The Reserve Bank of India has decided to limit the exchange facility for scrapped currency notes held by Nepalese nationals to Rs 4,500, raising fears about a further delay in replacing the now-useless notes of Rs 500 and Rs 1,000 denomination.
Officials of the Nepal Rastra Bank (NRB) had demanded that the ceiling be raised to Rs 25,000 per individual but this was rejected by the RBI team, which held talks with Nepalese officials here on Sunday and Monday, sources said. The team returned to India on Tuesday.
Both sides took up the issue on Monday but could not bridge their differences as they remained firm on their respective positions.
“We told them it was the Indian government’s decision to allow Nepalis to hold up to Rs 25,000 in cash and asked them to raise the ceiling. But they didn’t agree to our demand,” NRB deputy governor Chintamani Siwakoti said.
The RBI officials told the Nepalese side that they would take up Kathmandu’s demand with the highest authorities in New Delhi.
The Indian team arrived in Kathmandu on Saturday for talks on extending the exchange facility to Nepalese nationals holding scrapped Indian banknotes. According to the Indian proposal, individuals possessing the scrapped bills will have to deposit them in their bank accounts. The NRB will then send the notes to the RBI for verification.
After the notes are verified, the RBI will send back the equivalent value in new Indian currency notes. Though the NRB officials agreed to the modalities presented by the RBI, they said the proposed amount was too small.
The RBI delegation agreed to exchange banned banknotes held by Nepal’s financial system worth a total of Rs 33.6 million. This figure includes cash parked in banks, financial institutions and the NRB.
Although the official figure for demonetised Indian notes within the Nepali financial system is not very high, the actual stock is expected to be much higher because Nepalese nationals were previously allowed to hold up to Rs 25,000 in Rs 500 and Rs 1,000 notes.