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Business News/ Politics / Policy/  RBI to provide Rs1 billion in Rs100 notes to ease currency crisis in Nepal
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RBI to provide Rs1 billion in Rs100 notes to ease currency crisis in Nepal

The RBI move will allow the Nepal Rastra Bank to provide exchange facility for India rupee notes in Nepal for the next eight to nine months

Currently, NRB is providing exchange facility of up to Rs2,000 on basis of citizenship identification. Photo: Aniruddha Chowdhury/Mint (Aniruddha Chowdhury/Mint)Premium
Currently, NRB is providing exchange facility of up to Rs2,000 on basis of citizenship identification. Photo: Aniruddha Chowdhury/Mint (Aniruddha Chowdhury/Mint)

Kathmandu: The Reserve Bank of India (RBI) has agreed to provide Rs1 billion in Rs100 denomination notes to Nepal Rastra Bank (NRB) to ease the acute shortage of Rs100 notes faced by the Himalayan nation, according to a media report on Friday.

The NRB’s plan to import Rs100 denomination notes was delayed due to the Modi government’s move to demonetize Rs500 and Rs1,000 notes on 8 November. As RBI was under pressure to manage cash after the demonetization, the central bank of India had told its Nepali counterpart that it may have to wait till the situation normalizes in India, The Himalayan Times reported. However, RBI recently wrote to NRB that it will be able to provide Rs1 billion in Rs100 denomination notes, the paper said.

As RBI has agreed to provide Rs1 billion, NRB officials have said that the central bank is preparing to bring the amount within January. After the demonetization in India, NRB had also lowered exchange limit of Indian banknotes in Nepal.

Currently, NRB is providing exchange facility of up to Rs2,000 on basis of citizenship identification. Similarly, it is providing Rs10,000 to those who submit a copy of air or train ticket to travel to India and Rs25,000 for those travelling to India for medical check-up.

Janak Bahadur Adhikari, executive director of the banking office at NRB, said that the limit of currency exchange will not be reviewed until RBI is able to provide regular exchange facility.

RBI has been extending Rs6 billion exchange facility to Nepal every fiscal year but this year Nepal is unlikely to get this facility due to the demonetization, according to Adhikari. “NRB has brought Rs1.20 billion this year," he said.

Currently, NRB has around Rs3.5 billion in its coffers and after bringing another Rs1 billion, NRB will be able to provide exchange facility to Nepali and Indian nationals in Nepal for the next eight to nine months.

Hundreds of thousands of Nepalese, who earn a living by working as daily-wage labourers in India, visit the neighbouring country seeking medical treatment or rely on Indian markets to purchase daily essentials, were said to be holding big chunk of scrapped Indian bank notes. The NRB had said in November that Rs33.6 million in the denominations of 500 and 1,000 is within the financial system in Nepal. The figure included cash parked at vaults of banks, financial institutions and the NRB.

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Published: 06 Jan 2017, 08:36 PM IST
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