The RBI has agreed to provide Rupees one billion in Rs 100 denomination notes to Nepal Rastra Bank (NRB) to ease the acute shortage of Rs 100 notes faced by the Himalayan nation, a media report said on Friday.
The NRB's plan to import INR 100 denomination notes was delayed due to the Indian government's move to demonetise INR 500 and INR 1,000 notes on November 8.
As RBI was under pressure to manage cash after the demonetisation, the central bank of India had told its Nepali counterpart that Nepal may have to wait till the situation normalises in India, The Himalayan Times reported.
But, RBI recently wrote to NRB that it will be able to provide INR one billion in INR 100 denomination notes, the paper said. As RBI has agreed to provide INR one billion, NRB officials have said that the central bank is preparing to bring the amount within January.
After the demonetisation in India, NRB had also lowered exchange limit of Indian banknotes in Nepal. Currently, NRB is providing exchange facility of up to INR 2,000 on basis of citizenship identification.
Similarly, it is providing INR 10,000 to those who submit a copy of air or train ticket to travel to India and INR 25,000 for those travelling to India for medical check-up.
Janak Bahadur Adhikari, executive director of the Banking Office at NRB, said that the limit of INR exchange will not be reviewed until RBI is able to provide regular exchange facility. RBI has been extending INR six billion exchange facility to Nepal every year (based on Indian fiscal year calendar) but this year Nepal is unlikely to get this facility due to the demonetisation, according to Adhikari.
"NRB has brought only INR 1.20 billion this year," he said.
Currently, NRB has around INR 3.5 billion in its coffers and after bringing another INR one billion, NRB will be able to provide exchange facility to Nepali and Indian nationals in Nepal for the next eight to nine months. Hundreds of thousands of Nepalese, who earn a living by working as daily-wage labourers in India, visit the neighbouring country seeking medical treatment or rely on Indian markets to purchase daily essentials, were said to be holding big chunk of scrapped Indian bank notes.
The NRB had said in November that IRs 33.6 million in the denominations of 500 and 1,000 is within the financial system in Nepal. The figure included cash parked at vaults of banks, financial institutions and the NRB.