RBI to announce facility for NRIs to exchange old notes
The Reserve Bank of India (RBI) on Saturday said that it will introduce a facility for exchange of old specified…
While there is no clarity on
the fate of the withdrawn Indian currency notes of Rs.500 and Rs.1,000
denominations in Nepal, new Indian Rs.500 and Rs.2,000 bank notes are deemed
illegal and banned for exchange, Nepal’s central bank said on Thursday.
The Nepal Rastra Bank said
the new Indian notes, which have appeared in border areas dues to the open
border, cannot be exchanged until India accords approval.
Ramu Poudel, chief of the
NRB’s eastern region, told members of business community in Biratnagar that the
new Indian rupee notes in Nepal will be considered as “illegal” until
new facilities of exchange are determined by the Indian apex bank.
Advertisement
As of now, said Poudel, the
understanding with Reserve Bank of India is that a Nepali citizen can hold up
to Rs 25,000 worth of old Rs 500 and Rs 1,000 denomination Indian currency
notes. “Even the fate of those old notes is uncertain… how can these new
Indian notes coming into the market be considered as legal?”
Nepal and India have not yet
reached any agreement on the modality of exchange of the withdrawn notes, and
the new notes will be exchangeable in Nepal only after India’s central bank
issues a new FEMA notification under the Foreign Exchange Management Act,
according to the NRB.
The FEMA notification allows
foreign countries or nationals to hold on to a certain amount of Indian notes.
At present, India has allowed Nepali citizens to individually hold Rs.25,000 in
Indian currency.
Poudel said the two central
banks were in close contact to ease the exchange facilities but no way out has
been identified yet.
After India banned its old Rs.500 and 1,000 notes, Nepal’s central bank had formed a task force to prepare a
guideline for Indian currency exchange.
“The modality and
guidelines has already been handed over to the Indian side for their
consideration through the Indian Embassy,” said Poudel, adding that India
is cautious about providing exchange facilities to citizens of a foreign
country, as it fears it could be used as “a clearing house” to
convert counterfeit currency into legal tender.
Advertisement
