Nepal’s Finance Minister Bishnu Prasad Paudel has clarified that Nepal alone cannot decide to circulate Indian currency notes above ₹500. Speaking during a meeting of the Finance Committee, he explained that such a move would require India’s direct approval.
“Our decision alone isn’t enough. Since we would need to send those notes back to India eventually, using large denomination notes without their consent is not practical,” said Paudel.
This comment came after several lawmakers raised concerns that Nepal’s restriction on high-value Indian currency, combined with limits on carrying US dollars and Indian rupees, is creating problems for tourists entering the country.
As per current rules, travelers can carry up to ₹400,000 into Nepal without customs declaration and ₹600,000 if declared. While these rules exist, tourists have complained of confusion and inconvenience due to unclear enforcement and lack of usable denominations.
Finance Minister Paudel mentioned that digital payments and QR-based transactions have made things easier lately, but physical cash restrictions still affect many visitors.
Before India’s demonetization in 2016, ₹500 and ₹1000 notes were commonly accepted in Nepal. But after the note ban, India never exchanged the high-value currency held by Nepalis, leaving many with worthless paper.
In the same meeting, Paudel also emphasized the urgency of finalizing the Bank and Financial Institutions Act (BAFIA), stating the bill should move forward after proper discussion. The Ministry is ready to assist in every possible way to conclude it soon.
The ongoing discussion on the BAFIA bill includes proposals to make credit policies investment-friendly, separate bankers from business owners to reduce conflicts of interest, promote loans to productive sectors, allow public access to loans, and even bring cryptocurrency under a legal framework.
Nepal Rastra Bank’s Executive Director Guru Prasad Paudel shared that banks have disbursed around Rs. 5.6 trillion in loans to nearly 1.96 million borrowers. He added that deposit volume stands at around Rs. 7 trillion, with priority being given to agriculture, energy, and small industries, especially targeting farmers and women.
The bill, introduced in March 2024, aims to regulate digital currencies, strengthen the legal responsibility of board members, discourage insider lending, and update Nepal’s banking system to align with global financial trends.
If passed, the law is expected to improve the overall banking environment, making it more secure, transparent, and aligned with modern-day financial tools and risks.
