Roopa Magar (20) from Janakpur in Nepal works as a domestic help in a Gurgaon household. She left her home seven years ago to look for better work opportunities in India. She receives her salary in cash and is not familiar with the banking system.
On 8 September, when Prime Minister Modi announced the demonetisation of Rs 500 and Rs 1,000 notes, Magar was left feeling insecure and anxious about her financial security. Until her employers came to her rescue and agreed to deposit her savings in their bank account.
Magar is among the large number of Nepali blue-collar workers in India. With many of them coming from rural areas and uneducated, demonetisation came as a rude and sudden shock to them.
Besides, of the million-plus Nepali migrants living and working in India, many send remittances back home.
However, this too has been disrupted as remittance companies are not transferring money for the time being in view of the Indian government's demonetisation decision, according to a report in the Nepali newspaper The Kathmandu Post.
Bank-to-bank transfer of money via National Electronic Funds Transfer (NEFT) is possible between India and Nepal. But many Nepali immigrants do not have bank accounts. So, they have been adversely hit and can’t send money home.
However, for the lucky ones who do have bank accounts, things have been easier, notwithstanding the long queues and chaos at banks. Reth Bahadur Simkhada, a Nepali security guard in Khan Market, Delhi, has been living here for the last 30 years. He has a bank account through which he transfers money to his family once in six months.
I am not facing any problems here as such. Whenever I get the money, I get it deposited as soon as possible, and then transferred to Nepal in six months’ time. I pay tax on it too. Otherwise I don’t keep much cash with me, only notes of smaller denominations. So whenever I need money urgently, my friends here help me out.Reth Bahadur Simkhada, Nepalese migrant in India
Currency Ban Hits Nepal Too
Having a financial system which allows the use of Indian rupee on its soil, Nepal too scrapped the Indian Rs 500 and Rs 1,000 notes shortly after India's announcement of demonetisation.
Faced with millions worth of these Indian currency notes in their country, the Nepal Rashtra Bank (the central bank of Nepal) and the Nepali government are still waiting for clear directions from their Indian counterparts as to what to do with them.
Despite the talks between the two sides, the impasse continues even a week after PM Modi shocked everyone by announcing the demonetisation policy.
Speaking to The Quint, Prakash Rimal, editor of Nepali newspaper The Himalayan Times, said that talks between the two sides have been continuing.
The prime ministers of the two countries had a brief talk regarding the situation on Monday. Nepal’s PM Pushpa Kamal Dahal has asked the Indian government to find a solution to the problem. Modi said that he will talk to his Finance Minister Arun Jaitley. The talks between the two finance ministers also took place on Sunday. However, no action has been taken so far.Prakash Rimal, Editor, The Himalayan Times
The Scale of the Problem
Another journalist, Chiranjibi from the Nepal newspaper The Annapurna Post, pointed out that more than 40 percent of the people in Nepal have seen their businesses suffer a massive blow. He remarked that all the traders in the country carry out their business with the help of 500 and 1,000 Indian notes
"The trader community is in trouble. The central bank has been telling them that they are in talks with the RBI and the Indian government regarding the matter, and a decision can be expected in the next few days," he said.
According to an IANS report, the banking system of Nepal has withheld Rs 500 and Rs 1,000 notes amounting to approximately 35 million Indian rupees because of the Modi government’s move, an amount which is expected to increase further in the coming days.
Rimal pointed out how people in Nepal prefer to use hard cash, and how many of them replace the Nepali currency with Indian currency through informal channels to carry out their business.
While the Nepal Rashtra Bank has been in touch with the RBI and the Indian government, people here cannot deposit these higher denomination notes. The banks are simply turning them away. The problem is worse for people living outside Kathmandu, especially in remote areas, where people do not have easy access to banks.Prakash Rimal
According to him, even when Rs 500 and Rs 1,000 notes were banned in Nepal before 2015, the people in border areas extensively used them for transactions.
The Indian currency is reportedly used for 20 percent of the monetary transactions in the landlocked country, most importantly in the border areas where a lot of cross-border trade is carried out.
According to a report in The Times of India, many are now exchanging their Rs 1,000 notes for Rs 600 through illegal channels in the border areas in desperation.
Nepal Too Caught by Surprise
With the Indian government preoccupied with the large-scale confusion brewing in its own country, some argue it may probably not be giving due emphasis to the situation in Nepal.
Rimal mentioned how the decision to discontinue Rs 500 and Rs 1,000 Indian notes in Nepal sent shockwaves across the country, creating large-scale confusion among the people.
"The problem is that the central bank did not issue any clear notification to the people of Nepal regarding the move. It should have enumerated a clear set of procedures regarding what people should do, and asked them not to panic. But it is also waiting for clear guidelines from the Indian authorities," he said.
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