Demonetisation: Govt moves to ease pain for Nepal, Bhutan & expats

NEW DELHI: A joint committee of the foreign and finance ministries will issue instructions this week to ease demonetisation pains in

Nepal

,

Bhutan

, among Indian expatriates in different countries and foreign diplomats stationed in India.

The group was set up after Nepal PM Prachanda called Prime Minister Narendra Modi last week to ask for a solution to the fact that Nepal was sitting on crores of old Indian currency notes. Led by additional secretary in the finance ministry A Tyagi and joint secretary (north) in MEA

Sudhakar Dalela

, the group has met several times and is scheduled to meet again on Tuesda .

Nepal and Bhutan, where Indian currency is legal tender, are likely to be asked to hold the deposits following due process, which will include know-your customer (KYC) compliance and proper paperwork on identity of holder of the currency notes. These will then be exchanged by the Indian government. For many years, the Nepal government had outlawed the Rs 500 and Rs 1,000 notes.Ironically, these were readmitted as legal tender in Nepal when Modi visited in 2014. work in India and remit money back home.

There are others engaged in cross-border trade across the open frontier, and still others who come to India for medical treatment or education and many who use Indian currency to buy essentials for daily living, particularly in the border regions. They have been hit hard by the demonetisation drive. However, Nepal is also a known conduit for fake Indian currency , so the government body is expected to call for vetting of the currency notes in Nepal before the holders are compensated. This could delay the compensation process, as well as add to the pain of many in Nepal who may have been transmitting fake notes, perhaps unknowingly .

Border trade in countries around India -Bangladesh, Myanmar, Nepal and Bhutan -is taking a hit, according to sources, due to the currency crunch. In Bangladesh, while the Indian rupee is not legal tender, many traders, businessmen and transporters have been using Indian currency for their cash transactions, which are now rendered illegal. Bangladesh used to be a huge transit point for fake currency as well, but in the past few years, the Sheikh Hasina government has cracked down on the ISI-sponsored network, rolling up many of their operations.

However, money exchange traders in Kabul have reportedly said they were holding about Rs 60 crore in Indian currency notes. Since Kabul is a big transit centre for Indian notes from Pakistan, these currency traders may not get satisfaction, unless the notes are proved to be genuine.

Foreign ministry spokesperson Vikas Swarup said last week that money exchange associations in places like Dubai, Singapore and

Hong Kong

had asked how they would dispose of old Indian currency notes.Since the rupee is not yet a convertible currency , the government will have to find a way to not let them down in a way that diminishes faith in the credibility of the Indian currency .