Adding to the woes of Nepalese citizens who are facing problems in exchanging banned Indian currency, the Nepal Rashtra Bank has banned the use of the newly-issued ₹500 and ₹2000 notes.
The country’s central bank said that the new Indian currency cannot be exchanged until the Reserve Bank of India issues a notification under Foreign Exchange Management Act, according to a report in the Hindustan Times.
“As of now, our understanding with the Reserve Bank of India is that a Nepali citizen can hold up to Indian ₹25,000 (in the) old ₹500 and ₹1,000 notes. Even the fate of those old notes is uncertain, how can these new Indian notes coming into the market be considered as legal,” Ramu Poudel, the Nepal Rastra Bank’s chief for the eastern region was quoted in the report.
The central bank in its modality forwarded to the Indian government had said it planned to collect recently banned Indian 500 and 1,000 rupee notes from Nepali citizens and send them to the Reserve Bank of India (RBI) for verification before offering equivalent exchange in Nepali currency.
The NRB has clearly stated that it will not provide over-the-counter exchange facility for Nepalis holding banned Indian currency, saying it lacks expertise and technology to identify counterfeit Indian currency.
According to NRB Nepal’s financial system holds Indian ₹33.6 million in the denominations of 500 and 1,000. The amount includes cash kept in the vaults of banks, financial institutions and the central bank.
Nepal last year allowed people to carry Indian Rupees of higher denominations upto Indian ₹25,000 after years of banning the bank notes.
The Reserve Bank of India had formed a task force to ease currency exchange facility in Nepal for non-Indians who possess the now-defunct notes of 500 and 1,000 denominations.
