Kathmandu, November 9
Following the decision of the Indian government to ban 500- and 1,000-rupee notes, Nepal Rastra Bank today notified banks and financial institutions, money exchange counters and other agencies not to exchange or sell notes of such denomination in the country.
Besides banning exchange and sale of high-denomination Indian currency, the central regulatory and monetary authority wrote a letter to its Indian counterpart Reserve Bank of India with a copy sent to the Indian Embassy in Kathmandu, seeking an amicable solution to surrender such currency notes carried to Nepal, according to Bhishma Raj Dhungana, executive director of Foreign Exchange Management Department of NRB.
While there is uncertainty among Nepalis holding high-denomination notes of Indian currency regarding the exchange facility, NRB has said it would be able to issue a notice to the public only after it receives a positive response from RBI.
“Only after that can the central bank collect currency notes of such denominations from the public, BFIs and other agencies and surrender them,” said Dhungana.
NRB officials are unsure when RBI will respond on the matter, as the time taken by the Indian central bank to respond to NRB ranges from a couple of days to weeks, depending on the issue.
“What we are going to do with the high-denomination Indian currency notes in Nepal will be decided based on RBI’s response,” he told THT.
To expedite the process, NRB has also requested the government to explore diplomatic avenues. NRB today requested the Ministry of Foreign Affairs and Ministry of Finance to take diplomatic initiative to surrender the banned Indian currency.
Bharat Poudel, spokesperson for the MoFA, said the ministry would definitely initiate the process to talk with the Indian government to seek a way out.
Back in 2000, when the Indian government had banned export of high-denomination Indian currency notes to Nepal, the matter related to surrendering such currency was settled through prime minister-to-prime minister-level talks.
NRB does not have an exact figure of the amount of INR 500 and INR 1,000 notes that are in holding in Nepal.
As the Indian government allowed Nepalis and Indian nationals to carry up to INR 25,000 to Nepal, the central bank has assumed that there is a substantive amount of currency with general people, as well as with money changers, BFIs, hotels and restaurants, among others.
A version of this article appears in print on November 10, 2016 of The Himalayan Times.