Nepal Rastra Bank (NRB), the central bank, has lifted the ban on import and export of Indian bank notes of 500-rupee and 1,000-rupee denominations, with the issuance of a notice in the gazette.

The move came two days after the government legalised import and export of such notes by publishing a notice in the gazette.

Issuing a directive, NRB said Nepalis can carry Indian bank notes of 500-rupee and 1,000-rupee denominations while travelling to or returning from India. Similarly, Indian citizens can carry bank notes of those denominations while travelling to or leaving Nepal.

The sum of such bank notes, however, should not exceed IRs 25,000. “And Nepalis cannot carry such bank notes while travelling to countries other than India,” says the directive.

With the issuance of this directive, banks, financial institutions and money changers can now buy and sell Indian bank notes of 500-rupee and 1,000-rupee denominations, while other agencies, like hotels and travel agencies that have obtained permission to deal with foreign currency, can purchase Indian notes of those denominations.

The Ministry of Finance had barred circulation of Indian bank notes of 500-rupee denomination in the country by publishing a notice in the gazette on June 26, 2000. Although that gazette had not spoken of ban on Indian bank notes of 1,000-rupee denomination, NRB had prevented circulation of such notes.

This ban was imposed after India barred individuals travelling from Nepal to India or from India to Nepal to carry Indian notes of 500-rupee and 1,000-rupee denominations in May 2000. It had introduced the provision to curb circulation of counterfeit Indian currency notes and their unauthorised trade.

But last month, the Reserve Bank of India (RBI), the Indian central bank, changed its policy and allowed Nepalis returning from India and Indians to carry Indian bank notes of 500-rupee and 1,000-rupee denominations while coming to Nepal.

In a statement posted on its website, the RBI had said: “With a view to mitigating the hardship of individuals visiting from India to Nepal or Bhutan, it has now been decided that, an individual may carry to Nepal or Bhutan, currency notes of denominations above IRs 100, that is, currency notes of IRs 500 and/or IRs 1,000 denominations, subject to a limit of IRs 25,000.”

The RBI had changed its policy almost two months after Indian Premier Narendra Modi made a public announcement in this regard during his Nepal visit.