Indian Treaty Series

On the conclusion of the discussions which have taken place between the representatives of India and Kuwait regarding the withdrawal of Indian currency from Kuwait, following the proposed introduction of a new Kuwaiti currency, the dinar, 1 am setting out the points in respect of which agreement has been reached as a result of discussions.

2. The appointed day for the purposes of this Agreement shall be the date on which the new Kuwaiti currency is to be introduced, which date has been notified as the 1st April, 1961.

3. No individual, bank or other institution in Kuwait shall be entitled, on or after the appointed day, to tender to the Reserve Bank of India any special rupee notes or Indian coins for payment in sterling or otherwise.

4. Special rupee notes and Indian coins shall cease to be legal tender in Kuwait on the expiry of six weeks from the appointed day or such extended period as the Government of Kuwait may specify under Article 23 of the Kuwait Arniri Decree No. 41 of 1960. The Government of Kuwait shall keep the Government of India advised of any intention to extend the said period of six weeks. During the above period, including any extension of the period, hereinafter referred to as the exchange period, the special rupee notes and Indian coins would be accepted by the Government of Kuwait for exchange into dinars.

5. The special rupee notes and Indian coins exchanged by the Government of Kuwait in accordance with the provisions of paragraph 4 shall be dealt with in the manner indicated in the Annexure to this letter.

6. Without prejudice to the provisions of paragraph 4, the Government of Kuwait may, upto the 30th September 1961, accept, at its discretion, special rupee notes and Indian coins and tender the same to the Reserve Bank of India and the special rupee notes and Indian coins so tendered shall be treated and accounted for in the same manner as the special rupee notes and Indian Coins, exchanged in terms of paragraph 4

7. The value of each consignment of special rupee notes and Indian coins received by the Reserve Bank of India in accordance with the provisions of paragraphs 4, 5 and 6 shall, subject to the examination and acceptance of the notes or coins as. India's liability in accordance with the procedure set out in the Annexure -to this letter, be converted into sterling at the par value obtaining on the date of the receipt of each consignment by the Reserve Bank of India as shown on the relative provisional receipt of the Reserve Bank of India referred to in the Annexure to this letter and an amount in sterling equal to the total value of all the notes and coins so converted shall be treated as a loan repayable in sterling by the Government of India to the Government of Kuwait.

The amount of the loan determined in accordance with the provisions of this paragraph shall be intimated by the Government of India to the Government of Kuwait not later than fifteen days from the receipt by the Reserve Bank of India of the last remittance of special rupee notes and Indian coins and the Government of Kuwait shall confirm the amount of the loan. On receipt of the confirmation from the Government of Kuwait, the amounts standing to the credit of the Government of Kuwait with the Reserve Bank of India, in pursuance of the arrangements set out in the Annexure, shall be transferred to the Government of India.

8. The loan shall be discharged by the Government of India in accordance with the provisions set out below, namely,

(a) a part of the loan equal to the amount certified by the Reserve Bank of India as representing the net result of the sales by India of special rupee notes to, and the purchases by India of special rupee notes from the banks in Bahrain, Doha, Dubai, Kuwait, Muscat and Sharjah between the 11th May, 1959 and the appointed day shall be treated as an initial liability, and shall be repaid as under:

(1) a sum representing one half of such initial liability shall be paid within fifteen days from the termination of the exchange period or on the 1st July, 1961 whichever is later.

(2) the remainder representing the other half of such initial liability shall be paid on the expiry of twelve months from the date on which the payment under (i) above is due;

(b) the balance of the loan remaining unpaid, after the payments referred to in clause (a) above have been made shall be discharged in nine equal annual instalments, the first instalment being payable on the expiry of twelve months from the- date on which the payment under sub-clause (ii) of clause (a) is due;

(c) the payments by India against the amounts of the instalment under clause (b) shall be subject to the adjustments mentioned in the following paragraph;

(d) if a payment under clauses (a) or (b) of this paragraph falls due on a day which is a Bank holiday in Bombay, the payment shall be made on the immediately following working day.

9. If, during any period between the appointed day and the 31st March of the year in which the last instalment under clause N of paragraph 8 is due, there is a net return of special rupee notes by banks located outside Kuwait, and if such net return of special rupee notes is accompanied by an increase in the total circulation of Kuwaiti dinars, special rupee notes in circulation outside Kuwait shall, in the absence of evidence to the contrary, be deemed to have been replaced by Kuwaiti dinars upto the extent of such net return of special rupee notes or the increase in the circulation of dinars whichever is less and the amount of any instalment of principal payable under sub-cluase (ii) of clause (a) and clause (b) of paragraph 8 and interest payable under paragraph 11, shall be reduced by an amount equal to such replacement. If the amount of any instalment of principal and interest payable by India is less than the amount of the reduction due to be made under this paragraph, the Government of Kuwait shall reimburse to the Government of India in sterling the amount by which the replacement of special rupee notes exceeds the amount of the instalment referred to in this paragraph.

