The Reserve Bank of India has formed a task force to deal with the issue of providing note-exchange facility to Nepali and Indian residents in the Himalayan nation who possess Indian bank notes of Rs 500 and Rs 1,000 denomination that were pulled out of circulation on November 8.
In a communication to the Nepal Rastra Bank, the Nepali central bank, the RBI said the task force will come up with a modality to address the problems faced by residents of neighbouring countries like Nepal and Bhutan, where the circulation of the now-banned Indian notes was high.
Indian currency is freely exchangeable in Nepal and Bhutan and following the Indian move to demonetise its high-value bank notes, it came to light that billions of Indian rupees are stuck in banking channels and huge amounts have been hoarded by the public.
After the ban, Nepali Prime Minister Pushpa Kamal Dahal ‘Prachanda’, Finance Minister Krishna Bahadur Mahara and NRB Governor Chiranjibi Nepal spoke with their respective Indian counterparts Narendra Modi, Arun Jaitley and Urjit Patel.
Patel, in his conversation with counterpart Nepal, informed him about the formation of the task force. Other senior NRB officials have also spoken with RBI officers on a daily basis to avert any currency crisis and the Indian officials have indicated that problems, if any, would be resolved soon.
On Thursday, a parliamentary panel also urged the Nepal government to take all necessary and required steps to facilitate exchange of high-value Indian currency possessed by Nepalis.
Facing problems post-demonetisation are mostly residents of the Nepal-India border region, Nepali students pursuing studies in India, pilgrims and traders. India is a major destination for Nepali students and pilgrims and for people requiring medical treatment.
Earlier this week, on Monday, Prime Minister Prachanda urged PM Modi to arrange note-exchange facility in Nepal as Nepalis have quite a large stock of Indian notes of Rs 500 and Rs 1,000 denomination.
Also on Monday, Finance Minister Krishna Bahadur Mahara made the same request to his Indian counterpart Arun Jaitley.
NRB has said there is Indian Rs 33.6 million in denominations of Rs 500 and Rs 1,000 in circulation within the Nepali financial system. The figure includes cash parked in vaults of banks and financial institutions and with NRB.
But the actual amount of the now-banned Indian bank notes is expected to be much more because Nepalis were previously allowed to carry Indian Rs 500 and Rs 1,000 bank notes worth up to a total of Indian Rs 25,000.