New Delhi: Bhutan’s central bank has cautioned the country’s citizens about keeping Indian currency in cash, citing the risk of future changes in Indian monetary policy, including demonetisation.

With Indian currency being legal tender in Bhutan, the withdrawal of Rs 500 and Rs 1000 notes by the government in November 2016 had caused hardships, especially for Bhutanese traders and pilgrims.

Bhutan got a lot more immediate attention from India as compared to Nepal, but the impact of demonetisation continues to linger.

Over a year-and-a-half later, Royal Monetary Authority (RMA) issued a notification last week allowing Bhutanese to carry INR 500 notes in and out of Bhutan.

However, RMA also advised its citizens from stocking Indian currency, adding that the Bhutanese central bank will not be liable if the Reserve Bank of India announced future demonetisation of high denomination notes.

The notification states:

Further, the RMA would like to inform the general public to deposit any INR earnings/receipts in their accounts maintained with any commercial banks and refrain from holding the INR currency notes in cash. The RMA shall not be liable or responsible in case of any policy changes by the RBI, including demonetization of INR currency notes in the future.

At the time of the demonetisation, Bhutanese authorities had pointed out that the kingdom was adversely impacted as Bhutanese nationals held a substantial amount of Indian currency.

Within a day of the announcement of demonetisation, RMA had started to collect the withdrawn currency notes. A week later, it froze the exchange of ngultrums for deposited currency. It wasn’t until May 2017 that restrictions on withdrawal were removed.

In August 2017, RMA issued a notification that Indian currency notes of Rs 500 and Rs 200 were not accepted in Bhutan.

While the ban on Rs 500 notes has been lifted with this latest notification, but in a constrained way. From June 11, individuals can bring in or take out currency notes of Rs 500 subject to a total limit of Rs 25000.

Even as RMA removed the ban on Rs 500 notes, it warned against fake Indian currency notes. “The RMA also cautions the general public of counterfeit notes of INR 500 denomination and requests all individuals to be vigilant and careful while accepting this denomination,” it said.