Nepalis, sad­dled with banned In­dian ru­pee notes, risk los­ing sav­ings

Kuwait Times - - BUSINESS -

Nepalis stand to lose mil­lions of dol­lars held in high-value In­dian bank notes that In­dia banned last year and has yet to ex­change, a Nepali cen­tral bank of­fi­cial said yes­ter­day.

In­dian Prime Min­is­ter Naren­dra Modi in Novem­ber banned 500 ru­pee ($7.77) and 1,000 ru­pee bank notes as part of a drive against un­ac­counted wealth in In­dia that has also hit Nepal where In­dian ru­pees are widely used. Peo­ple hold­ing the notes in In­dia were given a lit­tle less than two months to ex­change them at banks.

In March, of­fi­cials from the Re­serve Bank of In­dia (RBI) vis­ited Nepal and promised to al­low ev­ery Nepali cit­i­zen to ex­change 4,500 In­dian ru­pees ($70) worth of the old notes for new ones.

“That was only a ver­bal as­sur­ance but no for­mal de­ci­sion from In­dia has come to us,” said Chinta Mani Shivakoti, a deputy gover­nor of the cen­tral Nepal Ras­tra Bank. “Even if this amount was ex­changed, in­di­vid­u­als hold­ing more than 4,500 In­dian ru­pees risk los­ing the ex­cess,” Shivakoti said. Nepal de­pends heav­ily on funds from work­ers in In­dia, who sent home $640 mil­lion in 2016, or about 3 per­cent of its gross do­mes­tic prod­uct. The In­dian cen­tral bank de­clined to com­ment. An In­dian fi­nance min­istry spokesman also de­clined to com­ment, say­ing it was a cen­tral bank mat­ter. In­dia fears that if it agrees to Nepal’s de­mand to al­low Nepalis to ex­change un­lim­ited amounts, a large num­ber of In­di­ans may laun­der their ill­got­ten old notes through Nepal.

Shivakoti said Nepal’s banks hold 78.5 mil­lion In­dian ru­pees worth of the old notes, while busi­ness of­fi­cials es­ti­mate that up to 10 bil­lion in old In­dian ru­pees ($155 mil­lion) may be held by in­di­vid­u­als in Nepal’s in­for­mal sec­tor. An­other NRB of­fi­cial, Bhisma Raj Dhun­gana, said the de­lay in re­solv­ing the is­sue was caus­ing con­cern. —Reuters

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