Cross-Border Ease: Nepal Reopens Doors to High-Value Indian Currency 

Nepal is set to lift a decade-long ban on high-denomination Indian currency notes, a move prompted by a recent RBI rule change and expected to ease significant practical burdens for cross-border travel. This reversal, which will allow individuals to carry Indian notes above ₹100 up to ₹25,000, directly addresses difficulties faced by millions of Nepali migrant workers, Indian tourists, pilgrims, and businesses that have struggled since India’s 2016 demonetization invalidated billions in rupees held in Nepal.

While digital payments have offered an alternative in cities, the physical cash remains essential for remote areas and will provide a direct boost to Nepal’s tourism and border economies. The policy shift resolves a longstanding friction point, symbolizing a step toward smoother economic integration while pragmatically acknowledging the deep, everyday financial ties between the two nations.

Cross-Border Ease: Nepal Reopens Doors to High-Value Indian Currency 

In a move set to reshape the dynamics of cross-border travel and commerce, Nepal is on the verge of lifting a decade-long prohibition on high-denomination Indian currency notes. This policy shift, eagerly awaited by millions, promises to ease a persistent source of friction for travelers and inject new vitality into Nepal’s tourism-dependent economy. 

The change comes after India’s central bank, the Reserve Bank of India (RBI), formally amended its foreign exchange regulations in late November 2025. Following this, Nepal’s central bank, the Nepal Rastra Bank (NRB), is in the “final stages” of publishing an official notice in the national gazette to enact the change, according to NRB spokesperson Guru Prasad Poudel. 

The Core of the Change: What the New Rules Allow 

The revised regulations introduce a two-tier system for carrying Indian currency across the border: 

• Unlimited Lower Denomination Notes: Individuals can carry Indian currency notes up to ₹100 in any amount to Nepal and back. 

• Capped Higher Denomination Notes: Individuals can carry notes above ₹100, up to a total value of ₹25,000, in either direction. 

This update resolves a long-standing asymmetry. While Nepal has allowed tourists to bring in up to $5,000 in foreign convertible currency without declaration, the specific ban on Indian notes above ₹100 created a unique hurdle for visitors from its largest tourist market. 

A Policy Reversal Born from a Decade of Difficulty 

To understand the significance of this change, one must look back at a turbulent history of currency policy between the two nations. 

India’s 2016 demonetization was a pivotal event. Overnight, Indian ₹500 and ₹1,000 notes held by Nepali citizens, businesses, and even its central bank became worthless pieces of paper. Nepal was estimated to be holding invalid currency worth nearly ₹1,000 crore (over $140 million at the time), a significant financial blow for which no resolution was ever formally reached. In response, Nepal imposed its comprehensive ban in early 2019. 

Who Stands to Gain? From Migrant Workers to Hoteliers 

The relaxation of rules is poised to benefit a wide cross-section of people, addressing practical hardships that have persisted for years. 

For Nepali Migrant Workers and Cross-Border Communities: An estimated three million Nepalis work in India. The old rules forced them to convert their earnings into thick wads of low-denomination ₹100 notes, making them conspicuous targets for theft during their journey home. Furthermore, in Nepali border regions like the Terai, Indian currency is not just common but essential. In some villages, over 95% of daily transactions are conducted in Indian rupees due to deep economic ties with adjacent Indian states. The ban had made simple cross-border trade and shopping exceptionally difficult. 

For Indian Tourists and Nepal’s Hospitality Sector: India is Nepal’s largest source of tourists, with millions crossing the open border by land each year. Unaware of the specific currency ban, many Indian tourists inadvertently broke the law, facing arrests, fines, and confiscation of their money at border points. This created a climate of anxiety that dampened travel. 

The impact was acutely felt in specific sectors: 

• Casinos and Hotels: Businesses catering to Indian visitors, particularly casinos where a majority of customers are Indian, saw revenues plummet. 

• Border Town Economies: Towns like Nepalgunj, which see seasonal booms from pilgrims traveling to Tibet’s Kailash Mansarovar, suffered from restricted tourist spending. 

For Pilgrims, Students, and Medical Travellers: The open border facilitates a constant flow of people for religious pilgrimages, education, and healthcare. The currency restrictions added an unnecessary layer of financial complexity to these essential journeys, which the new rules will streamline. 

Limitations and the Digital Alternative 

While welcomed, the new policy is not a complete return to the pre-2016 status quo. The ₹25,000 cap on high-value notes may still limit spending for some tourists and business visitors. Furthermore, it does not address the historical grievance of the demonetized currency still held in Nepal. 

In the interim, digital payments have emerged as a partial solution. Since March 2024, Indian tourists have been able to use QR-based UPI payments in Nepal. However, as tourism industry executives note, this system remains unreliable in remote trekking and mountain regions with poor connectivity, underscoring the continued necessity of physical cash. 

A Symbol of Broader Economic Diplomacy 

Beyond immediate convenience, this policy shift is a notable gesture in India-Nepal relations. It addresses a long-standing Nepali request and can be seen as part of a broader Indian effort to strengthen regional economic integration. In October 2025, just before this currency amendment, the RBI also moved to allow Indian banks to extend rupee-denominated loans to residents of Nepal, Bhutan, and Sri Lanka, facilitating trade and deepening financial ties. 

For Nepal, the decision balances economic pragmatism against sovereignty concerns. Some Nepali economists have historically argued that excessive circulation of Indian currency symbolizes economic dependency and undermines the Nepali rupee. The new, regulated allowance represents a middle path—harnessing the practical benefits of India’s economic gravity while maintaining regulatory control. 

Conclusion 

The impending circulation of high-value Indian notes in Nepal marks the closing of a fraught chapter that began with the shockwaves of demonetization. It is a pragmatic correction that prioritizes the daily realities of cross-border life for workers, families, pilgrims, and entrepreneurs. By removing a key friction point, it promises to foster greater people-to-people exchange and provide a boost to local economies on both sides of the border. While it may not erase all the economic memories of the past decade, it is a significant step toward smoother and more integrated cross-border relations.