Demonetization has impacted our neighbours too. And no, we are not talking about Pakistan, where government printing presses churn out counterfeit Indian currency bills to undermine the Indian economy and help fund terror. Nepal, Bangladesh, Sri Lanka and even Bhutan are nations where signifi cant amounts of Indian currency is held and circulated.
Prime Minister Narendra Modi’s announcement banning high value Indian bills with immediate effect has hit each one of them. While banks and other fi nancial institutions in these nations holding Indian currency should not face a problem, small traders, businessmen as well as tourists are feeling the pinch. Let’s take Nepal, often seen as a transit point for fake Indian currency printed in Pakistan.
The 1700 km border is extremely porous and unregulated, and many Nepalis living and working along it possess Indian currency. Then there’s thousands of Nepalese who work in India and send or take their earnings back home in Indian rupees.
Nepal’s Rashtra Bank says banned notes worth `33.6 million were within Nepal’s offi cial fi nancial system, but the actual figures are likely to be much higher since Nepalese are offi cially allowed to keep upto `25,000 in Indian currency. Bhutan, where the Indian rupee is legal tender, acted quickly, with the Royal Monetary Authority of Bhutan giving people time (initially till December 15, then revised it to November 30) to deposit their Indian currency into the banks, which in turn would send it to the India’s Reserve Bank for swapping with the new notes.
The RMA governor estimates that almost `100 crore would be deposited by Bhutanese nationals. In Sri Lanka, small businesses that trade with India and hence keep some Indian currency are likely to be the most affected. While the RBI has set up a task force to help these neighbouring nations deal with the crisis, it will take a while for the heartburn and unease to tide over