Now, Nepal Bans New Indian Rs 500 and Rs 2,000 Currency Notes

The notes will be legal in Nepal only when India issues a notification as per the Foreign Exchange Management Act.

Nepal last year allowed people to bring in up to Rs 25,000 in higher denomination Indian currency notes. (Photo: AP)

The Nepal Rastra Bank, the Himalayan country’s central bank, on Thursday banned the use of India's new Rs 500 and Rs 2,000 notes, terming them "unauthorised and illegal".

These notes were issued by the Reserve Bank of India recently after old Rs 500 and Rs 1,000 denomination notes were withdrawn.

NRB spokesperson Narayan Poudel said these new currency notes are not yet legal in Nepal, according to onlinekhabar.com.

Poudel said these notes will be legal in Nepal only when India issues a notification as per the Foreign Exchange Management Act.

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People seeking to exchange Indian currency in physical cash in Nepal can now receive only up to Rs 25,000 due to limited cash available in the country.

The Nepal Rastra Bank on Friday fixed an upper limit due to shortage of cash coming from the Reserve Bank of India, reported The Himalayan Times.

Pilgrims, students and those travelling for medical checkup (normal cases) to India will get Rs 10,000 only, the report said. The exchange facility for this category was Rs 25,000 earlier.

People who wished to exchange their money without supporting documents and travel documents will get Rs 2,000 after submitting a photocopy of their identity card as compared to Rs 5,000.

India is likely to issue a FEMA notification allowing people in Nepal and Nepalis in India to possess certain amount of Indian currency.

Earlier, a ban was in effect in Nepal till last year against the use of Rs 500 and Rs 1,000 denominations notes. Authorities had lifted this ban after the visit of Prime Minister Narendra Modi to Nepal.

Nepal then allowed people to bring in up to Rs 25,000 in higher-denomination Indian currency notes.

The RBI has formed a task force to allow currency exchange for non-Indians in Nepal who possess the now-defunct Rs 500 and Rs 1,000 notes.