Why has Nepal banned the use of Indian currency notes higher than Rs. 100 denomination?
India's neighbouring country Nepal has decided to ban Indian currency of all denominations above Rs 100, making notes of Rs 200, Rs 500 and Rs 2000 illegal, said a Kathmandu Post news. According to the report, Nepal's Council of Ministers in a recent meeting decided to publish a notice cautioning their residents not to use the Indian currency of 200, 500 and 2000 denominations - making the use of Indian all notes of denominations over 100 illegal.Notably, Indian government, on November 8, 2016, had banned currency notes of Rs 500, and Rs 1000.However, according to a BBC report, residents in Nepal are still in possession of old Indian currencies of Rs 500 and Rs 1000 denominations, which have not been returned to banks. The report further said that Nepal's central bank had earlier stated it has about Rs 8 crore worth old Indian currency notes. Nepal government officials have reportedly asked for reason why Indian government is not exchanging these old currency notes.
Why did Nepal Government ban the use of Indian currency notes of ₹2000, ₹500 and ₹100?
The main reason why Nepal has banned Indian currency above 200 is India’s inability to find the solution to exchange the old note(Rs 500/100) which is with Nepal. Now why Nepal has Indian currency?Because there many Nepali people who work in India who take Indian currency to Nepal which they earn here, there are many Indian tourists who visits Nepal, There are many Indian businessmen who has business in Nepal. They all used to deal in Indian currency. Earlier, there was no restriction for Indian currency to be used in Nepal. any one can go and buy anything form shops in Nepal to buy even daily needed items. So, it was great flexibility for Indians as well as Nepali people. So, as per the sources, Nepal has closed to 10,000 Crore worth of Indian Currency in various banks including Nepal Rashtra Bank(like we have RBI in India), people of Nepal. Post demonetization, Nepal govt asked India to exchange these old notes with the new one, but India refused.Like this, Nepal raised this issue many times whenever the leaders of the country met, but Indian didn’t take any concrete step.For a country with small economy like Nepal, 10,000 crore is a huge amount. Not just for Nepal, but for India too, its a huge amount.So, Nepal is frustrated with the Indian response and decided to ban Indian currency of higher denomination to avoid such situation if India decides to take similar step in future. This is the whole story. It has nothing to do with China because I have seen many people are blaming Nepal that its China who is doing this, blah blah blah. But thats not the case.
Can we use Indian currency in Nepal?
Both Yes and No.Previously when Prime Minister of India Mr Narendra Modi visited Nepal, both countries signed treaty to allow up to 25000 INR to be carried by person while visiting Nepal. Previous to prime ministers visit, Nepal had banned 500 and 1000 currency notes. (However denomination upto 100 were and are allowed)However post demonetization, Nepal banned 500 and 2000 currency notes and termed it as illegal to carry those currency. One of the reason, is huge Indian Rupees in old currency was trapped inside Nepal and RBI showed disinterest to convert it immediately and another reason is there should be amendment in FEMA regulations of India.Hope it answers your query Pavani Yasarapu.Regards,Dipendra Prasad Poudel
How will the ban on use of Indian Currency notes above Rs.100 in Nepal affect the relationship of India and Nepal?
a big part of nepal s foreign reserve was rupee. they are not going to trust india anymore. that can affect inflation rates in india in the long term badly. atv nepal his in a strategic ally weak position. they rely on idga for almost all their imports. what india did to nepal is equivalent to defaulting on loans. had nepal been a stronger country, they would have gone to war with india but they don't gave choices here
How will the ban on use of Indian Currency notes above Rs. 100 in Nepal hurt the business men and the local people in Nepal?
Indian and Nepali economies are seamlessly integrated. Traders from both sides visit other country for purchase of goods. About 2 million Nepali citizens are employed in India, who send their salaries home. India exports goods valued about 20% of their GDP and the size of parallel economy in Nepal is 40% of GDP. 20% of all monetary transactions are in Indian rupees and People there do savings in Indian currency. In March 18, it was reported that Nepal had about Rs. 10 billion in banned currency, following demonetization and didn’t know what to do with it.If all these transactions will now be done through official channels, on payment of taxes, it will seriously impact margins and viability of local business and in turn raise prices of traded goods, adversely affecting common man. Value and movement of their currency vis-a vis Rupee will now be an additional factor in economic transactions.Overall, negative for both, business and common man in Nepal.
Is it true that old 500 & 1000 currency notes are still legal in Nepal?
Whatever notes which were in circulation in Nepal ( indian currency) have been deposited back to nepal banks. Indian currency in a lagal tender in Nepal this is as per agreement between the two governments .The RBI report indicating collection of 99 % banned currency does not include the currency which Nepal will be returned by Nepal bank to RBI. It is a currency for which equivalent replacement has to be given to Nepal bank. Might be or must have been given but it is yet to be included in RBI account of returned notes.Many similar other small pockets are yet to be accounted for.Similar other governments hold Indian currency which is exchanged when Indians go to those countries. RBI has to accept that liability or currency also.But …Now as you say the Nepal banks may be still accepting indian currency as it is still lyeing there. But I don't have any definite information about it. Nepal people may know it better.Sriram.
I still have some demonetized INR 500 & 1000 currency notes. Can it still be exchanged at the RBI Offices?
When you will go to the RBI office, the concerned authority will say to you,‘Huzoor aate aate, bahut der kar di.’ (Sir, you have taken too much time to reach the office)30th December was the last date for resident Indians to deposit the demonetized notes.31st March was the final deadline, for the NRI’s to deposit the OHD currency, only those NRI’s who were not in India during November & December.Holding of more than 10 notes of banned currency has become a crime for Indian residents after March 31.Petitions were filed in the Supreme Court and the court had ordered RBI to open such window for genuine cases. In July, http://googleweblight.com/i?u=ht...But in September, the court changed its stance, http://googleweblight.com/i?u=ht...That time of exchanging old notes is over, my friend.Consider what remains with you as souvenirs, from a golden era.