The central bank governor has asked the Indian envoy to relax the ban on high denomination Indian currency (IC) notes in Nepal.
In a meeting with Indian ambassador to Nepal Jayant Prasad here today at Nepal Rastra Bank, central bank governor Dr Yubaraj Khatiwada said that a relaxation in the ban on Rs 500 and Rs 1,000 denomination IC notes would help solve the current problems of Indian currency shortage in Nepal.
"A limited and regulated relaxation on the ban of Rs 500 and Rs 1,000 denomination notes in the Nepal-India border could help solve the shortage of IC in Nepal," said Khatiwada, adding that facilitation of exchange of Nepali rupees with Indian rupees through banking channels at the Nepal-India border, and limited relaxation for air passengers to carry high denomination Indian currency notes would also help, though the central bank is, currently, consciously educating people on the ban.
"Due to the rising economy of India in the last one decade, Indian currency is on the way to becoming a regional currency," the governor said. "However, the long-term ban on high denomination IC notes in the neighbouring country would not be practical."
Thanking the Indian government and Reserve Bank of India for helping Nepal manage the demand for Indian currency and allowing to invest in Indian securities through Reserve Bank of India, he apprised the envoy of the problems of migrant Nepali workers in India, who have been facing difficulties in remitting due to lack of identity cards. "They have not been able to remit their earnings easily," Khatiwada said.
On the occasion, they also discussed on cooperation between Nepal Rastra Bank and Reserve Bank of India, demand and supply of Indian currency in Nepal, and payment system between the two neighbours.
As per an agreement between the two countries, the government has banned the use of Indian currency notes of Rs 500 and Rs 1,000 denominations for more than a decade to check smuggling and pushing of counterfeit Indian currency into India.The Indian envoy, on the occasion, assured to raise the issues of smooth passage for remittance from India and troubles of Nepali traders due to the ban on high denomination IC notes. He also promised to facilitate easy supply of cash through ATMs of Indian banks.