The movement of foreign currency across international borders is one of the most sensitive issues for any country. To maintain financial stability, prevent illegal money laundering, and ensure compliance with global practices, central banks across the world set rules and restrictions. In Nepal, the Nepal Rastra Bank (NRB) is responsible for regulating foreign exchange and controlling the inflow and outflow of both Nepalese and foreign currencies.
Recently, Nepal Rastra Bank issued a notice clarifying how much cash individuals can carry in and out of the country without a declaration, and also restated its restrictions on Indian currency notes. These rules are particularly important for international travelers, businesses, and tourists visiting Nepal, especially from India.
In this blog, we will cover everything you need to know about the NRB’s rules on foreign currency, the restrictions on Indian rupees, the legal basis behind these regulations, and their impact on tourism and the economy.
Limit on Carrying Foreign Currency
When it comes to carrying cash across borders, one of the biggest concerns is balancing convenience for travelers with the need to prevent illegal financial activities. Nepal Rastra Bank has made clear guidelines for this.
Up to USD 5,000 Can Be Carried Without Customs Declaration
According to NRB, Nepali or foreign nationals can freely bring or take up to USD 5,000 in cash or an equivalent amount in other foreign currencies into or out of Nepal. This means travelers do not need to declare amounts less than this limit to customs officials.
For instance, if someone is entering Nepal from the United States, they can carry USD 5,000 in cash without filling out a customs declaration form. Similarly, if they are carrying euros, British pounds, or any other currency, the amount equivalent to USD 5,000 is permissible.
Mandatory Customs Declaration for Amounts Above the Limit
If the amount exceeds USD 5,000 (or equivalent), travelers must declare it to customs authorities at the border or airport. The money must also be certified officially, and failing to declare could result in confiscation or legal action.
This rule is designed to:
- Prevent illegal transactions.
- Monitor large-scale cross-border cash flow.
- Ensure compliance with anti-money laundering laws.
Indian Rupees Included in the Arrangement
The USD 5,000 equivalent rule also applies to Indian rupees (INR). This means travelers can bring Indian rupees equivalent to USD 5,000 without declaration. However, due to specific restrictions on certain denominations of Indian currency, the rules are stricter for INR compared to other foreign currencies.
Legal Basis and Applicable Acts
The rules set by Nepal Rastra Bank are not arbitrary. They are based on laws that aim to ensure Nepal’s economy remains transparent, legal, and globally compliant.
Foreign Exchange Regulation Act, 2019
The Foreign Exchange Regulation Act, 2019 provides the foundation for regulating the inflow and outflow of foreign currencies. This act gives NRB the authority to impose restrictions, monitor financial transactions, and ensure that all currency exchange practices are legal and documented.
Anti-Money Laundering and Asset Laundering Prevention Act, 2007
Another important law that influences these restrictions is the Asset (Money) Laundering Prevention Act, 2007. Under this law, large, undocumented transactions are seen as suspicious and could potentially involve illegal activities such as terrorism financing, smuggling, or tax evasion.
By requiring customs declarations and restricting high-value cash transactions, NRB aligns Nepal’s financial practices with global anti-money laundering standards.
Restrictions on Use of Indian Currency in Nepal
While most foreign currencies are allowed in Nepal under the USD 5,000 rule, the case of Indian rupees is special. Because of Nepal’s close economic and social ties with India, Indian currency is widely used by travelers. However, due to certain risks, Nepal has placed strict restrictions on specific denominations of Indian rupee notes.
Ban on INR 500 and 1,000 Notes Issued Before November 9, 2016
After the Indian government’s demonetization drive in November 2016, INR 500 and 1,000 notes issued before that date lost their legal status in India. Accordingly, Nepal Rastra Bank banned their use in Nepal as well. These notes are not valid for transactions in Nepal and cannot be legally used in markets, banks, or business activities.
Prohibition on INR 200, 500, and 2,000 Notes in Nepal
In addition to older notes, NRB has prohibited bringing, using, or carrying INR 200, INR 500, and INR 2,000 notes in Nepal. This means anyone found with these denominations inside Nepal is violating the law.
Only smaller denominations such as INR 100 are legally allowed for use in Nepal. This is one of the main challenges faced by Indian tourists, as they are often unable to carry sufficient smaller denominations for their travel expenses.
Restriction on Taking Indian Currency Outside India
Nepali citizens are also prohibited from taking Indian currency outside of India to any third country, and foreigners are restricted from bringing Indian currency into Nepal from outside India. This measure prevents cross-border misuse of Indian rupees in international black markets.
Nepal Rastra Bank’s Public Notice and Warning
NRB regularly issues notices to remind the public about these rules.
Legal Action for Possession of Banned Notes
Anyone found carrying or using banned Indian currency notes in Nepal could face legal action, including seizure of cash and possible penalties under Nepalese law.
Public Urged to Remain Alert
The bank has requested Nepali citizens, foreign tourists, and businesses to remain alert and avoid using restricted denominations. The circulation of these notes not only creates confusion but also poses legal risks for individuals.
Impact of Indian Rupee Restrictions on Tourism
Nepal receives a large number of Indian tourists every year due to its proximity, cultural ties, and religious significance. However, the restrictions on Indian currency have created challenges for both tourists and the tourism sector.