The adjustment contemplated in this paragraph shall be made annually and the figures relating to the replacement of special rupee notes shall be computed upto the end of March each year on the basis of the figures exchanged between the two Governments and the reduction, where necessary, shall be made in the immediately following -instalment.

10. Any amount of sterling adjusted in' an instalment- payable by India and any amount reimbursed to India by the Government of Kuwait in accordance with the provisions of the preceding paragraph shall be treated as a loan re-payable by India, and be carried forward and paid in equal annual instalments commencing from the expiry of one year from the date of the last instalment payable under clause (b) of paragraph 8.

The amount of every instalment other than the last instalment payable under this paragraph shall be equal to the amount of the instalment which would have been payable under clause (b) of paragraph 8 but for the adjustment referred to in clause (c) of that paragraph read with paragraph 9 and the last instalment, payable under this paragraph shall be of such amount as may be necessary in order to discharge the loan finally.

11. The Government of India shall pay to the Government of Kuwait interest at the rate of 43/4 (four and three quarters) per cent per annum, free of Indian taxes, on the outstanding liability as determined in accordance with the provisions of paragraph 7, with effect from the dates on which the special rupee notes and In than coins in respect of which the liability has arisen have been received by the Reserve Bank of India; these dates shall be the dates appearing on the relative provisional receipts of the Reserve Bank of India referred to in the Annexure.

The First payment of interest shall be payable by India on the date on which the payment under sub-clause 60 of clause (a) of paragraph 8 is due and subsequent payments of interest shall be due on the dates on which instalments of principal are payable under clause (b) of paragraph 8. Interest will be payable subject to the adjustments, if any, under paragraph 9.

12. The Government of Kuwait shall furnish to the Government of India statistics relating to the circulation of the Kuwaiti dinar, and the Government of India shall furnish to the Government of Kuwait statistics relating to the circulation of special rupee notes at six monthly or such shorter intervals as may be agreed upon between the two Governments.

13. Without prejudice to the foregoing provisions, the Government of India and the Government of Kuwait shall exchange such other information as may be necessary from time to time in order to implement this Agreement.

14. If any Government or any other authority outside Kuwait in whose area special rupee notes are in circulation introduces or proposes to introduce its own currency, the Government of India and the Government of Kuwait shall hold joint consultations regarding the modifications, if any, necessary in the arrangements agreed to between the two Governments and set out in this letter.

15. 1 shall be grateful if you will kindly confirm that the foregoing paragraphs set out correctly the points in respect of which agreement has been reached between the two Governments.

Government of Kuwait,
Department of Finance and Economy,

Camp, New Delhi.

I acknowledge the receipt of your letter of MarcH 20, 1961 which reads as follows :

I agree with the above and confirm that it sets out correctly the understanding reached between us.

1. Packing and despatch of notes from Kuwait :

The special notes will be sorted according to denominations and made up into packets of 100 pieces each, and the packets tied together into bundles of 10 packets each. The bundles will be packed in wooden boxes of adequate size and strength. As far as possible, bundles, made up of notes of different denominations, will be packed in separate boxes.

Mutilated and other defective notes will be packed and tendered separately. These notes will be generally accepted by the Government of Kuwait, or its bankers, on collection basis and payment made to the tenderers on receipt of the Reserve Bank's advice of having passed the relative notes for payment under the Reserve Bank of India Note Refund Rules (copy enclosed). Applications from individual tenderers will not be forwarded to the Reserve Bank. Instead notes will be serially numbered and accompanied by a list giving the serial number of each note and its denomination as per Form 'A'. On receipt, the claims will be dealt with by the Reserve Bank as from the Government of Kuwait who will hold the Reserve Bank indemnified against counter claims. A reference will be made to the number of the notes, and the number of the list with which the notes are forwarded, in, the Reserve Bank's advices to the Government of Kuwait communicating the admission or rejection, as the case may be of the claim.

Slightly mutilated notes as described below, may, however, be exchanged by the Kuwait Government or its bankers.

(i) Notes disfigured by oil or other substances in such a manner as not to render their identification doubtful.

(ii) Notes with only a slight mutilation which does not interfere with identification.

(iii) Notes which are made up, of one piece - and the area of which is clearly more than half.

