Central bank to cut down circulation of new bank notes this Dashain

Nepal Rastra Bank (NRB) has said that it will sharply cut-down the issuance of fresh banknotes during the Dashain festival, as rate of notes damage remains very high during the festive season. Said an NRB official, the central bank was planning to fulfill the currency demand through a combination of new notes and notes in circulation in equal proportion. "However, we assure that the previously used notes to be issued will be very clean and as good as new notes," said NRB spokesperson Gopal Kafle, assuring that it will not dissatisfy the customers habituated to using new notes during the Dashain festival.

In the past, the central bank used to fulfill demand of different denominations, particularly smaller ones, by circulating freshly printed notes. But the bank decided to break the tradition practice as 80 percent of the new notes issued during Dashain are spoiled so badly that those notes cannot be reissued in the market. According to NRB, the normal life of Nepali paper money has a specific time span of 1.5 years. However, a large chuck of them becomes unusable within a year due to users´ mishandling. And notes freshly issued in Dashain cannot be reissued after three months.

"This is unwanted loss, which has unwanted cost attached," said an official at NRB Currency Management Division. Given that the cost is eventually met with taxpayers´ money, he argued it was meaningless having to shoulder the unnecessary cost when the clean notes can serve the purpose. Moreover, the central bank has assured that people who reeled under short supply of notes and were forced to curtail consumption during Dashain last year will witness affairs in the market completely different this festive season.

Officials at the central bank said it presently has Rs 97 billion worth of fresh notes in its inventory, whereas, it estimates the demand for fresh notes stands at around Rs 25 billion during the festive season. "Our inventory is strong and stands multifold of demand we expect to witness this season. People will not face notes crunch this year," said NRB Governor Dr Yuva Raj Khadiwada. Last year, the central bank had failed to pump out enough notes in the market during the festival, when consumption shot up dramatically, creating short supply of money in the system.

While that had created severe inconvenience, general customers were forced to cut-down consumption and their confidence in the banking system had eroded. According to an estimate, the consumption during Dashain this year will jump well over Rs 50 billion surpassing the earlier record. As the existing notes in circulation will fulfil the major chunk of people´s needs, NRB anticipates its preparedness to pump out Rs 25 billion will keep the business in normal state.

The central bank has said it has already issued enough cash to its seven offices located in Pokhara, Siddharthanagar, Janakpur, Biratnagar, Birgunj, Nepalgunj and Dhangadi to manage notes demand in different parts of the country.


Source:
myrepublica