In an effort to address the demonetisation woes that have adversely impacted Nepal’s economy, a delegation comprising their central bank Deputy Governor and senior Finance Ministry officials has arrived in India to meet their Indian counterparts.
Nepal has been most vocal about India’s demonetisation decision announced by Prime Minister Narendra Modi on November 8 under which old currency notes of ₹500 and ₹1,000 were rendered illegal, while higher denomination bills of ₹2,000 were introduced.
“A delegation is visiting India at present. The Indian government has assured us help in this matter. Hopefully the problem will be solved soon. We are facing a shortage of Indian rupees and are buying it against the dollar,” said Deep Kumar Upadhyay, Ambassador of Nepal to India, while addressing a conference organised at the Foreign Correspondents’ Club of South Asia here on Friday.
The delegation, which arrived here on Wednesday, is led by Nepal Rastra Bank Deputy Governor Chintamani Siwakoti along with senior officials from Nepal’s Finance Ministry.
While embassies and diplomatic missions of several countries have raised concerns over the government’s demonetisation move and the way it was implemented through the Dean of Diplomatic Corps, Nepal is the only country that has taken up the matter directly with the RBI.
“People in Nepal are facing a lot of difficulties. They are worried. I have pursued the issue at all levels including at the diplomatic level. I hope it will be solved soon,” Upadhyay added.
Nepal has been facing adverse conditions ever since India banned the high-value notes, especially the small and medium businessmen there who deal with the currency in a substantial way after that country lifted the ban on Indian currency.
“I am requesting the Government of India to please resolve it as early as possible. Otherwise people may lose their faith in the Government of Nepal and naturally in the Government of India too,” he added.
The Nepalese delegation is expected to request for a special provision under which old notes can be exchanged through the banking channels.
“We will ask them to provide an exchange facility for up to ₹25,000 in the banned denominations,” Siwakoti said in Kathmandu before leaving for India.
Siwakoti is also expected to request India to increase the annual quota of ₹1 billion of ₹100 denomination supplies. India supplies ₹6.2 billion in cash to the Nepali central bank every year. Nepal relies on India heavily as the remittances of the six million Nepalis working in India account for 2.6 per cent of Nepal’s GDP.
According to BMI Research, the ban on notes in India will drag down Nepal’s economy and its reconstruction post the catastrophic earthquake in 2015.