New Delhi (Sputnik): Nepal Rastra Bank, the official government bank of Nepal, has called the new Indian currency notes unauthorized and illegal. This has badly affected India-Nepal trade.
"These currency notes are not yet legal in India and these notes will be legal in Nepal only when India issues a notification as per the Foreign Exchange Management Act (FEMA)," Narayan Poudel, spokesperson of the Nepal Rastra Bank told media.
Under FEMA, a Reserve Bank of India notification allows citizens of foreign countries to hold a certain amount in Indian currency. Accordingly, Nepalese citizens can hold up to 25,000 Indian rupees. But the main problem with the Nepalese citizens is how to exchange their old currency notes of Rs 500 and Rs 1000.
India’s apex bank Reserve Bank of India had banned the use of old high denomination currency notes and introduced new currency notes of Rs 500 and Rs 2000.
Indian currency is widely accepted in Nepal due to the open border between the two countries.