- Nepal Rastra Bank has introduced an official exchange facility for Indian currency notes in denominations of INR 200 and INR 500.
- The move allows travelers and businesses to exchange these notes through authorized banks, facilitating safer and more transparent cross-border transactions.
- Citizens can carry up to INR 25,000 in these denominations, provided the banknotes were issued after India's 2016 demonetization.
- The exchange and circulation of INR 2,000 notes and old INR 1,000 notes remain strictly prohibited under current Nepalese regulations.
Kathmandu: In a significant move expected to benefit thousands of Nepalis travelling to India and Indian visitors to Nepal, Nepal Rastra Bank (NRB) has decided to introduce an official exchange facility for Indian currency notes in the denominations of INR 200 and INR 500. The decision follows discussions between Nepal's central bank and the Reserve Bank of India (RBI) aimed at simplifying cross-border currency transactions.
The move comes as the use of INR 200 and INR 500 banknotes has increased significantly since the Government of Nepal, in mid-November, allowed individuals to carry up to INR 25,000 in these denominations while travelling between the two countries. Until now, the absence of a formal exchange mechanism had created difficulties for travellers, traders and businesses, many of whom had limited access to authorized currency exchange services.
According to NRB, Nepali and Indian citizens will now be able to exchange INR 200 and INR 500 banknotes through authorized banks and financial institutions in accordance with Nepal's foreign exchange regulations. The central bank said the facility is intended to facilitate legitimate currency transactions while encouraging the public to use formal banking channels instead of informal money changers.
Nepal and India share an open border, with millions of people crossing it every year for employment, education, business, medical treatment, religious pilgrimages and tourism. Indian currency is widely used in many parts of Nepal, particularly in border districts and major tourist destinations, making access to officially exchangeable banknotes an important issue for both travellers and businesses.
Under the existing regulations, Nepali and Indian citizens are permitted to carry, exchange or transport Indian currency notes worth up to INR 25,000 in the denominations of INR 200 and INR 500, provided the notes were issued after November 9, 2016, when India introduced a new series of banknotes following its demonetisation drive.
However, NRB has clarified that the restrictions on certain Indian currency notes remain unchanged. The old INR 1,000 banknotes demonetised by India in 2016 continue to be prohibited in Nepal. Similarly, the circulation, exchange and transportation of INR 2,000 notes remain prohibited under Nepal's current foreign exchange regulations.
The latest decision is expected to provide relief to businesses engaged in cross-border trade, transport operators, pilgrims travelling to religious sites in India, students pursuing higher education there, and thousands of Nepali migrant workers who regularly travel between the two neighbouring countries. Banking officials believe the formal exchange facility will also help reduce reliance on informal currency exchange channels and improve transparency in foreign exchange transactions.
Economists view the decision as another step towards strengthening monetary and financial cooperation between Nepal and India. In recent years, the two countries have expanded collaboration in digital payment systems, banking connectivity and foreign exchange management to facilitate trade, tourism and cross-border financial transactions. The introduction of an official exchange facility for INR 200 and INR 500 notes is expected to further strengthen public confidence in the formal banking system while making cross-border transactions more convenient and secure.
NRB has urged the public to exchange Indian currency only through authorized banks and licensed financial institutions and to comply with the prescribed currency limit while travelling across the Nepal-India border. The central bank is expected to issue detailed operational guidelines to banks regarding the implementation of the new exchange facility.
