Nepal's central bank has announced the ban of Indian currency notes with denominations above ₹100. The Nepal Rastra Bank (NRB) on Sunday issued a circular for the institutions licensed by it notifying them about the ban, reports Xinhua news agency.
On December 13, Nepal's cabinet had decided to ban the use of these currency notes.
The decision to ban these notes has come at a time when the NRB has requested the Reserve Bank of India (RBI) to allow Nepal to use currency notes with all denominations.
At present, only the notes with a denomination of ₹100 and below are freely exchangeable in Nepal.
According to a report in Kathmandu Post, the circular prohibits Nepali travellers, banks and financial institutions from holding or carrying and trading Indian bank notes higher than ₹100.
The central bank said in its circular that Indian denominations of ₹200, 500 and 2,000 cannot be carried and used for trading.
Under the new rule, Nepali citizens cannot carry these denominations to other countries except India. In the same way, Nepali people are also not allowed to bring in such notes from other countries. However, Indian currency of 100 or below are still allowed for trading and conversion, NRB’s circular reads.
The note ban was criticised by travel traders and other business entrepreneurs saying that it would hurt the country’s tourism.
A majority of Indians come to Nepal from bordering towns, it’s quite difficult for them to convert their currency to dollar or Euro, they said
Overland Indian visitors’ survey showed that 1.2 million Indians visited Nepal through the surface route while 160,132 travelled via air.
Modi government, on November 8, 2016, banned the notes of INR 500 and INR 1,000. Since then, the Nepal Rastra Bank have also banned those notes in Nepal.
The Reserve Bank of India, in February 2015, introduced the Foreign Exchange Management (export and import of currency) Regulations, allowing Nepali and Bhutanese citizens to “carry Reserve Bank of India currency notes of denomination INR 500 and/or INR 1,000 up to a limit of INR 25,000”.
Following the Indian government’s move of 2016, billions of Indian currency notes of 500 and 1000 are still stuck in Nepal.
With IANS inputs