Nepal has conveyed to India that at least 10 days are required to exchange the banned Indian bank notes of 500 and 1000 denominations held by Nepali citizens and financial system. Nepali Ambassador to India, Deep Kumar Upadhyaya has conveyed this message in his talks with officials of Indian Foreign Ministry.

 With only seven days left for December 30 deadline set by Indian government to deposit the 500-rupee and 1000-rupee denominations, the Nepal government is clueless about providing exchange facility to Nepalis holding the banned Indian currency.

However, Indian government officials have assured that hard-owned money being held by Nepali citizens will be exchanged.  “We have demanded at least 10 days to exchange the old notes,” Upadhyaya told the Post. “We have informed them that considerable time is needed to exchange the old notes in the rural areas where there is no banking facility,” he said.  “We are waiting for formal decision of Indian government in this regard.” 

Sources told the Post that there could be two options to exchange the banned Indian notes held in Nepal if Indian government fails to take any decision within the remaining seven days. First Indian government could extend December 30 deadline so as to allow Nepal and Bhutan to exchange banned Indian notes. And the second is there could be a separate arrangement for Nepal and Bhutan in case of no deadline extension. 

 However, the Indian government has not taken any decision regarding extension of December 30 deadline. Instead it is tightening the exchange facility, and deposit rules for banned 500 and 1000 denominations. Despite strong pressure from the opposition parties, the Indian government is firm on implementing its decision of demonetization.

 The decision regarding the exchange of notes in Nepal and Bhutan was delayed in order to prevent the possible flow of Indian black money into Nepal due to the open border, according to officials. Nepali officials are trying to convince that a strong mechanism will be in place to check such activities.

 The central bank of India has said the country’s banking system, including banks, financial institutions and NRB, has IRs33.6 million in the denominations of 500 and 1,000. But actual stock of banned Indian bank notes is expected to be much more because Nepalis were previously allowed to carry Indian 500- and 1,000-rupee bank notes worth up to IRs25,000. Also, those residing in areas bordering India usually stash Indian notes of larger denominations as they have to frequent Indian markets to buy goods. Similarly, Nepali migrant workers who earn their salary in Indian currencies return to Nepal with Indian currency.