(iv) Notes consisting of two pieces which can be identified by number or otherwise as forming one note and together have an area clearly more than half

No notes about the genuineness of which there is any doubt or which suggests an attempt at alteration or fraud, will however, be accepted.

These paid notes will be bundled separately, and sent along with the remittance or by post/air freight as may be convenient.

There is no objection to defective notes of different denominations being packed in one box.

The remittance will be sent to the address of the Currency Officer, Reserve Bank of India, Issue Department Bombay. The Government of Kuwait, or its bankers, will make the arrangements in regard to transport of remittances by air/sea as also the insurance of the remittances at its end if considered necessary. The Kuwait Government may arrange for a representative of the Govt. or of its bankers, to accompany the remittance in each case. A programme of remittances to be despatched from Kuwait will be drawn up and supplied to the Currency Officer, Bombay from time to time. In addition, the particulars of the remittances despatched, as and when they are despatched, will be advised to the Currency Officer, Bombay in Form 'B' (enclosed) . Where the advice is sent by cable, the cable should clearly indicate the number of boxes and the value of remittance. The programme of remittances will be phased as far as possible, so as not to cause congestion of work in the Reserve Bank, Bombay.

2. Receipt of notes in India

The Kuwait Government will make the necessary arrangements for the clearance of the remittances. from the air/sea port at Bombay and for their tender to the Currency Officer, Bombay through the correspondents of its bankers or any other agency. If so desired, the Currency Officer, Bombay will be agreeable to arrange for the clearance of the remittances, and their transport from the port to the Bank's premises under proper police escort. All expenditure incurred in connection with the clearing and transport of the remittances will be borne by the Government of Kuwait.

3. Posting of representatives of the Government of Kuwait at the Reserve bank : It would be advantageous for the Govt. of Kuwait to station a representative or two of the Government, or of its bankers at the Issue Department of the Reserve Bank of India, Bombay which will handle the remittances, for the duration of the receipt and examination -of the remittances. The remittances will then be cleared at the port in the presence of such representative and subjected to preliminary examination under his supervision and thereafter held in joint custody with him pending detailed examination and final taking over by the Reserve Bank. The Reserve Bank will extend the necessary facilities for the safe custody of the remittances, in its vaults, and for their examination from day to day, under the supervision of the representative of the Kuwait Government, or of its bankers as the case may be.

4. Examination of Notes in the Reserve Bank :

The remittance boxes, as and when received will be opened in the presence of the representative of the Kuwait Government, of its bankers and the notes subjected to preliminary examination which will consist of counting the notes by bundles and packet., Every effort will be made to have the preliminary examination of the remittance completed by the close of the working day following the date of its receipt. Normally, it should be possible. for a remittance of about 50 boxes to be taken over, after preliminary examination, in one full working day. The remittance will, after preliminary examination be repacked for detailed examination to be taken up as soon as possible. A provisional receipt in Form 'C' (enclosed) will be issued on receipt of remittance after the preliminary examination is over.

Two accounts will be opened in the name of the Government of Kuwait in the Bombay Office of the Reserve Bank. The value 0f remittances received from the -national bank of Kuwait will he credited to account No. 1 and the value of those received from the British Bank of the Middle East credited to account No. 2 at the same time as the provisional receipts are issued. As credit in respect of the remittances will be afforded to the Kuwait Government on preliminary examination. it will furnish a letter to the Reserve Bank in Form D' (enclosed) authorising it to recover by- debiting the relative account with the amount of any shortages or deficiencies that may be found on detailed examination of the remittances. The boxes repacked, after preliminary examination, will be deposited in a separate cage in one of the vaults and the keys held by the officials of the Reserve Bank and the representatives - of the Kuwait Government, or of its bankers, as the case may be. A special section consisting of about 25 Note Examiners in charge of an Assistant Treasurer will be set up in the Bombay Office of the Reserve Bank for the detailed examination of the notes so that the examination of the remittances is not unreasonably delayed. On completion of detailed examination of each remittance a report of the result of the examination will be furnished to the Govt. of Kuwait, or its bankers, as the case may be, in Form 'E' (enclosed) with a copy to the representative stationed in Bombay. Adjustments in respect of shortages or deficiencies if any, will be made in the relative account of the Government of Kuwait.

5. Coins

Coins of each denomination will be placed in separate bags and tied, and the bags will thereafter be packed in wooden boxes. As far as possible, defective coins will be packed separately to be dealt with under the Coinage Rules. Coins of different denominations should be placed in bags as per value indicated below per each bag :

Anna pie coins

Denomination : Value Rs

Single piece - 50
1/2 anna - 100
1 anna - 250
2 annas - 500
4 annas - 2000
Rs. 1 - 2000

Decimal Coins.

