CURRENCY CRISIS - New Banknotes to Reach Soon

A belated consignment of currency notes will reach Kolkata port tomorrow.

"However, it will take a week for it to reach Raxaul because of the holidays on Friday (Gandhi Jayanti), Saturday and Sunday in India.

We are expecting the currency notes to reach Raxaul in a week,"

said a high level source at Nepal Rastra Bank, the central authority.

Due to the shortage of high denomination currency notes, the central bank faced hard times ahead of this Dashain even though a high-level committee formed by the finance ministry took a stop gap measure by circulating old currency notes worth Rs 940 million that bore ex-governor Tilak Rawal's signature and which had `some technical glitches'.

The central bank also circulated Indian currency (IC) to cope with the emergency and which was against Nepal Rastra Bank's (NRB) norms fixed in 1956 under the Nepal Rastra Bank Act, 1955. It has been recast by the new NRB Act of 2002. However, the demand for cash has come down since the annual festival ended officially today.

Last October 1, the central bank and Oberthur Technologies, Division fiduciaire -- a French company -- entered into an agreement to deliver 40 million pieces of Rs 500 denomination notes -- that is Rs 20 billion -- by this August.

Oberthur Technologies, Division fiduciaire -- the world's third private security printer specialised in high security for the production of banknotes, checks and other fiduciary documents in more than fifty countries -- deferred the date of shipment of the consignment twice by two months from August to September.

"Had the company shipped Rs 20 billion on time, there would not have been any shortage," the source said adding that the company had promised to hand over the consignment in August. However, it could dispatch only 20 per cent (Rs 4.5 billion). The rest of the consignment that is on its way to Nepal is Rs 15.5 billion.

The company shipped the consignment on August 10 from Port of Le Havre. But the ship did not dock directly at Kolkata port and reached Malaysia first. The shipment will reach Kolkata port on October 2.

This Dashain, NRB pumped around Rs 18 billion into the market but the demand is for an additional Rs 5 billion. Last year, NRB had circulated Rs 12 billion. Going by the figures, the demand has doubled this Dashain in comparison to last Dashain.

The year-on-year demand for currency notes during Dashain is increasing, an indication of the over-reliance on remittance economy that is fuelling consumerism.