The Indian government has formed a taskforce to deal with the issue of providing currency exchange facility to non-Indians who possess Indian banknotes of 500 and 1,000 denominations that were pulled out of circulation on November 8.
The taskforce was formed on Tuesday under the leadership of Reserve Bank of India (RBI), the Indian central bank. It will come up with a modality to address the problems faced by people of countries like Nepal and Bhutan, where the circulation of the banned Indian notes is high, according to Bhisma Raj Dhungana, chief of the Foreign Exchange Management Department of Nepal Rastra Bank (NRB).
“RBI Governor Urjit Patel has informed his Nepali counterpart [Chiranjibi Nepal] about the formation of the taskforce,” said Dhungana. “I also had conversations with RBI officials today and they have indicated that the issue would be resolved soon.”
The formation of the taskforce, according to Dhungana, signals that a solution to the problem faced by many Nepalis who own the banned notes is imminent. “But it is too early to say whether the solution would address the real problem faced by people here,” he said. “We are also in regular communication with the Indian Embassy in Kathmandu and are urging them to come up with a solution soon.”
Earlier on Monday, Prime Minister Pushpa Kamal Dahal urged his Indian counterpart to arrange exchange facility in Nepal, as Nepalis have quite a big stock of Indian notes of 500 and 1,000 denominations.
Also on Monday, Finance Minister Krishna Bahadur Mahara made the same request to his Indian counterpart Arun Jaitly. NRB has said IRs33.6 million in denominations of 500 and 1,000 is within the financial system of Nepal. The figure includes cash parked at vaults of banks, financial institutions and NRB.
But the actual stock of banned Indian bank notes is expected to be much more because Nepalis were previously allowed to carry 500- and 1,000-rupee Indian banknotes worth up to IRs25, 000.
Also, hundreds of thousands of Nepalis, who earn a living by working as daily-wage labourers in India, and those who visit the neighbouring country for medical treatment or rely on Indian markets to purchase daily essentials, are said to be holding scrapped Indian bank notes.
Besides, people who visit India as pilgrims and those engaged in cross-border trade have kept stock of banned Indian notes.
The Indian government has said people who have accounts in Indian banks need not worry as the financial institutions will provide them the currency exchange facility. But many Nepalis who own the banned notes do not have accounts in Indian banks. It is essential to exchange these banned notes with legal bills as early as possible as the Indian government has set a deadline of December 30 to deposit the scrapped notes at banks.
Published: The Kathmandu Post 17-11-2016