A local trader Rijwan Ansari said that they receive Rs 4 less for every Rs 100. “That’s why we rarely use Nepali currency for transactions,” he said.

IC is widely used in Gangapur, Matehiya, Narainapur, Kalaphata, Laxmanpur and Katkuiya villages, all of which are located near the Indian border. Due to lack of transportation on the Nepal side of the border, the people in these villages often hop to India to buy whatever they need in markets like Jamuna, M0alhipur, Laxmanpur, Vinga, Baghauda and Bangai.

According to the local people, the dependency on Indian markets has also compelled them to use IC instead of local currency. Nepalgunj, the main trade centre in the region, is too far for the villagers.

Another inhabitant Mohammad Shekh said they purchased mostly daily essentials from markets in India. “Outsiders wishing to pay in Nepali currency have to pay Rs 4 extra for every Rs 100.”

Government officials said that when they pay with notes of Rs 1,000 denomination, the payment is considered to amount to Rs 960.  

Ganesh Bahadur Shahi, chief of the Area Administration Office, blamed the widespread use of IC on lack of exchange counters for domestic currency. “People have to travel a long distance to Nepalgunj to exchange local currency,” he said.

The locals also consider the undervaluation of Nepali currency as normal. According to them, it has been in practice since times unknown.