Kathmandu, December 15, 2025 – The government of Nepal has officially lifted the ban on Indian currency notes of INR 200 and INR 500 denominations, permitting their use and circulation within the country. This decision, announced on Monday, is set to ease financial transactions for both Nepali and Indian citizens traveling across the border.
The decision aligns with the Reserve Bank of India's (RBI) notification issued on November 28, 2025, which allows individuals, excluding citizens of Bangladesh and Pakistan, to carry Indian currency notes exceeding INR 100 when traveling between India and Nepal or Bhutan, up to a limit of INR 25,000. The RBI's amendment to its Foreign Exchange Management (Export and Import of Currency) Regulations was officially published on December 2, 2025. These revised regulations permit individuals to carry Indian currency notes of any amount up to INR 100 and notes exceeding INR 100 up to a total value of INR 25,000 in either direction.
Jagadish Kharel, Minister for Communication and Information Technology and the government spokesperson, confirmed the cabinet's decision, stating that Nepali and Indian citizens can now carry Indian currency notes of INR 200 and INR 500 while traveling to India and returning to Nepal.
Nepal had initially imposed strict restrictions on high-value Indian currency notes following India's demonetization in 2016, with the aim of curbing counterfeit currency smuggling and addressing security concerns. The ban, which has been in effect for nearly a decade, caused considerable inconvenience to travelers, traders, and migrant workers who frequently move between the two countries. Many individuals faced financial hardships, confusion, and even detention for inadvertently violating the regulations.
The lifting of the ban is expected to provide a significant boost to Nepal's economy, particularly its tourism and hospitality sectors, which heavily rely on Indian visitors. Businesses in border towns, casinos, and pilgrimage routes that cater to Indian tourists are likely to benefit from the increased spending power of visitors.
Furthermore, the decision offers relief to the estimated two million Nepali migrant workers in India, who previously faced security risks while bringing their earnings home in small denominations. The ability to carry higher denomination notes will reduce their vulnerability to theft and other risks during travel.
According to Nepal's central bank, a substantial amount of unexchanged banknotes from the period following demonetization, estimated to be over INR 50 million, remains within Nepal's banking system. The easing of restrictions on higher-denomination Indian currency notes has been a long-standing demand from residents of communities along the India-Nepal border, who believe it will simplify daily life.
Prior to the demonetization, Nepal's central bank had lifted a ban on the use of INR 500 and INR 1,000 notes in 2015, in line with the Reserve Bank of India's relaxation at the time. Nepal had initially banned the use of INR 500 and INR 1,000 Indian banknotes in June 2000.
Financial experts in Kathmandu have hailed the decision as a landmark step towards financial integration and trust-building between India and Nepal, signifying a renewed phase of economic partnership between the two neighbors.
