Nepal Relaxes Rules on High-Value Indian Notes Following RBI Amendment

The Government of Nepal has eased restrictions on carrying Indian currency, allowing individuals to hold Indian banknotes in denominations of INR 200 and INR 500 up to a maximum limit of INR 25,000 per person.

Under the revised provision, both Nepali and Indian citizens may bring these denominations into Nepal from India or carry them from Nepal to India.

The Cabinet decision on Monday, December 15, follows amendments by the Reserve Bank of India to the Foreign Exchange Management (Export and Import of Currency) Regulations, 2015. The amendment permits Indian, Nepali and Bhutanese nationals to carry higher-denomination Indian currency while travelling to and from India.

As per the amendment dated November 28 and the notification published in the Gazette of India on December 2, individuals are now allowed to carry Indian currency notes above the INR 100 denomination, subject to an overall ceiling of INR 25,000.

Earlier, Nepal Rastra Bank spokesperson Guru Prasad Paudel had told New Business Age that the central bank would issue a new circular in response to the changes introduced by India.

According to Nepal’s state-owned news agency RSS, the provision applies only to Indian banknotes that have been in circulation since November 9, 2016.

India currently circulates banknotes of INR 200, INR 500 and INR 2,000 above the INR 100 denomination. The INR 2,000 note, introduced in 2016, remains legal tender but is being withdrawn from circulation.

Nepal, in December 2018, prohibited travellers and financial institutions from carrying or using Indian notes of INR 200, INR 500 and INR 2,000. Nepal Rastra Bank (NRB) issued a formal circular in January 2019 to enforce the ban.

Many Nepali traders, particularly in border regions, had criticised the restriction. They argued that it hampered cross-border trade, where Indian currency is commonly used.

Nepali officials point out that tourists are already allowed to bring up to $5,000, or its equivalent in convertible currency, provided larger amounts are declared. They noted that the INR 25,000 limit for Indian nationals is India’s own regulation.

India has long argued that counterfeit and illegal currency enters its territory through Nepal. High-denomination Indian notes have therefore faced restrictions in Nepal for years.

Under the 2015 Foreign Exchange Management Regulations, the RBI had allowed Nepali and Bhutanese citizens to carry Indian notes of INR 500 and INR 1,000 up to INR 25,000. That arrangement, however, collapsed after India’s demonetisation of the two notes in November 2016, a move aimed at curbing black money and corruption.

Despite repeated requests from Nepali authorities, India has not yet exchanged the demonetised notes held inside Nepal’s financial system. According to spokesperson Paudel, NRB still retains roughly INR 50 million (around Rs 80 million) in invalid INR 500 and INR 1,000 notes.

Observers emphasise the latest development brings practical benefits. Nepali workers in India would be able to bring home their earnings more easily, and Indian tourists would also find transactions smoother, they say.