parked at banks, financial institutions and the central bank. It is not known how much scrapped Indian notes Nepali traders, families of migrant workers and general public hold as the central bank had allowed Nepalis to carry IRs 500 and IRs 1,000 currency notes worth up to IRs 25,000.

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