Nepal Eases Rules on Indian Currency After a Decade — Here’s What Changes Now

Nepal has taken a significant policy step by relaxing long-standing restrictions on the use of Indian currency, ending a freeze that has been in place since the fallout of India’s 2016 demonetisation. The decision was cleared by the Nepal Cabinet earlier this week and formally announced by the government’s spokesperson.

Jagdish Kharel, Nepal’s Minister for Information Technology and Communication, said the revised framework allows the movement of certain Indian currency denominations across the India–Nepal border, subject to specific limits. While the government has opened the door to cross-border use of higher-value notes, it has retained a ceiling on the amount individuals can carry while travelling between the two countries.

Under the new arrangement, both Indian and Nepali citizens will be allowed to carry Indian currency up to a prescribed limit per person while entering or exiting Nepal. Kharel clarified that the relaxation applies only to Indian banknotes issued after November 9, 2016, the date on which New Delhi invalidated old high-denomination notes.

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Nepal had imposed the curbs in the aftermath of India’s demonetization, banning the circulation of Indian currency above Rs 100. The move disrupted everyday transactions in border regions and affected tourism and small trade, given the open-border system and the widespread acceptance of Indian currency in Nepal’s economy.

The shift follows recent regulatory changes by the Reserve Bank of India, which amended foreign exchange rules to formally permit the import and export of higher-denomination Indian notes between the two neighbouring countries. These amendments removed a key procedural hurdle that had prevented Nepal from revisiting its earlier decision.

The latest easing is being viewed as a confidence-building measure that could smoothen cross-border trade and travel. However, legacy issues persist. When demonetisation was announced in 2016, Nepal’s banking system was holding Indian currency worth an estimated Rs 50 million, much of which remains unexchanged even today.