Denomination : Value Rs.

I np - 100
2 np - 100
5 np - 250
10 np - 500
25 np - 2000
50 np - 2000

The particulars of coins forming the remittance, or a part thereof, will also be advised in Form '13'. The value of the coins will be credited, on receipt, to the Kuwait Government's Account No. 1 or No. 2, according as the remittance is received from the National Bank of Kuwait or the British Bank of the Middle East and any adjustment necessary as a result of detailed examination made subsequently in the account to which the credit had been afforded.

Accounts of the Government of Kuwait

The credits accruing to the Kuwait Government will be disposed of in accordance with the provisions of the letter dated the 20th March, 1961 exchanged between the Government of India and the Government of Kuwait. So long as there is a balance in any of the accounts of the Government of Kuwait the Bombay office of the Reserve bank will send a weekly statement of the transactions in the accounts to the Government of Kuwait. Certificates in respect of the balances held in the accounts and/or notes/coins held by the Reserve Bank pending detailed examination, will be furnished by the Reserve Bank, if so required by the Government of Kuwait.

List No.

2.

3.

4.

5.

6.

7.

Serial No:

Remittance of Special Indian rupee notes and

coins. ............

We advise that a remittance of special rupee notes (and Indian coins) as detailed below packed ..............in boxes will be despatched to you from this office by. ................flight. No........-/s.s.......... leaving here........ on the ------- reaching Bombay at .........-on the........ if Kuwait Govt. The remittance will (not) be accompanied by a representative. We shall be glad if you will kindly arrange to own receive the remittance (immediately on arrival of the Plane/Ship arrangements in Bombay) from bank and afford us credit in the for delivery of the account of -the Government of Kuwait on your books.

Denomination\ No. of boxes\ No. of pieces\ Value in Rs.

Re. I /

Rs. 5/

Rs. 10/

Rs. 100/

Total

Denomination \No. of boxes\ No. of pieces\. Value in rupees.

Re. 1/

Rs. 5/

Rs. 10/

Rs. 100/

Total

Anna-pie coins \No. of Value bags\No of boxes Decimal Coins Denomination\No of value Bags

Denomination

1. .............................................2.......................................3............................4

Single piece ...............................__...................................1np........................._

1/2 anna.................................__.......................................2 np......................._

I anna...................................._...........................................5 np......................._

2 annas ................................_ ...........................................10 np....................._

4 annas.................................._...........................................25 np....................._

8 annas................................_.............................................50 np....................._

Re. I/-................................_................................................_.........................._

Total.................................._.....................................................Total

FORM 'C'

Serial No.

We acknowledge receipt...................... of boxes said to contain special rupee notes to the value of Rs. ...........received from the Government of Kuwait as per its invoice No..............._ dated -............. 19. The remittance has been subjected to preliminary examination and a sum of Rs...................has this day been credited on provisional basis to account No. 1/2 of the Government of Kuwait with the Reserve Bank of India, Banking Deptt. Bombay. The remittance is being held by the Reserve Bank of India in joint custody with the Kuwait Governments representative and final adjustment will be made after examination of the remittance. Any adjustment necessary as a result of detailed examination will be made in your account.

Kuwait.

Copy forwarded for information to:

1. The representative of the Govt. of Kuwait, C/o Reserve Bank of India, Issue Deptt. Bombay.

2. The Chief Accountant, Reserve Bank of India, Central Office, Bombay.

Dear Sir,

In continuation of our advice No............ - dated ................(Serial No..........we furnish on the reverse a report on the result of the examination of the -remittance of Rupees received from you, vide -your advice No. dated 19...............

2. The defective notes for Rs............. included in the remittance are being dealt with separately and a further advice will be sent to you in due course. In the meantime they have been treated as deficiency in the remittance.

3. The rejected notes/coins of the nominal value of Rupees...............- have been handed over to your representative.

4. The forged note (s) for Rs................ -found in the remittance has/have -been impounded under the rules of the Department.

1. The representative of the Government of Kuwait, C/o Reserve Bank of India, Issue Department, Bombay.

2. The Chief Accountant, Reserve Bank of India, Central Office, Bombay.

Special Rupee Notes / 1/ 5/ 10/100 Total pieces / Value / Remarks

1. GOOD NOTES

2. EXCESS

3. TOTAL

4. SHORTAGE

5. DEFECTIVE NOTES

6. FORGED NOTES

7. TOTAL DEFICIENCY

8. DEFECTIVE NOTES PASSED FOR PAYMENT

9 .NET DEFICIENCY-----------------------------------------------------------------------