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Current major challenges in currency management in Nepal

Explore the current major challenges in currency management in Nepal, including banknote printing, counterfeit detection, cash-based economy, and environmental conditions.

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Current major challenges in currency management in Nepal

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  1. Current major challenges in currency management in Nepal Laxmiprapannaniroula Executive director Nepal rastra bank

  2. Outline Introduction to Nepal Current Status of Banknote circulation in Nepal Banknote Printing in Nepal Challenges in Currency Management in Nepal Progress in Currency Management Summary

  3. Introduction to Nepal Landscape Between two giant economies – China and India Divided into three regions- Himal, Hill and Terai 83 percent of the land has hills/ mountains and remaining 17 percent of the land is plain (Terai) The highest point is Mt. Everest (8848m) and the lowest point (70 meters above sea level) is located at KechanaKalan.

  4. Introduction to Nepal Banknotes and its relationship with Climate and Environment Cold in Himalayan region Moderate climate in Hilly region Hot and humid in Terai Region Due to urbanization, capital city and other major cities are densely populated Affected by pollution due to population growth and construction of Infrastructures

  5. Introduction to Nepal Landlocked Surrounded by China in the North Surrounded by India in the East, South and West No access to sea/ ocean- one of the cheapest routes for transportation Inaccessible roads Rural areas 29.3 million population

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  8. Note Chests • The NRB is to delivery currency notes across the country. • Currency chests as network of currency distribution. • Currency chests is to facilitate new and fit note supply. • Currency chests absorbed old note and supplied new or fit/clean notes. • Usually currency chests are established in important branches, and they do their function on behalf of the NRB • NRB has set up(NRB Board has taken the decision on 2016 BS) 77 (NRB 8+ RBB 45+ NBL 24=77) currency chests all over the country. (in India 4102 note chests) • Banknote should be printed based on the economic growth, remittance, inflation, number of note destroyed etc.

  9. Current Status of Banknote Circulation in Nepal Established in 1956 A.D., Nepal Rastra Bank is the central bank of Nepal It issues banknotes and coins as per the demand of the economy 11 banknotes in circulation- Rs 1, Rs 2, Rs 5, Rs 10, Rs 20, Rs 25, Rs 50, Rs 100, Rs 250, Rs 500 and Rs 1000 4 coins in circulation- Rs 1, Rs 2, Rs 5 and Rs 10 7 banknotes are regularly printed in a cycle and 2 coins are regularly minted

  10. Current Status of Banknote Circulation in Nepal FY 2074/75 corresponds to 2017/18

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  12. Detection of Counterfeit Notes: Quantity • Counterfeit Notes Detectedall over Nepal (by Nepal Rastra Bank).

  13. Banknote Printing/ Coin Minting in Nepal Process of International Competitive Bidding (ICB) No state owned printers Prequalification of security printers before invitation for bids Currently 6 are prequalified for Banknote Printing and 5 are prequalified for Coin Minting In the last cycle 1530 million pieces of banknotes were printed

  14. Banknote Printing in Nepal Banknote Printing in Nepal in Last cycle (2015-2018) Rupees 5- 260 million pieces (by CBPM) Rupees 10- 240 million pieces (by OF) Rupees 20- 210 million pieces (by PP) Rupees 50- 240 million pieces (by PP) Rupees 100- 200 million pieces (by CBPM) Rupees 500- 180 million pieces (by PP) Rupees 1000- 200 million pieces (by CBPM) Banknote Printing in Nepal in Recent cycle (2019-ongoing) Rupees 50- 230 million pieces (by OF) Rupees 100- 400 million pieces (by DLR)

  15. Challenges in Currency Management in Nepal Cash Based Economy • Nearly NRs 500 billion amount in circulation • Currency in Circulation to GDP ratio of 18.57 percent • Average cash holding per person –NRs 17000 (includes cash at vaults of BFIs) • Use of cash in retail sectors • Lack of proper cash handling behavior in public

  16. Challenges in Currency Management in Nepal Environmental Conditions • The banknote circulates through freezing temperatures in Himalayan region to as high as 45 Degree Celsius in the Terai region • In Kathmandu, the capital city of Nepal, temperature ranges between 1 Degree Celsius to 30 Degree Celsius • Rainfall is prevalent throughout the country • Humidity as well as pollution degrades the quality of banknote • Circulating same banknotes in different environment degrades its quality.

  17. Challenges in Currency Management in Nepal Festival Demand and supply chai Management of banknote Mis-handling of fresh and clean Banknote banknote management cost has increased every year Note chests are major vehicle for Banknote management across the country NRB has set up 77 (NRB 8+ RBB 45+ NBL 24=77) currency chests all over the country. (in India 4102 note chests)

  18. Challenges in Currency Management in Nepal Poor Accessibility • Poor transportation facilities and lack of infrastructure • Fund transfers, still, have to be made by army helicopter/ chartered flights in remote areas of the

  19. Challenges in Currency Management in Nepal Lack of Mechanization • Lack of automated banknote processing systems (Manual inspection of banknotes and only two small desktop sorters) • Lack of proper shredding and briquetting systems SBS (Burning of banknote in furnace) • Lack of cash centers and standardized fitness parameters for banknotes.

  20. Challenges in Currency Management in Nepal No state owned printer • There are no state owned printers in Nepal • Remittance of huge amounts of foreign currency in procurement process

  21. Forward Looking Approach • cfly{s jif{ @)&*÷&( ;Dddfs|lds?kdfCash Verification And Procession System CVPSvl/b u/L :yfkgfub}{ hfg] / a}+s tyfljQLo ;+:yfx/maf6 gf]6 ln+bfdlzgn] ;l6{ªn] u/]sfgf]6x/m dfqlng] Joj:yfug]{ . • shredding and briquetting systems SBS vl/b u/L :yfkgfub}{ hfg] / Unfit Note nfO{ hnfP/ gi6 ug]{ sfo{ aGbug]{ . • ;kmfgf]6 gLltkfngfgug]{ ;+:yftyfJolQmx?nfO{ b08 , hl/jfgf, ;hf+onufotJoj:yfnfO{ s8fO{ ub}{ n}hfg] .

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