India for revoking ban on Indian notes

Kathmandu, March 14

India has expressed interest to circulate high-denomination banknotes of INR 200 and INR 500 in Nepal. The notes are banned here and Nepal’s monetary authority is unlikely to entertain the request as the Indian authority has not made it clear whether India-bound Nepalis can carry currencies of those denominations.

Writing to the Nepal Rastra Bank recently, the Reserve Bank of India — India’s central bank — informed about the new provision adopted by the Indian government allowing its citizens to carry up to INR 25,000 of high-denomination banknotes of INR 200 and INR 500 to Nepal, paving the way for circulation of these high-denomination notes in Nepal.

However, there is a catch.

“Though the RBI has introduced the provision allowing Nepal-bound travellers to carry INR 200 and INR 500 notes worth up to INR 25,000, it has not stated whether it will allow India-bound Nepali citizens to carry the same amount of Indian currency in INR 200 and INR 500 denomination notes,” Chintamani Siwakoti, deputy governor of NRB, told THT. Siwakoti said the NRB had sought clarification on this matter from RBI.

Meanwhile, NRB stated that RBI had mentioned nothing about allowing circulation of INR 2,000 banknote in Nepal.

Siwakoti said high-denomination Indian currency notes would be legalised in Nepal once the RBI ensured two-way exchange facility of such notes.

High-denomination Indian currency notes have not been in circulation in Nepal after the Indian government demonetised INR 500 and INR 1,000 notes in 2016. In December, the government had officially banned Indian currency notes of all denominations above INR 100, stating that the notes have not yet been legalised in the country.

In January, the NRB had asked the RBI to manage exchange facility of high-denomination Indian currency notes in Nepal, especially against the backdrop of the country’s hospitality sector being hit due to lack of exchange facility for high-denomination Indian currency notes.

As Indian visitors account for a majority of annual tourists that Nepal receives every year, lack of exchange facility for high-denomination Indian notes has been troubling Indian tourists.