The way has been opened for the circulation (exchange) of Indian notes of denominations higher than Rs 100 in Nepal. The Reserve Bank of India (RBI) has given permission for the circulation (exchange) of high-denomination Indian notes in Nepal. Currently, only the Rs 100 denomination is in circulation in Nepal. After India gave permission, it will now be possible to use Rs 500 and Rs 2,000 denomination notes along with the Rs 100 denomination.

India has allowed the Central Bank of India to transport (import-export) up to 25,000 rupees to Nepal and Bhutan through the amendment to the Foreign Exchange (Import and Export of Currency) Regulations, 2025. ‘Citizens of Nepal and Bhutan, including Indians, will be able to bring notes of denominations greater than 100 rupees equivalent to 25,000 rupees into India and take them back to Nepal,’ says the new regulation issued by the RBI. 

However, the National Bank will have to issue a circular (instruction) to implement this provision. Because due to the directive of the National Bank, there is currently no facility to exchange Indian currency of denominations greater than 100 rupees. According to Guru Prasad Poudel, spokesperson of the Nepal Rastra Bank, after the RBI allows Indian currency of denominations greater than 100 rupees to be brought into Nepal from India and taken back to India, it will be convenient for citizens of both countries. 

‘The Indian government has made a new arrangement regarding foreign exchange management regulation, according to which a maximum of 25,000 rupees in denominations greater than 100 rupees can be brought into Nepal and taken out of Nepal,’ he says. ‘India had a similar arrangement before demonetization, but after demonetization, Nepal also decided not to provide exchange facilities for rupees greater than 100 rupees.’ 

Spokesperson Poudel says that such an arrangement will provide convenience not only to Indian tourists, students, businessmen and patients coming to Nepal but also to all Nepali tourists and students going to India. India has already demonetized three times. However, as the risk of demonetization remains, Spokesperson Poudel suggests that Nepali citizens should not collect Indian currency unnecessarily. 

‘According to the new arrangement, Nepali citizens can use the necessary Indian rupees, but when they are not needed, they should exchange the Indian rupees they have for Nepali rupees,’ he said, ‘If a lot of Indian rupees are deposited, there is a risk that they will not be exchanged if India demonetizes at that time.’

Now, India has provided a facility to bring and export up to 25,000 Indian rupees. Especially after the ban on 500 and 1000 denomination notes in 2016, although 100 denomination notes were allowed to be brought from India to Nepal, they were not allowed to be taken to India. This is why the Nepal government has repeatedly requested that arrangements be made to allow Indian rupees to be taken to India up to the specified limit. But India did not accept this request. 

After demonetization, the Indian government has not yet exchanged the 500 and 1000 denomination notes in Nepal. This is why the Rastra Bank was seeking assurance from the RBI that not only the Indian rupees can be brought to Nepal but also taken out. Now that the RBI has made the same arrangement, the Rastra Bank will soon issue a circular to exchange Indian rupees of denominations higher than 100. 

Currently, there are 100, 200, 500 and 2000 rupee notes in circulation in India. Since 2023, India has stopped printing new 2000 rupee notes. It has also issued a notice to the citizens to bring back the 2000 rupee notes printed before that. There is no ban on the circulation of 2000 rupee notes. Therefore, the new arrangement made by the RBI has paved the way for the exchange of all the mentioned Indian notes in Nepal. 

After India removed the then 500 and 100 rupee notes from circulation in 2016, the notes of those denominations in Nepal have not yet been exchanged. The Rastra Bank had issued instructions not to bring (exchange) large-denomination Indian notes into circulation. Now, India has allowed the import/export of up to 25,000 rupees to Nepal and Bhutan. Earlier, even though up to 25,000 rupees were allowed to be brought from India, there was no provision for taking them out. 

This arrangement will provide convenience to the citizens of both Nepal and India, said Rastra Bank spokesperson Guru Prasad Poudel. He said that this facility will be of special relief especially to Indian tourists visiting Nepal and Nepalis visiting India.

50 million rupees blocked by demonetization still not exchanged

Neighboring country India has not exchanged old 500 and 1000 rupee notes in Nepal's banking system for about 9 years. India, which claims to have given special importance to its relations with Nepal, has not exchanged Nepal's rupees in countries including Bhutan until 2018. Although the Nepal government and the National Bank have been raising the agenda of exchanging rupees in every high-level visit, India has been ignoring it.

The Indian government had decided to demonetize the 500 and 1000 rupee notes in circulation on November 8, 2016, in order to control black money and fake currency. It has been 9 years since that decision. Like every year, Nepal has been requesting for the currency to be exchanged. But experts say that India has not shown any interest in it.