Nepal Rastra Bank (NRB) has initiated groundwork to slap penalty against French note printer for its four-month delay in delivery of 500-rupee notes that has triggered a renewed shortage of high denomination notes. A high ranking NRB official told myrepublica.com that the central bank is exploring various options to take actions against the note printer and added that "some sort of actions will be taken against the note printer."
The central bank had placed an order for printing 40 million units of 500-rupee notes to the French company. The company had agreed to deliver the notes in May. "Though the notes have arrived in Kolkata and are on their way to Nepal, we are receiving the consignment after a four months´ delay," the official added.
He also hoped that the existing shortage of high denomination notes, mainly Rs 1,000 and Rs 5,000, will end once the new notes come into circulation. The official, however, said that the central bank has enough supplies of notes of all other denominations.
In addition to the delay in supply of new notes, the official also blamed higher demand of notes for the existing shortage.
Higher inflow of remittance, which remained 47 percent higher than a year before, has unexpectedly increased the demand for notes of higher denominations. This is why the growth in the circulation of currency remained 25.5 percent compared to 19.9 percent recorded in the previous years, according to the central bank.
The official also added that there have again been unusual withdrawals from banking system in recent months which also fueled shortage of high denomination notes. "We have reports of unnatural withdrawals from financial institutions and we have also traced that high denominations notes are not being freely circulated in the economy. But we are yet to know the exact reasons," he said.
He, however, said there might either have been a massive outflow of notes or there is possibility that most of the people have moved their deposits to their homes and bank lockers.
Earlier, the country had witnessed a huge shortage of 1000 and 500 denominations notes due to unusual withdrawals from banks after then Finance Minister threatened to take strong actions against those who didn´t comply with Voluntary Disclosure of Income Scheme (VDIS).
The official also said that all possible means have been adopted to ease the supplies and added that all rural branches of Nepal Bank Limited and Rastriya Banijya Bank have been instructed to transfer high denomination notes to center immediately.
Source:Republica
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