Amid worry over India’s move
to demonetise 500 and 1,000 rupee notes, that has affected tens of thousands of
Nepalese who work in India, the Indian embassy here held an informal meeting
with Nepali businesspersons to assuage concerns.

During the unofficial meeting
with Nepali businesspersons on Wednesday, officials of the Embassy of India in
Kathmandu said their government was positive about allowing each Nepali citizen
to exchange Rs.500 and Rs.1,000 worth up to Rs.25,000 with legal bills here,
the Kathmandu Post reported.

The Nepal Rastra Bank (NRB)
had suggested that exchange facility should be provided to Nepalese holding the
banned Indian banknotes of 500 and 1,000 here in Nepal.

Indian Prime Minister
Narendra Modi on November 8 announced scrapping of the high value currency
notes to curb the black money menace and terror finance.

“We have forwarded the
modality prepared by the NRB to our central government and have received
positive response,” a leading businessperson quoted an embassy official as
saying, according to the Post.
 

India is cautious about
providing exchange facility to citizens of a foreign country, as it could be
used as “a clearing house” to convert counterfeit currency into legal
tenders, the businessperson said on the condition of anonymity.

“But we tried to
convince Indian officials that there was very little chance of Nepal being used
for that purpose because the payment is made in Nepali currency, which is of no
use in India,” he said. “Also, the embassy looks convinced with the
modality prepared by the central bank.”

The central bank in its
modality forwarded to the Indian government had said it planned to collect
recently banned Indian 500 and 1,000 rupee notes from Nepali citizens and send
them to the Reserve Bank of India (RBI) for verification before offering
equivalent exchange in Nepali currency.

The NRB has clearly stated
that it will not provide over-the-counter exchange facility for Nepalese
holding banned Indian currency, saying it lacks expertise and technology to
identify counterfeit Indian currency.

As per the NRB’s modality,
Nepalese citizens have to open accounts at banks and financial institutions and
deposit the demonetised Indian currency to receive the equivalent exchange
directly in their bank accounts.

The modality was prepared by
a technical committee formed under the leadership of its Deputy Governor
Chintamani Siwakoti last week as per the request made by Indian Embassy of
India in Kathmandu.

The Indian government has
also formed a task force under the leadership of the RBI to come up with a
modality to address the problems being faced by people of Nepal and Bhutan
where the circulation of the banned Indian notes is high.

Earlier, Prime Minister
Pushpa Kamal Dahal ‘Prachanda’ and Finance Minister Krishna Bahadur Mahara
through telephonic conversation had urged their Indian counterparts to arrange
exchange facilities in Nepal as Nepalese have a large stock of Indian 500 and
1,000 bank notes.

The NRB has said that Nepal’s
financial system holds Rs 33.6 million in the denominations of Rs 500 and
1,000. The amount includes cash kept in the vaults of banks, financial
institutions and the central bank.

The actual amount of the
banned Indian bank notes in Nepal is expected to be much higher as Nepalese
were previously allowed to carry up to Rs.25,000.