The repercussions from India’s
demonetisationSee Demonetised banknote. More of the IRs 1,000 and 500 at the end of 2016 were felt even beyond its borders.
Indeed, Indian rupees are not only used in India, but also in Nepal, Bhutan and Zimbabwe. The old notes are also considered worthless in those countries, but many of them are still in circulation. As a result, the
Reserve BankSee Central bank. More of India (RBI) agreed to conduct discussions with the Nepal Rastra Bank (NRB) and offered to
exchangeThe Eurosystem comprises the European Central Bank and the national central banks of those countries that have adopted the euro. More the old Indian notes held by Nepalese people up to a limit of IRs 4,500. The team representing the Nepalese government had until March 31 to accept the offer but decided to turn it down. The reason for this is that Nepal asked India to provide a facilitated exchange for a value five times higher than India’s initial proposal (IRs 25,000), which is also equal to the legal amount people are authorised to carry in Nepal.
According to the NRB, demonetised Indian banknotes worth IRs 33.6 million are stored in the Nepalese banking system. This is excluding the notes held by traders, families and migrant workers. Bhisma Raj Dhungana, Executive Director of the NRB, remains positive and believes that India might come up with a new arrangement but if things do not go as planned, many Nepalese households and businesses could be hardly hit.