Context:

• Upset over continued delays by New Delhi in exchanging demonetised currency, Nepal says it will not accept high-value Indian notes until the government gives specific assurances against future shocks.

Details:

• Nepali officials said that India was yet to respond to Nepal’s two-year-old demand for the return of more than Rs. 7 crores in demonetised notes
• According to Nepali officials, when Rs. 500 and Rs. 1,000 notes were demonetised on November 8, 2016, neighbouring countries where Indian currency is used, such as Bhutan, Nepal and Myanmar, were left holding large sums of the demonetised currency. While India has subsequently settled the issue with Bhutan, it is yet to respond to Nepal’s requests
• And it has affected Nepal as the Indian currency is used in daily transactions and many Nepalese working in India take remittances and savings in cash across the border.
• Recent reports that India has stopped printing the Rs. 2,000 denomination notes have spurred speculation in Nepal that they might also be demonetised
• In this background, Nepali government has taken a decision to not accept high value Indian currencies until they get assurances from the Indian government.