Kathmandu, January 7: Nepal has written to India’s Central Bank- the Reserve Bank of India (RBI) to make new Indian currency notes of denominations higher than Rs 100 legal in Nepal. According to reports, the Nepal Rastra Bank (NRB) has requested the RBI to make new Indian currency of Rs 200, Rs 500 and Rs 2,000 legal in Nepal. The NRB has asked RBI to issue a notification under the Foreign Exchange Management Act (FEMA) making higher denomination Indian bank notes of a legal tender in Nepal and to provide the exchange facilities to get bills of such denominations.
Currently, the RBI has only allowed the circulation of Indian currency notes of Rs 100 and less in Nepal and provides exchange facilities for bills of only this denomination. The circulation of Indian currency notes in Nepal is solely depended upon the RBI and Indian government’s will. Rs 2000 Notes Printing Phasing Out? Economic Affairs Secretary Subhash Garg Rubbishes Report.
According to reports, the RBI had issued a FEMA notification allowing Nepali citizens to carry Rs 25,000 worth of such bank notes before the demonetisation of Rs 500 and Rs 1,000 bank notes in November 2016. After demonetisation, circulation of new banknotes of denominations Rs 200, Rs 500 and Rs 2,000 was started by the Indian government. However, the RBI did not issue the notification for the newly circulated bank notes, which made their use illegal in Nepal. India, Nepal Discuss Ways to Expedite Implementation of Bilateral Project.
Chief of Foreign Exchange Management Department at the NRB was quoted in the report stating that as the RBI was not allowing the circulation of the higher denomination Indian notes, the authorities had to ban their use in Nepal to protect their citizens. “However, after we received complaints from people in various sectors, especially those who have to visit India frequently, we asked the Indian central bank to make such bank notes legal tender in Nepal”, the official added.
The RBI had said that India’s banking system that includes banks, financial institutions and NRB, hold Indian currency denominations of Rs 500 and Rs 1,000 worth Rs 48 million. In a bid to make exchange facility available to Nepalis holding banned Indian currency, NRB has already prepared software to keep a database of names of people who sought exchange facility, the serial number of bills of 00 and Rs 1,000 submitted by the people. The report added saying that, the Indian government is yet to take a decision.