AMN/
Nepal’s central bank on Thursday banned the exchange of India’s new Rs 500 and Rs 2,000 currency notes. The Nepal Rastra Bank said the new Indian notes cannot be exchanged 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, told members of the business community in Biratnagar that the new Indian rupees are considered “ illegal” and cannot be exchanged until new arrangements are 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. Due to the open border between the two countries, the new Indian notes too have entered areas along the border with India.
Nepal and India are yet to reach an agreement on modalities for the exchange of the withdrawn notes held by Nepalese citizens.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.