Traders and locals in markets located along the Nepal-India border are especially upset by the government’s decision to prohibit the use of 200-, 500- and 2,000-rupee Indian currency notes in the country. They said that the ban would have a negative impact on the exchange of goods and services between the two neighbouring countries. Almost all market towns located along the border have been using Indian currency for payment.
There are many border markets where goods and services are traded. In Viswa market of Parsa, the second biggest market after Birgunj, 90 percent of the business transactions are conducted in Indian currency.
“Everyday, hordes of Nepali shoppers cross the border and buy household goods and clothes,” said Ganesh Jaiswal, president of the Merchant Association in Viswa. “They find it convenient to pay with Indian banknotes,” he said. “The government’s decision has worried everybody,” Jaiswal said, adding that shoppers fear that the police will take action against them.
“Not only Nepalis, even Indian traders and ordinary citizens fear that they will face action if they carry Indian notes larger than Rs100 in Nepal,” he said.
Indian shoppers come to Nepali markets to buy Chinese goods like electronics, clothes, shoes and cosmetics. They have been using Indian banknotes in Nepali markets too. Many Indian shoppers are not aware of the Nepal government’s decision. “This has caused panic among locals and traders of both countries,” said Jaiswal.
In Viswa market, there are more than five dozen shops aimed at Indian customers. Munna Jaiswal, a local trader, said that the government’s decision had not only distressed Nepali traders and locals along the Nepal-India border. “Indian tourists and traders also fear to travel to Nepal.
Every customer is complaining about the Nepal government’s decision to ban the use of high denomination Indian currency notes,” he said. “We are also in a dilemma. If we say yes, we will lose business; and if we say no, we fear our Indian customers will get into trouble.”
Gokul Balayar, in-charge of Viswa Police Station, said they had not started monitor activities at the bazaar. “We will start monitoring the market if we get an order from the upper level.”
Nepal Rastra Bank said it was not a new decision. Large Indian notes were already banned, but no notice had been published in the Nepal Gazette.
On November 8, 2016, the Indian government pulled Rs500 and Rs1,000 notes out of circulation ‘to unearth unaccounted wealth and fight corruption’. Since then, the central bank had also banned these banknotes in Nepal. Before that, Nepalis were allowed to carry Indian banknotes of Rs500 and Rs1,000 denominations as per an Indian government decision.
In February 2015, the Reserve Bank of India introduced the Foreign Exchange Management (Export and Import of Currency) Regulations, allowing Nepali and Bhutanese citizens to ‘carry Reserve Bank of India currency notes of denomination INR500 and/or INR1,000 up to a limit of INR25,000’.
According to Nepali travel trade entrepreneurs, credit cards are still not popular in South Asian countries, and travellers carry pocketfuls of cash. Since a majority of Indians come to Nepal overland from bordering towns, it’s difficult for them to convert their money into dollars or euros.