Himalaya Shamsher Rana: The governor who made Nepali currency the legal tender in Tarai

Indian currency was in use and circulation in Nepal's plains. King Mahendra wanted Nepali currency as a legal tender within the state of Nepal. He assigned the task to Himalaya Shamsher who accomplished it without fail.

Pushpa KC

  • Read Time 4 min.

Kathmandu: Himalaya Shamsher Rana, the first governor of Nepal Rastra Bank, passed away on Sunday. He was undergoing treatment for pneumonia at Norvic Hospital, Thapathali. He was 95.  The founder of Himalaya Bank, Rana was also Nepal’s first finance secretary.

Rana was a child with a rare ability. He passed his matriculation at the age of 14 and served as the governor of the central bank from April 26, 1956, to February 7, 1961. He also served as the resident ambassador of Nepal at the United Nations from 1962 to 1986.

The grandson of Rana Prime Minister Dev Shamsher, he set the foundation for the banking system in Nepal. 

Himalaya Shamsher studied BA and MA in Bombay (today’s Mumbai). This was the time when the independence movement was gaining momentum in India. Inspired by the freedom movement of India, Rana started to meet the leaders of the democracy movement in Nepal and during that course he met Subarna Shamsher Rana. He became a member of Nepal Prajantantra Congress in 2005. Then he devoted himself to contributing to the democracy movement in Nepal. He would type the leaflets and pamphlets and disseminate them.

After the end of Rana rule in 1951, Nepal witnessed reforms in administration and finance. The Ministry of Finance was created and the country needed a competent person to lead the ministry. Subarna Shamsher was looking for someone with a Master’s degree in economics. But such a person was rare to be found in Nepal.  Himalaya Shamsher was one such person. He soon became the finance secretary. He served in that capacity for five years, after which he became the governor of Nepal Rastra Bank. He was the one who proposed to use the slogan Asatoma Sadgamaya (meaning let us return to truth from untruth) in the seal of Nepal Rastra Bank. The seal with that mantra, however, was made by Jwala, the daughter of Bal Krishna Sama.

Himalaya Shamsher used to say he was appointed the governor of NRB by King Mahendra, with whom he shared a close relationship. Later Mahendra himself dismissed him from the post, before he completed his five years term. “After the 1960 coup, king Mahendra began to remove from posts those who had faith in democracy.  Many secretaries and officers were dismissed,” Rana had shared with Nepal Live in one of the interviews. “I was removed from the post because I was the one who believed in democracy.”

This was the time when Indian currency was in use and circulation in Nepal’s plains–from Jhapa to Kanchanpur.  Even the government would collect land revenues in IC in those places.  King Mahendra was not happy with this situation.  He was of the view that there should be only one currency in circulation within the state of Nepal and it should be Nepali currency.  The exchange rate between Nepali and Indian currency was determined by a group of few people to serve their own interests. 

When Nepalis returned home with pension money, the exchange rate would be put at a low price and when Nepal had to export goods during Dashain the exchange rate of Indian money would be put at a higher value. King Mahendra wanted to end this system. King Mahendra then created Nepal Rastra Bank, appointed Himalaya Shamsher as its governor and assigned him this responsibility.  Rana executed this policy without fail but it was not easy.

People of Tarai had greater exchanges with India in terms of marriage and export and import.  If the government directed them to use only Nepali currency there could be resistance. But it would be a win-win situation if they could exchange Indian currency into Nepali and vice-versa when they needed it. For this the country needed to put in place exchange counters in the plains from Jhapa to Kanchanpur and put up additional branches of the bank. Another challenging issue was about the rate of exchange. It took three years for Rana to assess the situation and to collect the statistics.  Having completed this process, Rana came to the conclusion that if 100 IC was exchanged at the rate of NRs 160, it would be suitable for Nepal.

All of this was being done secretly. People came to know about it only when the decision was made public in April 1960, when Himalaya Shamsher was on a foreign trip with King Mahendra. Back home, Prime Minister BP Koirala declared: “From April 13, 1960, there will be only one currency that will be in use in Nepal. Only Nepali currency will be a legal tender within Nepal. IC 100 will be NC 160 in Nepal.” 

The declaration caught many by surprise and they thought the decision would not be implemented. There was an Indian advisor from Reserve Bank of India in Nepal who worked in Nepal Rastra Bank, shared Rana with Nepal Live in one of the interviews. When he came to know about Nepal’s plan he said we would not be able to implement it. Rana and the Indian advisor betted. “I won Rs 5 in bet from him when the decision was finally implemented,” Rana had told Nepal Live in an interview in May 2019.

“When we started the campaign to use Nepali currency, the Mahendra Highway was not built. We had to ensure enough stock of Nepali and Indian currencies in branches and exchange centers from Jhapa to Kanchanpur. We had to be able to exchange the money the day the customers came for it. It was difficult to fulfill the demand,” he said. “Then we made an application to the Indian embassy in Kathmandu and sent trucks of Nepali and Indian notes to places in exchange centers from Jhapa to Kanchanpur. Initially, it was difficult but we could manage it.”

Initially, the decision was met with some criticism but later all people realized its importance, Rana said. Later, people of Tarai themselves started to say we never  felt like we were Nepali citizens because we used Indian currency. We were taught in schools that Rajendra Prasad is our president and Jawaharlal Nehru our prime minister. After the Nepali currency became a legal tender, we felt like we were real Nepali citizens,” Rana recalled those days.

According to Rana, the money earned by those serving in the Indian army would directly go to the Reserve Bank of India. If the Nepal government needed foreign currency we would have to send the money to the Indian embassy and write an application to the Reserve Bank of India. “After making Nepali currency the legal tender, we no longer had to rely on India,” Rana recalled.

Himalaya Shamsher Rana is no more with us but he has left a legacy that Nepal will always be proud of.