The Royal Monetary Authority (RMA) has allowed the use of new series of INR 500 and INR 200 in the country effective June 11.
This was following a circular issued by the Reserve Bank of India (RBI). However, this is subject to limit of INR 25,000 a person. Earlier the RMA issued notes in denomination of INR 100 and below.
Deputy Governor of the central Bank, Phajo Dorji said the limit of INR 25,000 has been made in cognizance to the counterfeit notes that are circulating in India. “As we share borders with India, there are chances that fake currencies could come into Bhutan,” he said.
The RMA also cautions the public of counterfeit notes of INR 500 denomination and requests all individuals to be vigilant and careful while accepting this denomination.
In May 2000, RBI had imposed ban on use of INR 500 and INR 1,000 following the request of Union government to curb smuggling of counterfeit currency. Later in 2015, before the demonetisation took place and on the approval of the RBI, RMA allowed INR 500 notes with a ceiling fixed at Nu 25,000.
Sources said that transportation becomes an issue when INR are issued in 100 denominations. However, since INR 200 note is in huge demand in India, supply in Bhutan would be limited.
The RMA has also notified the public to deposit any INR earnings and receipts in their accounts maintained with any commercial banks and refrain from holding INR currency in cash. “The RMA shall not be liable or responsible in case of any policy changes by the RBI, including demonetisation of INR currency notes in the future,” the notification cautions.
The deputy governor said that this is to sensitise people to deposit the INR instead of hoarding. “We will not take any responsibility in case of change in policy in India,” he said adding that people can now freely avail INR from the Central Bank.
A source also said that INR issuing counters would be soon opened in few commercial banks in the country.
However, even before the central bank allowed the use of INR 500 and INR 200, some of the retail traders, hotels and handicraft shops have been accepting these notes. According to sources, these establishments gather the INR notes and exchange them with Ngultrum at parity to facilitate travellers to India and Nepal.
The RBI has also issued the same notification to Nepal.