NRB urged to initiate foreign exchange intervention

Kathmandu, November 21

Private sector players have asked Nepal Rastra Bank (NRB) to initiate foreign exchange intervention to bring INR 500 and INR 1,000 notes in possession of the public and traders near border areas within the banking channel and provide effective exchange facility at the earliest.

Organising a press conference here today, officials of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) said that a large number of general public and traders in far-western region of Nepal and other areas bordering India have large volume of INR 500 and INR 1,000 notes in holding ‘for regular trade, transactions, medical checkups, among others’, for which the government should take the responsibility of managing exchange facility.

“Due to Nepal’s open border with India and regular flow of people to and from the southern neighbour, many Nepalis have some stock of INR 500 and INR 1,000 notes for daily transactions, which could amount to billions,” Pashupati Murarka, president of FNCCI, said adding that NRB and the government should address people’s dilemma and manage the exchange facility for the now demonetised notes.

Murarka said that the government, through any means, should bring the Indian currency in holding with the general public within the banking system and manage exchange facility.

Chandi Raj Dhakal, former president of FNCCI, said that many Nepali migrants who work in India are also likely to possess a huge chunk of demonetised Indian currency.

Meanwhile, NRB Spokesperson Narayan Prasad Paudel said that Nepalis holding a large amount of INR 500 and INR 1,000 notes were flouting the government provision which allows those travelling to Nepal from India to carry only up to INR 25,000 with them. However, Paudel said that NRB is preparing an effective modality to bring legal money of the public into the formal system and offer exchange facility. “We are in constant touch with our Indian counterpart — Reserve Bank of India (RBI) — to sort out the INR exchange issue,” Paudel said.

On the occasion, Anil Keshary Shah, president of Nepal Bankers’ Association (NBA), said that the INR exchange issue has to be sorted out through a political intervention. However, Shah said that banks are ready to bring INR 500 and INR 1,000 notes from the market in their channel if the central bank directs the financial institutions to do the same.