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Demonetisation effect: Nepal bans new Indian currency of Rs 500 and Rs 2000

Nepal, Kathmandu: Nepal Rastra Bank on Thursday announced the ban on new Indian currency denominations of Rs 500 and Rs 1000.

The Nepal Rastra Bank (NRB) termed the new currency 'unauthorised and illegal.' The two new Rs 500 and Rs 2000 currency notes were issued by Reserve Bank of India (RBI).

NRB spokesperson Narayan Poudel said these notes will be legal in Nepal only when India issues a FEMA notification as per the Foreign Exchange Management Act.

India is likely to issue a FEMA notification allowing the people in Nepal and India to possess certain amount of Indian currency. A ban was earlier in effect in Nepal till last year against the use of Rs 500 and Rs 1000 currency notes.

After the visit of Prime Minister Narendra Modi to Nepal, the authorities had lifted the ban. Nepal then allowed people to carry Indian rupees of higher denominations to Max Rs 25,000.