India’s fake currency fears slow INR replacement for Bhutan

According to a senior government source, Bhutan is waiting for the India to exchange around INR 2.5 bn or INR 250 crores of demonetized INR 500 and INR 1000 notes from Bhutan.
However, though Bhutan’s Foreign Ministry and its Embassy in Delhi has sent requests to India, the Reserve Bank of India (RBI) is yet to accept Bhutan’s INR notes.
This is when the INR 100 rupee reserves are effectively on the point of finishing in Bhutan with RMA giving out INR 5,000 to only the 50 first customers in Thimphu and Phuentsholing. Such is the shortage that even the INR 5,000 once a month rule has been revoked and even those who took INR 5,000 a month ago are not being given INR 5,000 in the new month. The banks also have no INR in cash to hand out.
This would mean if something is not done soon many Bhutanese would have to give up on their pilgrimage and travel plans to India this winter.
However, a Royal Monetary Authority said there is no reason for panic as Bhutan is sitting on around 25 bn of INR reserves mainly in Indian banks and so any transaction through the banking route would still be accepted.
The source said that the INR cash problem for Bhutan started from problems between India and Nepal.
Nepal in the past has been used as one of the conduits for bringing in fake currency into India.
The RBI and the Indian government are wary of fake INR coming in from Nepal. The two countries have also not been able to agree on a mode of exchanging the INR notes from Nepal. As a result Nepal banned the use of the new INR 500 and 2000 notes in Nepal further complicating the situation.
Though Bhutan has not been such a conduit and has a good record, the Indian authorities do not want to accord special treatment to Bhutan by accepting Bhutan’s INR notes immediately.
RBI officials also want to check ‘each INR note’ from Bhutan for any possible fake currency among them before accepting them. It is feared that this could take a long time given how RBI and Indian bank officials are busy meeting their own domestic demands.
Bhutan, which has carried out a meticulous process of collecting INR from its citizens to the extent of even asking depositors to list all the serial numbers of each currency they are depositing, is confident of its INR currency.
Of the Nu 2.5 bn around 1.5 bn was collected from citizens while another Nu 1 bn was held in cash by the RMA.
However, efforts are still on to get fresh INR currency into Bhutan and government officials are hopeful that things will move though there are no concrete assurances yet.

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