Kathmandu, December 8
Frustration mounts in Nepal as New Delhi continues to remain silent on the fate of demonitised Indian currency notes in Nepal and Bhutan, even as just 22 days remain before the Modi government deadline to exchange the notes elapses.
Two weeks after Nepal’s central bank directed BFIs not to accept Indian currency notes of 500 and 1,000 denominations, it is still not clear when and how Nepalis would be allowed to exchange their old notes. The Indian government’s silence has prompted Nepalis with Rs 500 notes to exchange them for NRs 600 (the official exchange value for INR 500 is Rs 800).
The Indian government’s inter-ministerial taskforce formed to facilitate exchange of notes for diplomatic missions and neighbouring countries has already submitted its report, but the centre is yet to take any action.
Official sources believe that the Indian government wants to give as less time as possible for neighbouring countries to exchange the notes as it fears that ‘black money’ (unaccounted money) could find its way into India from across the border. The Indian government also does not want terrorist groups, against whom the move was directed, to benefit from the exchange facility provided to citizens of Nepal and Bhutan.
A Nepal Rastra Bank source told Onlinekhabar, “It is unlikely that the Indian government would allow exchange facilities for currency worth over Rs 25,000 per person as under prevailing rules Nepali nationals could carry up to INR 25,000 while coming home from India.”
Nepal’s central bank, around 20 days ago, formed a committee to coordinate on the issue with the Indian side. The only thing the committee, chaired by Deputy Governor Chintamani Shiwakoti, is doing right now is to wait for the Reserve Bank of India to contact them. This looks possible only when New Delhi implements the inter-ministerial taskforce’s report, details of which are still under the wraps.
An official with the central bank told Onlinekhabar that the Indian government is less concerned about the implications of demonitisation on the neighbouring countries. This is a secondary issue for them as their focus is on mitigating the problems brought about by the announcement, he said.
Nepal’s Prime Minister Pushpa Kamal Dahal and his Indian counterpart have also discussed the issue over the phone, so has Nepal’s Finance Minister Krishna Bahadur Mahara and his India’s Arun Jaitley. India has assured it will provide exchange facility, but it has not provided any details.
On November 8, India’s Prime Minister Narendra Modi in an unscheduled live televised address at 20:15 declared that use of all Rs 500 and Rs 1,000 banknotes of the Mahatma Gandhi Series would be invalid from midnight of the same day and announced the issuance of new Rs 500 and Rs 2,000bank notes of the Mahatma Gandhi New Series in exchange for the old banknotes.
The government claimed that demonetisation was an effort to stop counterfeiting of the current banknotes allegedly used for funding terrorism, as well as a crack down on black money in the country. The move was described as an effort to reduce corruption, the use of drugs, and smuggling.
The Indian government’s deadline to exchange the demonitised notes elapses on December 30, 2016. Chances are that the Indian government would allow Nepalis to deposit their notes in their bank accounts in Nepal after bearers present their documents to prove the source of the currency. But the window period will be short.
Meanwhile, Nepalis have no option but to wait until the uncertainty clears.
