Shortage of Indian banknotes

NRB bringing IRs 1b by Jan-end

Published On: January 5, 2017 11:16 PM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Jan 6: Nepal Rastra Bank (NRB) is bringing in Indian Rs 1 billion from India to improve the supply of Indian currency which has worsened following the Indian government's November 8, 2016 decision to withdraw 1,000- and 500-rupee banknotes from circulation.

Janak Bahadur Adhikari, an executive director at the central bank, told Republica on Thursday that the central bank was planning to bring in a consignment IRs 1 billion in 100-rupee banknotes by the end of this month. "“e will send a team to bring the Indian banknotes soon,"”Adhikari, who heads the Banking Office Department of NRB, said. "“e expect the consignment to arrive by the end of January."

With the stock of Indian currency at the NRB vaults plunging in the wake of the ban on 500- and 1,000-rupee denomination Indian banknotes, the central bank reduced the exchange limit on Indian banknotes for individuals heading to India.

The Indian government tightened the supply of Indian currency to Nepal in the wake of problems in supply management in its territory due to demonetization of IRs 1,000 and IRs 500 banknotes. There have also been news reports that difficulty in getting Indian 100-ruupee denomination banknotes had been fueling a black market in such currency.

With its stock of Indian currency depleting, the central bank has been providing the general public exchange facility for up to IRs 2,000 only. A few days ago, one could exchange up to IRs 5,000.

However, those with urgent requirements -- for example people going to India for medical treatment or pilgrimage -- can exchange up to IRs 10,000. Earlier, such people used to get up to 25,000 Indian rupees. Patients who need more can get up to IRs 25,000 after furnishing documents from their doctors or hospitals. Earlier, such patients could get up to IRs 50,000.

Similarly, the central bank has barred money-changers from providing such exchange services.

The import of IRs 1 billion is likely to ease the supply of Indian currency for those heading to India for education, medical and other urgent purposes.

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