Nepali Ambassador to India Deep Kumar Upadhyay yesterday urged the Government of India to address the issues Nepali citizens are facing because of demonetized currency notes.

In this regard, the official urged India to consider a special window that allows Nepali citizens to exchange their demonetized notes.

“There are pensioners, also almost every Nepali family has a member in India. During festival seasons, when they return, they take money for needs that may be medical. It is my moral obligation. Nepal must be provided with some kind of window,” read an official statement by Deep Kumar.

Deep Kumar further informed that many Nepali citizens are not able to exchange demonetised notes because of the lack of a special provision for the same.

Nepalese living in the Indo-Nepal border areas could find a way, however, those living in hilly areas of the country are still holding the banned currency notes, he added.

According to Deep Kumar, Nepal had requested to allow Rs 25,000 exchange per account, but the Reserve Bank of India (RBI) had promised for Rs 4,500 per account and that did not happen yet.

This situation is seen despite the high-level discussions between officials of both the countries on the issue.

“There was almost a kind of an understanding between both the central banks (of both the countries) that India will provide a window for exchange of currency notes that Nepali people are holding. But I think, it has now been finalized and Nepal is waiting for the issue to be resolved. In our highest level also, we have again raised this issue,” read official statement by Deep Kumar.

Huge Loss to Nepali Citizens

This currency exchange issue has been concerning Nepali citizens since the time India announced ban of old currency notes of Rs 1000 and Rs 500.

Earlier in July 2017, a Nepal Rastra Bank official had said, “Nepalese stand to lose millions of dollars held in high-value Indian bank notes that India banned in 2016”.

Even though RBI responded, issues were not addressed yet.

“That was only a verbal assurance, but no formal decision from India has come to us. Even if this amount was exchanged, individuals holding more than INR 4,500 risk losing the excess,” said Chinta Mani Shivakoti, a Deputy Governor of the Nepal Rastra Bank in an earlier case.

According to Shivakoti, Nepali banks hold INR 78.5 million worth old currency notes. The Nepali businessmen also estimate that Rs 10 billion worth old Indian currency (USD 155 million) is stashed with the Nepali informal sector.

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Nepalese are still facing consequences of the Indian Government’s demonetization drive, and are yet to exchange their high-denomination Indian bank notes (Rs 1000 and Rs 500) banned by the Indian Government.

According to a central bank official, ‘Nepalese stand to lose millions of dollars held in high-value Indian bank notes that India banned in 2016’.

The Indian Government had given two-month time for Indians to exchange their high-denomination notes with the new ones. But, Nepal has no such formal intimation from the Indian Government on the issue.

The Reserve Bank of India, in its Nepal visit in March, promised of allowing every Nepali individual to exchange old notes worth INR 4,500 (USD 70) with the new ones.

“That was only a verbal assurance, but no formal decision from India has come to us. Even if this amount was exchanged, individuals holding more than INR 4,500 risk losing the excess,” says Chinta Mani Shivakoti, a Deputy Governor of the Nepal Rastra Bank.

No Response from Indian Officials

Bhisma Raj Dhungana, another NRD official, says the delay in resolving the issue is causing a concern. “India should have allowed the exchange facility much earlier,” he added.

While RBI officials failed to respond on the issue, an Indian Finance Ministry spokesperson skipped saying, “it’s a central bank issue”.

The Indian Government is worried that Indians may try to launder their old notes through Nepal, if Nepalese are allowed for unlimited currency exchange.

According to Shivakoti, Nepali banks hold INR 78.5 million worth old currency notes. Whereas, Rs 10 billion of old Indian currency ($155 million) is stashed with the Nepali informal sector, estimate Nepali businessmen.

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Following the successful completion of his three-day India visit, the Deputy Prime Minister, Krishna Bahadur Mahara participated in a briefing session with the Legislature Parliament.

Emphasizing on the discussions during his India visit, Mahara informed the Parliament that both the countries held high-level discussions on taking ahead the issues pertaining to the developmental projects that are in the pipeline between the two nations.

The Minister also informed about the key discussion he had with the Indian officials on impact of the new Indian tax system, GST, on the Indo-Nepal bordering markets. Problems regarding exchange of Indian currency between the nations will also be resolved soon, he added.

Bringing LPG bullets to Nepal and the upcoming BIMSTEC meeting set to held in Nepal were other issues discussed between the nations, he added.

Mahar also informed about the Prime Minister Sher Bahadur Deuba’s upcoming visit to India, which will be confirmed following discussions on both sides.

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