Indian Tourists Facing Difficulties
Many Indian visitors rely on carrying cash rather than electronic payment systems when traveling to Nepal. With restrictions on INR 200, 500, and 2,000 notes, tourists often find themselves unable to pay for hotels, shopping, and transportation.
Decline in Hotel and Tourism Business
Hoteliers and business owners in tourist hubs like Kathmandu, Pokhara, and Lumbini have reported that these restrictions have led to a decline in spending by Indian tourists. Since most visitors cannot carry enough INR 100 notes, their purchasing power in Nepal is limited.
Questions Raised by Lawmakers
Lawmakers in Nepal’s Parliament have also raised concerns over the policy, questioning whether the restrictions are discouraging Indian tourists from visiting Nepal. Some have argued that while the intention is to maintain financial discipline, the policy may need reconsideration to balance economic benefits with regulatory goals.
Discussion in the Parliamentary Finance Committee
The debate on Indian rupee restrictions has also reached the Finance Committee of the House of Representatives.
Concerns Raised by MP Gyan Bahadur Shahi
MP Gyan Bahadur Shahi highlighted that Indian tourists were facing significant difficulties due to the restrictions. He argued that the inability to bring larger denominations had reduced hotel occupancy and tourism-related revenue.
Suggestions by MP Surya Bahadur Thapa Chhetri
Similarly, MP Surya Bahadur Thapa Chhetri emphasized the negative impact on Nepal’s tourism sector. He urged the government to review the rules and consider easing the restrictions in a way that prevents illegal use but still supports tourism.
Governor’s Refusal to Respond
During one of the committee meetings, the Finance Committee directed the Governor of Nepal Rastra Bank, Maha Prasad Adhikari, to respond. However, he declined to provide an immediate explanation, leaving the issue unresolved at the time.
Final Thoughts
The rules and restrictions imposed by Nepal Rastra Bank on foreign currency and Indian rupee usage are rooted in strong legal and economic concerns. They aim to:
- Prevent money laundering.
- Control cross-border financial risks.
- Align Nepal with global financial standards.
However, the practical challenges for Indian tourists and Nepal’s tourism sector cannot be ignored. While financial security is vital, the government may need to explore balanced solutions that make it easier for Indian tourists to spend money in Nepal without compromising on compliance.
In the long run, promoting digital payment systems, banking channels, and formal money exchange services could be the answer to bridging this gap.
Nepal’s economy, tourism, and financial regulations are closely interconnected, and any change in currency rules has ripple effects. For now, travelers to Nepal—especially from India—must carefully follow NRB’s rules to avoid complications.
FAQs on Carrying Foreign Currency from Nepal
General Questions:
How much foreign currency can I carry from Nepal without declaration?
As per Nepal Rastra Bank (NRB) rules, Nepali or foreign citizens can carry up to USD 5,000 (or equivalent) in cash without declaration. Amounts beyond that must be declared at customs.
Do I need approval to carry foreign exchange abroad?
Yes. You need approval from a commercial bank licensed by NRB to purchase foreign exchange, depending on the purpose (tourism, medical, study, business, etc.).
Can I carry Nepali Rupees outside Nepal?
No. Carrying Nepali currency outside the country is strictly prohibited by law.
What if I want to take more than USD 5,000?
You must obtain prior approval and declaration at the airport customs counter with supporting documents (e.g., travel, tuition fees, medical bills).
For Normal Travelers
How much foreign currency can I take for a holiday trip?
For leisure or business travel, you can buy and carry up to USD 1,500 (or equivalent) per passport per year from authorized banks.
Can I use an international debit/credit card abroad?
Yes, but you need NRB approval for international cards. Transaction limits apply as per bank rules.
Can I receive foreign currency as a gift to carry abroad?
No. All foreign exchange must be purchased legally through authorized banks. Carrying undeclared or unofficially obtained foreign cash is illegal.
For Students Traveling Abroad
How much foreign currency can a student take for studies?
Students can take foreign currency as per the fee structure approved by the foreign university/college.
- Tuition fees can be directly remitted from Nepalese banks to the university.
- For living expenses, students are allowed to carry up to USD 500 in cash while the rest must be sent through banking channels.
Do students need documents to get foreign exchange?
Yes. Required documents include:
- Admission letter from the foreign university
- I-20 form (for USA), CAS letter (for UK), or equivalent
- Student visa
- Cost estimate of study and living expenses
- Bank guarantee or educational loan papers (if applicable)
Can parents send money later for living expenses?
Yes. Parents/guardians can remit money legally through commercial banks in Nepal under NRB guidelines.
Airport & Customs Related
Do I need to declare the money I’m carrying at Tribhuvan International Airport (TIA)?
You must declare if carrying more than USD 5,000 in cash or traveler’s cheque.
What happens if I carry undeclared cash?
If caught, the cash can be confiscated and legal action (including fines) may be taken under Nepal’s Foreign Exchange Regulation Act.
Can I carry gold or jewelry instead of currency?
Limited quantity of personal jewelry is allowed, but carrying gold as investment without declaration is illegal.
Country-Specific Rules
Do different countries have their own currency entry rules?
Yes. Each country has its own limits. For example:
- India: NRB allows Nepalis to carry INR 25,000 per person (new notes only: 100, 200, 500).
- USA, UK, Australia, Canada, EU: Must declare if carrying more than USD 10,000 (or equivalent) on entry.
- Gulf Countries: Declaration required if carrying more than USD 3,000–5,000 (varies by country).