RBI forms task force to ease currency exchange in Nepal

Kathmandu: The Reserve Bank of India has formed a task force to ease currency exchange facility in Nepal for non-Indians who possess the now-defunct notes of 500 and 1,000 denominations, as a Nepalese parliamentary panel asked the government to take "necessary steps" to settle the issue.

The task force has been formed by the RBI and will come up with modalities to address the problems faced by people of Nepal and Bhutan - where the banknotes were in wide circulation, said Bhisma Raj Dhungana, chief of Foreign Exchange Management Department of the Nepal Rastra Bank (NRB).

"RBI Governor Urjit Patel has informed his Nepali counterpart [Chiranjibi Nepal] about the formation of the taskforce," Dhungana was quoted as saying by The Kathmandu Post.

"I also had conversations with RBI officials today and they have indicated that the issue would be resolved soon."

Dhunga said the formation of the taskforce signals that a solution to the problem is imminent.

"But it is too early to say whether the solution would address the real problem faced by people here," he said.

"We are in regular communication with the Indian Embassy in Kathmandu and are urging them to come up with a solution soon." NRB Governor Chiranjibi said they were in talks with their counterparts at RBI to ease the exchange process.

The Finance Committee under the Legislature-Parliament has also directed the Nepal government to take necessary steps to ease the process of exchange of the Indian banknotes, a source on the committee said.

The committed directed the Ministry of Finance and the Nepal Rastra Bank (NRB) to take measures in this regard. Committee president Praskash Jwala said Nepalese people holding the notes were facing difficulties in exchanging them.

Premier Prachanda earlier this week telephoned Prime Minister Narendra Modi and sought an arrangement so that Nepali people holding the high denomination Indian bank notes could swap them with legal Indian currency in the country.

During the five-minute conversation, Prachanda told Modi that Nepalis have "quite a big stock" of the bank notes. According to NRB, Indian currency notes having a value of Rs 33.6 million in denominations of 500 and 1,000 is circulated in Nepal's financial system.

The figure includes cash parked at bank vaults, financial institutions and NRB. But the actual stock of the now-defunct notes could be much more because Nepalis were previously allowed to carry Rs 500 and Rs 1,000 Indian banknotes worth up to Rs 25,000.

Also, hundreds of thousands of Nepalis, who earn a living in India and those who visit the country for medical treatment or rely on Indian markets to purchase daily essentials, are said to be holding the scrapped Indian banknotes.

Besides, people who visit India as pilgrims and those engaged in cross-border trade have kept stock of banned Indian notes, the report said outlining the worries among the people.