Delegates from India arrived in Nepal on Saturday to hold discussions on extending exchange facility to Nepalis who are holding banned Indian banknotes of 500 and 1000. The three-member team led by director of Reserve Bank of India (RBI) will hold discussion with the Nepali team led by Chintamani Siwakoti, deputy governor of Nepal Rastra Bank (NRB), the central bank of Nepal.

“We will hold discussion with the Indian team on Sunday,” Siwakoti told the Post. “We are hopeful that we will reach an agreement on modality to provide exchange facilities to our citizens this time.” 

This is the second time the Indian team visited Nepal to hold talks on allowing exchange facility to Nepalis holding demonitised Indian banknotes. A similar team from India visited Nepal on the last week of February. During the first meeting, they had expressed fears about Nepal being used as “a clearing house” to channel illegally amassed banned notes into India’s financial system. But the team, according to NRB, had returned back to India on a positive note after getting assurance of no such possibility by the Nepali delegates participating in the meeting. 

The Indian team’s first visit to Nepal took place a month later after a Nepali delegation led by NRB Deputy Governor Siwakoti had visited India to discuss the issue. The Nepali team had visited India almost two weeks after the expiration of the December 30 deadline to deposit the banned notes in Indian banks. But Indian authorities refused to take any decision then, and chose to visit Nepal first. 

The Indian government’s move to demonitize their largest bank notes has caused inconvenience to many Nepalis holding such currency, especially those who earn a living by working as daily-wage labourers in India, visiting the neighbouring country seeking medical treatment or relying on Indian markets to purchase daily essentials.

Nepal’s financial system holds IRs 33.6 million according to the NRB. The figure includes cash parked at banks, financial institutions and NRB.

But actual stock of banned Indian bank notes is expected to be much higher because Nepalis were previously allowed to carry Indian 500- and 1,000-rupee bank notes worth up to IRs 25,000. 

Also, those residing in areas bordering India usually keep Indian notes of larger denominations as they have to visit Indian markets frequently to buy goods.