New Guidelines for Indian Rupee Exchange: How Much of ₹200 and ₹500 Notes Can Now Be Carried?
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Rajupasad Lalchan, a trader from Mustang, reported facing significant difficulties last month due to Indian currency issues. With a surge in Indian tourists, many local traders accepted payments in Indian rupees.
“Most traders had accumulated ₹200 and ₹500 notes, but banks were unable to facilitate exchange,” said Lalchan, president of the Mustang Industry and Commerce Association.
“Tourists coming from India often carried ₹500 notes, and we as traders were compelled to accept them, but difficulty arose when banks declined to exchange these notes.”
Earlier, Lalchan had requested Tourism Minister Khadkaraj Paudel to address this problem.
“This money was hard-earned by the traders. We also appealed during inspections on the Pokhara-Kathmandu route for leniency and assistance by overlooking certain informalities.”
Decision by Nepal Rastra Bank
To ease difficulties faced by many like Lalchan, the central bank issued new guidelines on Thursday.
“Indian ₹200 and ₹500 notes in circulation since November 9, 2016, may now be legally brought, carried, and exchanged up to ₹25,000 per individual by Nepali or Indian citizens as per regulations,” stated the Rastra Bank notice.
In fact, a notification published in the Nepal Gazette on January 11, 2026 (Poush 28, 2082 BS) had already allowed Nepali and Indian nationals to carry Indian ₹200 and ₹500 notes up to ₹25,000 when traveling between the two countries.
“The central bank has now clarified the necessary procedures based on the earlier decision published in the Gazette,” said Gurup Prasad Paudel, spokesperson for the Rastra Bank.
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“Although the decision was finalized earlier, uncertainties remained due to unclear procedures. Many Indian citizens were bringing such notes within the limit and making payments here, but exchange was problematic.”
“Now, this clarification allows bringing, carrying, and exchanging these notes within the prescribed limit through authorized institutions.”
This move is expected to strengthen the official exchange system for Indian currency, ease access for Indian tourists visiting Nepal, discourage informal exchanges, and promote tourism, trade, and cross-border economic activities.
“However, this does not mean these rupees can be widely circulated in Nepal,” added the spokesperson.
Numerous banks, financial institutions, large hotels, restaurants, and licensed money changers are currently authorized to conduct such exchanges.
Following this announcement, trader Lalchan voiced hope for improved convenience going forward.
Past Bitter Experiences
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Strict regulations applied on the use of higher denomination Indian notes in Nepal.
In the 2000s, at India’s request, Nepal banned ₹500 and ₹1000 rupee notes.
This ban was in response to Indian officials’ concerns about the increasing circulation of counterfeit Indian currency smuggled from Nepal.
The ban was lifted in 2014 during then Indian Prime Minister Narendra Modi’s visit to Nepal, allowing Indian and Nepali taxpayers to carry up to ₹25,000 per person.
However, this rule did not last long.
On November 8, 2016, Prime Minister Modi suddenly demonetized ₹500 and ₹1000 notes, affecting the general public, traders, and banks even in Nepal.
Huge amounts of old notes are still deposited in Nepalese banks.
Post demonetization, the Rastra Bank prohibited use of these notes in Nepal and blocked exchange of newly issued ₹500 and ₹2000 notes.
Facilities Regarding US Dollars
According to Thursday’s release, the Rastra Bank permits Nepali or foreign nationals to bring in up to $5,000 in cash and an equivalent of $5,000 in other foreign currencies into Nepal without customs declaration.
When leaving Nepal, individuals may carry $3,000 per the passport allowance and an additional $1,500 without customs declaration.
“The passport allowance is $3,000, but individuals can hold up to $1,500 received from relatives, tips, or prior foreign visits without disclosing the sources,” explained spokesperson Paudel.
Currently, the central bank holds large foreign currency reserves, totaling approximately $2.468 billion USD.
As of the end of Ashad 2079 (mid-July 2022), total foreign currency reserves were worth roughly NPR 2.677 trillion.
Between Shrawan 2078 and Jestha 2083 (mid-2021 to mid-2026), foreign currency reserves grew by about 40%, reaching NPR 3.755 trillion, while remittances exceeded NPR 2.1 trillion during the same period.
Increased remittances from Nepali workers abroad are the main drivers of this foreign currency reserve growth.
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