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Demonetisation: Nepal Premier Prachanda dials Modi, seeks to swap illegal currency with legal one

Kathmandu: Nepal Premier Prachanda has telephoned Prime Minister Narendra Modi and sought an arrangement so that Nepalese holding a huge stock of banned high denomination Indian bank notes could swap them with legal currency in the country.

During his five-minute telephonic conversation with Modi, Prachanda told him that Nepalese have quite a big stock of Indian bank notes of 500 and 1,000 denominations that have now been pulled out of circulation.

Hundreds of thousands of Nepalese, who earn a living by working as daily-wage labourers in India, visit the neighbouring country seeking medical treatment or rely on Indian markets to purchase daily essentials, are said to
be holding big chunk of scrapped Indian bank notes, Kathmandu Post reported.

Also, those visiting India as pilgrims and those engaged in cross-border trade are said to have a big stock of now-useless Indian bank notes.

Some of these people, according to the Federation of Nepalese Chambers of Commerce and Industry, may lose their entire savings if the now-obsolete notes are not replaced with legal bills.

 Demonetisation: Nepal Premier Prachanda dials Modi, seeks to swap illegal currency with legal one

Nepal Premier Prachanda. AFP

"Considering this, India should make an arrangement so that Nepalese can exchange the banned notes here in Nepal," a statement posted on Prachanda's personal website quoted the premier as saying.

In response, Modi said he would immediately resolve the issue and would also ask Finance Minister to hold talks with Nepalese counterpart.

Following the Indian government's surprise decision, the Nepal Rastra Bank (NRB), the central bank, also banned the use of those bank notes in Nepal from last Wednesday.

The NRB has said IRs 33.6 million in the denominations of 500 and 1,000 is within the financial system in Nepal, the report said.

The figure includes cash parked at vaults of banks, financial institutions and NRB.

But actual stock of banned Indian bank notes is expected to be much more because Nepalese were previously allowed to carry Indian 500 and 1,000-rupee bank notes worth up to IRs 25,000, it said.

Also, those residing in areas bordering India usually stash Indian notes of larger denominations as they have to frequent Indian markets to buy goods.

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 Nepalese who own the banned notes do not have accounts in Indian banks.

Against this backdrop, the Ministry of Finance wrote to the Indian Finance Ministry on Thursday requesting that arrangements be made so that Nepalese holding banned Indian notes could replace them with legal tenders here in Nepal.

NRB too wrote a letter to the Reserve Bank of India, seeking exchange facility for Nepalese holding banned Indian
notes here in Nepal.

The Indian central bank earlier responded saying the NRB’s message has been conveyed to the Indian Finance Ministry.

Indian central bank governor Urjit Patel told the same thing to Nepali central bank governor Chiranjibi Nepal during the conversation between the two, a senior NRB official said on condition of anonymity.

This was an indication concrete results may not be achieved by holding talks at the central bank level, as the Reserve Bank of India cannot make any move without getting an instruction from the Indian Finance Ministry, the report said.

This, many said, called for the need to hold talks at higher level.

Earlier, former finance ministers Ram Sharan Mahat and Surendra Pandey had also told Parliament that interventions need to be made at the top Indian government level to reap favourable results.

The urgency was shown by almost everyone to deal with the issue as the Indian government has set a deadline of 30 December to deposit the scrapped notes at banks.

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Updated Date: Nov 15, 2016 15:05:24 IST