Kathmandu, January 28

Despite the Indian government's positive response in allowing the use of recently issued high denomination Indian banknotes in Nepal, the Nepal Rastra Bank (NRB) seems reluctant to bring the high denomination Indian currency in use.

NRB has not lifted the ban on use of high denomination Indian currency notes that was imposed on November 9 last year, immediately after the move of the government of India to cancel legal tender of INR 500 and INR 1,000 notes.

During the talks with the NRB deputy governor led panel, which had visited India in the second week of January, the Ministry of Finance, India, had said Nepal could legalise the use of new INR 500 and INR 2,000 banknotes based on the previous announcement of the Indian government in November 2014.

The central bank had then on February 24, 2015, allowed Indian or Nepali nationals to carry high denomination Indian banknotes of up to INR 25,000.

However, NRB has said that the ban in use of high denomination Indian banknotes will not be lifted until the Indian government provides exchange facility for the now-demonetised Indian notes that are in Nepal. The government had formed the panel comprising joint secretary of the Ministry of Finance, executive director of Foreign Exchange Management Department of NRB and economic counsellor of Nepali Embassy in New Delhi to sort out the issue of exchange facility with India.

However, the Indian government has not given any positive clue regarding the exchange facility for Nepal yet. Indian currency is widely accepted in Nepal and Bhutan in South Asia. "Until and unless the country gets exchange facility of demonetised notes that were circulated in Nepal, NRB will not lift the ban on use of high denomination Indian banknotes within the country," a high level source at NRB told The Himalayan Times.

Meanwhile, NRB has sent the modality of INR exchange facility to Indian Finance Ministry slapping the stringent rules as recommended by the Indian authorities during talks held in Delhi in second week of January. In response, the Ministry of Finance, India has said the Indian government will take a decision in this regard only after the submission of budget in the parliament.