Nepal, Nov 25 (NIA) – The Nepal Rastra Bank, on Friday, banned the use of India’s new currency notes of Rs 500 and Rs 2,000 denomination, terming them “unauthorised and illegal”.
The Bank said the new Indian notes cannot be exchanged in Nepal until the Reserve Bank of India (RBI) issues a new notification under the Foreign Exchange Management Act.
Such a notification allows citizens of foreign countries to hold a certain amount in Indian currency, officials said.
Ramu Poudel, the Nepal Rastra Bank’s chief for the eastern region, quoted in local media reports said that the new Indian bank notes were considered “ illegal” and could not be exchanged until new arrangements were made by the Indian side.
“As of now, our understanding with the Reserve Bank of India is that a Nepali citizen can hold up to Indian Rs 25,000 (in the) old Rs 500 and Rs 1,000 notes. Even the fate of those old notes is uncertain, how can these new Indian notes coming into the market be considered as legal?” Poudel said.
Indian currency is widely accepted in Nepal, where many people have been facing problems in exchanging the old Rs 500 and Rs 1,000 notes. A lot of Nepali’s have sought employment in India and return home their salaries in Indian currency.
Nepal and India are yet to reach an agreement on modalities for the exchange of the withdrawn notes held by Nepalese citizens. Poudel said the two central banks are in close contacts to address this issue but no way out has been found as yet.
India and its surrounding countries have been facing affected by Prime Minister Narendra Modi’s surprise announcement last month to ban the Rs.500 and Rs.1000 bank notes, in order to curb black money and catch money launderers.
Indians rely heavily on cash for daily transactions and those living in rural areas or who do not have bank accounts have been hit particularly hard.
Modi said he had been “pained” by the hardships people were facing following the ban, but insisted the move would ultimately benefit poor Indians.
(With inputs from Hindustan Times)