Nepal Rastra Bank has banned the use of India’s new currency notes of Rs. 500 and Rs. 2,000 denomination, terming them “unauthorised and illegal”.
These two currency notes were issued by the Reserve Bank of India recently after the old Rs. 500 and Rs. 1,000 notes were declared invalid.
These new notes are not legal in Nepal yet. The new notes would get legal sanction in Nepal only after India issues a notification via the Foreign Exchange Management Act. India could issue a FEMA notification soon.
Nepal and India have not yet reached any agreement on the modality of exchange of the withdrawn notes, and the new notes will be exchangeable in Nepal only after India’s central bank issues a new FEMA notification under the Foreign Exchange Management Act, according to the NRB.
The FEMA notification allows foreign countries or nationals to hold on to a certain amount of Indian notes. At present, India has allowed Nepali citizens to individually hold Rs 25,000 in Indian currency.