Nepali businesses struggle to exchange Indian currency

By Kokila Dhakal,Ilam, Aug. 19: Businesses in Pashupatinagar, a Nepali market in Ilam along the Nepal-India border, are facing a unique problem. They have not been able to exchange Indian currency they received from Indian buyers. According to the businesses, they have money they cannot use.

Nepal Rastra Bank, the central bank of Nepal, has banned Indian currency notes of IRs. 200 and above since 2019. However, Nepali businesses in Pashupatinagar are bound to accept the Indian currency as they are highly dependent on the Indian buyers. Nevertheless, the businesses have not been able to exchange the Indian notes they have received as there is no authorized agency for currency exchange in the area.

According to locals, Pashupatinagar has a branch of the Rastriya Banijya Bank; however, it does not have the jurisdiction to accept the Indian currency.  There used to be a currency exchange counter of the central bank in Pashupatinagar in 1980s but was later removed. Since the counter was removed, the problem of currency exchange has persisted in Pashupatinagar, said the locals.

“From small-scale vegetable sellers to hoteliers and transporter operators, all are forced to accept Indian currency to run their businesses. Meanwhile, they all need Nepali currency to pay for any goods and services inside Nepal. We can see how the businesses struggle to exchange the Indian currency,” said Pramod Rai, chairman of Suryodaya Muncipality-based FNCCI. Rai added, “We have drawn the attention of everyone possible but to no avail.”

Businesses suffering

“We cannot earn if we do not accept the Indian currency. But after accepting it, we struggle for the exchange,” said Milan Chhetri, chairman of Pashupatinagar-based Taxi and Jeep Transport Pvt. Ltd. Recalling a recent incident, Chhetri said that Laxmi Prasad Prasai aka Raju, a grocery shop owner, was arrested with Indian currency by the Revenue Investigation officials around 22 days ago. 

“Prasai was seeking exchange of IRs. 1 million he had collected from the buyers. However, he was arrested for carrying illegal Indian currency and faced legal procedures. He was released after paying double the seized amount as a security deposit,” said Chhetri.

According to the businesses in Pashupatinagar, they need to reach Kakadvitta in Jhapa district to import any goods from India because the Pashupatinagar border cannot be used for import of the goods. “Even if someone wants to exchange the Indian currency by reaching exchange counters outside Ilam, they can face legal consequences and punishment if arrested with Indian notes,” said Chhetri.

In the lack of an authentic currency exchange counter, individuals providing currency exchange illegally have thrived in Pashupatinagar. Locals who are fed up with difficulties to exchange Indian notes legally, pay as much as Rs. 100 to exchange IRs. 1,000 into Nepali currency.

However, following strictness from security personnel, individuals exchanging the Indian currency are also difficult to find in Pashupatinagar these days.

Complaints from tourists

Suryodaya Municipality of Ilam started operating a Tourism Information Centre 22 days ago. According to Suryodaya Municipality’s Ward No. 2 Chairman Dik Bahadur Bomjon, the centre has received several complaints regarding difficulties to exchange the currency from the Indian tourists.

“The Indian tourists arrive in large numbers in Ilam. They often carry notes above IRs. 500 and Nepali businesses are compelled to accept them to earn something,” said Bomjon. However, the Indian tourists struggle while visiting small shops to buy some basic goods as such shops fear accepting Indian notes above IRs. 200.

Assurance to solve the problem

Locals of Pashupatinagar had expressed their concern regarding currency exchange to Sudan Kirati, Minister for Culture, Tourism and Civil Aviation, when he visited Ilam on July 31.

Minister Kirati had then assured to provide a solution by apprising the Prime Minister and Nepal Rastra Bank’s Governor of their problems.

“However, more than 15 days have passed since and we have received no response. The problem will increase further if the authorities remained silent as now,” said Rai, the chairman of Suryodaya Muncipality-based FNCCI.

Locals said that even small-scale business operators have IRs. 50,000 in cash with them in the lack of an exchange facility. Several business operators in Pashupatinagar with whom The Rising Nepal spoke said that they had earned money they could not use.