KATHMANDU, OCT 05 - Nepal’s Central Bank has been dragged to court for its ‘unlawful’ act of bringing Indian currency into use during a sudden acute cash crunch just before Dashain. A writ registered at the Supreme Court (SC) on Sunday claims Nepal Rastra Bank (NRB) has miserably failed to carry out its duties leading to some seriously “flawed” and “illegal” decisions in desperation, denting the country’s sovereignty and nationality.

Filed by advocate Hem Mani Subedi, the writ demands immediate court intervention to prevent an “irreparable loss” to the general public, industries, businessmen and the country’s overall economy.

The writ cites four major unlawful acts of NRB--creation of intentional cash crunch in the market for a long time, use of ‘faulty’ notes during the crunch, bringing into use Indian currency during that time, and failing to take action against responsible officials--which demand immediate court intervention.

No law of the land, the writ goes, has given the Central Bank any authority to bring into use any foreign currency on any pretext whatsoever. “It is utter negligence on the part of the concerned NRB officials to resort to the extent of distributing faulty Nepali notes stored for incineration as well as Indian currency. This act has dented the country’s nationality and sovereignty,” the writ argues.

Besides, the writ demands a court order to make NRB amend its Act (2001) to incorporate a provision for punishment of responsible officials, which the existing law lacks. As per the Act, only the Cabinet can take action against NRB management. Accusing that NRB failed to make the concerned officials accountable for the crunch, the writ demands that the Commission for the Investigation of Abuse of Authority (CIAA) investigate the issue.

However, NRB officials defend that distribution of Indian currency during Dashain was in no way associated with the cash crunch. “The crash crunch and circulation of Indian currency during Dashain was a coincidence; they are two different events,” said Executive Director of the Currency Management Department, Aswini Kumar Thakur, one of the defendants identified by the writ. “Besides, NRB has provided IC to the commercial banks following due legal procedures,” argued Thakur.

Deputy Governor Krishna Bahadur Manandhar, however, conceded that some unfortunate events, including delay in the delivery of new notes, unexpected rise in currency flow during Dashain period (from Rs. 13 billion last year to over 17 billion this year) and ‘abnormal’ currency cycle led to the cash crunch.

Posted on: 2009-10-05 08:30

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