If you have visited Nepal you will know that Indian currency is accepted very widely by shops and establishments there. People there will quote you prices in Indian rupees or Nepali rupees. If you're quoted a price in Nepali rupees you can usually pay in Indian rupees simply by calculating the exchange rate: 1.6 NR to 1 IR and paying in Indian rupees. So what has been impact of the recent Indian currency monetisation on this situation?
While the one hundred rupee notes and denominations lower than that were easily accepted by people in our neighbouring country, the five hundred rupee notes and one thousand rupee notes were less welcome. They are also difficult to exchange for local currency.
While exchange was difficult, it was still possible to use the high denomination notes in Nepal prior to demonetisation. For a while the notes were banned, however they had been accepted once again after a visit to Nepal by PM Modi (up to Rs25,000 in high denomination notes was permitted). Post demonetisation however, these notes are no longer accepted at all.
According to the Nepal SBI website, the Nepal Rastra Bank, the central bank of the country has declared it illegal to possess these notes. So the 500 and 1000 rupee notes are not accepted anywhere in Nepal now.
The new 500 rupee note in its new avatar and the new 2000 rupee note are not considered legal tender in Nepal either.
According to Nepal Rastriya Bank official Narayan Prasad Sapkota the RBI or other Indian government authority has not officially informed the Nepali authorities of this. He said that these notes can only be accepted in his country after proper notice had been received to the effect.
Narayan Poudel the spokesperson for the Nepali central bank has said that the new notes will be legal in Nepal only after a notification under FEMA (Foreign Exchange Management Act) is issued. For non Indians who possess the now useless notes, the RBI has formed a task force in Nepal to ease the currency exchange process.
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