Demoneteized Indian banknotes in Nepal

India's silence over exchange facility frustrates NRB officials

Published On: May 25, 2017 01:50 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, May 25: Nepal Rastra Bank (NRB) officials have almost given up hope that the southern neighbor would accept demonetized Indian banknotes that Nepalis hold.

Though it has already been a month since the NRB made an official request seeking exchange facility for up to IRs 4,500 per person, India has not responded yet.

Frustrated with the delay in India’s response to their request of providing exchange facility for up to IRs 4,500 per person as agreed by a visiting Indian government team, the officials also urge the government to raise the issue at government level.

“We are yet to get any response from the Indian side to our request regarding the exchange facility,” Bhisma Raj Dhungana, an executive director with the NRB, told Republica. “We have been following up the issue. Since this is not something that is on the hands of Reserve Bank of India (RBI) -- the Indian central bank -- alone, the issue should be taken at the government level,” Dhungana, who heads the Foreign Exchange Department of the NRB, said.

After an initial reluctance to accept RBI’s offer of providing exchange facility for up to IRs 4,500 per person, the NRB had sent a formal letter on April 13, requesting the RBI to initiate the process of currency swap in line with the Indian proposal. However, it has not got any response on its formal response yet. 

While the Indian delegation, which was second from India to discuss over the issue, had offered the exchange facility of up to IRs 4,500, Nepali team leading the negotiation had sought exchange facility of up to IRs 25,000 that Nepali citizens can carry legally. With both the sides failing to reach consensus over the ceiling for exchange facility, the Nepal side had told the Indian side that they would get back to them with a formal response on their request. 

“We sent the letter in line with their offer during the negotiation. However, I do not understand why it is taking so long for them to respond or whether they would really respond at all,” said Dhungana. 

It has been more than six months since the Indian government withdrew legal tender of Indian banknotes of 1,000 and 500 denominations, making the fate of such Indian currency held by Nepali nationals uncertain. Before the demonetization came into effect, Nepali nationals were allowed to carry of up to IRs 25,000. 

Numerous attempts from the central bank, the Ministry of Finance and even a telephone conversation between the prime ministers of the two countries have failed to yield to any result.

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