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India tries to iron out currency with Nepal

Currencies
Mumbai - India has proposed to Nepal that it was ready to exchange banned Indian currency notes of 500 and 1000 rupees up to 4500 Indian rupees (R856) for individuals in Nepal, way below the amount one is legally allowed to posses in the Himalayan country, a senior official of Nepal’s central bank said.

Nepal has allowed Nepalese citizens and Indian nationals to carry such notes to a maximum 25000 rupees in Nepal since January, 2015. But Indian currency notes denominated up to 100 rupees are freely exchangeable in Nepal.

Although India had made arrangements for exchanging the notes in India since they were banned on November 8, 2016 it has not yet made arrangements to exchange such notes in Nepal.

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In this November file photo, discontinued Indian currency notes of 1 000 denomination are seen after they were exchanged at a bank in Bangalore, India, in a government effort to crack down on corruption by banning high-denomination currency notes. AP Photo/Aijaz Rahi, File

Officials of the Nepalese central bank and visiting officials of the Reserve Bank of India (RBI) were holding discussions on the issue as of yesterday.

“RBI officials have maintained that they could exchange the banned IC (Indian currency) notes of up to 4500 rupees by individuals in Nepal, which we feel is a very low amount,” said Bhisma Raj Dhungana, chief of the foreign exchange management department of the Nepal Rastra Bank (NRB), the central bank of the Himalayan country.

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“But we have requested the Indian side to exchange such notes up to the legally allowed 25000 rupees.”

NRB officials said two senior officials of RBI had come to negotiate the matter and the two sides will continue with the talks until today.

Nepal’s banks and financial institutions have held banned Indian currency notes worth 78.3 million rupees, according to NRB. But neither the central bank nor the government have any idea as to how much Nepalese citizens have had in their possession.

Nepalese traders involved in trade with India and Nepalese migrant workers are supposed to have had such notes in abundant amounts.

But Federation of Nepalese Chambers of Commerce and Industry president Pashupati Murarka said he believed the traders do not have much banned Indian currency notes.

“Due to uncertainty over the exchange of banned IC notes in Nepal, many traders have made settlements in their own way,” he said. He also asked Nepal’s central bank to make arrangements to exchange banned Indian currency notes to the maximum limit. 

XINHUA

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