Nepal plea to RBI on notes

TT, Kathmandu: Nepal's central bank has asked its Indian counterpart to declare newly circulated Indian currency notes of denominations higher than Rs 100 legal tender in the country, according to a news report on Sunday.

The Nepal Rastra Bank (NRB), the country's central monetary authority, has written a letter on Friday to the Reserve Bank of India, asking it to make Indian notes of Rs 200, Rs 500 and Rs 2,000 legal tender in Nepal, The Himalayan Times reported.

The NRB has asked the India's central bank to issue a notification under the Foreign Exchange Management Act (Fema), which will make Indian notes of denomination more than Rs 100 legal tender in Nepal and to provide the exchange facilities to get bills of such denominations, it said.

The RBI has only allowed the circulation of Indian currency notes of Rs 100 and less in Nepal and provides exchange facilities for bills of these denominations.

Before the demonetisation of Rs 500 and Rs 1,000 bank notes in November 2016, the RBI had issued a Fema notifi- cation allowing Nepali citizens to carry Rs 25,000 worth of such bank notes. After the demonetisation, the Indian government started circulating new notes of Rs 200, Rs 500 and Rs 2,000.

The RBI did not issue the notification for the newly circulated bank notes, making their use illegal in Nepal.

"As the RBI was not allowing the circulation of the higher denomination Indian notes, we had to ban their use in Nepal to protect our citizens," said the chief of foreign exchange management department at the NRB.

"However, after we receiving complaints from people in various sectors, especially those who have to visit India frequently, we have asked the Indian central bank to make such bank notes legal tender in Nepal." The circulation of such notes in Nepal, according to Dhungana, will solely depend upon the RBI and Indian government's will.

The NRB, in the same letter, has asked the Indian central bank to provide exchange facility to Nepalis holding the banned Indian currency in the country. PTI.