 "New currency notes of Rs 500 which is ready to float, at State Bank of India head office in New Delhi")
Nepal Prime Minister Pushpa Kamal Dahal on Tuesday called his Indian counterpart Narendra Modi amid growing tensions in the Himalayan country over demonetisation of Indian currency. It is believed that 29 million Nepalese citizens are holding Rs 1,000-1,500 crore in denomination of Rs 500 and Rs 1,000. In Nepal and Bhutan, Indian rupee is the second currency and is freely transacted. India had recently permitted people travelling to Nepal from India to carry up to Rs 25,000.
Pashupati Murarka, president of the Federation of Nepalese Chambers of Commerce and Industry, told Business Standard over phone that Dahal, also known as Parchanda, spoke to Modi on Tuesday and sought his help. “The Nepal Rastra Bank (equivalent to the Reserve Bank of India) is exchanging its current holding of around Rs 3,360 crore with the RBI (Reserve Bank of India,” Murarka said after a meeting with the Nepalese PM.
The Nepal Rastra Bank and other financial institutions have already stopped exchange of Indian currency. “Most people are still holding Indian rupees, which they brought from India after Dusshera and Diwali,” Murarka said. The industry leader said the Nepal Rastra Bank might allow exchange limit of Rs 25,000 per Nepalese citizen. Though there are reports that Indian businessmen are sending their black money to Nepal and exchanging it for half the value, experts say exchange of Indian rupee once allowed will only be in the Nepalese rupee, which is not in transaction outside the Himalayan country and defies the purpose of money laundering.
According to India’s Ministry of External Affairs (MEA), around 600,000 Indians are working or domiciled in Nepal whereas six million Nepalese are working in India.
In recent years, trade between the countries has increased substantially. “Exports from Nepal to India increased from Rs 230 crore in 1995-96 to Rs 3,713.5 crore ($605 million) in 2013-14 and India’s exports to Nepal increased from Rs 1,525 crore in 1995-96 to Rs 29,545.6 crore ($4.81 billion) in 2013-14,” says the MEA website.
There are media reports that people from bordering Nepal, which shares 1,850 km with five Indian states – Sikkim, West Bengal, Bihar, Uttar Pradesh and Uttarakhand – are flocking to India to exchange their Indian currency. Business is mostly affected in the Madesh area, which has 21 districts. The Madeshis mostly trade in Indian currency due to its closeness to Bihar and Uttar Pradesh.
