Indian Demonetisation: New Delhi delegation postpones Nepal visit

Kathmandu, February 23

An Indian delegation, which was to arrive in Nepal this week to take stock of demonitised Indian notes, has postponed the trip for an indefinite period.

The delegation was to arrive between February 20-21, said Nepal Rastra Bank Executive Director and head of the foreign exchange department Bhisma Dhungana.

The central bank has been informed that the delegation will come to Nepal soon, but who is going to come and on what date remains a mystery.

This comes a few days after Nepal Rastra Bank officials visited New Delhi to hold talks with India’s Finance and External Affairs ministries. However, they were told that a delegation will visit Nepal to take a call on the issue. NRB has proposed that a Nepali citizen be allowed to exchange up to Rs 25,000, and had told its Indian counterpart that it could collect all the notes within a month.

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 2,000 bank 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 crackdown 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 elapsed on December 30, 2016.

Chances are that the Indian government will 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.

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.

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