Nepal bans the use of Indian currency notes of Rs 200, 500, 2000

In a move that may severely impact Indian tourists, traders and the Nepalese persons working in India, the Government of Nepal has banned use of Indian currency banknotes of Rs 200, Rs 500 and Rs 2000.

The decision was taken in a cabinet meeting on December 10 following which a notice was issued asking the Nepalese citizens not to keep or transact in these banknotes.

"Indian Rupees 200, 500 and 2,000 banknotes will not be allowed to bring in or to keep with will be illegal. So the notice about not to use, carry and possess those banknotes would be published," the press release made by Nepal's Ministry of Communication and Information Technology said while giving reference to the cabinet decision.

With this decision Nepali citizens are only allowed to carry or make the transactions using Rs 100 banknotes as it is not specified in the release about ban on this or explained further.

There was no specific clause or provisions about the new Indian banknotes which were issued after the demonetization move by the Indian Government last November. But the Central Bank of Nepal, the Rashtra Bank, had asked public not to transact using the new Indian banknotes issued later that year.

Even though Indian banknotes are not a legal tender in Nepal, it is widely used in the country due to free flowing movement of citizens and trade from both sides. A lot of Nepalese citizens work in India who carry Indian currency back home while Indian tourists travelling to the Himalayan country find it comfortable to transact in Indian rupees.

Nepalese citizens were highly impacted during demonetisation and according to estimates roughly Rs 950 crores of Indian currency was in Nepal while Indian Government announced demonetisation. The note-ban by India severely impacted the economy of Nepal following which Prime Minister KP Sharma Oli raised the matter of exchanging the demonetised currency with new banknotes with the Indian government.