RBI Headquarters in Mumbai
RBI Headquarters in Mumbai | Photo: Shashank Parade | PTI
Text Size:

New Delhi: In what could come as a major relief to thousands of small traders, tourists and Nepalese citizens working in India, the government and the Reserve Bank of India are working to resolve the knotty issue of the ban on Rs 2,000, Rs 500 and Rs 200 currency notes in Nepal.

The RBI is expected to finally issue a notification allowing the circulation of these new post-demonetisation high-value currency notes in Nepal. This was a key sticking point due to which the Nepalese government had banned these notes in December 2018, citing a lack of clarity. The notification is expected to be issued soon.

“The issue is under consideration… It will be notified soon and thereafter, the high value currency notes will be treated as legal tenders,” Subhash Garg, secretary, economic affairs, told ThePrint.

“There has been unnecessary confusion on this issue. Earlier, the high value currency notes of Rs 500 and Rs 1,000 were officially allowed to be circulated. They were demonetised, and now, a new notification has to come, allowing circulation of the new notes. That will come.”

Also read: India-Nepal currency deadlock has its roots in face-off over Madhesis

Apprehensions that led to the issue

Traditionally, Indian currency has been in wide circulation in the Himalayan nation — some estimates say that about 25 per cent of all currency in Nepal is Indian rupees. Nepal is a favourite tourist destination for Indians, and “most Indian tourists make their financial transactions and purchases in Indian rupees as it is easier for them as well”, pointed out a public sector bank official who looks after foreign exchange.

However, after the new Rs 2,000, Rs 500 and Rs 200 notes were introduced post-demonetisation, Indian authorities were reluctant to allow their circulation in Nepal as there were apprehensions of hoarding and generation of fake currency.

We are deeply grateful to our readers & viewers for their time, trust and subscriptions.

Quality journalism is expensive and needs readers to pay for it. Your support will define our work and ThePrint’s future.


Nepal had urged the RBI to issue the notification, but in the absence of that, decided to ban the new notes. Currently, only lower denominations of up to Rs 100 are allowed to be circulated in Nepal.

“The delay in allowing circulation of Indian currency in Nepal has been causing a lot of problem even for the tourists,” the bank official said.

Anti-India sentiments

Anti-Indian sentiments have also been growing in Nepal after the RBI did not provide any opportunity for Nepalese to exchange their demonetised currency notes. Government officials said demonetised currency notes of old Rs 500 and Rs 1,000 that are left in Nepal — reportedly adding up to about Rs 10 crore — will not be exchanged anymore, even though neighbouring Bhutan was allowed to deposit the defunct bills.

Nepalese Prime Minister K.P. Sharma Oli had pointed out that demonetisation hurt the people of his country, and said he would raise the matter with Indian leaders.

Also read: Why Nepal wants high-denomination Indian bills as legal tender in the country

Subscribe to our channels on YouTube & Telegram

News media is in a crisis & only you can fix it

You are reading this because you value good, intelligent and objective journalism. We thank you for your time and your trust.

You also know that the news media is facing an unprecedented crisis. It is likely that you are also hearing of the brutal layoffs and pay-cuts hitting the industry. There are many reasons why the media’s economics is broken. But a big one is that good people are not yet paying enough for good journalism.

We have a newsroom filled with talented young reporters. We also have the country’s most robust editing and fact-checking team, finest news photographers and video professionals. We are building India’s most ambitious and energetic news platform. And we aren’t even three yet.

At ThePrint, we invest in quality journalists. We pay them fairly and on time even in this difficult period. As you may have noticed, we do not flinch from spending whatever it takes to make sure our reporters reach where the story is. Our stellar coronavirus coverage is a good example. You can check some of it here.

This comes with a sizable cost. For us to continue bringing quality journalism, we need readers like you to pay for it. Because the advertising market is broken too.

If you think we deserve your support, do join us in this endeavour to strengthen fair, free, courageous, and questioning journalism, please click on the link below. Your support will define our journalism, and ThePrint’s future. It will take just a few seconds of your time.

Support Our Journalism

2 Comments Share Your Views



Please enter your comment!
Please enter your name here