The Central Bank of Nepal has announced the ban on the use of Indian currency notes of Rs 2,000, Rs 500 and Rs 200 denominations. The move is going to affect Indian tourists, who visit the Himalayan nation and where Indian currency is widely used.

Recently Nepal Rastra Bank has issued a circular prohibiting travellers, banks and financial institutions from holding or carrying out any transaction and trading in Indian bank notes. The central bank has also informed in its circular that Indian currency of 200, 500 and 2,000 denominations couldn’t be henceforth used or carried out for any kind of trading.

As per this new regulation, Nepali citizens also cannot carry these denominations to the countries other than India. At the same time, the people of Nepal are also not allowed to bring such notes from other countries. Indian notes of 100 or below, however, are allowed for transaction, trading and conversion, the bank’s circular declared.

On 13th December 2018, the Cabinet of Nepal had decided to publish the notification in the Nepal Gazette not to allow people to carry Indian currency notes above 100 denominations in Nepal. The ban has been criticised by travel traders and entrepreneurs, according to them this decision would hurt the country’s prospering tourism at a time when the government has launched its “Visit Nepal” campaign with an objective to attract around 2 million tourists in 2020.

Since India and Nepal shares common boundary and a majority of Indians come to Nepal via land from its bordering towns, it is difficult for them to convert their currency to dollar or Euro. According to a survey, 1.2 million Indians came to Nepal through the surface route while 160,132 travelled via air. The average length of stay of Indian tourists coming through land was 5 to 7 days. Average expenditure per visitor is more than 10,000/- the survey analysed.

In the year 2016, the Indian government introduced new banknotes of Rs. 2,000, Rs. 500 and Rs. 200 denominations after the demonetization of old notes worth Rs. 500 and 1,000. The move then also affected countries like Nepal and Bhutan, where Indian currency is widely used.

Prime Minister of Nepal, K P Sharma Oli earlier this year has said that demonetization in India has hurt the people of Nepal. The people of Nepal have been using the new Indian currency in Nepal for nearly two years now.