New Indian Rs 500 and Rs 2,000 notes banned in Nepal

Mangalore Today News Network

Kathmandu, Nov 24, 2016 : At a time when Nepalese citizens are facing problems in exchanging withdrawn Indian notes of Rs 500 and Rs 1,000 denomination, the country’s central bank on Thursday banned the exchange of India’s new Rs 500 and Rs 2,000 currency notes.

 

The Nepal Rastra Bank said the new Indian notes cannot be exchanged until the Reserve Bank of India (RBI) issues a new notification under the Foreign Exchange Management Act. Such a notification allows citizens of foreign countries to hold a certain amount in Indian currency, officials said.

Ramu Poudel, the Nepal Rastra Bank’s chief for the eastern region, told members of the business community in Biratnagar that the new Indian rupees are considered “ illegal” and cannot be exchanged until new arrangements are made by the Indian side.

“As of now, our understanding with the Reserve Bank of India is that a Nepali citizen can hold up to Indian Rs 25,000 (in the) old Rs 500 and Rs 1,000 notes. Even the fate of those old notes is uncertain, how can these new Indian notes coming into the market be considered as legal?" Poudel said.

No agreement has been reached so far by the central banks of Nepal and India for the exchange of the withdrawn Indian notes.

Nepalese citizens have been paying higher exchange rates as they fear they may not be able to exchange their Indian Rs 500 and Rs 1,000 notes through normal banking channels. They also fear the authorities may set a ceiling for such exchanges and their Indian currency could turn into useless paper.

Some are even willing to exchange their Rs 500 and Rs 1,000 notes at lower rates. People have also received messages on Viber and WhatsApp with offers to exchange Indian currency. One such message received by a businessman in Kathmandu read, “Anyone want to change Indian banned 500 or 1,000 currency notes? Will give Rs 500 NC for IRs 500.”

According to Nepal’s central bank, nearly Indian Rs 500 and Rs 1,000 notes worth Rs 33.6 million are in the banking channels. There are no official figures for notes in the possession of traders, families of migrant workers and the general public.

The Indian government has formed a committee to look into the issue of demonetised currency notes held by people in Nepal and Bhutan. Nepal’s central bank also formed a panel to look into the issue and prepare guidelines on easing the process. Indian and Nepali officials will meet soon and resolve the issue affecting millions of Nepalese, officials said. 

Courtesy:Hindustan Times