Nepal will get to exchange demonetised Indian currencies: Jaitley

KATHMANDU: Nepal will get to exchange the demonetised Indian currencies that were legally in circulation, India's Finance Minister Arun Jaitley said here in Kathmandu on Friday.

Speaking to media today, the Indian minister, who addressed the Nepal Investment Summit in Kathmandu yesterday as a keynote speaker,  said the issue apropos to the exchange of demonetised Indian bank notes of denomination 500 and 1000 will be resolved after central banks of two countries -- Nepal Rastra Bank and Reserve Bank of India -- work out on a modality, the Rastriya Samachar Samiti reported.

It is believed that Nepali banks and financial institutions had a stock of Indian currency, worth billions of rupees, in the high-denomination notes, that were banned by the Indian government on November 8 last year.

According to the NRB, INR 78.4 million in high denomination was in the financial system and government mechanisms. There is no estimate of money that the general people possessed, but it is believed the fortune is worth millions.

Earlier, Nepal Rastra Bank had written to the Indian side -- Reserve Bank of India and Ministry of Finance of India -- seeking exchange facility of the demonetised banknotes. In response, India reportedly formed an inter-ministry committee comprising officials from the Ministry of Finance, Ministry of External Affairs and officials from the RBI to study the modality to provide exchange facility for Nepal.

Nepal too formed a panel, led by the deputy governor of NRB, to sort out the issue of demonetised Indian currency, which went to New Delhi to meet with the Indian authorities seeking exchange facility for the banned notes.

During the meeting, the Indian officials had shown concern about chances of ‘black money’ flowing back into the system through Nepal. In response, the panel members submitted a revised exchange modality with stricter provisions to ensure only genuine people availed the exchange facility.