Nepal’s central bank on Thursday said, New Indian Currency Notes of Rs. 500 and Rs. 2000 are deemed illegal and banned for exchange.
The Nepal Rastra bank said the new Indian notes which have appeared in border areas due to the open border, cannot be exchanged until India accords approval.
Mr. Ramu Poudel, Chief of NRB’s eastern region said, “As of now, the understanding with Reserve Bank of India is that a Nepali citizen can hold up to Rs. 25000 worth of old Rs. 500 and Rs. 1000 denomination Indian currency notes. Even the fate of those notes is uncertain…how can these new notes coming into the market be considered as legal?”
Nepal and India have not yet reached an agreement on the modality of exchange of the withdrawn notes, and the new notes will be exchangeable in Nepal only after India’s central bank issues a new FEMA notification under the Foreign Exchange Management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.