RBI to give Nepal Rs 100 cr to tide over shortage after demonetisation
India will provide Nepal currency notes of Rs 100 denomination worth Rs 100 crore to tide over a shortage of Indian currency in the aftermath of demonetisation.world Updated: Jan 07, 2017 00:31 IST
India has agreed to provide Nepal bank notes of Rs 100 denomination worth a total of Rs 100 crore to tide over a shortage of Indian currency, a spokesperson for the country’s central bank said on Friday.
The currency will be supplied to Nepal’s Rastra Bank by the Reserve Bank of India by the end of January, said spokesperson Narayan Poudel.
Nepal’s central bank will send a team to India to bring the currency. The central bank currently has Indian notes of Rs 100 denomination worth about Rs 350 crore and the addition of another Rs 100 crore means it can provide exchange facilities for another seven months, he added.
Nepalese citizens have been facing hardship in obtaining Indian currency of Rs 100 denomination following the withdrawal of notes of Rs 500 and Rs 1,000 denomination by India in November.
The two countries have an open border and a visa-free regime and Indian currency is widely used in Nepal, especially in areas and markets along the border.
After the demonetization, there has been limited availability of Indian currency and Nepalese citizens travelling to India for medical treatment, students pursuing higher studies in Indian universities, traders and people living in border areas have been hit hardest.
Branches of government and private banks in Nepal have seen long queues of people wanting to exchange the scrapped Indian notes. Nepal Rastra Bank has allowed the limited exchange of up to Rs 2,000 for people who provide identity documents.
People travelling to India by train or air can obtain up to Rs 10,000 after submitting tickets. Similarly people going to India for treatment can obtain up to Rs 25,000 on producing a doctor’s referral.
However, the Reserve Bank of India has not yet sorted out the problem of exchanging the withdrawn Indian currency notes that are within and outside Nepal’s banking channels. Authorities on both sides have held several rounds of talks to find a way out but no decision has been taken as yet.
The two central banks have an agreement whereby Nepal Rastra Bank can import a total of Rs 6 billion in various denominations every year.
Officials said New Delhi has been tightening the supply of Indian currency following the demonetisation drive and this has forced banks to reduce the amount of Indian currency provided to people travelling across the border for treatment or studies.
The demand for Indian currency spikes in winter as a lot of Nepalese citizens travel to pilgrimage sites in India. The demand for Indian currency through banking channels is Rs 1 crore per day.
The shortage of Indian currency has resulted in notes being exchanged at a premium in border areas. Reports said people were paying as much as 175 Nepali rupees for Indian Rs 100 even though the official rate is Nepali Rs 160 for Indian Rs 100.
First Published: Jan 06, 2017 19:41 IST